Annual Results 2023
Earnings as expected below previous year’s record level
- Sharp decline in demand and significant market- and capex-related downtime at MM Board & Paper weigh on results
- Strong profit performance at MM Packaging
- Comprehensive modernisation programme to increase competitiveness of MM Board & Paper implemented
- Successful integration of last year’s acquisitions in the resilient area of pharmaceutical packaging
- Profit & cash protection plan proves effective
- Dividend of EUR 1.50 proposed in line with long-standing dividend policy
- Positive volume trend for MM Board & Paper at beginning of 2024, however pressure on margins is continuing
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Group Key Indicators – IFRS
Income statement
At EUR 4,164.4 million, the Group’s consolidated sales were 11.1 % or EUR 517.7 million below the previous year’s figure (2022: EUR 4,682.1 million). A volume- and price-related decline in the division MM Board & Paper, was offset by an acquisition-related increase in the division MM Packaging.
The decrease in adjusted operating profit to EUR 229.2 million after EUR 562.4 million in 2022 was primarily volume- and price-related from the division MM Board & Paper, while MM Packaging recorded a significant increase. The Group’s operating margin was therefore 5.5 % (2022: 12.0 %) and the return on capital employed was 6.5 % (2022: 17.9 %). Adjusted EBITDA amounted to EUR 450.2 million (2022: EUR 769.0 million), resulting in an EBITDA margin of 10.8 % (2022: 16.4 %).
Financial income went up to EUR 8.7 million (2022: EUR 4.3 million). The increase in financial expenses from EUR -32.1 million to EUR -58.3 million resulted in particular from the rise in interest rates for variable-interest loans and further financing of the accomplished acquisitions and organic growth projects. “Other financial result – net” changed to EUR -11.4 million (2022: EUR -15.5 million), in particular owing to currency translation.
Profit before tax was EUR 136.7 million compared to EUR 467.0 million in the previous year. Income tax expense amounted to EUR 47.6 million (2022: EUR 121.7 million), resulting in an effective Group tax rate of 34.8 % (2022: 26.1 %).
Profit for the year totalled EUR 89.1 million (2022: EUR 345.3 million).
Overview of significant one-off effects on operating profit and EBITDA
1) MM Board & Paper
2) MM Packaging
Consolidated Balance Sheet
The Group’s total assets of EUR 5,076.9 million as of December 31, 2023 were EUR 268.1 million above the figure at year-end 2022 (EUR 4,808.8 million). This increase is primarily due to the higher capex volume in competitive strength and growth. The Group’s total equity rose from EUR 1,959.1 million (December 31, 2022) to EUR 2,012.4 million, the growth through profit being offset by the dividend payment. Return on equity was 4.5 % after 19.1 % in the previous year.
Financial liabilities are largely of a long-term nature and increased from EUR 1,761.6 million at year-end 2022 to EUR 2,019.5 million as of December 31, 2023 due to borrowings to finance organic growth projects. The equity ratio was 39.6 % (December 31, 2022: 40.7 %).
With cash available to the Group totalling EUR 757.5 million (December 31, 2022: EUR 280.1 million), net debt decreased from EUR 1,481.5 million to EUR 1,261.9 million at the end of 2023. This is primarily due to the implementation of the profit & cash protection plan. Furthermore, credit lines and credit facilities amounting to EUR 393.0 million (December 31, 2022: EUR 481.4 mil-lion), which can be used at any time, were available to the Group at the end of 2023. The net debt to equity ratio was 0.6 and the net debt to EBITDA ratio was 2.8 (December 31, 2022: 0.8; 1.9).
Development in the 4th quarter
With a slight volume growth in the division MM Board & Paper, which was offset by a decline in the MM Packaging division, the 4th quarter was characterised by a heterogeneous picture. As in the previous quarters, however, the pressure on prices and margins continued. Consolidated sales of EUR 967.9 million were volume- and price-related below last year’s period (4th quarter 2022: EUR 1,231.7 million).
The Group’s adjusted operating profit decreased mainly price-related to EUR 38.8 million (4th quarter 2022: EUR 109.1 million). The operating margin was 4.0 % (4th quarter 2022: 8.9 %). Profit before tax amounted to EUR 17.8 million (4th quarter 2022: EUR 50.2 million), profit for the period to EUR -2.1 million (4th quarter 2022: EUR 30.0 million).
MM Board & Paper recorded an adjusted operating profit of EUR -24.2 million after EUR 87.4 million in the 4th quarter of the previous year, mainly as a result of lower average prices. The operating margin was -5.4 % (4th quarter 2022: 14.1 %).
The adjusted operating profit of MM Packaging at EUR 63.0 million was above the previous year’s quarter (4th quarter 2022: EUR 21.7 million), particularly acquisition-related. The operating margin amounted to 11.2 % (4th quarter 2022: 3.3 %).
Outlook
In the highly competitive European cartonboard and paper sector, MM Board & Paper is currently experiencing a positive volume trend, however, at the same time pressure on margins is continuing. Although destocking in the supply chain has largely been completed, we expect only a slow market recovery due to the weak economic situation in Europe and continued restrained consumer spending. At the same time, due to difficult general conditions on non-European export markets continued oversupply and dampened capacity utilisation in Europe are expected to remain.
The pressure to increase competitiveness is therefore constantly increasing. This also applies to MM Packaging, although this sector is overall more resilient due to its broad positioning. Against this backdrop, our profit & cash protection programme will be consistently continued in 2024 and supplemented by targeted structural adjustment measures. Recent increases in production costs will be passed on through corresponding price adjustments.
The capex volume of around EUR 300 million expected for 2024, which includes carry-overs from the previous year, will be focussed on selected projects to improve competitiveness.
With more sustainable and innovative packaging solutions as well as the significantly optimised asset base in recent years and solid financing, MM is very well positioned to successfully manage the persistently challenging market situation.
MM Board & Paper
MM Packaging
Quarterly Overview
Forthcoming Results:
April 23, 2024 Results for the 1st quarter of 2024
1) adjusted for material one-off effects (material defined as impact on operating profit of more than EUR 10 million)
2) calculated with adjusted result figure
3) including interdivisional sales
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