Interim Report January - June 2011 Lower sales volume in the first six months
Six-months January–June
• Net sales amounted to SEK 3,612 million (3,647). Average prices rose 5% while delivery volumes fell by 6% compared with the same period in the previous year.
• Operating profit from continuing operations decreased to SEK 576 million (798). The decrease was due to lower roundwood delivery volumes, primarily sawlogs from own forests.
• Change in value of forest assets amounted to SEK 171 million (100).
• Operating profit amounted to SEK 809 million (1,093).
• Profit for the first half of the year was SEK 520 million (731).
CEO’s comments
Sveaskog’s net sales for the first half of the year amounted to SEK 3,612 million (3,647). Taken as a whole, the lower sales volume compared with the corresponding period in the previous year was counteracted by higher average prices for wood raw material. Operating profit from continuing operations amounted to SEK 576 million (798). The lower earnings are mainly due to lower deliveries of sawlogs from the company’s own forests.
A higher proportion of pulpwood and biofuel sales, due to uncertainty in the market for sawn timber and the cold winter, also affected earnings with lower revenues and higher production costs.
Sales of wood raw material totalled 5.7 million cubic metres (m3sub), a decrease of just over 6% compared with the same period in the previous year. Sales from own forests decreased by 9%. The main decrease was in sales of sawlogs, which are the most valuable products. In terms of earnings the lower delivery volumes were offset to some extent by 3% higher prices for own wood raw material.
At the beginning of April, Sveaskog and the insurance company If reached a settlement on compensation for the damage caused in Sveaskog’s forests by the storm Gudrun in 2005. Under the terms of the settlement, If settled a total claim of approximately SEK 200 million including excess. SEK 62 million was recognised as income in the second quarter. The rest of the compensation was recognised as income in previous years.
At the Annual General Meeting in April, Sveaskog’s owner decided on new financial targets for Sveaskog. The new targets are a consequence of the clearer mission for Sveaskog adopted by the Swedish parliament in 2010. The targets mean that Sveaskog will increase its profitability through, among other things, higher productivity and efficiency.
The yield target is a minimum of 5% and the target for return on equity is at least 7% viewed over a business cycle. The equity ratio target is 35–40%. The dividend target is unchanged and the ordinary dividend over time will continue to correspond to at least 60% of profit after tax after some adjustments.
In accordance with the Annual General Meeting decision, in addition to a cash dividend of SEK 756 million, the shares in Ersättningsmark i Sverige AB have been distributed to the owner. The consolidated value of the net assets in Ersättningsmark i Sverige AB amounted to SEK 983 million when the distribution took place. This distribution marks the completion of the special assignment to transfer 100,000 hectares of productive forest land to the Swedish state for use as replacement land.
In June, Sveaskog signed a leasehold agreement with the Finnish company Morven relating to the industrial property owned by Sveaskog in Seskarö. Morven will use the facility to process material for glulam manufacture in Finland.
Sveaskog in 2007. The remainder will have a positive impact on earnings in the second quarter of this year.
Sveaskog’s complete Interim Report is published on www.sveaskog.se.
For further information, please contact
Gunnar Olofsson, President and CEO, tel + 46 8 655 91 74, + 46 703 34 15 16
Per Matses, CFO, tel + 46 8-655 92 90, + 46 70 - 655 98 20
Sveaskog is Sweden’s leading forest company. We sell sawlogs, pulpwood and biofuel. We also work with land transactions and develop the forest as a venue for fishing, hunting and other nature based experiences. The forest is Sveaskog’s core business and we accept major responsibility as a driving force for development as well as contributing to new applications for both wood products and forest land. We defend sustainable development in everything we do. We have annual sales of SEK 7 billion and some 720 employees.