METSÄ BOARD Annual review 2023
Net investments in a foreign entity 31.12.2023
common ownership). At the end of 2023, there was around 1.0 per cent (1.0) shortfall of credit insurance limits beyond usual policy deductibles and exclusions. Managing the capital Terms capital and capital structure are used to describe investments made in the company by its owners and retained earnings (together equity) and debt capital (liabilities) as well as the relation between them. In managing its capital structure, the Group aims at maintaining an efficient capital structure that ensures the Group’s operational conditions in financial and capital markets in all circumstances despite the fluctuations typical to the sector. The company has a credit rating for its long-term financing. Certain central target values, which correspond to standard requirements set by financing and capital markets, have been defined for the capital structure. No target level has been defined for the credit rating. The Group’s capital structure is regularly assessed by the Group’s Board of Directors and its Audit Committee. Metsä Board´s long-term financial target for the comparable return on capital employed is minimum 12 per cent. According to the company´s target, the ratio of interest-bearing net liabilities to comparable EBITDA (last 12 months) is a maximum of 2.5. In 2023 the long-term financial targets have been kept constant.
The key ratios describing the capital structure and the capital amounts used for the calculation of the key ratio were on 31.12.2023 and 31.12.2022 the following.
Equity exposure
EUR million
USD
GBP
SEK
Others
Total
Business operations and value creation 2 This is Metsä Board 4 CEO’s review 6
Equity exposure (mill. currency units)
124 112
4 4
7,745
Equity exposure (EUR million)
698
3
817
EUR million
2023
2022
Interest-bearing net liabilities/comparable EBITDA
0.7
0.2
Net gearing ratio, %
7
4
Net investments in a foreign entity 31.12.2022
Equity exposure
Strategy and financial targets
Interest-bearing borrowings
438.1 291.6
453.0 356.2
EUR million
USD
GBP
SEK
Others
Total
./. Liquid funds
8
Value creation
Equity exposure (mill. currency units)
109 103
3 4
7,769
./.Interest-bearing receivables Net interest bearing liabilities
2.5
2.3
Equity exposure (EUR million)
699
3
808
144.0
94.5
Financial development 10 Key figures 12
Interest rate risk / duration and re-pricing structure of loans (incl. interest rate derivatives) 31.12.2023
Equity attributable to shareholders of parent company
1,897.0
2,082.0
+ Non-controlling interest
155.6
173.2
Report of the Board of Directors
Re-pricing structure of interest rates of loans
Loan amount (EUR million)
Average interest rate (%)
Interest rate sensitivity 1) (EUR million)
Total Equity
2,052.6
2,255.2
20 72
• Sustainability statement • Sustainability statement assurance report
Duration (months)
1–4/2024
5–8/2024
9–12/2025
2025
2026
2027
>2027
438
30.6
2.6
-1.8
53
7
7
64
14
12
280
Financial covenants of external loans In Group`s certain financial contracts the financial covenants have been set regarding financial performance and capital structure. Other covenants in the Group’s loan agreements are customary terms and conditions including for example a negative pledge, restrictions on major asset dis- posals, limitations on subsidiary indebtedness, restrictions on changes of business and mandatory prepayment obligations upon a change of control of the Group. Metsä Board loan agreements and credit facility agreement include a financial covenant that is related to net gearing. The Group has been in compliance with its covenant during the accounting periods 2023 and 2022. In case the company could not meet its obligations as defined in financial contracts and in order to avoid a breach of contract that could have an adverse effect on the company’s financial position, it would need to renegotiate its financial arrangements, payback its loans or get its debtors to give up their claims to meet these obligations.
74
Consolidated financial statements
Interest rate risk / duration and re-pricing structure of loans (incl. interest rate derivatives) 31.12.2022
78 Notes to the consolidated financial statements 126 Parent company financial statements 129 Notes to the parent company financial statements 142 The Board’s proposal to the Annual General Meeting for the distribution of funds 143 Auditor’s Report 147 Shares and shareholders 151 Ten years in figures 152 Taxes 153 Production capacities 155 Calculation of key ratios and comparable performance measures Corporate governance 157 Corporate governance statement 165 • Board of Directors of Metsä Board 168 • Corporate Management Team of Metsä Board
Re-pricing structure of interest rates of loans
Loan amount (EUR million)
Average interest rate (%)
Interest rate sensitivity 1) (EUR million)
Duration (months)
1–4/2023
5–8/2023
9–12/2023
2024
2025
2026
>2026
453
36.1
2.2
-2.3
54
8
2
14
63
14
299
1) Interest rate sensitivity is an estimate of the effect of an interest rate change of one percent in one direction on net interest cost based on year end exposure
REPAYMENT OF NON-CURRENT LOANS EUR million
BREAKDOWN OF CURRENCY EXPOSURE %
Hedging of natural gas price risk exposure
Hedging of logistics oil price risk exposure
300 250 200 150 100 50 0
Tons
31 Dec 2023 31 Dec 2022
Tons
31 Dec 2023 31 Dec 2022
USD�����������������������������������54% SEK�����������������������������������35% GBP������������������������������������� 9% Others��������������������������������� 2%
Oil exposure, net
65,322 39,660
56,257 49,248
Natural Gas exposure, net
377 211
315 306
Oil hedging
Natural Gas hedging
Hedging at the end of the year (%)
61
88
Hedging at the end of the year (%)
56
97
Average price of hedging at the end of the year (€/tons)
Average price of hedging at the end of the year (€/tons)
468.84
558.08
51.09
70.45
24 25 26 27 28 29-
Logistic oil price risk is hedged based on defined risk management policy by financial contracts. Metsä Board logistic oil exposure includes positions with bunker clause. Metsä Board is hedging gas oil, heavy fuel oil and marine fuel oil purchases.
Natural Gas price risk is hedged based on defined risk management policy by financial contracts. Metsä Board position is hedged using TTF financial contracts.
Hedging of foreign exchange transaction exposure 31.12.2023
Annual transaction exposure
EUR million
USD
GBP
SEK
AUD
CAD Other long Other short
Total
Transaction exposure, net (mill. currency units) Transaction exposure, net (EUR million) Transaction exposure hedging (EUR million) Hedging at the end of the year (months)
763 691
102 117 -76 7.8
-4,969
5 3
37 25
-448
5
1,289
-478
352
-14 6.6 6.6
-921
8.3 7.9
9.4
8.6 8.7
Average hedging in 2023 (months)
7.6
10.5
Average rate of hedging at the end of the year
1.0898
0.8707
11.6454
170 Remuneration report 174 Investor relations and investor information
Hedging of foreign exchange transaction exposure 31.12.2022
Annual transaction exposure
EUR million
USD
GBP
SEK
AUD
CAD Other long Other short
Total
Transaction exposure, net (mill. currency units) Transaction exposure, net (EUR million) Transaction exposure hedging (EUR million) Hedging at the end of the year (months)
1,069 1,003 -698
96
-5,941
33 23
108 -69
-534 462 10.4
9
1,676 -1,242
-12 6.6 5.5
8.4 8.0
7.7 7.8
8.9 8.5
Average hedging in 2022 (months)
9.8
Average rate of hedging at the end of the year
1.0403
0.8709
10.7134
110
111
Consolidated financial statements | METSÄ BOARD ANNUAL REVIEW 2023
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