M-real Corporation Interim report 1 January-31 March 2009
M-real Corporation Interim report 1 January-31 March 2009
22.4.2009 at 11.30 a.m.
M-real's operating result excluding non-recurring items for first
quarter of 2009 EUR -65 million
Result for the first quarter of 2009
* Sales EUR 623 million (Q1/2008: 859)
* Operating result excluding non-recurring items EUR -65 million
(14). Operating result including non-recurring items EUR -118
million (37)
* Result before taxes excluding non-recurring items EUR -62 million
(-21). Result before taxes including non-recurring items EUR -115
million (2)
* Result per share from continuing operations excluding non-recurring
items EUR -0.18 (-0.06), and, including non-recurring items EUR
-0.32 (0.00)
Events during the first quarter
* The renewed management and reporting structure including the
Consumer Packaging, Office Papers and Other Papers business areas
as well as the Market Pulp and Energy reporting segment was
announced.
* Statutory negotiations concerning 1,500 people in mill operations
in Finland were concluded.
* Statutory negotiations concerning 480 people were conducted at the
Hallein mill in Austria. Paper production will be discontinued by
the end of April. At Gohrsmühle, Germany, standard coated fine
paper production will be discontinued during April while the
production of speciality papers and uncoated fine paper reels and
folio sheets will be expanded.
* A new EUR 80 million profit improvement programme and a separate
programme of EUR 60 million to improve the cash flow were launched.
* M-real repurchased from the market its own EUR 400 million senior
floating rate notes in the total par value of EUR 59.95 million.
The loan matures in December 2010. A gain of approximately EUR 31
million was booked from the repurchases."At the beginning of the year, the demand for our main products was
weak due to the global recession, and the continuing decline in the
price of pulp. We continued our major profit improvement programmes,
which will, concurrently with declining wood raw material and
chemical costs, ease the challenging situation. In the current
difficult operational environment, improving cash flow and securing
liquidity is most important."
Mikko Helander, CEO, M-real Corporation
2009 2008 2008 2008 2008 2008
KEY FIGURES Q1 Q4 Q3 Q2 Q1
Sales, EUR million 623 722 826 829 859 3,236
EBITDA, EUR million -48 -18 49 127 96 254
excl. non-recurring items,
EUR million -13 4 60 55 73 192
Operating result, EUR million -118 -161 -8 71 37 -61
excl. non-recurring items,
EUR million -65 -51 3 -1 14 -35
Result before taxes
from continuing operations,
EUR
million -115 -197 -45 36 2 -204
excl. non-recurring items,
EUR million -62 -87 -34 -36 -21 -178
Result for the period
from continuing operations,
EUR
million -105 -163 -44 37 0 -170
from discontinued
operations, EUR
million -10 -62 -212 -45 -19 -338
Total, EUR million -115 -225 -256 -8 -19 -508
Result per share
from continuing operations,
EUR -0.32 -0.50 -0.15 0.10 0.00 -0.55
from discontinued
operations, EUR -0.03 -0.19 -0.64 -0.14 -0.06 -1.03
Total, EUR -0.35 -0.69 -0.79 -0.04 -0.06 -1.58
Result per share
excl. non-recurring items,
EUR -0.18 -0.17 -0.13 -0.12 -0.06 -0.48
Return on equity, % -32.0 -43.3 -10.1 7.9 0.0 -10.4
excl. non-recurring items, % -17.6 -14.5 -8.3 -7.4 -4.8 -9.0
Return on capital employed, % -13.4 -19.7 -0.5 8.9 5.7 -1.3
excl. non-recurring items, % -7.0 -6.2 1.0 -0.2 2.9 -0.5
Equity ratio at end of period,
% 30.3 30.8 32.5 36.5 35.0 30.8
Gearing ratio at end of
period, % 151 152 129 112 120 152
Net gearing ratio at end of
period, % 101 90 114 100 100 90
Interest-bearing net
liabilities 1,243 1,254 1,865 1,888 1,892 1,254
Gross investments, EUR million 16 39 38 30 21 128
Deliveries, 1,000 tonnes
Paper businesses 321 394 438 448 481 1,761
Consumer Packaging 274 303 348 351 342 1,345
Personnel at the end of period
in continuing operations 6,314 6,546 6,679 7,035 6,866 6,546
in discontinued operations 2,159 2,322 2,256
Map Merchant Group divested in 2007 and Graphic Papers business
divested in 2008 have been reported in Discontinued operations.
Result January-March compared with the previous quarter
M-real's sales totalled EUR 623 million (Q4/2008: 722). Comparable
sales were down 13.6%. Operating result was EUR -118 million (-161),
and operating result excluding non-recurring items was EUR -65
million (-51).
The non-recurring items recognised in operating result amounted to
EUR -53 million net, the most significant being:
* EUR 28 million cost provisions and write-downs for the closure of
the Hallein paper mill in Other Papers business area.
* EUR 22 million cost provisions and write-downs related to the
closure of Metsä-Botnia's Kaskinen mill. Of these, EUR 16 million
was recognised in Consumer Packaging, and EUR 6 million in Market
Pulp and Energy.
* EUR 2 million cost for the streamlining of the salesnet in Other
operations.
Non-recurring items in the previous quarter totalled EUR -110 million
net, the most significant being:
* EUR 86 million impairment charges under IAS 36.
* EUR 14 million cost provision for streamlining M-real's business
structure to reflect the divestment of Graphics Papers business in
Other operations.
* EUR 10 million cost provision and write-down for the closure of
the New Thames mill's cut-size operations in Office Papers.
