Metsä Board Corporation Half year financial report 1 January–June 30 2016 4 August 2016 at 12:00 EET
January–June 2016 (1–6/2015)
• Sales amounted to EUR 858.5 million (1,047.7).
• Operating result excluding non-recurring items was EUR 70.8 million (90.2), or 8.2 per cent of sales. Operating result including non-recurring items was EUR 67.2 million (110.3).
• Result before taxes excluding non-recurring items was EUR 56.8 million (72.3). Result before taxes including non-recurring items was EUR 53.3 million (90.2).
• Earnings per share excluding non-recurring items were EUR 0.14 (0.19), and earnings per share including non-recurring items were EUR 0.13 (0.24).
April-June 2016 (1–3/2016)
• Sales amounted to EUR 422.9 million (435.6).
• Operating result excluding non-recurring items was EUR 35.8 million (35.0), or 8.5 per cent (8.0) of sales. Operating result including non-recurring items was EUR 34.5 million (32.7).
• Result before taxes excluding non-recurring items was EUR 26.8 million (30.0). Result before taxes including non-recurring items was EUR 25.5 million (27.7).
• Earnings per share excluding non-recurring items were EUR 0.07 (0.07), and earnings per share including non-recurring items were EUR 0.06 (0.07).
Events in April-June 2016
• The demand for paperboards remained stable in both Europe and the Americas. Price levels were stable.
• Metsä Board announced it will increase the price of white fresh fibre linerboard in Europe by EUR 50 per tonne (as of 16 May 2016) and the price of folding boxboard by EUR 110 per tonne (as of 1 August 2016).
• Metsä Board Corporation agreed on the extension of its existing syndicated credit facility by two years. After the extension, the facility, which consists of a loan facility of EUR 150 million and a revolving credit facility of EUR 100 million, will mature in March 2020.
Events after the review period
• Metsä Board is planning to close down its wallpaper base machine PM3 and discontinue its loss-making wallpaper base manufacturing at the Kyro mill in Hämeenkyrö, Finland. In addition, the company adjusts and improves operations at the Kyro mill in order to increase its competitiveness. The company will commence related statutory labour negotiations covering all employees at the mill. The estimated personnel effect is up to 100 employees.
• The production of uncoated paper reels at Husum ended in July. The remaining inventory will be sold during the second half of the year.
• As the paper production ends, the company will modify its external reporting structure. The Non-core Operations segment and Other operations will be discontinued, and as of the third quarter, Metsä Board will use only one reporting segment externally for its financial reporting.
Profit guidance for July-September 2016
Metsä Board’s operating result excluding non-recurring items in the third quarter of 2016 is expected to remain roughly at the same level as in the second quarter of 2016.
Mika Joukio, CEO:
“The operating result for the second quarter of the year remained at the first-quarter level, as we expected. The development of our result was still affected by the start-up of the new paperboard production line at Husum and the lower prices of the start-up volumes of folding boxboard. The bottlenecks in the finishing area of production and a leak in the recovery boiler at the pulp mill at the end of the period decreased the production volumes of folding boxboard at Husum. In addition, they will slow down deliveries in the coming months. Due to these production challenges, we have revised our folding boxboard sales target for Husum from 200,000 tonnes to 150,000 tonnes in 2016. The bottlenecks have now been eliminated, and the production volumes of folding boxboard at Husum are growing. The operational reliability of the paperboard production line has also clearly improved. The efficiency improvement measures at the Husum integrated mill are progressing as planned.
Operations at our mills in Finland remained stable. However, maintenance shutdowns at several mills took place in the second quarter as planned, which weakened our result compared to the first quarter.
We announced price increases in fresh fibre liner-boards and folding boxboard in Europe. We are al-ready seeing clear signs of the success of the price increase in fresh fibre linerboards. The impact of the price increase in folding boxboard will become evident in the coming months.
After the review period, in July, our paper production at Husum finally came to an end. Thus, we have fully exited the unprofitable paper business. From now on, we will focus on the production of lightweight and ecological fresh fibre paperboards according to our strategy. The investment programme at Husum was the last significant step in our transformation from a paper company into a paperboard company. We are also planning to close down our wallpaper base ma-chine PM3 due to loss-making wallpaper base manufacturing at the Kyro mill in Hämeenkyrö, Finland.
