Metsä tissue's first-quarter turnover eur 147.5 million

METSÄ TISSUE'S FIRST-QUARTER TURNOVER EUR 147.5 MILLION. RESULT BEFORE EXTRAORDINARY ITEMS A LOSS OF EUR 5.4 MILLION * Metsä Tissue's turnover for January - March 2000 was EUR 147.5 million (145.5 million last year). * There was a loss on operations of EUR 3.3 million (profit of 9.3 million). * The loss before extraordinary items was EUR 5.4 million (profit of 7.5 million). * The equity ratio was 28.7 per cent (31.4). * The loss per share was EUR 0.18 (earnings of 0.18). * Sales of converted tissue products in the Nordic countries and in continental Europe were up on the first quarter of last year. * Before extraordinary items, the result for the year will be a loss. Turnover and results Metsä Tissue's turnover for the period January - March was EUR 147.5 million, 1.4 per cent up on the first quarter's figure of last year EUR 145.5. million. Turnover for 1999 includes board production in Poland and sales of giftwrap and disposable tableware in Germany, which were discontinued in 1999. On a comparative basis, the growth in turnover was approximately 5 per cent. The loss on operations was EUR 3.3 million, 2.2 per cent of turnover (operating profit of EUR 9.3 million, 6.4 per cent). The loss made during the first quarter is due primarily to the spiralling cost of chemical pulp and recycled fibre, the company's main raw materials. It has not been possible to increase sales prices in pace with rising raw material prices. Before extraordinary items there was a loss of EUR 5.4 million (profit of 7.5 million). After taxes and minority interests, there was a loss of EUR 5.5 million (5.3 million profit). Minority interests contributed EUR 0.1 million to the financial result, while direct taxes, including the change in deferred tax liability, were EUR 0.2 million. Key figures The loss per share was EUR 0.18 (earnings of 0.18). Return on capital employed was -3.6 per cent (10.7). Return on equity was -15.9 per cent (14.4). The equity ratio was 28.7 per cent (31.4) and the net gearing ratio was 159.2 per cent (132.8). Financial position and liquidity The Metsä Tissue Group's liquidity was good throughout the review period. Liquid assets at the end of March were EUR 9.6 million (17.4 million at 31 December 1999). In addition, the Group has EUR 61.3 million (52.2 million at 31 December 1999) in unutilized credit facilities, of which EUR 56.6 million are committed and EUR 4.7 million are uncommitted. In February, Metsä Tissue signed an agreement with the Nordic Investment Bank concerning a EUR 15 million long-term loan. The loan will be used to finance the Group's investments in Sweden. Interest-bearing net liabilities were EUR 219.4 million (200.9 million at 31 December 1999). The cash flow from operations before investments was - 5.5 million euros (2.6 million) and capital expenditure was EUR 5.4 million (8.1 million). Net financial expenses were EUR 2.1 million, 1.4 per cent of turnover. Shares and shareholders The highest quotation for Metsä Tissue Corporation's shares during the review period was EUR 13.70 and the lowest EUR 9.85. The average quotation was EUR 11.31. At 31 March 2000, the company's shares were quoted at EUR 11.20. During the review period, the company's shares were traded to a total value of EUR 5.98 million, which represents 1.8 per cent of the total number of shares. The company's market capitalization at 31 March 2000 was EUR 336.0 million. At the end of March, Metsä Tissue has 1,691 registered shareholders. Metsä-Serla Corporation holds 65.6 per cent of the share capital and international investors 26.7 per cent. Business area reviews The company's business areas are Consumer, Away-from-Home and Other operations. The Table Top business is a separate product area within the Consumer and Away-from-Home business areas. Prices for converted tissue products in the Nordic countries were marginally higher during the review period than for the same period last year. Prices in continental Europe were for the most part about the same as a year ago. Prices for high-density papers were slightly higher than at this time last year. In Poland, product prices have risen significantly, while at the same time higher quality tissue products have increased their share of total sales. Efforts to raise product prices in line with rising raw material costs continue to be made in all markets. The process has been slowed down somewhat by competition for market shares and by intense competition in the retail sector. The Consumer business area made a loss on operations of EUR 3.0 million (4.4 million profit). Turnover rose 15.5 per cent to EUR 78.3 million (67.8 million). Sales of converted tissue products in the Nordic countries were up on the first quarter of last year. Sales volumes in continental Europe have also developed favourably. Branded products continued to strengthen their market positions in the Nordic countries. The new-look Leni family of top-quality products was launched in Sweden and Norway. Sales by the Table Top business have gone according to plan and demand for products is good. The Fasana range of napkins was re-launched in January. The Away-from-Home business area returned an operating profit of EUR 0.2 million (3.3 million). Turnover fell by 8.6 per cent to EUR 39.1 million (42.8 million). Sales in the Nordic countries were up slightly on this period last year. Sales volumes for tissue products also rose in continental Europe. However, total sales fell following the removal of disposable tableware from the product range. Prices continued to be raised in all market areas. Other operations produced an operating loss of EUR 0.3 million (2.3 million profit). Turnover fell 