Compared with the previous quarter, the operating result excluding
non-recurring items was weakened by the decrease in delivery volumes
due to a weakened demand situation, the lower pulp sales price, and
the decrease in values of product, wood and pulp inventories. The
result was improved by implemented price increases and cost savings.
In January-March, the total delivery volume of the paper businesses
was 321,000 tonnes (394,000). The deliveries by Consumer Packaging
amounted to 274,000 tonnes (303,000).
Financial income and expenses over the period totalled EUR +4 million
(-36). Foreign exchange gains and losses from accounts receivables,
accounts payable, financial income and expenses and the valuation of
currency hedging were EUR 0 million (+11). Net interest and other
financial income and expenses amounted to EUR 4 million (-47). Other
financial expenses include EUR 2 million of valuation gains on
interest rate derivatives (valuation loss: 3). Financial income
includes an approximately EUR 31 million gain from the repurchase of
EUR 400 million senior floating rate notes maturing in December 2010.
The cash flow from financial items during the period was positive. On
the year-end balance sheet, there was an unexceptionally high amount
of valuation gains which will had a cash impact.
In January-March, the result from continuing operations before taxes
was EUR -115 million (-197). The result from continuing operations
before taxes excluding non-recurring items totalled EUR -62 million
(-87). Income taxes, including the change in deferred tax
liabilities, were EUR +10 million (+34).
Earnings per share were EUR -0.35 (-0.69). Earnings per share from
continuing operations excluding non-recurring items were EUR -0.18
(-0.17). Return on equity was -32.0% (-43.3), and -17.6% (-14.5)
excluding non-recurring items. Return on capital employed was -13.4%
(-19.7); excluding non-recurring items -7.0% (-6.2).
Result for January-March compared with the corresponding period the
previous year
M-real's sales totalled EUR 623 million (Q1/2008: 859). Comparable
sales were down 27.5%. Operating result was EUR -118 million (+37),
and operating result excluding non-recurring items was EUR -65
million (+14).
In January-March, the non-recurring items amounted to EUR -53 million
net, the most significant being:
* EUR 28 million cost provisions and write-downs for the closure of
the Hallein paper mill in Other Papers business area
* EUR 22 million cost provisions and write-downs related to the
closure of Metsä-Botnia's Kaskinen mill
* EUR 2 million cost for the streamlining of the salesnet in Other
operations.
The operating result excluding non-recurring items compared with the
previous quarter was weakened by the decrease in demand resulting in
lower delivery volumes and values of product, wood and pulp
inventories. The result was improved by the implemented price
increases and cost savings.
In January-March, the total delivery volume the paper businesses was
321,000 tonnes (481,000). Consumer Packaging's deliveries amounted to
274,000 tonnes (342,000).
Financial income and expenses in the review period totalled EUR +4
million (-35). Foreign exchange gains and losses from accounts
receivables, accounts payable, financial income and expenses and the
valuation of currency hedging were EUR 0 million (+2). Net interest
and other financial income and expenses amounted to EUR +4 million
(-37). Other financial expenses include EUR 2 million of valuation
gain on interest rate derivatives (valuation loss: 3). Financial
income includes approximately EUR 31 million gain from the repurchase
of EUR 400 million senior floating rate notes maturing in December
2010.
The cash flow of financial items in the review period was positive.
On the year-end balance sheet, there was an unexceptionally high
amount of valuation gains which will had a cash impact.
In the review period, the result from continuing operations before
taxes was EUR -115 million (2). The result from continuing operations
before taxes excluding non-recurring items totalled EUR -62 million
(-21). Income taxes, including the change in deferred tax
liabilities, came to EUR +10 million (-2).
Earnings per share were EUR -0.35 (-0.06). Excluding non-recurring
items, earnings per share from continuing operations were EUR -0.18
(-0.06). Return on equity was -32.0% (0.0), excluding non-recurring
items EUR -17.6 (-4.8). The return on capital employed was -13.4%
(+5.7); excluding non-recurring items, -7.0% (+2.9).
Personnel
The number of personnel in continuing operations was 6,314 on 31
March 2009 (31 December 2008: 6,546), of which 2,189 (2,258) worked
in Finland. In January-March 2009, M-real employed an average of
6,384 people (Q1/08: 9,087). M-real's number of personnel
incorporates 30% of Metsä-Botnia's personnel.
Investments
Gross investments in January-March totalled EUR 16 million (Q1/2008:
21), including a EUR 3 million share of Metsä-Botnia's investments
(13). Metsä-Botnia's investment share is based on M-real's 30%
ownership share.
Structural change
In February 2009, M-real launched a new profit improvement programme
with an annual target of EUR 80 million. The programme targets at
savings in the business areas and streamlining the support functions
to reflect the new company structure after the divestment of Graphic
Papers. The full annual effect of the programme will be visible from
2011. The majority of the profit improvement measures are expected to
be implemented in 2009, and the profit impact is estimated to be EUR
20-25 million in 2009. The related non-recurring costs booked during
2009 are expected to be about EUR 18 million. M-real is also
implementing a separate EUR 60 million programme to improve the 2009
cash flow including, e.g., the reduction of operating net working
capital and cuts in investments.
In 2008, M-real announced to be planning the discontinuation of the
standard coated fine paper production at the Hallein and Gohrsmühle
mills based on earlier examined strategic options. Both mills have
been loss-making for a long period of time. Statutory negotiations
were conducted at the Hallein mill, Austria, in January 2009,
resulting in 480 people being made redundant. Paper production will
be discontinued by the end of April. At the Gohrsmühle mill, Germany,
the standard coated fine paper production will be discontinued in
April. At Gohrsmühle, the production of speciality papers as well as
uncoated fine paper reels and folio sheets will be expanded. The
combined annual production capacity of standard coated fine paper at
the Hallein and Gohrsmüle mills is about 0.6 million tonnes. M-real
continues to explore various options for the Hallein pulp mill.
