Interim Report January - June 2002

INTERIM REPORT JANUARY - JUNE 2002 Quarter January-June MSEK 2-02 1-02 2002 2001 Net turnover 4,027 3,938 7,965 8,213 Operating profit 616 743 1,359 1,366 Profit after financial 572 705 1,277 1,309 items Profit after tax 514 499 1,013 917 Earnings per share 6.43 6.24 12.67 11.47 (before dilution), SEK Return on equity, % 14.8 14.4 14.6 13.5 - The Group's profit after financial items for January-June was MSEK 1,277 (January-June 2001: 1,309). Holmen Paper's operating profit declined by MSEK 258, while Iggesund Paperboard's operating profit increased by MSEK 181. The profit for the second quarter amounted to MSEK 572 (January-March: 705). The first quarter result includes MSEK 110 from the divestment of a replaced paper machine. - The profit after tax was MSEK 1,013 (917), which corresponds to earnings per share of SEK 12.67 (11.47). The return on equity was 14.6 per cent (13.5). - The market for newsprint and magazine paper remained weak. Holmen Paper's deliveries were higher than in the first quarter, but production remained restricted. Prices were unchanged. The market for paperboard remained weak. Iggesund Paperboard's deliveries and prices remained unchanged from the first quarter. Production was restricted, but to a lesser extent than previously. BUSINESS AREAS Holmen Paper Quarter January-June Full year 2-02 1-02 2002 2001 2001 Net turnover, MSEK 2,029 1,894 3,923 4,214 8,757 Operating profit, MSEK 364 470 834 1,092 2,410 Operating margin, % 18 25 21 26 28 Return on operating 15 20 17 25 26 capital, % Production, 1,000 376 362 738 788 1,586 tonnes Deliveries, 1,000 383 345 728 743 1,525 tonnes The market for newsprint and magazine paper remained weak. Deliveries of newsprint to Western Europe from west European producers were 8 per cent lower during the first half of the year than for the corresponding period in 2001. The capacity utilisation of west European producers ben efited from increased exports from Western Europe and reduced imports from Canada. Deliveries of magazine paper were slightly more stable, with a decline of some two per cent for both SC and LWC grades. The LWC market continues to be characterised by considerable over-capacity. Holmen Paper's deliveries during the January-June period were 2 per cent lower than during the corresponding period in 2001. During the second quarter deliveries increased by 11 per cent in relation to the first quarter's low level. The prices of uncoated products were stable during the quarter. Capacity utilisation was restricted due to the order situation and the commissioning of a new paper machine. The operating profit for January-June was MSEK 834 (1,092). The result was adversely affected by lower volumes and lower prices, which was partly offset by positive currency effects. The result includes a profit of MSEK 110 from the divestment of the old machine in connection with the installation of a new paper machine at the Hallsta Paper Mill. The operating profit for the second quarter was MSEK 364 (Q1, 2002: 470). Excluding the profit generated by the sale of the paper machine at Hallsta, the result improved by MSEK 4. Deliveries increased, while the commissioning and trimming of the new paper machine increased costs. Holmen Paper produces newsprint and magazine paper at three mills in Sweden and one in Spain. Iggesund Paperboard Quarter January-June Full year 2-02 1-02 2002 2001 2001 Net turnover, MSEK 1,209 1,205 2,414 2,155 4,467 Operating profit, MSEK 190 186 376 195 455 Operating margin, % 16 15 16 9 10 Return on operating 18 17 18 8 9 capital, % Production, 115 106 221 198 403 paperboard, 1,000 tonnes Deliveries, 110 110 220 201 410 paperboard, 1,000 tonnes The market for solid bleached board and folding boxboard remained weak in Western Europe during the second quarter. Deliveries from west European producers, however, increased in January-June by 3 per cent on the same period in 2001 as a result of increased exports outside Western Europe. Iggesund Paperboard's deliveries for January-June increased by 9 per cent compared with the same period in 2001. Deliveries and prices remained unchanged from the first quarter. Production was restricted, but to a lesser extent than previously. Iggesund Paperboard has announced price increases for solid bleached board and folding boxboard for the autumn of 2002. The operating profit for January-June amounted to MSEK 376 (195). The improvement in the result is due primarily to higher delivery volumes and favourable currency effects as well as to lower costs than during the corresponding period in 2001, during which there was a production stop for rebuilding. The operating profit for the second quarter amounted to MSEK 190 (Q1, 2002: 186). Higher maintenance costs were offset by lower costs for wood and energy. Iggesund Paperboard produces solid bleached board and folding boxboard at two mills in Sweden and one in