Peter Oswald, MM CEO, comments: “The development of the MM Group in the 1st half-year reflects the continuing weak demand in the cartonboard and paper sector after the record year 2022.
As already communicated in mid-June, the significant decline in results is mainly attributable to the weak volume development in the division MM Board & Paper. In contrast, the division MM Packaging was able to record an overall positive performance with the successful integration of last year's acquisitions in the resilient pharmaceutical packaging sector and factoring in one-off restructuring costs.”
The historically unusual decline in volumes on the European cartonboard market was higher than expected, mainly as a result of the restraint in consumer spending due to inflation as well as reduction of high inventories at customers. In addition, MM recorded considerable capex-related downtime at the Frohnleiten and Neuss board mills in the 1st half-year. Together with the annual maintenance downtime at the Kwidzyn pulp mill, this led to a significant decline in volumes and results in the MM Board & Paper division.
Due to the weak overall economy and sluggish private consumption, there are currently no signs of an improvement in demand. As a result, substantial machine downtime will again be necessary at Board & Paper in the 3rd quarter, aligning production with market demand. Taking this into account, a recovery of results is not yet predictable. In response, a profit and cash protection program has been initiated aiming at comprehensive cost savings, optimizing working capital and reducing new capital expenditures.
“Securing long-term value creation, resilience, and growth in sustainable and innovative packaging for consumer goods is at the core of our business model. Through strengthening our competitiveness and quality leadership during our recent transformation as well as strategic investments in a competitive asset base and product portfolio, the MM Group is very well positioned to benefit from a promising long-term perspective.”, underlines Oswald.
• Results below previous year as expected
• Growth in pharma packaging due to previous year’s acquisitions
• Inflation-related restraint in consumer spending weighs on end markets
• Strong decline in volumes at MM Board & Paper related to market demand and capex
• No recovery in 3Q foreseeable
• Profit and cash protection program initiated
• Adaptation of investment program: Kwidzyn project start postponed to 2024
• Margin improvement – central aim of the initiated measures
Source: MM Group
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