Metsä Group Reports Half-Year and Second Quarter 2025 Operating Results

Aug. 4, 2025 - Metsä Group on July 31 reported half-year and second quarter 2025 operating results.

Events During the Second Quarter of 2025

The average sales prices of Metsä Group's softwood market pulp were 5% higher in Europe and 6% lower in China than in the previous quarter.

Demand for market pulp was weak in both Europe and China. Metsä Fibre has curtailed its pulp production at the Joutseno mill for the time being.

Metsä Group's paperboard delivery volumes de-creased slightly from the previous quarter. Average paperboard prices remained stable. The uncertainty caused by the US import duties in particular has negatively affected customers' purchasing behaviour.

To improve profitability and competitiveness, the Tako board mill was closed permanently. The mill's production ended in June 2025, and production was transferred to Kyro board mill.

Change negotiations at the Kreuzau tissue paper mill were concluded.

Jussi Vanhanen assumed his post as President and CEO of Metsä Group on 1 July 2025.

Result Guidance July-September 2025

In July-September 2025, Metsä Group's comparable operating result is expected to be weaker than in April-June 2025.

Events After the Review Period

Due to prolonged weak profitability and the uncertain market outlook, Metsä Group is to initiate the planning of a significant cost savings and profit improvement programme. The aim of the programme is to achieve annual cost savings of approximately EUR 300 million, which are expected to be implemented gradually from 2026.

The planning of the cost savings and profit improvement programme is to be completed by the end of the current quarter. According to the plans, the programme will focus on procurement and logistics costs, the wood supply chain's optimisation from the forest to production units, and the reduction of fixed costs. The programme does not include permanent or temporary closures of production units.

In addition to the cost savings programme, each Metsä Group's business area will aim to improve its result by updating and sharpening its commercial strategy.

CEO Comments

President and CEO Jussi Vanhanen said, "Metsä Group's result in the second quarter of 2025 was clearly negative. This was mainly due to the increased uncertainty in world trade. The US administration first raised tariffs on Chinese imports and later on nearly all other countries' imports. Metsä Group's customers reacted as any rational company would: cautiously. In the short term, uncertainty about the level of tariffs was no less problematic than the tariffs themselves. In addition, consumer confidence weakened in both Europe and the US in the first half of the year.

"In the second quarter, Metsä Group's pulp deliveries declined by more than 30% from the first quarter. Our pulp customers in Asia especially were concerned about their sales and profitability development and significantly reduced their sales volumes at the beginning of the quarter. This led to a decrease in prices. Demand in Asia recovered slightly towards the end of the quarter. In Europe, demand decreased to some extent in most end-use sectors due to increasing economic uncertainty.

"Our US paperboard customers reduced their order volumes due to the uncertain tariff situation. We have avoided losing customers permanently so far, but prolonged uncertainty increases the risks. In Europe, demand remained stable.

"Higher costs — especially those of wood raw material — also weakened the profitability of all Metsä Group business operations in the second quarter. The purchase prices of Metsä Group's wood took a downward turn during the quarter but remained at a historically high level.

"In recent years, Metsä Group's operations have focused on growing the business, which is important for the company and its owner-members in the long term. In line with our ownership strategy, all our production is in Northern Europe, but a third of our sales go outside Europe. Metsä Group is therefore susceptible to changes in global trade flows.

"After the review period, the United States and the EU reached a preliminary agreement under which the US will impose a 15% tariff on almost all imports from Europe, including forest industry products. The competitiveness of Nordic forest industry on the US market will depend both on local competition and on the tariff agreements the US makes with other countries. At this stage, it seems that our competitiveness is weakening compared to both American and Canadian operators. The regionalisation of supply chains initiated by the pandemic will probably continue. Our significant growth investments in the tissue paper business and wood products industry will be completed during the next year. They are based on demand in Europe.

"Metsä Group's equity ratio remains strong, and we must ensure that it continues to do so. Our current profitability level is unsustainable and does not enable new growth investments. We cannot just wait for a potential improvement in economic cycles but must instead focus on improving profitability. We are therefore initiating the planning of launching a cost savings and profit improvement programme, aiming for cost savings of at least EUR 300 million by the end of 2026.

