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ROTTNEROS YEAR-END REPORT JANUARY – DECEMBER 2017

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ANNUAL PRODUCTION EXCEEDS 400,000 TONNES, NEW ANNUAL RECORD FOR BOTH MILLS

  • Production volume in the fourth quarter rose by 8% to 94.4 thousand tonnes (87.1). For the whole of 2017, production rose by 7% to 401.2 thousand tonnes (374.1).
  • Investments in the Agenda 500 development programme are progressing according to plan, in terms of both increased capacity and expenses.
  • Net turnover in the fourth quarter rose by 12% to SEK 496 million (441). Turnover for 2017 as a whole rose by 11% to SEK 1,912 million (1,730).
  • Profit during the fourth quarter was affected (as was the case in the previous year) by the annual maintenance shutdown at Vallvik Mill. The loss of production and the direct cost of the shutdown decreased earnings for the fourth quarter by approx. SEK 55 million (55).
  • The profit after financial items for the year amounted to SEK 147 million (163). Earnings per share for 2017 were SEK 0.75 (0.84).
  • Cash flow from operating activities for the fourth quarter was strong, amounting to SEK 74 million (13) and to SEK 222 million (187) for the entire year.
  • Rottneros is mapping out the potential for increase in efficiency and has a clear focus on improved profitability.
  • A new organisation was presented during the fourth quarter, with a joint group sales organisation and site managers for the respective mills.
  • The Board decided on investments worth approximately SEK 120 million during the fourth quarter. Both stage 2 of the CTMP line, which will increase capacity for Rottneros Mill by 18 thousand tonnes from 2019, and a weak gas system for Vallvik Mill expected to be put into service at the end of 2018.
  • The Board proposes an ordinary dividend of SEK 0.30 per share and an extra dividend of SEK 0.07 per share, corresponding to 50% of net income for 2017 in accordance with the current covenants.

COMMENTS BY THE CEO: VOLUME GROWTH CONTINUES

Our targeted efforts and strategic investments have generated a significant increase in production at our mills both during the fourth quarter and the year as a whole. Profit, however, is being held back by increased costs. Prior to 2018, we have had a clear focus on increased profitability through improvements in efficiency.

2017 proved to be eventful with a number of milestones confirming that we are advancing at a good pace. We are now placing considerable emphasis on mapping out how we can make activities more efficient. This is taking place in parallel with the direction of growth in our selected niches. Following a number of years of major capacity-increasing investments, we are now entering a phase of optimisation and consolidation of what has been achieved in order to be able to produce the highest possible return for our shareholders.

The gradual upturns during the year mean that the Group's production for the entire year rose by 7 per cent to over 400,000 tonnes. During the fourth quarter, growth was just over 8 per cent. The annual shutdown at Vallvik took place in October and went according to plan.

Cost trends
Costs during Q4 were affected by both external factors, as well as by certain non-recurring items. The wet and mild weather during the autumn and at the start of winter has resulted in low stocks of pulp wood at our plants at the end of the year and the start of 2018. The weather, combined with high production throughout the forestry industry, has led to increasing wood prices, which had a negative impact on purchasing costs of approximately SEK 5 million compared with the previous quarter.

Focus on increased profitability
When mapping out the efficiency opportunities, we apply a systematic approach similar to what we have used to raise production levels. The new organisation presented during the course of the quarter is an important element of this approach with the creation of a joint group sales organisation and the appointment of site managers for the respective mills. The goal, among others, is to establish clear areas of responsibility and thus create the conditions for increased efficiency throughout the entire line.

Market remains strong
The market continues to have a good balance between supply and demand. The dollar’s weakening against the krona during 2017 has been offset by an increasing pulp price in USD. Demand is partly driven by good growth in the global economy. Rottneros thus has a good springboard for achieving profitable growth during 2018. This is confirmed by our healthy order books and the positive development in our various niches. 

A successful year
To sum up, 2017 was a year of definite success in production, sales and the development of the group to meet future requirements. We are especially pleased with the big steps that we have taken towards decreasing our CO2 footprint, for example by putting into service the new biofuel boiler at Rottneros Mill. The continued strong market and our internal focus on efficiency improvements lay the foundations for taking the Group to the next level in terms of efficiency and profitability.

Lennart Eberleh

(For full report, please see attached file)


This information is information that Rottneros AB is obliged to publish under the EU Market Abuse Regulation and the Securities Market Act. The information was submitted via the contact person below for publication on 8 February 2018 at 8 a.m. CET. This report has been drawn up in both a Swedish and an English version. The Swedish version shall prevail in the event of differences between the two reports.

For further information, please contact: Lennart Eberleh, President and CEO, Rottneros AB, +46 270 622 65


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