The MM Group was able to overall successfully close the financial year 2021, which was characterized by historically unprecedented cost increases, in particular for energy, recovered paper and pulp. The strong pressure on margins was successively compensated for by price increases, which could only be implemented with a time lag due to contractual commitments. The continuing strong demand for cartonboard packaging and papers and thus high capacity utilization in both divisions provided significant support in this respect.

The growth in operating profit by 16.5 % to EUR 269.6 million is attributable to both divisions. While MM Packaging recorded a rather robust ongoing development, the increase in profit of MM Board & Paper is mainly attributable to one-off effects of structural changes.

With the acquisition of the cartonboard and paper mills Kwidzyn in Poland and Kotkamills in Finland as well as the sale of the two smaller cartonboard mills, Baiersbronn and Eerbeek, and the launching of several major investments to increase efficiency, innovation, and sustainability, 2021 was a year of significant strategic transformations at MM in addition to operational challenges. The fundamental objective is to enable long-term growth in sustainable fiber-based packaging solutions as well as an increase in profitability through intensified competitiveness.
 

Through the acquisitions in the virgin fiber sector, MM has not only strengthened its position as the leading cartonboard and folding carton producer in Europe, but also acquired two new core products, kraft papers and uncoated fine papers, which offer interesting potential and are managed in the division MM Board & Paper.
 

In line with the solid profit development, a dividend increase to EUR 3.50 per share (2020: EUR 3.20) for the financial year 2021 will be proposed to the 28^th Annual General Meeting on April 27, 2022.

Group key indicators - IFRS
(consolidated, in millions of EUR)                              2021                             2020                   +/-
Sales                                                                              3,069.7                        2,528.4            + 21.4 %
EBITDA                                                                              421.0                           398.9            + 5.5 %
Operating profit                                                              269.6                           231.4            + 16.5 %
Operating margin (in %)                                                    8.8 %                            9.2 %            - 37 bp
Profit before tax                                                             244.5                            222.1             + 10.1 %
Income tax expense                                                       (53.8)                            (59.8)               
Profit for the year                                                          190.7                             162.2             + 17.5 %
Earnings per share (in EUR)                                                 9.46                             8.06                

INCOME STATEMENT

The Group's consolidated sales reached EUR 3,069.7 million which is 21.4 % or EUR 541.3 million above the previous year's figure (2020: EUR 2,528.4 million). This increase was mainly acquisition-related from the division Board & Paper.
 

At EUR 269.6 million operating profit was 16.5 % or EUR 38.2 million above the previous year (2020: EUR 231.4 million). Around 55 % of this increase is attributable to MM Board & Paper and around 45 % to MM Packaging. One-off expenses from the initial consolidation of the mills Kwidzyn and Kotkamills in the amount of EUR 26.3 million, which are mainly attributable to ancillary acquisition costs including transaction taxes and inventory valuation, as well as restructuring expenses in the division MM Packaging of EUR 20.1 million were offset by one-off income from the sale of the Eerbeek and Baiersbronn mills in the amount of EUR 46.1 million (after incidental transaction costs). In 2020, one-off effects amounted to EUR -64.0 million. The Group's operating margin was therefore at 8.8 % (2020: 9.2 %), the return on capital employed at 12.8 % (2020: 13.7 %). EBITDA rose by 5.5 % or EUR 22.1 million to EUR 421.0 million (2020: EUR 398.9 million), the EBITDA margin reaching 13.7 % (2020: 15.8 %).
 

Financial income of EUR 3.3 million (2020: EUR 1.7 million) was contrasted with financial expenses of EUR -24.4 million (2020: EUR -7.9 million). The latter increased mainly due to the issuance of Schuldschein loans and Namensschuldverschreibungen to finance the acquisitions and organic growth projects. "Other financial result - net" amounted to EUR -4.0 million (2020: EUR -3.2 million), mainly attributable to changes in the foreign currency result.
 

Accordingly, profit before tax at EUR 244.5 million was 10.1 % higher than in the previous year (2020: EUR 222.1 million). Income tax expenses totaled EUR 53.8 million (2020: EUR 59.8 million), resulting in an effective Group tax rate of 22.0 % (2020: 27.0 %). The reduction compared to the previous year is mainly due to tax-free income from company disposals.

Profit for the year rose by 17.5 % or EUR 28.5 million to EUR 190.7 million (2020: EUR 162.2 million).

DEVELOPMENT IN THE 4^TH QUARTER 2021

The 4^th quarter 2021 was characterized by continuous strong demand in both divisions. Consolidated sales of EUR 962.6 million were mainly acquisition-related above last year's period (4^th quarter 2020: EUR 624.9 million).

