EANS-News: Mayr-Melnhof Karton AG / Annual Results 2020

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Annual Result

Vienna -

  • Solid business performance
  • Sales at previous year's level
  • Earnings below last year due to structural and market-related one-off effects
  • Stable dividend - EUR 3.20/share
  • Course set for growth through sustainability, innovation and efficiency
  • Currently strongly increasing input prices put pressure on cartonboard margins

The Mayr-Melnhof Group was able to close the financial year 2020 with a solid volume and cash flow development despite challenging general conditions. The concentration of the business portfolio on cartonboard and cartonboard packaging for consumer staples allowed for a certain resilience.

While sales almost reached the previous year's level, profit figures were, as expected, below the previous year due to one-off effects, primarily from market-and structure-related adjustments. These had an impact of EUR 64.0 million on the operating profit for 2020, with a large part attributable to impairment of current and non-current assets and personnel expenses.
In its current business, the cartonboard division benefited in particular from favorable raw material and energy costs. The packaging division showed a solid performance mainly due to the overall good volume development.

Growth through efficiency and innovation in sustainable cartonboard and fiber-based packaging solutions are the strategic focus of the MM Group. The recently concluded agreements on the acquisition of Kotkamills, Finland, and Kwidzyn, Poland, in the virgin fiber-based cartonboard sector and the intensified investment program 2021 - 2022 for sites with cost benefits are transformative milestones on this path, and offer an attractive potential.

At the 27th Annual General Meeting on April 28, 2021, a stable dividend compared to the previous year of EUR 3.20 per share will be proposed for the financial year 2020.

Group Key indicators - IFRS
Consolidated, in millions of EUR 2020 2019 +/-
Sales 2,528.4 2,544.4 - 0.6 %
EBITDA 398.9 389.6 + 2.4 %
Operating profit 231.4 255.3 - 9.4 %
Operating margin (in %) 9.2 % 10.0 % - 88 bp
Profit before tax 222.1 251.1 - 11.6 %
Income tax expense (59.9) (60.9)
Profit for the year 162.2 190.2 - 14.7 %
Earnings per share (in EUR) 8.06 9.49

Consolidated sales of the Group reached EUR 2,528.4 million and were thus close to the previous year's level (2019: EUR 2,544.4 million). A volume-related increase in sales in the packaging division was offset by a price-related decline in the cartonboard division.

EBITDA rose by 2.4 % or EUR 9.3 million to EUR 398.9 million (2019: EUR 389.6 million), the EBITDA margin to 15.8 % (2019: 15.3 %). At EUR 231.4 million, the operating profit was 9.4 % or EUR 23.9 million below the previous year (2019:
EUR 255.3 million). This includes one-off expenses of EUR 64.0 million, in particular from necessary market- and structure-related adjustments. Thereof, EUR 40.2 million are attributable to the cartonboard division and EUR 23.8 million to the packaging division. Depreciation and amortization including impairment thus increased from EUR 134.3 million to EUR 167.5 million. The result of the packaging division, which was close to the previous year's level, was offset by a decline in the cartonboard division. The Group's operating margin therefore amounted to 9.2 % (2019: 10.0 %), the return on capital employed to 13.7 % (2019: 15.4 %).

Financial income of EUR 1.7 million (2019: EUR 1.4 million) contrasted with financial expenses of EUR -7.9 million (2019: EUR -8.4 million). The "Other financial result - net" changed to EUR -3.2 million (2019: EUR 2.8 million), mainly due to changes in the foreign currency result.

Accordingly, profit before tax of EUR 222.1 million was 11.6 % lower than in the previous year (2019: EUR 251.1 million). Income tax expense amounted to EUR 59.8 million (2019: EUR 60.9 million), resulting in an effective Group tax rate of 27.0 % (2019: 24.3 %).

Profit for the year amounted to EUR 162.2 million (2019: EUR 190.2 million).

DEVELOPMENT IN THE 4th Quarter 2020
In the fourth quarter of 2020, market dynamics in the cartonboard business traditionally slowed down, while demand in the folding carton business continued to be significantly higher than the previous year's level, in particular for fast moving consumer goods and e-commerce.

