Metsä Group Interim Report 1–6/2015 Stock Exchange Release 6 August 2015 at 12.00 noon EET
Result for January–June
– Sales were EUR 2,585 million (1–6/2014: EUR 2,519 million).
– Operating result excluding non-recurring items was EUR 266 million (197). Operating result including non-recurring items was EUR 272 million (230).
– Result before taxes excluding non-recurring items was EUR 230 million (157). Result before taxes including non-recurring items was EUR 234 million (189).
– Return on capital employed excluding non-recurring items was 13.8 per cent (11.3).
– Cash flow from operations was EUR 333 million (193).
Result for April-June
– Sales were EUR 1,330 million (4–6/2014: EUR 1,265 million).
– Operating result excluding non-recurring items was EUR 137 million (92). Operating result including non-recurring items was EUR 154 million (160).
– Result before taxes excluding non-recurring items was EUR 114 million (77). Result before taxes including non-recurring items was EUR 128 million (146).
– Return on capital employed excluding non-recurring items was 14.1 per cent (10.3).
– Cash flow from operations was EUR 266 million (226).
Events during the second quarter
– Metsä Group made the decision to build a bioproduct mill in Äänekoski.
– Sales volume in the pulp industry increased by 15 per cent compared to the first quarter.
– Paperboard deliveries continued to grow, and the price levels were stable.
– Metsä Group sold 30.13 per cent of Finsilva Oyj's shares to a fund managed by Dasos Capital Oy. After the transaction, Metsä Group's holding in Finsilva is 19.8 per cent.
– Metsä Board divested the Gohrsmühle mill to the German mutares AG's wholly owned holding company and its partner company.
– Metsäliitto Cooperative reached an understanding with mutares AG on the divestment of the entire share capital of Metsä Wood France SAS. The arrangement is estimated to be completed by the end of October 2015 at the latest.
– Moody's Investors Service raised Metsä Board Corporation's credit rating by two notches from B1 to Ba2. The outlook of the rating is stable.
“The development of Metsä Group's business operations was solid also in the second quarter of 2015. The operating result excluding non-recurring items was slightly better than in the previous quarter and considerably better than in the corresponding period last year. The most significant profitability improvements compared to last year were achieved in our pulp and paperboard businesses.
Our growth investments are proceeding as planned. The construction of the bioproduct mill to be completed in the third quarter of 2017 has started well in Äänekoski. The transformation of the Husum mill, which was formerly focused on printing papers, into a paperboard mill is also progressing in according to our targets.
Over the past ten years, we have eliminated several non-core businesses. In May, this work continued with the divestment of the Gohrsmühle speciality paper mill in Germany. In June, we also reached an understanding on the divestment of the mechanical wood product upgrading operations in France.
The challenging overall economic situation seems to continue in Finland and in our main markets in Europe. The plans announced by the new Finnish government are restoring faith in the recovery of the national economy and the future improvement of the business environment for the export industry.”
Kari Jordan, President & CEO
Metsä Group
| 2015 | 2014 | 2015 | 2014 | 2014 | |
| Income statement, EUR million | 1–6 | 1–6 | 4–6 | 4–6 | 1–12 |
| Sales | 2 585.3 | 2 519.2 | 1 330.2 | 1 264.9 | 4 970.3 |
| Other operating income | 68.2 | 124.3 | 52.9 | 88.2 | 170.3 |
| Operating expenses | -2 245.1 | -2 287.8 | -1 161.9 | -1 135.3 | -4 447.5 |
| Depreciation and impairment losses | -136.5 | -125.8 | -67.1 | -57.7 | -276.2 |
| Operating result | 271.9 | 229.8 | 154.0 | 160.2 | 416.9 |
| Share of results from associated companies and joint ventures | 9.3 | 15.3 | 3.2 | 7.9 | 16.4 |
| Exchange gains and losses | -3.2 | -1.2 | -6.7 | 0.9 | 2.7 |
