- Growth in sales and profit
 - High capacity utilization
 - Growth driver MM Packaging
 - Rise in recovered paper prices weighs on MM Karton margin
 - Dividend increase

The Mayr-Melnhof Group was again able to maintain its position on the whole in 2016, a year characterized by little dynamics and intense competition on its European main market, increasing both sales and profit. Due to the wide geographical sales spectrum and close cooperation with customers from different consumer goods industries, both divisions achieved high levels of capacity utilization in spite of the weak market environment.
The packaging division provided noticeable growth and profit impulses, particularly as a result of the integration of the latest acquisition in France as well as a favorable product mix. In contrast,
MM Karton's margins came under increasing pressure following a significant rise in the prices for recovered paper as from the third quarter. The objective is therefore to pass on the cost increase through higher cartonboard prices.
In line with the positive profit development, a recommendation will be made to the 23^rd Ordinary Shareholders' Meeting on April 26, 2017, to increase the dividend to EUR 3.00 per share for the financial year 2016, following EUR 2.80 per share (sum of EUR 1.60 interim dividend and EUR 1.20 dividend) for 2015.
 

GROUP KEY INDICATORS - IFRS
 
in millions of EUR 
                                                                        2016                           2015                  +/-

Sales                                                            2,272.7                    2,181.5              +4.2 %
Operating Profit                                               213.7                       199.9              +6.9 %
Operating margin (in %)                                      9.4 %                       9.2 %
Profit before tax                                               209.2                       190.6              +9.8 %
Income tax expense                                         (55.8)                      (48.5)
Profit for the year                                              153.4                      142.1               +8.0 %
Earnings per share (in EUR)                                7.67                        7.08                

The Group's consolidated sales rose by 4.2 % to EUR 2,272.7 million and were thus EUR 91.2 million above the previous year's amount (2015: EUR 2,181.5 million). This increase is primarily due to the acquisition-related higher business volume at MM Packaging.
 
At EUR 213.7 million, operating profit was 6.9 % or EUR 13.8 million higher than in the previous year (2015: EUR 199.9 million). A clear increase in profit in the packaging division contrasted with a decline in the cartonboard division. The Group's operating margin was thus 9.4 % (2015: 9.2 %).
The return on capital employed amounted to 15.9 % (2015: 16.1 %).
 
With the persistent low euro key interest rate, financial income totaled EUR 3.1 million (2015: EUR 2.2 million) while financial expenses were EUR -6.1 million (2015: EUR -6.3 million).
 
Profit before tax increased by 9.8 % to EUR 209.2 million after EUR 190.6 million in the previous year. Income tax expense amounted to EUR 55.8 million (2015: EUR 48.5 million), resulting in an effective Group tax rate of 26.7 % (2015: 25.4 %).
 
Profit for the year thus rose by 8.0 % to EUR 153.4 million (2015: EUR 142.1 million), with the net profit margin increasing slightly from 6.5 % to 6.7 %.
 
OUTLOOK ON THE FINANCIAL YEAR 2017
The general conditions in our main European markets remain challenging. Against the backdrop of weak dynamics in the general economic environment, demand for cartonboard packaging is still restrained. In contrast, there are sufficient supply capacities that are gradually growing as a result of constant optimization.The business climate in our sector is sustainably characterized by intense competition over prices and volumes. At the same time, significantly higher recovered paper prices compared to the beginning of 2016 have further increased tensions.

Nevertheless, the aim for 2017 is to continue the long-term course of success in both cartonboard production as well as cartonboard processing and to grow further while maintaining margins the best possible. In the cartonboard division, the focus is on volume increases, especially through product optimizations as well as on passing on the higher recovered paper prices. In the packaging division particularly measures to raise productivity are intended to strengthen the profit level of the business with higher throughput.
We will continue our usual scope of investment activity focusing on reducing direct costs. The special investment project started last year, new gas and steam turbine power station at the cartonboard mill in Frohnleiten, will be completed on schedule in the course of the year and put into operation at the beginning of 2018. Costs will amount to between EUR 40 and 45 million
 
Owing to the short-term nature of the business, it is not yet possible to provide a forecast for the result of 2017. However, the record result achieved in 2016 presents a challenging new level for our ambitions.
Our growth course applies unchanged in both core business areas, cartonboard and folding cartons, and will be pursued value-oriented, organically as well as through acquisitions.

The press release and a video presentation by the Management Board are available on the internet under www.mayr-melnhof.com.

The Annual Report 2016 will be available on April 5, 2017.
 
Forthcoming Results:
May 18, 2017 - Results for the first Quarter of 2017


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