MM Karton recorded a capacity utilization of 96 % after 95 % in the fourth quarter of the previous year. The operating profit of the division amounted to EUR 18.3 million after EUR 23.1 million. Rising prices for paper for recycling under ongoing Covid measures as well as lower volumes and the increase of the one-off effect from the shut-down of Hirschwang Karton by EUR 2.5 million weighed on profit. The operating margin amounted to 7.2 % (4th quarter 2019: 8.7 %).

With a good volume development, the operating profit of MM Packaging of EUR 43.8 million was above the previous year's level (4th quarter 2019: EUR 36.6 million). The operating margin amounted to 11.0 % (4th quarter 2019: 9.5 %).

Consolidated sales of EUR 624.9 million were slightly above last year's period (4th quarter 2019: EUR 620.1 million) as a result of volume growth at MM Packaging.

The Group's operating profit and operating margin were slightly above the previous year's level at EUR 62.1 million and 9.9 %, respectively (4th quarter 2019: EUR 59.7 million; 9.6 %).

Profit before tax amounted to EUR 61.5 million (4th quarter 2019: EUR 56.9 million), while profit for the period was at EUR 45.9 million (4th quarter 2019:
EUR 43.9 million).

OUTLOOK ON THE FINANCIAL YEAR 2021
The Covid-19 pandemic and measures taken to contain it will continue to weigh heavily on the overall economic situation in our sales markets in the current year, despite the start of vaccination programs. Economic recovery appears to be lower than expected. The extent and timing still remain difficult to assess. Due to the business portfolio of the MM Group that focuses on system-relevant packaging products for consumer staples, there should, however, be a certain resilience in demand. In any case, the current development of order levels of both divisions signals continuity.

By contrast, the prices for the strategic raw material of paper for recycling are rising sharply. In parallel, prices for pulp, energy, chemicals, and logistics are also rising, which is why MM Karton has increased the prices for recycled fiber-based cartonboard, which will have an effect as of the second quarter.
Due to the currently strong pressure on cartonboard margins, maintaining the previous year's result levels will prove a challenge for 2021.

The focus on optimizing cost structures and increasing market penetration with sustainable and innovative packaging products will be pursued systematically. Investment activities aimed at this will be intensified in 2021 - 2022 and are intended to ensure growth in the following years. In this context, MM focuses in particular on e-commerce and circular economy through innovation in plastic substitution as well as digitalization.

Investments to increase capacity and efficiency are made in numerous MM Packaging plants. At MM Karton, in addition to the major project Frohnleiten with rebuilds in Neuss and Kolicevo, the focus is in particular placed on high-performance sites. Accordingly, investments in 2021 and 2022 are expected to range from EUR 250 to 300 million p.a. instead of the usual around EUR 150 million.

For the acquisitions of Kotkamills, Finland, and Kwidzyn, Poland, whose closing is expected for the middle of the year and the third quarter of 2021, respectively, the focus over the next two years will be on integration.

The investment program and the acquisitions will be financed by Schuldschein loans and Namensschuldverschreibungen taken out at the end of February 2021 as well as committed credit lines and cash flow.

The press release and a video statement by the Management Board are available on our homepage: www.mayr-melnhof.com [http://www.mayr-melnhof.com/] The Annual Report 2020 will be available as of April 7, 2021.

Forthcoming Results:
May 18, 2021 Results for the first Quarter of 2021

end of announcement euro adhoc

issuer: Mayr-Melnhof Karton AG
Brahmsplatz 6
A-1040 Wien
phone: +43 1 50 136
FAX:
mail: investor.relations@mm-karton.at
WWW: www.mayr-melnhof.com
ISIN: AT0000938204
indexes: ATX, ATX PRIME
stockmarkets: Wien
language: English

Digital press kit: http://www.ots.at/pressemappe/33715/aom

Rückfragen & Kontakt:

For further information, please contact:
Stephan Sweerts-Sporck
Investor Relations
Mayr-Melnhof Karton AG
Brahmsplatz 6
A-1040 Vienna
Tel.: +43 1 501 36-91180
Fax: +43 1 501 36-191195
E-Mail: investor.relations@mm-karton.com
Website: https://www.mayr-melnhof.com

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