Metsä Board Corporation Interim report 1 January–30 September 2016 2 November 2016 at 12:00 EET January–September 2016 (1–9/2015)
• Sales amounted to EUR 1,298.5 million (1,545.3).
• Comparable operating result was EUR 104.7 million (144.8), or 8.1 per cent of sales. Operating result was EUR 93.8 million (164.9).
• Comparable result before taxes was EUR 84.0 million (119.8). Result before taxes was EUR 73.0 million (137.7).
• Comparable earnings per share were EUR 0.21 (0.27), and earnings per share were EUR 0.18 (0.32).
July–September 2016 (4–6/2016)
• Sales amounted to EUR 440.0 million (422.9).
• Comparable operating result was EUR 34.0 million (35.8), or 7.7 per cent (8.5) of sales. Operating result was EUR 26.6 million (34.5).
• Comparable result before taxes was EUR 27.1 million (26.8). Result before taxes was EUR 19.8 million (25.5).
• Comparable earnings per share were EUR 0.07 (0.07), and earnings per share were EUR 0.05 (0.06).
Events in July–September 2016
• The production volumes of Husum's new folding boxboard machine grew steadily.
• Metsä Board's production of uncoated fine paper ended in July.
• The wallpaper base machine PM3 at the Kyro mill was closed down in September.
Events after the review period
• Metsä Board was identified as a global leader for its actions and strategies in response to climate change. CDP (formerly Carbon Disclosure Project) awarded Metsä Board a position on the Climate A List. Metsä Board was among the 9% of corporations participating in programme to be awarded a position on the list.
Profit guidance for October – December 2016
Metsä Board's comparable operating result for the fourth quarter of 2016 is expected to remain roughly on the same level as in the third quarter of 2016.
Mika Joukio, CEO:
“Comparable operating result for the third quarter remained on the same level as in the previous quarter, as we expected. Our result continued to be burdened by the lower price level of the start-up volumes of Husum's new folding boxboard. In addition, a leak in the pulp mill's recovery boiler and the production-related challenges of the new folding boxboard machine in the second quarter slowed down our customer deliveries especially to North America. The production and delivery volumes of Husum's new folding boxboard have increased steadily since the summer, and the average price of the order inflow is already at a good level. Due to the long lead time, the profit impact of the improved average price will nevertheless be visible with a delay of approximately three months. The profit development of our Finnish mills was positive. The decrease in working capital turned our cash flow from operations clearly positive.
During the review period, we produced our last fine paper reels and announced to discontinue the loss-making wallpaper business. In the future, we will focus on premium fresh fibre paperboard used in consumer goods and retail-ready packaging, in line with our strategy.
After the review period, we were identified by CDP as a global leader for our actions and strategies in response to climate change . The importance of responsibility and its assessment is gaining increased prominence in our customer relationships, and improves our competitiveness. I am also very proud of the recognition our premium products received at the Pro Carton ECMA Awards, in which Metsä Board's fresh fibre paperboard was used in three prize-winning paperboard packages .
Metsä Board's future looks bright. Husum's new folding boxboard machine’s capacity is approaching the targeted nominal capacity, which enables us to better meet increasing demand in our main market areas. Next year, we will also have our own extrusion coating line, which will expand the range of paperboard suitable for food and food service packaging. We can look forward to a busy year in 2017, but we have every chance of achieving our long-term growth and profitability targets.”
