Metsä Group Interim Report 1–9/2012 Stock Exchange Release 1 November 2012 at 12 noon
Result for January–September
– Sales amounted to EUR 3,773 million (1–9/2011: EUR 4,123 million).
– Operating result excluding non-recurring items was EUR 181 million (311). Operating result including non-recurring items was EUR 161 million (229).
– Result before taxes excluding non-recurring items was EUR 106 million (217). Result before taxes including non-recurring items was EUR 86 million (130).
Result for July–September 2012
– Sales totalled EUR 1,242 million (7–9/2011: EUR 1,317 million).
– Operating result excluding non-recurring items was EUR 67 million (63). Operating result including non-recurring items was EUR 56 million (44).
– Result before taxes excluding non-recurring items was EUR 35 million (35). Result before taxes including non-recurring items was EUR 25 million (17).
Events in the third quarter of 2012
– Pulp deliveries improved on the previous quarter, but market prices decreased. Delivery volumes of paperboard increased on the previous quarter, with prices remaining stable.
– Metsä Wood decided to invest EUR 30 million in upgrading its Vilppula sawmill. The investment will be carried out in 2013.
– A new paper machine was commissioned in Metsä Tissue’s Krapkowice mill in Poland. The investment programme includes two new paper machines, the second of which will be commissioned next year.
– The bark gasification plant at Metsä Fibre's Joutseno mill was introduced for trial use in July. With this plant, the mill will be the first carbon dioxide neutral pulp mill in Finland.
Events after the period
– A biopower plant was opened at Metsä Board’s Kyro mill on 9 October. The biopower plant, owned by Pohjolan Voima and Leppäkosken Sähkö, will increase the use of renewable fuels and decrease carbon dioxide emissions from energy production in the Hämeenkyrö region.
“Market predictability continues to be low, especially due to the unstable economic situation in Europe. Therefore careful planning of business operations and continuous efficiency improvement of all functions play a key role at Metsä Group.
Our investment programme is proceeding according to plan. A new paper machine was commissioned in Metsä Tissue’s Krapkowice mill in Poland as part of the development programme aiming to improve the productivity and energy efficiency and reduce the carbon footprint of production activity.
Our strategy to focus on pulp, board and tissue and cooking papers brings stability to our operations also in this market situation.”
Kari Jordan, President & CEO, Metsä Group
Metsä Group
| Income statement | 2012 1–9 | 2011 1–9 | 2012 7–9 | 2011 7–9 | 2011 1–12 |
| Sales | 3 773 | 4 123 | 1 242 | 1 317 | 5 346 |
| Other operating income | 52 | 64 | 14 | 14 | 95 |
| Operating expenses | -3 467 | -3 692 | -1 134 | -1 210 | -5 058 |
| Depreciation and impairment losses | -197 | -265 | -66 | -76 | -354 |
| Operating result | 161 | 229 | 56 | 44 | 29 |
| Share of profit from associates | 5 | 5 | 1 | 2 | 4 |
| Exchange gains and losses | 1 | 2 | 2 | 1 | 2 |
| Other net financial items | -81 | -106 | -34 | -31 | -133 |
| Result before income tax | 86 | 130 | 25 | 17 | -98 |
| Income taxes | -34 | -81 | -9 | -21 | -59 |
| Result for the period | 52 | 50 | 16 | -4 | -157 |
Metsä Group
| Profitability | 2012 1–9 | 2011 1–9 | 2012 7–9 | 2011 7–9 | 2011 1–12 |
| Operating result, EUR mill. | 161 | 229 | 56 | 44 | 29 |
| - “ -, excluding non-recurring items | 181 | 311 | 67 | 63 | 314 |
| - “ - % of sales | 4.8 | 7.6 | 5.4 | 4.8 | 5.9 |
| Return on capital employed, % | 6.1 | 8.0 | 5.9 | 4.9 | 1.1 |
| - ” -, excluding non-recurring items | 6.8 | 10.9 | 7.0 | 6.7 | 8.5 |
| Return on equity, % | 4.1 | 3.9 | 3.5 | -0.9 | -9.9 |
