Results for the first quarter of 2024
- Result below previous year as expected
- Significant volume growth at MM Board & Paper
- Continuity at a good level at MM Packaging
- Weak consumption continues to weigh on end markets
- Pressure on margins carries on
- Successful profit & cash protection programme will be continued
- Sales price development decisive for earnings situation in 2024
Group Key Indicators - IFRS
consolidated, in millions of EUR, IFRS | 1Q/2024 | 1Q/2023 | +/- |
Sales | 1,025.0 | 1,122.1 | -8.7 % |
Adjusted EBITDA1) | 94.5 | 133.6 | -29.3 % |
Adjusted EBITDA margin(%) | 9.2 % | 11.9 % | -269 bp |
Adjusted operating profit1) | 39.6 | 78.7 | -49.6 % |
Adjusted operating margin (%) | 3.9 % | 7.0 % | -314 bp |
Operating profit | 39.6 | 61.6 | -35.6 % |
Return on capital employed2) (%) | 5.4 % | 16.0 % | -1,060 bp |
Profit before tax | 18.0 | 49.0 | -63.2 % |
Income tax expense | (7.1) | (14.1) |
|
Profit for the period | 10.9 | 34.9 | -68.8 % |
Net profit margin (%) | 1.1 % | 3.1 % |
|
Earnings per share (in EUR) | 0.52 | 1.71 |
|
Cash flow from operating activities | 52.5 | 67.2 | -21.9 % |
Employees3) | 14,865 | 15,087 |
|
Capital expenditures | 92.8 | 96.4 |
|
Depreciation and amortisation4) | 54.9 | 55.0 |
|
Free cash flow | (38.5) | (28.6) | -34.5 % |
1) adjusted for material one-off effects (material defined as impact on operating profit of more than EUR 10 million)
2) The calculation is based on the adjusted result figure and refers to the average of the last 12 months.
3) excl. temporary workers; previous year’s value as of December 31, 2023
4) incl. impairment on property, plant and equipment and intangible assets
Peter Oswald, MM CEO, comments: “The MM Group recorded a decline in both Group sales and adjusted operating profit in the 1st quarter of 2024 compared to the previous year’s value, due to the earnings performance in the Board & Paper division. The destocking in the supply chain has been largely completed, leading to a significant recovery of volumes sold in Board & Paper. However, pressure on margins continued as expected, as price increases will only compensate for the recent rise in production costs from the 2nd quarter onwards. In contrast, the Packaging division recorded a slight increase in results compared to the previous year, even though the margin was below the strong level of the 3rd and 4th quarter of 2023.
Against this background, the profit & cash protection programme, which has already been successfully implemented, and the measures to intensify market penetration will be systematically continued in 2024.
As consumer spending on everyday goods remains subdued, the end markets continue to record hardly any growth. In particular, the development of sales prices will remain decisive for the earnings situation in 2024.”, underlines Oswald.
Income statement
At EUR 1,025.0 million, the Group’s consolidated sales were below the previous year's figure (1Q 2023: EUR 1,122.1 million), primarily due to price-related declines in both divisions.
Adjusted operating profit decreased by EUR 39.1 million from EUR 78.7 million to EUR 39.6 million. This decrease is primarily due to the recent increase in production costs in the Board & Paper division, which are to be offset by higher sales prices from the 2nd quarter onwards. The Group’s adjusted operating margin was therefore 3.9 % (1Q 2023: 7.0 %).
Financial income amounted to EUR 6.6 million (1Q 2023: EUR 1.3 million). The increase in financial expenses from EUR -10.8 million to EUR -21.4 million resulted in particular from higher interest rates for variable-interest loans. “Other financial result - net” changed from EUR -3.1 million to EUR -6.8 million, mainly owing to currency translations.
Profit before tax thus totalled EUR 18.0 million after EUR 49.0 million in the previous year. Income tax expense amounted to EUR 7.1 million (1Q 2023: EUR 14.1 million), resulting in an effective Group tax rate of 39.6 % (1Q 2023: 28.7 %).
Thus, profit for the period decreased from EUR 34.9 million to EUR 10.9 million.
Outlook
Despite significant volume increases compared to the previous year in the Board & Paper division, there are still hardly any signs of growth on the consumer goods end markets. Under these conditions, MM is focusing on margin-conscious market share gains and a consistent continuation of the profit & cash protection programme, which has been successfully implemented to date.
The upward trend in production costs is to be compensated by an ongoing improvement in sales prices. This development in particular will remain decisive for the profit situation in 2024.
Development in the Divisions
MM Board & Paper
in millions of EUR, IFRS | 1Q/2024 | 1Q/2023 | +/- |
Sales1) | 483.5 | 521.2 | -7.2 % |
Adjusted EBITDA | 13.4 | 54.3 | -75.4 % |
Adjusted operating profit | (13.3) | 27.7 | -147.8 % |
Adjusted operating margin (%) | -2.7 % | 5.3 % | -807 bp |
Operating profit | (13.3) | 27.7 | -147.8 % |
Cash flow from operating activities | (14.6) | 10.0 | -246.3 % |
Tonnage sold (in thousands of tonnes) | 564 | 473 | +19.2 % |
Cartonboard | 439 | 375 | +17.4 % |
Paper | 125 | 98 | +25.9 % |
Tonnage produced (in thousands of tonnes) | 576 | 488 | +18.0 % |
1) including interdivisional sales
The MM Board & Paper division achieved a significant volume increase in the 1st quarter, following extensive market- and rebuild-related downtime in the previous year. Sales volume increased by 19.2 % from 473,000 tonnes to 564,000 tonnes, while production volume rose by 18.0 % to 576,000 tonnes (1Q 2023: 488,000 tonnes). Market share gains were also achieved selectively as part of a sales excellence programme. The division’s average order backlog amounted to 182,000 tonnes in the first three months, compared to 143,000 tonnes in the same period of the previous year.