In Finland, statutory negotiations concerning 1,500 people at mill
operations were conducted to carry out temporary lay-offs. The
statutory negotiations were conducted from 30 January to 2 February,
2009 in different locations. The lay-offs will be implemented in
varying periods during the year. The maximum total lay-off period is
90 days.
The reorganisation of salesnet after the Graphic Papers divestment
was carried out during the first quarter, and the statutory
negotiations were concluded by the end of March. The statutory
negotiations were conducted from 30 January to 2 February, 2009 in
different locations. The statutory negotiations, conducted
simultaneously in 14 countries, concerned some 310 people in sales,
customer service and administration. Some 50 people were transferred
to M-real's other businesses and some 160 people were made redundant.
After the divestment of Graphic Papers, Sappi recruited some 100
people from M-real's salesnet.
The strategic review of the paper business continues.
Changes in top management
Matti Mörsky, SVP, Business Development, was appointed CFO. Mörsky
will start in his new position at a later announced date. The current
CFO, Seppo Parvi, will join another company at the latest in July
2009.
Financing
At end of March 2009, M-real's equity ratio was 30.3% (31 December
2008: 30.8), the gearing ratio 151% (2008: 152) and the net gearing
101 (90). Some of M-real's financing agreements set a 120% limit on
the company's net gearing ratio and a 30% limit on the equity ratio.
Calculated as defined in the loan agreements, the net gearing ratio
at the end of the year was approximately 81% (74) and the equity
ratio some 35% (36).
At the end March, interest-bearing net liabilities totalled EUR 1,243
million (1,254). Foreign-currency-denominated loans accounted for
15%; 94% were floating-rate and the rest were fixed-rate. At the end
of March, the average interest rate on loans was 6.7% and the average
maturity of long-term loans 2.8 years. The interest rate maturity of
loans was 3.8 months at the end of March. During the review period,
the interest rate maturity has varied between 3 and 4 months.
In January-March, cash flow from operations was EUR -20 million
(Q4/2008: 16). Working capital was down by EUR 50 million (down 26).
At end of review period, an average of 4.2 months of the net foreign
currency exposure was hedged. The level of hedging varied between 4
and 5 months during the period. Approximately 89% of
non-euro-denominated equity was hedged at the end of the review
period.
Liquidity continues to be at a good level. The approximately EUR 400
million cash settlement at the end of December from the Graphic
Papers divestment improved M-real's liquidity and financing position
considerably. Liquidity at the end of the period was EUR 1,195
million, of which EUR 894 million consisted of committed long-term
credit facilities and EUR 301 million of liquid assets and
investments. The company also had interest-bearing receivables worth
EUR 316 million. In addition, to meet its short-term financing needs,
the company had at its disposal non-binding domestic and foreign
commercial paper programmes and credit facilities amounting to some
EUR 550 million. At the beginning of 2009, refinancing negotiations
with banks have been initiated to secure future liquidity. If
necessary, the sale of the vendor loan note, received from Sappi in
relation to divestment of Graphic Papers in December 2008, will be
considered as part of liquidity management.
M-real repurchased from the market its own EUR 400 million senior
floating rate notes maturing in December 2010 in the total par value
of EUR 59.95 million. A gain of approximately EUR 31 million was
booked from the repurchases.
On 16 January 2009, Standard & Poor's downgraded M-real's B- rating
to CCC+. The outlook of the rating remains negative. Downgrade has an
annual impact of approximately EUR 2 million on M-real's current
annual financing costs.
On 13 February 2009, Moody's Investors Service downgraded M-real's B3
rating to Caa1. The outlook of the rating remains negative. Downgrade
has an annual impact of approximately EUR 2 million on M-real's
current annual financing costs.
Shares
In January-March 2009, the highest price of M-real's B share on the
NASDAQ OMX Helsinki Ltd was EUR 0.86, the lowest EUR 0.19, and the
average price EUR 0.42. At end of March, the price of the B share was
EUR 0.28.
The trading volume of B shares was EUR 63 million, or 52% of the
share capital. At the end of March, the market value of the A and B
shares totalled EUR 111 million.
At end of March, Metsäliitto Cooperative owned 38.6% of M-real
Corporation's shares, and the voting rights conferred by these shares
was 60.5%. International investors' holdings decreased to 16%.
On 5 February, Financier de l'Echiquier SA's holding in M-real
decreased to 4.8% of the share capital and 1.6% of the voting rights.
The company does not possess its own shares.
Consideration of the result for the financial year and dividend
The distributable funds of the parent company as of 31 December 2008
were EUR -303,901,093.04 of which the result for the financial year
is EUR -535,312,028.39. Thus, the company does not have distributable
funds. The Annual General Meeting decided that no dividend is paid
for the financial year ending on 31 December 2008.
Board of Directors and Auditors
The Annual General Meeting confirmed that the number of Board members
is nine (9). The Annual General Meeting elected as members of
M-real's Board of Directors Martti Asunta, M.Sc. (Forestry); Kari
Jordan, Honorary Counsellor; Erkki Karmila, LL.M.; Kai Korhonen,
M.Sc. (Technology); Liisa Leino, M.Edu.; Runar Lillandt, Counsellor
of Agriculture; Juha Niemelä, Honorary Counsellor; Antti Tanskanen,
Minister, and Erkki Varis, M.Sc. (Technology). The term of office of
the members of the Board of Directors expires at the end of the next
Annual General Meeting.
