Interim Report January–September 2007

Continued strong earnings for Setra

• Consolidated net sales for the period January-September amounted to SEK 4,680 million (4,257). The increase compared with the same period in the previous year is mainly due to higher prices. Net sales for the third quarter were SEK 1,355 million (1,286).
• Operating profit for the period January-September amounted to SEK 703 million (125), an improvement of SEK 578 million compared with the same period in 2006. The improvement in earnings is an effect of a higher gross profit margin due to the strong business climate as well as completed efficiency enhancements. Operating profit for the third quarter amounted to SEK 220 million (39).
• Profit after tax for the period January-September amounted to SEK 486 million (96). Earnings per share reached SEK 15.38 (3.03).
• Cash flow from operating activities for the period January-September was SEK 190 million (266). The lower cash flow compared with the same period in the previous year was mainly due to increased tied-up working capital. Cash flow in the third quarter amounted to SEK 240 million (237).

Kent Torwald, President and CEO, comments:
“Setra reports a continued strong operating profit for the period January-September of SEK 703 million. The operating margin for the quarter remained at an historically high level of 16.2%. Our assessment is, however, that margins will decrease in the coming quarter.
The European market for wood products is currently characterised by excess supplies, primarily of whitewood products, following the extensive windthrows at the beginning of the year. This has led to an increased build-up of stocks among producers which has resulted in price pressure. Setra therefore decided to scale down production of whitewood products during the fourth quarter, a move that was also announced by other major players primarily in Finland.
During the third quarter Setra decided to invest SEK 220 million in the Hasselfors sawmill. The investment, which mainly involves a new integrated planing mill, is a key part of Setra’s long-term focus on increased value-added processing.”

The complete Report can be accessed at www.setragroup.com, under Financial reports.