FINANCIAL KEY FIGURES
| 2016 | 2016 | 2016 | 2015 | 2016 | 2015 | 2015 | |
| Q3 | Q2 | Q1 | Q3 | Q1–Q3 | Q1–Q3 | Q1–Q4 | |
| Sales, EUR million | 440.0 | 422.9 | 435.6 | 497.6 | 1,298.5 | 1,545.3 | 2,007.5 |
| EBITDA, EUR million | 60.6 | 59.6 | 55.5 | 80.8 | 175.7 | 243.4 | 302.5 |
| comparable, EUR million | 59.4 | 60.7 | 57.8 | 80.8 | 178.0 | 223.6 | 283.3 |
| EBITDA, % of sales | 13.8 | 14.1 | 12.7 | 16.2 | 13.5 | 15.8 | 15.1 |
| comparable, % of sales | 13.5 | 14.4 | 13.3 | 16.2 | 13.7 | 14.5 | 14.1 |
| Operating result, EUR million | 26.6 | 34.5 | 32.7 | 54.6 | 93.8 | 164.9 | 199.0 |
| comparable, EUR million | 34.0 | 35.8 | 35.0 | 54.6 | 104.7 | 144.8 | 179.9 |
| Operating result, % of sales | 6.0 | 8.2 | 7.5 | 11.0 | 7.2 | 10.7 | 9.9 |
| comparable, % of sales | 7.7 | 8.5 | 8.0 | 11.0 | 8.1 | 9.4 | 9.0 |
| Result before taxes, EUR million | 19.8 | 25.5 | 27.7 | 47.5 | 73.0 | 137.7 | 167.1 |
| comparable, EUR million | 27.1 | 26.8 | 30.0 | 47.5 | 84.0 | 119.8 | 150.2 |
| Result for the period, EUR million | 18.6 | 23.2 | 23.9 | 26.8 | 65.7 | 110.8 | 137.3 |
| comparable, EUR million | 24.1 | 24.6 | 25.7 | 26.4 | 74.4 | 92.7 | 120.2 |
| Result per share, EUR | 0.05 | 0.06 | 0.07 | 0.08 | 0.18 | 0.32 | 0.39 |
| comparable, EUR million | 0.07 | 0.07 | 0.07 | 0.08 | 0.21 | 0.27 | 0.34 |
| Return on equity, % | 7.4 | 9.4 | 9.5 | 10.6 | 8.6 | 15.9 | 14.7 |
| comparable, % | 9.6 | 9.9 | 10.2 | 10.4 | 9.8 | 13.3 | 12.9 |
| Return on capital employed, % | 6.3 | 8.2 | 7.8 | 13.0 | 7.4 | 13.8 | 12.5 |
| comparable, % | 8.0 | 8.5 | 8.3 | 13.0 | 8.3 | 12.1 | 11.3 |
| Equity ratio at end of period, % | 48 | 47 | 44 | 46 | 48 | 46 | 46 |
| Net gearing ratio at end of period, % | 49 | 54 | 42 | 34 | 49 | 34 | 32 |
| Interest-bearing net liabilities/EBITDA 1) | 2.1 | 2.1 | 1.5 | 1.2 | 2.1 | 1.2 | 1.2 |
| Shareholders' equity per share at end of period, EUR | 2.82 | 2.81 | 2.77 | 2.86 | 2.82 | 2.86 | 2.89 |
| Interest-bearing net liabilities, EUR million | 487.6 | 541.4 | 412.3 | 344.2 | 487.6 | 344.2 | 333.4 |
| Gross investments, EUR million | 16.4 | 48.3 | 54.3 | 44.8 | 119.0 | 117.0 | 177.8 |
| Net cash flow from operating activities, EUR million | 67.0 | -22.2 | -22.3 | 92.5 | 22.5 | 180.8 | 246.7 |
| Personnel at the end of period | 2,493 | 2,762 | 2,573 | 2,642 | 2,493 | 2,642 | 2,601 |
| 1) Ratio of end of period interest-bearing net liabilities to 12-month rolling comparable EBITDA | |||||||
Near-term outlook
Metsä Board’s paperboard deliveries in October–December are expected to remain on the same level as in the previous quarter due to the seasonally weaker December. The increase in the average price for folding boxboard is supported by smaller share of Husum's start-up deliveries out of total total deliveries.
The average price for Husum's folding boxboard orders received in September–October has been at a good level. Due to the long lead time, the profit impact of the improved average price will recognise with a delay of approximately three months.
The result of the fourth quarter will be weakened by the annual maintenance shutdown of the Husum integrated mill, which was extended by approximately a week due to the problems discovered in the pulp mill's recovery boiler.
Full production capacity of the new folding boxboard machine at Husum is expected to be reached by the end of 2016.
Total production costs in October–December are expected to remain at approximately the level of the third quarter of 2016.
The estimate concerning the total gross investment in 2016 increased to EUR 165 million from the earlier EUR 135 million. The change was mainly due to cost overruns in the investment at Husum and the cost allocation between years of extrusion coating line.
Demand for premium fresh fibre paperboards is expected to remain good in both Europe and the Americas. The increased capacity of European folding box-board producers has not had a negative effect on the demand for and prices of Metsä Board's products. The market prices of folding boxboard and white fresh fibre linerboards are expected to remain fairly stable or increase slightly. The global demand and supply for long-fibre and short-fibre pulp is expected to remain stable.
METSÄ BOARD CORPORATION
Further information:
Jussi Noponen, CFO, tel. +358 (0)10 465 4913 Katri Sundström, Head of Investor Relations, tel. +358 (0)400 976 333
More information will be available as of 1 p.m. on 2 November 2016. A conference call held for investors and analysts in English will begin at 3 p.m. Conference call participants are requested to dial in and register a few minutes earlier on the following numbers: Finland +358 (0)9 7479 0361 Sweden +46 (0)8 5033 6574 United Kingdom +44 (0)203 043 2003 United States +1 719-457-2086 The conference ID is 8298586.
Metsä Board is a leading European producer of folding boxboards and white linerboards made from fresh fibres. Its lightweight paperboards are developed as the perfect fit for consumer goods, retail-ready and food service packaging. The pure fresh 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.
