High Moelven figures: Moelven invests positive profits in long-term investments
In the second quarter, Moelven posted an operating profit totalling NOK 329 million, which is an increase of NOK 238 million compared to the same quarter last year (91). The Group will be using the very good quarterly result to modernise plants in order to secure future and stable jobs in the local communities in which they operate.
Operating revenues for the Group in the second quarter totalled NOK 2 119 million compared to last year's NOK 1,716 million. Operating revenues for the first half year totalled NOK 4,108 million, compared to NOK 3,273 million for the same period last year, with an operating profit of NOK 554.8 million (141), while ordinary pre-tax profit totalled NOK 540 million (123). "The main factor contributing to the increase in profits is the excellent market situation that continued favourably during the second quarter. Also, the operating conditions and access to raw materials have in general been very good. In addition, we are also reaping the benefits from various efficiency measures that are put in place, primarily oriented toward better use of raw materials and more efficient logistics," says President and CEO of Moelven Industrier ASA, Mr. Hans Rindal.
The CEO and President emphasises the importance of taking advantage of the current period of high market demand for the Group's products to implement measures that over time will contribute to making the Group cost-efficient, thus securing a satisfactory profitability in the long term. "A wise strategy during good times is to use the high profits to modernise our plants and facilities and reduce debt, so that we are in a better position to meet the challenges of any less favourable periods which may face us in the future. This long-term approach will help us to be as least as prepared as our competitors for tougher times ahead," says Mr. Rindal.
Committed to local communities
Mr. Rindal is anxious to ensure that Moelven is not just talking about the company's commitment to the local communities in which the Group has plants and facilities, but practicing what we preach. "The proof of the pudding" is in our actions - recently documented in our recent bid for Trysil Skog AS, which has now been accepted by the seller. There, we have committed to a major investment over a given period in upgrading the facility. With this, Moelven will be investing in local jobs in the Trysil municipality. This investment, added to others will also strengthen the Group's overall ability to serve chains of builders' merchants in Sweden and Norway in a cost-efficient manner," says Mr. Rindal.
He emphasises that Moelven is also having long-term strategies for other parts of Norway and Sweden where the Group is represented. "Moelven is investing close to one billion Norwegian kroner in a three-year investment program, and we plan to geographically stay where we presently are represented , in addition we are also open for additional activity in these for us key areas. For the sawmills, access to raw materials in certain regions is putting limitations on our expansion potential, while the processing business does not have such limitations. Among the larger wood-working companies, Moelven has the largest planing mill proportion, and this is an area in which we intend to expand. It turns out that this activity also generates more jobs per sales revenue Krone compared to pure sawmill activity, thus local value creation is also boosted through this strategy," says Mr. Rindal.
Solid market conditions expected during the next six months
The Board expects the positive market conditions to continue throughout the last half of the year, and that the overall demand for the Group's products and services will be higher than the year before.
While the rate of new-builds, which is important for the Wood division, has already showed some expected signs of slowing from the extremely high current level in Norway, a continued slight increase is expected in Sweden. A continued high level of activity is anticipated for the renovation and maintenance sectors. Although private house building has peaked in Denmark and is expected to slow somewhat the coming year, this should be partially offset by higher construction activity in the business and public-sector construction markets.
For the sawmills, high demand is expected in the domestic markets. Solid demand for products in the export markets for sawn wood is also expected to continue, while increased supply - particularly for spruce products - will contribute to calm down the upward price trend. The supply of sawtimber is expected to be high in the second half of the year, and restrictions on volumes taken into the sawmills may have to be imposed. Average prices should be higher over the next six months compared to the first six months of the year.
The plants in the Building Systems division have at the end of the first six months of the year a satisfactory order reserve and rate of new orders. The division expects to be operating at full capacity and maintaining this level of activity through the last six months of the year.
The three-year investment program that was started in 2006 will continue in 2007, and the total investment budget for the year is close to NOK 300 million. In all, the Board expects operating revenues and profit to be considerably higher this year compared to last year.
For more details:
President and CEO Hans Rindal, cell phone: +47 90 69 69 10
President and CEO Hans Rindal, cell phone: +47 90 69 69 10
CFO Morten Sveiverud, cell phone: +47 90 98 06 67
Communications and Human Resources, Kristin Vitsø Bjørnstad, cell phone: 90713701
Communications and Human Resources, Kristin Vitsø Bjørnstad, cell phone: 90713701
Communications advisor, Tom Erik Holmlund, cell phone: +47 91 66 86 68