Metsä Group Half Year Financial report 2017 · Metsä Group Half Year Financial report 2017 Kari...

Metsä Group Half Year Financial report 2017

Kari JordanPresident and CEO

3.8.2017

• Sales EUR 2,451 million (1–6/2016: 2,339 million)• Operating result * EUR 247 million (229 million)• Operating result of sales* 10.1% (9.8%)• Return on capital employed* 11.5% (11.0%)• Sales grew mainly as a result of higher delivery volumes • Operating result improved mainly due to the positive

development in Finland’s paperboard business and the increase in pulp prices

3.8.2017 Metsä Group2

Metsä Group’s profitability improved

Metsä Group – Q2

*comparable

• The market prices of long-fibre and short-fibre pulp increased • Paperboard deliveries grew by 11% from the previous quarter• Metsä Tissue started to rebuild the baking paper machine at the

Düren mill in Germany• Metsä Wood started to build a birch plywood mill in Pärnu, Estonia• Metsä Fibre prepared the start-up of the bioproduct mill

due in mid-August 2017• Ilkka Hämälä was appointed CEO of Metsäliitto Cooperative

as of 1 January 2018 and the President and CEO of Metsä Group as of 1 April 2018

• Ismo Nousiainen was appointed Deputy CEO of Metsä Fibre as of 1 August 2017 and CEO as of 1 January 2018


Metsä Group – Q2

Events in the second quarter


1,254 1,2651,204

1,248 1,2551,330

1,225 1,2051,156 1,184 1,143 1,175 1,216 1,235

0

200

400

600

800

1 000

1 200

1 400

Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17

Sales

Metsä Group – Q2

EUR million


Operating result

Metsä Group – Q2

10592

104117

129137

149

123109

120

103 107

128119

70

160

103

84

118

154142

128

107

119

107110

131122

0

20

40

60

80

100

120

140

160

180

Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17

Comparable operating result Operating result (IFRS)

EUR million


5364 68 71

8994

73

87

105

92104

117129

137149

123

109120

103 107

128119

0

20

40

60

80

100

120

140

160

Q1/

12 Q2

Q3

Q4

Q1/

13 Q2

Q3

Q4

Q1/

14

Q2

Q3

Q4

Q1/

15

Q

2

Q

3

Q

4

Q1/

16

Q

2

Q

3

Q

4

Q1/

17

Q2

Q

3

Q

4

Comparable operating result

Metsä Group – Q2

EUR million

Change in comparable operating result


Metsä Group – Q2

EUR million

Comparable operating result 1–6/2016 229

Sales prices -12

Sales volumes 42

Exchange rates 10

Raw materials and energy 5

Employee costs 8

Change of inventories -30

Other -4 18

Comparable operating result 1–6/2017 247

Items affecting comparability 1–6/2017


Metsä Group – Q2

EUR million 1–6/2017

Operating result (IFRS) 253.4

Items affecting comparability:

