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2021-10-27

Metsäliitto Osuuskunta: Metsä Group's comparable operating result in January-September 2021 was EUR 694 million

Metsä Group Interim Report January-September 2021, 27 October 2021 at 12:00 noon EEST

January-September 2021 (1-9/2020)

  • Sales were EUR 4,457 million (3,698).
  • Operating result was EUR 652 million (279). Comparable operating result was EUR 694 million (274).
  • Result before taxes was EUR 616 million (242). Comparable result before taxes was EUR 658 million (236).
  • Comparable return on capital employed was 16.4% (7.0).
  • Net cash flow from operations was EUR 596 million (361).

July-September 2021 (7-9/2020)

  • Sales were EUR 1,515 million (1,245).
  • Operating result was EUR 273 million (116). Comparable operating result was EUR 278 million (115).
  • Result before taxes was EUR 263 million (103). Comparable result before taxes was EUR 267 million (102).
  • Comparable return on capital employed was 18.8% (8.8).
  • Net cash flow from operations was EUR 222 million (158).

Events in the third quarter of 2021

  • The dollar-denominated average market prices of long-fibre and short-fibre pulp were stable compared to the previous quarter, but at a markedly higher level than during the third quarter last year.
  • Demand for Metsä Board's paperboards remained strong across all main market areas, and their average prices increased significantly.
  • Metsä Board decided to invest EUR 210 million in increasing folding boxboard capacity at its Husum mill in Sweden.
  • Metsä Tissue announced that it is planning a new tissue paper mill in the United Kingdom. The annual production capacity would be 240,000 tonnes.
  • Metsä Wood announced that it is planning a new EUR 200 million Kerto LVL® mill to be built in the Äänekoski mill area.
  • Metsä Group's innovation company, Metsä Spring, invested in the start-up company Innomost, which produces bioactive products from forest industry side streams. 

The coronavirus pandemic

Metsä Group has three key priorities in its operations when it comes to stopping the coronavirus pandemic: personnel safety, full participation in combating the pandemic as part of society and ensuring business continuity. Metsä Group follows and complies with the guidelines issued by the authorities with regard to the coronavirus. Minimising physical contact is the most important precautionary measure.

Metsä Group's resources have remained normal during the coronavirus pandemic. Production and deliveries have run normally, barring a few exceptions. 

Events after the review period

On 12 October 2021, the European Commission conducted an investigation at Metsä Fibre as part of a wider EU-level antitrust investigation of companies active in the wood pulp sector concerning suspected antitrust violations.

Metsä Group launched a new programme, implemented outside commercial forests, which supports projects improving biodiversity or the state of waterways with financial contributions and expertise.

Result guidance for October-December 2021

Metsä Group's comparable operating result in October-December 2021 is expected to weaken from July-September 2021.

President and CEO Ilkka Hämälä:

"According to expectations, Metsä Group's third quarter in 2021 proved to be excellent. The good demand in the pulp business and for mechanical wood products which characterised the first half of the year continued. The price of pulp declined in the Chinese market, while prices in Europe remained stable. Demand for folding boxboard and linerboard continued to be very strong, supporting a rising trend in prices. Demand for tissue paper continued to be weaker than usual, and price increases in raw materials and energy burdened Metsä Tissue's result.

The ongoing investment projects are progressing according to plan and on schedule. Price increases in construction materials and steel have had an impact, especially on the cost estimate of the Kemi bioproduct mill. The planning of the Mariestad tissue paper mill and the development plan for the mechanical forest industry to be implemented in the Äänekoski mill site are progressing. Their environmental permit processes are expected to be completed during 2022. The investment increasing the capacity of Husum's folding boxboard machine by 200,000 tonnes is underway. When completed, the machine will be the most efficient in Europe in its field.

Metsä Spring continues its work to create new forest industry business opportunities. Metsä Spring's biggest projects are the demo plant for textile fibres operating in Äänekoski, and the demo plant for 3D fibre packaging, which will be completed during the second half of this year, also in Äänekoski.

During the review period, we worked to strengthen our ecological sustainability programme by developing the nature management of herb-rich forests. Outside commercial forests, we decided to launch a nature programme promoting biodiversity.

Metsä Group's work accounts for the social, ecological and economic perspectives of sustainability. We are building the future every day in our everyday work."

