July 27, 2023
(press release)
–
Metsä Group Half-year financial report January–June 2023 January–June 2023 (1–6/2022) April–June 2023 (4–6/2022) Events during the second quarter of 2023 Result guidance for July–September 2023 In July–September 2023, Metsä Group’s comparable operating result is expected to be weaker than in April–June 2023. President and CEO Ilkka Hämälä: As expected, the first quarter and its excellent result were followed by a poorer result in the second quarter. The quarter’s result was weak. The Group’s largest business areas – paperboard and pulp – are experiencing a slow business cycle. The demand for paperboard is low, especially in the European market, where high inflation has affected consumers’ purchasing behaviour and therefore the demand for packaging materials. The import of Chinese paperboard is having a significant impact on the folding boxboard market, especially around the Mediterranean. The demand situation in the US, an important market for Metsä Board, is considerably stronger than in Europe. In the pulp market, prices have been decreasing in the first half of the year. In China, the market price has dropped by roughly a third from its peak. The low availability rates of the European paper and paperboard industry have reduced pulp consumption. The Chinese market has turned to Europe for pulp volumes replacing the normal level of pulp deliveries from Russia and Canada. Due to the demand in the paperboard and pulp industry, production was curtailed at Metsä Board’s and Metsä Fibre’s mills in the second quarter. The demand for sawn timber was lower than normal because of the weak demand in the construction industry. The demand for Metsä Wood’s birch plywood and LVL has remained at a good level. As the market for spruce plywood was weak, similar to the previous quarter, production at the Suolahti plywood mill was curtailed. Tissue and greaseproof papers are consumer products enjoying relatively stable demand, as has been seen during the current economic cycle. Metsä Tissue posted a strong performance. The wood market has been active in the first part of the year. In February, Metsä Group released its strategic regenerative forestry target, and since June, we have been offering forest owners the Metsä Group Plus forest management model, which pays increased attention to forest nature and the biodiversity of commercial forests in forestry and harvesting work. The new service has been very well received. Despite the economic cycle leading to reduced wood consumption in the pulp and sawn timber industry, Metsä Group aims to increase its wood supply volume in the latter part of the year to meet the needs of the Kemi bioproduct mill, which will start up in the third quarter. The development of new products continues to be active. At the textile fibre demo plant, test runs were launched using a revised process based on the experiences from the first stage of testing. Valmet and Metsä Group’s joint 3D demo plant for moulded fibre-based packaging produced the first product series in cooperation with Fiskars. Andritz and Metsä Group agreed to invest in a demo plant producing lignin for new products in Äänekoski. Dow, a materials science company, will use the lignin to produce raw material for the concrete industry. The Group’s investment projects scheduled for completion in the latter part of the year include the Kemi bioproduct mill, where much of the test use of equipment began in the second quarter, the development investment in the Kemi linerboard mill, which will be deployed when the bioproduct mill is started up, and the 50% increase in the capacity of the Husum folding boxboard machine to 600,000 tonnes per year. The Husum project will be completed in the fourth quarter. The revision of the Group’s enterprise resource planning solution is one of the largest ongoing investment and development projects. The information system project began with the definition of business processes in 2018, and the last parts of the new system will be completed in 2026. To date, the common financial and wood supply solutions have been implemented as planned. The deployment of the first industrial business system has begun in Metsä Wood. Ongoing industrial projects include Metsä Tissue’s next-generation tissue paper mill in Mariestad and Metsä Wood’s LVL mill, featuring two production lines, in Äänekoski. An investment decision on the latter was made in June. The pre-engineering and environmental permit processes of the Kaskinen folding boxboard mill are progressing, and any preparation of the investment decision is expected to begin in a year. For better and worse, economic cycles have a strong and sometimes unexpected impact on our industry. It is essential to be realistic in estimates of global demand and to secure the competitiveness of our own operations. Metsä Group is in a strong financial position to carry out both ongoing and planned development projects, which will help secure future competitiveness. Our operations are based on converting our owner-members’ ecologically, economically and socially sustainably produced wood for people’s daily needs. Metsä