- Further profit increase
- High capacity utilization
- Significant growth in results at MM Karton
- Higher costs weigh on margin at MM Packaging
- Slowing demand dynamics
- Growth course with acquisition of TANN Group continued

The Mayr-Melnhof Group was able to carry on the improved profitability level of the earlier part of the year with a good third quarter and hence to conclude after three quarters above the previous year. Both divisions reported ongoing high capacity utilization despite increasingly slowing market dynamics.

Supported by a profit increase in the cartonboard division, particularly due to better prices, the Group's operating profit came in more than 8 % above the comparative period of the previous year. The packaging division continued to grow, however, a strong rise in input costs, especially for cartonboard, put considerable pressure on margins. Price increases aiming to pass on costs are difficult to impose, or only possible with delay.

For the fourth quarter, maintaining the high level of profit remains a challenge.

In October, MM Packaging announced a significant growth step with the acquisition of the TANN Group. The acquisition is subject to the approval of the antitrust authorities. The transaction is expected to be closed at the beginning of 2019.

Group Key indicators (IFRS, unaudited)

consolidated in millions of EUR      1-3 Q/2018                1-3Q/2017                         +/-
Sales                                               1,763.1                          1,749.1                    +0.8 %
Operating Profit                                  172.3                             158.9                    +8.4 % 
Operating margin (in %)                         9.8%                              9.1%
Profit before tax                                  169.0                             151.9                    +11.3 %
Profit for the period                             126.4                             113.3                    +11.6 %
Earnings per share (in EUR)                  6.30                               5.65

In the first nine months of 2018, the consolidated sales of the Group totaled EUR 1,763.1 million and were thus slightly above the previous year's value (1-3Q 2017: EUR 1,749.1 million). Both divisions contributed to this.

At EUR 172.3 million, operating profit was 8.4 % or EUR 13.4 million above the comparative value of the previous year (1-3Q 2017: EUR 158.9 million). A significant profit increase at the cartonboard division contrasted with a decrease at the packaging division. The Group's operating margin thus climbed to 9.8 % (1-3Q 2017: 9.1 %).

Profit before tax at EUR 169.0 million was 11.3 % above the comparative figure of the previous year (1-3Q 2017: EUR 151.9 million). Income tax expense totaled EUR 42.6 million (1-3Q 2017: EUR 38.6 million), resulting in an effective Group tax rate of 25.2 % (1-3Q 2017: 25.4 %).

Profit for the period rose accordingly by 11.6 % to EUR 126.4 million (1-3Q 2017: EUR 113.3 million).


DEVELOPMENT IN THE THIRD QUARTER

In the third quarter of 2018, the company was successful in maintaining, both in sales and operating profit, the strong performance of this year's previous quarters as well as the good figures of the comparative quarter of last year. Capacity utilization of the facilities remained overall at a high level, although the positive momentum of the first half of this year was increasingly followed by a normalization of demand.

At around 99 % (1Q/2Q 2018: both 99 %; 3Q 2017: 98 %), the cartonboard division recorded continuing full capacity utilization. The division's operating margin amounting to 9.0 % did, however, not match the strong figures of the first two quarters of this year (1Q/2Q 2018: 10.3 % and 10.6 %), due to higher costs. Nevertheless, it remained significantly above the previous year (3Q 2017: 7.4 %).

The packaging division succeeded in achieving an operating margin of 9.7 %, mainly as a result of increased value in the product mix and savings, following 8.3 % and 8.6 % in the first and second quarter of 2018, and 10.3 % in the third quarter of the previous year.

The Group's operating profit reached EUR 58.0 million (1Q/2Q 2018: EUR 57.1 million and EUR 57.2 million; 3Q 2017: EUR 56.8 million), with an operating margin of 9.8 % (1Q/2Q 2018: 9.6 % and 9.9 %; 3Q 2017: 9.5 %) being achieved.

At EUR 42.7 million, the profit for the period exceeded last year's figure (3Q 2017: EUR 41.4 million) as well as those of the previous quarters (1Q/2Q 2018: EUR 41.7 million and EUR 42.0 million).


OUTLOOK

As a result of a well-stocked supply chain, demand in our markets and therefore also incoming orders are currently showing an increasingly slower pattern. Accordingly, competitive pressure has again intensified. On the fiber markets prices for mixed recovered paper grades have bottomed out. Furthermore, the price hike in pulp and mechanical pulp prices requires a price increase for virgin fiber-based board. Discipline in price and product policy as well as further rationalization are directed on securing the Group's profit quality. Nevertheless, maintaining the high profit level of the previous quarters remains a challenge for the fourth quarter.
 

Please find the detailed press release and the Interim Report for the first three quarters of 2018 on our website: www.mayr-melnhof.com

Forthcoming results:
March 19, 2019         Financial results for 2018

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
Fax: +43 1 501 36-191195
E-Mail: investor.relations@mm-karton.com
Website: http://www.mayr-melnhof.com