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Edited Transcript of MMK.VA earnings conference call or presentation 17-Mar-20 7:00am GMT

Full Year 2019 Mayr Melnhof Karton AG Earnings Pre-Recorded Presentation

Vienna Mar 20, 2020 (Thomson StreetEvents) -- Edited Transcript of Mayr Melnhof Karton AG earnings conference call or presentation Tuesday, March 17, 2020 at 7:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Franz J. Hiesinger

Mayr-Melnhof Karton AG - CFO & Member of the Management Board

* Wilhelm Hörmanseder

Mayr-Melnhof Karton AG - Chairman of the Management Board & CEO

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Presentation

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Wilhelm Hörmanseder, Mayr-Melnhof Karton AG - Chairman of the Management Board & CEO [1]

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Good morning, ladies and gentlemen. It is a great pleasure presenting to you Mayr-Melnhof Group Annual Results 2019. In a conference call today at 9:30 a.m. Vienna Time, I'll be pleased to answer your questions. The dial-in details are displayed at the end of this video and on our website.

Today's results are again a positive event, since we can report a continuation of our group's course of success with another record result and a further dividend increase in succession. Even in a weak economic environment, our focus on relentless implementation of industrial excellence in cost, technology and innovation created resilience and a sustained upbeat for MM.

Both divisions made a significant contribution and reported overall good volume development. The cartonboard division accelerated its favorable path from last year and recorded again high capacity utilization of 97%.

Consistent pricing, gains in European market share, in particular, with new products and declining costs, especially for fibers, could be translated in a significant earnings rise.

In the packaging division, the prime driver of growth was the integration of (inaudible) [TANN GROUP], which fully meets our expectations. The technological proximity and shared best practice open up attractive potential, which already started to realize in the integration year.

In the ongoing packaging business, measures aimed at improving cost efficiency, adding new business and value where we are systematically implemented to sustain a good performance in a high competitive market.

In line with the group's significant earnings growth, we will propose to the annual shareholders meeting a dividend increase to EUR 3.6 per share after EUR 3.2 the year before. This follows an upward trend throughout more than 2.5 decades.

Our strategy to base market leadership in cartonboard packaging on cost, technology and innovation leadership, and the strong performance of the entire MM team made this possible.

How we improved performance in 2019 from a financial point of view will now be presented by our CFO, Franz Hiesinger.

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Franz J. Hiesinger, Mayr-Melnhof Karton AG - CFO & Member of the Management Board [2]

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In 2019, the Mayr-Melnhof Group once again demonstrated good progress with strong earnings. High volume, consequent pricing and cost management were the main contributors to our ongoing business, while the initial consolidation of the TANN GROUP, had a strong positive impact on our 2019 financial accounts.

Group sales rose mainly acquisition-related to over EUR 2.5 billion. Europe continues to be our most important market with the sale share of 83%, while Asia and Middle East has come up to a 10% share.

Overall profitability of our business stepped up with an operating margin reaching 10% and a return on capital employed of more than 15%.

Operating profit was 18% or EUR 40 million above the previous year, while the packaging division, accounting for around 60%, and the cartonboard division for around 40% of this increase.

The EBITDA of EUR 390 million or more than 15% of sales demonstrates the ongoing strong cash generation of the MM Group. We paid out EUR 268 million net for the TANN acquisition, invested more than EUR 150 million in the future of the MM Group with a focus on state of the art technology and cost reduction.

In addition, we distributed EUR 64 million on dividends. Due to this significant outflow of funds, our previous net cash position turned to net debt of about EUR 220 million by year end. However, with a shareholder equity of EUR 1.5 billion and an equity ratio of 62%, our financing remained on very solid grounds.

The return on equity after tax of 13% demonstrates that the funds yield high in the MM Group. The solid financial position of the group provides, even after financing of the TANN acquisition, sufficient room for further growth.

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Wilhelm Hörmanseder, Mayr-Melnhof Karton AG - Chairman of the Management Board & CEO [3]

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Coming to the outlook. We see European economies currently facing low momentum. Nevertheless, private consumption continues to demonstrate a stable development, and in line with this, the demand for cartonboard packaging. Against this background, our plans register an overall high utilization since the beginning of the year.

After the record year 2019, it's always our target to follow up best possible into 2020. Following a good start into the year, we see, however, challenges to increase throughout the further course of the year. Nonetheless, the MM Group enters the new decade, strengthened at a high level and well positioned as a market leader in Europe and globally in many attractive markets.

After 30 years with MM, 25 of them on the management board and 18 years as its CEO, this is for me personally in our moment of thanks to all who have accompanied me. Over the past 3 decades, we have built together a company that has created truly sustainable value under often very challenging conditions. The recipe for this success is, in my view, the cohesion of our excellent MM team, for which I thank all our employees most sincerely. The strong entrepreneur spirit will stay the driving force for MM.