CEO Mika Joukio's review

CEO's review

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

Comment on full year 2019 results   

"October–December developed according to our expectations, and our comparable operating result was EUR 31.9 million. In addition to lower paperboard delivery volumes, our profitability was burdened by market pulp prices, which weakened compared to the previous quarter, particularly in Europe. Our sales prices of folding boxboard and white kraftliner remained stable and lower maintenance costs together with the sales of emission allowances improved the result.

The planned renewal of the Husum pulp mill is progressing. The equipment suppliers for the new recovery boiler and turbine have been selected, and we made the first investments related to the project at the end of the year. We expect to make the final investment decision, which awaits the amendment to the environmental permit issued by the Swedish authorities, during the second quarter of 2020. The renewal will enable the long-term development of our paperboard business at the Husum integrated mill. It will also improve our energy efficiency and is a remarkable step toward our goal of fossil-free mills.

Our comparable operating result in 2019 was EUR 184.4 million. The higher average prices of paperboards, especially in folding boxboard, improved our profitability. In white kraftliners, we defended our prices successfully, particularly in Europe's muted demand. The total paperboard delivery volumes were lower than in the previous year. Our market pulp position is large through our holding in Metsä Fibre, due to which the decline in the pulp market prices had a significant negative impact on our results. The cash flow from our operations, EUR 200.5 million, was clearly better than in the previous year, and our balance sheet remained strong.

In 2019, we focused on product development: In the spring, we renewed our folding boxboard portfolio, and in the autumn, we introduced a new, plastic-free eco-barrier paperboard. Both have generated a lot of interest among our customers, and I believe strongly in their commercial success.

The importance of sustainability cannot be over-emphasised. We are committed to slowing down climate change and have set ourselves ambitious targets through which we aim, among other things, to have fossil-free mills and raw materials by 2030. Sustainability is important for our customers, and I believe that fossil-free products will provide us with a significant competitive edge in the long run.

Our strategy and financial targets remained unchanged in 2019. We will continue to focus on premium fresh fiber paperboards, and our future growth is strongly guided by our profitability targets. We are a forerunner in sustainability and are increasingly investing in developing innovative and sustainable packaging solutions in cooperation with our customers.

I want to thank our personnel, customers and other stakeholders for the past year."


 

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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