Interim Report Jan-Sept

Interim Report January - September 2001 Quarter January - September MSEK 2001 Q 3 2001 Q 2 2001 2000 Net turnover 1,643 3,031 9,564 18,827 Operating profit 319 1,703 2,711 2,667 Profit after net 354 1,697 2,741 2,402 financial items Earnings per 2.68 20.70 27.45 17.18 share, SEK - calculated on average number of shares 95,157,179 95,157,179 98,616,673* 118,373,034 * weighted average · The Swedish State has through Sveaskog AB made a public offer for all the shares in AssiDomän AB. The offer value is estimated to correspond to approximately SEK 280 per share. AssiDomän's Board has recommended shareholders to accept the offer. · Profit after net financial items decreased in the third quarter by MSEK 1,343, compared with the previous quarter. This decline is mainly due to capital gains in the second quarter. In the first nine months of 2001, profit after net financial items improved by MSEK 339, compared with the same period in the previous year. · Operating profit for remaining units, excluding Billerud and property sales, decreased by MSEK 21 to MSEK 181, compared with the previous quarter. This decline is mainly seasonal. Operating profit for the first nine months of the year increased by MSEK 56 to MSEK 591, compared with the same period in the previous year. Market The terrorist attacks in the United States and the subsequent political uncertainty are having a negative impact on the already weak growth in the global economy. The intensity and duration of the global economic downturn are difficult to estimate today. The North American economy is expected to show negative growth figures in the fourth quarter while the economy in Europe is still showing slightly better development. Despite this, a relatively even volume development is expected for sawlogs and pulpwood, although with lower deliveries than in the same period last year. Demand for sawn timber has weakened in Europe but a more balanced supply situation has temporarily improved market conditions. Demand for cartonboard has risen following a seasonal decline. Prices for sawlogs, pulpwood and cartonboard are expected to be relatively stable. For sawn timber, redwood prices have leveled while a weak rise in market prices for whitewood products can be noted. Sales, results and profitability The sale of the Corrugated & Containerboard business area was completed in May 2001. In 2001, the business area is included in AssiDomän's consolidated accounts for the period January - April. The overall net earnings impact of this transaction amounted to MSEK 1,791, of which MSEK 1,603 was reported in the second quarter and MSEK 188 in the first quarter. Earnings for the third quarter were not affected by the sale. Third quarter AssiDomän's net turnover for the period amounted for remaining units (excluding Billerud) to MSEK 1,643, a decrease of 21% compared with the previous quarter mainly due to seasonal fluctuations. In total, turnover decreased by 46% as a result of the sale of the Corrugated & Containerboard business area. Operating profit for remaining units amounted to MSEK 181, a decrease of MSEK 21 compared with the previous quarter. For Forestry & Wood Supply this deterioration was seasonal. Timber's profit was also adversely affected by a reduction in volumes during the vacation period. Cartonboard's earnings were negatively affected by a major planned maintenance and investment shutdown. Lower restructuring costs and elimination of the intercompany profit reserve in stocks reduced group- wide costs considerably. In total, operating profit amounted to MSEK 319, compared with MSEK 1,703 in the second quarter. Earnings for the second quarter included an overall earnings impact from the sale of Corrugated & Containerboard of MSEK 1,333. Capital gains from property sales amounted to MSEK 29 (20). Profit after net financial items amounted to MSEK 354, a decline of MSEK 1,343 compared with the previous quarter. Corrugated & Containerboard affected earnings for the second quarter by MSEK 1,319. Net financial items amounted to MSEK 35 compared with MSEK -6 in the second quarter. This improvement was mainly due to interest income on a purchase price received. January - September Net turnover for the first three quarters amounted to MSEK 5,528 for remaining units, an increase of 3% compared with the previous year. In total, turnover amounted to MSEK 9,564, a decrease compared with the same period in 2000 of MSEK 9,263 or 49%. This change is essentially attributable to the sale of operations in both 2000 and 2001 and the formation of Billerud. Operating profit for remaining units increased by MSEK 56 to MSEK 591. Both Cartonboard and Forestry & Wood Supply improved their earnings while Timber's earnings decreased. The operating margin amounted to 11% during the period. Total operating profit amounted to MSEK 2,711, compared with MSEK 2,667 in the first nine months of 2000. The total earnings impact from Corrugated & Containerboard amounted to MSEK 1,610 (694). The results for the previous year included MSEK 388 for units sold to Frantschach and MSEK 332 in funds from Alecta (formerly SPP). The capital gain from property sales amounted to MSEK 52 (232). Profit after net financial items amounted to MSEK 2,741, compared with MSEK 2,402 in the same period last year. Net financial items improved by MSEK 295 due to a substantially reduced net debt. Net tax of MSEK -32 is reported for the period. This corresponds to a tax charge of 28% for remaining units and a positive tax effect from the sale of Corrugated & Containerboard. In the first three quarters of 2000, the tax charge was MSEK 364, corresponding to an average tax rate of 35% as well as a positive tax effect from the sale of operations. Return on capital employed amounted to 14% during the period and return on equity was 15%, all calculated on a full-year basis. Interest cover was 13.3. The number of employees decreased due to the sale of operations and rationalization measures. The average number of employees in remaining units amounted to 2,272. Investments, cash flow and financial position Investments amounted to MSEK 507 during the period January - September. The amount for remaining units was MSEK 246, with Cartonboard accounting for more than half. Cash flow from operating activities amounted to MSEK 1,282. Interest- bearing net cash amounted to MSEK 4,919 on September 30, 2001, compared with a net debt of MSEK 2,177 at year-end 2000. Liquid assets increased mainly through liquid assets