Metsä Group Half-year financial report January–June 2024
January–June 2024 (1–6/2023)
- Sales were EUR 2,937 million (3,116).
- Operating result was EUR 46 million (402). Comparable operating result was EUR 57 million (380).
- Result before taxes was EUR 19 million (389). Comparable result before taxes was EUR 30 million (370).
- Comparable return on capital employed was 1.8% (10.7).
- Net cash flow from operations was EUR -252 million (18).
April–June 2024 (4–6/2023)
- Sales were EUR 1,480 million (1,481).
- Operating result was EUR -12 million (127). Comparable operating result was EUR -13 million (104).
- Result before taxes was EUR -26 million (119). Comparable result before taxes was EUR -27 million (98).
- Comparable return on capital employed was -0.3% (5.9).
- Net cash flow from operations was EUR -114 million (-19).
Events during the second quarter of 2024
- The average sales prices of Metsä Group’s long-fibre pulp increased from the previous quarter in Europe and China.
- Demand for softwood market pulp has been strong in Europe and North America. In China, purchasing activity weakened in market pulp.
- The demand for and prices of Metsä Group’s paperboards remained stable compared to the previous quarter. Delivery volumes increased slightly.
- The Kemi bioproduct mill returned online in June after the damage resulting from the gas explosion at the evaporation plant had been repaired.
- In April, Metsä Board made an investment decision on the renewal of the Simpele board machine.
- On 13 May 2024, Metsä Group completed a transaction with which the ownership of the Group’s Russian subsidiaries were transferred to the VLP Group. In 2022, Metsä Group discontinued its business operations in Russia, including the Metsä Svir sawmill, wood supply and paperboard sales. After the transaction was completed in May, the Group no longer owns anything in Russia. The transaction had a total impact of EUR 13.8 million on the operating result of financial reporting period.
Result guidance July–September 2024
In July–September 2024, Metsä Group’s comparable operating result is expected to improve compared to April–June 2024.
President and CEO Ilkka Hämälä:
The first half of 2024 was financially very weak for Metsä Group. This was due to lower year-over-year sales prices, especially in pulp and paperboard, and the continued increase in wood costs. In the review period, political strikes caused a loss of EUR 60 million in operating profit. The gas explosion at the Kemi bioproduct mill’s evaporation plant reduced comparable operating profit by approximately EUR 100 million before insurance compensation. Despite the gloomy figures, positive development is seen in many of our businesses. In Europe, the pulp market was strong in the second quarter, and the price level is increasing. Demand for fresh fibre paperboards in 2024 has clearly improved from last year's record low levels. Despite the continued weak situation in the construction industry, Kerto® LVL has been at a stable and good level in terms of both price and demand. The profitability of tissue papers continues to be reasonable, but raw material prices have a significant impact on the level of results. Of all our product groups, the weak cycle now only continues in sawn timber and spruce plywood, which are directly hit by the construction industry’s muted sentiment.
In the early part of the year, we have continued our preparations for the Group’s future development. Our Kuura® textile fibre project has moved on to the next phase, in which we will explore opportunities for an industrial investment. The demo plant will continue its operations, producing raw material for textiles for the market to obtain customer feedback.
The pre-engineering project for an industrial-scale mill for moulded MuotoTM fibre-based packaging in Rauma is progressing. In the latter part of the year, our demo plant in Äänekoski will move from development activities to production for end customers, seeking to obtain product development feedback for the mill’s industrial stage. The product’s primary end use will be as a replacement for fossil-based materials in food packaging. We are also looking into the refining of lignin at the demo plant constructed in Äänekoski. Lignin can be used to replace fossil-based raw materials in many chemical industry products. The first application will be an additive used in the concrete industry. The investigation of carbon capture from the pulp industry’s combustion gases is a very extensive and significant development project. The EU’s stricter carbon capture targets for the future include a scheme for a significant volume of technologically captured carbon. Metsä Group’s potential for carbon capture exceeds 10 million tonnes annually, but the project is very challenging in terms of technology and requires legislation supporting the use of captured carbon.
The preparation and potential implementation of these large-scale development projects require Metsä Group’s existing businesses to be competitive and to create cash flow for development inputs. The markets for Metsä Group’s main products are increasing, and we have a strong position in our selected product segments. The situation in the pulp industry, extremely important for the Finnish forest industry, matches our market position as the world’s largest producer of soft-wood market pulp.
All Metsä Fibre’s four mills offer world-class performance in softwood pulp production, with the Kemi and Äänekoski mills in a class of their own compared to their competitors. Metsä Board’s folding boxboard industry is the market leader in its segment for demanding customer uses in both Europe and the US. The expansion of the Husum folding boxboard machine, completed last year, makes it Europe’s most efficient unit. Metsä Board has decided to modernise folding boxboard machine at Simpele board mill as part of a wider development investment programme at the mill. It will ensure the qualitative and financial competitiveness of operations far into the future. Metsä Tissue will strengthen its position as the leading Nordic tissue paper producer thanks to the new production line in Mariestad and the Mänttä mill development programme. The ongoing mill investment in Äänekoski will significantly increase the volume and production efficiency of Kerto LVL, which is in strong demand.
