FINANCIAL STATEMENT BULLETIN FOR 2002
Metsä Tissue Corp. STOCK EXCHANGE RELEASE 6 February 2003 at 9.00
FINANCIAL STATEMENT BULLETIN FOR 2002
METSÄ TISSUE ACHIEVED ITS TARGETED FINANCIAL RESULT FOR 2002 -
PROFIT IMPROVED TO EUR 37.1 MILLION
* Profit before extraordinary items improved to EUR 37.1 million
(27.1 million in 2001).
* Turnover fell by 0.3 per cent to EUR 647.8 million (649.6
million).
* Earnings per share were EUR 0.93 (0.80).
* Return on capital employed was 13.2 per cent and return on
equity 18.1 per cent.
* The gearing ratio fell to 77.5 per cent (123.2 per cent at 31
December 2001).
* EUR 90 million investments were launched as part of development
programmes.
* Business operations in Poland were expanded.
* The profit and cash flow targets for 2002 were achieved.
* The Board of Directors proposes that no dividend be paid for
the 2002 financial year.
Results and turnover
Operating profit improved to EUR 43.1 million, 6.7 per cent of
turnover (36.5 million and 5.6 per cent). The improved profit is
due to greater cost-effectiveness, improvements made to the
product range, and a growth in sales volumes. Operating profit for
the fourth quarter was EUR 5.9 million, down by EUR 11.2 million
on the previous quarter. This is explained by the seasonally lower
sales compared with the third quarter and by non-recurring costs.
The profit for the fourth quarter includes provisions totalling
EUR 3.7 million made for reorganization of operations, most of
which concerns business operations in Germany.
Turnover was 0.3 per cent down on the previous year at EUR 647.8
million (649.6 million). Sales volumes, calculated to exclude the
effect of acquisitions, rose overall by about 3 per cent, but
average sales prices were some 5 per cent lower than in 2001. The
fall in average sales prices was due to a substantial drop in
market prices for some products, in particular for tissue base
paper. Company acquisitions raised turnover by just under one per
cent.
Depreciation was 39.2 million (40.1 million). Net financial
expenses fell to EUR 6.0 million, 0.9 per cent of turnover (9.3
million and 1.4 per cent). The lower financial expenses are
attributable mainly to the decrease in interest-bearing
liabilities made possible by the good cash flow from operations.
Profit before extraordinary items was EUR 37.1 million, 5.7 per
cent of turnover (27.1 million and 4.2 per cent). Profit was
reduced by taxes for the period totalling EUR 9.2 million (0.7
million). A non-recurring increase of EUR 3.3 million in deferred
tax receivables concerning the German subsidiaries was set against
tax in the accounts. Profit after taxes and minority interests was
EUR 28.0 million (24.1 million).
Main events during the financial period
Metsä Tissue is vigorously developing all areas of its operations.
The company has launched several market-oriented investment and
development programmes designed to raise product quality and
degree of converting, particularly of consumer products, and at
the same time to substantially improve production efficiency.
These programmes will raise the degree of converting and improve
product quality, thus making the products more competitive. The
programmes will be largely completed during the period 2002 - 2004
and involve investments totalling around EUR 90 million.
The cost of the investment and development programmes being
carried out in the Nordic countries is roughly EUR 30 million. The
programmes will help to improve quality, particularly of brand
name products, and will significantly improve cost-effectiveness.
The programmes will be completed for the most part by the end of
2003.
In September, a development programme was decided on for
operations in Poland. The aims of the programme are to raise
converting capacity at the Krapkowice and Warsaw mills, to improve
product quality, and to at least double productivity. Around EUR
15 million will be invested in developing business in Poland over
the next 18 months.
In October, Metsä Tissue decided to launch a major investment and
development programme for its operations in Germany. The aims of
the programme are to improve product quality and raise the degree
of converting, particularly of consumer products, and to raise
productivity by more than a third. Logistics will also be
rationalised, as part of which a rail link is to be built to serve
the Kreuzau mill. The development programme involves investments
totalling around EUR 45 million and will be largely complete by
the end of 2004. The programme also involves considerable
workforce reductions, and a provision for costs of EUR 3.0 million
has been made for this purpose in the accounts for 2002.
