Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Paperboard delivery volumes increased by 7% year-over-year and 3% quarter-over-quarter.
- Market prices for pulp increased in both Europe and China, with strong demand in Europe.
- Metsa Board Oyj (FRA:MSRB, Financial) achieved the platinum level in EcoVadis sustainability rating.
- Investment in renewing the Simpele board machine to improve efficiency and move towards fossil-free production by 2030.
- Sales in Q2 amounted to EUR510 million, slightly higher than the same period last year.
Negative Points
- Political strikes in Finland led to production losses of 50,000 tonnes in paperboards and 30,000 tonnes in BCTMP.
- A gas explosion at the Kemi bioproduct mill significantly impacted kraftliner production and increased production costs.
- Operating result in Q2 was negative due to one-off events, with a EUR31 million loss.
- Lower sales prices of folding boxboard negatively impacted profitability.
- Net debt increased by EUR150 million due to poor cash flow and increased working capital.
Q & A Highlights
Q: You expect paperboard delivery volumes to increase slightly in Q3 QoQ. Do you expect restocking in the supply chain to continue in Q3, or do you expect the underlying demand to improve? Also, do you expect prices to remain unchanged in Q3?
A: Yes, we estimate that prices will remain stable during Q3 versus Q2. A significant portion of our folding boxboard deals are annual, which influences this stability. Regarding restocking, it is about to end, but the recovery of demand is slower than expected. However, we still estimate higher volumes in Q3 compared to Q2.
Q: Is there a difference between the demand situation of paperboard in Europe versus North America?
A: North America is slightly stronger, which has been the case for the last two to three years.
Q: Could you elaborate on the cost situation, particularly wood costs, and why you expect overall costs to remain flat in Q3?
A: We expect wood costs to go up, but some elements like chemicals are likely to decrease, resulting in an overall flat cost position.
Q: Should we expect insurance payments related to the Kemi explosion to be booked this year? What percentage of the EUR40 million could be recovered?
A: The process is ongoing, and it's possible we will receive part of the compensation this year, but we cannot confirm the exact timing. Both Metsa Board and Metsa Fibre are claiming compensation, and we will keep you informed as the process progresses.
Q: Can you run the Kemi kraftliner operations at desired capacity until the installation of new evaporation units?
A: Yes, we can run at desired capacity until the new units are installed.
Q: How should we view the net working capital situation going into H2? Should we expect an increase?
A: Net working capital typically accumulates in the first half and releases in the second half. We expect less accumulation in H2, depending on activity levels.
Q: Could you give any indications on order flows during Q2 and expectations for Q3 delivery volumes?
A: Order inflows were slightly stronger at the beginning of the year compared to May and June. We believe Q3 delivery volumes will be higher, but we are not running at full capacity.
Q: Could you provide insights on pulp volumes and costs, particularly for Metsa Fibre and Metsa Board, for Q3?
A: Pulp demand in Europe and North America is expected to be stable in Q3, but weaker in China. Metsa Board helped Metsa Fibre with deliveries to China in Q2, resulting in good volumes for Metsa Board. This situation is now normalized, and volumes will likely be lower in Q3 compared to Q2.
Q: How do you assess the industry operating rates in Europe and the US?
A: It's difficult to speculate on exact figures, but our operating rate is around 80%. We estimate that our peers are likely at a similar level.
Q: What is the sensitivity of your net pulp position to changes in pulp prices?
A: A 10% change in pulp prices impacts our annual results by approximately EUR50 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
