METSÄ TISSUE?S FIRST-QUARTER PROFIT SHOW
Metsä Tissue Corp. Stock Exchange Release 1(8) 25.4.2003 at 2.00 pm.
METSÄ TISSUES FIRST-QUARTER PROFIT SHOWS SLIGHT RISE
* Profit before extraordinary items rose slightly to EUR 9.9 million
(9.6 million in 2002).
* Turnover was up by 3.5 per cent at EUR 164.7 million (159.2
million).
* Earnings per share increased to EUR 0.23 (0.22).
* Return on capital employed was 14.5 per cent (14.0) and return on
equity 16.3 per cent (18.4).
* Implementation of the investment and development programmes
continues.
* Majority interest in the Polish company Krapex secured.
Results and turnover
Operating profit was EUR 11.7 million, 7.1 per cent of turnover
(11.6 million and 7.3 per cent). Profit benefited from a small
growth in sales volumes and from improvements made to the product
range, but was negatively influenced by costs related to product
launchings.
Some additional production-related costs also adversely affected
first-quarter profit.
Operating profit was up by EUR 5.8 million on the fourth quarter of
last year. The increase is attributable to non-recurring costs set
against profit in the previous quarter and also to better sales
season.
Turnover was up 3.5 per cent on this period last year at EUR 164.7
million (159.2 million). Company acquisitions accounted for about 3
per cent of the rise in turnover. Growth of sales volumes was
roughly 1 per cent on this period a year ago, but average sales
prices were about one per cent lower.
Depreciation for the first quarter was EUR 10.3 million (9.7
million). Net financial expenses fell to 1.8 million, 1.1 per cent
of turnover (2.0 million and 1.3 per cent).
Profit before extraordinary items rose to EUR 9.9 million, 6.0 per
cent of turnover (9.6 million and 6.0 per cent). Profit for the
period was reduced by taxes totalling EUR 2.9 million (3.0 million).
After taxes and minority interest there was a profit of EUR 6.9
million (6.6 million).
Most important events
Metsä Tissue is vigorously developing all areas of its operations.
The ongoing investment and development programmes will raise the
degree of converting and improve product quality, thus making the
company more competitive. The development programmes are being
conducted largely during the period 2002-2004 and involve
investments totalling some EUR 90 million, of which roughly EUR 45
million has been allocated for this year. Implementation of the
programmes progressed according to plan during the review period.
The first of the improved products have been introduced to the
market during review period. Positive effects from them are
expected during near future.
Hannu Anttila, who has been the companys President and CEO since
1998, took up a new post with the Metsäliitto Group on 19 March
2003. Mikko Helander was appointed Metsä Tissues new President and
CEO with effect from 1 August 2003. During the interim period 19
March to 31 July, the post of President and CEO will be filled by
Lars Warvne, COO and head of Metsä Tissues Supply Team.
In April 2003, Metsä Tissue acquired a 38 per cent shareholding in
the Polish tissue products converter Krapex Sp.zoo, having first
obtained the necessary approval of the Polish authorities. The cost
of the shares was EUR 0.8 million, and was based on the (100%) debt-
free value of the whole of Krapex, which is around EUR 3 million.
Metsä Tissue already owned 47 per cent of the company, and the share
acquisition has brought its interest in Krapex to 85 per cent.
Krapex will be consolidated into Metsä Tissues accounts with effect
from 1 April 2003. Krapex has an annual turnover of around EUR 10
million and its operations are in profit.
Key figures
Earnings per share for the first quarter improved to EUR 0.23
(0.22). Equity per share at the end of the period was EUR 5.68
(4.86). Capital invested in business operations at the end of the
period was EUR 323.3 million (325.5 million at 31 December 2002).
The return on capital employed was 14.5 per cent (14.0) and the
return on equity 16.3 per cent (18.4).
Financing
The cash flow from the groups business operations was negative
during the first quarter. This is due to the fact that net working
capital, which had been exceptionally low at the turn of the year,
has returned to normal levels. The cash flow from operations was EUR
-4.0 million before investments (22.0 million) and EUR -10.0 million
after investments (19.6 million).
The gearing ratio at the end of March was almost unchanged at 81.0
per cent (77.5 per cent at 31 December 2002). The equity ratio was
39.3 per cent (37.4 per cent at 31 December 2002).
