Interim Report January-March 2001

INTERIM REPORT JANUARY - MARCH 2001 HIGHLIGHTS * The operating profit amounted to MSEK 703, which may be compared with MSEK 641 for the first quarter of 2000, excluding divested activities. The fourth quarter operating profit was MSEK 438. Profit after financial items amounted to MSEK 699 compared with MSEK 605 for the first quarter of 2000 excluding divested activities (first quarter of 2000 including divested activities: MSEK 823). The fourth quarter profit in 2000 amounted to MSEK 424. The profit for the period after tax amounted to MSEK 490 (607), which corresponds to earnings per share of SEK 6.10 (6.80). The return on equity was 13.4 per cent (15.0). * The market conditions for newsprint and magazine paper were still good, and Holmen Paper's order situation remained strong. Prices were raised at the beginning of the year. The market conditions for paperboard were weaker during the first quarter of 2001 than in the corresponding period of last year. Iggesund Paperboard raised the prices of solid bleached board and folding boxboard. * Holmen's Board has made a decision in principle on an investment in a new paper machine for production of wood-containing printing paper. Production start is planned for the end of 2003/beginning of 2004. Net turnover and results Net turnover amounted to MSEK 4,116 (first quarter of 2000: 3,685). Fourth quarter turnover amounted to MSEK 4,048. The operating profit amounted to MSEK 703 (641, excluding divested activities) and the operating margin was 17.1 per cent (17.2). The improvement in the result was due to higher selling prices. The operating profit increased by MSEK 265 in relation to the fourth quarter of 2000, mainly due to higher selling prices and lower costs. The return on operating capital was 13.5 per cent (15.6 excluding divested activities). The return on equity was 13.4 per cent (15.0). Earnings per share amounted to SEK 6.10 (6.80). Holmen Paper The market conditions for newsprint and magazine paper are still good, but deliveries are growing at a slacker rate. First quarter deliveries of newsprint to Western Europe were 1 per cent lower than in the first quarter of 2000 while MF Journal deliveries were up by 3 per cent, SC paper by 2 per cent and coated printing paper by 3 per cent. Holmen Paper's first quarter deliveries declined in relation to the fourth quarter, when delivery volumes were very high. Production capacity was utilised to the full, except for a planned production stop for rebuilding. Stocks rose from a very low level at the start of the year, but they are still low for the time of year. The order situation remained strong. Prices were raised at the beginning of the year. The operating profit for the January-March period amounted to MSEK 495 (294). The improvement was largely due to the effects of higher prices and to a positive contribution from Papelera Peninsular. Higher prices were also the main reason behind the MSEK 190 improvement in the result in relation to the fourth quarter of 2000. Lower delivery volumes had an adverse effect on the result. High maintenance costs were charged during the previous quarter. Quarter Full year Holmen Paper 1-01 4-00 1-00 2000 Net turnover, MSEK 2,041 2,137 1,699 7,618 of which external customers 2,041 2,137 1,699 7,618 Operating profit, MSEK 495 305 294 1,389 Operating margin, % 24 14 17 18 Return on operating capital, % 23 14 18 17 Production, 1,000 tonnes 394 402 362 1,535 Deliveries, 1,000 tonnes 369 434 349 1,560 Iggesund Paperboard Deliveries of virgin fibre-based paperboard from West European producers remained largely unchanged in relation to the previous quarter. The order intake showed a seasonal increase, but was lower than during the corresponding period in 2000. Iggesund Paperboard's deliveries declined by 3 per cent in relation to the fourth quarter, and market related production stops were made. The prices of folding boxboard and solid bleached board were raised at the beginning of the year. Iggesund Paperboard's operating profit for the January-March period amounted to MSEK 142 (174). Higher selling prices had a favourable effect on the result, while variable costs, including the cost of chemicals, rose. The figures for the first quarter of 2000 included the positive effect of restocking on the result. Workington's profitability is still unsatisfactory. The result improved by MSEK 50 in relation to the fourth quarter of 2000, mainly due to higher paperboard prices. A production stop for an investment project to raise quality will decrease production of solid bleached board and profit for the second quarter. Quarter Full year Iggesund Paperboard 1-01 4-00 1-00 2000 Net turnover, MSEK 1,102 1,076 991 4,186 of which external customers 1,094 1,070 985 4,162 Operating profit, MSEK 142 92 174 569 Operating margin, % 13 9 18 14 Return on operating capital, % 11 8 15 12 Production, paperboard, 1,000 tonnes 106 107 115 442 Deliveries, paperboard, 1,000 tonnes 104 107 97 415 Iggesund Timber The sawn timber market is still experiencing excess supply and prices