Year end report for 2001

YEAR END REPORT FOR 2001 HIGHLIGHTS · Profit after financial items (excluding items affecting comparability and divested activities) amounted to MSEK 2,914 (2000: 2,194). The corresponding figure for the fourth quarter was MSEK 748, which may be compared with MSEK 857 for the third quarter. A write-down of MSEK 620 in the value of fixed assets was charged against the fourth quarter result, after which the profit after financial items amounts to MSEK 2,294 for 2001 (4,741). · Net turnover amounted to MSEK 16,655 (15,155). The fourth quarter's net turnover was MSEK 4,343, compared with MSEK 4,099 for the third quarter. · The operating profit, excluding items affecting comparability and divested activities, was MSEK 3,066 (2,295) for the full year and MSEK 791 for the fourth quarter, compared with MSEK 909 for the third quarter. · Profit after tax amounted to MSEK 2,186 (3,972). The return on equity was 16.0 per cent (24.1). · The Board proposes a dividend of SEK 10 per share. Ordinary dividend last year was SEK 9 per share. · Market conditions for newsprint and magazine paper weakened during the second half of the year. Holmen Paper made some production stops during the fourth quarter due to market conditions. Prices were stable during the year. Prices for 2002 are currently under negotiation. Market conditions for paperboard remained weak in the fourth quarter. Iggesund Paperboard's production continued to be restricted due to market conditions. Prices are stable. BUSINESS AREAS Holmen Paper Market conditions for newsprint and magazine paper weakened during the second half of the year. The fourth-quarter deliveries of newsprint were 2 per cent higher than in the third quarter. The delivery trend, however, was weaker than normal for the season. Compared with the high delivery levels in 2000, deliveries of standard newsprint to Western Europe in 2001 declined by 3 per cent and of MF Magazine by 2 per cent, while deliveries of SC paper remained unchanged. Deliveries of coated grades declined by 6 per cent. Holmen Paper's deliveries rose by 1 per cent during the fourth quarter compared with the third quarter, but the order situation has weakened. Capacity utilisation was high during the year, but some production stops were made during the fourth quarter due to market conditions. Prices were stable during the year. Prices for 2002 are currently under negotiation. The operating result for 2001 amounted to MSEK 2,410 (1,389). The improvement is largely attributable to higher prices, positive currency effects, and a positive result at the Spanish newsprint mill, which was acquired in July 2000. The fourth-quarter result deteriorated by MSEK 182 to MSEK 568 in relation to the third quarter, largely as a result of seasonally higher costs. During the first quarter of 2002 there will be a long production stop at the Hallsta Paper Mill for the installation of a new paper machine, which will replace an old machine. This will decrease production and affect the result for the first half of the year. Quarter Full year Holmen Paper 4-01 3-01 2001 2000 Net turnover MSEK 2,283 2,260 8,757 7,618 Operating profit MSEK 568 750 2,410 1,389 Operating margin % 25 33 28 18 Return on operating 24 32 26 17 capital % Production 1,000 tonnes 387 410 1,586 1,535 Deliveries 1,000 tonnes 394 388 1,525 1,560 Iggesund Paperboard The market conditions for paperboard remained weak during the fourth quarter. Deliveries of virgin fibre-based board from West European producers declined by 4 per cent in relation to the third quarter. For 2001 as a whole, deliveries were 3 per cent down on the previous year's figures. During the fourth quarter, Iggesund Paperboard's deliveries rose by 2 per cent in relation to the third quarter. The production continued to be restricted due to market conditions. Prices are stable. The operating result for 2001 amounted to MSEK 455 (569). Higher prices and positive currency effects had a positive effect on the result, while lower production volumes and higher raw material costs affected the result negatively. The fourth-quarter profit declined by MSEK 40 to MSEK 110 in relation to the third quarter, mainly due to costs for the ongoing personnel cutbacks and seasonally higher costs. Quarter Full year Iggesund Paperboard 4-01 3-01 2001 2000 Net turnover MSEK 1,181 1,131 4,467 4,186 Operating profit MSEK 110 150 455 569 Operating margin % 9 13 10 14 Return on operating 9 12 9 12 capital % Production, paperboard1, 106 99 403 442 000 tonnes Deliveries, paperboard1, 106 103 410 415 000 tonnes Iggesund Timber The market for sawn timber remained weak. The operating result for 2001 was a loss of MSEK 79 (loss 116, of which structuring costs of MSEK 64). The result was adversely affected by higher variable production costs. The fourth-quarter result was a loss of MSEK 24 (Q3: loss 19), after charging some cost provisions. The activities at Domsjö Sawmill were discontinued as of end of July. An extensive review of the business, which now consists of a sawmill in Iggesund, is currently being carried out. Quarter Full year Iggesund Timber 4-01 3-01 2001 2000 Net turnover MSEK 161 175 712 762 Operating loss MSEK 24 19 79 116 