METSÄ BOARD Annual review 2023
impact on the demand for Metsä Board’s products and the company’s profitability. Increasing sales on a global scale also involves cost and exchange rate risks. The business is also developed by modernising the production tech- nology, efficiency programmes, product development and harmonising business processes. If development projects and investments significantly exceed their costs, or if their completion is delayed or their production or commercial objectives are not met, this could negatively affect the company’s profitability. Corporate and security risks Risks to corporate security include shortcomings and neglect in personal safety and security and safety at work and in the management of financial misconduct, any negative information manipulation and cyber threats, threats affecting the supply chains, and the adequacy of internal control. A cyberattack on information systems could lead to a leak of sensitive information and damage the company’s reputation. Operating processes related to corporate security and the guidelines, training and internal control related to the management of threat factors are developed contin- uously, and exercises on the management of crisis situations are organised on a regular basis. Personnel availability and retention Metsä Board pays attention to ensuring the availability and retention of competent personnel by means of various personnel development programmes and successor plans, and by investing in its employer image. Metsä Board also prepares for retirements and other personnel risks through the promotion of multiple skills and work ability as well as through job rotation. Liability risks Metsä Board’s business involves liability risks, such as contractual, envi- ronmental and product liability risks. Liability risks are managed by way of efficient business processes, contract training, management practices, quality control and transparent operations. Some of the operational liabil- ity risks have been hedged with insurance policies. Business ethics Risks related to business ethics are discussed in this report’s Sustainability statement.
approximately EUR 45 million. The British pound strengthening by 10% would have a positive impact of approximately EUR 10 million. The impact of weakened exchange rates would be the opposite. The sensitivities do not include the impact of hedging. Credit risks The management of credit risks related to commercial operations is the responsibility of Metsä Board’s executive management and Metsä Group’s centralised credit control. Metsä Board’s management determines the lim- its on credit extended to customers and the applicable terms of payment in cooperation with the centralised credit control. Nearly all credit risks are transferred by means of credit insurance contracts. Metsä Board’s customer credit risk was at a normal level in 2023. The main principles of credit control are defined in the credit guidelines of the risk management policy approved by the company’s Board of Directors. Metsä Board’s financial risks and their management are described in more detail in Note 5.6 (Management of financial risks) to the consolidated financial statements in the 2023 Annual Review. Shares and trading Metsä Board has two series of shares. Each series A share entitles its holder to twenty (20) votes at a General Meeting of Shareholders, and each series B share entitles the holder to one (1) vote. All shares carry the same right to receive a dividend. Metsä Board’s shares are listed on the Nasdaq Helsinki. At the end of 2023, the closing price of Metsä Board’s B share on the Nasdaq Helsinki was EUR 7.19. The share’s highest and lowest prices were EUR 8.96 and EUR 6.26 respectively. Correspondingly, the closing price of the A share was EUR 7.80; the share’s highest and lowest prices were EUR 13.05 and EUR 7.48 respectively. In January–December, the average daily trading volumes of the B and A shares on the Nasdaq Helsinki were around 466,200 shares and around 2,100 shares respectively. The total trading volume of the B share was EUR 874 million, and the total trading volume of the A share was EUR 5 million. At the end of 2023, the market value of all Metsä Board shares was EUR 2.6 billion, of which the market value of the B shares and the A shares accounted for EUR 2.3 billion and EUR 0.3 billion respectively. Metsä Board’s major shareholder Metsäliitto Cooperative holds approx- imately 52% of Metsä Board’s shares and approximately 69% of votes. As Metsä Board is an entity controlled by Metsäliitto Cooperative, Metsäliitto Cooperative’s ownership also includes 701,215 of the company’s own shares held by Metsä Board. International and nominee-registered investors held approximately 9% (15) of all shares. (Source: Euroland) Governance Metsä Board’s statutory administrative bodies are the Annual General Meeting, the Board of Directors and the CEO. The Board of Directors has general authority and, accounting for the scope and quality of the compa- ny’s operations, it is responsible for matters that are strategic, far-reaching and unusual in nature, and therefore not part of the company’s day-to-day business operations. The company’s operational management is handled
by the CEO, supported by the Corporate Management Team, the members of which are not members of the Board of Directors. The tasks and respon- sibilities of the different corporate bodies are determined in accordance with the Finnish Limited Liability Companies Act. Metsä Board’s Board of Directors has nine members, three of whom are women. A majority of Board members (six of nine) are independent of both the company and its biggest shareholders. Three members of the Board of Directors are not independent of Metsäliitto Cooperative. During 2023, the Board of Directors held 14 meetings, at which the attendance of Board members was 97% (97 in 2022). Resolutions of Annual General Meeting and issue authorisations The Annual General Meeting (AGM) of Metsä Board Corporation was held on 23 March 2023. All the proposals made by the Board of Directors to the AGM were supported. The AGM resolved that a dividend of EUR 0.58 per share would be dis- tributed for financial period 2022. The dividend was paid on 5 April 2023. The AGM resolved to amend the Articles of Association to include the Board of Directors’ possibility to arrange, at its discretion, a General Meeting of Shareholders as a hybrid meeting. In