Metsä Tissue acquired a controlling interest in the Polish tissue
company Zaklady Papiernicze w Krapkowicach S.A. (ZPK). During the
year Metsä Tissue increased its shareholding in ZPK by 64.7 per
cent and at the end of the year its shareholding in the company
stood at 89.4 per cent. The shares acquired cost a total of EUR
3.3 million, in addition to which Metsä Tissue took over from ZPK
interest-bearing liabilities of EUR 5.1 million. ZPK was
consolidated as a subsidiary in Metsä Tissue's consolidated
financial statements from the beginning of October. The
acquisition of ZPK raised Metsä Tissue's share of the Polish
consumer products market to almost 20 per cent.
In December, Metsä Tissue signed an agreement to purchase 38 per
cent of the shares of the Polish tissue products converter Krapex
Sp.zoo. The price of the shares is EUR 0.8 million and is based on
the (100%) debt-free value of the whole of Krapex, which is
roughly EUR 3 million. The acquisition is subject to the results
of a process of due diligence and requires approval by Poland's
competition authority and Ministry of the Interior. Official
approval could be obtained during the first half of 2003. If these
conditions are met, Metsä Tissue's interest in Krapex will
increase to 85 per cent of the shares and votes. The acquisition
will also make Metsä Tissue Poland's biggest supplier of converted
tissue products.
Key figures
Earnings per share for the financial period were EUR 0.93 (0.80)
and equity per share at the end of the period was EUR 5.52 (4.70).
Capital invested in business operations at the end of the period
was EUR 325.5 million (342.3 million at 31 December 2001). The
return on capital employed was 13.2 per cent (10.3) and the return
on equity 18.1 per cent (20.2).
Financing
The cash flow from the group's business operations was good during
the review period, and as a result there was a further fall in the
gearing ratio. The cash flow from operations was EUR 97.3 million
(85.7 million) before investments and EUR 53.7 million (65.5
million) after investments. It was possible to reduce net working
capital considerably during the year. Net working capital at the
end of the year was very low.
The gearing ratio at the end of the year was 77.5 per cent (123.2
per cent at 31 December 2001). The equity ratio improved to 37.4
per cent (31.5 per cent at 31 December 2001).
Interest-bearing liabilities at the end of the year were EUR 158.2
million (196.0 million). Liquidity was good throughout the year.
Liquid funds at the end of the financial period were EUR 28.6
million (26.3 million at 31 December 2001). In addition, the group
had EUR 104.6 million in unutilised credit facilities (74.8
million at 31 December 2001), of which EUR 100.2 million were
committed and EUR 4.4 million uncommitted. Net interest-bearing
liabilities fell during the year by EUR 44.5 million to EUR 129.6
million (174.1 million).
Of the group's interest-bearing liabilities, 92 per cent were tied
to a maximum of 12-month variable market interest rates and the
rest to fixed interest rates. The time to repricing of the group's
liabilities has been extended through interest rate derivatives,
and for this reason the time to repricing at the end of the
financial period was 16.7 months. The average rate of interest on
the group's interest-bearing liabilities was 4.0 per cent (3.8).
During the year Metsä Tissue signed important contracts to hedge
the cost of its chemical pulp raw material. The contracts cover
around 20 per cent of annual consumption up to mid-2005. Metsä
Tissue also has currency derivative contracts to cover sales in
Norwegian and Danish crowns should the exchange rates for these
currencies vary against the Swedish crown. At the end of the
review period, these sales were hedged up to the end of 2003.
The market
Tissue sales in Europe are currently rather more than 5 million
tonnes a year. The tissue markets served by Metsä Tissue represent
roughly 3.5 million tonnes. Metsä Tissue's share of these markets
is about 10 per cent.
The general economic decline in Europe has affected demand for
tissue products, which overall grew extremely slowly in 2002. In
some markets, for example Germany, demand for certain tissue
products has actually fallen slightly. At the same time new
production capacity has come onto the market, and this has further
intensified competition.
Historically, the European tissue market has been rather
fragmented, with each country forming its own market. However, a
process of harmonization is now under way. This was assisted
during 2002 by internationalization and consolidation,
particularly within the retail trade, and by the introduction of
the euro.
Overall, prices for the group's main raw materials were somewhat
lower than the year before. The average price in euros for
chemical pulp, the most important raw material, was 16 per cent
lower than in 2001, but prices for waste paper, energy and
packaging materials were all up on the year before.
