Metsä Board’s comparable operating result in January–March 2023 was EUR 89 million

January–March 2023 (compared to 1–3/2022)

• Sales were EUR 542.1 million (582.0).
• The comparable operating result was EUR 88.7 million 121.5), or 16.4% of sales (20.9). Operating result was EUR 88.4 million (140.7).
• Comparable earnings per share were EUR 0.19 (0.26), and earnings per share were EUR 0.19 (0.31).
• Comparable return on capital employed was 13.9 % (21.1).
• Net cash flow from operations was EUR 126.4 million (92.6).

Events in January–March 2023

• The demand for fresh fibre paperboards declined due to the decreasing demand for consumer products and the adjustments made to inventories in the value chain.
• The average prices of Metsä Board’s paperboards increased. This was caused especially by the price increases in folding boxboard for annual contract customers.
• The demand situation for market pulp weakened more than expected in Europe. In China, the economic recovery has not boosted demand for market pulp as expected. Market prices for pulp (PIX) decreased from the previous quarter.
• Metsä Board adjusted its paperboard, pulp and  BCTMP production to meet demand. Production volumes were below capacity levels.
• The 2023 Annual General Meeting was held on 23 March. The AGM decided to distribute a dividend of EUR 0.58 per share for the 2022 financial period.
• The associated company Metsä Fibre paid Metsä Board a dividend of EUR 83 million for the 2022 financial period.
• Metsä Board updated its 2030 sustainability targets

Events after the review period

Metsä Board issued a profit warning on 12 April 2023 regarding the result guidance for January–March 2023. The company previously estimated that its comparable operating result for January–March 2023 would be roughly at the same level as in October–December 2022. The comparable operating result for October–December 2022 was EUR 100.8 million, compared to EUR 88.7 million in January–March 2023.

Result guidance for April–June 2023

Metsä Board’s comparable operating result in April–June 2023 is expected to be weaker than in January–March 2023.

Metsä Board’s CEO Mika Joukio:

“Despite the challenging business environment, our first-quarter sales totalled EUR 542 million, and our comparable operating margin was 16.4% (1–3/2022: 582 and 20.9). This is an excellent performance, taking into account that our production and delivery volumes decreased notably from the comparison period and remained below capacity levels. In addition, our profitability was negatively affected by total costs, which were some 15% higher than in the corresponding period last year. In January–March, our cash flow from operations was EUR 126 million (1–3/2022: 93), and our balance sheet remained strong, with our interest-bearing net liabilities close to zero.

The decline in demand for consumer products and adjustments to inventories in the value chain continue to affect the demand for fresh fibre paperboards. However, the higher average prices of our paperboards and a positive currency effect have made up for the weaker result caused by declining volumes. In the first quarter, average prices were driven up by new annual contract prices for folding boxboard and focus on customers in our main market areas. We adjusted and will continue to adjust our production to match the demand situation. In the second quarter, our production will also be restricted by several planned annual maintenance shutdowns at our mills in Finland.

In the beginning of the year, the pulp market developed weaker than expected, having a negative impact on our profitability. In Europe, the demand for market pulp has decreased by the prolonged shutdowns of paper and paperboard producers. In China, the economic recovery following the lifting of strict Covid restrictions has not boosted demand for market pulp as expected. Market pulp prices decreased in January–March from the previous quarter, and the same trend has continued after the review period.

Russia’s unjustified attack on Ukraine has affected the European energy markets, making energy self-sufficiency a significant competitive factor for companies. Metsä Board’s high energy self-sufficiency will further improve this year, with the new recovery boiler and turbine started up in Husum, and the Olkiluoto 3 nuclear power plant coming online. The war also discontinued wood imports from Russia, making for a tighter wood market in the Baltic Sea region. In Finland and Sweden, pulpwood prices have increased as a result of stumpage prices and cost inflation in the supply chain. Currently, the availability of pulpwood is good and adequate for production to meet demand.

Despite the short-term challenges, I feel positive about Metsä Board’s future. Our company is on a strong financial shape, and we are investing in sustainable fibre-based packaging materials with excellent growth prospects for the long term. Our investments in Husum and Kemi will be completed in the second half of this year, increasing our annual paperboard capacity by approximately 240,000 tonnes. The pre-engineering of our new folding boxboard mill in Kaskinen is ongoing, and a potential investment decision can be made in 2024 at the earliest. In addition, our associated company Metsä Fibre’s new bioproduct mill will start up in Kemi this year. The mill is the largest ever forest industry investment in Finland.”

METSÄ BOARD CORPORATION