EQS News: Mayr-Melnhof Karton AG: MM reports half-year results for 2024 | 22.08.24

• Q2 for Q2 2023
• Half-year financial results lower than last year due to price changes
• Cash flow significantly improved
• Strong volume growth in Board & Paper
• For greater transparency, Packaging will now be reported as two divisions:
  MM Food & Premium Packaging and MM Pharma & Healthcare Packaging
• Solid performance in the packaging divisions
• Significant reduction in carbon footprint vs. 1^st HJ 2023
• Continued consumer caution in end markets in line with overall economic weakness
• Q3 impacted by annual maintenance outages at Board & Paper

Group core indicators – IFRS

Peter Oswald, CEO of MM, comments: “The MM Group has succeeded in growing its adjusted EBITDA and adjusted operating profit in the 2^nd quarter compared to both the previous two quarters and the 2 of last year^nd quarter. The consistent execution of the profit and cash protection program resulted in a significant increase in cash flow from operating activities and free cash flow. At the same time, the Group’s financial leverage remained largely constant.

In the Board & Paper division, we saw an improvement in market demand after reducing high inventories in the supply chain. Also, our improved products after the rebuilding of the machine were well received by our customers. This led to a significant increase in sales volumes of around 18%. Despite selective price increases in the 2^nd quarter, average prices were still significantly lower than last year, resulting in lower sales. At the same time, some costs, such as paper for recycling and personnel costs, increased again in the 2^nd quarter. Thanks to the extensive cost protection program, Board & Paper succeeded in achieving adjusted operating profit in the 2^nd quarter after four quarters of operating losses.

Packaging, which has shown consistent solid performance overall, will now be reported as two divisions to increase transparency: MM Food & Premium Packaging and MM Pharma & Healthcare Packaging, as pharmaceutical packaging pursues a different business model and is seen as highly specialized within the packaging industry. It also includes leaflets and labels on top of folding cartons.”

“Due to the continued weak economy in the most important market of Europe and the continued restrained consumer spending on daily consumer goods, we expect only slow development in the end markets and continued underutilization in the cardboard industry. In the 3^rd “In the coming quarter, the annual maintenance outages at our paper mills in Kwidzyn and Kotkamills will impact Board & Paper results, while we expect continuity for both packaging divisions,” Oswald emphasizes.

PROFIT AND LOSS ACCOUNT
At EUR 2,043.9 million, the Group’s consolidated turnover was below the previous year’s figure (1^st half-year 2023: EUR 2,181.4 million), mainly as a result of lower sales prices.

Adjusted operating profit decreased by EUR 36.4 million from EUR 127.0 million to EUR 90.6 million. This decrease is mainly due to lower average prices in the Board & Paper division. The Group’s adjusted operating margin was 4.4% (1^st half of 2023: 5.8%).

Financial income amounted to EUR 13.3 million (1^st half-year 2023: EUR 3.7 million). The increase in financial expenses from EUR -24.7 million to EUR -42.7 million was mainly due to higher interest rates for variable rate financing. The “Other financial result – net” changed from EUR -5.9 million to EUR -10.0 million, mainly due to currency translations.

Pre-tax profit totaled EUR 51.2 million, up from EUR 77.2 million in the previous year. Income tax expense was EUR 13.8 million (1^st half-year 2023: EUR 13.9 million), resulting in an effective group tax rate of 27.1% (1^st half of 2023: 17.9%).

Profit for the period decreased accordingly from EUR 63.3 million to EUR 37.4 million.

SUSTAINABILITY DEVELOPMENT
The MM Group’s carbon footprint decreased by 23% in the first quarter.^st half year (1^st half of 2024: 569,294 tCO₂and; 1^st half of 2023: 737,926 tCO₂and).

DEVELOPMENT IN THE 2^ND QUARTER
In the 2^nd In the third quarter, the MM Group managed to improve its results compared to the previous quarter and exceed the previous year’s figures.

After four quarters, the MM Board & Paper division was able to achieve a positive adjusted operating profit again with improvements in price and volume. The MM Food & Premium Packaging division registered continuity at a good level, while momentum at MM Pharma & Healthcare weakened slightly due to a full supply chain.

Consolidated turnover of EUR 1,018.9 million was slightly below 1^st quarter of 2024 (EUR 1,025.0 million) and the level of the previous year (Q2 2023: EUR 1,059.3 million).

The Group’s adjusted operating profit increased to EUR 51.0 million, exceeding both the previous quarter’s and the previous year’s figure (Q1 2024: EUR 39.6 million; Q2 2023: EUR 48.3 million). The adjusted operating margin was 5.0% (Q1 2024: 3.9%; Q2 2023: 4.6%). Adjusted EBITDA reached EUR 107.2 million (Q1 2024: EUR 94.5 million; Q2 2023: EUR 103.7 million). Profit for the period amounted to EUR 26.5 million (Q1 2024: EUR 10.9 million; Q2 2023: EUR 28.4 million).

The adjusted operating margin of the MM Board & Paper division increased to 0.4% (Q1 2024: -2.7%; Q2 2023: -2.0%) due to the positive development of sales and production volumes despite lower average prices. Capacity utilization was significantly higher than in the 2^nd quarter of the previous year, which was characterized by significant market and conversion-related machine downtime.

MM Food & Premium Packaging maintained a solid adjusted operating margin of 10.2% (Q1 2024: 9.5%; Q2 2023: 11.4%), mainly due to productivity increases.

MM Pharma & Healthcare Packaging’s operating margin was 4.6% (Q1 2024: 7.3%; Q2 2023: 4.9%), reflecting weaker demand as a result of a reduction in inventories in the pharmaceutical industry supply chain.

PROSPECT
Given the continued weakness of the economy and continued restraint in consumer spending, we expect the current low market activity to persist in the coming months. We will continue to pursue selective price increases. In the 3^rd quarter, the annual maintenance outage at our paper mills in Kwidzyn and Kotkamills will impact Board & Paper results, while we expect the packaging departments to continue as a going concern.

MM remains focused on improving earnings and cash generation by continuing the earnings and cash protection program. Most of the savings are expected to be realized in 2025. Capital expenditures will remain significantly lower than in previous years as major projects have already been successfully completed. Our strategy and capital allocation will continue to focus on expansion in growing, innovative and sustainable market segments, but we will prioritize margin improvement before pursuing further inorganic growth.

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The detailed press release and the 2024 Half-Year Financial Report, as well as the CEO’s video statement and details of today’s CEO Conference Call, can be found on our website: https://www.mm.group.

The results will be published soon:
Results first three quarters 2024 November 7, 2024

For further information please contact:
Stephan Sweerts-Sporck, Investor Relations, Mayr-Melnhof Karton AG,
Brahmsplatz 6, A-1040 Vienna
Telephone: +43 1 501 36-91180,
Email: [email protected], Website: https://www.mm.group