 

Key figures

2021 2020 2021 2020 2020
1-9 1-9 7-9 7-9 1-12
Sales, EUR million 4,456.8 3,697.7 1,514.8 1,245.0 5,054.9
EBITDA, EUR million 925.4 515.8 353.3 191.1 679.3
  Comparable, EUR 924.3 510.5 353.3 190.5 670.9
million
  % of sales 20.7 13.8 23.3 15.3 13.3
Operating result, EUR 652.4 279.0 273.4 115.9 375.8
million
  Comparable, EUR 694.0 273.7 278.0 115.3 367.7
million
  % of sales 15.6 7.4 18.3 9.3 7.3
Result before income 616.3 241.8 262.6 103.1 330.1
tax, EUR million
  Comparable, EUR 657.9 236.5 267.2 102.5 322.0
million
Result for the period, 492.8 190.0 210.2 80.9 262.2
EUR million
Return on capital 15.4 7.2 18.5 8.9 7.2
employed, %
  Comparable, % 16.4 7.0 18.8 8.8 7.1
Return on equity, % 15.3 6.7 18.5 8.6 6.8
  Comparable, % 16.4 6.5 18.8 8.5 6.6
Equity ratio, % 60.5 56.6 60.5 56.6 57.2
Net gearing ratio, % -1.4 10.1 -1.4 10.1 4.3
Interest-bearing net -65.9 381.4 -65.9 381.4 167.7
liabilities, EUR
million
Total investments, EUR 636.9 266.4 206.1 98.7 400.5
million
Net cash flow from 596.1 361.3 222.4 158.3 667.4
operations, EUR
million
Personnel at the end 9,470 9,252 9,470 9,252 9,213
of the period

Sales and Wood Wood Pulp andSawn Paperboard  Tissue and
Operating Supply Products Timber Industry Industry Greaseproof
result 1-9/202 and Industry Papers
1 Forest
EUR million Services
Sales 1,520.2 438.8 1,906.6 1,565.6 687.5
  Other 2.6 2.2 8.7 23.0 6.8
operating
income
  Operating -1,488.6 -406.6 -1,351.6 -1,231.3 -647.3
expenses
  Depreciation -7.8 -15.1 -132.2 -72.3 -33.6
and
impairment
losses
Operating 26.5 19.2 431.5 285.0 13.5
result
  Items 0.0 0.0 34.5 10.3 0.0
affecting
comparability
Comparable 26.5 19.2 465.9 295.3 13.5
operating
result
  % of sales 1.7 4.4 24.4 18.9 2.0

Near-term outlook

The demand for wood focuses on stands to be harvested when the ground is unfrozen. Both crown wood and energy wood trunks are purchased as energy wood. The demand for forest management services remains good.

Demand for Metsä Wood's engineered wood products is expected to remain good in all product categories across the main markets. The demand for Kerto LVL is expected to remain strong in the main market, in line with the robust construction activity. The demand for spruce plywood in the main markets is expected to remain strong despite the fact that the availability of substitute products has improved to some degree. Demand for birch plywood is expected to remain strong, particularly in the transport industry. Demand at Metsä Wood's UK business is expected to experience seasonal decline over the next few months.

The annual maintenance shutdown of Metsä Fibre's Äänekoski bioproduct mill will take place during the fourth quarter. Demand for long-fibre market pulp is expected to remain good in Europe. The restrictions on energy consumption and cuts in carbon dioxide emissions imposed by the Chinese government are causing uncertainties related to the capacity utilisation rates of paper and paperboard machines, and thereby the consumption of market pulp during the rest of the year. Demand for sawn timber is expected to decline seasonally towards the winter.

The demand for Metsä Board's paperboards is expected to remain good in the company's main market areas in Europe and the United States. The order books for paperboards are at a high level. Paperboard delivery volumes in October-December are expected to decline from the delivery volumes in July-September due to annual maintenance shutdowns in the fourth quarter, low inventory levels, and a potentially seasonally slower December. The delivery volumes of Metsä Board's market pulp, on the other hand, are expected to increase slightly. The average prices of folding boxboard and white kraftliners are expected to increase in October-December, compared to the average prices in July-September. More planned annual maintenance shutdowns of mills are set to take place in October-December than in July-September. Cost inflation is expected to continue, especially in chemical and energy prices. Metsä Board expects to recognise insurance indemnities attributable to the production losses due to the fire at Husum during the fourth quarter of the year.

Uncertainty about the impact that the pandemic will have on the short-term demand for products will continue in the countries in which Metsä Tissue operates. Demand for tissue paper is expected to increase as the measures to lift the restrictions proceed. Demand for greaseproof papers is expected to continue to grow slightly. To ensure profitability, the company is responding to an increase in the costs of raw materials and other costs with price increases.

METSÄ GROUP
 

For further information, please contact:

Vesa-Pekka Takala, EVP, CFO Metsä Group, tel. +358 10 465 4260
Juha Laine, SVP, Communications, Metsä Group, tel. +358 10 465 4541

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