| Other net financial items | -43.7 | -61.1 | -22.4 | -23.3 | -106.1 |
| Result before income tax | 234.3 | 182.9 | 128.2 | 145.7 | 329.9 |
| Income tax | -53.0 | -41.2 | -35.5 | -35.8 | -69.7 |
| Result for the period | 181.3 | 141.7 | 92.7 | 109.9 | 260.3 |
| 2015 | 2014 | 2015 | 2014 | 2014 | |
| Profitability | 1–6 | 1–6 | 4–6 | 4–6 | 1–12 |
| Operating result, EUR million | 271.9 | 229.8 | 154.0 | 160.2 | 416.9 |
| - ” -, excluding non-recurring items | 265.8 | 196.6 | 137.1 | 91.5 | 418.1 |
| - ” -, % of sales | 10.3 | 7.8 | 10.3 | 7.2 | 8.4 |
| Return on capital employed, % | 14.0 | 12.6 | 15.5 | 17.2 | 11.1 |
| - ” -, excluding non-recurring items | 13.8 | 11.3 | 14.1 | 10.3 | 11.4 |
| Return on equity, % | 16.6 | 14.4 | 16.5 | 22.4 | 13.0 |
| - ” -, excluding non-recurring items | 16.3 | 11.8 | 13.9 | 8.4 | 13.4 |
| 2015 | 2014 | 2015 | 2014 | 2014 | |
| Financial position | 30.6. | 30.6. | 31.3. | 31.3. | 31.12. |
| Equity ratio, % | 41.9 | 37.9 | 39.0 | 37.2 | 37.9 |
| Net gearing ratio, % | 34 | 70 | 41 | 83 | 46 |
| Interest-bearing net liabilities, EUR million | 779 | 1 389 | 887 | 1 614 | 938 |
Segments
| Sales and Operating result 1–6/2015, EUR million | Wood Supply and Forest Services | Wood Products Industry | Pulp Industry | Paperboard Industry | Tissue and Cooking Papers |
| Sales | 805.2 | 452.2 | 721.5 | 1 047.7 | 502.7 |
| Other operating income | 4.5 | 2.2 | 10.3 | 31.8 | 2.3 |
| Operating expenses | -792.3 | -441.8 | -525.1 | -916.9 | -472.4 |
| Depreciation and impairment losses | -1.8 | -16.9 | -35.5 | -52.3 | -21.4 |
| Operating result | 15.6 | -4.3 | 171.1 | 110.3 | 11.2 |
| Non-recurring items | - | 22.3 | - | -20.1 | 12.1 |
| Operating result excluding non-recurring items | 15.6 | 18.0 | 171.1 | 90.2 | 23.4 |
| - " -, % of sales | 1.9 | 4.0 | 23.7 | 8.6 | 4.6 |
Near-term outlook
Metsä Forest buys wood from across Finland, currently primarily from stands harvested when the ground is unfrozen. The level of sales of forest management services is expected to remain good.
Sales in the wood products industry are expected to increase slightly in the third quarter when compared to the corresponding period of the previous year. Intense competition is expected to continue in the sawn timber market, which suffers from oversupply. The demand for other wood products is expected to remain at a relatively good level.
The global demand for softwood pulp is expected to continue to grow slightly, and softwood pulp supply and demand are expected to be in balance in the near future as well. The annual maintenance shutdowns at three Metsä Fibre mills are scheduled for the second half of the year.
The delivery volumes of paperboards are forecast to increase slightly in the third quarter from the previous quarter. No material paperboard price changes are currently in sight.
In the tissue paper market, demand is expected to continue to be stable in all market areas and to grow in eastern Central Europe, in particular.
Metsä Group's operating result excluding non-recurring items in the third quarter of 2015 is expected to be approximately on the same level compared to the second quarter of 2015.
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–June 2015 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
Juha Laine, SVP, Communications, Metsä Group, tel. +358 (0)10 465 4541
www.metsagroup.com
Metsä Group is a responsible forest industry group whose products’ main raw material is renewable wood from sustainably managed northern forests. Metsä Group focuses on tissue and cooking papers, fresh forest fibre paperboards, pulp, wood products, and wood supply and forest services. Its high-quality products combine renewable raw materials, customer-orientation, sustainable development and innovation. Metsä Group’s sales totalled EUR 5 billion in 2014, and it employs approximately 10,500 people. The Group operates in some 30 countries. Metsäliitto Cooperative is the parent company of Metsä Group, and it is owned by approximately 122,000 Finnish forest owners.