decreased during the quarter. The operating result for the January-March period was a loss of MSEK 16 (loss 12). The deterioration in the result is mainly due to higher variable costs as well as lower prices and lower delivery volumes for whitewood. The result was MSEK 4 better than in the fourth quarter of 2000 (excl. structuring costs). Quarter Full year Iggesund Timber 1-01 4-00 1-00 2000 Net turnover, MSEK 180 202 193 762 of which external customers 180 202 193 762 Operating loss, MSEK 16 84 12 116 Operating margin, % 9 11 6 7 Return on operating capital, % 15 74 11 28 Production, 1,000 m3 87 99 95 374 Deliveries, own sawmills, 1,000 m3 85 96 89 360 Holmen Skog The cost of pulpwood at Holmen's mills rose by 5 per cent in relation to the first quarter of 2000 as a result of increases in market prices in the autumn of 2000. The operating profit for the January-March period was MSEK 100 (136). The deterioration is largely due to the lower volume harvested in the company forests. In relation to the fourth quarter of 2000 - which included negative periodisation items - the result declined by MSEK 8. Holmen Skog's result comes largely from sales of wood harvested in company forests. This volume represents some 50 per cent of the Group's demand for wood in Sweden. Quarter Full year Holmen Skog 1-01 4-00 1-00 2000 Net turnover, MSEK 1,172 979 1,191 4,117 of which external customers 672 526 689 2,257 Operating profit, MSEK 100 108 136 466 Holmen's wood consumption, 1,000 m3 1,115 1,163 1,158 4,546 Harvesting in company forests, 1,000 m3 390 620 479 2,338 Holmen Kraft Holmen Kraft's operating profit for the January-March period amounted to MSEK 36 compared with MSEK 41 for the fourth quarter. In relation to the first quarter of 2000, the result has declined by MSEK 45, largely due to lower prices for electric energy in the new contracts. Holmen Kraft's result is largely earned on the production of electric energy at wholly or part-owned hydro-electric power stations, which meet some 35-40 per cent of the Group's electricity requirements in Sweden. Quarter Full year Holmen Kraft 1-01 4-00 1-00 2000 Net turnover, MSEK 308 347 351 1,110 of which external customers 129 113 119 356 Operating profit, MSEK 36 41 81 99 Holmen's electricity consumption, GWh 1,004 1,051 1,016 4,171 Holmen's production of electricity, GWh 465 365 506 1,552 FINANCING The cash flow before payment of dividend amounted to MSEK 662. The ordinary dividend, amounting to MSEK 720, and the extra dividend of MSEK 4,798 were disbursed during the quarter. The Group's net financial liability increased to MSEK 4,603 (December 31, 2000: asset +294). The debt-equity ratio was 0.38 (negative 0.02). The equity ratio was 49.0 per cent (64.7). CAPITAL EXPENDITURE The Group's capital expenditure amounted to MSEK 319 (231). Depreciation according to plan amounted to MSEK 281 (248). EMPLOYEES The average number of employees in the Group was 5,211 (full year 2000: 5,275). DECISION IN PRINCIPLE ON INVESTMENT Within the framework of the Group's strategic direction, Holmen's Board decided at its meeting on April 26, 2001 on the principles of an investment in a new machine for the production of wood-containing printing paper. The location - which may be at the Braviken Paper Mill in Norrköping, Sweden, or at Papelera Peninsular in Madrid, Spain - will be determined before the Board makes its final decision, which will also depend on for instance the question of permits being clarified with the relevant authorities. The intention is to bring the new machine into production at the end of 2003 or in the beginning of 2004. (This decision in principle is covered in more detail in a separate press release.) ACCOUNTING PRINCIPLES This interim report has been made up in compliance with the Swedish Financial Accounting Standards Council's Recommendation RR 20 Interim Reports. In compliance with the Swedish Financial Accounting Standards Council's Recommendation RR 9 Income Taxes, deferred tax liability in respect of the Group's forest holdings and deferred tax receivables are stated gross in the consolidated balance sheet. As a result of this change, the value of fixed assets has increased by MSEK 1,715, deferred tax liability has increased by MSEK 1,906, and deferred tax receivable by MSEK 191 as of December 31, 2000. In other respects, the same accounting principles and calculation methods have been applied as for the prior year's final accounts. Stockholm April 26, 2001 Per Ericson President and CEO ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2001/04/26/20010426BIT01360/bit0001.doc Full Report http://www.bit.se/bitonline/2001/04/26/20010426BIT01360/bit0001.pdf Full Report

About Us

Holmen is a forest industry group that manufactures paperboard, paper and wood products and runs forestry and energy production operations. In 2016 Holmen’s net sales were SEK 15.5 billion and the group has approx. 3 000 employees. Holmen’s shares are listed on Nasdaq Stockholm, Large Cap. For more information, visit holmen.com

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