Feb. 8, 2024 - Metsä Group today reported fourth quarter 2023 results (as compared to 4Q 2022). In 4Q 2023, sales were EUR 1.486 million (1.741). Operating result was EUR 55 million (316). Comparable operating result was EUR 57 million (311). Net cash flow from operations was EUR 439 million (399).
Events during the fourth quarter of 2023
Comments from President and CEO Ilkka Hämälä
"In 2023, economic activity was low, and growth was weak. This was clearly reflected in Metsä Group's business operations and overall result. The prices of capital goods, which increased amid the strong growth experienced in 2021 and 2022, also contributed to weaker results.
"However, the long-term outlook for Metsä Group's products remains good. Wood raw material obtained from sustainably managed forests is converted in our resource-efficient processes into products that people worldwide need in their daily lives. The Group's operations and product development aim to provide the functionality required by consumers with minimal material and energy use, thereby contributing to solving global resource scarcity.
"In the early part of the year, we announced our goal to measurably achieve regenerative forestry by 2030. This means that the measures we adopt in commercial forests improve the prerequisites for biodiversity and its development. Improved biodiversity makes forests more resilient to the strain caused by climate change.
"In 2023, laminated veneer lumber (LVL) was increasingly used in industrial construction solutions. Despite the weak cycle in construction, demand for LVL remains strong, demonstrating the product's competitiveness. Working with our customers, we make construction processes more efficient and the material use in structures more ecological. In the second quarter, we made a decision to construct a new LVL mill featuring two production lines on the Äänekoski mill site.
"The Kemi bioproduct mill came online in September. In its wood supply, the most modern mill in its field relies on the potential increase in felling in northern Finland's commercial forests. The peatland drainage of past decades and forest regeneration have led to a situation in which the harvesting of softwood pulpwood in particular must be increased to safeguard forest growth.
"Production on the expanded folding boxboard machine in Husum began in the last quarter. Thanks to the 200,000-tonne increase in annual capacity, the paperboard machine is now the most efficient of its kind in Europe. The capacity expansion strengthens Metsä Board's position as the folding boxboard market leader in Europe and North America.
"In February 2023, Metsä Tissue made an investment decision on a new tissue paper line in Mariestad, Sweden. The investment covers a paper machine, three converting lines for the machine's output, and automated storage and product dispatch. The output, set to increase by 70,000 tonnes, will be sold on the Scandinavian market. At every stage of the project, there has been a special emphasis on reducing the carbon footprint of tissue paper across the value chain, from raw material procurement to the consumer.
"In line with its goals, our innovation company Metsä Spring invested in new start-up projects. Our projects at the demo plant stage — the MuotoTM 3D fibre product and Kuura® textile fibre - progressed to the investment planning stage to be carried out in 2024.
"We continue to systematically develop our Group to meet society's needs and the owners' expectations. Our financial position is strong, and our competitiveness in our chosen products and market areas ensures the continuity of our operations, regardless of economic cycles."
The demand for wood will focus particularly on thinning stands, birch logs and roundwood out of delivery sales. In energy wood, the demand will focus on crown wood and small trees. The demand for forest management services is expected to remain strong.
Construction activity has remained weak in all the main markets in Europe, and no turn for the better is expected in the demand for wood products in the near future. This will have a negative impact especially on the demand for spruce plywood and Kerto® LVL products. However, continued strong construction activity in the US and new business are supporting demand for Kerto LVL. The economic slowdown is reflected in weaker demand in the industrial customer segments for birch plywood, while the demand for standard grades remains higher.
In the UK, the demand for upgrading is expected to continue at a level that is normal for the season in the next few months.
In the early part of the year, Metsä Group's market pulp deliveries to China will be affected by various paper and paperboard production shutdowns because of the Chinese New Year. The supply of softwood market pulp will be reduced by the announced pulp mill closures and the poor availability of wood raw material, especially in North America. The price of softwood market pulp is expected to increase during the first quarter.
The demand for sawn timber is expected to increase slightly during the first quarter of 2024, and sawn timber prices are also expected to rise.
The paperboard industry's global market environment will remain uncertain, and the visibility of near-term paperboard sales development will remain weak. The increase in the cost of living affects consumers' purchasing behaviour and may reduce the general demand for consumer products. The management measures for inventories in the value chain are expected to mirror the market situation.
In the first quarter of 2024, the delivery volumes of Metsä Group's paperboards are expected to increase from the previous quarter. The currency-denominated sales prices of folding boxboard are expected to slightly decrease, and those of white kraftliners to remain stable. If required, the company will continue its production adjustment measures and temporary layoffs of personnel at the Finnish mills in 2024. In the first quarter, total costs, excluding pulp costs, are expected to remain quite stable.
The business environment for tissue papers will continue to be unstable, as underlying inflation remains high. If required, the company will opt for commercial shutdowns to secure adequate product profitability when demand begins to normalise.
Metsä Group uses wood to make recyclable products for the day-to-day lives of millions of people globally. The Group focuses on wood supply and forest services, wood products, pulp, paperboards, and tissue and greaseproof papers.
SOURCE: Metsä Group
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