Business areas
Turnover for the Consumer business area fell by 2.6 per cent to
EUR 350.0 million (359.3 million). Operating profit was EUR 19.7
million, 5.6 per cent of turnover (21.9 million and 6.1 per cent).
Sales volumes in continental Europe were up slightly on the year
before. Because of intense competition, average sales prices were
somewhat lower than in 2001. In the Nordic countries, Metsä
Tissue's own brands further strengthened their positions. Sales of
Mola products in Poland were up by a quarter on the year before.
The Away-from-Home business area produced a turnover of EUR 177.3
million, up by 2.2 per cent on last year's figure of EUR 173.5
million. Operating profit improved to EUR 17.7 million, 10.0 per
cent of turnover (12.1 million and 7.0 per cent). Sales volumes
were somewhat higher than the year before, while average sales
prices were almost the same. The improved financial result is
attributable to lower costs and to improvements made to the
product range. In the autumn, a new streamlined Katrin product
range, including more modern dispenser systems, was brought onto
the market.
Other operations produced a turnover of EUR 127.2 million (121.0
million). Operating profit was EUR 6.6 million, 5.2 per cent of
turnover (3.7 million and 3.1) per cent. The Baking & Cooking
business area recorded higher sales volumes than the previous
year, with further converted products, in particular, showing
better sales. Profitability also benefited from greater business
efficiency and cost savings. Tissue base paper sales were about
the same as the previous year in volume terms, but average sales
prices were lower. Other operations also includes the packaging
board business of the Krapkowice mill in Poland for the fourth
quarter of the year.
The Table Top business area's sales volumes were almost the same
as the previous year, but did not reach the targets. However,
operating profit improved thanks to greater efficiency and lower
costs.
Investments
Investment during 2002 totalled EUR 47.1 million (21.1 million). A
total of EUR 3.3 million was used for share purchases (5.1
million) and EUR 43.8 million was invested in fixed assets (16.0
million). Fixed asset sales during the period totalled EUR 3.5
million (0.9 million).
The most significant share purchase during the financial period
was the acquisition of a controlling interest in the Polish tissue
company Zaklady Papiernicze w Krapkowicach S.A. (ZPK). The cost of
the shares concerned was EUR 3.3 million, in addition to which
Metsä Tissue took over from ZPK interest-bearing liabilities of
EUR 5.1 million. At the end of the year Metsä Tissue owned 89.4
per cent of ZPK's shares. An additional 20 per cent of the share
capital of Mäntän Energia Oy was acquired during the year,
bringing Metsä Tissue's interest in the company up to 45 per cent.
In line with the development programmes, investments in fixed
assets were mainly directed at product development work and at
raising the production efficiency of the converting lines.
Investments were made at all the group's mills. The brand name
Serla, including full rights, was acquired at the end of the
financial period.
Personnel
The Metsä Tissue Group had an average of 3,067 employees in 2002
(3,000). The number at the end of the year was 3,299 (2,923).
Company acquisitions increased the number at the end of the year
by altogether 409.
Personnel by
country:
31.12.2001 31.12.2002 2002 average
Finland 672 648 693
Other Nordic countries 685 675 689
Germany 1,280 1,237 1,270
Poland 253 707 382
Other countries 33 32 33
Total 2,923 3,299 3,067
Shares and shareholders
In 2002, the highest price quoted for Metsä Tissue Corporation's
shares was EUR 11.00 and the lowest EUR 8.50. The average
quotation was EUR 9.81. At the end of the year the shares were
quoted at EUR 10.50.
Metsä Tissue shares to a total value of EUR 17.5 million were
traded during the year, 5.9 per cent of the total number of
shares. The company's market capitalization at the end of the year
was EUR 315 million.
At the end of the year Metsä Tissue had 1,498 registered
shareholders. M-real Corporation held 65.6 per cent of the shares
and international investors 21.8 per cent.
The Board of Directors has no current authorization to issue
shares, convertible bonds or share options.
General meeting of shareholders, Board of Directors and auditors
Metsä Tissue Corporation's Annual General Meeting was held on 19
March 2002. The following persons were elected members of the
Board of Directors: Ari Heiniö, Jouko M. Jaakkola, Curt Lindbom,
Jussi Länsiö, Antti Oksanen and Arimo Uusitalo. The term of office
of the Board members extends until the end of the 2003 Annual
General Meeting. The Board of Directors elected from among its
number Antti Oksanen as chairman and Arimo Uusitalo as vice
chairman.
