Interim report January - September 2001

INTERIM REPORT JANUARY - SEPTEMBER 2001 SUMMARY GROUP · The profit after financial items amounted to MSEK 2,166 (corresponding period 2000: 1,770*). The profit for the third quarter amounted to MSEK 857 compared with MSEK 610 for the second quarter. · Net turnover amounted to MSEK 12,312 (11,107). Net turnover for the third quarter was MSEK 4,099 compared with MSEK 4,097 for the second quarter. · The operating profit amounted to MSEK 2,275 (1,857*). The third quarter operating profit was MSEK 909 compared with MSEK 663 for the second quarter. · The profit after tax was MSEK 1,958 (3,656), which corresponds to earnings per share of SEK 24.50 (41.20). Earnings per share for the third quarter amounted to SEK 13.00. · The return on operating capital was 14.3 per cent (14.3*). The return on equity was 19.3 per cent (29.9). · The market conditions for newsprint and magazine paper weakened during the third quarter. Holmen Paper's capacity utilisation continued at a high level and prices were stable. The market conditions for paperboard remained weak during the third quarter. Iggesund Paperboard's production continued to be restricted due to market conditions. Prices were stable. · * excluding items affecting comparability and divested activities BUSINESS AREAS Holmen Paper The market conditions for newsprint and magazine paper weakened during the third quarter. Deliveries of newsprint to Western Europe during January-September were slightly lower compared with the same period last year. Deliveries of MF Magazine and SC Paper increased by almost 2 per cent, while deliveries of coated grades declined by 4 per cent. Holmen Paper's deliveries rose by 4 per cent during the third quarter but the order situation has weakened. Capacity utilisation continued at a high level and prices were stable. The January-September operating profit amounted to MSEK 1,842 (1,084). The improvement in the result is largely explained by price increases, favourable currency effects, and a positive result earned by the Spanish newsprint mill that was acquired in July last year. The third quarter profit improved compared with the second quarter by MSEK 153 to MSEK 750 as a result of higher delivery volumes and lower costs, to a large extent seasonal. Maintenance stops and higher level of investment activities will negatively affect the fourth quarter result. Quarter January- Full September year Holmen Paper 3-01 2-01 2001 2000 2000 Net turnover MSEK 2,260 2,173 6,474 5,481 7,618 Operating profit MSEK 750 597 1,842 1,084 1,389 Operating margin % 33 27 28 20 18 Return on operating 32 27 27 19 17 capital % Production 1,000 tonnes 410 394 1,198 1,133 1,535 Deliveries 1,000 tonnes 388 374 1,131 1,126 1,560 Iggesund Paperboard The market conditions for paperboard remained weak during the third quarter. The order intake at West European producers showed a seasonal decline during the third quarter whereas deliveries remained unchanged. Iggesund Paperboard's deliveries rose by 6 per cent in relation to the low level of deliveries during the second quarter. Production continued to be restricted due to market conditions. Prices were stable. The January-September operating profit amounted to MSEK 345 (477). The decline is mainly explained by lower production and delivery volumes. The third quarter profit improved compared with the second quarter by MSEK 97 to MSEK 150. This improvement was due to higher deliveries and seasonally lower costs. The second quarter profit was affected by a stop for rebuilding and maintenance at the paperboard mill in Sweden. The profitability of the paperboard mill in England is still unsatisfactory. Quarter January- Full September year Iggesund Paperboard 3-01 2-01 2001 2000 2000 Net turnover MSEK 1,131 1,053 3,286 3,110 4,186 Operating profit MSEK 150 53 345 477 569 Operating margin % 13 5 10 15 14 Return on operating 12 4 9 14 12 capital % Producton, paperboard1,0 99 92 297 335 442 00 tonnes Deliveries, paperboard1, 103 97 304 308 415 000 tonnes Iggesund Timber The market conditions for sawn timber continued to be weak, with strong supply side pressure and depressed prices. The January-September operating result was a loss of MSEK 55 (loss 32). The deterioration is among other things due to higher wood costs and higher depreciation. The third quarter result was a loss of MSEK 19 (Q 2: loss 20). Pursuant to the decision made in December 2000 the operations at the Iggesund Sawmill have since August 1 been concentrated solely on the sawing of redwood, and the activities at