The main reason for the improved profit figures are the excellent market conditions. "Since the first quarter in 2006, several efficiency measures have been implemented within the Group which has also contributed to boosting the profit figure by NOK 174,9 compared to the previous year. Even though the efficiency measures overall have contributed a smaller share of the increase than market conditions, the measures will help maintain satisfactory profitability when market conditions stabilise at a more normal level," says President and CEO Mr. Hans Rindal in Moelven Industrier ASA.

The high level of business activity in Europe in the construction field continued throughout the first quarter and boosted a traditionally high seasonal demand for the Group's products and services. "The way we see it, wood-based building products have not become unreasonably expensive. Wood, which represents a significant share of the materials used to build housing made of wood in Norway and Sweden, is still only about 5-8% of the total costs of building housing, even after accounting for price increases. That certainly can be said to be a modest share," says Mr. Rindal. 

 

The President and CEO is firm about the Group's commitment to long-term customer relations. "Our emphasis is on building long-term customer relations. Even though exporting sawn wood could have boosted our operating margin by about five percent this quarter, we increased the volume sold in the domestic markets. If we had exported all our products from the planing mills our profit figure would have been higher. In other words, we have invested in long-term customer relations in Scandinavia this year," says Mr. Rindal.

 

"Instead of focussing on prices, we have focussed on cost-cutting and efficiency processes the past few years. From 2002 to 2006 our operating revenues increased by about NOK 2 billion, while the number of employees only increased by 90. This means an increase in turnover per employee from NOK 1,480 million in 2002 to NOK 2,085 million in 2006. In short, our output has grown faster than our expenses," explains Mr. Rindal.

 

The President of Moelven adds that 15% operating margins - which is what they now are in certain parts of Moelven's business - is unusually high. "They are so high that both supply and demand will have to adapt and the margins will decrease. Still, over time the margins will not be able to remain as low as they have been. Moelven has invested substantial amounts in machines and other equipment the past few years to satisfy the markets' increasing need for quality deliveries. Operating margins at such low levels as those we have seen the past few years will lead to our industry downsizing in pace with machines wearing out. The industry will eventually grind to a halt if the margins are under 5%," says Mr. Rindal.  

 

 

Total rate of sick-leave the first quarter of 2007 was 6.57% (6.20). Of the overall amount, long-term sick-leave accounted for 2.85% (2.80). After having been slowly decreasing for some time, the rate of sick-leave increased the first quarter this year. Additional measures will therefore be implemented to find out the reasons for the increase and to attempt to reduce the rate down toward the long-term goal of 5%. One of the measures that came into force as of April 1st was special health insurance for all employees in Norway and Sweden (employees in Denmark already enjoy a similar programme). This special insurance will allow employees who are sick to get treatment by specialists faster if the public health system is not able to expedite treatment. A pilot project carried out in two of the Group's subsidiaries has shown excellent results.

 

The Board expects the positive market trend to continue in Scandinavia during the second quarter, while it is expected to flatten out in the second half of the year. The business level in Sweden is expected to stay high somewhat longer than in Denmark and Norway. Overall, demand for the Group's products and services is expected to be higher this year compared to the previous year.

For more information:
Konsernsjef Hans Rindal, cell phone: +47 90 69 69 10

CFO Morten Sveiverud, cell phone: +47 90 98 06 67
Director of Communications and Human Resources Kristin Vitsø Bjørnstad, cell phone: 90713701