Metsä Group Interim report Q1/2019€¦ · Metsä Board / Disposal of the shares in Liaison...

Metsä Group Interim report Q1/2019

Ilkka HämäläPresident and CEO

26 April 2019

• Sales EUR 1,438 million (Q1/2018: EUR 1,428 million)

• Operating result* EUR 180 million (EUR 208 million)

• Operating result* 12.5% of sales (14.6%)

• Return on capital employed* 13.8% (16.6%)

• Profit-making ability weakened compared to the excellent previous

year, mainly due to the pulp price decline in late 2018

• The decrease in the operating result in Q1/2019 vs. Q1/2018 was

mainly due to higher raw material and production costs. Exchange

rate fluctuations had a positive effect on the operating result

26.4.2019 Metsä Group3

Metsä Group achieved good result

Metsä Group –Q1 2019

*comparable

• Delivery volumes and prices of folding boxboard increased.

Delivery volumes of white kraftliner declined

• Market pulp deliveries began to grow after the sudden decline

in Q4/2018. The market in China picked up, and prices began

to rise. In Europe, prices declined following the price changes

in China with a typical delay

• Metsä Fibre invested EUR 30 million in the capacity of the

debarking department at the Joutseno mill

• Rest of the production lines at the plywood mill in Pärnu by

Metsä Wood were started up. The new Kerto ® LVL line in

Punkaharju started up for a test run

26.4.20194

Events in the first quarter of 2019


Metsä Group


1,2551,330

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

1,216 1,235 1,2601,328

1,4281,477

1,386 1,419 1,438

0

200

400

600

800

1 000

1 200

1 400

1 600

Q1/15 Q2 Q3 Q4 Q1/16 Q2 Q3 Q4 Q1/17 Q2 Q3 Q4 Q1/18 Q2 Q3 Q4 Q1/19

Sales quarterly


EUR million


129137

149

123109

120

103 107

128119

134

185

208 210223

208

180

0

50

100

150

200

250

Q1/15 Q2 Q3 Q4 Q1/16 Q2 Q3 Q4 Q1/17 Q2 Q3 Q4 Q1/18 Q2 Q3 Q4 Q1/19


EUR million

Comparable operating result quarterly

Change in comparable operating result



EUR million

Comparable operating result Q1/2018 208

Sales prices -4

Sales volumes -2

Exchange rates 28

Raw material and energy -51

Employee costs -3

Maintenance and other fixed costs -7

Depreciations 9

Other 2

Comparable operating result Q1/2019 180

Items affecting comparability



EUR million Q1/2019

Operating result (IFRS) 183.0

Items affecting comparability:

