INTERIM REPORT JANUARY - JUNE 2002 - QUARTERLY REPORT APRIL - JUNE 2002

* Profit after net financial items Jan. ¡V June SEK 10 m (226)

April ¡V June SEK 6 m ( 37)

* Earnings per share after net financial items Jan. ¡V June SEK 0.05 (1.08)

April ¡V June SEK 0.03 (0.18)

* Cash flow per share Jan. ¡V June SEK -0.16 (0.82)

April ¡V June SEK -0.08 (-0.33)

* Shareholders¡¦ equity per share SEK 9.01 (31.12.2001: 9.40)

* Equity/assets ratio 71 % (31.12.2001: 73%)

* Recovery of pulp prices in USD during the second quarter. Pulp prices in USD expected to stabilize during the third quarter with possible further increase during the fourth quarter. Rottneros¡¦ delivered volumes during the first half of 2002 continued at high level.

* Earlier published prognosis for a positive full year result 2002 remains.

ROTTNEROS IN BRIEF

Rottneros, with its origins in the 1600s, is an independent and flexible supplier of customised, high-quality paper pulp. Through continuous product development, high delivery reliability, technical support and service, Rottneros is able to adapt to satisfy its demanding customers.

As one of the world¡¦s leading independent market pulp producers, Rottneros is a market leader in groundwood pulp for the open market and one of the main producers of other grades of pulp.

Rottneros has a total production capacity of more than 700,000 tonnes of pulp per year produced at five mills in Sweden and Spain, making the Group one of the ten biggest suppliers of market pulp in the world. Increasingly intensive product development in accordance with customers¡¦ demands should lead to more stable and higher profitability throughout an economic cycle.

THE PULP MARKET

The year 2001 ended with Norscan inventory of 1,760,000 tonnes. During the first quarter 2002 the Norscan inventory was reduced to 1,732,000 tonnes. Inventory reductions of 191,000 tonnes and 100,000 tonnes respectively then occurred in April and May. This left Norscan inventory down at 1,441,000 tonnes at the end of May. This was the first time since September of the boom year 2000 that Norscan inventory had fallen below the 1,500,000 tonne mark that is regarded as the clearest indicator of a strong pulp market. In June inventory decreased by a further 77,000 tonnes, with the result that at mid-year Norscan inventory stood at 1,364,000 tonnes.

Prices for the leading pulp qualities NBSK (Northern Bleached Softwood Kraft, i.e. bleached long-fibred sulphate pulp) and BEK (Bleached Eucalyptus Kraft, i.e. bleached eucalyptus sulphate pulp) in December 2001 and January 2002 stood at $465 and £á470 respectively. The price of NBSK then fell in the subsequent three months and in April stood at $430. This was the lowest listed price for NBSK since 1993. Thanks to the stronger pulp market, this negative trend has now been turned around and prices for NBSK were raised to $460 in May and $480 in June. In July a price of $500 per tonne was announced.

The main reason for the positive price trend for paper pulp in the first half of the year is that the fine paper market has improved compared with last year. Fine paper is the end-use area that is the biggest consumer of market pulp in general and short-fibred chemical pulp in particular. Helped along by an improved fine paper market, the price increase for BEK was able to be introduced a month earlier than that for NBSK. The price of BEK in March was £á445 and since then the price has risen steadily to £á475 in April, £á510 in May and £á520 in June. The effect on profits of the substantial increase in the price of NBSK pulp in the second quarter ¡V an improvement of over 10% ¡V has largely been offset by the weaker USD. Prices for the Group¡¦s other pulp products ¡V magnefite, CTMP and groundwood pulp ¡V are tracking the price trend for NBSK and BEK well.

PRODUCTION AND DELIVERIES

The Group¡¦s five pulp mills in Rottneros, Rockhammar, Utansjö, Vallvik and Miranda in Spain have a combined capacity of some 700,000 tonnes per year. Produc-tion in the first half of 2002 increased by 24,400 tonnes or 8% compared with 2001. Deliveries increased by 36,800 tonnes or 13%. The Group¡¦s order book has been good.

