Mayr-Melnhof Karton AG: Annual Results 2018

- Further profit increase
- Dividend increase to EUR 3.20/share proposed
- High capacity utilization
- Significant growth in results at MM Karton
- Higher costs weigh on margin at MM Packaging
- Demand again normalized after slowdown in 4Q/2018

The Mayr-Melnhof Group was able to conclude the year 2018 with a further profit increase in succession. A strong development in the first three quarters contrasted with a noticeable market- and production-related decrease in volumes in the final quarter, which reduced the lead over the previous year. The company nevertheless succeeded in maintaining capacity utilization and volumes at a high level on a whole year perspective. The cartonboard division was the main driver of profit growth, in particular as a result of improved average prices. In contrast, a sharp rise in input costs, in particular for cartonboard, put pressure on the margin, as this increase could only be passed on with delay.

In line with the sound profit development, a recommendation will be made to the 25^th Ordinary Shareholders' Meeting on April 24, 2019, to increase the dividend for the financial year 2018 to EUR 3.20 per share (2017: EUR 3.10).

With the acquisition of the Tann-Group, which was successfully closed on January 15, 2019, MM Packaging took an important growth step. The aim is to expand value added and strengthen the profitability of MM Packaging as well as to achieve further growth.

GROUP KEY INDICATORS - IFRS

in millions of EUR                                             2018               2017                +/-

Sales                                                             2,337.7           2,336.8           + 0.0 %
Operating Profit                                                217.1              215.0           + 1.0 %
Operating margin (in %)                                       9.3 %              9.2%              
Profit before tax                                                217.9               205.5          + 6.0 %
Income tax expense                                          (53.7)              (50.5)               
Profit for the year                                              164.2               155.0          + 5.9 %
Earnings per share (in EUR)                                8.18                 7.73                


Consolidated sales of the Group totaled EUR 2,337.7 million and thus were at previous year's level (2017: EUR 2,336.8 million). A price-related increase in sales at the cartonboard division contrasts with a slight decrease at the packaging division.

At EUR 217.1 million, an operating profit above the previous year's level was achieved (2017: EUR 215.0 million). The Group's operating margin reached 9.3 % (2017: 9.2 %), the return on capital employed 15.5 % (2017: 15.1 %).

Financial income of EUR 1.3 million (2017: EUR 2.0 million) contrasted with financial expenses of EUR -6.1 million (2017: EUR -6.2 million). "Other financial result - net" went up to EUR 5.6 million (2017: EUR -5.3 million), in particular as a result of foreign currency gains, after one-time expenses due to accumulated currency translations of EUR 2.6 million had been reported in the previous year following the deconsolidation of subsidiaries.

Profit before tax increased by 6.0 % to EUR 217.9 million (2017: EUR 205.5 million). Income tax expenses totaled EUR 53.7 million (2017: EUR 50.5 million), with the effective Group tax rate for 2018 remaining constant at 24.7 % (2017: 24.6 %).

Profit for the year rose by 5.9 % to EUR 164.2 million (2017: EUR 155.0 million).


DEVELOPMENT IN THE 4^TH QUARTER 2018

After a solid development during the first quarters, demand for cartonboard packaging showed a noticeable weakening in the fourth quarter, especially due to a reduction in stocks along the supply chain.

MM Karton recorded, market- and production-related, a lower capacity utilization of 90 % after 99 % in the fourth quarter of the previous year. The operating margin of the division was at 6.3 % (4th quarter 2017: 7.3 %).
MM Packaging reached an operating margin of 8.4 % (4th quarter 2017: 10.5 %).

Consolidated sales at EUR 574.6 million were around 2.2 % lower than in the previous year's period (4th quarter 2017: EUR 587.7 million). While MM Karton was able to keep up sales due to better prices, MM Packaging faced a reduction.

The Group's operating profit totaled EUR 44.8 million (4th quarter 2017: EUR 56.1 million), resulting in an operating margin of 7.8 % (4th quarter 2017: 9.5 %).

Profit before tax was at EUR 48.9 million after EUR 53.6 million in the last quarter of 2017.
Profit for the period amounted to EUR 37.8 million (4th quarter 2017: EUR 41.7 million).


OUTLOOK ON THE FINANCIAL YEAR 2019

Since the beginning of 2019, demand for cartonboard packaging has once again normalized following the weakening in the fourth quarter of last year, though without any noticeable momentum. Against this background, the plants are reporting overall good capacity utilization, however competition in the markets remains very intense.

The price increase for virgin fiber-based cartonboard announced by MM Karton as a result of higher prices for pulp and groundwood pulp took effect at the beginning of the year. In contrast, a continuous pricing policy is pursued for recycled fiber-based cartonboard due to stable recovered paper markets. The focus at MM Packaging remains on passing on increases in input factors promptly.

The aim of both divisions in 2019 is to continue to grow with the market as well as through displacement and to maintain the profit quality at a high level. Therefore, the focus on products with high value added and productivity gains in manufacture will be pursued consistently. In 2019, the largest contribution to growth will result from the acquisition of the Tann-Group, which will be integrated into the Group following the successful closing in the first quarter of 2019.

We will continue our investment activities on a long-term scale focusing on growth and cost reduction through the use of state-of-the-art technology.

After another record result was achieved in 2018, our goal is to make 2019 another year of success.

High attention will also be paid to the continuation of our acquisition course.
 

The press release and a video presentation by the Management Board are available on the internet under: www.mayr-melnhof.com

The Annual Report 2018 will be available as of April 3, 2019.

Forthcoming Results:
May 15, 2019     Results for the first Quarter of 2019

For further information, please contact:

Stephan Sweerts-Sporck
Investor Relations
Mayr-Melnhof Karton
Brahmsplatz 6
A-1040 Vienna
Tel.: +43 1 501 36-91180
Fax: +43 1 501 36-191195
E-Mail: investor.relations@mm-karton.com
Website: https://www.mayr-melnhof.com