At its organising meeting the Board of Directors elected Kari Jordan
as its Chairman and Martti Asunta as its Vice Chairman. The Board
further resolved to organize the Board committees. The members of the
Audit Committee are Erkki Karmila (Chairman), Kai Korhonen, Antti
Tanskanen and Erkki Varis. The members of the combined Nomination and
Compensation Committee are Kari Jordan (Chairman), Martti Asunta,
Liisa Leino, Runar Lillandt and Juha Niemelä.
The Annual General Meeting elected as M-real's auditor Authorized
Public Accountants PricewaterhouseCoopers Oy. The term of office of
the auditor expires at the end of the next Annual General Meeting.
The Annual General Meeting instructed the Board of Directors to
investigate possibilities and the related terms to merge the
company's A- and B-series shares. The investigation results were
instructed to be presented to the next General Meeting.
Near-term outlook
During the coming months, demand and delivery volumes seem to remain
clearly weaker than during the corresponding period last year. Major
production curtailments will be continued.
The current level of product prices is defended by production
curtailments.
At present, it seems possible that the pulp cycle will turn in the
second half of 2009.
The profit improvement programmes implemented at M-real, concurrently
with declining wood raw material and chemical costs, will ease the
challenging profitability situation.
Due to the significant uncertainties in the general economy,
providing profit forecasts is exceptionally challenging at present.
As a result and for the time being, M-real will not provide forecasts
on the estimated result development when presenting the future
outlook.
Near-term business risks
The weakening of and the general uncertainty in the global economy
have also had a negative impact on the operating preconditions of the
European paper and paperboard industry, and there is a risk that the
recession in the global economy will deepen. There are uncertainties
related to the availability of corporate funding due to the general
financial market situation.
Production may be curtailed more than planned due to weak demand. The
risk of declining product prices exists.
The risk of the euro strengthening, which would have a negative
impact on operational preconditions of the industry, still exists.
During the first part of the year, cash flow has remained
satisfactory despite the clearly negative result. There is a risk of
weakening cash flow development if the global recession is prolonged.
M-real has significant assets that can, if needed, be divested in
order to ensure sufficient financing.
Because the forward-looking estimates and statements of these
financial statements are based on current plans and estimates, they
contain risks and other uncertain factors that may cause the results
to differ from the statements concerning them.
In the short term, M-real's result will be particularly affected by
the price of, and demand for, finished products, raw material costs,
the price of energy, and the exchange rate development of the euro.
More information about longer-term risk factors can be found on pages
37-38 of M-real's 2008 Annual Report.
M-REAL CORPORATION
Further information:
Seppo Parvi, CFO, tel. +358 10 465 4321
Juha Laine, Vice President, IR and Communications, tel. +358 10 465
4335
Further information on 22 April, 2009 from 1 p.m. (EET). The
conference call and webcast for investors and analysts begins at 3
p.m. (EET).
BUSINESS AREAS AND MARKET DEVELOPMENT
2009 2008 2008 2008 2008 2008
Consumer Packaging Q1 Q4 Q3 Q2 Q1
Sales, EUR million 226 248 274 274 266 1,061
EBITDA, EUR million 15 11 37 23 37 108
excl. non-recurring items 19 11 37 23 38 109
Operating result, EUR million -17 -13 17 3 17 24
excl. non-recurring items -1 -9 17 3 18 29
Return on capital employed, % -8.8 -6.0 8.3 1.4 8.7 3.2
excl. non-recurring items, % -0.4 -4.0 8.3 1.4 9.2 3.8
Deliveries, 1,000 tonnes 274 303 348 351 342 1,345
Production, 1,000 tonnes 292 293 347 335 361 1,336
Result for January-March compared with the previous quarter
The operating result excluding non-recurring items for the Consumer
Packaging business area improved from the previous quarter and was
EUR -1 million (Q4/2008: -9). The result was improved by the
increased average price resulting from achieved price increases last
year and low fixed costs. However, the result was negatively impacted
by reduced delivery volumes due to a weakened demand and by the lower
value of inventories mainly resulting from the decline in the market
price of pulp.
In addition, EUR 16 million cost provisions and write-downs related
to the closure of the Metsä-Botnia's Kaskinen mill were recognised in
the result.
The result for the previous quarter included non-recurring items of
EUR 4 million.
The deliveries of European folding boxboard producers were 7% lower
compared with the previous quarter. Consumer Packaging's folding
boxboard deliveries fell by 9%.
Result for January-March compared with the corresponding period the
previous year
The operating result excluding non-recurring items for the Consumer
Packaging weakened compared with the corresponding period last year
and totalled EUR -1 million (Q1/2008: 18). The most significant
factor weakening the result was declining demand. The result was
improved by achieved price increases, implemented cost savings
actions and the strengthened US dollar.
The result for the corresponding period the previous year included
non-recurring items of EUR 1 million.
The deliveries of European folding boxboard producers fell by 20%
compared with the corresponding period the previous year. Consumer
Packaging's folding boxboard deliveries fell by 20%.
2009 2008 2008 2008 2008 2008
Office Papers Q1 Q4 Q3 Q2 Q1
Sales, EUR million 147 174 203 204 223 804
EBITDA, EUR million -2 -3 11 10 17 35
excl. non-recurring items -2 -1 11 10 17 37
Operating result, EUR million -17 -38 -6 -7 -2 -53
excl. non-recurring items -17 -14 -6 -7 -2 -29
Return on capital employed, % -12.4 -25.6 -3.2 -3.2 -0.6 -7.4
excl. non-recurring items, % -12.4 -9.2 -3.2 -3.2 -0.6 -3.8
Deliveries, 1,000 tonnes 203 237 270 274 300 1,081
Production, 1,000 tonnes 199 177 226 245 257 905
Result for January-March with the previous quarter
The operating result excluding non-recurring items for the Office
Papers business area weakened compared with the previous quarter and
was EUR -17 million (Q4/2008: -14). The result was weakened by the
declining demand and lower average selling price. The result was
improved by lower raw material costs. The result did not include
non-recurring items.