received from the sale of Corrugated & Containerboard but decreased through payment of the previously decided share redemption of MSEK 4,411. The interest-bearing debt also decreased through debts transferred to Billerud in conjunction with the company's formation. The Group's visible equity ratio at the end of the period was 72%, compared with 62% at the beginning of the year. The debt/equity ratio was -0.22 (0.09). Business areas Forestry & Wood Supply Third quarter The market for pulpwood gradually weakened during the period. A subdued trend in the pulp and paper markets, together with market-related and other production shutdowns at the mills, contributed to some surplus supplies, mainly of pine pulpwood and chips. The sawlogs market was more balanced with some shortages in both north and south Sweden. Price reductions were implemented for both pulpwood and timber. Operating profit amounted to MSEK 186, compared with MSEK 274 in the previous quarter. This downturn is mainly seasonal with lower delivery volumes and a higher proportion of pulpwood. January - September Operating profit amounted to MSEK 695, compared with MSEK 655 in the same period last year. Lower harvesting costs and higher deliveries from own forests contributed to this improvement and compensated for the slightly lower price level. Timber Third quarter The European market for sawn timber remained uncertain with signs of lower demand in key sub markets. Despite this, prices for redwood products stabilized and rose slightly for whitewood products due to lower supplies in the summer. AssiDomän's delivery volumes were lower than in the previous quarter. Operating profit for the quarter amounted to MSEK 1 compared with MSEK 11 in the previous quarter. This decline was mainly due to lower volumes. January - September Operating profit for the first nine months was MSEK 14, a decline of MSEK 15 compared with the same period in 2000. Higher deliveries could not compensate for lower selling prices. The Swedish sawmill industry has been characterized by serious profitability problems for many years. During the year, these problems were aggravated in step with shrinking margins. For AssiDomän's sawmill operations, however, the focus on strategically selected markets and customers has increased resistance to the general deterioration in conditions for the industry. All units therefore show positive earnings. Cartonboard Third quarter The general market situation for packaging board was characterized by a seasonal weakening in the third quarter. Prices were unchanged within the product areas in which AssiDomän operates. AssiDomän's delivery volumes decreased during the period, among other things due to the annual maintenance shutdown. Average prices rose slightly due to earlier price increases. Operating profit for the quarter amounted to MSEK 18 compared with MSEK 56 in the previous quarter. This deterioration was due to the effects of the extended production shutdown which led to lower volumes and higher costs. January - September Operating profit for the period amounted to MSEK 114, an increase of MSEK 60 compared with the same period last year. This improvement was mainly due to higher selling prices, an improved product mix, higher delivery volumes and improved productivity. Billerud Third quarter The trend for Billerud's paper products was relatively stable during the period while market pulp was affected by significant price decreases. Operating profit amounted to MSEK 246, a decrease of MSEK 73 compared with the previous quarter. This decline was mainly due to lower average prices for market pulp, maintenance shutdowns at Gruvön and Karlsborg and the costs for the stock-exchange listing. Profit after net financial items amounted to MSEK 217. January - September Operating profit in the first nine months of 2001 amounted to MSEK 1,034, compared with MSEK 998 in the same period last year. This improvement was mainly due to higher average prices for paper products, expressed in Swedish kronor, which were counteracted by lower pulp prices and higher variable costs. Profit after net financial items amounted to MSEK 951. Changes in the Group Billerud At the beginning of the year, AssiDomän's pulp and paper mills in Karlsborg and Skärblacka and Stora Enso's mill in Gruvön were merged to form the 50/50 owned company Billerud AB. Following a decision at AssiDomän's Annual General Meeting in May 2001, AssiDomän's shareholding in Billerud will be distributed to shareholders in conjunction with the stock-exchange listing of the company. This is planned to take place in November this year. Prior to the distribution, AssiDomän will acquire 20% of the shares in Billerud from Stora Enso. As a result, 70% of Billerud will be distributed to AssiDomän's shareholders. More detailed information in the terms for the distribution will be made available to shareholders at the beginning of November. Public offer for AssiDomän AssiDomän is now primarily a forestry company with 2.4 million hectares of productive timberland in Sweden. After the distribution of Billerud, the industrial operations will comprise the sawmill operations and the cartonboard mill in Frövi. On October 10, the Swedish State, via its wholly owned company Sveaskog AB, made a offer to acquire all the shares in AssiDomän AB. The offer is subject to AssiDomän completing the distribution of its shares in Billerud. Payment is intended to take the form of cash and shares in Billerud which the State will receive when AssiDomän distributes Billerud. The total value of the distribution of shares in Billerud and the takeover offer is estimated to correspond to approximately SEK 280 per share in AssiDomän. The MSEK 12,000 redemption program previously announced by AssiDomän will not be carried out if the offer is completed. AssiDomän's Board has found the offer acceptable and has therefore unanimously decided to recommend the shareholders of AssiDomän AB to accept the State's offer. The State intends to present its offer in more detail in November through a prospectus which will be sent to all AssiDomän's shareholders. Stockholm, October 30, 2001 Gunnar Palme President AssiDomän AB (publ) (556016-9020) This interim report has not been reviewed by the Company's auditors. Financial calendar Year-end report for 2001 January 29, 2002 ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/10/30/20011030BIT00270/bit0002.doc The Full Report http://www.waymaker.net/bitonline/2001/10/30/20011030BIT00270/bit0002.pdf The Full Report