Mayr Melnhof Karton : Report for the first quarter of 2021

1Q 21

REPORT FOR THE 1ST QUARTER OF 2021

MAYR-MELNHOF KARTON AG

• Ongoing good demand and capacity utilization
• Sales and result slightly below previous year
• Significant increase in input prices weighs on profit of MM Karton
• Price increases in both divisions in implementation
• Result of the 2nd quarter expected below 1st quarter

MM GROUP

Group Key Indicators

		1st Quarter
		Jan. 1 - Mar. 31,		Jan. 1 - Mar. 31,	+/-
(consolidated, in millions of EUR)		2021	2020
Consolidated sales		641.3		646.6		- 0.8 %
EBITDA		92.7		98.9		- 6.3 %
Operating profit	61.2		64.6		- 5.2 %
Operating margin (%)		9.6 %		10.0 %		- 44 bp
Profit before tax	58.6		62.8		- 6.7 %
Income tax expense		(14.7)		(17.7)
Profit for the period	43.9		45.1		- 2.8 %
Net profit margin (%)		6.8 %		7.0 %
Earnings per share (in EUR)		2.18		2.25		- 3.1 %
Cash flow from operating activities		77.8		84.5		- 7.9 %
Capital expenditures (CAPEX)		60.3		31.2		+ 93.3 %
Depreciation and amortization		31.5	34.3	- 8.4 %

Balance sheet date

Mar. 31, 2021	Dec. 31, 2020

Total equity (in millions of EUR)

Total assets (in millions of EUR)

Equity ratio (%)

Net debt (-) (in millions of EUR)

Employees

1,603.7		1,547.1
3,551.2	2,399.6
45.2 %		64.5 %
- 110.3	- 122.2
10,022		9,938

2	MAYR-MELNHOF KARTON AG, 1Q/2021

MM GROUP

Group Report

DEAR SHAREHOLDERS,

Your Company recorded overall high capacity utilization with robust demand for cartonboard packaging in the 1st quarter of 2021. Sales and operating profit were slightly below the previous year's level. An increase in result in the packaging division was offset by a significant decline in the cartonboard division.

In the cartonboard division, the drastically rising prices of recovered paper over the last few months, but also higher prices for energy, pulp, chemicals and logistics, led to a significant cost inflation after last year's cost deflation. For this reason, MM Karton has already increased the prices for recycled fiber- based cartonboard in two steps, effective in the 2nd quarter and again in the middle of the year. In the case of virgin fiber-based cartonboard, prices are also to be increased in the middle of the year where there is no longer-term validity. The cost increases for cartonboard, paper, inks and varnishes, which are clearly noticeable by MM Packaging in the 2nd quarter, will mainly be passed on from the middle of the year onwards.

The objective is to return in the second half of the year 2021 to the earnings level of the 1st quarter in the Group's current business after an expected decline in result in the 2nd quarter.

INCOME STATEMENT

Consolidated sales of the Group amounted to EUR 641.3 million in the first three months of 2021, almost reaching the previous year's level (1Q 2020: EUR 646.6 million).

At EUR 61.2 million, the operating profit was 5.2 % or EUR 3.4 million below the comparative value of the previous year (1Q 2020: EUR 64.6 million). An increase in the packaging division was contrasted by a decline in the cartonboard division. In the previous year, one-off expenses in the amount of EUR -8.6 million were included, which were divided equally between the two divisions. The Group's operating margin was at 9.6 % (1Q 2020: 10.0 %).

Financial income of EUR 0.5 million (1Q 2020: EUR 0.4 million) contrasted with financial expenses of

EUR -3.6 million (1Q 2020: EUR -2.1 million). "Other financial result - net" amounted to EUR 0.5 million

(1Q 2020: EUR -0.1 million).

MAYR-MELNHOF KARTON AG, 1Q/2021

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MM GROUP

Accordingly, profit before tax at EUR 58.6 million was 6.7 % below the previous year's value (1Q 2020: EUR 62.8 million). Income tax expense amounted to EUR 14.7 million (1Q 2020: EUR 17.7 million), resulting in an effective Group tax rate of 25.2 % (1Q 2020: 28.2 %).

Profit for the period decreased slightly from EUR 45.1 million to EUR 43.9 million and earnings per share from EUR 2.25 to EUR 2.18.

ASSETS, CAPITAL, AND LIQUID FUNDS

The Group's total assets amounted to EUR 3,551.2 million as of March 31, 2021, after EUR 2,399.6 million at the end of 2020. The Group's total equity grew mainly profit-related from EUR 1,547.1 million to EUR 1,603.7 million.

Financial liabilities, principally of a long-term character, increased from EUR 268.4 million at the end of the previous year to EUR 1,339.2 million as of March 31, 2021. This rise results in particular from the issue of Schuldschein loans and Namensschuldverschreibungen in the amount of EUR 1,000 million to finance the acquisitions and organic growth projects. In parallel, total cash available to the Group increased from EUR 146.2 million to EUR 1,228.9 million. Net debt thus amounted to EUR 110.3 million (December 31, 2020: EUR 122.2 million). The equity ratio went down to 45.2 % (December 31, 2020: 64.5 %).

Non-current assets rose from EUR 1,397.9 million to EUR 1,427.0 million, mainly due to higher capital expenditures. At EUR 2,124.2 million, current assets were above the end of 2020 (EUR 1,001.7 million), in particular due to the growth in cash and cash equivalents.

CASH FLOW DEVELOPMENT

Cash flow from operating activities amounted to EUR 77.8 million, after EUR 84.5 million in the first three months of the previous year. This change resulted in particular from a lower cash-effective result.

Cash flow from investing activities changed from EUR -36.7 million to EUR -64.1 million, mainly as a result of higher payments for the acquisition of property, plant and equipment and intangible assets. Investments focused on expansions and growth projects in both divisions.

Cash flow from financing activities changed from EUR -28.7 million to EUR 1,066.2 million, primarily due to the issue of Schuldschein loans and Namensschuldverschreibungen.

4	MAYR-MELNHOF KARTON AG, 1Q/2021

MM GROUP

OUTLOOK

With well-filled order books, we see growing demand for cartonboard and packaging also in 2021. In view of the continuing increase in input prices for fibers, energy, chemicals and logistics, the focus is currently on passing them on. The objective is to return in the second half of the year 2021 to the earnings level of the 1st quarter in the Group's current business after an expected decline in result in the 2nd quarter.

In addition to the necessary price increases, our intensified investments in the future and growth projects in several mills of MM Karton and MM Packaging got off to a good start. As reported, the main emphasis is on improving cost structures and increasing market penetration with sustainable, innovative fiber-based packaging solutions. However, this is also accompanied by selective adjustment and restructuring measures in the portfolio, as currently planned at MM Graphia Bielefeld in the 2nd quarter. By relocating the production volume to other MM Packaging sites in Germany, but also in Russia, Ukraine and Asia, competitiveness is to be increased. This measure is expected to result in one-off expenses of EUR 25 - 30 million in the 2nd quarter.

The closing of the Kotkamills acquisition in Finland continues to be expected in the middle of the year and that of Kwidzyn in Poland in the 3rd quarter of 2021.

MAYR-MELNHOF KARTON AG, 1Q/2021

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