The operating result for the previous quarter included non-recurring
items of EUR -24 million net.
Total deliveries by European uncoated fine paper producers were down
by 6% compared with the previous quarter. The delivery volume of
Office Papers fell by 14%. The figure includes the effect of the
divestment of the New Thames mill.
Result for January-March compared with the corresponding period the
previous year
The operating result excluding non-recurring items for Office Papers
weakened compared to the corresponding period the previous year and
totalled EUR -17 million (Q1/2008: -2). The result was weakened by
the lower average selling price and the declining demand for
products. The result did not include non-recurring items.
The result for the corresponding period the previous year did not
include non-recurring items.
Total deliveries by European uncoated fine paper producers were down
by 18% compared with the corresponding period the previous year. The
delivery volume of Office Papers fell by 32 per cent. The figure
includes the effect of the divestment of the New Thames mill.
2009 2008 2008 2008 2008 2008
Other Papers Q1 Q4 Q3 Q2 Q1
Sales, EUR million 117 147 153 158 164 622
EBITDA, EUR million -33 -1 7 8 31 45
excl. non-recurring items -5 1 7 9 7 23
Operating result, EUR million -40 -75 -3 -2 21 -59
excl. non-recurring items -12 -8 -3 -1 -3 -15
Return on capital employed, % -43.4 -63.5 -2.3 -1.2 18.1 -14.3
excl. non-recurring items, % -12.5 -5.8 -2.3 -0.8 -2.6 -3.4
Deliveries, 1,000 tonnes 118 157 168 174 181 680
Production, 1,000 tonnes 99 160 170 186 190 705
Result for January-March compared with the previous quarter
The operating result excluding non-recurring items for the Other
Papers business area weakened compared to the previous quarter and
was EUR -12 million (Q4/2008: -8). The result was weakened by the
heavy decline in demand. The result was improved by the increase in
the average selling price.
Cost provision and write-downs of EUR 28 million were recognised in
the operating result as non-recurring items related to the closure of
Hallein paper mill.
The operating result for the previous quarter included EUR -67
million net of non-recurring items.
Total deliveries by European coated fine paper manufacturers fell by
17% compared with the previous quarter. The delivery volume of Office
Papers fell by 25 per cent.
Result for January-March compared with the corresponding period the
previous year
The operating result excluding non-recurring items for Other Papers
weakened compared with the corresponding period previous year and
totalled EUR -12 million (Q1/2008: -3). The result was weakened by
the heavy decline in the demand for products. The result was improved
by increased selling prices and implemented cost savings actions.
Cost provision and write-downs of EUR 28 million were recognised in
the operating result as non-recurring items related to the closure of
Hallein paper mill.
The result for the corresponding period the previous year included
non-recurring items of EUR 24 million.
Total deliveries by European coated fine paper producers fell by 28%
compared with the corresponding quarter the previous year. The
delivery volume of Office Papers fell by 35%.
2009 2008 2008 2008 2008 2008
Market Pulp and Energy Q1 Q4 Q3 Q2 Q1
Sales, EUR million 134 150 172 160 162 644
EBITDA, EUR million -4 8 23 96 21 148
excl. non-recurring items -3 8 23 22 21 73
Operating result, EUR million -18 -2 12 86 10 106
excl. non-recurring items -12 -2 12 12 10 32
Return on capital employed, % -8.4 -1.3 5.1 37.3 4.7 12.6
excl. non-recurring items, % -5.8 -1.3 5.1 4.8 4.7 3.6
Deliveries, 1,000 tonnes 287 264 291 279 281 1,115
Result for January-March compared with the previous quarter
The operating result excluding non-recurring items for the Market
Pulp and Energy reporting segment weakened compared with the previous
quarter and was EUR -12 million
(Q4/2008: -2). The result was weakened by the lower selling price of
pulp and the production curtailments at pulp mills due to low demand.
The result was improved by lower wood costs.
In addition, cost provisions and write-downs of EUR 6 million related
to the closure of the Metsä-Botnia's Kaskinen mill were recognised in
the result.
The result for the previous quarter did not include non-recurring
items.
Result for January-March compared with the corresponding period the
previous year
The operating result for the Market Pulp and Energy reporting segment
weakened compared with the corresponding period last year and
totalled EUR -12 million (Q1/2008: 10). The result was weakened by
the lower selling price of pulp and the production curtailments of
pulp mills due to low demand. The result was improved by lower wood
costs.
In addition, cost provisions and write-downs of EUR 6 million related
to the closure of the Metsä-Botnia's Kaskinen mill were recognised in
the result.
The result for the corresponding period the previous year did not
include non-recurring items.
The financial statements are unaudited.
