NOK 75.9 million in operating profit first six months for Moelven
Moelven Industrier ASA improved its operating profit the first six months of the year compared to the first six months last year. The operating result totalled NOK 75.9 million, against NOK 72.3 million for the first six months of 2001. Ordinary pre-tax profit was NOK 55.3 million, against NOK 43.5 million for the same period last year. Profit after taxes totalled NOK 40.2 million (32.0). The Group's operating revenues the first six months of the year were NOK 2,378.6 million, against NOK 2,251.1 million for the same period last year. These figures were presented on Wednesday in the directors' report for the first six months of the year.
In the second quarter alone, operating revenues totalled NOK 1,246.0 million (1,150.5), which produced a profit of NOK 52.6 million (39.9) and is one of the best quarterly results for Moelven in recent years. Profit after taxes totalled NOK 30.3 million (18.7). The Moelven Timber Group (business area) contributed particularly to this boost in profit. Other reasons for the improvement include more effective use of the means of production and working capital, which led to less capital being tied-up and lower finance costs than the year before. The board anticipates the overall result for the year to be somewhat better than in previous years.
Pleased Group Managing Director
The new Group Managing Director in Moelven Industrier ASA, Bo B. Borgström, is very pleased with the results for the first six months. He says that the result is consistent with budget projections and that Moelven has achieved this result despite a strong Norwegian crown and difficult market conditions in the construction sector, which has not developed as expected. "In the second half of the year, the construction markets in Scandinavia will continue to show major regional variations that will challenge our ability to be flexible and adapt to our customers' needs," says Borgström.
He points to Moelven's strategic choice to focus as much as possible on its home markets in Scandinavia. "This is a sound strategy that - with our wide-ranging wood-based product spectre - will help further improve our business with the Group's main target groups in the construction, industrial and distribution sectors. The result for the first six months shows that we are on the right track to reaching our goal of becoming Scandinavia's leading supplier of wood-based construction products and services. We know that the construction markets in Scandinavia will be difficult in the second half of the year, but we will work hard to reach our budget targets," says Group Managing Director Bo B. Borgström.
Here is the board's report for the first six months of the year:
The ordinary general meeting of Moelven Industrier ASA voted to delist the company from the Oslo Stock Exchange, and the last day of listing for the company was 28 May. Today the company has 1001 shareholders - four of the largest share- holders control 99.5 percent of the shares. The four largest shareholders are Metsäliitto Osuuskunta (16.3%), Finnforest Oyj (60.9%), which is a fully owned subsidiary of Metsäliitto Osuuskunta, Glommen Fond AS (14.8%) and Mjøsen Skogeierforening (7.5%). All of the four largest shareholders have long-term interests in the wood working industry, and have signed a shareholder's agreement in which they commit themselves to developing Moelven as a leading supplier of woodbased building products and accompanying services mainly to the Scandinavian market.
As a result of the change in the shareholder's situation, President and CEO Frode Alhaug resigned from his position on 1 July. Mr. Bo B. Borgström, Deputy President of Finnforest (special responsibility for Scandinavia), has taken over the position as Moelven's new President and CEO effective 1 July.
Operating revenues and profit
The Group's operating revenues the first six months was NOK 2378.6 million, compared to NOK 2251.1 million for the same period last year. The sale of wooden building products and building modules has particularly contributed to the increase. Operating profit totalled NOK 75.9 million (72.3), and there were no significant differences in operating profit for any of the business areas compared to previous years.
Finance costs totalled NOK 21.2 million, which is lower than the year before (29.6). The decline is due to a lower rate of tied up capital and a lower interest level, especially for Swedish krona. Ordinary pre-tax profit was NOK 55.3 million (43.5), while profit after taxes totalled NOK 40.2 million (32.0). Profit per share totalled NOK 0.35 (0.28).
For the second quarter alone, operating revenues amounted to NOK 1246.0 million (1150.5) and operating profit was NOK 52.6 million (39.9). Profit after taxes was NOK 30.3 million (18.7), corresponding to NOK 0.26 (0.16). The improvement in profit is primarily due to gains in the Moelven Timber Group business area.
Balance and financing
At the end of the second quarter, the Group had assets amounting to NOK 2454.4 million (2497.3). Employed capital totalled NOK 1701 million (1830). The reduction in tied up capital is due to a more efficient utilisation of the means of produc-tion, better control of working capital and a weaker Swedish krona.
