Results for the first three quarters of 2023
- 3Q operating profit above previous quarter but well below previous year
- Solid performance at MM Packaging
- Market- and capex-related volume decline continued to weigh on results of MM Board & Paper
- General conditions remain tight as a result of inflation-related consumption restraint and the macroeconomic slowdown
- No immediate recovery in sight
- Initiated profit and cash protection program begins to take effect
Group Key Indicators – IFRS
1) The calculation is based on the average of the last 12 months.
2) excl. temporary workers; previous year’s value as of December 31, 2022
3) including impairment of property, plant and equipment and intangible assets
Peter Oswald, MM CEO, comments: “After the record year 2022, the MM Group has been operating for several quarters in a market environment with significantly reduced demand in the paper and board industry and increasing price pressure. Although destocking in the supply chain seems to be coming to an end in many places, restraint in consumer spending continues due to inflation and as a result of the overall economic slowdown in our main European markets.”
As expected, the difficult general conditions are also reflected in the 3rd quarter, in particular in the weak volume and result development of the division MM Board & Paper, which was again characterized by planned capex-related downtime in addition to significant market-related downtime. In contrast, the division MM Packaging recorded an overall solid performance despite a heterogeneous packaging market as well as the successful integration of last year’s acquisitions in the resilient area of pharmaceutical packaging.
In view of the current market and result situation and the prospect of no improvement in the short term, our focus is on safeguarding and gaining volumes with reasonable margins. Our profit and cash protection program, which in addition to cost reductions in all areas targets on a significant reduction in working capital and capex cash outs, starts to take effect and will be supplemented by selected structural adjustment measures.
“Due to our continuous efforts to expand our competitiveness and quality leadership as well as the recent strategic investments in our plants and sustainable, innovative packaging products, MM is very well positioned to manage the current difficult market situation and to create long-term added value for our customers and shareholders.”, underlines Oswald.
Income statement
At EUR 3,196.5 million, the Group’s consolidated sales were below the previous year’s figure (1-3Q 2022: EUR 3,450.4 million). A primarily volume-related decline in the division MM Board & Paper contrasted with an acquisition- and price-related increase in the division MM Packaging.
Operating profit decreased by EUR 292.4 million from EUR 452.2 million to EUR 159.8 million. This decline mainly results from extensive market- and capex-related downtime at MM Board & Paper. The Group’s operating margin was therefore at 5.0 % (1-3Q 2022: 13.1 %).
Financial income amounted to EUR 5.4 million (1-3Q 2022: EUR 3.1 million). The increase in financial expenses from EUR -23.3 million to EUR -40.0 million is primarily due to higher interest expenses for Schuldscheindarlehen and financing of the accomplished acquisitions and organic growth projects. “Other financial result – net” changed from EUR -15.2 million to EUR -6.3 million, in particular owing to currency translation.
Profit before tax was EUR 118.9 million after EUR 416.8 million in the previous year. Income tax expense amounted to EUR 27.7 million (1-3Q 2022: EUR 101.6 million), resulting in an effective Group tax rate of 23.3 % (1-3Q 2022: 24.4 %).
Thus, profit for the period decreased from EUR 315.2 million to EUR 91.2 million.
Development in the 3rd quarter
Outlook
Weak demand in the cartonboard and paper sector continues in almost all areas, as higher costs of living reduce general demand for consumer goods and the overall economic market environment remains uncertain. There is currently no sign of a market recovery, but the bottom seems to have been reached and destocking in the supply chain largely completed. Against this background and in view of sufficient capacities in the industry, significant machine downtime will continue to be necessary – at least also in the 4th quarter – in order to adjust production to market demand. This will primarily impact the division MM Board & Paper.
Under these tightened general conditions, MM is focusing on safeguarding and gaining volume with reasonable margins. Our profit and cash protection program, which in addition to cost reductions in all areas aims at a significant reduction of working capital and capex cash-outs, will be consistently pursued and implemented as well as supplemented by targeted structural adjustment measures. Overall, the pressure to enhance competitiveness is steadily increasing.
Our primary focus remains on recovering margins as quickly as possible and reducing net debt. With sustainable and innovative packaging solutions, MM is very well positioned to successfully manage the current difficult market situation.
MM Board & Paper
MM Packaging
Quarterly Overview
Forthcoming Results:
March 12, 2024 Financial Results for 2023
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