"We have considerable savings opportunities in procurement and logistics, fixed costs, and the optimisation of wood consumption. This calls for increasingly close internal cooperation throughout the organisation. More detailed planning of cost savings projects is underway and will be completed by the end of the third quarter.

"Over its history, Metsä Group has faced various challenges and change and development needs, to which our employees have always responded with persistent effort. We will also address the current profitability challenge through determined cooperation."

Near-Term Outlook

The demand for wood will particularly concern thinning sites suitable for summer harvesting and crown wood in terms of energy wood. Demand for forest management services is expected to remain strong.

In much of Europe, the outlook for construction remains muted, and this is reflected in the weak demand for spruce plywood in particular. However, demand for Kerto LVL products remains stable. The overall demand for birch plywood is expected to remain stable, but industrial customers' demand for speciality plywood products is expected to pick up.

In the UK, demand for the upgrading business is expected to remain stable in the DIY segment but weaker than normal in the wholesale customer segment and new construction in the coming months.

Overall demand for softwood market pulp is expected to improve slightly but remain lower than normal as uncertainty about global economic development and tariff negotiations related to trade policy undermine overall demand for paper and paperboard products. Demand for sawn timber is expected to decline slightly during the third quarter on a seasonal basis.

The annual maintenance shutdown of the Äänekoski bioproduct mill will take place in the third quarter.

Consumers' cautious purchase behaviour and the supply of fresh fibre paperboards increasing faster than demand, especially in the EMEA region, continue to affect paperboard demand. Tensions in global trade policy, especially the import duties imposed by the US, increase uncertainty and make it difficult to predict the trend in paperboard sales. In July-September 2025, Metsä Board's overall paperboard deliveries are expected to remain at largely the same level as in April-June.

Demand for tissue and greaseproof papers is expected to remain stable.

Metsä Group has its roots in the Finnish forests: our parent company Metsäliitto Cooperative is owned by over 90,000 forest owners. The Group focuses on wood supply and forest services, wood products, pulp, paperboards, and tissue and greaseproof papers.

SOURCE: Metsä Group

Total U.S. Containerboard Production Decreased 5 Percent in Q2 2025

July 28, 2025 - The American Forest & Paper Association (AF&PA) released the Q2 2025 Containerboard Quarterly report. According to the report, total containerboard production in Q2 decreased 5% compared to Q2 2024. It was down 3% when compared to the same six months of 2024.

The operating rates for all four major grades in Q2 2025 declined from Q1, with the overall rate dropping 2.7 points.

Production for export has declined nearly 12% year-to-date. Domestic new supply, however, has only declined 1.2%.

Inventories at mills peaked in May, climbing to their highest level in over 15 months, and then declined slightly to end the quarter at 433 thousand short tons.

A subscription to the complete report with detailed tables, charts and historical data can be purchased by contacting Kory Bockman at [email protected] or 202-463-4716.

About AF&PA

The American Forest & Paper Association (AF&PA) serves to advance U.S. paper and wood products manufacturers through fact-based public policy and marketplace advocacy. The forest products industry is circular by nature. AF&PA member companies make essential products from renewable and recycle resources, generate renewable bioenergy and are committed to continuous improvement through the industry's sustainability initiative — Better Practices, Better Planet 2030: Sustainable Products for a Sustainable Future.

The forest products industry accounts for approximately 5% of the total U.S. manufacturing GDP, manufactures about $350 billion in products annually and employs about 925,000 people. The industry meets a payroll of about $65 billion annually and is among the top 10 manufacturing sector employers in 43 states.

SOURCE: AF&PA

Sappi Europe to Close Two Paper Machines at Alfeld Mill in Germany

July 9, 2025 - Sappi Europe on July 8 announced the initiation of a consultation process at its Alfeld Mill in Germany as part of a proposed partial asset restructure. This step is being taken in response to sustained financial challenges and a structural decline in demand across Europe.

The Alfeld mill produces coated and uncoated packaging and specialty papers, along with chlorine-free bleached pulp. The mill houses five paper machines.

The board produced on PM1 is double coated on one and two sides on an offline coating line. PM2 to PM5 produce single-sided smooth papers. PM2, PM3 and PM4 also have inline coating units and calendaring capabilities with paper surfaces suitable for the specialty papers segment.

