Pääjohtajan esitys Q3 2019 EN - Metsä Group · by the EFQM Global Excellence Award 16 31.10.2019...

Metsä Group Interim report Q3/2019

Ilkka HämäläPresident and CEO

31 October 2019

• Sales EUR 4,183 million (1–9/2018: EUR 4,290 million)• Operating result* EUR 418 million (EUR 641 million)• Operating result of sales* 10.0% (14.9%)• Return on capital employed* 11.0% (17.1%)• Operating result compared to previous year weakened due to

higher raw material and production costs, and lower pulp prices, particularly in the Chinese market

• Exchange rate fluctuations had a positive effect on the operating result

31.10.2019 Metsä Group3

Metsä Group’s result as expected

Metsä Group – Q3 2019

*comparable

• The average market prices of pulp declined in Europe and China compared to the previous quarter

• The delivery volumes of paperboard grew from the previous quarter• Several scheduled maintenance shutdowns curtailed the

production of chemical and high-yield pulp • Metsä Board signed a bank financing facility with sustainability

targets• Metsä Board started up a new sheeting line at Äänekoski • Metsäliitto Cooperative acquired EUR 75 million worth of Metsä

Board’s B shares from the market• Metsä Tissue announced its plan for increasing tissue paper

capacity in Sweden, and the start of a related environmental permit process

• Pre-engineering projects related to investments in Kemi, Husum and Rauma proceeded as planned

31.10.20194

Events during the third quarterMetsä Group – Q3 2019

Metsä Group


1,2551,330

1,225 1,2051,156 1,184 1,143 1,175 1,216 1,235 1,260

1,3281,428 1,477

1,386 1,419 1,4381,372 1,374

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 Q2 Q3

Sales quarterlyMetsä Group – Q3 2019

EUR million


129 137149

123109

120103 107

128119

134

185

208 210223

208

180

128110

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 Q2 Q3


EUR million

Comparable operating result

Change in comparable operating result



EUR million

Comparable operating result 1–9/2018 641

Sales prices -224

Sales volumes 45

Exchange rates 80

Raw materials and energy -100

Employee costs -3

Maintenance and other fixed costs -26

Change in inventory 1

Other 4

Comparable operating result 1–9/2019 418

Items affecting comparability



EUR million 1–9/2019

OPERATING RESULT (IFRS) 342.1

Items affecting comparability:

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

Metsä Board / Sale of Niemenranta lots in Tampere -5.5

Metsä Tissue / goodwill related impairment 102.5

Metsä Group / goodwill related elimination -25.2

Metsä Tissue / restructuring provision 7.8

Items total 76.3

COMPARABLE OPERATING RESULT 418.4


Comparable ROCEMetsä Group – Q3 2019

14.2

10.511.2

17.1

11.0

0

2

4

6

8

10

12

14

16

18

1-9/2015 1-9/2016 1-9/2017 1-9/2018 1-9/2019

%

Target > 12%


Equity ratio


43.2 43.9 45.0

53.156.0

0

10

20

30

40

50

60

12/2015 12/2016 12/2017 12/2018 9/2019

%


Interest-bearing net liabilities


610

1,033 993

463 488

0

200

400

600

800

1 000

1 200

12/2015 12/2016 12/2017 12/2018 9/2019

EUR million


Capital expenditure


492

758

608

274

137

0

200

400

600

800

2015 2016 2017 2018 1-9/2019

EUR million


Personnel


9,599 9,300 9,126 9,310 9,434

0

2 000

4 000

6 000

8 000

10 000

12 000

12/2015 12/2016 12/2017 12/2018 9/2019

Wood deliveries slightly smaller than in 2018

• Wood was delivered to the customers a total of 26.4 million m3 during Q1–Q3 (27.2)

• Harvesting and transportation conditions have remained good throughout the year

• The supply of wood in Finland was slightly weaker than last year

• In the Baltic Sea area, the supply of wood continued to be strong

• In Finland, log prices have declined since the beginning of the year, and the prices of pulpwood began to decline in Q3

• Metsä Group launched a new pine and spruce mixed cultivation service for forest owners