PricewaterhouseCoopers Oy (authorised public accountants) were re-
elected as the company's auditors, with Göran Lindell, APA,
responsible for the audit.
Hannu Anttila has been President and CEO of the company since
1998. He will take up a new post as Senior Vice President, CFO,
with the Metsäliitto Group in spring 2003, when a new President
and CEO will be appointed.
Events occurring after the closing of accounts
On 20 January 2003, Svenska Cellulosa Aktiebolaget SCA
relinquished its shareholding in Metsä Tissue. At the same time,
M-real Corporation's interest in Metsä Tissue Corporation
increased to over 90 per cent, and M-real announced its intention
to acquire all Metsä Tissue's shares. This means that Metsä
Tissue's shares will no longer be listed on the Helsinki
Exchanges.
In January Metsä Tissue Corporation increased its shareholding in
the Polish tissue company Zaklady Papiernicze w Krapkowicach S.A.
(ZPK) to 90.6 per cent.
Outlook for 2003
Demand for tissue products is expected to remain fairly steady in
the near future. No material growth is anticipated, and
competition will therefore remain fierce. Raw material prices are
expected to increase somewhat from their present levels during the
latter part of the year.
Metsä Tissue will continue with its programmes aimed at product
development and at making business more cost effective in all its
business areas. Most of these programmes will be completed by
summer 2004.
Both turnover and financial results are expected to show positive
development in 2003.
Distribution of profits
At 31 December 2002, the Metsä Tissue Group had disposable funds
of EUR 42,012,000. The company's Board of Directors will propose
to the Annual General Meeting to be held on 18 March 2003 that no
dividend be distributed for the financial period ending 31
December 2002.
The figures presented in this report are unaudited.
Espoo, 5 February 2003
BOARD OF DIRECTORS
More information
Hannu Anttila, President and Chief Executive Officer
Tel. +358 10469 4959, mobile +358 50 2398
Timo Suuriniemi, Chief Financial Officer
Tel. +358 10 469 4580, mobile +358 50 560 8271
Enclosures
Consolidated profit and loss account and balance sheet
Cash flow statement and quarterly figures
Key figures
Metsä Tissue Corporation's Interim Report for January - March 2003
will be published on Friday, 25 April 2003.
Interim reports, annual reports, the company's stock exchange
bulletins and other financial information are also available on
the Internet at www.metsatissue.com
METSÄ TISSUE GROUP
(unaudited)
PROFIT AND LOSS ACCOUNT Q1-4/02 % Q1-4/01 % Change %
(EUR million)
Turnover 647.8 100.0 649.6 100.0 -1.8 -0.3
Other operating income 5.6 5.2 0.4
Operating expenses 571.1 578.2 -7.1
Depreciation according to plan 39.2 40.1 -0.9
Operating profit 43.1 6.7 36.5 5.6 6.6
Net exchange gains/losses -0.3 1.0 -1.3
Other financial income/
expenses -5.6 -0.9 -10.3 -1.4 4.7
Profit before extraordinary
items 37.1 5.7 27.1 4.2 9.9
Extraordinary income 0.0 0.0 0.0
Extraordinary expenses 0.0 0.0 0.0
Profit before taxes and 37.1 5.7 27.1 4.2 9.9
minority interest
Taxes -9.2 -0.7 -8.5
Minority interest 0.0 2.4 -2.4
Profit for the period 28.0 4.3 24.1 3.7 3.9