Both recovered paper and pulp prices have recently been experiencing an upward trend on the procurement markets, thus sales prices will be increased from the 2nd quarter onwards.
At EUR 483.5 million, sales were price-related 7.2 % below the comparable figure (1Q 2023: EUR 521.2 million) despite significantly higher volumes. The adjusted operating profit amounted to EUR -13.3 million (1Q 2023: EUR 27.7 million), the adjusted operating margin to -2.7 % (1Q 2023: 5.3 %).
MM Packaging
in Mio. EUR, nach IFRS | 1Q/2024 | 1Q/2023 | +/- |
Sales1) | 592.6 | 656.7 | -9.8 % |
Adjusted EBITDA | 81.1 | 79.3 | +2.4 % |
Adjusted operating profit | 52.9 | 51.0 | +4.1 % |
Adjusted operating margin (%) | 8.9 % | 7.8 % | +119 bp |
Operating profit | 52.9 | 33.9 | +56.6 % |
Cash flow from operating activities | 67.1 | 57.2 | +17.4 % |
Produced volume (in millions of m2) | 1,032 | 1,094 | -5.7 % |
1) including interdivisional sales
The overall conditions in the folding carton business continued to be characterised by weak consumption in many end markets for everyday consumer goods in the 1st quarter of 2024. However, by serving a broad range of industries and through its global positioning, MM Packaging was able to maintain a balance and deliver stable results. Due to increasing competitive and margin pressure, the implementation of the profit & cash protection programme and selective structural adjustments have high priority alongside the generation of new business.
At EUR 592.6 million, sales were price- and volume-related 9.8 % lower than the previous year's figure of EUR 656.7 million. The adjusted operating profit increased by 4.1 % from EUR 51.0 million to EUR 52.9 million, primarily due to successful cost saving measures. The adjusted operating margin was therefore 8.9 % (1Q 2023: 7.8 %).
Volume produced at 1,032 million m2 came in 5.7 % below the previous year's figure (1Q 2023: 1,094 million m2).
Quarterly Overview
consolidated, in millions of EUR, IFRS | 1Q/2023 | 2Q/2023 | 3Q/2023 | 4Q/2023 | 1Q/2024 |
Sales | 1,122.1 | 1,059.3 | 1,015.1 | 967.9 | 1,025.0 |
Adjusted EBITDA | 133.6 | 103.7 | 121.4 | 91.5 | 94.5 |
Adjusted EBITDA margin(%) | 11.9 % | 9.8 % | 12.0 % | 9.5 % | 9.2 % |
Adjusted operating profit | 78.7 | 48.3 | 63.4 | 38.8 | 39.6 |
Adjusted operating margin (%) | 7.0 % | 4.6 % | 6.2 % | 4.0 % | 3.9 % |
Operating profit | 61.6 | 42.4 | 55.8 | 37.8 | 39.6 |
Profit before tax | 49.0 | 28.2 | 41.7 | 17.8 | 18.0 |
Income tax expense | (14.1) | 0.2 | (13.8) | (19.9) | (7.1) |
Profit for the period | 34.9 | 28.4 | 27.9 | (2.1) | 10.9 |
Net profit margin (%) | 3.1 % | 2.7 % | 2.7 % | -0.2 % | 1.1 % |
Earnings per share (in EUR) | 1.71 | 1.41 | 1.38 | (0.14) | 0.52 |
Cash flow from operating activities | 67.2 | 82.9 | 177.2 | 458.9 | 52.5 |
Free cash flow | (28.6) | (36.3) | 73.7 | 361.0 | (38.5) |
in millions of EUR, IFRS | 1Q/2023 | 2Q/2023 | 3Q/2023 | 4Q/2023 | 1Q/2024 |
Sales1) | 521.2 | 498.1 | 448.4 | 451.4 | 483.5 |
Adjusted EBITDA | 54.3 | 17.7 | 14.7 | 6.0 | 13.4 |
Adjusted operating profit | 27.7 | (9.8) | (13.5) | (24.2) | (13.3) |
Adjusted operating margin (%) | 5.3 % | -2.0 % | -3.0 % | -5.4 % | -2.7 % |
Operating profit | 27.7 | (9.8) | (13.5) | (24.2) | (13.3) |
Cash flow from operating activities | 10.0 | 3.0 | 64.1 | 214.5 | (14.6) |
Tonnage sold (in thousands of tonnes) | 473 | 486 | 487 | 502 | 564 |
Cartonboard | 375 | 365 | 365 | 371 | 439 |
Paper | 98 | 121 | 122 | 131 | 125 |
Tonnage produced (in thousands of tonnes) | 488 | 469 | 482 | 506 | 576 |
1) including interdivisional sales
in Mio. EUR, nach IFRS | 1Q/2023 | 2Q/2023 | 3Q/2023 | 4Q/2023 | 1Q/2024 |
Sales1) | 656.7 | 606.5 | 605.9 | 562.0 | 592.6 |
Adjusted EBITDA | 79.3 | 86.0 | 106.7 | 85.5 | 81.1 |
Adjusted operating profit | 51.0 | 58.1 | 76.9 | 63.0 | 52.9 |
Adjusted operating margin (%) | 7.8 % | 9.6 % | 12.7 % | 11.2 % | 8.9 % |
Operating profit | 33.9 | 52.2 | 69.3 | 62.0 | 52.9 |
Cash flow from operating activities | 57.2 | 79.9 | 113.1 | 244.4 | 67.1 |
Produced volume (in millions of m2) | 1,094 | 979 | 963 | 948 | 1,032 |
1) including interdivisional sales
Forthcoming Results:
August 22, 2024 Half-Year Results 2024