The average capacity utilisation at the mills during the reporting period was relatively high. The capacity utilisation was 92 % (82), which breaks down as magnefite pulp 88 % (86), groundwood pulp 87 % (65) and CTMP 95 % (92). The capacity utilisation for sulphate pulp was 94 % (86). The low capacity utilisation for groundwood pulp in 2001 was due to a weak market which recovered somewhat in 2002. In the first quarter 2002 the Group had no planned shut-downs for maintenance. In the second quarter 2002 the Group had maintenance shut-downs in Rockhammar, Utansjö and Vallvik. All the costs of maintenance shut-downs were reported in the period in which the shut-down took place. Maintenance shut-downs are scheduled at Rottneros in the third quarter and at Miranda in the fourth quarter.

In June 2001 the decision was taken to change from two shifts to one at the sawmill in Rockhammar, thereby reducing production as well as focusing on the manufacture of products based on a coarser range of raw materials. Annual capacity subsequently amounts to 65,000 m3. In the second quarter 2002 production amounted to 12,400 m3 (19,300) and deliveries amounted to 10,600 m3 (15 900). In the first half production in the sawmill amounted to 25,000 m3 (38,000), while deliveries amounted to 24,100 m3 (35,200).

INVOICED SALES AND RESULTS

January ¡V June 2002

The Group¡¦s net turnover was SEK 1,301 million (1,488). Pulp accounted for SEK 1,263 million (1,429) of the total net turnover and sawn timber for SEK 38 million (59).

There were three main elements to the SEK 187 million reduction in turnover in the first half. Lower pulp prices accounted for SEK -382 million, but this was partly compensated by a positive currency effect of SEK 25 million due to USD exposure as well as higher deliveries of SEK 170 million.

The consolidated operating loss amounted to SEK -13 million (212). The operating loss for the pulp-producing units amounted to SEK -10 million (230) and for the sawmill in Rockhammar SEK -3 million (-4).

The weaker operating result is mainly the result of lower pulp prices. The result was adversely affected by SEK 24 million in respect of forward contracts compared with the spot rate. The period also includes a positive effect of SEK 5 million as a result of pulp price hedging.

The profit after net financial items amounted to SEK 10 million (226) and includes net financial income of SEK 23 million (14) in the first half of 2002. In addition to the return on normal cash management, the net financial income for the first half includes capital gains primarily related to the disposal of hedge fund investments.

The parent company reported a loss after net financial items of SEK -18,4 million (-6.6), which includes capital gains on hedge funds.

Earnings per share after tax amounted to SEK 0.02 (0.76). Cash flow per share amounted to SEK -0.16 (0.82).

As announced in a press release on 22 November 2001, the Rottneros Group has signed a letter of intent to participate in the financing of AS Estonian Cell through a subordinated loan of NOK 125 million, equivalent to SEK 160 million. Negotiations are in progress and a decision on Rottneros¡¦ possible participation in the project will be made in 2002.

April ¡V June 2002 compared with April ¡V June 2001

Turnover in the second quarter 2002 fell by SEK 15 million compared with the second quarter 2001. The reduction is mainly due to lower pulp prices, accounting for SEK -120 million, and a weaker USD which accounts for SEK ¡V35 million, which was partly compensated by an increase in deliveries of SEK 140 million. Net financial items in the second quarter 2002 also includes capital gains. The profit after net financial items in the second quarter 2002 amounted to SEK 6 million compared with SEK 37 million in the same period last year.

April ¡V June 2002 compared with January ¡V March 2002

In comparison with the first quarter 2002, turnover in the second quarter fell by SEK 9 million. The reduction is due to a lower USD, accounting for SEK -28 million, but also to a lower volume of SEK -5 million. On the other hand, higher pulp prices improved the result by SEK 24 million. In the second quarter maintenance costs of approx. SEK 20 million were incurred, while there were no scheduled maintenance shut-downs in the first quarter. Net financial items in the second quarter also includes capital gains, e.g. on hedge funds. The profit after net financial items in the second quarter 2002 amounted to SEK 6 million compared with SEK 4 million in the first quarter of 2002.

ACCOUNTING PRINCIPLES

The accounting principles are the same as those applied in the last annual report.

RISK MANAGEMENT

Since 2000 the Group has had a strategy of trying to achieve a positive result even in years when the pulp market is in downturn. For this reason the Group applies operating strategies aimed at evening out business over an economic cycle and a financial strategy aimed at alleviating the effects of economic fluctuations, e.g. by hedging currency rates as well as pulp and electricity prices, as well as otherwise using its financial resources to achieve its aim of making a profit when the pulp market is in downturn.

