CEO Mika Joukio's review

CEO's review

Metsä Board's CEO Mika Joukio comments on the performance of the company.

Comment in 2017 Financial Statements bulletin

“The average prices of our paperboards rose during the fourth quarter of 2017. Due to the seasonal decline in December, the delivery volumes of paperboards remained at a lower level than in the previous quarter. We also continued measures to improve the geographical sales mix of folding boxboard. Due to the strong pulp market, we raised the previously announced result guidance for the fourth quarter.

Year 2017 was Metsä Board’s first full year as a pure-play paperboard company. It was also a year of strong growth – our paperboard deliveries grew by 15 per cent from the previous year and amounted to approximately 1.8 million tonnes. Five of our eight production units set new annual production records.

Our comparable operating result improved by 41 per cent from the previous year and was EUR 194 million. In addition to an increase in paperboard deliveries, our profitability improved due to the strong pulp market. The new bioproduct mill of our associated company Metsä Fibre at Äänekoski started up in August in an excellent market situation, in addition to which the mill’s production volumes have been higher than forecast. The global market situation for white kraftliners remained good throughout the year.

Our cash flow from operations grew clearly in 2017, and our balance sheet is strong. We issued a ten-year bond, and the strong demand for it is also an indication of the credit market’s trust in Metsä Board’s future.

We begin 2018 in a good market situation. The prices of paperboard are on the rise and demand is at a good level in the market areas that are important for us. On the other hand, the weakening of the US dollar has a negative impact on our result. We have not yet reached the targeted profitability in Husum’s folding boxboard, and we are continuing our measures on this front.

As part of our business development, we renewed our key marketing messages, and harmonised our product and service portfolio in 2017. This strengthens Metsä Board’s market position as a company focused on premium, lightweight paperboards. The Better with Less concept reflects our desire to promote packaging solutions that create better consumer experiences with less environmental impact.

Metsä Board will continue to invest in growth, but at the same time, we want to reward our shareholders. The Board of Directors proposes that a dividend of EUR 0.21 per share will be paid for 2017. I would also like to extend my thanks for the past year to our customers, employees and other stakeholders.”

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Review in the 2017 Annual report

 
 

Target is to continue profitable growth

Dear reader,
After completing the restructuring, 2017 was Metsä Board’s first full year as a pure-play paperboard company. In line with our strategy, we are focusing on the production of premium lightweight fresh fibre paperboards. Through Husum mill’s new folding boxboard capacity, we are well positioned to meet the growing global demand for fresh fibre paperboards. In 2017, our total paperboard deliveries grew from the previous year, and our profitability improved markedly.

Megatrends support growing demand for fresh fibre paperboard
Demand for packaging materials made from fresh fibre paperboard is supported by strong megatrends, such as population growth and urbanisation, as well as the increasing requirements for recyclable, resource-efficient and safe packaging materials. More and more, fresh fibre paperboard is being used to replace plastic and recycled paperboard, particularly in food and food service packaging.

Demand for fresh fibre paperboards grew globally in 2017, and price levels in local currencies increased. Metsä Board also announced paperboard price increases in 2017.

Continued growth
Metsä Board’s target is profitable growth exceeding the average market growth. In 2017, our paperboard deliveries grew by 15 per cent from the previous year. As expected, Husum’s folding boxboard was the most significant growth factor, but our white kraftliner deliveries were also on a higher level than last year.

Five out of our eight mills, Tako, Husum, Simpele, Kaskinen and Joutseno, set new annual production records. The average price of folding boxboard was burdened by the geographical sales mix of folding boxboard from Husum especially in the first half of the year. However, the situation improved towards the end of the year, and paperboard deliveries to the Americas grew. The strong pulp market and higher-than-expected pulp prices supported our profitability throughout the year.

In April, we started a new extrusion coating line at the Husum mill in Sweden. The line produces PE-coated paperboards suitable for food and food service packaging. We are now well positioned to serve the global food service packaging market through better product availability and competitive quality.

The new bioproduct mill of Metsä Fibre, our associated company, started up in August according to plan, in an excellent market situation. At the end of the year, its production was at a higher level than expected, and its customer deliveries were off to a good start.

Our cash flows from operations grew substantially in 2017, and we have a strong balance sheet. In the autumn, we issued a ten-year bond. The bond was oversubscribed, which reflects the loan market’s strong confidence in Metsä Board’s future.

Responsibility and sustainability at the core of our operations
Sustainability and responsible business operations are integral parts of our operations. Sustainability and responsibility must begin with senior management, to ensure commitment throughout the organisation. In 2017, we again received wide recognition for our sustainability practices, from CDP and EcoVadis, among other parties. Ensuring well-being and safety at work is particularly important for us, and our investment in these aspects has produced visible and tangible results. We have a low employee turnover rate and our accident frequency rate has decreased year on year.

As part of operational development we renewed our key marketing messages and harmonised our product and service portfolio. This strengthens our market position as a company focusing on premium, lightweight paperboards. With our ‘Better with Less’ concept, we aim to promote packaging solutions that create better consumer experiences with less environmental impact. The increasing environmental and product safety requirements and the growing emphasis on the appearance of packaging are driving demand for premium, lightweight, sustainably produced packaging materials. Metsä Board’s paperboards bring all these qualities together. Our products are complemented by three service areas: packaging analysis and design, availability services and technical expertise and R&D. The aim is to jointly with customers develop lighter and more efficient packaging solutions.

A clear direction for the future
Our vision is to be the preferred supplier of premium paperboards creating value for customers globally. This gives us a clear future direction. We want to continue to develop our products and services in line with our customers’ needs, and we want to respond profitably to the growing market demand. Our highly competent employees, clear strategy and strong financial position make me confident in Metsä Board’s future development.

I would like to extend my thanks to our customers, employees, shareholders and other stakeholders for the past year.

Mika Joukio
CEO

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