Metsä Group’s short- and long-term industrial development measures focus on higher value-added and strengthen industrial competitiveness. Everything is based on Finnish commercial forests – both now and in the future. Sustainable forestry development work that pays attention to the ecological, economic and social balance must be continued actively, openly and persistently. The success of Finnish forestry and forest industry plays an important role in safeguarding our national wellbeing. Around a third of the net earnings from Finnish goods exports is generated by the forest industry, which uses Finnish raw materials and work. The cash flows from export earnings are channelled through many routes into building wellbeing for Finnish society.
| Key figures | |||||
| 2024 | 2023 | 2024 | 2023 | 2023 | |
| 1–6 | 1–6 | 4–6 | 4–6 | 1–12 | |
| Sales, EUR million | 2,937.0 | 3,115.8 | 1,479.5 | 1,481.4 | 6,110.4 |
| EBITDA, EUR million | 270.2 | 555.3 | 85.5 | 200.5 | 845.3 |
| Comparable, EUR million | 273.4 | 531.9 | 87.9 | 177.1 | 833.0 |
| % of sales | 9.3 | 17.1 | 5.9 | 12.0 | 13.6 |
| Operating result, EUR million | 46.1 | 402.3 | -11.6 | 126.6 | 498.1 |
| Comparable, EUR million | 57.0 | 379.8 | -12.9 | 104.1 | 487.9 |
| % of sales | 1.9 | 12.2 | -0.9 | 7.0 | 8.0 |
| Result before income tax, EUR million | 19.1 | 389.2 | -26.1 | 118.7 | 487.8 |
| Comparable, EUR million | 29.8 | 370.0 | -27.3 | 98.1 | 481.6 |
| Result for the period, EUR million | 20.5 | 305.8 | -19.9 | 92.6 | 383.6 |
| Return on capital employed, % | 1.5 | 11.3 | -0.2 | 7.0 | 7.3 |
| Comparable, % | 1.8 | 10.7 | -0.3 | 5.9 | 7.2 |
| Return on equity, % | 0.7 | 10.7 | -1.4 | 6.5 | 6.8 |
| Comparable, % | 0.9 | 10.2 | -1.7 | 5.3 | 6.7 |
| Equity ratio, % | 56.4 | 58.7 | 56.4 | 58.7 | 55.9 |
| Net gearing ratio, % | 21.3 | 15.3 | 21.3 | 15.3 | 11.7 |
| Interest-bearing net liabilities, EUR million | 1,179.6 | 870.2 | 1,179.6 | 870.2 | 662.9 |
| Total investments, EUR million | 262.1 | 552.9 | 145.9 | 302.9 | 1,193.2 |
| Net cash flow from operations, EUR million | -251.6 | 18.3 | -114.4 | -19.2 | 925.6 |
| Personnel at the end of the period | 10,045 | 10,232 | 10,045 | 10,232 | 9,464 |
| Sales and Operating result | |||||
| 1–6/2024, EUR million | Wood Supply and Forest services | Wood Products Industry | Pulp and Sawn timber industry | Paperboard Industry | Tissue and Greaseproof papers |
| Sales | 1,165.0 | 295.9 | 1,159.1 | 993.6 | 581.3 |
| Other operating income | 5.2 | 3.1 | 24.7 | 25.8 | 6.5 |
| Operating expenses | -1,151.6 | -272.7 | -1,135.4 | -936.0 | -507.0 |
| Depreciation and impairment losses | -0.9 | -10.9 | -117.1 | -61.0 | -23.7 |
| Operating result | 17.8 | 15.4 | -68.8 | 22.3 | 57.1 |
| Items affecting comparability | -4.1 | -0.1 | 4.6 | 8.3 | 2.5 |
| Comparable operating result | 13.6 | 15.3 | -64.1 | 30.7 | 59.6 |
| % of sales | 1.2 | 5.2 | -5.5 | 3.1 | 10.3 |
Near-term outlook
The demand for wood will focus particularly on thinning sites suitable for summer harvesting, as well as on birch logs and roundwood from delivery sales. In energy wood, the demand will focus on crown wood and small trees. Demand for forest management services is expected to remain strong.
Construction has remained weak in all the main markets in Europe, and this is especially reflected in the low demand for spruce plywood. However, demand for Kerto LVL products is good. In the US, the continued strength of residential construction and new customer relationships continue to support demand for Kerto LVL. Demand for birch plywood exceeds supply despite the general economic recession. Demand for standard grades is expected to remain good, while demand in the German transport equipment segment will probably continue to be weaker than normal.
In the UK, demand for wood product upgrading is expected to continue at a level that is normal for the season in the next few months.
Overall demand for softwood market pulp is expected to remain stable in Europe and North America. Demand for softwood market pulp continues to be weak in China. The demand and price for sawn timber is expected to remain at current level.
Demand for paperboards is expected to remain stable in the third quarter. The general demand for consumer products will continue to be influenced by the trend in consumers’ purchasing power and general purchasing behaviour. In July–September, paperboard delivery volumes are expected to increase slightly from the previous quarter. Sales prices in local currencies are expected to remain stable.
The cost increase in the first quarter weakened margin levels in the tissue paper business, and measures to improve margins will continue. Demand for tissue and greaseproof papers is expected to remain stable.
METSÄ GROUP