Condensed consolidated statement of comprehensive income
2009 2008 Change 2008 2008
EUR million Q1 Q1 Q4
Continuing operations
Sales 623 859 -236 3,236 722
Other operating income 33 47 -14 182 9
Operating expenses -704 -810 106 -3,164 -749
Depreciation and impairment
losses -70 -59 -11 -315 -143
Operating result -118 37 -155 -61 -161
% of sales -18.9 4.3 -1.9 -22.3
Share of results in associated
companies -1 0 -1 -1 0
Exchange gains and losses 0 2 -2 13 11
Other net financial items 4 -37 41 -155 -47
Result before income tax -115 2 -117 -204 -197
% of sales -18.5 0.2 -6.3 -27.3
Income taxes 10 -2 12 34 34
Result for the period from
continuing operations -105 0 -105 -170 -163
% of sales -16.9 0 -5.3 -22.6
Discontinued operations
Result from discontinued
operations -10 -19 9 -338 -62
Result for the period -115 -19 -96 -508 -225
Other comprehensive income
Cash flow hedges -1 -4 3 -41 -29
Available for sale financial
assets -63 70 -133 87 17
Currency translation differences 3 -5 8 11 5
Other items 0 0 0 0
Income tax relating to components
of other
comprehensive income 18 -18 36 -19 -4
Other comprehensive income, net
of tax -43 43 -86 38 -11
Total comprehensive income for
the period -158 24 -182 -470 -236
Result attributable to
Shareholders of parent company -116 -20 -96 -517 -225
Minority interest 1 1 0 9 0
-115 -19 -96 -508 -225
Total comprehensive income attributable to
Shareholders of parent company -162 25 -187 -481 -237
Minority interest 4 -1 5 11 1
-158 24 -182 -470 -236
Earnings per share for result attributable
to shareholders of
parent company (EUR/share)
from continuing operations -0.32 0.00 -0.32 -0.55 -0.50
from discontinued operations -0.03 -0.06 0.03 -1.03 -0.19
Total -0.35 -0.06 -0.29 -1.58 -0.69
Condensed consolidated 31.3. 31.3. 31.12.
balance sheet EUR million 2009 % 2008 % 2008 %
Assets
Non-current assets
Goodwill 51 1.2 172 3.2 51 1.1
Other intangible assets 61 1.5 74 1.4 51 1.1
Tangible assets 1,766 43.4 2,680 49.6 1,808 40.1
Biological assets 60 1.5 44 0.8 57 1.3
Investments in associated
companies 61 1.6 64 1.3 63 1.4
Available for sale
investments 380 9.3 396 7.3 440 9.8
Non-current financial
assets 231 5.7 34 0.6 232 5.2
Deferred tax receivables 5 0.1 5 0.1 5 0.1
2,615 64.3 3,469 64.3 2,707 60.1
Current assets
Inventories 465 11.4 651 12.0 505 11.2
Accounts receivables and
other receivables 689 16.9 1,087 20.1 743 16.5
Cash and cash equivalents 301 7.4 197 3.6 550 12.2
1,455 35.7 1,935 35.7 1,798 39.9
Total assets 4,070 100 5,404 100 4,505 100
SHAREHOLDERS'
EQUITY AND LIABILITIES
Shareholders' equity
Equity attributable to
shareholders of parent
company 1,667 28.7 1,835 34.0 1,329 29.5
Minority interest 61 1.5 52 1.0 57 1.3
1,228 30.2 1,887 35.0 1,386 30.8
Non-current liabilities
Deferred tax liabilities 202 5.0 306 5.5 232 5.1
Post-employment benefit
obligations 91 2.2 141 2.6 98 2.2
Provisions 97 2.4 61 1.1 99 2.2
Borrowings 1,517 37.3 1,797 33.3 1,568 34.8
Other liabilities 16 0.4 36 0.7 18 0.4
1,923 47.3 2,341 43.2 2,015 44.7
Current liabilities
Current borrowings 343 8.4 464 8.6 538 11.9
Accounts payable and other
liabilities 576 14.1 712 13.2 566 12.6
919 22.5 1,176 21.8 1,104 24.5
Total liabilities 2,842 69.8 3,517 65.0 3,119 69.2
Total shareholders' equity
and liabilities 4,070 100 5,404 100 4,505 100
Condensed consolidated cash flow statement
2009 2008 2008 2008
EUR million Q1 Q1 Q4
Result for the period -114 -19 -508 -225
Total adjustments 44 92 619 215
Change in working capital 50 -33 7 26
Cash flow arising from operations -20 40 118 16
Net financial items 16 -18 -193 -129
Income taxes paid -3 -13 -22 -2
Net cash flow arising from
operating activities -7 9 -97 -115
Investments in tangible and
intangible assets -16 -21 -128 -39
Divestments of assets and other 2 57 483 342
Net cash flow arising from
investing activities -14 36 355 303
Share issue, minority interest 0 2 2 0
Changes in long-term loans and
other financial items -229 -209 -71 226
Dividends paid 0 -20 -20 0
Net cash flow arising from
financing activities -229 -227 -89 226
Changes in cash and
cash equivalents -250 -182 169 414
Cash and cash equivalents at
beginning of period 550 380 380 133
Translation difference in cash and
cash equivalents 1 -1 1 0
Changes in cash and cash equivalents -250 -182 169 414
Assets held for sale 0 0 0 3
Cash and cash equivalents
at end of period 301 197 550 550
Statement of changes in shareholders' equity
Equity attributable to shareholders of parent company
Fair
Share value Re-
pre- Trans- and tain- Minor-
mium lation other ed ity
Share ac- differ- re- earn- inter-
EUR million capital count ence serves ings Total est Total
Shareholders'equity,
1 January, 2008 558 667 -11 225 391 1,830 52 1,882
Dividends paid -20 -20 -20
Metsä-Botnia
restructuring
in Uruguay 1 1
Comprehensive income
for the period -4 48 -19 25 -1 24
Shareholders' equity
31 March, 2008 558 667 -15 273 352 1,835 52 1,887
Shareholders'
equity,
1 January, 2009 558 667 -9 259 -146 1,329 57 1,386
Comprehensive income
for the period 1 -47 -116 -162 4 -158
Shareholders' equity
31 March, 2008 558 667 -8 212 -262 1,167 61 1,228
2009 2008 2008 2008
Key ratios Q1 Q1 Q4
Sales, EUR million 623 859 3 236 722
EBITDA, EUR million -48 96 254 -18
excl. non-recurring items, EUR
million -13 73 192 4
Operating result, EUR million -118 37 -61 -161
excl. non-recurring items, EUR
million -65 14 -35 -51
Result from continuing operations
before taxes, EUR million -115 2 -204 -197
excl. non-recurring items, EUR
million -62 -21 -178 -87
Result for the period
from continuing operations, EUR
million -105 0 -170 -163
from discontinued operations, EUR
million -10 -19 -338 -62
Total, EUR million -115 -19 -508 -225
Earnings per share
from continuing operations, EUR -0.32 0.00 -0.55 -0.50
from discontinued operations, EUR -0.03 -0.06 -1.03 -0.19
Total, EUR -0.35 -0.06 -1.58 -0.69
Earnings per share, excl.