Over recent years, Sappi has taken considerable steps to improve the financial performance of its Alfeld Mill. However, despite reducing losses significantly, the complexity of the current product and asset portfolio has limited the mill's ability to operate sustainably under current and foreseeable market conditions.

To ensure long-term viability, the proposed restructure includes the potential closure of Paper Machine 1, Paper Machine 4, Offline Coater 2, and Sheet Finishing. These changes would allow Sappi to align capacity with shifting market demand, reduce operational complexity, and concentrate production on the most profitable and in-demand segments.

"As we respond to evolving market expectations for lower-carbon, resource-efficient materials and work to ensure a competitive and resilient future for our European operations, these difficult decisions are necessary," said Marco Eikelenboom, CEO of Sappi Europe. "This step supports our broader commitment to the Clean Industrial Deal, by accelerating the decarbonisation of our mill and adapting our product portfolio to better meet future customer needs and regulatory requirements. By focusing on our most efficient assets, we can strengthen our service offering, enhance sustainability and secure long-term regional viability."

The proposed restructure supports Sappi Europe's strategy of optimising its asset base to match evolving customer needs and sustainability goals.

The consultation process may affect up to 200 positions at the Alfeld Mill. Sappi remains committed to supporting employees throughout this process and will work closely with employee representatives to find appropriate solutions.

Headquartered in Brussels, Belgium, Sappi Europe is the leading European producer of coated graphic paper as well as packaging and speciality papers.

SOURCE: Sappi Europe

PCA Agrees to Buy Greif Containerboard Business for $1.8 Billion

July 1, 2025 (Press Release) - Packaging Corporation of America (NYSE: PKG) today announced that it has entered into a definitive agreement to purchase the containerboard business of Greif, Inc. for $1.8 billion in cash. The transaction is expected to close by the end of PCA's third quarter, subject to certain customary conditions and regulatory approvals.

The Greif containerboard business includes two containerboard mills with approximately 800,000 tons of production capacity and eight sheet feeder and corrugated plants located across the United States. The business generated approximately $1.2 billion in sales and $212 million of earnings before interest, taxes, depreciation and amortization (EBITDA) for the 12 months ended April 30, 2025 (the LTM period).

Synergies are estimated to generate pre-tax benefits of approximately $60 million and are expected to be fully realized within two years after closing. The synergies are projected to come from improved operational and production capabilities and efficiencies at the mills, increased integration, mill grade optimization and lower transportation costs. Approximately one half of the benefits are expected by the end of the first year with the remainder being received by the end of the second year.

The purchase price represents a multiple of 8.5X LTM EBITDA and, with $60 million in benefits from synergies, the purchase price represents a multiple of 6.6X LTM EBITDA. The acquisition is expected to be accretive to earnings immediately.

PCA is expected to finance the transaction with $1.5 billion of new debt and cash on hand. PCA's pro forma leverage ratio (net debt to EBITDA) will be approximately 1.7X after completion of the transaction.

PCA CEO Mark Kowlzan said, "This acquisition furthers PCA's profitable growth strategy. The mills nicely complement PCA's system and will provide containerboard to support PCA's continued corrugated products growth. We expect to achieve significant synergies with minimal capital investment through our operational expertise and will identify even more opportunities within the combined system for future high return investments to grow with our corrugated and sheet feeder customers. We will continue to generate significant cash flows and value for our shareholders."

PCA President Tom Hassfurther added, "We have a great deal of respect for Greif and are very pleased to have reached agreement to acquire this business. Greif's people have developed deep and lasting relationships with their customers, who we look forward to serving with Greif's well capitalized facilities. It is a very strong cultural fit with us in terms of safety, innovation, growth and dedication to serving the needs of customers. We will apply the sales, customer service and operational expertise of the combined organization to even better serve our corrugated and sheet feeder customers and achieve additional growth and profitability."

BofA Securities provided financial advice to PCA and provided committed financing for the transaction.

PCA is the third largest producer of containerboard products and a leading producer of uncoated freesheet paper in North America. PCA operates eight mills and 86 corrugated products plants and related facilities.

SOURCE: Packaging Corporation of America (PCA)