Interim Report January-March 2007

Strong first quarter for Setra

Setra, Sweden’s largest wood products company, reports a continued strong development. Operating profit for the first quarter reached SEK 161 million (24), an improvement of SEK 137 million compared with the previous year. Positive development was noted in all customer segments and most geographic markets

Kent Torwald, President and CEO, comments: “Despite rising raw material prices, it is gratifying to note that the operating margin rose from 8.3% in the fourth quarter of 2006 to 10.3% in the first quarter of this year. A strong market with continued high demand and rising prices contributed to this.

“Raw material prices will probably continue to rise during the year. In northern Sweden in particular, supplies are limited, and higher prices have already been announced for the second quarter,” says Kent Torwald.

The operating margin amounted to 10.3% for the quarter compared with 8.3% in the fourth quarter of 2006. Cash flow from operating activities amounted to SEK 31 million (-142). The SEK 173 million improvement was mainly due to the favourable earnings trend.

“Continued low stocks, a good order backlog and continued stable demand within important market segments and product groups, should provide continued opportunities for positive development of Setra’s delivery volumes and prices. The overall assessment is that earnings for the year will significantly exceed the 2006 result,” says Kent Torwald.

During the first quarter a decision was made to invest a total of SEK 70 million in Setra’s units in Nyby (Uppsala) and Kvarnåsen (Norsjö). The intention is to improve yield, raise quality and increase value added at the two facilities. The investment in Nyby relates to a new band saw line and in Kvarnåsen a new paint shop and expanded finishing capacity.