the Domsjö Sawmill have been discontinued. The approved investment programme at the Iggesund Sawmill continues according to plan. Quarter January- Full September year Iggesund Timber 3-01 2-01 2001 2000 2000 Net turnover MSEK 175 196 551 560 762 Operating loss MSEK 19 20 55 32 116 Operating margin % 11 11 10 6 7 Return on operating 19 20 18 9 28 capital % Production 1,000 m3 71 78 236 275 374 Deliveries own sawmills1 74 92 251 264 360 ,000 m3 Holmen Skog The January-September operating profit amounted to MSEK 262 (358). The reduction in the profit is due to the lower priority given to harvesting in company forests during the period. The third quarter profit was MSEK 83 (Q 2: 79). A new harvesting estimate shows that Holmen Skog can increase the volume harvested from company forests by some 10 per cent. The higher volume is expected in future to result in an improvement of some MSEK 50 in the profit on an annual basis, based on current market conditions. Holmen Skog's profit is mainly earned from the sale of wood harvested from company forests. The volume corresponds to some 50 per cent of the Group's wood requirements. Quarter January- Full September year Holmen Skog 3-01 2-01 2001 2000 2000 Net turnover MSEK 808 1,005 2,985 3,138 4,117 of which external 438 586 1,696 1,731 2,257 customers Operating profit MSEK 83 79 262 358 466 Wood consumption - Group's Swedish mills1 1,019 1,006 3,140 3,383 4,546 ,000 m3 Harvesting in company 567 504 1,461 1,718 2,338 forests 1,000 m3 Holmen Kraft The January-September operating profit amounted to MSEK 56 (58). The third quarter profit was affected by high production of own hydroelectric power and amounted to MSEK 15 (Q 2: 5). Holmen Kraft's profit is largely earned from the generation of electricity at wholly owned and associate hydroelectric power stations, which together with the mills' electricity generation normally correspond to some 35 per cent of the Group's electricity requirements in Sweden. Quarter January- Full September year Holmen Kraft 3-01 2-01 2001 2000 2000 Net turnover MSEK 263 251 822 763 1,110 of which external 102 95 326 243 356 customers Operating profit MSEK 15 5 56 58 99 Electric power consumption 1,021 984 3,009 3,120 4,171 Group's Swedish millsGW h Group production of 399 317 1,181 1,187 1,552 electric power GWh FINANCING The Group's net financial liability amounted to MSEK 4,133 (December 31, 2000: asset 294). The change is mainly due to the positive cash flow of MSEK 1,156 generated from operations, and to the payment of MSEK 5,518 in the form of ordinary and extra dividends. Net liability decreased by MSEK 161 during the third quarter. The debt/equity ratio was 0.29 (0.02). The equity ratio was 54.9 per cent (64.7). CAPITAL EXPENDITURE The Group's capital expenditure amounted to MSEK 1,270 (669 excluding acquisitions and 2,722 including acquisitions). Depreciation according to plan amounted to MSEK 842 (761). EMPLOYEES The average number of employees in the Group was 5,266 (full year 2000: 5,275). TAX The County Administrative Court has decided that Holmen should be entitled to claim tax relief for deficits in its 1997 tax return. The effect of MSEK 325 on the result is stated in the accounts in the third quarter. A further tax case has been settled in Holmen's favour. The Administrative Court of Appeal has decided that Holmen should be entitled to claim tax relief for deficits in its 1996 tax return. Pursuant to this decision, which has come into legal effect, the estimated tax charge for 2001 will be reduced by some MSEK 200. The effect on the result will be stated in the fourth quarter. ACCOUNTING PRINCIPLES This interim report is made up in accordance with the Swedish Financial Accounting Standards Council's Recommendation RR 20 Interim Reports. Pursuant to 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 increases by MSEK 1,715, deferred tax liability by MSEK 1,906 and deferred tax receivable by MSEK 191 as of December 31, 2000. In all other respects, the same accounting principles and calculation methods have been applied as for the previous year's final accounts. Stockholm October 25, 2001 Per Ericson President and CEO This interim report has not been subject to a general examination by the company's auditors. The year-end release for 2001 will be published on January 31, 2002. For further information please contact: Per Ericson, 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/2001/10/25/20011025BIT00840/bit0002.doc Full report http://www.waymaker.net/bitonline/2001/10/25/20011025BIT00840/bit0002.pdf Full report