Metsä Group financial results 2015

Metsä Group Results 2015

Kari JordanPresident & CEO

3.2.2016

• Sales EUR 5,016 million (EUR 4,970 million). • Operating result* EUR 537 million (EUR 418 million). • Operating result*, 10.7% of sales (8.4%)• Return on capital employed* 13.6% (11.4%)• Pulp Industry and Paperboard Industry accounted for the most

significant result improvement

3/2/2016 Metsä Group3

Year of strong results

Metsä Group –Results 2015

*excluding non-recurring items

• The construction of Metsä Fibre's bioproduct mill in Äänekoskiprogressed as planned

• Metsä Board began the installation of the new folding boxboard machine at the Husum mill in Sweden

• Metsä Board announced it would expand its range of paperboard for food service packaging by investing EUR 38 million in extrusion coating at the Husum mill in Sweden

• The sale of the share capital of Metsä Wood's French timber upgrading company, Metsä Wood France SAS, to mutares AG was completed


Events during the last quarter of theyear

Metsä Group – Results 2015


Annual sales


EUR million

5,3465,001 4,939 4,970 5,016

0

1000

2000

3000

4000

5000

6000

2011 2012 2013 2014 2015


Quarterly sales


EUR million

1.284 1.247 1.242 1.228 1.264 1.242 1.214 1.219 1.254 1.2651.204

1.2481.330

1.225 1.205

0

200

400

600

800

1 000

1 200

1 400

Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15

1.255


Operating result excl. non-recurring items


EUR million

314

256

343

418

537

050

100150200250300350400450500550600

2011 2012 2013 2014 2015


Operating result


5364 68 71

8994

7387

10592

104117

129137

149

123

45

62 57

77

94 89

63

8870

160

103

84

118

154142

128

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40

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160

180

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Excl. non-recurring items Incl. non-recurring items

EUR million


96

154 155142

130119

63

3

5364 68 71

89 94

7387

10592

104117

129137

149

123

0

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60

80

100

120

140

160

180

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10

Q2/

10

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10

Q4/

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Q1/

11

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11

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11

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12

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Q3/

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15

Operating result excl. non-recurring items


EUR million

Change in operating result



EUR million

Operating result excl. non-recurring items 1–12/2015 418

Sales prices -182

Sales volumes -19

Exchange rates 222

Raw materials 80

Energy 13

Employee costs 10

Write-offs and others, total -5 +119

Operating result excl. non-recurring items 1–12/2015 537

Non-recurring items in 2015



EUR million 2015

Operating result incl. non-recurring items 542.1

Non-recurring items:

Sale of Finsilva shares 20.8

Sale of Gohrsmühle mill 17.5

Sale of Metsä Wood France SAS -21.4

Metsä Tissue’s efficiency programme in the German napkin business and changes in operations in Russia -11.7

Write-off of Metsä Tissue’s B&C upgrading line in Düren -1.8

Other items 1.3

Non-recurring items total +4.7

Operating result excl. non-recurring items 537.4

Metsä Group12 3/2/2016 Metsä Group12

Return on capital employed excl. non-recurring items


8.5

7.1

9.1

11.4

13.6

0

2

4

6

8

10

12

14

16

2011 2012 2013 2014 2015

%

Target >10%


Equity ratio on 31.12.


28.1

34.737.9 37.9

43.2

0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

40,0

45,0

2011 2012 2013 2014 2015

%


Interest-bearing net liabilities on 31.12.


