Metsä Board Oyj: Metsä Board's comparable operating result in 2024January-June was EUR 31 million

January-June 2024 (compared to 1-6/2023)

Sales were EUR 993.6 million (1,040.2).

The comparable operating result was EUR 30.7 million (116.0), or 3.1% of sales (11.2). Operating result was EUR 22.3 million (117.9).

Comparable earnings per share were EUR 0.03 (0.24), and earnings per share were EUR 0.01 (0.25).

Comparable return on capital employed was 2.9% (9.3).

Net cash flow from operations was EUR -16.5 million (142.0).

April-June 2024 (compared to 4-6/2023)

Sales were EUR 509.8 million (498.2).

The comparable operating result was EUR -0.8 million (27.3), or -0.2% (5.5) of sales. Operating result was EUR -0.7 million (29.5).

Comparable earnings per share were EUR -0.03 (0.05), and earnings per share were EUR -0.03 (0.06).

Comparable return on capital employed was 0.3% (4.6).

Net cash flow from operations was EUR -8.6 million (15.6).

Events in April-June 2024

The demand and price situation for Metsä Board's fresh fibre paperboards remained stable compared to the previous quarter. Delivery volumes increased slightly.

The average prices of market pulp increased, especially in Europe.

Metsä Board made an investment decision to renew the Simpele folding boxboard machine. The value of the investment is approximately EUR 60 million.

On 21 March 2024, a gas explosion occurred at the evaporation plant of the associated company Metsä Fibre's Kemi bioproduct mill, which also affected production at Metsä Board's paperboard mill. The explosion's negative impact on the operating result was around EUR 40 million, including the impact through Metsä Fibre's share of the result. The claim settlement process to compensate financial losses has been initiated with the insurance consortium.

Due to trade union strikes, Metsä Board's paperboard and BCTMP production had to be halted for 2-3 weeks in March-April at all the mills in Finland. In the second quarter, the strikes' negative impact on the operating result was approximately EUR 15 million (H1/2024: EUR 25 million), including the impact through Metsä Fibre's share of the result. 

Interest-bearing net liabilities/comparable EBITDA was 2.2 at the end of the review period. The ratio was affected especially by the result development of the previous 12 months. Interest-bearing net liabilities increased due to the payment of dividends, which totalled EUR 89 million (EUR 0.25 per share).

Metsä Board achieved Platinum level in the EcoVadis sustainability assessment. The company has achieved the highest level every year since 2017.

Near-term outlook

The demand situation for fresh fibre paperboards is expected to remain stable in the third quarter. The overall demand for consumer products will continue to be influenced by the trend in consumers' purchasing power and general purchasing behaviour.

Metsä Board's paperboard delivery volumes are expected to increase slightly in July-September compared to the previous quarter (4-6/2024: 377,000 tonnes). The sales prices in local currencies are expected to remain stable.

More annual maintenance shutdowns will take place at the mills in July-September than in the previous quarter.

Total costs, excluding pulp costs, are expected to remain stable.

Total demand for softwood market pulp is expected to remain stable in Europe and North America. In China, demand for market pulp remains weak. The demand and price situation for sawn timber is expected to remain at its current level.

In July-September 2024, exchange rate fluctuations, including the impact of hedges, will have a negative impact on the operating result compared to April-June 2024 and a negative impact compared to July-September 2023.

The claim settlement process to compensate Metsä Board's financial losses from the gas explosion at Metsä Fibre's Kemi bioproduct mill has been initiated with the insurance consortium. Compensation is not included in the previously reported financial losses caused by the explosion. The progress of the discussions as well as the amount and timing of the compensation will be reported in the company's interim reports or, if necessary, in a separate releases. 

Result guidance for July-September 2024

Metsä Board's comparable operating result in July- September 2024 is expected to improve from April-June 2024 (4-6/2024: EUR -0.8 million).

Metsä Board's CEO Mika Joukio:

"In 2024, the demand for fresh fibre paperboards has clearly improved from last year's record low level. The demand for paperboards has been supported by restocking in the value chain. The strengthening of overall consumer product demand has been somewhat slower than expected, as consumers' purchasing power continues to be eroded by higher living costs and persistently high interest rates.

Metsä Board's paperboard deliveries increased markedly in January-March, and the increase continued in the second quarter. In January-June, delivery volumes totalled 742,000 tonnes (H1/2023: 734,000, H2/2023: 639,000). Despite this increase, delivery volumes remained clearly below capacity levels. 