At the moment, our most important task is to ensure success in the sales of Husum’s new folding boxboard from Husum. However, while doing that, we must also keep our eye on the future. In order to meet the growth in demand for fresh fibre paperboards, we are continuously investigating options to further develop our mills in both Finland and Sweden. We want to continue to grow profitably together with our customers and to promote their sales by supplying them high-quality, ecological fresh fibre paperboard.”
| KEY FIGURES | |||||||||||||
| 2016 | 2016 | 2015 | 2015 | 2016 | 2015 | 2015 | |||||||
| Q2 | Q1 | Q2 | Q1 | Q1–Q2 | Q1–Q2 | Q1–Q4 | |||||||
| Sales, EUR million | 422.9 | 435.6 | 522.0 | 525.7 | 858.5 | 1,047.7 | 2,007.5 | ||||||
| EBITDA, EUR million | 59.6 | 55.5 | 93.3 | 69.3 | 115.2 | 162.6 | 302.5 | ||||||
| excl. non-recurring items, EUR million | 60.7 | 57.8 | 73.1 | 69.7 | 118.6 | 142.8 | 283.3 | ||||||
| EBITDA, % | 14.1 | 12.7 | 17.9 | 13.2 | 13.4 | 15.5 | 15.1 | ||||||
| excl. non-recurring items, % | 14.4 | 13.3 | 14.0 | 13.3 | 13.8 | 13.6 | 14.1 | ||||||
| Operating result, EUR million | 34.5 | 32.7 | 67.2 | 43.1 | 67.2 | 110.3 | 199.0 | ||||||
| excl. non-recurring items, EUR million | 35.8 | 35.0 | 47.0 | 43.2 | 70.8 | 90.2 | 179.9 | ||||||
| EBIT, % | 8.2 | 7.5 | 12.9 | 8.2 | 7.8 | 10.5 | 9.9 | ||||||
| excl. non-recurring items, % | 8.5 | 8.0 | 9.0 | 8.2 | 8.2 | 8.6 | 9.0 | ||||||
| Result before taxes, EUR million | 25.5 | 27.7 | 58.0 | 32.2 | 53.3 | 90.2 | 167.1 | ||||||
| excl. non-recurring items, EUR million | 26.8 | 30.0 | 40.0 | 32.3 | 56.8 | 72.3 | 150.2 | ||||||
| Result for the period, EUR million | 23.2 | 23.9 | 54.7 | 29.3 | 47.1 | 84.0 | 137.3 | ||||||
| excl. non-recurring items, EUR million | 24.6 | 25.7 | 36.9 | 29.4 | 50.3 | 66.3 | 120.2 | ||||||
| Result per share, EUR | 0.06 | 0.07 | 0.15 | 0.09 | 0.13 | 0.24 | 0.39 | ||||||
| excl. non-recurring items, EUR | 0.07 | 0.07 | 0.10 | 0.09 | 0.14 | 0.19 | 0.34 | ||||||
| Return on equity, % | 9.4 | 9.5 | 22.5 | 13.2 | 9.3 | 18.2 | 14.7 | ||||||
| excl. non-recurring items, % | 9.9 | 10.2 | 15.2 | 13.2 | 9.9 | 14.3 | 12.9 | ||||||
| Return on capital employed, % | 8.2 | 7.8 | 16.5 | 11.0 | 8.0 | 13.9 | 12.5 | ||||||
| excl. non-recurring items, % | 8.5 | 8.3 | 11.6 | 11.0 | 8.4 | 11.6 | 11.3 | ||||||
| Equity ratio at end of period, % | 47 | 44 | 46 | 41 | 47 | 46 | 46 | ||||||
| Net gearing ratio at end of period, % | 54 | 42 | 39 | 34 | 54 | 39 | 32 | ||||||
| Interest-bearing net liabilities/EBITDA 1) | 2.1 | 1.5 | 1.5 | 1.3 | 2.1 | 1.5 | 1.2 | ||||||
| Shareholders' equity per share at end of period, EUR | 2.81 | 2.77 | 2.83 | 2.63 | 2.81 | 2.83 | 2.89 | ||||||
| Interest-bearing net liabilities, EUR million | 541.4 | 412.3 | 389.0 | 318.9 | 541.4 | 389.0 | 333.4 | ||||||
| Gross investments, EUR million | 48.3 | 54.3 | 48.3 | 23.9 | 102.6 | 72.2 | 177.8 | ||||||
| Net cash flow from operating activities, EUR million | -22.2 | -22.3 | 55.8 | 32.5 | -44.5 | 88.3 | 246.7 | ||||||
| Deliveries, 1,000 tonnes | |||||||||||||
| Paperboard | 408 | 378 | 366 | 345 | 786 | 711 | 1,449 | ||||||
| Non-core operations | 11 | 15 | 138 | 156 | 26 | 294 | 478 | ||||||
| Market pulp | 113 | 144 | 142 | 150 | 257 | 292 | 549 | ||||||
| Personnel at the end of period | 2,762 | 2,573 | 2,850 | 3,158 | 2,762 | 2,850 | 2,601 | ||||||