Group performs its task as part of Finnish society, developing its operations every day. Near-term outlook The demand for wood will focus particularly on thinning stands suitable for summer harvesting, as well as on birch logs and roundwood out of delivery sales. In energy wood, the demand will focus on crown wood and energy wood trunks. The demand for forest management services is expected to remain strong. The construction sector has slowed notably in all the main markets in Europe, and the situation is not expected to improve in the second half. This will have a negative impact on the demand for Metsä Wood’s spruce plywood and Kerto LVL products. However, construction activity is expected to continue more strongly in Australia and especially in the US. Demand still exceeds supply due to the absence of Russian birch plywood imports on the European market. In industrial customer segments, the economic downturn is visible as weaker demand and as a slight change in the sales mix. In Metsä Wood UK, the demand for upgrading is expected to continue to be weaker than the long-term average over the next few months. The European and Chinese paper and paperboard markets’ development in the coming months creates uncertainty around the demand for Metsä Fibre’s softwood market pulp. The supply of softwood market pulp is restricted by the limited availability of wood raw material in North America and by the global market-based production curtailments. In the third quarter, the demand for sawn timber is expected to continue to be lower than normal in Metsä Fibre’s main markets. The start-up of the Kemi bioproduct mill and the annual maintenance shutdowns of the Joutseno pulp mill and the Merikarvia and Lappeenranta sawmills will take place in the third quarter. Metsä Board’s global market environment will remain uncertain, and the visibility for near-term paperboard sales will remain weak. The rise in consumers’ living costs will influence purchasing behaviour and the demand for consumer products in general. The management measures for inventories in the value chain are expected to follow the market situation. Paperboard delivery volumes in July–September 2023 are expected to remain at roughly the same level as in April–June 2023 (353,000 tonnes). The company will continue its production adjustment measures to match the demand. Paperboard sales prices are expected to remain stable in the Americas in the third quarter. In the EMEA and APAC regions, prices are expected to decrease slightly from the second quarter. Overall costs are expected to remain fairly stable. Investment shutdowns will take place in Husum and Kemi in the third quarter. The operating environment for Metsä Tissue’s tissue paper business continues to be unstable, as underlying inflation remains high. If required, the company will opt for commercial shutdowns to secure adequate product profitability when demand begins to normalise. METSÄ GROUP For further information, please contact: Metsä Group Metsä Group is leading the way in advancing the bioeconomy. We invest in growth, bioproduct development and a fossil free future. The raw material for our products is renewable wood from sustainably managed northern forests. We focus on the growth sectors of the forest industry: wood supply and forest services, wood products, pulp, fresh fibre paperboards, as well as tissue and greaseproof papers. Metsä Group’s annual sales amount to approximately EUR 7 billion, and we have around 9,500 employees in around 30 countries. We promote a culture of diversity, equality and inclusion. Our international Group has its roots in the Finnish forests: our parent company is Metsäliitto Cooperative which is owned by over 90,000 forest owners. Follow Metsä Group: Twitter LinkedIn Facebook YouTube Instagram Slideshare
Key figures
2023
2022
2023
2022
2022
1–6
1–6
4–6
4–6
1–12
Sales, EUR million
3,115.8
3,416.1
1,481.4
1,822.3
6,980.2
EBITDA, EUR million
555.3
776.1
200.5
356.6
1,636.4
Comparable, EUR million
531.9
717.9
177.1
395.5
1,564.4
% of sales
17.1
21.0
12.0
21.7
22.4
Operating result, EUR million
402.3
589.3
126.6
248.0
1,301.9
Comparable, EUR million
379.8
574.4
104.1
330.2
1,276.4
% of sales
12.2
16.8
7.0
18.1
18.3
Result before income tax, EUR million
389.2
564.4
118.7
234.9
1,269.8
Comparable, EUR million
370.0
549.5
98.1
317.1
1,240.3
Result for the period, EUR million
305.8
431.5
92.6
172.5
998.7
Return on capital employed, %
11.3
18.8
7.0
15.3
19.9
Comparable, %
10.7
18.3
5.9
20.5
19.5
Return on equity, %
10.7
17.4
6.5
13.6
19.0
Comparable, %
10.2
17.7
5.3
19.9
18.9
Equity ratio, %
58.7
59.7
58.7
59.7
60.6
Net gearing ratio, %
15.3
0.9
15.3
0.9
3.1
Interest-bearing net liabilities, EUR million
870.2
46.6
870.2
46.6
177.0
Total investments, EUR million
552.9
719.7
302.9
387.7
1,500.4
Net cash flow from operations, EUR million
18.3
456.4
-19.2
320.9
1,226.8
Personnel at the end of the period
10,232
10,077
10,232
10,077
9,155
Vesa-Pekka Takala, EVP, CFO Metsä Group, tel. +358 10 465 4260
Katariina Saelan, SVP, Communications, Metsä Group, tel. +358 40 8299455
www.metsagroup.com
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