BUSINESS OPERATIONS AND VALUE CREATION
Report of the Board of Directors 2022
■ Metsä Board’s business Metsä Board produces high-quality, sustainable fresh fibre paperboards, and is Europe’s largest producer of folding boxboard and white kraftliners. The company’s folding boxboard is mainly used to package consumer products such as food and pharmaceuticals, while its white kraftliners are mainly used for various packaging needs in the retail sector. More than half of the white kraftliners made by Metsä Board are coated. The total annual paperboard capacity is approximately 2 million tonnes, and it is sold to approximately 100 countries. Metsä Board’s main market areas are Europe and North America. Metsä Board produces chemical pulp and bleached high-yield pulp (BCTMP), which are used in its own paperboard production, with some sold as market pulp. The annual capacity for pulp and BCTMP is roughly 1.5 million tonnes. In addition, Metsä Board owns 24.9% of its associated company Metsä Fibre, a global leader in the production of softwood market pulp. Metsä Fibre’s annual pulp capacity is roughly 3.3 million tonnes. ■ Strategy and financial targets Metsä Board’s strategy is to grow in fibre-based packaging materials and renew its industrial operations. To implement this strategy, the company has significant growth and development investments ongoing and planned to meet the rapidly growing demand for recyclable and plastic-replacing packaging materials in Europe and North America. Metsä Board’s produc- tion is located close to its most important raw material, the high-quality Northern wood fibre. The company aims to maintain high self-sufficiency in pulp and energy. Metsä Board’s decision-making is guided by financial and sustainability targets, as well as long-term shareholder value growth. The company focuses on continuous cost efficiency improvements and on customers who benefit from the high performance of the company’s products and services. The objective is to pay a competitive dividend and maintain a strong balance sheet. In 2022, Metsä Board’s financial targets and dividend policy remain unchanged:
■ Market environment
Paperboards Global megatrends pose requirements for the safety, quality, sustainability and recyclability of packaging. Pure and easily recyclable fresh fibre paperboards made from renewable raw materials replace non-renewable packaging materials like plastic. The coronavirus pandemic shifted consumption from services to goods and accelerated the demand for fresh fibre paperboards in nearly all end uses. At the end of 2022, the general decline in the demand for consumer products, and the inventory adjust- ments made in the value chain reduced the demand for paperboards. In addition, the volumes of paperboard imported from Asia to Europe increased towards the end of the year as the global challenges in logistics eased. In 2022, the deliveries of European folding boxboard and white kraftliners to Europe decreased significantly from the previous year. Cor- respondingly, market prices increased notably. Metsä Board accounted for 33% (34) of the overall deliveries of European folding boxboard producers and for 57% (56) of exports from Europe. In the United States, the 2022 production volumes of solid bleached board for local consumption increased, and those of food service board increased notably compared to the previous year. The market prices of both solid bleached board and food service boards grew significantly. Market pulp Metsä Board and its associated company Metsä Fibre sell mainly long-fibre pulp to Europe, the Middle East, Africa and Asia. In the long run, demand for market pulp will be supported by the global growth in demand for packaging and hygiene products made from renewable materials. In 2022, the demand for long-fibre market pulp was mainly at a good level in Europe. In China, overall economic activity was weakened by the strict coronavirus measures, but the demand for pulp remained at a good level in view of supply. In the last quarter, demand for market pulp declined in both Europe and China. The global supply for long-fibre market pulp decreased due to several planned and unplanned production shutdowns, as well as challenges in logistics, which eased towards the
The comparable return on capital employed (ROCE) is at minimum 12%. • Actual in 2022 was 20.9%.
A ratio of interest-bearing net debt to comparable EBITDA at maximum 2.5. • Actual in 2022 was 0.2.
In line with dividend policy, Metsä Board aims to distribute at least 50% of the result for the financial period in dividends every year. • The Board of Directors’ proposal to the AGM on the dividend for the 2022 financial year, EUR 0.58 per share, corresponds to 50% of the result for the financial period.
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