The Group's operating profit increased to EUR 92.4 million (4^th quarter 2020: EUR 62.1 million), while the operating margin at 9.6 % was slightly below previous year's level (4^th quarter 2020: 9.9 %). Profit before tax amounted to EUR 82.1 million (4^th quarter 2020: EUR 61.5 million), profit for the period to EUR 62.3 million (4^th quarter 2020: EUR 45.9 million).

MM Board & Paper recorded a capacity utilization of 97 % after 96 % in the 4^th quarter of the previous year. Due to acquisitions, the operating profit of the division reached EUR 33.4 million after EUR 18.3 million. The 4^th quarter  was again characterized by a significant rise in costs, particularly for energy, which could not be compensated for by the price increases implemented so far. The operating margin therefore amounted to 5.9 % (4^th quarter 2020: 7.2 %).

With a solid volume development, the operating profit of MM Packaging at EUR 59.0 million was above the previous year's figure in particular due to a better product mix and the adjustment of the restructuring provision (4^th quarter 2020: EUR 43.8 million). The operating margin amounted to 13.7 % (4^th quarter 2020: 11.0 %).

 

OUTLOOK ON THE FINANCIAL YEAR 2022
Demand and order situation for the products of both divisions have remained in good shape since the beginning of the year. The price increases necessary in view of massive cost increases, especially the extraordinary rise in energy prices, could be implemented for the 1^st quarter. In addition, a further cartonboard price increase is planned for the 2^nd quarter in order to compensate for the cost inflation which has been going on since the beginning of the year. Also in Packaging we are continuously increasing prices. Due to some long-term contracts with price indices not covering all costs and delays of passing on higher costs, we expect a lower operating margin at least for the first half of 2022. As a result of widely booked capacities and longer delivery times, our customers continue to focus on supply security, a demand that we meet with the highest possible flexibility and transparency.

Due to capacity limitations, the Group's sales volume can only increase gradually. However, the expansions recently initiated at several MM Packaging plants should enable more business in the course of the year. At MM Board & Paper, where the investment focus is on efficiency improvements and optimization of the product portfolio, the expansive effects will only gradually take effect from 2023 onwards.

As already indicated, due to intensified investment activity in increasing competitiveness and growth, investments in a range of EUR 250 - 300 million p.a. can also be assumed for 2022 and 2023. At MM Board & Paper, in addition to the major investments in Frohnleiten, Neuss, and Kolicevo, the focus is also placed on projects at the new acquisitions MM Kotkamills and MM Kwidzyn in order to be able to utilize attractive potentials in a timely manner. At MM Packaging, in Poland we are pursuing a doubling of the large site in Bydgoszcz as well as the construction of a new packaging plant near Warsaw in order to participate in the market growth in Central-Eastern Europe and to take advantage of more favorable costs. In addition, sites in Great Britain, Austria and Romania are expanded to critical size.

The orientation of the MM Group towards a long-term moderate growth course has proven successful and will be further pursued. While at MM Board & Paper the emphasis is currently on the integration of the new acquisitions, the market presence of MM Packaging is also to be expanded through acquisitions. The focus on optimizing cost structures, digitalization, and innovative, sustainable packaging products to replace plastic packaging will be consistently continued.

In view of ongoing cost inflation and further developments that are difficult to predict, the focus remains on compensating this weight by increasing selling prices as quickly as possible and reducing structural costs in order to catch up again in terms of margins.

The MM Group closely monitors the developments in Russia and Ukraine as well as the international measures and possible impacts on the Group. MM cumulatively generates approx. 9 % of the Group's EBITDA in Russia and Ukraine. In Russia, packaging products for the local demand of daily consumer goods are produced at two sites, St. Petersburg and Pskov. A downtime has to be expected. MM has stopped all cartonboard deliveries to Russia. In Ukraine, where MM produces packaging at the Cherkassy site in the center of the country, operations are currently very limited.


The press release and a video statement by the Management Board are available on the internet under www.mm.group.

The Annual Report 2021 will be available as of April 6, 2022.

Forthcoming Results:
April 26, 2022    Results for the 1^st quarter of 2022

For further information, please contact:
Stephan Sweerts-Sporck
Investor Relations
Mayr-Melnhof Karton AG
Brahmsplatz 6
A-1040 Vienna
Tel.: +43 1 501 36-91180
E-Mail: investor.relations@mm.group, 
Website: https://www.mm.group