Mayr-Melnhof (MM) Group's CEO, Peter Oswald, made the following comments about the Group's first three quarters of 2022:
"The MM Group recorded organic growth of nearly 6% in Packaging in the first three quarters. This demonstrates that demand for our natural, recyclable products from renewable fibers stayed high and that customers esteem our investments in competitive sites, innovation and sustainability.
The acquisition of Essentra Packaging, finalized at the beginning of October, marked a further milestone in the past two years transformation of MM concentrating on value enhancing acquisitions and focused organic growth combined with a strong emphasis on the improvement of productivity. This acquisition positions MM as a global player in secondary pharma packaging and contributes to more resilience and growth throughout our business.
Performance in the 3rd quarter remained strong, although behind the exceptional high level of the 2nd quarter, which allowed for an important rise in results for the first three quarters of 2022 in a very challenging cost and operating environment.
We continued to mitigate significant cost inflation through price adjustments, cost control and efficiency gains. Moreover, the inclusion of the cartonboard and paper mills MM Kwidzyn and MM Kotkamills, which we acquired at the beginning of August 2021, had a particular impact on the income statement.
While Packaging registered an ongoing solid order intake, the order backlog of Board & Paper saw a significant reduction throughout the 3rd quarter towards a pre-pandemic level due to the filled supply chain. This required selective temporary downtime aside the rebuilding work for the production of more Absorbex® from MM Kotkamills. Despite recurring bottlenecks on our procurement markets, we managed to keep up a steady supply of our customers.
For the 4th quarter, we expect impacts from necessary adjustment measures and ongoing selective temporary downtime in the Board & Paper division. Although a recessionary scenario must be assumed for the economy as a whole, most of our business areas are expected to set forth a rather robust development despite further destocking in the supply chain filtering through. In the current rapidly changing environment safeguarding of profitability stays our top priority."
Outlook
"Against the backdrop of a looming recession, we expect selective downtime measures to continue, predominantly in Board & Paper due to further destocking. However, our end markets are resilient and non-cyclical since they are focusing on products of daily needs.
In the current rapidly changing environment, we place top priority on preserving profitability while closely following up on necessary structural adjustment measures for more efficiency, sustainability and innovation. In the 4th quarter a particular focus has been directed on the planned reorganization of production at the Slovenian MM Kolicevo mill to concentrate production from the small board machine 2 on the larger and advanced board machine 3 which is strengthened by significant current investments. For the acquisition of Essentra Packaging, the positive contribution from the current result is expected to be offset by one-off expenses from the initial consolidation.
As already indicated, capex for the Group will be on a high level also in 2023 in order to reduce energy consumption, raise quality and increase output. In Board & Paper, all machine rebuilds, which are an integral part of the current major investment programs, at Frohnleiten in Austria, Neuss in Germany and Kolicevo in Slovenia are now scheduled for implementation during 2023.
In Packaging, top priority is the post-merger integration of Essentra Packaging while major capex will focus on expansions for further specializations in Poland and France. Intended improvements, optimization of the product portfolio as well as expansive effects will gradually take effect from 2024 onwards.
Looking forward, we aim to increase the share of renewable energies and to expand further in order to meet the growing demand for innovative, sustainable fiber-based packaging. Although 2023 will most likely be a difficult year, we are well positioned to further develop our business."
MM Group's complete three quarters 2022 report and CEO comments can be found on the Group's website: www.mayr-melnhof.com.
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