14.3 per cent to EUR 32.9 million (38.4 million). Other operations comprise the Baking and Cooking product area and tissue base paper. Prices for high-density papers were raised in the main markets. The Nordic Swan environmental label was awarded for Serla baking papers. As sales of converted tissue products rose, sales of tissue base paper declined. The feminine hygiene products business of the Hedwigsthal mill in Germany was sold in January 2000. Metsä Tissue is responsible for sales of feminine hygiene products to present customers under the annual agreements that existed at the time of the sale. Investments Investment for the first quarter totalled EUR 5.4 million (8.1 million). Investment mainly concerned replacements and rationalization projects. The Katrinefors mill and the city of Mariestad have decided to engage in a joint project to build a power plant that will burn deinking waste and wood chips. To be completed in spring 2002, the plant will reduce the mill's environmental loading and secure its energy supply at competitive prices well into the future. The project will cost around EUR 23 million and will be implemented by Katrinefors Kraftvärme AB, of which Metsä Tissue owns 50 per cent. Metsä Tissue's obligations in the project are limited to a long-term purchase agreement. Annual General Meeting The Annual General Meeting, held on 23 March 2000, decided that the Board of Directors would have seven members. The following members were re- elected: Ari Heiniö, Managing Director of Stockmann Plc; Curt Lindbom, Chairman of the Board of Cumasa Oy; Jussi Länsiö, Managing Director of Hartwall Plc; Antti Oksanen, President and CEO of the Metsäliitto Group; Arimo Uusitalo, Chairman of the Board of Metsäliitto Osuuskunta; Jorma Vaajoki, President and CEO of Metsä-Serla Corporation; and Juhani Saarela, Executive Vice President of Metsä-Serla Corporation. The Annual General Meeting decided to distribute a dividend of EUR 0.70 (0.12) per share for the 1999 financial period. The Annual General Meeting approved the Board's proposal to convert the company's share capital and the nominal value of its share into euros. The share capital was raised through a transfer from the share premium account. The new share capital is EUR 51,000,000 and the nominal value of the company's share is now EUR 1.70. Personnel The Metsä Tissue Group had an average of 3,239 employees (3,453) during the period January - March. The number at the end of March was 3,196 (3,447). Outlook Measures to improve cost-effectiveness are being implemented at all the company's Nordic mills. In Germany, priority is being given to making logistics more efficient and achieving significant improvements in cost- effectiveness. The effect on the company's profit of the strike by the Finnish Paperworkers' Union in April will be around EUR 2 million. Raw material prices and the implementation of price rises for tissue products are the two key factors affecting financial results. Because of the delay with which the continuous rise in raw material costs is passed on to sales prices for products, the result before extraordinary items for the year as a whole will be a loss. The figures presented in this bulletin are unaudited. Espoo, 26 April 2000 BOARD OF DIRECTORS Enclosures * Review by the CEO * Profit and loss account, balance sheet * Key figures * Quarterly data For more information please contact Hannu Anttila, CEO Tel. +358 1046 94959, mobile +358 50 2398 Mikko Hietanen, Chief Financial Officer Tel. +358 1046 94595, mobile +50 558 1280 Metsä Tissue Corporation's interim report for January - June will be published on Thursday, 3 August 2000. This interim report, the Annual Report for 1999, the company's stock exchange releases and other financial information are available at the Internet address www.metsatissue.com Dear shareholder, As expected, the first quarter of 2000 produced a loss. The main reasons for this were the sharp rise in raw material costs and low sales prices for products, particularly in the fiercely contested markets of continental Europe. The introduction of price rises is currently our main priority, and prices will continue to be raised in all market areas. By far our greatest challenge is to make our German operations more efficient and to bring financial results into line with the target. We are currently going ahead with programmes designed to reduce the number of employees and achieve cost savings. In developing the Table Top product area we have got off to a good start, especially in relation to sales and marketing. The Fasana brand was re-launched in January, and all production will be transferred to the Stotzheim mill in Germany during this spring. Development measures important to the future of the Group have gone ahead according to plan. Start-up of the CCM production line at the Nyboholm mill in Sweden and the launch of the new-look Leni brand products on the Swedish and Norwegian markets have both been very successful. In Poland, financial results have developed favourably, but the result is still not satisfactory. The power plant to be built jointly by the Katrinefors mill and the city of Mariestad will go into operation in spring 2002. The plant will be designed to burn deinking waste and wood chips. The new plant will improve the mill's energy situation and reduce its environmental loading. The ongoing measures to cut costs and raise product prices will be reflected in financial results during the third and final quarters of this year. Hannu Anttila CEO ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/2000/04/27/20000427BIT00160/bit0001.doc The full report http://www.bit.se/bitonline/2000/04/27/20000427BIT00160/bit0002.pdf The full report