Metsä Group’s comparable operating result

Metsä Group Interim Report January– September 2019

January–September 2019 (1–9/2018)

• Sales were EUR 4,183 million (4,290).
• Operating result was EUR 342 million (635). Comparable operating result was EUR 418 million (641).
• Result before tax was EUR 298 million (576). Comparable result before tax was EUR 374 million (582).
• Cash flow from operations was EUR 421 million (591).

July–September 2019 (7–9/2018)

• Sales were EUR 1,374 million (1,386).
• Operating result was EUR 110 million (223). Comparable operating result was EUR 110 million (223).
• Result before tax was EUR 96 million (208). Comparable result before tax was EUR 96 million (208).
• Cash flow from operations was EUR 239 million (314).

Events in the third quarter of 2019

• The prices of long-fibre and short-fibre pulp in Europe declined by 13% compared to the previous quarter. In China, the price of long-fibre pulp declined by 15% and the price of short-fibre pulp by 24%.
• The delivery volumes of paperboard grew from the previous quarter. Prices remained stable.
• Several scheduled maintenance shutdowns curtailed the production of Metsä Group’s chemical and high-yield pulp during the third quarter.
• Metsä Board signed a bank financing arrangement, comprising a loan of EUR 150 million and a revolving credit facility of EUR 200 million.
• Metsä Board started up a new sheet-cutting line at the Äänekoski paperboard mill.
• In August–September, Metsäliitto Cooperative acquired EUR 75.3 million worth of Metsä Board Corporation’s B shares from the market.
• Metsä Tissue announced its plan for a next-generation tissue paper mill in Mariestad, Sweden, and the start of a related environmental permit process.

Events after the period

• In the end of October, Metsä Fibre was awarded for its sustainability work by the EFQM Global Excellence Award. The company won the Outstanding Achievement for Sustainability Award and reached the EFQM rating Recognised for Excellence 6 Stars.
• Metsä Board announced on 30 October 2019 to make certain financial commitments for the implementation phase related to the Husum investment plans prior to the final investment decision. The total value of the commitments will be a maximum of EUR 100 million, and is included in the total value of the first phase of the investment, estimated at EUR 320 million.

Result guidance for October–December 2019

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

President and CEO Ilkka Hämälä:  

“Metsä Group’s third quarter result weakened, as expected, compared to the previous quarter. The price level of pulp in Europe continued to decline as a result of China’s lower price level. In China, the prices of softwood pulp were stable during the third quarter and took a slightly upward turn at the end of September as softwood pulp inventories approached their average level, and as a number of producers announced production curtailments attributable to the market situation and technical reasons.

Metsä Board issued a positive profit warning immediately after the end of the third quarter. The result remained at the level of the previous quarter due to the stronger than expected paperboard market.

The market for sawn timber and veneer products continued to be weaker than normal as demand, particularly in Europe, was at a low level. The sawn timber market was also weakened by the additional production which entered the market following storm damages in Central European forests.

Demand for Metsä Tissue’s products remained stable. The decline in pulp prices improved the company’s result, along with the reorganisation of the business carried out during the first half of the year.

The pre-engineering projects concerning the Kemi, Rauma and Husum investments continue with the aim of ensuring the projects are ready for the final decisions during the first half of 2020.

The equipment installations at the demo plant for textile fibre at Äänekoski are progressing. Production is set to begin in early 2020.”