Welcome, everyone, to the announcement of our 2025 half-year results. I'm really pleased to report a 29% increase in adjusted operating profit in the first half. This strong performance was primarily driven by our Board & Paper division, which delivered a significant earnings uplift due to our profit improvement program, Fit for Future, at two major mills in a difficult market. In light of this success, we have now launched the Fit for Future program on a group-wide scale to deliver a structural and sustainable improvement in earnings quality. We are confident that this program will enable us to achieve structural, sustainable profit improvements of over EUR 150 million by 2027, compared to the 2024 excluding TAN baseline and excluding market-related fluctuations. The sale of TAN Group was completed on schedule in the second quarter, resulting in a preliminary run-off income of EUR 127 million.
Strategically, this move allows us to concentrate on our core business of consumer packaging, having divested the tipping paper business at a time of record profitability. Now, let's come to the performance of our divisions. Food & Premium Packaging continued to deliver solid returns driven by service excellence and innovation. Following the deconsolidation of TAN in early June, we also report figures excluding TAN for your analytics. Our main goal is now to sharpen our competitive edge for more organic growth and higher profitability. Pharma & Healthcare Packaging experienced mixed market dynamics. The U.S. market showed growth; however, Europe showed a slight decline. Nevertheless, the division successfully offset the lack of volume growth through productivity gains, as reflected by the margin improvement in Q2. In addition, a footprint optimization in Southwestern Europe is underway to enhance competitiveness and efficiency.
Finally, MM Board & Paper operated in a sideways moving European cartonboard market, while the uncoated fine paper market experienced a sharp downturn since the beginning of the year. Overall, we could slightly increase sales and production volumes. Input cost developments had a largely neutral effect so far this year. Thanks to the early contributions from the Fit for Future program, our self-help, adjusted operating profit for Board & Paper improved despite this more difficult trading environment. At this point, I would like to thank all my colleagues for their excellent work. Well done. Keep on the good work. Now, looking at our group balance sheet, it stayed solid with an equity ratio of 47% and a gearing at 50%. Net debt to adjusted EBITDA is 2.5, nearly unchanged from year-end 2024.
The reason why net debt did not reduce following the divestment of TAN was mainly a sharp reduction in trade liabilities driven by a maximal usage of cash discounts. Half-year CapEx amounted to approximately EUR 105 million, below both last year's level and depreciation. For the full year, we expect CapEx to stay below EUR 250 million, which is less than originally anticipated. We continue to benefit from long-term financing at low-interest rates, which we fixed in 2021. Earlier this year, we launched a share buyback program for up to 1 million shares to take advantage of our undervalued share price. As of August 1th, we have repurchased around 436,000 shares, representing 2.2% of all outstanding shares. Sustainability remains a top priority for us, and we are proud to report a further reduction in our carbon footprint with a 5% decline in the first half of the year.
Our continuous investment really yields a benefit now. This is also recognized by the outside world. We received an A rating from CDP in the climate category and maintained leadership positions in the forest and water security categories. Furthermore, our inclusion in CDP's supplier engagement leadership board highlights our commitment to responsible sourcing. EcoVadis awarded a gold rating, placing us amongst the top 5% of companies assessed. Let's now look at the crystal ball of the future. We expect markets to remain soft. We don't see any upward movement. There will be persisting overcapacities, especially in virgin cartonboard. Whilst our exports to the U.S. are less than 1% of our sales, U.S. import duties will have significant negative secondary effects, especially on the European virgin cartonboard market. Order intake in both packaging divisions is currently flat.
In the second half of this year, our board and paper division will be impacted by annual maintenance standstills. In Poland, we will even have a cold outage done every five years. Therefore, the financial impact will be higher than usual at a level of approximately EUR 40 million. Two-thirds of the profit impact will be in Q3, and one-third will be in Q4. As a result of these standstills and due to the absence of TAN 's contribution, earnings in the second half of this year are expected to be lower than in the first half. That said, we remain fully committed to enhancing long-term profitability. As emphasized earlier this year, we will do whatever it takes to strengthen our earnings base.
We, the whole management team of MM, are confident that the Fit for Future program will play a vital role in MM 's long-term success, contributing over EUR 150 million in structural, sustainable profit improvements by 2027, compared to the 2024 excluding TAN baseline and excluding market fluctuations. This program is not about some short-term savings. It's about structural cost improvements for the long term. We will continue to inform you regularly on the progress of this important program. In summary, MM is well positioned to create sustainable value backed by a solid financial foundation, but most importantly, a cost and market leadership position in our core consumer packaging business. Thank you for your attention.