addition, the amendment enables arranging a General Meeting of Shareholders as a virtual meeting without a meeting venue. The AGM resolved to keep the remuneration of the members of the Board of Directors unchanged, so that the Chair would be paid EUR 99,000, the Vice Chair EUR 85,000, and ordinary members EUR 67,000 per year. In addition, it was resolved to keep the meeting fees unchanged at EUR 800 for each attended meeting of the Board of Directors and its Committees. The AGM resolved that half the annual remuneration would be paid in the company’s Series B shares to be acquired from public trading. The transfer of such shares is restricted for a two-year period. Furthermore, the Chair of the Audit Committee will be paid an additional monthly remuneration of EUR 900. The AGM confirmed the number of members of the Board of Directors as nine (9) and elected the following persons as members of the Board of Directors: Hannu Anttila MSc (Economics), Raija-Leena Hankonen-Nybom MSc (Economics), Erja Hyrsky MSc (Economics), Ilkka Hämälä MSc (Technology), Mari Kiviniemi MSocSc (Economics), Jussi Linnaranta, MSc (Agriculture and Forestry), Jukka Moisio M Sc (Economics), Mikko Mäkimattila, MSc (Agriculture and Forestry), and Juha Vanhainen, MSc (Process Technology). The term of office of the members of the Board of Directors expires at the end of the next AGM. The AGM resolved to authorise the Board of Directors to decide on the issuance of shares, the transfer of treasury shares and the issuance of spe- cial rights referred to in chapter 10, section 1 of the Finnish Companies Act. The authorisation applies to Series B shares. By virtue of the authorisation the Board of Directors may issue new shares or transfer treasury shares up to a maximum of 35,000,000 shares, including shares that may be issued by virtue of special rights referred to in chapter 10, section 1 of the Finnish Companies Act. The number of shares corresponds to approximately 10%
of all shares in the company. The authorisation is effective until 30 June 2024. The AGM resolved to authorise the Board of Directors to decide on the repurchase of the company’s own Series B shares. The number of the company’s own shares to be repurchased under the authorisation will not exceed 1,000,000 Series B shares, which corresponds to approximately 0.3% of all shares in the company. The authorisation is effective until 30 June 2024. Near-term outlook The global market environment will remain uncertain, and visibility for the near-term development of paperboard sales continues to be weak. Higher costs of living affect consumers’ purchasing behaviour and may reduce the general demand for consumer products. The value chain is expected to follow the market situation in its inventory adjustment efforts. Metsä Board’s paperboard delivery volumes are expected to increase in the first quarter of 2024 compared with the previous quarter (10–12/2023: 299,000 tonnes). The sales prices of folding boxboard in local currencies are expected to decrease slightly, and the sales prices of white kraftliners to remain stable. The company will continue production adjustment measures if neces- sary, as well as temporary layoffs at its mills in Finland, in 2024. In the first quarter of the year, total costs excluding pulp costs are expected to remain stable. The unstable security situation in the Red Sea may hamper the sea transport of Metsä Board and Metsä Fibre to Asia and increase logistics costs. Demand for market pulp in China may be affected by several paper and paperboard production shutdowns during the Chinese New Year. In January–March, market prices for pulp (PIX) are expected to improve compared to the previous quarter, especially in Europe. The global supply of long-fibre market pulp is constrained by announced production capacity closures and wood raw material availability problems, especially in North America. The demand and price situation for sawn timber is expected to improve seasonally in the second quarter of 2024. Board of Directors proposal for dividend The distributable funds of the parent company on 31 December 2023 were EUR 518.9 million, of which the retained earnings for the financial period are EUR 308.2 million. The Board of Directors proposes to the Annual General Meeting to be held on 26 March 2024 that a dividend of EUR 0.25 per share be distributed for the 2023 financial period. The proposed dividend corresponds to 94% of the earnings per share for 2023. The amount of dividend totals approximately EUR 88.7 million. The dividend will be paid to shareholders who are registered in the com- pany’s shareholders register held by Euroclear Finland Oy on the dividend payment record date of 28 March 2024. The Board of Directors proposes 9 April 2024 as the dividend payment date.
Business operations and value creation 2 This is Metsä Board 4 CEO’s review 6
Strategy and financial targets
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Value creation
Financial development 10 Key figures 12
Report of the Board of Directors
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• Sustainability statement • Sustainability statement assurance report
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Consolidated financial statements
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
■ Financial risks
Financial and exchange rate risks As a result of increasing regulation in the financial market, the operations of credit and bond markets may become more difficult, which may impact the company’s ability to acquire long-term debt financing at a competitive price. The financial risks are managed in accordance with the treasury policy approved by Metsä Board’s Board of Directors. The purpose is to hedge against considerable financial risks, balance cash flow and give the business enough time to adjust to changing conditions. Metsä Board sells its products in several countries and is therefore susceptible to fluctuations in exchange rates. The US dollar strengthening by 10% against the euro would have a positive impact of approximately EUR 70 million on Metsä Board’s annual operating result. Correspondingly, the Swedish krona strengthening by 10% would have a negative impact of
170 Remuneration report 174 Investor relations and investor information
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Report of the Board of Directors | METSÄ BOARD ANNUAL REVIEW 2023
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