BALANCE SHEET (EUR million) Q4/02 % Q4/01 %
Assets
Fixed assets and other
non-current assets 262.7 58.8 250.1 55.8
Inventories 60.9 13.6 69.1 15.4
Other current assets 123.5 27.6 129.1 28.8
Total 447.1 100.0 448.4 100.0
Liabilities
Shareholders´ equity
Restricted equity 100.1 100.1
Unrestricted equity 65.6 40.9
Shareholders equity, total 165.7 37.1 141.0 31.4
Minority interest 1.5 0.3 0.3 0.1
Provisions for future costs 15.6 3.5 13.4 3.0
Liabilities
Long term liabilities 163.9 169.3
Short term liabilities 100.4 124.4
Liabilities, total 264.3 59.1 293.7 65.5
Total 447.1 100.0 448.4 100.0
METSÄ TISSUE GROUP
(unaudited)
CASH FLOW STATEMENT (EUR million) Q1-4/2002 Q1-4/2001
Profit before extraordinary items 37.1 27.1
Depreciation according to plan 39.2 40.1
Direct taxes -11.6 -9.7
Other changes 2.1 7.6
Funds from operations 66.8 65.1
Change in working capital 30.4 20.6
Cash flow from operations 97.2 85.7
Capital expenditure1) -47.1 -21.1
Disposals and other changes in fixed assets 3.6 0.9
Cash flow after capital expenditure 53.7 65.5
Change in interest bearing loans -47.8 -57.6
Change in interest bearing receivables -2.2 0.2
Dividends -3.0 0.0
Other items 1.8 -0.7
Change in liquid funds 2.4 7.4
1) Excluding interest-bearing liabilities of acquired companies
QUARTERLY DEVELOPMENT
2001 - 2002
TURNOVER 2002 2001
EUR million Q1-4 Q4 Q3 Q2 Q1 Q1-4 Q4 Q3 Q2 Q1
Consumer 350.0 92.8 86.2 83.8 87.3 359.3 91.6 91.1 89.0 87.5
Away-from-
Home 177.3 43.7 45.9 43.6 44.2 173.5 42.7 42.2 44.4 44.1
Other
operations 127.2 35.9 31.6 30.3 29.4 121.0 30.8 28.1 30.4 31.6
Internal
sales -6.8 -1.7 -1.4 -2.0 -1.7 -4.3 -1.8 -0.4 -0.8 -0.9
Total 647.8 170.7 162.3 155.7 159.2 649.6 163.2 161.0 163.0 162.2
OPERATING PROFIT 2002 2001
EUR million Q1-4 Q4 Q3 Q2 Q1 Q1-4 Q4 Q3 Q2 Q1
Consumer 19.7 2.3 7.9 3.9 5.6 21.9 8.4 6.8 4.5 2.3
Away-from-
Home 17.7 2.7 6.4 4.0 4.7 12.1 4.0 4.1 2.5 1.6
Other
operations 6.6 1.1 3.1 1.0 1.4 3.7 1.8 0.4 0.7 0.9
Group
costs -0.9 -0.1 -0.2 -0.4 -0.1 -1.2 -0.3 -0.1 -0.4 -0.3
Total 43.1 5.9 17.2 8.4 11.6 36.5 13.8 11.1 7.3 4.4
Operating
margin, % 6.7 3.5 10.6 5.4 7.3 5.7 8.5 6.9 4.5 2.6
Net exchange gains/
losses -0.3 0.3 -0.2 -0.1 -0.4 1.0 0.5 -1.0 0.6 0.9
Other financial income and
expenses -5.6 -1.2 -1.5 -1.3 -1.6 -10.3 -1.8 -2.5 -2.9 -3.2
Profit before extraordinary
items 37.1 5.0 15.5 7.0 9.6 27.1 12.5 7.6 5.0 2.1
METSÄ TISSUE GROUP
(unaudited)
KEY FIGURES Q1-4/2002 Q1-4/2001
Share related indicators, EUR
Earnings per share 0.93 0.80
Shareholders´ equity per share 5.52 4.70
Investments
Gross investments, MEUR 47.1 21.1
Investments, % turnover 7.3 3.2
Net interest bearing liabilities, MEUR 129.6 174.1
Financial ratios
Return on equity, % 18.1 20.2
Return on capital employed, % 13.2 10.3
Capital turnover 1.94 1.80
Gearing, % 77.5 123.2
Equity ratio, % 37.4 31.5
Personnel
Personnel, average 3,067 3,000
Personnel, at the end of period 3,299 2,923
Leasing commitments, MEUR
Payments due during next 12 months 2.4 2.7
Payments due in subsequent years 3.5 3.5
Derivatives, MEUR
Currency derivatives 75.4 70.8
Interest rate derivatives 240.0
Commodity derivatives 63.3 26.1
Mortgages, MEUR 3.4 2.4
Guarantees, MEUR 0.0 0.0
Other liabilities, MEUR 0.1 0.1