England. Iggesund Timber Quarter January-June Full year 2-02 1-02 2002 2001 2001 Net turnover, MSEK 148 157 305 376 712 Operating loss, MSEK 2 6 8 36 79 Production, 1,000 m3 55 56 111 165 299 Deliveries own 54 63 117 177 322 sawmills, 1,000 m3 The market for sawn timber remained weak. The operating result for January-June was a loss of MSEK 8 (loss 36). The improvement is mainly due to lower costs. In comparison with the first quarter, the result improved by MSEK 4 to a loss of MSEK 2 owing to lower costs. Iggesund Timber produces sawn timber at one sawmill in Sweden. Holmen Skog Quarter January-June Full year 2-02 1-02 2002 2001 2001 Net turnover, MSEK 929 948 1,877 2,177 3,982 of which external 561 564 1,125 1,258 2,306 customers Operating profit, MSEK 105 128 233 179 455 Wood consumption at Group's Swedish 946 945 1,891 2,121 4,144 mills, 1,000 m3 Harvesting in company 639 530 1,169 894 2,394 forests, 1,000 m3 The operating profit for January-June was MSEK 233 (179). The level of harvesting in company forests was higher while prices were lower. In comparison with the first quarter, the result deteriorated by MSEK 23 to MSEK 105, mainly due to seasonally higher costs, which were partly offset by a higher level of harvesting in company forests. Holmen Skog's profit is mainly generated by the sale of wood harvested from company forests. Holmen Kraft Quarter January-June Full year 2-02 1-02 2002 2001 2001 Net turnover, MSEK 247 295 542 559 1,108 of which external 85 123 208 224 439 customers Operating profit/loss, 2 18 16 41 49 MSEK Electric power consumption 971 882 1,853 1,988 3,998 at Group's Swedish mills, GWh Group production of 333 459 792 782 1,578 electric power, GWh The operating profit for January-June was MSEK 16 (41). The decrease in the result is mainly due to lower prices. In comparison with the first quarter, the result declined by MSEK 20 to a loss of MSEK 2, largely due to a seasonal decrease in power generation. Holmen Kraft's result is primarily generated by the production of electricity at wholly and partly owned hydroelectric power stations. FINANCING The cash flow before capital expenditure was MSEK 1,728 for the first six months of 2002. Capital expenditure amounted to MSEK 1,065. A dividend of MSEK 800 was paid. The Group's net financial debt amounted to MSEK 3,284 at June 30 (December 31, 2001: 3,161). The debt/equity ratio was 0.23 (0.22). The equity ratio was 56.5 per cent (56.4). Holmen's sales consist to a large extent of exports from Sweden. Currency exposure has been hedged for the remainder of 2002, approximately 75 per cent for 2003 and approximately 25 per cent for 2004. A five-year committed credit facility of MEUR 500 was taken up during the second quarter, which replaces the previous committed credit facility. CAPITAL EXPENDITURE The Group's fixed capital expenditure was MSEK 1,065 (728), of which MSEK 705 relates to the new paper machine at the Hallsta Paper Mill. Depreciation according to plan amounted to MSEK 566 (562). EMPLOYEES The average number of employees in the Group was 5,097 (full year 2001: 5,238). TAX The County Administrative Court has decided that Holmen is entitled to make a deduction for tax purposes of a deficit shown in its 1995 tax return. The decision has come into legal effect. The effect on the result of MSEK 102 is included in the tax stated for the second quarter. IMPORTANT EVENT Holmen has decided to exercise an option to buy back hydroelectric power assets with an annual production capacity of 541 GWh, which were sold in 1983 under a "partner-financing" arrangement. The transaction will be carried out at the turn of the year 2002/2003 and the price is just over SEK 1.7 billion. Stockholm 13 August 2002 Göran Lundin President and CEO The interim report has not been subject to general examination by the company's auditors. The interim report for January-September will be released on 29 October. For further information please contact: Göran Lundin, President and CEO, tel +46 8 666 21 00 Anders Almgren, CFO, tel +46 8 666 21 16 Christer Lewell, Public Relations Director, tel +46 8 666 21 15. ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2002/08/13/20020813BIT00480/wkr0001.doc The Full Report http://www.waymaker.net/bitonline/2002/08/13/20020813BIT00480/wkr0002.pdf The Full Report

About Us

Holmen’s business concept is to own and add value to the forest. The forest holdings form the basis of the business – an ecocycle in which the raw material grows and is refined into everything from wood for climate-smart building to renewable packaging, magazines and books. The forest is managed to provide a good annual return and stable value growth while our production operations are run with a focus on profitability and greater value added. In 2018 Holmen’s net sales were just over SEK 16 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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