Interest-bearing liabilities at the end of the review period were
EUR 151.6 million (158.2 million). Liquidity was good throughout the
period. Liquid funds at the end of March were EUR 12.5 million (28.6
million at 31 December 2002). In addition, the group had EUR 102.0
million in unutilized credit facilities (104.6 million at 31
December 2002), of which EUR 97.7 million were committed and EUR 4.3
million uncommitted. Net interest-bearing liabilities were EUR 139.1
million (129.6 million).
Metsä Tissue has signed important contracts to hedge the cost of its
chemical pulp raw material. These 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
The growth in demand for tissue products in Europe is extremely slow
because of the general economic decline. At the same time, new
production capacity has come onto the market, and as a result
competition has remained fierce.
Prices for Metsä Tissues main raw materials rose during the review
period. At the end of the period, the price in euros of
chemical pulp, the most important raw material, was over 14 per cent
higher than at the turn of the year. Prices for waste paper, energy
and packaging materials have also risen.
Business areas
Turnover for the Consumer business area was up 1.9 per cent at EUR
89.1 million (87.3 million). Operating profit was EUR 4.9 million,
5.5 per cent of turnover (5.6 million and 6.4 per cent). Sales
volumes rose slightly in continental Europe but in the Nordic
countries volumes did not reach the levels of last year. Sales
prices were almost unchanged. Intensification of marketing efforts
adversely affected the financial result for the period as the
introduction of improved Lambi products on the Nordic and Polish
markets began during the review period.
Turnover for the Away-from-Home business area was EUR 46.6 million
(44.2 million), a growth of 5.4 per cent on the first quarter last
year. Operating profit improved to EUR 5.0 million, 10.8 per cent of
turnover (4.7 million and 10.7 per cent). Sales volumes were
somewhat higher than the year before, while average sales prices
were unchanged. The new Katrin product range launched last autumn
has been well received by the market.
Other Operations produced a turnover of EUR 31.1 million (29.4
million). Operating profit rose to EUR 1.7 million, 5.4 per cent of
turnover (1.4 million and 4.6 per cent). The Baking & Cooking
business area recorded an increase in sales volumes on this period
last year, but average sales prices were marginally lower.
Profitability improved thanks to greater efficiencies. Tissue base
paper sales and profitability were about the same as this period
last year. Other Operations also includes the packaging board
business of the Krapkowice mill in Poland as of autumn 2002.
The Table Top business areas sales volumes were somewhat higher
than for this period a year ago. There were no material changes in
sales prices. Converting operations were further developed and the
trend in the financial result was positive.
Investments
First-quarter investment totalled EUR 6.0 million (2.4 million). A
total of EUR 0.1 million was used for share purchases (0.0 million)
and EUR 5.9 million was invested in fixed assets (2.4 million).
There was no sale of fixed assets during the review period.
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 groups mills. Share purchases during the period
comprised an increase in Metsä Tissues shareholding in Zaklady
Papiernicze w Krapkowicach S.A (ZPK) by 2.2 percentage points to
91.6 per cent.
Personnel
The Metsä Tissue Group had an average of 3,250 employees during the
review period (2,916). The number at the end of March was 3,203
(2,936). Company acquisitions increased the average number of
employees by 374 compared with this period last year.
Shares and shareholders
Svenska Cellulosa Aktiebolaget SCA relinquished its shareholding in
Metsä Tissue on 20 January 2003. On the same date, M-real
Corporations shareholding in Metsä Tissue Corporation rose to more
than 90 per cent, and M-real announced its intention to acquire all
remaining Metsä Tissue shares. On 3 March 2003, M-real instigated
proceedings under Chapter 14, Section 19 of the Companies Act to
redeem the outstanding Metsä Tissue shares. The listing for Metsä
Tissues shares on the Helsinki Exchanges will cease when M-real
Corporation has acquired control of all Metsä Tissues shares. At
the end of the review period, M-reals shareholding in Metsä Tissue
was 99.9 per cent.
The highest price quoted for Metsä Tissue Corporations shares
during the review period was EUR 12.37 and the lowest EUR 9.51. The
average quotation was EUR 9.81. At the end of March, the shares were
quoted at EUR 12.30. Metsä Tissue shares to a total value of EUR
127.8 million were traded during the period January March, 34.7
per cent of the total number of shares. The companys market
capitalization at the end of the review period was EUR 369 million.
At the end of March, Metsä Tissue had 156 registered shareholders.
Non-Finnish shareholders accounted for 0.01 per cent.
The Board of Directors has no current authorization to issue shares,
convertible bonds or share options.