Operating margin % 16 11 11 7 Return on operating 26 19 20 28 capital % Production 1,000 m3 63 71 299 374 Deliveries own sawmills1 71 74 322 360 ,000 m3 Holmen Skog The operating profit for 2001 amounted to MSEK 455 (466). The fourth- quarter result was a profit of MSEK 193 (Q3: 83), and the improvement was largely due to a higher volume of wood harvested in company forests. Holmen Skog's profit is mainly earned from the sale of wood harvested in company forests. The volume harvested accounts for some 50 per cent of the Group's wood requirements. Quarter Full year Holmen Skog 4-01 3-01 2001 2000 Net turnover MSEK 997 808 3,982 4,117 of which external 610 438 2,306 2,257 customers Operating profit MSEK 193 83 455 466 Wood consumption at Group's Swedish mills 1,004 1,019 4,144 4,546 1,000 m3 Harvesting in company 933 567 2,394 2,338 forests 1,000 m3 Holmen Kraft The operating profit for 2001 amounted to MSEK 49 (99). Lower selling prices for electricity generated within the Group had an adverse effect on the result, which was partly offset by a higher level of production. The fourth-quarter result was a loss of MSEK 7 (Q3: profit 15). Holmen Kraft earns most of its income by generating electricity in wholly owned or part-owned hydroelectric power stations, whose output, together with that of the mills' own back-pressure production, normally corresponds to some 35 per cent of the electricity requirements of the Group's Swedish units. Quarter Full year Holmen Kraft 4-01 3-01 2001 2000 Net turnover MSEK 286 263 1,108 1,110 of which external 113 102 439 356 customers Operating profit/lossMSE 7 15 49 99 K Electric power consumption 989 1,021 3,998 4,171 at Group's Swedish mills GWh Group production of 397 399 1,578 1,552 electric power GWh ITEMS AFFECTING COMPARABILITY The profitability of the English paperboard mill and of the sawmill in Iggesund is unsatisfactory. Action plans to improve productivity and reduce costs are currently in progress; they include a significant reduction in manning at both facilities. The fixed assets at the paperboard mill and at the sawmill have been written down in the final accounts by MSEK 500 and MSEK 120 respectively. The write-down is stated as item affecting comparability. TAX Two major tax cases were decided in Holmen's favour during the year. This had positive effects on the total tax charge which were taken into the accounts for the third quarter (MSEK 325) and the fourth quarter (MSEK 200). FINANCING The Group's net financial debt amounted to MSEK 3,161 (December 31, 2000: asset of MSEK 294). The change is mainly due to the positive cash flow of MSEK 2,117 generated from operations and the payment of ordinary and extra dividends of MSEK 5,518. Net debt declined by MSEK 972 during the fourth quarter. The debt/equity ratio was 0.22 (-0.02). The equity ratio was 56.4 per cent (64.7). Holmen's sales consist to a large extent of exports from Sweden. The currency exposure for the larger part of the expected flows in 2002, and for about half of the flows in 2003 has been hedged. Currency fluctuations during the period will therefore have a limited effect on the Group's result. CAPITAL EXPENDITURE The Group's capital expenditure amounted to MSEK 1,715 (excluding acquisitions: 1,115. Including acquisitions: 3,168). Depreciation according to plan amounted to MSEK 1,126 (1,045). EMPLOYEES The average number of employees in the Group was 5,238 (2000: 5,275). DIVIDEND PROPOSAL The Board proposes that the Annual General Meeting to be held on March 20 resolves in favour of paying a dividend of SEK 10 per share. Ordinary dividend last year was SEK 9 per share. IMPORTANT EVENTS · The conditions for building a new newsprint machine at the mill in Madrid are now being examined in detail. A decision to build a new newsprint machine was made in principle in April 2001. Final decision to build the machine is expected to be made in the autumn of 2002. The project will thereafter take around 18 months to complete. · In December the Board reversed an earlier decision to invest MSEK 175 in a finishing unit at the sawmill in Iggesund. The business is now being reviewed with the object of reducing costs and raising productivity, and different investment alternatives are being evaluated. ACCOUNTING PRINCIPLES This report has been 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. The Group has applied the Swedish Financial Accounting Standards Council's recommendation RR 17 Impairement of Assets in its accounts for 2001. In this year's accounts the value of fixed assets has been written down by MSEK 620. In all other respects, the same accounting principles and calculation methods have been applied as for the previous year's final accounts. Stockholm, 31 January 2002 Göran Lundin President and CEO The report has not been subject to final examination by the company's auditors. The annual report for 2001 will be published at the beginning of March. The interim report for January-March will be released on 29 April. 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/2002/01/31/20020131BIT00590/bit0002.doc The full year-end report http://www.waymaker.net/bitonline/2002/01/31/20020131BIT00590/bit0002.pdf The full year-end report