Metsä Wood / sale of the project business 3.3

Metsä Board / sale of the paper machine at Kyro, net 3.4

Metsä Wood & Metsä Fibre / transfer of the sawmills -0.2

Items total +6.5

Comparable operating result 246.9


Comparable ROCE

Metsä Group – Q2

9.8

11.3

13.7

11.0 11.5

0

2

4

6

8

10

12

14

16

QI–II/2013 QI–II/2014 QI–II/2015 QI–II/2016 QI–II/2017

%

Target >10%


Equity ratio

Metsä Group – Q2

37.9 37.9

43.2 43.9 45.3

0

5

10

15

20

25

30

35

40

45

50

12/2013 12/2014 12/2015 12/2016 6/2017

%


Interest-bearing net liabilities

Metsä Group – Q2

1,510

938

610

1,033

1,252

0

250

500

750

1 000

1 250

1 500

1 750

12/2013 12/2014 12/2015 12/2016 6/2017

EUR million


Capital expenditure

Metsä Group – Q2

214143

492

758

275

0

100

200

300

400

500

600

700

800

1–12/2013 1–12/2014 1–12/2015 1–12/2016 1–6/2017

EUR million

Full-year estimate

Income statement


Metsä Group – Q2

EUR million QI–II/2017 QI–II/2016 ChangeSales 2,451.4 2,339.6 111.8

Other operating income 25.7 25.2 0.5

Operating expenses -2,109.0 -2,013.6 -95.4

Depreciation and impairment losses -114.6 -125.8 11.2

Operating result 253.4 225.3 28.1

Comparable operating result 246.9 229.3 17.6

Share of results from associated companies and joint ventures 18.9 -0.9 19.8

Exchange gains and losses -2.6 -0.5 -2.0

Other net financial items -33.2 -37.9 4.7

Result before tax 236.6 186.0 50.6

Key figures


Metsä Group – Q2

QI–II/2017 QI–II/2016 ChangeReturn on capital employed, % 11.8 10.8 1.0

Comparable return on capital employed, % 11.5 11.0 0.5

Return on equity, % 14.3 11.8 2.5

Comparable return on equity, % 13.9 12.1 1.8

Equity ratio, % 45.3 44.8 0.5

Net gearing ratio, % 45 38 7

Interest-bearing net liabilities, EUR million 1,252 945 307

Capital expenditure, EUR million 275 338 -63

Personnel at end of period 9,824 10,075 -251

Cash Flow Statement I


Metsä Group – Q2

EUR million QI–II/2017 QI–II/2016

Cash flow from operating activities

Result for the period 192.8 143.9

Adjustments to result for the period 167.4 190.6

Interest received 1.8 1.7

Interest paid -28.7 -30.5

Dividends received 1.6 0.8

Taxes -38.3 -75.7

Other financial items, net -15.0 6.2

Change in working capital -169.8 -213.8

Net cash flow from operating activities 111.8 23.6

Cash Flow Statement II


Metsä Group – Q2

EUR million QI–II/2017 QI–II/2016Net cash flow from operating activities 111.8 23.6

Purchase of shares -0.8 0.0Acquired shares from non-controlling interests -30.7 0.0Investments -275.4 -337.9Sales of assets and others 28.4 16.4Change in members’ capital and other capital 65.4 81.5Interest on members’ capital and dividends paid -122.1 -120.2Change in long-term loans and committed facilities 104.6 -31.3

Change in cash and cash equivalents -118.7 -367.9

Cash and cash equivalents at beginning of the period 895.1 1,120.8Translation differences and others -0.5 0.4Change in cash and cash equivalents -118.7 -367.9

Cash and cash equivalents at end of the period 775.9 753.3


Personnel

Metsä Group – Q2

10,736 10,4109,599 9,300

9,824

0

2 000

4 000

6 000

8 000

10 000

12 000

12/2013 12/2014 12/2015 12/2016 6/2017*

*including approximately 800 summer employees

Wood Supply and Forest Services

Wood Supply and Forest Services


Metsä Forest – Wood Supply and Forest Services

EUR million QI–II/2017 QI–II/2016 Change

Sales 829.4 779.0 50.4

Other operating income 1.5 3.7 -2.2

Operating expenses -816.0 -766.6 -49.4

Depreciation and impairment losses -1.9 -1.7 -0.2

Operating result 12.9 14.3 -1.4

Items affecting comparability, total - - -

Comparable operating result 12.9 14.3 -1.4

% of sales 1.6 1.8 -0.2

Purchasing volumes of wood increased• In Finland, the supply of wood was steady,

and stumpage prices stable• Metsä Forest delivered a total of

16.4 million cubic metres of wood (15.7)• The sales of forest management services

grew by approximately 25%• 28% of the wood from private forest owners

was purchased online. In the sale of forest management services, the share was 37%

• Metsä Forest divested its share in ZAO HK Vologodskie Lesopromyshlennik

• Metsä Forest acquired the wood supply of Harvestia Oy in southeast Finland and of Metsäkolmio Oy


Comparable operating resultEUR million

Metsä Forest – Wood Supply and Forest Services

8.7

6.9 7.06.3

7.8

6.5

7.7

8.98.5

4.4

0,0

1,0

2,0

3,0

4,0

5,0

6,0

7,0

8,0

9,0

10,0

Q1/

15

Q2/

15

Q3/

15

Q4/

15

Q1/

16

Q2/

16

Q3/

16

Q4/

16

Q1/

17

Q2/

17

Q3/

17

Q4/

17

Wood Products Industry

Wood Products Industry


Metsä Wood – Wood Products Industry

EUR million QI–II/2017 QI–II/2016 ChangeSales 242.0 251.2 -9.2


Operating expenses -218.5 -228.5 10.0



Items affecting comparability, total -3.2 0.4 -3.6

Comparable operating result 19.1 21.4 -2.3

% of sales 7.9 8.5 -0.6

Demand for wood products continued strong

• Demand for Kerto® LVL products continued strong• Deliveries of Kerto® LVL declined due to the

investment related shutdown of one line in Lohja• The delivery volumes and sales of birch and

spruce plywood grew especially thanks to strong demand in Northern and Central Europe

• Metsä Wood started to build a birch plywood mill Pärnu, Estonia. It will start production in the second half of 2018

• The new Kerto® LVL line will start up in Lohja mill in August

• Converting the paper machine hall at Äänekoskiinto a birch veneer mill is proceeding



Metsä Wood – Wood Products Industry

4.5

7.18.0

8.4 8.2

13.2

9.08.3

10.7

8.4

0,0

2,0

4,0

6,0

8,0

10,0

12,0

14,0

Q1/

15

Q2/

15

Q3/

15

Q4/

15

Q1/

16

Q2/

16

Q3/

16

Q4/

16

Q1/

17

Q2/

17

Q3/

17

Q4/

17

Pulp and Sawn Timber Industry

Pulp and Sawn Timber Industry


Metsä Fibre – Pulp and Sawn Timber Industry

EUR million QI–II/2017 QI–II/2016 ChangeSales 848.5 831.3 17.2

Other operating income 10.7 5.9 4.8




Items affecting comparability, total 0.1 5.0 -4.9


% of sales 14.8 13.8 1.0


Price of pulp (PIX) 2009–Q2/2017


350

450

550

650

750

850

950

1050

350

450

550

650

750

850

950

1050

´09 ´10 ´11 ´12 ´13 ´14 ´15 ´16 ´17

Hardwood/EUR Softwood/EUR Hardwood/USD Softwood/USD

USD EUR

Source: Foex

Higher pulp prices improved results

• The demand for pulp grew more than expected

• The market price of long-fibre pulp grew about 6% and short-fibre 1%, compared to the first half of 2016

