MM Group: Results for the first quarter of 2024

Peter Oswald, MM CEO, comments: “The MM Group recorded a decline in both Group sales and adjusted operating profit in the 1st quarter of 2024 compared to the previous year’s value, due to the earnings performance in the Board & Paper division. The destocking in the supply chain has been largely completed, leading to a significant recovery of volumes sold in Board & Paper. However, pressure on margins continued as expected, as price increases will only compensate for the recent rise in production costs from the 2nd quarter onwards. In contrast, the Packaging division recorded a slight increase in results compared to the previous year, even though the margin was below the strong level of the 3rd and 4th quarter of 2023.

Against this background, the profit & cash protection programme, which has already been successfully implemented, and the measures to intensify market penetration will be systematically continued in 2024.

As consumer spending on everyday goods remains subdued, the end markets continue to record hardly any growth. In particular, the development of sales prices will remain decisive for the earnings situation in 2024.”, underlines Oswald.

Income statement
At EUR 1,025.0 million, the Group’s consolidated sales were below the previous year's figure (1Q 2023: EUR 1,122.1 million), primarily due to price-related declines in both divisions.

Adjusted operating profit decreased by EUR 39.1 million from EUR 78.7 million to EUR 39.6 million. This decrease is primarily due to the recent increase in production costs in the Board & Paper division, which are to be offset by higher sales prices from the 2nd quarter onwards. The Group’s adjusted operating margin was therefore 3.9 % (1Q 2023: 7.0 %).

Financial income amounted to EUR 6.6 million (1Q 2023: EUR 1.3 million). The increase in financial expenses from EUR -10.8 million to EUR -21.4 million resulted in particular from higher interest rates for variable-interest loans. “Other financial result - net” changed from EUR -3.1 million to EUR -6.8 million, mainly owing to currency translations.

Profit before tax thus totalled EUR 18.0 million after EUR 49.0 million in the previous year. Income tax expense amounted to EUR 7.1 million (1Q 2023: EUR 14.1 million), resulting in an effective Group tax rate of 39.6 % (1Q 2023: 28.7 %).

Thus, profit for the period decreased from EUR 34.9 million to EUR 10.9 million.

Outlook
Despite significant volume increases compared to the previous year in the Board & Paper division, there are still hardly any signs of growth on the consumer goods end markets. Under these conditions, MM is focusing on margin-conscious market share gains and a consistent continuation of the profit & cash protection programme, which has been successfully implemented to date.

The upward trend in production costs is to be compensated by an ongoing improvement in sales prices. This development in particular will remain decisive for the profit situation in 2024.