Metsä Board First Quarter Profit Up on Strong Paperboard Volumes

May 8, 2013 - Metsä Board reports its first quarter 2013 results yesterday. Events in the first quarter included:

  • Folding boxboard order inflow strengthened and delivery volumes increased from the previous quarter.
  • Demand for white-top kraftliner continued to be very strong. Metsä Board announced a white-top kraftliner price increase.
  • The delivery volumes of uncoated fine paper and coated papers improved from the previous quarter, but prices declined. Metsä Board announced an uncoated fine paper price increase in Europe.
  • Demand for market pulp continued to be strong and prices increased slightly.
  • In January, Metsä Board divested the Alizay mill site in France, including the equipment and buildings, to Conseil Général de l’Eure, representing the French government, for EUR 22 million.

"The market situation in paperboard is currently strong." – Mikko Helander, CEO, Metsä Board.

Metsä Board's CEO Mikko Helander made the following comments:

“Our operating result excluding non-recurring items improved in the first quarter of 2013, mainly due to increased delivery volumes. The market situation in paperboard is currently strong, and delivery volumes are expected to be good in the second quarter as well. We will increase the prices of white-top kraftliner in all our main markets during the second quarter. Demand for pulp has also continued to be strong, and prices have continued to increase slightly.

"Production efficiency of our expanded folding boxboard capacity reached the targeted level at the beginning of 2013. The capacity expansion was very important to our customers so that the availability of high-quality paperboard could be ensured. In the folding boxboard business, Europe is our home market, but we are seeking new business in North America and Asia as well, where we are developing our operations in order to clearly increase delivery volumes in the future. We still have good opportunities to grow the capacity of our existing paperboard machines through moderate investments in order to support our customers' growth.

"No signs of improvement are visible in the European paper market. Cash flow of the Husum mill has been positive even in the difficult market situation. Nevertheless, Husum’s profitability must be improved, and we have launched a new cost savings programme to reduce both fixed and variable costs. We have worked hard in order to develop more profitable products at Husum, both in parallel with the existing ones and to replace them. The first concrete example of this is the light-weight uncoated linerboards, the production of which was launched in April. Our linerboard business has developed very well, and the Kemi mill, which increasingly focuses on the coated grades, has been operating at full capacity for a long time. Husum's new products enable profitable growth in the linerboard business, and they complement our product portfolio in an excellent way," Helander concluded.

Near-term outlook
Delivery volumes of folding boxboard improved in the first quarter of 2013 and were at a good level. The folding boxboard delivery volumes are estimated to continue to further improve slightly in the second quarter of 2013. Metsä Board is considering to announce a folding boxboard price increase during the coming months.

Demand for white-top kraftliner is expected to continue to be at very good level, and delivery volumes are estimated to be at the previous quarter's level in the second quarter of 2013. Metsä Board has announced a white-top kraftliner price increase of approximately EUR 50 per tonne in all main markets. The delivery volumes of uncoated fine paper and coated papers are estimated to decline slightly from the previous quarter due to seasonal reasons in the second quarter of 2013. Metsä Board has announced an uncoated fine paper price increase of approximately EUR 50 per tonne in Europe. The price of coated paper is estimated to remain unchanged at the low level in the near future.

Delivery volumes of market pulp are estimated to be at the previous quarter’s level. The pulp price increase is expected to continue in the second quarter.

Higher number of planned maintenance shutdowns has a slight negative result impact in the second quarter of 2013.

Production costs in the second quarter of 2013 are expected to be approximately at the same level as in the previous quarter.

Metsä Board’s operating result, excluding non-recurring items, is in the second quarter of 2013 expected to be roughly in line with the first quarter of 2013.

For additional information about Metsa Board, visit: www.metsaboard.com.

SOURCE: Metsä Board