UPDATE 2-Metsa Board to pay dividend again after turnaround

Thu Feb 7, 2013 10:44am EST

* Proposed dividend higher than expected

* Q4 core operating profit 25 mln euros, meets consensus

* Forecasts rise in first quarter 2013 profit

* Shares jump nearly 6 percent (Recasts with background on restructuring, adds quote, updates shares)

HELSINKI, Feb 7 (Reuters) - Packaging board maker Metsa Board said it would pay a dividend for the first time since 2008 after a restructuring plan helped it turn profitable last year.

The Finnish company, formerly known as M-real, has spent the past few years selling or closing most of its paper production business to focus instead on consumer packaging.

Metsa Board on Thursday proposed an annual dividend of 6 euro cents per share, more than the market's consensus for 3 cents in a Reuters poll.

It forecast a rise in first-quarter core earnings, showing a confidence that has become rare in Europe's forestry products industry.

Metsa shares rose 5.7 percent to 2.41 euros by 1506 GMT.

"Compared to companies like Stora Enso and UPM-Kymmene, this is a very positive guidance. The outlook for the packaging market seems especially good," said analyst Markku Jarvinen from Evli brokerage. "Furthermore, shareholders do like dividends."

The company is Europe's market leader in folding boxboard (FBB), used in cereal, chocolate and cigarrette packets, with a market share of about 30 percent.

Most of its boxboard sales are to major global brands such as Unilever and Nestle.

Metsa Board CEO Mikko Helander told a conference call the company is now ready to boost its annual FBB production by 16 percent, or 150,000 tonnes, with its expanded capacity.

"The (FBB) market outlook is positive and we succeeded in booking very good additional volumes in our annual contract negotiations... We are optimistic that we will succesfully sell new capacity, and increase sales and delivery volumes," he said.

FBB was becoming more popular than plastic, glass and recycled paperboard packaging, Metsa said.

Analysts, before Thursday's results, expected the company's core operating profit to grow this year to 124 million euros from 74 million euros in 2012. ($1 = 0.7387 euros) (Reporting by Jussi Rosendahl; Editing by Louise Ireland and Ritsuko Ando)

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