non-recurring items
from continuing operations, EUR -0.18 -0.06 -0.48 -0.17
Return on equity, % -32.0 0.0 -10.4 -43.3
excl. non-recurring items, % -17.6 -4.8 -9.0 -14.5
Return on capital employed, % -13.4 5.7 -1.3 -19.7
excl. non-recurring items, % -7.0 2.9 -0.5 -6.2
Equity ratio at end of period, % 30.3 35.0 30.8 30.8
Gearing at end of period, % 151 120 152 152
Net gearing at end of period, % 101 100 90 90
Shareholders' equity per share at
end of period, EUR 3.56 5.59 4.05 4.05
Net interest-bearing liabilities
at end of period, EUR million 1,243 1,892 1,254 1,254
Gross capital expenditure, EUR
million 16 21 128 39
Deliveries, 1,000 tonnes
Paper business 321 481 1 761 394
Consumer Packaging 274 342 1 345 303
Personnel at end of period
In continuing operations 6,314 6,866 6,546 6,546
In discontinued operations 2,256
Securities and guarantees 2009 2008 2008
EUR million Q1 Q1
For own liabilities 57 59 61
On behalf of associated companies 1 1 1
On behalf of Group companies 5 4 5
On behalf of others 5 3 2
Total 68 67 69
Open derivative contracts 2009 2008 2008
EUR million Q1 Q1
Interest rate derivatives 1,271 1,735 1,286
Foreign exchange derivatives 2,541 3,112 2,805
Other derivatives 289 150 185
Total 4,101 4,997 4,276
The fair value of open derivative contracts calculated at market
value was EUR -37.1 million at the end of the review period (EUR 15.0
million 31 December 2008).
The gross amount of open contracts also includes closed contracts,
totalling EUR 1,836.0 million (31 December 2008: EUR 2,068.8
million).
Commitments related to fixed assets 2009 2008 2008
EUR million Q1 Q1
Payments in less than a year 0 5 0
Payments later 1 1 1
Changes in property,
plant and equipment 2009 2008 2008
EUR million Q1 Q1
Carrying value at beginning of period 1,808 2,820 2,820
Capital expenditure 13 21 128
Decrease 0 -72 -670
Depreciation and impairment losses -65 -56 -282
related to discontinued operations 0 -19 -149
Translation difference 10 -14 -39
Carrying value at end of period 1,766 2,680 1,808
Depreciation and impairment losses related to discontinued
operations include write-downs and impairments
of Graphic Papers business.
Related-party transactions
Transactions with parent company 2009 2008 2008
and sister companies EUR million Q1 Q1
Sales 7 11 34
Other operating income 1 1 3
Purchases 92 161 571
Interest income 2 1 7
Interest expenses 1 1 4
Non-current receivables 5 19 5
Current receivables 67 49 49
Non-current liabilities 0 0 0
Current liabilities 99 46 228
Transactions with associated 2009 2008 2008
companies Q1 Q1
Sales 0 0 0
Purchases 0 1 4
Non-current receivables 0 2 0
Current receivables 7 8 7
Current liabilities 2 3 2
Accounting policies
This unaudited interim report has been prepared in accordance with
accounting policies set out in International Accounting Standard 34
and in the M-real's Annual Report for 2008.
The Group has adopted the following standards: IAS 1 (revisited),
Presentation of Financial Statements. The revisited standard is aimed
at improving users' ability to analyse and compare the information
given in financial statements by separating changes in equity of an
entity arising from transactions with owners from other changes in
equity. The Group presents non-owner changes in equity in the
statement of comprehensive income.
IFRS 8, Operating Segments. The new standard replaces IAS 14. The new
standard requires a 'management approach', under which segment
information is presented on the same basis as that used for internal
reporting purposes.
The operating segments are the same as in 2008 according to IAS 14 or
Consumer Packaging, Office Papers, Other Papers and Market Pulp and
Energy.
The figures in the financial statement release are unaudited.