Return on employed capital the first six months was 9.1 percent (8.4) and for the second quarter alone totalled 12.4 percent (9.1). The increase is due both to improved operating profit and a reduction in tied up capital.
Net interest bearing debt was NOK 782 million (915), and liquidity reserves totalled NOK 504.9 million (862.6). The liquidity reserve is for the most part of a long-term nature and gives the Group considerable financial flexibility. Equity totalled NOK 918.7 million (914.8), corresponding to an equity ratio of 37.4 percent (36.6).
Cash flow from profit and loss items was for the first six months NOK 111.6 million (106.0), corresponding to NOK 0.96 per share (0.92). Investments in fixed assets for the first six months totalled NOK 41.9 million (65.6).
MOELVEN TIMBER GROUP
Operating revenues for the Moelven Timber Group have been somewhat higher than in previous years, despite the closing down of three production units. For the sawmills in Moelven Timber, production and sales have developed as expected. The demand has been high for both spruce and pine products, and this trend seems to be continuing into the second half of the year. This may lead to a price increase for most product types, calculated in the purchasing country's currency. An unusually strong Norwegian krone will nonetheless mean that the level of profitability on exports from Norway will in many cases be unsatisfactory. The planing mills at Moelven Wood have also experienced solid demand for most of the divi- sion's products - this is especially true of products used for construction purposes. The increased focus on marketing and distribution has generated positive results.
The Laminated Timber division is still facing very intense price pres-sures on standard products for the international markets. As a result of this and the unfavourable Norwegian currency situation, major changes have been made in the Norwegian factories in the first six months and production is now to a larger extent focused on customer-adapted products for deliveries to local markets. This has had a negative effect on the profit during the period, but should generate a more positive effect in the future. The Group's Swedish laminated timber business also has some-what higher deliveries of customer-adapted products to local markets than during the same period last year. The Swedish business has also a better starting point for exports of standard products, and half of the deliver-ies go to selected industrial customers, particularly in Japan.
Operating revenues the first six months for the Moelven Timber Group were NOK 1759.8 million (1710.4), and operating profit was NOK 60.8 million (44.1). The second quarter alone generated operating revenues of NOK 936.6 million (880.0), with operating profit at NOK 46.3 million (21.8).
MOELVEN BUILDING GROUP
Operating revenues for the Moelven Building Group were somewhat higher the first six months of the year compared to the year before. Market conditions have been somewhat more difficult than expected in several of the Building Group's business areas and the increase in operating revenues is primarily due to the acquisition of new businesses in the Modular Buildings division.
The demand for system interiors for commercial buildings has been slower as a result of the lower activity in the new building sector in several regions in Sweden and Norway. In addition, the government's announcement regarding the elimination of a special Norwegian investment tax has led to a certain shift in the R + M sector (Repair and Maintenance). This means that the order book for the third quarter is better than normal, while the Swedish market is characterised by lower activity on the part of certain major customers.
For the Modular Buildings divi-sion, the activity level has been normal the first six months of the year, while the order composition has resulted in uneven capacity utilisation. There have also been certain problems with respect to the efficiency at one of the plants, which has had a negative effect on the operating profit. The order stock for Modular Buildings is less than normal at the start of the third quarter.
Operating revenues for the Moelven Building Group the first six months were NOK 628.6 million (551.9) and operating profit totalled NOK 22.5 million (27.2). For the second quarter alone, operating revenues were NOK 312.9 million (274.7) and the operating profit was NOK 9.3 million (15.9).
This business area includes the Group's parent company, business units supplying certain services - such as IT and Finance - to the Group's operative businesses, as well as certain minor activities which are not viewed as core businesses. Operating revenues for the first six months were NOK 33.6 million (30.3), with an operating loss of NOK 7.4 million (1.0). For the second quarter alone, operating revenues totalled 17.7 million (15.5), with an operating loss of NOK 3.0 million (2.2).
The Moelven Timber Group expects the high activity level to continue and anticipates a favorable price development for industrial spruce and pine timber in the second six months of the year. Prices are expected to remain stable for planed products and other wood-based building products. The strong Norwegian krone will cause a certain amount of pressure on third quarter profits. The Moelven Building Group expects the same level of activity during the second half of the year, and the Board expects that the Group's overall result will be somewhat higher compared to previous year.