Annual General Meeting
Metsä Tissue Corporations Annual General Meeting was held on 18
March 2003. The meeting appointed the following persons 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 members of the Board of Directors extends to the end of the 2004
Annual General Meeting. The Board of Directors elected Antti Oksanen
as its chairman and Arimo Uusitalo as its vice chairman.
The meeting re-appointed the authorized public accountants
PricewaterhouseCoopers Oy to act as the companys auditors, with
Göran Lindell, APA, responsible for the audit.
Outlook
Demand for tissue products is expected to remain fairly stable in
the near future. No material acceleration of growth is envisaged,
and competition will therefore remain fierce. Some increase in raw
material prices is anticipated later in the year. To secure
profitability, attempts will have to be made to raise sales prices
for tissue products also.
Metsä Tissue will continue with its programmes aimed at product
development and greater cost-effectiveness in all its business
areas. These programmes will be largely completed by year 2004.
The figures presented in this report are unaudited.
Espoo, 25 April 2003
BOARD OF DIRECTORS
More information
Lars Warvne, President and CEO
gsm +46 70 572 8921
Timo Suuriniemi, Chief Financial Officer
Tel. +358 10 469 4580, gsm +358 50 560 8271
Enclosures
Profit and loss account and balance sheet Cash flow statement and
quarterly figures Key figures
Metsä Tissue Corporations Interim Report for January June 2003
will be published on 25 July 2003.
Interim reports, annual reports, stock exchange bulletins and other
financial information are also available on the Internet at
www.metsatissue.com
METSÄ TISSUE GROUP
(unaudited)
PROFIT AND Q1-
LOSS ACCOUNT Q1/03 % Q1/02 % Change % 4/02 %
(EUR million)
Turnover 164.7 100.0 159.2 100.0 5.5 3.5 647.8 100.0
Other operating
income 1.1 1.2 -0.1 5.6
Operating
expenses 143.9 139.1 4.8 571.1
Depreciation
according to
plan 10.3 9.7 0.6 39.2
Operating
profit 11.7 7.1 11.6 7.3 0.1 0.7 43.1 6.7
Net exchange
gains/losses -0.5 -0.4 -0.1 -0.3
Other financial
income/expenses -1.3 -1.1 -1.6 -1.3 0.3 -5.6 -0.9
Profit before
extraordinary
items 9.9 6.0 9.6 6.0 0.3 3.0 37.1 5.7
Extraordinary
income 0.0 0.0 0.0 0.0
Extraordinary
expenses 0.0 0.0 0.0 0.0
Profit before
taxes and 9.9 6.0 9.6 6.0 0.3 3.0 37.1 5.7
minority
interest
Taxes -2.9 -3.0 0.1 -9.2
Minority
interest 0.0 0.0 0.0 0.0
Profit for
the period 6.9 4.2 6.6 4.1 0.3 5.2 28.0 4.3
BALANCE SHEET
(EUR million) Q1/03 % Q1/02 % Q4/02 %
Assets
Fixed assets
and other
non-current
assets 255.1 58.4 244.3 54.8 262.7 58.8
Inventories 66.7 15.3 66.9 15.0 60.9 13.6
Other current
assets 115.0 26.3 134.7 30.2 123.5 27.6
Total 436.8 100.0 445.9 100.0 447.1 100.0
Liabilities
Shareholders´
equity
Restricted
equity 100.1 100.3 100.1
Unrestricted
equity 70.5 45.7 65.6
Shareholders
equity, total 170.5 39.0 146.0 32.7 165.7 37.1
Minority
interest 1.2 0.3 0.3 0.1 1.5 0.3
Provisions
for future
costs 15.7 3.6 13.0 2.9 15.6 3.5
Liabilities
Long term
liabilities 162.2 169.3 163.9
Short term
liabilities 87.1 117.4 100.4
Liabilities,
