Metsä Group Interim report Q1/2019€¦ · Metsä Board / Disposal of the shares in Liaison Technologies Inc. -3.3 ... 9 26.4.2019 Metsä Group Comparable ROCE Metsä Group –Q1
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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 –Q1 2019
Metsä Group
26.4.2019 Metsä Group5
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
Metsä Group –Q1 2019
EUR million
26.4.2019 Metsä Group6
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
Metsä Group –Q1 2019
EUR million
Comparable operating result quarterly
Change in comparable operating result
26.4.2019 Metsä Group7
Metsä Group –Q1 2019
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
26.4.2019 Metsä Group8
Metsä Group –Q1 2019
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
26.4.2019 Metsä Group9
Comparable ROCE
Metsä Group –Q1 2019
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%
26.4.2019 Metsä Group10
Equity ratio
Metsä Group –Q1 2019
43.2 43.9 45.0
53.1 53.3
0
10
20
30
40
50
60
2015 2016 2017 2018 3/2019
%
26.4.2019 Metsä Group11
Interest-bearing net liabilities
Metsä Group –Q1 2019
610
1,033993
463
646
0
200
400
600
800
1 000
1 200
2015 2016 2017 2018 3/2019
EUR million
26.4.2019 Metsä Group12
Capital expenditure
Metsä Group –Q1 2019
492
758
608
272
310
200
400
600
800
2015 2016 2017 2018 Q1/2019
EUR million
Full year
estimate
26.4.2019 Metsä Group13
Personnel
Metsä Group –Q1 2019
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
26.4.2019 Metsä Group14
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
26.4.2019 Metsä Group15
Sales and comparable operating result EUR million
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
Sales Operating result
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
26.4.2019 Metsä Group16
Sales and comparable operating result EUR million
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
Sales Operating result
26.4.2019 Metsä Group17
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
26.4.2019 Metsä Group18
Sales and comparable operating result EUR million
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
Sales Operating result
26.4.2019 Metsä Group19
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
26.4.2019 Metsä Group20
Sales and comparable operating result EUR million
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
Sales Operating result
• 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
26.4.2019 Metsä Group21
Summary
Outlook
• Metsä Group’s comparable operating
result is in the second quarter of 2019
expected to weaken from the first
quarter of 2019
26.4.2019 Metsä Group22
Near-term outlook
Summary
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