The first half of the year was overshadowed by several setbacks unrelated to Metsä Board. In March-April, political strikes in Finland stopped operations at all our Finnish mills, and port closures broadly prevented our customer deliveries. The gas explosion at Metsä Fibre's Kemi bioproduct mill in late March stopped pulp production at the integrated mill for three months. It also affected Metsä Board's kraftliner production. However, we were able to continue our kraftliner production under special arrangements, thus securing our customer deliveries. The strikes and gas explosion had a total negative impact of roughly EUR 65 million on Metsä Board's operating result, including the impact through Metsä Fibre's share of the result. A significant part of this focused on the second quarter's comparable operating result, which decreased to EUR -0.8 million.

In January-June, our sales amounted to EUR 994 million, and our comparable operating result to EUR 30.7 million (H1/2023: 1,040; 116). Profitability was weakened especially by the lower price level of folding boxboard. On the other hand, operating result was supported by lower production costs and the pulp business, which has benefited especially from the positive demand and price situation in Europe. At the end of the period, the ratio of interest-bearing net liabilities to comparable EBITDA was 2.2, which is clearly higher than in previous years. The increase is mainly due to the weak profit development of the last few months.    

In line with our strategy, we aim to grow in fibre-based packaging materials and renew our industrial operations. In March, we announced our planned new investment programmes for the Simpele and Kyro paperboard mills and the Husum integrated mill. In April, we made the first investment decision in our Simpele programme - the renewal of the mill's folding boxboard machine. The investment will improve the quality of folding boxboard, increase production efficiency and enable the replacement of fossil fuels in paperboard production. The value of the investment is EUR 60 million, and we expect the investment to be completed in the second half of 2025.

Last year, we completed two significant investments in Kemi and Husum, which will further strengthen our leading position in folding boxboard and white kraftliners. We will continue to ramp up additional capacity and focus on its full-scale use in our main market areas in Europe and North America."

Key figures
2024 2023 2024 2023 2023
Q2 Q2 Q1-Q2 Q1-Q2 Q1-Q4
Sales, EUR million 509.8 498.2 993.6 1,040.2 1,941.9
EBITDA, EUR million 26.4 55.0 83.4 168.4 214.6
  comparable, EUR million 26.3 52.7 84.1 166.4 216.0
EBITDA, % of sales 5.2 11.0 8.4 16.2 11.1
  comparable, % of sales 5.2 10.6 8.5 16.0 11.1
Operating result, EUR million -0.7 29.5 22.3 117.9 120.8
  comparable, EUR million -0.8 27.3 30.7 116.0 122.2
Operating result, % of sales -0.1 5.9 2.2 11.3 6.2
  comparable, % of sales -0.2 5.5 3.1 11.2 6.3
Result before taxes, EUR million -2.5 27.5 17.6 115.3 120.9
  comparable, EUR million -2.6 25.4 25.9 113.5 122.6
Result for the period, EUR million -5.0 22.6 9.7 98.0 101.6
  comparable, EUR million -5.2 21.0 16.5 96.8 103.8
Earnings per share, EUR -0.03 0.06 0.01 0.25 0.27
  comparable, EUR -0.03 0.05 0.03 0.24 0.27
Return on equity, % -1.1 4.3 1.0 9.1 4.7
  comparable, % -1.1 4.0 1.7 9.0 4.8
Return on capital employed, % 0.3 5.0 2.3 9.5 5.0
  comparable, % 0.3 4.6 2.9 9.3 5.1
Equity ratio at end of period, % 65 67 65 67 67
Net gearing at end of period, % 15 12 15 12 7
Interest-bearing net 2.2 0.6 2.2 0.6 0.7
liabilities/comparable EBITDA, 12
months rolling
Shareholders' equity per share at 4.90 5.37 4.90 5.37 5.35
end of period, EUR
Interest-bearing net liabilities 293.6 257.0 293.6 257.0 144.0
at end of period, EUR million
Total investment, EUR million 29.4 50.2 53.3 107.6 228.7
Net cash flow from operations, EUR -8.6 15.6 -16.5 142.0 342.8
million
Personnel at end of period 2,446 2,466 2,446 2,466 2,240

METSÄ BOARD CORPORATION