1,953

1,6091,510

938

610

0

250

500

750

1 000

1 250

1 500

1 750

2 000

2011 2012 2013 2014 2015

EUR million


Capital expenditure


227204 214

143

492

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200

300

400

500

600

2011 2012 2013 2014 2015

EUR million

Income Statement



EUR million 2015 2014 ChangeSales 5,016.0 4,970.3 45.7

Other operating income 95.7 170.3 -74.6

Operating expenses -4,311.4 -4,447.5 136.2

Depreciation and impairment losses -258.2 -276.5 18.0

Operating result 542.1 416.9 125.2

Operating result exclunding non-recurring items 537.4 418.1 119.3

Share of results from associated companies and joint ventures 11.2 16.4 -5.2

Exchange gains and losses -1.2 2.7 -3.9

Other net financial items -83.8 -106.1 22.3

Result before income tax 468.4 329.9 138.4

Key figures



2015 2014 ChangeROCE, % 13.7 11.1 2.6

excluding non-recurring items 13.6 11.4 2.2

ROE, % 15.9 13.0 2.9

excluding non-recurring items 15.8 13.4 2.4

Equity ratio, % 43.2 37.9 5.3

Net gearing ratio, % 25 46 -21

Interest-bearing net liabilities, EUR million 610 938 -328

Investments, EUR million 492 143 349

Personnel at the end of period 9,599 10,410 -811

Cash Flow Statement I



EUR million 2015 2014

Cash flow from operating activities

Result for the period 355.7 260.3

Adjustments to result for the period 387.2 305.0

Interest received 4.0 5.6

Interest paid -68.9 -91.9

Dividends received 5.7 3.3

Taxes -97.3 -52.7

Other financial items, net -11.9 -11.0

Change in working capital 221.3 198.6

Cash flow arising from operating activities 796.0 617.3

Cash Flow Statement IIEUR million 2015 2014Net cash flow from operating activities 796.0 617.3

Purchase of shares -2.4 -3.4Acquired shares from non-controlling interest 0.0 -20.9Investments -491.6 -143.0Sales of assets and others 40.2 145.5Changes in members' capital and in other equity 106.4 67.8Interest on members' capital and dividends paid -94.9 -87.9Change in long-term loans and other financial items -180.8 -79.5

Change in cash and cash equivalents 172.8 495.8

Cash and cash equivalents at beginning of period 947.9 454.4Translation differences and others 0.1 -2.3Change in cash and cash equivalents 172.8 495.8

Cash and cash equivalents at end of period 1,120.8 947.93/2/2016 Metsä Group19



Personnel on 31.12.


12,525

11,44710,736 10,410

9,599

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

2011 2012 2013 2014 2015

Wood supply and Forest services

Wood supply and Forest services


Metsä Forest – Wood supply and forest services

EUR million 2015 2014 Change

Sales 1,518.1 1,575.0 -56.9

Other operating income 7.4 6.7 0.7


Depreciation and impairment losses -3.5 -3.0 -0.5


Non-recurring items, total - 1.5 -1.5

Operating result excluding non-recurring items 29.0 28.2 0.8

% of sales 1.9 1.8 0.1

Continued good growth in sales of forest services• Supply of wood remained good throughout the

year and the stumpage prices were stable• Metsä Forest delivered 30.0 million cubic

metres of wood to customers (30.2)• Mild weather in the last quarter made

harvesting stands and delivering wood more difficult

• Sales of forest management servicescontinued to grow during the year

• Electronic services related to wood trade and forest management were well-received

• Metsä Group increased bonuses payable to owner-members from wood trade


Operating result excl. non-recurring itemsEUR million

Metsä Forest – Wood supply and Forest services

7.4 7.7

5.5

7.1

8.6

7.0

4.5

8.18.7

6.9 7.06.3

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7

8

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Wood Products Industry

Wood Products Industry


Metsä Wood – Wood Products Industry

EUR million 2015 2014 ChangeSales 852.2 896.9 -44.7


Operating expenses -820.3 -842.5 22.2


Operating result 10.0 34.1 -24.1

Non-recurring items, total 21.4 3.1 18.3

Operating result excluding non-recurring items 31.4 37.2 -5.8

% of sales 3.7 4.1 -0.4

4.4

11.9

-2.9

2.0

8.6

14.4

6.2

8.0 7.9

10.2

5.9

7.5

-4

-2

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Slight growth in delivery volumes• Metsä Wood's comparable delivery volumes grew

slightly from the previous year due to the increased deliveries of sawn timber

• Oversupply of Nordic sawn timber continued throughout the year, which manifested in prices that were clearly lower than in the previous year

• Metsä Wood adjusted the sawing volume during the autumn

• Delivery volumes of birch and spruce plywood were at the previous year's level and market prices increased mainly due to changes in exchange rates

• Metsä Wood France SAS and pole business Burt Boulton and Haywood Ltd. were divested


Operating result excl. non-recurring itemsEUR million

Metsä Wood – Wood Products Industry

Pulp Industry

Pulp Industry


Metsä Fibre – Pulp Industry

EUR million 2015 2014 MuutosSales 1,444.6 1,295.7 148.9


Operating expenses -1,060.2 -1,039.2 -21.0


Operating result 3 37.2 227.9 109.3

Non-recurring items, total - -20.3 20.3


% of sales 23.3 16.0 7.3

3/2/201629

Price of pulp (PIX) 2007–2015


USD EUR

Source: FOEX Indexes Ltd

350

450

550

650

750

850

950

1050

350

450

550

650

750

850

950

1050

'07 '08 ´09 ´10 ´11 ´12 ´13 ´14 ´15

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

47.3 47.550.8 51.0

54.9

36.3

51.8

64.5

78.7

92.585.5

80.5

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Positive effect from higher delivery volume and favourable USD exchange rate