total 249.4 57.1 286.7 64.3 264.3 59.1
Total 436.8 100.0 445.9 100.0 447.1 100.0
METSÄ TISSUE GROUP
(unaudited)
CASH FLOW STATEMENT
(EUR million) Q1/2003 Q1/2002 Q1-4/2002
Profit before
extraordinary items 9.9 9.6 37.1
Depreciation
according to plan
10.3 9.7 39.2
Direct taxes
-2.5 -2.5 -11.6
Other changes
0.2 -0.4 2.2
Funds from
operations 17.8 16.4 66.8
Change in work
ing capital -21.8 5.6 30.4
Cash flow from
operations -4.0 22.0 97.3
Capital exp
enditure 1) -6.0 -2.4 -47.1
Disposals and other
changes in fixed assets 3.5
Cash flow after
capital expenditure -10.0 19.6 53.7
Dividends 0.0 0.0 -3.0
Other items 0.5 1.2 1.8
Change in
liquid funds
-9.5 20.8 52.5
1) Excluding interest
bearing liabilities of acquired companies
QUARTERLY DEVELOPMENT
2001 - 2003
TURNOVER 2003 2002
EUR million Q1 Q1-4 Q4 Q3 Q2 Q1
Consumer 89.1 350.0 92.8 86.2 83.8 87.3
Away-from
Home 46.6 177.3 43.7 45.9 43.6 44.2
Other opera
tions 31.1 127.2 35.9 31.6 30.3 29.4
Internal
sales -2.0 -6.8 -1.7 -1.4 -2.0 -1.7
Total 164.7 647.8 170.7 162.3 155.7 159.2
TURNOVER 2001
EUR million Q1-4 Q4 Q3 Q2 Q1
Consumer 359.3 91.6 91.1 89.0 87.5
Away-from-Home 173.5 42.7 42.2 44.4 44.1
Other
operations 121.0 30.8 28.1 30.4 31.6
Internal sales -4.2 -1.9 -0.5 -0.8 -0.9
Total 649.6 163.3 161.0 163.0 162.3
OPERATING P
ROFIT 2003 2002
EUR million Q1 Q1-4 Q4 Q3 Q2 Q1
Consumer 4.9 19.7 2.3 7.9 3.9 5.6
Away-from Home 5.0 17.7 2.7 6.4 4.0 4.7
Other opera
tions 1.7 6.6 1.1 3.1 1.0 1.4
Group costs 0.1 -0.9 -0.1 -0.2 -0.5 -0.1
Total 11.7 43.1 5.9 17.2 8.4 11.6
Operating
margin, % 7.1 6.7 3.5 10.6 5.4 7.3
Net exchange
gains/losses -0.5 -0.3 0.3 -0.2 -0.1 -0.4
Other finan
cial income and
expenses -1.3 -5.6 -1.2 -1.5 -1.3 -1.6
Profit before
extraordinary
items 9.9 37.1 5.0 15.5 7.0 9.6
OPERATING PROFIT 2001
EUR million Q1-4 Q4 Q3 Q2 Q1
Consumer 21.9 8.4 6.8 4.5 2.3
Away-from-Home 12.1 4.0 4.1 2.5 1.6
Other operations 3.7 1.8 0.4 0.7 0.9
Group costs -1.3 -0.3 -0.1 -0.4 -0.3
Total 36.5 13.8 11.1 7.2 4.4
Operating
margin, % 5.6 8.4 6.9 4.4 2.7
Net exchange
gains/losses 1.0 0.5 -1.0 0.6 0.9
Other financial
income and
expenses -10.3 -1.8 -2.5 -2.9 -3.2
Profit before
extraordinary
items 27.1 12.5 7.6 4.9 2.1
METSÄ TISSUE GROUP
(unaudited)
KEY FIGURES Q1/2003 Q1/2002 Q1-4/2002
Share related indicators, EUR
Earnings per share 0.23 0.22 0.93
Shareholders´equity per share 5.68 4.86 5.52
Investments
Gross investments, MEUR 6.0 2.4 47.1
Investments, % turnover 3.6 1.5 7.3
Net interest bearing
liabilities, MEUR 139.1 153.3 129.6
Financial ratios
Return on equity, % 16.3 18.4 18.1
Return on capital invested, % 14.5 14.0 13.2
Capital turnover 2.03 1.90 1.94
Gearing, % 81.0 104.8 77.5
Equity ratio, % 39.3 32.8 37.4
Personnel
Personnel, average 3 250 2 916 3 067
Personnel, at the end of period 3 203 2 936 3 299
Leasing commitments, MEUR
Payments due during next 12
months 2.2 2.9 2.4
Payments due in subsequent years 3.4 3.8 3.5
Derivatives, MEUR
Currency derivatives 53.3 60.9 75.4
Interest rate derivatives 240.0 240.0
Commodity derivatives 55.0 74.7 63.3
Mortgages, MEUR 3.3 2.5 3.4
Guarantees, MEUR 0.0 0.1 0.0
Other liabilities, MEUR 0.1 0.0 0.1