Rottneros bases all its pulp pricing on the USD. Although the USD rate has weakened in recent months, in the first half of the year the Group benefited from the fact that the average USD rate relative to SEK was 2% higher than in 2001. This has resulted in a positive effect on profits of SEK 25 million. At the same time, currency hedging agreements have affected the result negatively by SEK 24 million during the reporting period compared with the spot rate. The net effect of the dependence on the USD thus amounted to SEK 1 million. At the end of the second quarter 2002 exchange rate guarantees had been taken out for USD 162 million against SEK, at an average rate of SEK 10.07 per USD. Of these contracts, USD 44 million relate to the year 2002, at an average of 9.74. Hedging has not been done for other currencies.

Over the past eight quarters the company has hedged pulp prices in SEK at levels of approx. SEK 5,200 per tonne, amounting to 27,000 tonnes annually Long-term customer agreements with price equalisation profiles in relation to NBSK have been signed, which is entirely in line with the company¡¦s niche strategy. The company also hedges electricity prices.

BUY-BACK OF THE COMPANY¡¦S OWN SHARES

In the second quarter 2002 the company commenced the new buy-back programme approved at the Annual General Meeting on 24 April. A maximum of 10% of the shares may be bought back, i.e. 18.8 million shares. The aim of the planned buy-back is partly to optimise the company¡¦s capital structure, and partly to create opportunities to use its own shares as liquidity in future acquisitions.

The company took the special measures decided on at the AGM on 24 April with a view to reducing the administration period for starting the new buy-back programme from around 5-6 months to 1 month. These measures included reducing the capital stock by withdrawing ordinary shares, issuing redeemable ¡¥series C¡¦ shares and subsequently redeeming these same ¡¥series C¡¦ shares.

In the second quarter 1,064,000 of the company¡¦s shares were bought back at an average price of SEK 10.49 per share, making a total of SEK 11,158,122. The number of outstanding shares at the end of the reporting period is 187,334,895. A latest settlement date of 30 June 2002 was used for reconciliation. At the end of the first half of 2002 the company had purchased a further 146,733 shares with settlement dates after 30 June 2002, at an average price of SEK 10.04 per share ¡V totalling SEK 1,473,022.

CAPITAL INVESTMENT AND FINANCIAL POSITION

The Group¡¦s net capital investment in fixed assets amounts to SEK 112 million (89). The major investments include a SEK 20 million energy optimisation project and a SEK 15 million control system for the bark boiler in Utansjö, a SEK 10 million washing filter in Miranda as well as a SEK 5 million chimney in Vallvik.

Liquid funds amounted to SEK 366 million at the end of the period, compared to SEK 480 million at the beginning of the year. The company has no interest-bearing loans. Unutilised lines of credit totalled SEK 797 million. The equity/assets ratio was 71 %. Surplus liquidity is invested in low-risk securities in accordance with the company¡¦s liquidity policy. In order to increase the return on surplus liquidity, the company has invested SEK 60 million in four different hedge funds since June 2001. These funds were realised in the second quarter and a capital gain of SEK 9 million was reported under net financial items. The return on this investment in hedge funds has been 15 % since the investment was made halfway through 2001. The company intends to use the funds released primarily to buy back its own shares. Shareholders¡¦ equity per share amounted to SEK 9.01 after taking into consideration translation differences in equity (31.12.2001: 9.40).

AVERAGE NUMBER OF EMPLOYEES

The average number of employees in the reporting period was 847 (867).

OUTLOOK FOR 2002

In the year-end release for 2001, which was published on 7 February 2002, the following forecast was made: ¡§To start with year 2002 is distinguished by a weak market with low pulp prices. An increase in the global economy should bring an increasing pulp market. Against this background a positive result for the year 2002 can be expected¡¨.

An increase in price to USD 500 per tonne for NBSK has been announced. The pulp price in USD is expected to stabilize during the third quarter with possible increase during the fourth quarter. Earlier released prognosis for a positive result for the whole of year 2002 remains valid.

UPCOMING FINANCIAL INFORMATION

24 October ¡V Interim report (9 months)

For more information please visit the Rottneros website at www.rottneros.com.

Upplands Väsby, 30 July 2002

Lars Blecko

President and CEO

This report has not been reviewed by the company¡¦s auditors.

See attached file