- Europe’s
largest folding boxboard (FBB) and white kraftliner producer saw Q1 20A EBITDA down
40% y/y: Lower pulp prices
were the key driver of weaker results (long SW pulp: 600ktpa). A 10% decline in pulp price impacts EBIT by -EUR30m.
The Finnish strike reduced EBIT by EUR 15m, with a further -EUR 5m impact expected
in Q2.
- COVID-19
has not impacted their production but has supported demand: The net effect on order inflow for their paperboards
has been positive. However, demand for packaging of luxury products and graphical
end uses has slowed down.
- Deliveries
by European producers of FBB +4% y/y, with prices lower. Metsä’s market share was 33% (Q1 19A:36%)
and 55% (Q1 19A:60%) in terms of European Exports.
- EMEA
saw strong demand for paperboard: Q1 volumes higher y/y despite the strike. White kraftliner volumes
increased (4% y/y; 9% q/q) with pricing slightly softer. FBB volumes and average
pricing remained flat y/y.
- US industry solid bleached boxboard (SBB) production
for local consumption was flat y/y: However, production of food
service paperboard declined y/y. SBB pricing declined slightly, with food paper
board stable.
- Metsä
delivers FBB and coated white kraftliner to the US: Volumes increased q/q but were flat y/y. E–commerce
benefitted demand for white kraftliner. FBB pricing rose y/y, while white top kraftliner
was stable.
- Liquidity strong (EUR 700m) and healthy
maturity profile: Net debt/EBITDA of 1.0x. Final div/capital distribution
maintained (59% of EPS).
- Metsä is the only company to provide
guidance for Q2 (EBIT to improve q/q): Potential for cost
deflation is more likely than inflation (wood and energy prices were lower y/y).
Their paperboard order book is
strong and expect deliveries in Q2 to be roughly flat q/q. Normal order book
levels are c.20 weeks and are currently higher. They expect FBB and white kraftliner
prices to remain stable. SW pulp supply/demand expected to remain balanced, and
for prices not to decline. Husum pulp mill renewal continues as planned.
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