Capacity adjustments impact Metsä Board results

- Impact of restructuring and expansion of mill operations noted in results

 

- Expanded capacities expected to be fully available from the beginning of 2013

 

Material supplier Metsä Board reported normalized demand for paperboard in the second quarter of 2012, although its results were weakened by restructuring and expansion initiatives at its mills.

 

Q2 sales, to June 30, were €522 million, down from €545 million in Q1 2012 and €660 million in Q2 2011.

 

This put sales in the first half, also to June 30, just below €1.1 billion, down from more than €1.3 billion in the same period of the 2011 financial year.

 

The company’s operating result excluding non-recurring items improved quarter-on–quarter from €5 million in Q1 to €19 million in Q2, although it was down on the €32 million reported in Q2 2011. The first half operating result excluding non-recurring items fell from €75 million in 2011 to €24 million in 2012.

 

Mikko Helander, Metsä Board chief executive officer, said: ‘Our profitability improved in the second quarter of the year, primarily as a result of the reduced losses from the paper units under restructuring.

 

‘The market situation and profitability of the paperboard business developed also favourably, but the result weakened slightly due to the production shutdown related to the capacity expansion at the Äänekoski folding boxboard mill.

 

‘The paperboard order books and operating rates are at a good level but due to the general economic uncertainty in Europe, full capacity has, however, not been reached yet.’

 

For its near-term outlook, Metsä Board said its paperboard order books and operating rates are at a normal level. In the third quarter, the paperboard delivery volumes are expected to improve compared to the second quarter.

 

Metsä Board said it will increase linerboard prices by 5-8 percent as of September 2012, including Kemiart white-top kraftliner products. Implementation of a folding boxboard price increase in early autumn is also under consideration.

 

Delivery volumes of uncoated fine paper and pulp are not expected to change significantly in the third quarter. Delivery volumes of coated paper are estimated to improve in the third quarter. Metsä Board has announced plans to increase uncoated fine paper prices by 6-8 percent as of September. No material changes in the prices of coated paper and pulp are in sight.

 

Meanwhile, extensive maintenance shutdowns at the Husum and Kemi mills will have a negative impact on the result for the third quarter of 2012.

 

Metsä Board’s operating result for the third quarter of 2012, excluding non-recurring items, is expected to be slightly better than in the second quarter of 2012.

 

Helander added: ‘In 2011 and 2012, we have successfully made investments at the Simpele, Kyro and Äänekoski mills to increase our annual folding boxboard capacity by a total of 150,000 tonnes.

 

‘The expanded capacity is expected to be fully available from the beginning of 2013 when the renewed paperboard machines will be operating at the targeted efficiency levels.’

 

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