Metsä Group reports Q1 net income down 96.8% year-over-year to €2M and net sales down 8.5% to €1.28B, says continuing uncertainty over world economy affected financial performance in all of its business operations
May 3, 2012
– Result for the first quarter of 2012
– Sales amounted to EUR 1,284 million (1–3/2011: EUR 1,403 million).
– Operating result excluding non-recurring items was EUR 52 million (130). Operating result including non-recurring items was EUR 44 million (133).
– Result before taxes and excluding non-recurring items was EUR 18 million (86). Result before taxes including non-recurring items was EUR 10 million (89).
Events in the first quarter
– Metsäliitto Group changed its name to Metsä Group and adopted a new corporate identity. Wood Products Industry is now Metsä Wood, Metsä-Botnia is Metsä Fibre and M-real is Metsä Board. The name of Metsä Tissue remained unchanged. Metsäliitto Cooperative’s Wood Supply is now Metsäliitto Puunhankinta in Finland and Metsä Forest internationally.
– A new investment product, Equity Bonus, has been available to owner-members of Metsäliitto Cooperative from the beginning of the year.
– The unprofitable operations of Metsä Board’s Gohrsmühle mill were discontinued and the Alizay mill in France was closed down.
– Metsä Board sold the Premium Paper business operations of the Reflex mill to Hahnemühle FineArt GmbH.
Events after the period
– Metsä Group agreed on a transaction in which the Japanese Itochu Corporation acquires a 24.9 per cent holding in Metsä Fibre. The transaction is expected to be completed within the next couple of days. In addition, on 24 April 2012, Metsäliitto Cooperative used its purchase option concerning Metsä Fibre shares owned by UPM-Kymmene. The realisation price of the purchase option concerning UPM’s 11 per cent holding in Metsä Fibre was EUR 150 million.
– At the beginning of May, Metsä Board signed a committed syndicated credit facility totalling EUR 600 million, in order to refinance a EUR 500 million bond maturing on 1 April 2013.
“Our performance in the first quarter of 2012 was as expected: both sales and the result improved compared with the final quarter of 2011. In particular, Metsä Board and Metsä Fibre improved their operating results, due to higher delivery volumes of board, improved utilisation rates and increased sales volumes of pulp. However, the continuing uncertainty over the world economy affected financial performance in all of our business operations.
Metsä Board’s restructuring measures, initiated in 2005, and the strategic review of its paper business are close to completion. Measures taken due to the discontinuing of businesses have proceeded according to plan and within the estimated cost budget. The company is now focusing on fresh forest fibre board, its foundation is stronger and results will start to show in the next quarters. Our position as one of the leading players in the global pulp market will be strengthened by the ownership arrangement carried out in April.
Metsä Group's new corporate identity has been received well in the market, and it enhances the Group's competitiveness. Thanks to our focused strategy, we can allocate our development investments to areas where we see the best opportunities for growth. Our investment programme to improve the productivity and efficiency of our production plants is progressing as planned.”
Kari Jordan, President & CEO, Metsä Group
Other operating income
Depreciation and impairment losses
Share of profit from associates
Exchange gains and losses
Other net financial items
Result before income tax
Result for the period
Operating result, EUR mill.
- “ -, excluding non-recurring items
- “ - % of sales
Return on capital employed, %
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Return on equity, %
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Equity ratio, %
Net gearing ratio, %
Interest-bearing net liabilities, EUR mill.
Sales and Operating result
Paperboard and Paper
Tissue and Cooking
Other operating income
Depreciation & impairment losses
Operating result, excl. non-rec. items
- % of sales
Demand for logging sites harvested in the summer continues to be good, particularly with regard to log-dominated regeneration felling and thinning. Demand for wood from delivery contracts is also good.
The operating result of Wood Products Industry is expected to strengthen during the second quarter. In particular, building is expected to recover, due to seasonal variation in demand.
The increases in delivery volumes and prices in the first quarter provide a good basis for the coming months in the pulp business, provided that there are no negative developments in the general economic climate.
Order books for board have normalised and utilisation rates have clearly improved from the year-end level. In the second quarter, board delivery volumes are expected to improve compared with the first quarter. No essential changes are expected in board prices in the next few months. No major changes are expected in paper product delivery volumes in the second quarter. The price of uncoated fine paper is expected to rise slightly, and the price of coated paper is expected to remain steady on average.
Demand for tissue and cooking papers is expected to increase moderately. Additional sales are sought through new products. High energy and raw material prices will continue to present challenges to the company’s profit development. The increase of sales based on own brands, the increase of cash flow and improvement of the operating result are the main goals for this year.
Metsä Group's operating result excluding non-recurring items in the second quarter of 2012 is expected to improve from the first quarter.
Metsä Group follows the disclosure procedure enabled by Standard 5.2b published by the Finnish Financial Supervision Authority and hereby publishes its Interim Report for January–March 2012 enclosed to this stock exchange release. Metsä Group’s complete Interim Report is attached to this release in pdf-format and is also available on the company's web site at www.metsagroup.com.