Welcome, ladies and gentlemen, to the audio webcast interview on the MM's interim results for the first quarter of 2025.
I'm pleased to have the company's CEO, Peter Oswald, with me for some firsthand insights. Peter, could you please share with us your reflections on the start of the year 2025 for the Group?
Yes, I am pleased that results were nicely up compared to the start of last year, but still not at an acceptable level. The improvement was mainly driven by our Board & Paper division. Also, Food & Premium Packaging increased profits and showed again a strong performance. Pharma Packaging came in somewhat below last year's level due to smaller one-off effects and delayed rollout of weight reduction products. Overall, market demand remained soft.
What were the drivers of the significantly improved board and paper operating profit?
Interestingly, the improvement of our results was to a large degree driven by our internal profit improvement program. This means we had only marginal market tailwind for volumes and prices. Our main costs, energy, wood, and paper for recycling, were broadly in line with last year, and personnel costs were up in Europe in general. I think that's very important because it proves that we can step by step improve our results by self-help, even if we have no tailwind from the markets.
Capacity development in the European cartonboard industry has been a key topic of discussions for quite some time. How do you view this in the context of the current year?
Yeah, the overcapacity issue has turned significantly more severe for virgin fiber board, whereas it had somewhat eased in recycled board. In the case of virgin fiber board, we are now talking about roughly 1 million tonnes of excess capacity after net new capacity has been added in Finland. For recycled board, the figure will be around 500,000 tonnes after a mill closure in Spain. We shouldn't forget, imports are rising. Therefore, further capacity reductions in Europe are an absolute necessity for both grades. However, we shouldn't be too optimistic because experience tells us to expect that these obvious capacity reductions take much longer than rational behavior would dictate. This is for all sorts of reasons like over-optimism about markets and plastic substitution, overestimation of one's strength, indecisiveness, or procrastination. At MM Board & Paper, we have done our homework with machine closures in Austria, Slovenia, and Poland.
We have no longer any obvious case for consolidation. We enjoy a strong network of mills and excellent products. Our top priority continues to be to reduce costs in order to be the clear cost leader in every market.
U.S. tariffs have been very much on the agenda throughout the past weeks. In how far is or could be the Group affected?
Yeah, fortunately, our board and paper exports to the U.S. account for less than 1% of our total sales. We are currently hardly directly affected. We are also operating six converting plants in the U.S. in pharma packaging, which purchase locally and sell within the U.S. As such, we are also not impacted by the tariffs in packaging either. However, we do plan to expand our exports to the U.S., and if tariffs are imposed, we would have to slow down that plan. Additionally, it is expected that overcapacity in virgin fiber board in Europe will continue to rise as Nordic producers are currently exporting significant volumes to the U.S., which they may want to redirect back to Europe, obviously depending on the tariffs in the U.S. Fortunately, as for recycled board, U.S. tariffs are practically irrelevant because recycled board isn't in any significant way exported to the U.S.
Covering shortly financials, your gearing was up and your cash down after three months compared to year-end 2024. What is the reason behind, and do you expect CapEx to continue also at around EUR 55 million throughout the subsequent quarters?
Yeah, we shouldn't overinterpret the quarterly numbers. End of 2024, we probably overdid our working capital management. In Q1, we were not focused enough and we reduced our factoring. The share buyback cost us around EUR 25 million. The correct figure is somewhere in between the two numbers. With regards to your question on CapEx, we are sticking to our full-year guidance of approximately EUR 300 million.
At the end of last year, you announced the divestment of TAN Group. How is this proceeding?
It's proceeding well. We are on schedule to close the transaction in the first half of 2025. This will make our balance sheet even stronger.
Looking ahead, how do you assess further progress this year?
Yeah, given the current soft demand situation and the high levels of uncertainty, especially with regards to the U.S. tariffs, we expect market conditions to remain challenging. This is the basis for our management actions and management plans. Our top priority is to consistently strengthen MM's competitiveness by pursuing cost, technology, and innovation leadership. Our comprehensive efficiency and optimization programs are well on track and will provide stability and support even in a difficult market environment.
Peter, thank you very much for this interview.