| EBITDA = Earnings before interest, taxes, depreciation and impairment charges | |||||||||||||
| 1) Ratio of end of period interest-bearing net liabilities to 12-month rolling EBITDA excluding non-recurring items | |||||||||||||
Near-term outlook
Metsä Board’s paperboard deliveries are expected to grow in July–September from the second quarter of 2016. The third quarter result will still be impacted by the start-up volumes of folding boxboard at Husum, which will reduce the average price of folding box-board.
The company has revised its folding boxboard sales target for Husum due to the bottlenecks in the finishing area of the folding boxboard production and a leak in the recovery boiler at the pulp mill. The target is to sell approximately 150,000 tonnes of new folding box-board from Husum to the Americas and for food service packaging globally in 2016. Previous sales target was 200,000 tonnes.
The company estimates that the full production capacity of Husum’s new folding boxboard machine will be reached by the end of 2016.
Total production costs in July–September are expected to remain at approximately the level of the second quarter of 2016.
Demand for paperboard is expected to remain stable in both Europe and the Americas. European producers have increased their folding boxboard capacity, but a large part of this capacity targets the global market. The market prices of folding boxboard and white fresh fibre linerboard are expected to remain fairly stable or increase slightly. Metsä Board has announced that it will increase the price of white fresh fibre linerboard and folding boxboard in Europe.
The global demand for and supply of long- and short-fibre pulp are expected to remain stable.
Disclosure procedure
Metsä Board Corporation follows the disclosure procedure enabled by Standard 5.2b published by the Finnish Financial Supervision Authority and hereby publishes its Half year financial report for January–June 2016 enclosed to this stock exchange release. Metsä Board's complete Half year report is attached to this release in pdf-format and is also available on the company's web site at www.metsaboard.com.
METSÄ BOARD CORPORATION
More information:
Markus Holm, CFO, tel. +358 (0)10 465 4913 Katri Sundström, Head of Investor Relations, tel. +358 (0)400 976 333
More information will be available from 1 p.m. on 4 August 2016. A conference call for investors and analysts will be held in English and begin at 3 p.m. (EET). Conference call participants are requested to dial in and register a few minutes earlier on the following numbers:
Europe: +44 (0)20 3427 1925 US: +1 646 254 3370
Conference ID: 1443353.
Metsä Board is a leading European producer of folding boxboards and white linerboards made from fresh forest fibres. Its lightweight paperboards are developed as the perfect fit for consumer goods, retail-ready and food service packaging. The pure fresh forest fibres Metsä Board uses are a renewable resource, traceable to origin in northern forests.
The global sales network of Metsä Board supports customers worldwide, including brand owners, converters and merchants. In 2015, the company’s sales totalled EUR 2.0 billion, and it has approximately 2,600 employees. Metsä Board, part of Metsä Group, is listed on the Nasdaq Helsinki.