| - ” -, excluding non-recurring items | 5.8 | 10.8 | 5.9 | 3.4 | 8.6 |
| Financial position | 2012 30.9 | 2011 30.9 | 2012 30.6 | 2011 30.6 | 2011 31.12 |
| Equity ratio, % | 34.4 | 31.0 | 33.8 | 30.9 | 28.3 |
| Net gearing ratio, % | 89 | 113 | 94 | 121 | 131 |
| Interest-bearing net liabilities, EUR mill. | 1 648 | 1 895 | 1 705 | 2 051 | 1 953 |
Segments
| Sales and Operating result January–September 2012 (EUR mill.) | Wood Supply | Wood Products Industry | Pulp Industry | Paperboard and Paper Industry | Tissue and Cooking Papers |
| Sales | 1 140 | 688 | 952 | 1 599 | 727 |
| Other operating income | 7 | 7 | 8 | 177 | 10 |
| Operating expenses | -1 132 | -656 | -798 | -1 511 | -678 |
| Depreciation & impairment losses | -2 | -23 | -42 | -86 | -32 |
| Operating result | 13 | 16 | 120 | 179 | 27 |
| Non-recurring items | - | 1 | -2 | -130 | - |
| Operating result, excl. non-rec. items | 13 | 17 | 117 | 49 | 27 |
| - % of sales | 1.2 | 2.4 | 12.3 | 3.1 | 3.7 |
Near-term outlook
Metsä Forest is actively purchasing wood. In Finland, priority in purchases is still given for pine logs, birch pulpwood and energy wood in particular.
The low demand for sawn timber and factors of uncertainty concerning log harvesting are expected to impair Metsä Wood’s result outlook for the fourth quarter, and adjustments in sawmill activities may be inevitable.
The utilisation rates of Metsä Fibre’s pulp mills are expected to remain good in the fourth quarter. The USD denominated market price of long fibre pulp is expected to increase slightly during the rest of the year, but the average price of fourth-quarter deliveries is expected to be slightly lower than in the third quarter.
Metsä Board’s paperboard delivery volumes are expected to seasonally fall slightly short of the level of the third quarter during the fourth quarter. Delivery volumes of paper and pulp are expected to be at least at the third quarter level.
Average folding boxboard prices are not expected to change materially in the coming months. No significant changes in the price of paper are visible. Linerboard prices will be slightly higher in the fourth quarter than the third quarter as the result of a price increase that took effect in September. It is estimated that the increase in the price of linerboard is not sufficient to fully compensate the negative impact on the result due to the lower delivery volumes during the fourth quarter.
The steady growth in the demand for tissue and cooking papers continues. Despite cost pressure, profitability is expected to be at the same level or somewhat higher compared with the previous quarter.
The predictability of the market will continue to be poor due to the European economic situation. Metsä Group's operating result excluding non-recurring items in the fourth quarter of 2012 is expected to be at approximately the same level as in the previous quarter.
Disclosure procedure
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–September 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.
METSÄ GROUP
Group Communications
For further information, please contact:
Vesa-Pekka Takala, CFO, Metsä Group, tel. +358 (0)10 465 4260
Reeta Kaukiainen, SVP, Metsä Group Communications, tel. +358 (0)10 465 4541, +358 (0)50 522 0924
www.metsagroup.com
Metsä Group is a responsible forest industry group whose products are part of people’s everyday life and promote sustainable well-being. Metsä Group produces high-quality products mainly from renewable Nordic wood. The Group’s business areas are tissue and cooking papers, board and paper, pulp, wood products as well as wood supply. Metsä Group’s sales totalled EUR 5.3 billion in 2011, and it employs approximately 12,500 people. The Group is present in some 30 countries.