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–March 2021 interim report   

"Metsä Board's year got off to a brisk start. Demand was very strong in all our products and in all our main markets. The delivery volumes of folding boxboard and white kraftliners were record high in January–March, totalling 491,000 tonnes. At the end of the review period, the order backlog was at an exceptionally high level, which indicates good paperboard sales for the second quarter, too.

Thanks to the low number of maintenance shutdowns and the mills' further improved production efficiency, the production volumes of paperboard and market pulp were also record high.

Our comparable operating result in January–March was EUR 88.8 million, i.e. clearly better than during the comparison period (1–3/2020: EUR 33.8 million). The profitability of the comparison period was burdened by the paper industry strike in Finland, which had a roughly EUR 15 million negative impact on the operating result. The operating result of the review period improved due to higher delivery volumes of paperboard and the rapidly increased prices of market pulp in Europe and particularly in China. At the same time, a growing shortage of containers in the traffic between Europe and Asia has resulted in challenges and will continue to impact deliveries, especially in market pulp.

At the beginning of the year, we sold a 30% share of our Husum pulp mill to Norra Skog. The transaction made us a net debt free company. At the end of the review period, our interest-bearing net debt was EUR -6.6 million. Our cooperation with Norra Skog will reduce the amount of wood delivered to the Husum pulp mill from the Baltic countries, as it will be replaced by local pulpwood. This will, in turn, increase the share of certified wood fibre out of all wood fibre we purchase. Our target is, that more than 90% of all the wood fibre we purchase will be certified by 2030.

Our strong financial position and the growing demand for sustainable fresh fibre paperboard provides us with an excellent basis for the growth and development of our paperboard business. During the review period, we initiated pre-engineering on increasing the annual production capacity of Husum's folding boxboard machine by some 200,000 tonnes. The decision readiness for the investment is expected to be reached in the summer of 2021, in which case the planned increase of production could start in 2023. In addition, we launched a development programme at the Kemi paperboard mill in which the annual production capacity of white kraftliner will be increased by 40,000 tonnes and the mill's water and energy efficiency will be improved considerably.

We continue to invest in product development and innovations, and have an excellent platform for doing so in the Excellence Centre we opened last year. The centre manages development work globally in cooperation with our customers and technology partners.

Our ambition is to be a forerunner in sustainability, and we aim for entirely fossil free production and products by 2030. During the review period, Metsä Board was included on CDP's Supplier Engagement Rating Leaderboard for supply chain engagement on climate issues. Our recyclable paperboards made from renewable wood fibre are ideal for sustainable packaging, which will also support the demand for them in the future."

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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