Metsä Board's regional goals

 

 

 

 

 



Metsä Board’s main market area is EMEA. We have established our strong market position in Europe with long-lasting customer relationships – especially with brand owners. In Europe, safety is increasing its significance in food packaging. Paperboard is seen as a strong alternative to plastics and aluminium. Growing e-commerce is increasing the demand for high-end white-top kraftliners.

In the coming years, Metsä Board is seeking the most rapid growth in the Americas. We have a strong market position in both folding boxboard and coated white kraftliner. We see several growth drivers in the Americas: limited local availability of premium, lightweight folding boxboard; non-integrated converters looking for alternative suppliers in paperboard; and strong demand in food service applications made from fresh fibre paperboards. In addition, the rise of discounters and growing e-commerce are increasing demand for high-end white-top fresh fibre linerboards.

In the Asia-Pacific region, Metsä Board focuses on premium segments and aims for moderate growth, primarily in cooperation with brand owners.

Market overview

Paperboard – excellent growth potential globally

Demand for paperboard is being driven by a number of megatrends, such as growing population, increasing disposable income, urbanization and ageing population. Scaring pictures of oceans being filled with plastics as well as the increasing understanding of the scarcity of resources increase focus on environmental issues.

Paperboard can be made from fresh forest fibres or recycled fibres. Metsä Board’s paperboard is made exclusively from fresh forest fibres, making it safe in food applications. Many food packaging companies are reducing the use of paperboard made from recycled fibres, amidst concerns of food contamination from mineral oil present in recycled fibres. Thanks to high class product development, Metsä Board can produce high-yield, lighter weight products without compromising on the quality, saving both resources and logistics costs.

Metsä Board is self-sufficient in pulp. Fresh forest fibre pulp is produced from a renewable resource – wood. Wood is used sustainably: forests grow annually more than they are used both in Finland and Sweden.

Metsä Board’s paperboard product portfolio consists of folding boxboard and white kraftliner. Folding boxboard is used to pack consumer goods such as high quality food, beauty care and healthcare products. Thanks to the newly installed extrusion coating line, Metsä Board can also supply PE-coated paperboard for the food service segment. White kraftliner is used to pack heavier goods, e.g. in the food and electronics industry. It is also commonly used as retail-ready packaging and point-of-sale-displays in sales promotion activities. White kraftliners benefit from the increasing e-commerce, especially of luxury products.

At the end of its lifecycle, the paperboard packaging can be recycled and used in the production of recycled pulp. Over 70% of the European paper and board is recycled.

In general, the profitability of the industry is driven by macroeconomic factors, industrial production, the competitive situation and naturally by the profitability of customers and end users. Demand has been relatively insulated from economic downturns, as many of the end use products, such as food, are stable by nature.

The European market for folding boxboard and white kraftliner remains concentrated. The five largest producers represent close to 85 per cent of the European capacity in these grades.

 

Market shares 

Largest Folding Boxboard Producers in Europe*

by Production Capacity and Capacity Share (1,000 tonnes per annum)

Company Capacity % Capacity: tons/year (thousand)
Metsä Board 35 1330
Competitor 1 21 810
Competitor 2 10 400
Competitor 3 10 325
Competitor 4 9 250
Others 19 685
*Total capacity : 3.9 M tonnes
Source: Metsä Board estimates

 

Largest White Fresh Fibre Linerboard Producers in Europe*

(1,000 tonnes per annum)

Company Capacity % Capacity: tons/year (thousand)
Metsä Board 33 690
Competitor 1 23 495
Competitor 2 14 310
Competitor 3 11 235
Competitor 4 8 165
Others 10 225
*Total capacity : 2.1 M tons
Source: Metsä Board estimates

Near-term risks and uncertainties 

 

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 result.

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 profitability.

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 hedging.

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.

risks

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