Metsä Board / Disposal of the shares in Liaison Technologies Inc. -3.3

Comparable operating result 179.7


Comparable ROCE


13.5

10.6

12.5

16.6

13.8

0

4

8

12

16

20

Q1/2015 Q1/2016 Q1/2017 Q1/2018 Q1/2019

%

Target > 12%


Equity ratio


43.2 43.9 45.0

53.1 53.3

0

10

20

30

40

50

60

2015 2016 2017 2018 3/2019

%


Interest-bearing net liabilities


610

1,033993

463

646

0

200

400

600

800

1 000

1 200

2015 2016 2017 2018 3/2019

EUR million


Capital expenditure


492

758

608

272

310

200

400

600

800

2015 2016 2017 2018 Q1/2019

EUR million

Full year

estimate


Personnel


9,599 9,300 9,1269,310 9,492

0

2 000

4 000

6 000

8 000

10 000

2015 2016 2017 2018 3/2019

Wood was harvested according to targets

• Wood supply in Finland was steady. Log prices

declined slightly, pulpwood prices were stable

• Metsä Forest purchased wood at the same rate

as in Q1/2018. Deliveries to customers were

carried out smoothly

• Harvesting and transportation conditions were

good

• 37% of wood from private forest owners was

purchased digitally. In the sale of forest

management services, the figure was 50%

• Members of Metsäliitto Cooperative get 70% in

advance funding for thinning fit for summer

harvesting during 8 Feb and 30 Apr


Sales and comparable operating result EUR million

Metsä Forest –Wood Supply and Forest Services

433397

376

429

490 496471

526 526

8.5

4.4

5.95.4

8.7

5.8

8.9 8.9

11.3

0

3

6

9

12

15

18

0

100

200

300

400

500

600

Q1/17 Q2 Q3 Q4 Q1/18 Q2 Q3 Q4 Q1/19

Sales Operating result

Market situation of birch plywood weakened

• Profitability declined due to the weaker market

situation in birch plywood and the costs from the

start-up of strategic investments

• Prices of Kerto LVL® products and spruce plywood

increased. Prices of birch plywood declined slightly

from the previous year

• Production of birch plywood was adjusted in the

beginning of the year due to decrease in demand

• Profitability of the UK business improved

• All production lines at the birch plywood mill in

Pärnu are running

• The new Kerto LVL line in Punkaharju started up for

a production test run



Metsä Wood –Wood Products Industry

120 122

110 108 109

119

106 108 11110.7

8.4

7.66.9

6.25.5

2.82.2

1.8

0

3

6

9

12

15

0

30

60

90

120

150

Q1/17 Q2 Q3 Q4 Q1/18 Q2 Q3 Q4 Q1/19


Pulp sales volumes increased

• Sales volume of pulp increased compared to

Q1/2018

• Operating result declined mainly due to higher

wood costs

• Strengthening of the US dollar had a positive

impact on the operating result

• Average prices of long-fibre pulp increased 9%,

and the prices of short-fibre pulp decreased 1%

• Demand for softwood pulp in China started to

improve and the prices recovered during Q1/2019

• Demand and the price level of sawn timber were

below the Q1/2018 level



Metsä Fibre – Pulp and Sawn Timber Industry

422 427

475

552

601629

609630 623

55

71 68

126

145

165

187172

122

0

40

80

120

160

200

240

280

0

100

200

300

400

500

600

700

Q1/17 Q2 Q3 Q4 Q1/18 Q2 Q3 Q4 Q1/19



Pulp price (PIX) 2011–Q1/2019

Metsä Fibre – Pulp and Sawn Timber Industry

400

600

800

1000

1200

1400

400

600

800

1000

1200

1400

´11 ´12 ´13 ´14 ´15 ´16 ´17 ´18 ´19

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

USD EUR

Source: Foex

Good development in folding boxboard prices and

delivery volumes

• Operating result improved due to the higher

prices of folding boxboard and white kraftliner

and the increased delivery volumes of folding

boxboard

• The production costs of paperboard and pulp

were clearly higher than in the comparison

period. Wood prices as well as the North

American logistics costs increased, in particular

• Exchange rate fluctuations had a positive

impact on the result compared to Q1/2018



Metsä Board –Paperboard Industry

445474 479

451

492519

475458

487

45.2 43.5

50.454.4

69.0

59.264.0

60.0 61.8

0

20

40

60

80

100

120

0

100

200

300

400

500

600

Q1/17 Q2 Q3 Q4 Q1/18 Q2 Q3 Q4 Q1/19



600

700

800

900

1000

1100

1200

2011 2012 2013 2014 2015 2016 2017 2018 2019

Folding boxboard White-top kraftliner Sources: Fastmarkets RISI & Fastmarkets FOEX

Prices of folding boxboard and white-top kraftliner in

Europe 2011–Q1/2019

EUR/tonne

Metsä Board –Paperboard Industry

Tissue and Greaseproof papers business is

being streamlined

• Sales increased due to higher sales prices. Lower

sales volumes and the weakening of the Swedish

and Polish currencies had a negative impact on

sales

• Lower sales volumes and cost inflation had a

negative effect on the operating result

• The operational review proceeded according to plan

• Metsä Tissue commenced a programme aiming to

savings in fixed costs of EUR 25 million a year

• Serla introduced a new packaging wrap which relies

on recycled plastic and a renewable sugar cane as

raw material



Metsä Tissue – Tissue and Greaseproof Papers

252 251 250261 259 256 254

270 267

17.616.3 16.8

23.3

12.311.5

6.4 6.1

10.5

0

5

10

15

20

25

30

0

50

100

150

200

250

300

Q1/17 Q2 Q3 Q4 Q1/18 Q2 Q3 Q4 Q1/19


• Wood demand focuses on thinning sites to be harvested when the

ground is unfrozen and, in terms of energy wood, on crown wood

• Demand for Kerto LVL and spruce plywood remains stable.

Uncertainty in the demand for birch plywood and the price

competition in the distributor market continue

• Demand for pulp is expected to remain stable. Demand and

supply will achieve a balance due to the maintenance shutdowns

in Q2/2019. Producers’ inventory levels are expected to decrease

• Paperboard deliveries are expected to remain at the same level as

in Q4/2018. Prices of folding boxboard in local currencies are

expected to remain stable. Weaker demand may have negative

impact on the price of kraftliner

• Demand in the tissue and greaseproof paper markets remains

stable. Profitability is burdened by the high prices of raw materials


Summary

Outlook

• Metsä Group’s comparable operating

result is in the second quarter of 2019

expected to weaken from the first

quarter of 2019


Near-term outlook

Summary

Metsä Group Interim report Q1/2019€¦ · Metsä Board / Disposal of the shares in Liaison...

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