Metsa Board Oyj (FRA:MSRB) Q1 2025 Earnings Call Highlights: Navigating Challenges with ...

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Wed, Apr 30, 2025, 1:07 AM 4 min read

Revenue: EUR481 million, stable compared to the corresponding period last year.
Operating Result: EUR23 million, down almost 30% from the corresponding period last year.
Comparable Return on Capital Employed: 4%, with a target of at least 12%.
Net Debt: Approximately EUR400 million at the end of March.
Leverage: 2.4 times, below the targeted maximum level of 2.5 times.
Annual EBITDA Improvement Expectation: Roughly EUR30 million starting mainly from the fourth quarter.
Investment Expectation for 2025: EUR100 million to EUR150 million, with maintenance investments of EUR50 million to EUR60 million.
US Sales in 2024: EUR430 million with 365,000 tonnes of paperboard delivered.
Free Cash Flow: Negative both in the quarterly review and on a 12-month rolling basis.
Dividend Payment: EUR25 million in the first quarter.

Warning! GuruFocus has detected 9 Warning Signs with FRA:MSRB.

Release Date: April 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Paperboard sales improved from the previous quarter, driven by increased delivery volumes.
Production volumes grew compared to both the previous quarter and the corresponding period last year.
The company performed exceptionally well in the CDP evaluation, achieving an A score in climate change, forests, and water security.
Metsa Board Oyj has a strong market position in the US for folding boxboard and quality kraftliners.
The company expects annual EBITDA to improve by roughly EUR30 million starting mainly from the fourth quarter of this year due to operational efficiency enhancements.

Negative Points

Operating cash flow was negative due to increased inventory levels and prolonged weak profitability.
The closure of the Tako mill will result in 208 job cuts.
US tariffs have a significant impact on Metsa Board Oyj's business, creating uncertainty in financial and operational impacts.
Overall demand for paperboards remained moderate and far from pre-pandemic levels.
Energy efficiency weakened, and the TRIF (Total Recordable Incident Frequency) increased, indicating room for improvement in safety and efficiency.

Q & A Highlights

Q: Can you explain the dynamics behind the growing volumes in folding boxboard and declining volumes in white kraftliner in America during the quarter? A: The decline in white kraftliner volumes was mainly due to customers ordering more in Q4 to prepare for a potential strike in Finland that did not occur. Currently, discussions with customers are ongoing, and the US tariffs are making them more cautious in their ordering, which has a negative impact.

Q: Are the market-related production curtailments more on the boxboard or liner side? A: The planned curtailments are more on the folded boxboard side, but the extent will depend on order inflow in the coming weeks.

Q: How do you expect the pricing environment in Europe to develop in Q2 compared to Q1? A: We are not providing forward-looking comments on prices. Prices have been stable over the past year, but the market is evolving, and we are closely monitoring it.

Q: What stops US buyers from shifting to domestically produced SBS as an alternative to your products? A: Our value proposition in the US market is strong, with robust customer relationships and technical service. We believe our customers understand the situation with tariffs and will remain with us.

Q: Is the closure of the Tako mill enough to rebalance the market, or could there be more closures? A: The Tako closure was a strategic move to balance our offering and improve efficiencies. We believe it will help balance the market from our perspective, especially with the new capacity at Husum.

Q: How are you managing FX exposure, and what impact do you expect in the future? A: We hedge about eight months of forecasted currency flows, so we are almost fully hedged for this year. The overall FX impact year-on-year will be small, but if current spot rates persist, 2026 could see a bigger impact once hedges roll off.

Q: Can you provide guidance on Metsa Fibre's associated income for Q2? A: We do not provide separate guidance on Metsa Fibre results, only on Metsa Board level.

Q: What is your vision for the company compared to your predecessor, and do you think enough has been done with capacity closures? A: We have made strategic decisions independently to strengthen our market position. The Tako closure and Husum ramp-up were related decisions to improve efficiencies and balance our offering.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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