From 2019 Financial Statements bulletin (published on 12 February 2020):
Considerable uncertainties still exist in the global economy. If realised, they may result in weakened demand
and reduced prices for paperboard and pulp products.
An imbalance in supply and demand may impact the
prices of end products and Metsä Board’s profitability.
Metsä Board is focusing on the active development and
growth of its paperboard business. The growth of the
paperboard business and the introduction of new products to the markets depend on the success of sales. Increasing sales on a global scale also involves cost and
exchange rate risks.
Various countries have imposed import duties and other
trade restrictions on each other’s products, but these
have not had a direct impact on Metsä Board’s business operations so far. Negative developments in world
trade could, if continued, weaken Metsä Board’s result.
There are several geopolitical risk concentrations
around the world, and forecasting developments in
them is difficult. Changes in these areas may be very
sudden and unpredictable. There have been, and will
continue to be, international sanctions related to these
crises, and they may also have a direct or indirect impact on the demand for paperboards and, therefore, on
Metsä Board’s result.
Majority of Metsä Board's production is in Finland. In
the past, there have been several labor disputes in Finland both in the forest industry and in the distribution
chain of forest industry products. These can adversely
affect production volumes and customer deliveries, as
well as the company's competitive position and profitability.
Wood accounts for more than a quarter of Metsä
Board’s total costs. The availability of the wood raw material becoming more difficult or a sudden increase in
prices would have a negative effect on Metsä Board’s
Metsä Board’s climate risks concern particularly forests,
as well as the use of energy and water. Regulation
may steer the future use of forests. In addition, regulation aiming to mitigate climate change and reduce
greenhouse gas emissions may, furthermore, increase
costs and result in substantial change requirements applicable to production technology. The supply and demand of products in a low-carbon economy may differ
from the current situation. Climate change may cause
an increasing number of extreme weather phenomena,
such as storms, floods and drought, and weaken the
availability of the process water and electricity required
by mills and result in breaks in production. Extreme
weather conditions may also limit the availability of the
wood raw material. Should they materialise, climate
risks could have a negative impact on Metsä Board’s
Changes in the market price of pulp have a significant
impact on Metsä Board’s profitability. Metsä Board’s annual overall pulp position shows a surplus of roughly
600,000 tonnes. A 10% decline (increase) in the price
of market pulp would have an approximately EUR 30
million negative (positive) impact on the company’s annual operating result.
The US dollar strengthening by 10% against the euro
would have a positive impact of approximately EUR 63
million on Metsä Board’s annual operating result. Correspondingly, the Swedish krona strengthening by 10%
would have a negative impact of approximately EUR 39
million. The British pound strengthening by 10% would
have a positive impact of approximately EUR 9 million.
The impact of weakened exchange rates would be the
opposite. The sensitivities do not include the impact of
The forward-looking estimates and statements in this financial statements bulletin are based on current plans
and estimates. For this reason, they contain risks and
other uncertainties that may cause the results to differ
from the statements concerning them. In the short term,
Metsä Board’s result will be particularly affected by the
price of and demand for finished products, raw material
and transportation costs, the price of energy, and the exchange rate development of the euro compared to
the company’s other main currencies.
Further information on long-term risks and risk management is available on pages 24–25 and 110–111 of
Metsä Board’s 2018 Annual Report.
Further information on long-term risks and riskmanagement is available on pages 24–25 and 110–111 of
Metsä Board's 2018 Annual Report.