Moelven earned close to NOK 95 million on operations in the third quarter 2009. This figure is almost NOK 90 million more than the result for the same period last year.
Operating revenues for the Group in the third quarter totalled NOK 1 522 million (1 780). Total operating revenues for the first three quarters of the year were NOK 4 749 million (5 934), while the overall result was NOK 30 million (198). The strong profit figure in the third quarter is due to capacity adjustments and cost-cutting measures implemented in many Moelven companies in the wake of the financial crisis, combined with a seasonal good demand for wooden building materials.
- The financial crisis, which also affected Moelven rather hard in the second half of 2008, forced the Group to adjust operations to a lower level of market activity. One unfortunate consequence was that a number of employees lost their jobs. Moelven is now emerging from the crisis, however, as a more flexible company and with a cost level that is having a positive effect on the company's results, says CEO and President Hans Rindal of Moelven Industrier ASA.
The president and CEO is quick to add that demand for wood products has been very good in the third quarter, causing a seasonal upturn that is boosting results for the sawmill and planing divisions in Moelven.
- After having fallen for some time, prices for sawn wood began to rise toward the end of the second quarter. The reason for the upward price trend has been large reductions in production internationally. Production has fallen more than demand overall, which has led to an increase in prices even though the underlying demand is relatively unchanged, explains Mr. Rindal.
Moelven's Building Systems division, however, which is largely oriented toward the commercial building market, has had a challenging market situation in the third quarter.
- The Building Systems division is the last division to be affected by the downturn in the economy, and several of the companies in the division now have very low order reserves. The reason for this situation is the low rate of new-build activity in the commercial building sector, which particularly affects the building module companies, says Mr. Rindal.
New commercial building projects on hold
Mr. Rindal says that the activity level of Moelven's divisions mirrors the effect of the government's stimulus packages aimed at helping the economy.
- Demand for rehabilitation and additions are good as a result of lower interest rates and tax breaks for private individuals in Sweden. The weak market for new commercial building projects shows just how difficult it is for the government to micromanage fluctuations in the economy because of the long-term nature of decision-making in this area. The effect of the government's measures has been very little on new-build projects, while many more maintenance projects have been initiated in the past few months in the public sector than is normal, says Mr. Rindal.
Mr. Rindal is full of admiration for the many employees who have contributed immensely during this difficult period.
- Hard-working Moelven employees at all levels have been the key to getting the company back on a profitable course. Unfortunately I am not sure that we are out of the crisis yet, but I don't think we will again experience the dramatic plummet we had the past year. For Moelven's part, many necessary adjustments have fortunately already been made, says Mr. Rindal.
Outlook Despite positive signs in the economy recently, a full recovery after the financial crisis is expected to take time. It will take some time before underlying demand improves enough to have a positive impact on market activity. The risk of a new, although less serious, downturn when the government's stimulus packages are used up or are discontinued exists. The Moelven Group is emphasising having sufficient flexibility in the organization to be able to quickly adjust to changing market conditions.
Overall, the fourth quarter 2009 and the first quarter 2010 will be challenging for the Group because of the normal seasonal slowdown combined with a weak economy. However, because of the cost-cutting and efficiency measures that have been implemented the past year, the Group is better prepared to meet the challenges than was the case at this time last year.
Timber prices will increase in the fourth quarter, thereby increasing the cost of raw materials for the Group's timber consuming plants. On the other hand, this price increase should boost availability of raw materials to the sawmills.
For further information: CEO, Hans Rindal, mobile (+47) 90696910
Director of Finance, Morten Sveiverud, mobile (+47) 90 98 06 67 Director of Communication and Human Resources Kristin Vitsø Bjørnstad, mobile (+47) 90713701 Communication Consultant, Tom E. Holmlund, mobile (+47) 91668668