• Operating result improved compared to previous year due to higher delivery volume, favourable US dollar rate as well as decrease in raw material costs

• Euro-denominated prices of pulps increased compared to the previous year due to the stronger US dollar

• Bioproduct mill project progresses as planned

– More than 10% of the mill is ready– Equipment installation has started– Capital investments in 2015 were over EUR

220 million


Operating result excl. non-recurring items EUR million


Paperboard Industry

Paperboard Industry


Metsä Board – Paperboard Industry

EUR million 2015 2014 ChangeSales 2,007.5 2,008.4 -0.9





Non-recurring items, total -19.2 19.9 -39.1


% of sales 9.0 6.8 2.2


Market prices of folding boxboard and white-top kraftliner in Europe 2010–2015


EUR/tonne

Source: Pöyry Management Consulting and FOEX Indexes Ltd

600650700750800850900950

100010501100

2010 2011 2012 2013 2014 2015

Folding boxboard White-top kraftliner

30.226.0

18.9

29.3

36.1

28.3

35.2 36.9

43.247.0

54.6

35.1

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Clear profitability improvement• Operating result was improved by increased

paperboard deliveries, favourable exchange rate changes, and divestment of the loss-making Gohrsmühle mill

• Metsä Board's transformation from a paper company to a leading paperboard company, launched in 2005, was completed.

– Husum’s new folding boxboard production line is in a start up phase

– Production of printing paper at Husum came to an end almost in its entirety by end 2015

• Range of paperboard for food service packaging was decided to be expanded by investing EUR 38 million in extrusion coating at Husum




Tissue and cooking papers

Tissue and Cooking papers


Metsä Tissue – Tissue and Cooking papers

EUR million 2015 2014 ChangeSales 1,015.8 1,012.8 2.9


Operating expenses -938.5 -921.6 -16.9


Operating result 41.6 .61.8 -20.2

Non-recurring items, total 13.5 0.4 13.1

Operating result excluding non-recurring items 55.1 62.2 -7.1

% of sales 5,4 6.1 -0.7

13.2 13.812.6

15.1

11.8

9.7

19.621.1

15.8

7.6

13.2

18.6

0,0

5,0

10,0

15,0

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25,0

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Sales Growth

• Slight growth in sales due to price increases• Operating result was weakened by higher

pulp and recycled fibre prices, as well as the weakening of the Norwegian krone against the euro

• At Raubach, renewal of the production line was started to improve tissue paper quality

• New product launches and product development have strengthened the position of company's own brands in the Nordic countries and eastern Central Europe



Metsä Tissue – Tissue and Cooking papers

Summary

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

wood, on crown wood• Sales of forest management services are expected to grow

Wood Products Industry • Sales are expected to be on a similar level as previous year’s first quarter• In the first quarter, the sawn timber market balance is expected to improve for spruce sawn timber. For pine

sawn timber, oversupply is expected to continue due to weak demand in the EMEA sales region• Shutdowns are possible in birch plywood production, depending on the market situation• Demand for other wood products is expected to continue stable

Pulp Industry• Global economic uncertainty and changes in the currency market will impact Metsä Fibre's operating

environment• Global demand for pulp has remained stable, and there are no signs of material changes in the market situation


Summary

Outlook for the business areas 2/2

Paperboard• Metsä Board's paperboard deliveries in January–March are expected to grow from the last quarter of 2015• The new paperboard production line at Husum, still in the start-up phase, will have an effect of decreasing

the average price of folding boxboard. The required quality objectives are expected to be reached latest by the third quarter of 2016, according to the original plan

Tissue and Cooking papers• In the tissue and cooking paper markets, demand is expected to continue stable in all market areas• Demand for tissue paper is expected to grow in particular in eastern Central Europe and for cooking papers

in Asia


Summary

• Metsä Group’s operating result excluding non-recurring items is in the first quarter of 2016 expected to be approximately on the same level as in the fourth quarter of 2015


Near-term outlook

Summary

Metsä Group financial results 2015

Business

Transcript of Metsä Group financial results 2015