CEO Mika Joukio's review

CEO's review

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

Comment on January–September 2020 results   

"Metsä Board's business operations performed well in the second quarter. At the beginning of the coronavirus pandemic in March–April, demand for fresh fibre paperboards used in food and pharmaceutical packaging in particular was exceptionally strong, and our order backlog increased to a high level. This rapid growth is explained not only by the pandemic, but also by the Finnish paper industry strike in early 2020. However, demand normalised towards the end of the review period. Our paperboard delivery volumes in April–June were higher than in the first quarter and in the corresponding period last year.

Our comparable operating result in the second quarter improved year-on-year and was EUR 60.5 million (41.0). Profitability was supported by lower production costs, particularly in the paperboard business, and favourable foreign exchange development. The price development of our paperboards has remained relatively stable, but the sales prices of market pulp were clearly lower than in the previous year.

Our cash flow from operations has remained strong for three consecutive quarters. In the first half of 2020, our cash flow from operations was clearly higher than in previous years, at EUR 152.3 million. This further supports our good liquidity. Our profit distribution from 2019 was in line with the original proposal of the Board of Directors, and our strong financial position also enables us to proceed with our investments as planned.

I have also observed with great pleasure the excellent performance of our mills during the coronavirus pandemic. Our total paperboard production volume was a record high in April–June. We also succeeded in improving safety at work during the first half of the year. We are heading in the right direction, although our long-term safety target, zero accidents, is still quite far away.

We will continue our close cooperation with our customers in product development and packaging design. The Excellence Centre for paperboard and packaging design in Äänekoski was completed in June, and it will boost our joint development projects. By centralising expertise in various fields in a coordinated entity, we will be better able to meet our customers' needs and respond to development challenges."

Mika Joukio
CEO

 

Review in the 2019 Annual report:
Solutions for packaging of the future

 
 

Dear reader,
The signs of change in the operating environment of packaging materials are increasingly strong. Climate change mitigation and the reduction of plastic waste require action from everyone. We want to contribute by offering solutions for these challenges and are steering our operations and development work accordingly.

Successes in the paperboard business in 2019
In 2019, demand for our folding boxboard was stable and our average prices rose in all market areas relevant to us. We successfully defended our prices for white kraftliners in the modest demand situation in Europe, which nevertheless picked up after the summer. The total delivery volume of our paperboards was roughly 1.8 million tonnes and our comparable operating result was EUR 184 million. Our profitability was impacted by the decline in the prices of market pulp in both Europe and China. Our cash flow from operations was strong, EUR 201 million. The Board of Directors proposes that EUR 0.24 per share will be distributed to the shareholders, which is in line with our dividend policy. In the spring, we introduced our renewed folding boxboard portfolio to the market. It will help our customers to respond to the requirements of future packaging – to save on resources and reduce their carbon footprint. In the autumn, we launched a new plastic-free eco-barrier paperboard, which provides good protection against moisture and grease, particularly in food and food service packaging. Our recyclable eco-barrier paperboard has generated a lot of interest among our customers and I believe strongly in its commercial success.

We are a forerunner in sustainability
Focus, growth and profitability are the cornerstones of our strategy. We will continue to focus on premium fresh fibre paperboards, and our future growth is strongly guided by our profitability targets. We are a forerunner in sustainability and concentrate increasingly on the development of innovative and sustainable packaging solutions in cooperation with our customers.

As part of Metsä Group, we have set ourselves ambitious sustainability targets with which we aim, among other things, for mills and raw materials by 2030. We are committed to mitigating climate change in accordance with the UN's Sustainable Development Goals. Sustainability is also important for our customers, and I believe that fossil free products will provide us with a significant competitive edge.

Future packaging is expected to provide better brand experiences with less environmental impact than before, not forgetting the functionality of the packaging. We always know the origin of our most important raw material – pure northern fibre – and our end products support the principles of the circular economy. We are in the process of building a paperboard and packaging Excellence Centre in Äänekoski.

The centre will combine packaging design and R&D excellence under the same roof. The centre enables extensive cooperation with our customers throughout the value chain. Our success has been enabled by skilled and committed personnel. We want everyone to be successful in their work and to develop their own competence. Clear goals and supervisory work in line with our values, as well as the systematic development of our personnel's know-how will support these successes.

We invest in future growth
With the renewal, we will ensure the development of our paperboard business in the Husum integrated mill in the future. It also improves our energy efficiency and is a significant step toward our target of fossil free mills.

The future of fresh fibre paperboard looks bright. Fibre-based, fully recyclable packaging solutions are replacing packaging materials based on fossil based raw materials to an increasing degree, which means that there is a lot of potential. I am very confident of Metsä Board's continued success.

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

Mika Joukio
CEO

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