Mayr-Melnhof Karton (MMK) H1 2024 earnings summary

Executive summary

• Sequential and year-over-year improvement in results, with Board and Paper returning to operating profit and higher volumes, though 1st half-year results were below prior year due to lower pricing.

• Packaging now reported in two divisions: Food and Premium Packaging, and Pharma and Healthcare Packaging, for greater transparency.

• Food and Premium Packaging saw some profit decline but maintained record 2023 results; Pharma and Healthcare Packaging showed steady progress post-Essentra acquisition.

• Cash flow and free cash flow significantly improved; balance sheet remains stable; carbon footprint reduced by 23% year-over-year.

• Persisting consumer restraint and weak economic environment impacted demand.

Financial highlights

• 1st HY 2024 sales: €2,043.9m (-6.3% vs. 1st HY 2023); adjusted EBITDA: €201.7m (-15.0%).

• Board and Paper volumes substantially up; sequential and year-over-year profit improvement.

• Pharma and Healthcare Packaging EBITDA improved 2.5x pro forma post-Essentra integration; EBIT target of 10% by 2026.

• Capital expenditures: €145.5m (down from €217.8m); cash flow from operations: €200.6m (+33.7%).

• Capacity utilization in Board and Paper increased to around 90% in H1 2024, up from 75-80% in 2023.

Outlook and guidance

• Annual maintenance shutdowns in Q3 expected to reduce Board and Paper volumes by about 25,000 tons, with a double-digit million euro impact.

• Cost-cutting measures to have full impact in 2025, with gradual benefits starting in H2 2024.

• Energy cost hedges are a drag in 2024 but expected to be more favorable in 2025.

• CapEx for 2024 to be comfortably below €300 million; 2025 CapEx to be significantly lower.

• Consumer spending expected to remain restrained; margin pressure from overcapacity in cartonboard industry.