CEO Mika Joukio's review

CEO's review

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

CEO's comment in January–June 2021 half-year financial report   

“The year 2021 has been very good for Metsä Board. Demand for our fresh fibre paperboards has been strong in all our products and in all our main markets. Sales prices have risen during the first half of the year and we see the same trend continuing in the third quarter. The order books for paperboards remain at an exceptionally high level, which also supports the outlook for the rest of the year.

The delivery volumes of folding boxboard and white kraftliners were again record high in April–June, totalling 514,000 tonnes. Our comparable operating result was excellent, EUR 102.5 million (4–6/2020: EUR 60.5 million). Cash flow during the second quarter was also strong, EUR 134 million, and at the end of the period we were nearly free of net debt.

Our comparable operating result in January–June 2021 was EUR 191.3 million (1–6/2020: 94.2). Our profitabil-ity improved due to the rapid rise in market pulp prices and record-high paperboard volumes. The comparison period was weakened by the paper industry strike in Finland, which had an approximately EUR 20 million negative impact on the result.

Cost inflation has accelerated during the year, raising the price level of energy and some chemicals, among other things. Logistics costs have also increased and shortage of containers in the traffic between Europe and Asia continues to affect deliveries, particularly in market pulp.

The fire which broke out on the chip conveyor of the Husum pulp mill in late June resulted in significant production losses for us, in both market pulp and paperboards. This will have an impact on third quarter sales. The damage caused by the fire has been repaired, and Husum’s paperboard and market pulp production are now running at normal capacity.

Our strong financial position, combined with the growing demand for sustainably produced packaging materials that supports the circular economy, provides us with an excellent starting point for growing and developing our paperboard business. After the review period, we made an investment decision to increase our folding boxboard capacity by 200,000 tonnes at our Husum mill in Sweden. The investment will bring to market the additional capacity that customers want and strengthens our position as Europe’s leading producer of folding boxboard. In addition, we have earlier launched a development programme for the Kemi paperboard mill, which will increase the annual production capacity of white kraftliners by 40,000 tonnes and significantly improve the mill’s water and energy use.

In May, we launched a new 360 Service approach, which will benefit our customers throughout the packaging value chain – from recyclability to a brand’s impact as well as the efficiency of production and the supply chain, and the reduction of environmental impacts. The virtual customer workshops held by our Excellence Centre continued, focusing, among other things, on testing pharmaceutical packaging under extreme conditions.

During the review period, we again achieved the highest level, Platinum, in EcoVadis’s sustainability and social responsibility evaluation. This puts us among the top 1% in the category of paper, paperboard and packaging manufacturers. Our ambition is to be a forerunner in sustainability, and we aim for entirely fossil free production and products by 2030.”


Mika Joukio

 

Review in the 2020 Annual Report: A strong year for Metsä Board

The paperboard market has been strong and the operational efficiency of our mills has been high, even in the challenging year of the coronavirus pandemic. Our strategy to focus on profitable growth in fresh fibre paperboards has proven to work and we are now in an even stronger position to develop our core business.

The past year has been exceptional. In spring, the effects of the coronavirus pandemic, which are still present, shook the whole world. The top priority in our operations has been to ensure the safety of our employees, prevent the virus from spreading and secure the continuity of our business. I think we have succeeded well in achieving these aims. We have avoided cluster infections and our deliveries have continued without disruption during the pandemic. The annual maintenance shutdowns at our mills were also carried out successfully. The production efficiency of our mills was at a high level and we achieved new production records. I have seen positive attitudes, great teamwork and commitment in daily work – in line with precautionary measures and safety instructions. I would like to express my sincere thanks to our personnel for their excellent performance during these difficult times. 

The coronavirus pandemic has increased the demand for pure and safe packaging materials, particularly in the food, beverage and pharmaceutical industries. Our product portfolio responds well to this demand, and our efficient supply chain has ensured continuous and reliable deliveries to our customers. Our paperboard deliveries in 2020, totalling 1,810,000 tonnes, were at a higher level than in the previous year. This is an excellent achievement considering that our business, and particularly our results early in the year, were burdened the paper industry strike in Finland, which lasted for more than two weeks. Our comparable operating result in 2020 was EUR 221 million and the return on capital employed was 12.2%. Cash flow from operations was strong, EUR 308 million. In accordance with our dividend policy, the Board of Directors proposes a distribution of EUR 0.26 per share. 

WE GAIN A COMPETITIVE ADVANTAGE BY BEING A FORERUNNER IN SUSTAINABILITY AND COLLABORATING IN INNOVATIONS 

We aim to be a forerunner in sustainability. For us, this means investing in resource efficiency and combating climate change, in sustainable products and the supply chain, and in the sustainable use of forests. We aim for entirely fossil free production and products by 2030. Our sustainability targets have been approved by the Science Based Targets initiative, and they meet the strictest requirements of the Paris Agreement, aiming to limit global warming to 1.5 degrees Celsius. In recognition of the control of greenhouse gas emissions and the sustainable use of water resources, Metsä Board was again accepted on to the CDP’s respected Climate A and Water A lists in 2020. In the CDP’s forest programme, we achieved level A-. 

Growing consumption and the increased demand for sustainable packaging solutions are accelerating the need for innovations and close cooperation with customers and technology partners. The new state-of-the-art Excellence Centre in the bioeconomy ecosystem of Äänekoski, which we opened in September, provides an excellent platform for development collaboration. As part of Metsä Group, we participate in large-scale collaboration projects which aim to develop high-volume bioproducts with a significantly lower carbon footprint compared to products currently on the market. An example of this is the 3D fibre product presently under development. 

OUR STRATEGY EMPHASISES CLEAR CHOICES WHICH ENABLE OUR SUSTAINABLE GROWTH 

Our strategy to focus on premium and recyclable fresh fibre paperboards has proven correct, and we will continue to implement it. Customers value our services and the high and consistent quality of our products, based on the excellence of our mills and tailor-made high-quality pulp. Late last year, we announced a cooperation arrangement with the Swedish forest owners’ cooperative Norra Skog, which will enable us to allocate more capital to the The new state-of-theart Excellence Centre in the bioeconomy ecosystem of Äänekoski provides an excellent platform for development collaboration. development of the paperboard business in the coming years. Self-sufficiency in pulp and the stable market situation in the paperboard business support our future investment plans. 

Population growth, urbanisation and climate change continuously set more requirements for packaging in terms of sustainability, recyclability and product safety. I see these as excellent opportunities to develop our business operations, grow profitably and create value for our shareholders. 

Finally, I would like to thank our customers, employees and other partners for their trust and cooperation in 2020. We have a good starting point for 2021 – a favourable market situation, a strong financial position, and safe and sustainable products that meet growing global consumer demand. I am positive and confident about the future.  

Mika Joukio

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