• The production and sales volumes of sawn timber continued to grow. Prices are still at a low level

• The bioproduct mill is nearly completed. The mill will be started-up in mid-August

• Ismo Nousiainen was appointed Deputy CEO of Metsä Fibre as of 1 August 2017 and CEO as of 1 January 2018




82.0

95.6

83.479.7

61.2

53.246.4

53.7 54.5

70.8

0,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0

80,0

90,0

100,0

Q1/

15

Q2/

15

Q3/

15

Q4/

15

Q1/

16

Q2/

16

Q3/

16

Q4/

16

Q1/

17

Q2/

17

Q3/

17

Q4/

17

Paperboard Industry

Paperboard Industry


Metsä Board – Paperboard Industry






Items affecting comparability, total -3.4 3.6 -7.0


% of sales 9.7 8.2 1.5

Prices of folding boxboard and white-top kraftliner in Europe 2011–Q2/2017

600650700750800850900950

10001050110011501200

2011 2012 2013 2014 2015 2016 2017

Folding boxboard White-top kraftliner Source: RISI, Inc. & FOEX Indexes Ltd

3.8.2017Metsä Group

30


EUR/ tonne

Paperboard deliveries at a record level• The result was improved by the positive

development in Finland’s paperboard business and market pulp business

• Demand for fresh fibre paperboards remained good in all Metsä Board’s main market areas

• Deliveries of folding boxboard increased by 19% and white fresh fibre linerboards by 16%

• The average prices of paperboards produced in Finland remained roughly at the level of the comparison period

• The new extrusion coating line at the Husum mill in Sweden started up in April

• Metsä Board launched a renewed product and service portfolio in May




43.247.0

54.6

35.1 35.0 35.834.0 32.8

45.2 43.5

0,0

10,0

20,0

30,0

40,0

50,0

60,0

Q1/

15

Q2/

15

Q3/

15

Q4/

15

Q1/

16

Q2/

16

Q3/

16

Q4/

16

Q1/

17

Q2/

17

Q3/

17

Q4/

17

Tissue and Cooking Papers

Tissue and Cooking Papers


Metsä Tissue – Tissue and Cooking Papers






Items affecting comparability, total - - -


% of sales 6.7 5.4 1.3

Sales volumes of tissue and cooking papers increased • Sales grew due to increased sales volumes• The operating result was positively

impacted by the higher sales volumes and the strengthening of the Norwegian krone

• The result was impacted negatively by the price increase in fresh and recycled fibre, and the weakening of the Swedish krona and the British pound

• Metsä Tissue started the rebuild of the baking paper machine at the Düren mill in Germany. The investment is EUR 15 million



Metsä Tissue – Tissue and Cooking Papers

15.8

7.6

13.2

18.6

13.5 13.2

15.8

20.6

17.616.3

0,0

5,0

10,0

15,0

20,0

25,0

Q1/

15

Q2/

15

Q3/

15

Q4/

15

Q1/

16

Q2/

16

Q3/

16

Q4/

16

Q1/

17

Q2/

17

Q3/

17

Q4/

17

Summary

Outlook for the business areas 1/2Wood Supply and Forest Services• Wood demand will focus on felling sites to be harvested when the ground is unfrozen and, in terms of

energy wood, on crown wood

Wood Product Industry • Demand for wood products will remain good, and this will be reflected in the order book level, which will be

higher than in the previous year, particularly in Kerto® LVL products• The outlook for plywood products is likewise positive• Construction in the UK is expected to remain at a good level, but delivery volumes in the third quarter are

expected to suffer a slight seasonal decline

Pulp and Sawn Timber Industry• Demand and supply of market pulp in Europe and Asia are in balance, with normal seasonal variation• Demand for spruce sawn timber is expected to remain good in most markets• Demand for pine sawn timber has improved, and the market balance strengthened


Summary

Outlook for the business areas 2/2Paperboard • The growth in the demand for high-quality consumer packaging paperboard made from fresh fibre is

expected to continue in market areas important for Metsä Board• Delivery volumes in July–September are expected to remain roughly at the level of the second quarter

Tissue and Cooking Papers• In the tissue and cooking paper markets, demand is expected to remain stable in all market areas • Demand for tissue paper will particularly increase in Eastern Central Europe and demand for cooking

papers in Asia


Summary

• Metsä Group’s comparable operating result is in the third quarter of 2017 expected to be roughly at the same level as in the second quarter of 2017


Near-term outlook

Summary

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