Sales and comparable operating result EUR million

Metsä Forest – Wood Supply and Forest Services

433397 376

429

490 496471

526 526 508474

8.5

4.4

5.9 5.4

8.7

5.8

8.9 8.9

11.3

5.65.0

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 Q2 Q3

Sales Operating result

Challenging market situation in wood products

• Production was adjusted as the market slowed• Costs from the ramp-up of strategic investments,

production challenges and wood costs burdened profitability

• Delivery volumes of Kerto LVL grew, but the plywood volumes declined from the comparison period

• Average sales price of birch plywood was close to the previous year’s level, while the prices of spruce plywood and Kerto LVL rose

• Additional capacity provided by the investments has not been used in full due to the market situation



Metsä Wood – Wood Products Industry

120 122110 108 109

119106 108 111

11911110.7

8.47.6

6.96.2

5.5

2.82.2 1.8

3.3 3.1

0

3

6

9

12

15

0

30

60

90

120

150

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


The weakening of pulp market led to lower result

• Operating result was weakened by lower sales prices and higher prices of raw materials

• Market prices of long-fibre pulp declined by 9% in Europe and by 27% in China during Q1–Q3

• The annual maintenance shutdowns of 4 mills took place during the review period

• Inventory levels began to decline during the third quarter, particularly in long-fibre pulp

• Average market prices of sawn timber declined due to oversupply

• Metsä Fibre was awarded for the sustainability work by the EFQM Global Excellence Award



Metsä Fibre – Pulp and Sawn Timber Industry

422 427475

552601 629 609 630 623

556 567

54.570.8 68.4

125.9144.9

164.9187.0

172.0

122.4

83.1

33.0

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 Q2 Q3



Price of pulp (PIX) in Europe and China

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/USDSoftwood/USD Softwood/China/USD Hardwood/China/USD

USD EUR

Source: Fast Markets Foex

The Q3 result of paperboard business at the previous quarter level

• Higher sales prices of paperboards, folding boxboard in particular, had a positive effect on the operating result in Q1–Q3 2019

• Exchange rate fluctuations had a positive result impact of EUR 38 million in Q1–Q3

• Profitability was weakened by market pulp’s lower delivery volumes and sales prices, and higher production costs

• A new sheeting line was started up at the Äänekoski paperboard mill

• Metsä Board signed a bank financing arrangement, comprising a 5 year loan of EUR 150 million and a 5 year revolving credit facility of EUR 200 million



Metsä Board – Paperboard Industry

445474 479

451492

519475 458

487 477 489

45.2 43.550.4 54.4

69.059.2

64.0 60.0 61.8

41.0 42.5

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 Q2 Q3



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 kraftlinerin EuropeEUR/tonne

Metsä Board – Paperboard Industry

Profitability of tissue and greaseproof papers improved

• Result was positively impacted by the increase in sales prices, the efficiency measures and the lower raw material costs

• Programme aiming for a reduction of EUR 25 million in fixed costs is progressing as planned

• Operational review of mill operations, which was started in May, was completed

• The strategic assessment of the Stotzheim napkin mill and the related efficiency measures are progressing as planned

• Metsä Tissue announced its plan for increasing tissue paper capacity in Sweden, and the start of a related environmental permit process



Metsä Tissue – Tissue and Greaseproof Papers

252 251 250 261 259 256 254270 267 266 263

17.616.3 16.8

23.3

12.3 11.5

6.4 6.1

10.5

13.5

22.8

0

5

10

15

20

25

30

0

50

100

150

200

250

300


• Wood oversupply in the Baltic Sea area is expected to continue• The demand for Kerto LVL and birch plywood will continue to be

uncertain. Production adjustments will be continued in Q4• The demand for long-fibre market pulp in developing markets is

expected to remain good. The supply-demand will be balanced by the production curtailments by pulp producers and by the annual maintenance shutdowns

• The market situation of sawn timber is in the main markets is expected to remain challenging

• Paperboard deliveries are expected to decline from the Q3. Prices for folding boxboard and white kraftliner are expected to remain stable

• The efficiency measures, higher sales prices and lower raw material costs will have a positive effect on profitability of tissue and greaseproof paper business


Summary

Outlook for the business areas

• Metsä Group’s comparable operating result is in the fourth quarter of 2019 expected to weaken from the third quarter of 2019.


Result guidance

Summary

Pääjohtajan esitys Q3 2019 EN - Metsä Group · by the EFQM Global Excellence Award 16 31.10.2019...

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