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Metsä-Botnia's finacial result for January-September 2001 reasonable despite low pulp prices

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Metsä-Botnia retains its competitiveness


    * Turnover EUR 899.5 million (EUR 1,063.0 million for January - September
2000) 
    *  Operating profit EUR 232.1 million (EUR 393.6 million)
    * Profit before extraordinary items EUR 221.7 million (EUR 368.7 million)
    * Investments EUR 113.8 million (EUR 78.6 million)
    * Return on capital employed 23.1% (38.8%)
    * Equity ratio 67.9% (66.1%)

Turnover and financial results

Metsä-Botnia's turnover for the nine months to September was EUR 899.5 million,
15.4 per cent down on the same period last year. Operating profit was down by
41.0 per cent at EUR 232.1 million. Profit before extraordinary items was EUR
221.7 million, 39.9 per cent lower than last year's corresponding figure of EUR
368.7 million. Return on capital employed was 23.1 per cent (38.8%) and the
gearing ratio was 21.6 per cent (22.4%). 

The lower turnover and operating profit are due mainly to the fall in world
market pulp prices resulting from weaker demand. Sales prices in euros were on
average about 8 per cent lower than for this period last year, and the sales
volume was some 13 per cent down. Production during the review period was
adapted to correspond with demand. 

Operating profit for the third quarter was EUR 46.9 million, EUR 13.2 million
down on the previous quarter. The decline in profitability is due to the
continuing fall in chemical pulp prices. On average, mill prices for chemical
pulp during the third quarter were 19 per cent lower than during the second. In
terms of volume, however, third-quarter pulp sales were 16 per cent up on the
previous quarter due to start-up of Joutseno's new fibre line and to growth in
deliveries of market pulp. 

Market review

The decline in demand for market pulp that began in autumn last year continued
up to the end of the review period. The Norscan countries operated at 83 per
cent of capacity during the review period, and stocks stood at 1.5 million
tonnes at the end of September. 

The price of softwood pulp fell from USD 705/t to USD 450/t during the review
period. Prices for short-fibre pulp fell correspondingly from EUR 720 to EUR
440. An increase in the price of softwood pulp to USD 480/t has been announced
for October, while the price of short-fibre pulp will be raised to EUR 465/t. 

European demand for white top liner improved as it normally does at this time
of year. Demand for linerboard in the USA has been stable. It has also been
possible to maintain prices. 

Production and deliveries

Pulp deliveries for the first nine months were 1,491,000 tonnes, 13 per cent
less than for this period last year. However, deliveries for the third quarter
were 16 per cent up on the second quarter. Production during the review period
was severely curtailed (by some 400,000 tonnes) to correspond with demand. 

Linerboard deliveries for the period January - September were 213,477 tonnes, 7
per cent less than for this period last year. It has also been necessary to cut
linerboard production to correspond with demand. 

Production will continue to be curtailed over the next few months.

Investments

The new fibre line at the Joutseno mill has been successfully started up and
the targets set for quality and quantity have largely been achieved. However,
curtailment of production has prevented the production capacity of the new line
from being used to the full. 

Environmental emissions have fallen to below target, and Joutseno is now one of
the world's cleanest mills in this respect. 

Outlook

Market pulp prices have bottomed out and have now started to rise.
Nevertheless, capacity utilization rates are likely to remain low for the rest
of the year. How prices develop in the months ahead depends very much on the
trends in the US and EU economies. 

Demand for linerboard is expected to remain steady for the rest of the year,
and price levels will probably be maintained. 
Financial results for the final quarter are expected to be about the same as
for the third quarter. 

For more information contact:
Erkki Varis, President & CEO, tel. +358 1046 94671
Jukka Forsström, Senior Vice President, tel. +358 1046 94674

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