Calculation of key ratios
= (Result from continuing operations
Return on equity (%) before tax - direct taxes) per
(Shareholders' equity (average))
(Result from continuing operations
= before tax + interest expenses,
Return on capital employed net exchange gains/losses and other
(%) financial expenses) per
(Shareholders' equity + interest-bearing
borrowings (average))
Equity ratio (%) = (Shareholders' equity) per
(Total assets - advance payments
received)
Gearing ratio (%) = (Interest-bearing borrowings) per
(Shareholders' equity)
(Interest-bearing borrowings - liquid
= funds - interest-bearing receivables)
Net gearing ratio (%) per
(Shareholders' equity)
= (Profit attributable to shareholders of
Earnings per share parent company) per
(Adjusted number of shares (average))
Shareholders' equity per = (Equity attributable to shareholders of
share parent company) per
(Adjusted number of shares at end of
period)
Quarterly information
Sales and result
by segment, 2009 2008 2008 2008 2008 2007 2008
EUR million Q1 Q4 Q3 Q2 Q1 Q4
Consumer Packaging 226 248 274 274 266 259 1 061
Office Papers 147 174 203 204 223 213 804
Other Papers 117 147 153 158 164 161 622
Market Pulp and Energy 134 150 172 160 162 147 644
Other operations 34 57 77 87 102 107 323
Internal sales -35 -54 -53 -54 -58 -59 -218
Sales 623 722 826 829 859 828 3 236
Consumer Packaging 15 11 37 23 37 26 108
Office Papers -2 -3 11 10 17 26 35
Other Papers -33 -1 7 8 31 -4 45
Market Pulp and Energy -4 8 23 96 21 11 148
Other operations -24 -33 -29 -10 -10 5 -82
EBITDA -48 -18 49 127 96 64 254
% of sales -7.7 -2.5 5.9 15.3 11.2 7.7 7.8
Consumer Packaging -17 -13 17 3 17 -1 24
Office Papers -17 -38 -6 -7 -2 -179 -53
Other Papers -40 -75 -3 -2 21 -12 -59
Market Pulp and
Energy -18 -2 12 86 10 7 106
Other operations -26 -33 -28 -9 -9 -3 -79
Operating result -118 -161 -8 71 37 -188 -61
% of sales -18.9 -22.3 -1.0 8.6 4.3 -22.7 -1.9
Non-recurring items
EUR million
Consumer Packaging -16 -4 0 0 0 -8 -5
Office Papers 0 -24 0 0 0 -183 -24
Other Papers -28 -67 0 -1 24 -2 -44
Market Pulp and Energy -6 0 0 74 0 -1 74
Other operations -3 -14 -11 -1 -1 -3 -27
Non-recurring items in
operating result -53 -110 -11 72 23 -197 -26
Consumer Packaging 19 11 37 23 38 27 109
Office Papers -2 -1 11 10 17 23 37
Other Papers -5 1 7 9 7 -1 23
Market Pulp and Energy -3 8 23 22 21 12 73
Other operations -22 -15 -18 -8 -10 6 -50
EBITDA, excl. non-
recurring items -13 4 60 55 73 66 192
% of sales -2.1 0.6 7.3 6.6 8.5 8.0 5.9
Operating result, excl. 2009 2008 2008 2008 2008 2007 2008
non-recurring items Q1 Q4 Q3 Q2 Q1 Q4
Consumer Packaging -1 -9 17 3 18 7 29
Office Papers -17 -14 -6 -7 -2 4 -29
Other Papers -12 -8 -3 -1 -3 -10 -15
Market Pulp and Energy -12 -2 12 12 10 8 32
Other operations -23 -18 -17 -8 -9 0 -52
Group -65 -51 3 -1 14 9 -35
% of sales -10.4 -7.1 0.4 -0.1 1.6 1.1 -1.1
Return on capital
employed %
Consumer Packaging -8.8 -6.0 8.3 1.4 8.7 0.1 3.2
Office Papers -12.4 -25.6 -3.2 -3.2 -0.6 -79.9 -7.4
Other Papers -43.4 -63.5 -2.3 -1.2 18.1 -11.4 -14.3
Market Pulp and Energy -8.4 -1.3 5.1 37.3 4.7 3.5 12.6
Group -13.4 -19.7 -0.5 8.9 5.7 -22.4 -1.3
Capital employed
EUR million
Consumer Packaging 774 801 839 829 813 823 801
Office Papers 517 556 645 664 726 808 556
Other Papers 312 415 518 532 522 398 415
Market Pulp and Energy 876 899 929 921 912 752 899
Unallocated and
eliminations 609 822 -12 165 263 522 822
Group 3,088 3,493 2,919 3,111 3,236 3,303 3,493
The capital employed for a segment included its assets: goodwill,
other intangible goods, tangible assets, biological assets,
investments in associates, inventories, accounts receivables,
prepayments and accrued income (excluding interest and taxes), less
the segment's liabilities (accounts payable, advance payments,
accruals and deferred income (excluding interest and taxes).
Personnel 2009 2008 2008
Average Q1 Q1
Consumer Packaging 1,527 1,655 1,664
Office Papers 1,462 1,704 1,561
Other Papers 2,004 2,035 2,016
Metsä-Botnia 533 552 569
Other continuing operations 858 1,068 1,039
Discontinued operations 0 2,251 2,238
Total 6,384 9,265 9,087
Deliveries 2009 2008 2008 2008 2008 2007 2008
1,000 tonnes Q1 Q4 Q3 Q2 Q1 Q4
Consumer Packaging 274 303 348 351 342 336 1,345
Office Papers 203 237 270 274 300 284 1,081
Other Papers 118 157 168 174 181 177 680
Paper business, total 321 394 438 448 481 461 1,761
Market Pulp 287 264 291 279 281 247 1,115
Production 2009 2008 2008 2008 2008 2007 2008
1,000 tonnes Q1 Q4 Q3 Q2 Q1 Q4
Consumer Packaging 292 293 347 335 361 339 1,336
Office Papers 199 177 226 245 257 279 905
Other Papers 99 160 170 186 190 182 705
Paper business, total 298 337 396 431 447 461 1,610
Metsä-Botnia pulp 1) 231 235 270 233 252 225 990
M-real pulp 277 303 377 391 415 369 1,486
1) corresponds to M-real's ownership share of 30% in Metsä-Botnia