Market pulp sales Metsä Board’s market pulp deliveries totalled 503,000 tonnes (496,000) in January–December. the EMEA region accounting for 72% (66), and the APAC region for 28% (34). The associated company Metsä Fibre’s overall paperboard deliveries totalled 2,880,000 (3,058,000) tonnes, of which 54% was delivered to the EMEA region, 43% to the APAC region, and 3% to the Americas. Metsä Board holds 24.9% of Metsä Fibre. Paperboard, pulp and BCTMP production The production volume of paperboard totalled 1,877,000 tonnes (1,906,000), while the combined production volume of pulp and BCTMP amounted to 1,409,000 tonnes (1,362,000). Paperboard production was restricted in the latter part of the year to meet demand. The combined production volume of pulp and BCTMP was at a record high in 2022. In 2021, a fire broke out on the chip conveyor of the Husum pulp mill, closing Husum’s pulp production for around four weeks. Paperboard production was run at a lower-than-normal capacity following the pulp mill’s shutdown. The production losses resulting from the fire amounted to roughly 50,000 tonnes in pulp and roughly 30,000 tonnes in paperboard. Corporate transactions On 1 January 2022, Metsä Board acquired all the shares in Hämeenkyrön Voima Oy held by Pohjolan Voima Oyj and DL Power Oy, part of Leppäkoski Group. The company was merged with the parent company in the third quarter. The arrangement will not have a significant impact on Metsä Board’s key financial figures. The share capital of Metsä Board’s subsidiary Oy Hangö Stevedoring Ab was sold to Euroports Finland Oy on 31 March 2022. The company rec- ognised a capital gain of EUR 19.2 million in its January–March operating result as an item affecting comparability. Impacts of Russia’s war in Ukraine Russia’s attack on Ukraine in early 2022 has had an impact on Metsä Board’s business operations. In 2021, Russia accounted for 5.6%, and Ukraine for 0.7%, of Metsä Board’s sales. Folding boxboard deliveries to Russia were approximately 130,000 tonnes in 2021, mainly to multinational brand owners. In March 2022, Metsä Board discontinued its sales to Russia, and reallocated the delivery volumes to its main markets Europe and North America. Metsä Group, responsible for Metsä Board’s wood procurement, discontinued its wood procurement from Russia in March and focused it on Finland and Sweden. In 2021, Russian wood accounted for approximately 9% of Metsä Board’s wood supply. Imports from Russia have been mainly birch wood, for which the market situation has tightened throughout Metsä Group’s operating area. In May, Russia halted natural gas supplies to Finland. Prior to this, Metsä Board’s Joutseno BCTMP mill and the Tako and Kyro paperboard mills used natural gas imported from Russia in their production. Despite the halt to deliveries from Russia, the mills have been supplied with natural gas without disruption. Natural gas has also been replaced by oil, and during the first quarter in 2023, the company will have the readiness to use LNG
in its Kyro and Joutseno mills. Constraints in the availability of alternative energy sources could affect the continuity of Metsä Board’s production. In the long term, by the end of 2030 at the latest, Metsä Board’s target is that all the energy it uses will be fossil free. Impacts of COVID-19 The pandemic shifted consumption from services to goods and increased the consumption of products used at home. Metsä Board’s paperboard product portfolio responded well to the changes in demand resulting from the pandemic, and strong cash flow supported the financial flexibility. Metsä Board’s production and deliveries ran smoothly during the pandemic. Most of the strict precautionary measures adopted at Metsä Board’s production and office units during the pandemic were mainly completely lifted during the second half of the year. The company continues its efforts to ensure the health of employees, prevent the spread of the virus and secure business continuity. The situation is monitored continuously, and local precautionary measures can be quickly initiated if required. From 2023 onwards, the development of the COVID-19 and its effects will only be reported if they have a material impact on Metsä Board’s business or financial situation ■ Cash flow Net cash flow from operations in January–December 2022 was EUR 232.0 million (1–12/2021: 329.6). Working capital increased by EUR 151.4 million (decreased of 49.5). The increase in working capital derived from the increase in paperboard inventories, a rise in inventory value due to cost inflation, and the increase in trade receivables resulting from the higher prices of finished products. ■ Balance sheet and financing Metsä Board’s equity ratio at the end of the financial period was 66% (31 December 2021: 63) and the net gearing ratio was 4% (-4). The ratio of interest-bearing net liabilities to comparable EBITDA in the previous 12 months was 0.2 (-0.2). At the end of the financial period, interest-bearing liabili-ties totalled EUR 453.0 million (31 December 2021: 448.6). Non-euro-denominated loans accounted for 2.0% of loans and floating-rate loans for 13.9%, the rest being fixed-rate loans. The average interest rate on liabilities was 2.2% (2.3), and the average maturity of non-current liabilities was 4.0 years (4.7). The interest rate maturity of loans was 36.1 months (45.3). At the end of the financial period, interest-bearing net debt totalled EUR 94.5 million (31 December 2021: -78.4). Metsä Board’s liquidity has remained strong. At the end of the financial period, the available liquidity was EUR 556.0 million (31 December 2021: 916.0), consisting of the following items: liquid assets and investments of EUR 356.2 million and a syndicated credit facility (revolving credit facility) of EUR 200.0 million. Of the liquid assets, EUR 338.6 million consisted of short-term de-posits with Metsä Group Treasury, and EUR 17.6 mil-lion were cash funds and investments. Other interest-bearing receivables amounted
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Report of the Board of Directors | METSÄ BOARD ANNUAL AND SUSTAINABILITY REPORT 2022
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