March 15, 2023 - Mayr-Melnhof Group (MM Group) CEO, Peter Oswald, provided the following comments about the Group's 2022 and fourth quarter results:
"In the 2022 financial year, the MM Group grew significantly both organically and through acquisitions in terms of earnings and sales in a macroeconomically and geopolitically challenging environment. Demand for our natural, recyclable packaging products made from renewable raw materials was dynamic for much of the year and customers value our investments in competitive locations, innovation and sustainability.
"The energy and raw materials crisis presented MM with special challenges that were successfully overcome overall. Selling price adjustments compensated for the massive increases in energy and raw material costs. In addition, we succeeded in ensuring the continuous supply of our customers despite unstable supply chains.
"The acquisitions of Essentra Packaging and Eson Pac, completed in 2022, position MM as a global player in pharmaceutical secondary packaging and contribute to increased resilience and growth across the company. Together with the two acquisitions of the previous year in the Board & Paper division, MM Kwidzyn and MM Kotkamills, they are part of the transformation of MM to increase the added value and growth potential of the MM Group through acquisitions and operational optimization.
"Despite an increasing market weakness for cardboard and paper from the end of the 3rd quarter, as a result of the well-stocked supply chain and thus considerable market-related machine shutdowns in this area, the MM Group recorded a strong overall increase in earnings in 2022.
"The increase in the operating result from EUR 269.6 million to EUR 510.3 million is mainly due to the MM Board & Paper division as a result of operational improvements and the full-year inclusion of the previous year's acquisitions. In contrast, the operating result of MM Packaging fell due to one-off expenses despite pleasing organic growth of around 5%," Oswald concluded.
The course of the fourth quarter was characterized by a sharp drop in demand in the Board & Paper Division due to high customer inventories and stable demand in the MM Packaging Division. At EUR 1,231.7 million, consolidated sales were above the prior-year period (Q4 2021: EUR 962.6 million), primarily due to price and acquisition factors.
The Group's operating result fell to EUR 58.1 million (Q4 2021: EUR 92.4 million) due to market conditions and one-off effects. Operating margin was 4.7% (Q4 2021: 9.6%). Earnings before taxes amounted to EUR 50.1 million (Q4 2021: EUR 82.1 million), the profit for the period was EUR 30.0 million (Q4 2021: EUR 62.3 million).
Due to necessary market-related shutdowns, MM Board & Paper recorded a capacity utilization of 75% after 97% in the fourth quarter of the previous year. Due to acquisitions, the division's operating result reached EUR 62.8 million after EUR 33.4 million, whereby one-off expenses had to be booked due to the concentration of production at the Kolicevo plant on the larger machine. The operating margin reached 10.1% (Q4 2021: 5.9%).
With solid volume development, the operating result of MM Packaging was EUR -4.7 million (Q4 2021: EUR 59.0 million) due to one-off effects. In particular, expenses in connection with the market exit from Russia and structural adjustment measures in Turkey led to a negative effect on earnings. The operating margin was -0.7% (Q4 2021: 13.7%).
Geopolitical and macroeconomic uncertainties continue to determine our framework conditions. While some input prices continue to fall, high inventory levels have continued to be reduced since the beginning of the year, as was the case in the last few months of the previous year.
In the MM Board & Paper division, market-related machine shutdowns are necessary in the 1st quarter. As previously announced, there were longer machine downtimes in the first three quarters as part of the major investments at the cartonboard sites in Frohnleiten, Neuss and Kolicevo. Prices are mostly falling. Therefore, as expected, a significant decline in volume and earnings is foreseeable in the Board & Paper segment in the current year.
In the MM Packaging division, demand weakened somewhat in the first two months, but is proving resilient. Structural adjustment measures and cost optimization will continue.
Regardless of the transition year in the MM Board & Paper division, MM Group's business model with a focus on sustainable packaging for everyday consumer goods remains resilient and attractive in the long term.
MM's balance sheet and ongoing cash generation are solid. Investment activity will remain increased in 2023 in order to further strengthen the competitiveness and growth potential of the MM Group.
MM Group is expecting an investment volume of more than EUR 400 million this year, primarily in the course of the modernization of three board machines and value-enhancing, technological innovations in the area of pharmaceutical and beauty packaging. The goal remains to continue the Group's growth with sustainable and innovative consumer goods packaging in the long term with an attractive return on the capital employed.
MM Group's complete 2022 results are available on the company's website: www.mm.group.
MM Group is a leading global producer of cartonboard and folding cartons with an attractive offer in kraft papers and uncoated fine papers for various end applications.
SOURCE: Mayr-Melnhof Group
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