Metsäliitto Group Interim Report 1-9/2011
Metsäliitto Group Interim Report 1–9/2011, Stock Exhange Release 2 November 2011 at noon
Metsäliitto Group’s operating result excluding non-recurring items was EUR 311 million
Result for January–September 2011
– Sales amounted to EUR 4,123 million (1––9/2010: EUR 3,986 million).
– Operating result excluding non-recurring items was EUR 311 million (405). Operating result including non-recurring items was EUR 229 million (415).
– Result before taxes and excluding non-recurring items was EUR 217 million (299). Including non-recurring items, the result before taxes was EUR 130 million (293).
Result for July–September 2011
– Sales amounted to EUR 1,317 million (7–9/2010: EUR 1,345 million).
– Operating result excluding non-recurring items was EUR 63 million (155). Operating result including non-recurring items was EUR 44 million (170).
– Result before taxes and excluding non-recurring items was EUR 35 million (114). Including non-recurring items, the result before taxes was EUR 17 million (128).
Events in the third quarter of 2011
– Metsä Tissue's Düren mill was inaugurated on 14 September 2011.
– Metsäliitto Cooperative's shareholding in Metsä Tissue increased from 70.5 per cent to 76.6 per cent.
– The divestment of M-real's Hallein pulp mill was completed on 1 September 2011.
Events after the period
– M-real announced it would start negotiations on closing the Alizay mill and on discontinuing the unprofitable operations at the Gohrsmühle mill.
– M-real announced plans to restructure its coated paper business, including closure of Äänekoski paper mill and increase of Husum mill’s production.
“The result development in the third quarter was in accordance with the guidance we provided. In addition to the economic uncertainty and weakened situation in the paper and pulp market also the costs for closing down the mills and annual maintenance shutdowns affected our operating result.
If realised, our plans concerning the paper business in Alizay, Gohrsmühle and Äänekoski will further M-real’s focus in cartonboard for which the demand outlook is good. The launch of the operations at Metsä Tissue's Düren mill in Germany strengthens our position as a significant European manufacturer of baking and cooking papers.”
Kari Jordan, President & CEO, Metsäliitto Group
Key figures
Metsäliitto Group
| Income statement (Continuing operations) | 2011 1–9 | 2010 1–9 | 2011 7–9 | 2010 7–9 | 2010 1–12 |
| Sales | 4 123 | 3 986 | 1 317 | 1 345 | 5 377 |
| Other operating income | 64 | 98 | 14 | 51 | 142 |
| Operating expenses | -3 692 | -3 461 | -1 210 | -1 157 | -4 686 |
| Depreciation and impairment losses | -265 | -207 | -76 | -70 | -336 |
| Operating result | 229 | 415 | 44 | 170 | 497 |
| Share of results in associates | 5 | -14 | 2 | -1 | -15 |
| Exchange gains and losses | 2 | -6 | 1 | -6 | -7 |
| Other net financial items | -106 | -103 | -31 | -35 | -129 |
| Result before income tax | 130 | 293 | 17 | 128 | 345 |
| Income taxes | -81 | -102 | -21 | -39 | -131 |
| Result from continuing operations | 50 | 191 | -4 | 89 | 214 |
Metsäliitto Group
| Profitability (Continuing operations) | 2011 1–9 | 2010 1–9 | 2011 7–9 | 2010 7–9 | 2010 1–12 |
| Operating result, EUR mill. | 229 | 415 | 44 | 170 | 497 |
| - “ -, excluding non-recurring items | 311 | 405 | 63 | 155 | 547 |
| - “ - % of sales | 7.6 | 10.2 | 4.8 | 11.5 | 10.2 |
| Return on capital employed, % | 8.0 | 13.1 | 4.9 | 16.6 | 11.8 |
| - ” -, excluding non-recurring items | 10.9 | 13.3 | 6.7 | 15.2 | 13.4 |
| Return on equity, % | 3.9 | 16.9 | -0.9 | 22.4 | 13.9 |
| - ” -, excluding non-recurring items | 10.8 | 17.4 | 3.4 | 18.8 | 18.2 |
| Financial position | 2011 30.9 | 2010 30.9 | 2011 30.6 | 2010 30.6 | 2010 31.12 |
| Equity ratio, % | 31.0 | 28.1 | 30.9 | 27.6 | 29.7 |
| Net gearing ratio, % | 113 | 123 | 121 | 135 | 116 |
| Interest-bearing net liabilities, EUR mill. | 1 895 | 1 985 | 2 051 | 2 109 | 1 939 |
Business Areas
| Sales and Operating result January–September 2011 (EUR mill.) | Wood Supply | Wood Products Industry | Pulp Industry | Board and Paper Industry | Tissue and Cooking Papers |
| Sales | 1 121 | 720 | 1 011 | 1 961 | 725 |
| Other operating income | 6 | 4 | 11 | 47 | 7 |
| Operating expenses | -1 107 | -687 | -732 | -1 859 | -685 |
| Depreciation & impairment losses | -2 | -25 | -48 | -148 | -30 |
| Operating result | 18 | 12 | 242 | 1 | 17 |
| Non-recurring items | - | 0 | 4 | 80 | - |
| Operating result, excl. non-rec. items | 18 | 12 | 246 | 81 | 17 |
| - % of sales | 1.6 | 1.6 | 24.4 | 4.1 | 2.3 |
Near-term outlook
The rainy autumn season has slowed down harvesting and made deliveries difficult. Nevertheless, the supply of wood to Metsäliitto Group's production plants has been successful. All timber types are still being purchased from privately owned forests, with the focus being on stands marked and suitable for summer felling until the freezing weather.
Pressures on prices of sawn timber, in particular, will have a negative impact on the result outlook of Wood Products Industry in the last quarter of the year. Adapting sawmill operations in order to safeguard financially sustainable development will be necessary.
In the last quarter of the year, Metsä-Botnia's utilisation rate will be slightly lower than normal due to the upcoming annual maintenance shutdowns. The annual maintenance shutdowns in Joutseno, Kemi and Äänekoski took place in August–October, and the shutdown at the Rauma mill will take place in November.
No signs of weakness have been observed in the end demand for cartonboard. Delivery volumes were at a record high level at the end of last year and at the beginning of this year. Nevertheless, inventory levels have been clearly reduced in recent months in different parts of the supply chain as the general economic situation has become more uncertain and producers' ability to supply materials has improved. The long-term demand and profitability outlook for cartonboard will continue to be strong, and the inventory levels are estimated to normalize during the next few months.
Improving the operating result and increasing the sales of own brands will be Metsä Tissue's goals for the remainder of the year. Furthermore, the company's investments into successful completion of strategic development projects will continue.
The economic uncertainty has weakened the situation in the paper and pulp market and in the sawmill industry in all main markets in recent months. Order books are currently below the normal level and production curtailments will be carried out at most mills during the remainder of the year.
Metsäliitto Group's operating result excluding non-recurring items in the last quarter of 2011 is estimated to be slightly lower than in the third quarter.
New disclosure procedure
Metsäliitto Group has adopted a new disclosure procedure made possible by the Financial Supervision Authority Standard 5.2b. This report is a summary of Metsäliitto Group's Interim Report for January–September 2011. The Interim Report and its tables are attached to this Stock Exchange Release as a PDF attachment and are available on the Metsäliitto Group website at www.metsäliitto.fi.
Further information:
Vesa-Pekka Takala, Group CFO, Metsäliitto Group, tel. +358 10 465 4260
Anne-Mari Achrén, Group CCO, Metsäliitto Group, tel. +358 10 465 4541