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2010-02-04 11:01:05 CET 2010-02-04 11:03:34 CET REGULATED INFORMATION Metsäliitto Osuuskunta - Company AnnouncementMetsäliitto Group's Financial Statements for 2009Metsäliitto Group's Financial Statements for 2009, 4 February 2010 at 12:00 noon Metsäliitto Group's full year operating result excluding non-recurring items EUR -75 million in 2009 Positive operating result excluding non-recurring items EUR 44 million in October-December Result for 2009 * Sales EUR 4,837 million (2008: EUR 6,434 million). * Operating result excluding non-recurring items was EUR -75 million (45). Operating result including non-recurring items was EUR -169 million (2). * Result before tax excluding non-recurring items was EUR -224 million (-192). Result before tax including non-recurring items was EUR -329 million (-233). Result for October-December * Sales EUR 1,190 million (10-12/2008: EUR 1,453 million). * Operating result excluding non-recurring items was EUR 44 million (-75). Operating result including non-recurring items was EUR 18 million (-206). * Result before tax excluding non-recurring items was EUR 8 million (-148). Result before tax including non-recurring items was EUR -18 million (-277). Events in the fourth quarter of 2009 * An agreement on the new ownership structure of Metsä-Botnia and the sale of operations in Uruguay to UPM-Kymmene Corporation was signed on 22 October 2009. The transaction was completed on 8 December 2009. * The Market Court imposed an infringement fine of EUR 21 million on Metsäliitto Cooperative for breach of competition legislation in 1997-2004. * M-real announced new profit improvement measures, including the permanent closure of the Alizay pulp mill in France, an investment of EUR 22 million to improve the energy efficiency of the Husum mill in Sweden, and a EUR 20 million internal profit improvement programme. In addition to these, M-real announced significant streamlining efforts at the Zanders speciality paper mills in Germany."The positive price development of pulp, higher utilisation rates of the mills and internal profit improvement measures had a favourable effect on the operating result for the fourth quarter. During the period, we continued focusing on our core functions and completed significant restructuring measures. The Group's business structure is now almost in line with the target we set in 2005. We will continue the strategic review of the paper businesses, and also other industrial arrangements are possible if justified by shareholder value." Kari Jordan, President & CEO, Metsäliitto Group Metsäliitto Group Income statement 2009 2008 2009 2008 2007 (Continuing operations) 1-12 1-12 Q4 Q4 1-12 Sales 4 837 6 434 1 190 1 453 6 797 Other operating income 353 239 237 23 92 Operating expenses -4 858 -6 189 -1 185 -1 487 -6 256 Depreciation and impairment losses -501 -482 -224 -195 -589 Operating result -169 2 18 -206 44 Share of results in associates -16 6 -4 -5 12 Exchange gains and losses 2 19 2 18 5 Other net financial items -147 -260 -34 -84 -220 Result before income tax -329 -233 -18 -277 -160 Income tax 10 60 -9 66 -24 Result from continuing operations -318 -172 -27 -211 -183 Metsäliitto Group Profitability 2009 2008 2009 2008 2007 (Continuing operations) 1-12 1-12 Q4 Q4 1-12 Operating result, EUR mill. -169 2 18 -206 44 - " -, excluding non-recurring items -75 45 44 -75 301 Return on capital employed, % -3.3 0.5 1.2 -16.1 1.4 - " -, excluding non-recurring items -1.4 1.3 3.7 -6.1 6.4 Return on equity, % -20.0 -8.4 -8.0 -43.6 -7.5 - " -, excluding non-recurring items -13.4 -6.4 -0.3 -17.0 2.7 Financial position 2009 2008 2009 2008 2007 31.12. 31.12. 30.9. 30.9. 31.12. Equity ratio, % 24.5 26.0 23.9 27.5 28.8 Net gearing ratio, % 157 149 180 162 142 Interest-bearing net liabilities, EUR mill. 2 203 2 666 2 363 3 373 3 271 Business segments Sales and Operating result Wood Board Tissue 2009 Wood Products Pulp and and (EUR mill.) Supply Industry Industry Paper Cooking Industry Papers Sales 1 101 806 1 195 2 432 890 Other operating income 10 6 344 252 8 Operating expenses -1 116 -814 -1 173 -2 595 -763 Depreciation & impairment losses -4 -45 -173 -356 -42 Operating result -9 -47 193 -267 93 Non-recurring items 21 6 -236 117 0 Operating result excl. non-recurring items 12 -41 -43 -150 93 The figures of the financial statements are unaudited METSÄLIITTO GROUP FINANCIAL STATEMENTS 2009 Sales and result Metsäliitto Group's sales for 2009 totalled EUR 4,837 million (6,434), and the operating result excluding non-recurring items was EUR -75 million (45). Net non-recurring items amounted to EUR -94 million (-43), of which EUR 67 million was recognised during January-September. Of the non-recurring costs, EUR 40 million was related to the closure of the Metsä-Botnia Kaskinen mill and EUR 29 million to the closure of the M-real Hallein paper mill. Other cost provisions totalled EUR 6 million. A sales gain of EUR 8 million was recognised for the Vapo deal in June. During the fourth quarter, Metsäliitto Group's operating profit included EUR 195 million of non-recurring income and EUR 222 million of non-recurring expenses. The non-recurring income was fully related to the ownership arrangements of Metsä-Botnia. The most significant cost items were the impairment charge of EUR 113 million booked by M-real and the write-downs and cost provisions of EUR 73 million associated with the action plans announced in December. Metsäliitto Cooperative recognised the EUR 21 million infringement fine imposed by the Market Court for breach of competition legislation in 1997-2004 as an expense, and Wood Products Industry made a write-down of EUR 6 million on the fixed assets of the Kyröskoski sawmill. Other cost provisions totalled EUR 9 million. The fourth-quarter operating result excluding non-recurring items was EUR 44 million positive (Q4/08: EUR -75 million). Compared to the previous quarter the operating result improved by EUR 35 million. The result was improved by, among other things, more favourable development of pulp prices than expected, improved utilisation rates at the mills and internal profit improvement measures. The result of the tissue paper business was good throughout the year. The consolidation method of Metsä-Botnia was changed from associated company to subsidiary on 8 December 2009, and the change had an impact of approximately EUR 5 million on the operating result. Metsäliitto Group's operating result including non-recurring items in 2009 was EUR -169 million (2). Financial income amounted to EUR 26 million (17), income from associates was EUR -16 million (6) and financial expenses totalled EUR 173 million (277). Net exchange gains recognised in financial items were EUR 2 million (19). The US dollar strengthened on average 5% during the year, while the British pound weakened by 12%and the Swedish krona by 10% compared to 2008. Income from associates includes an EUR 11 million non-recurring expense item related to the sale of Myllykoski Paper's Sunila shares. In the first quarter, M-real made a market repurchase with a nominal value of approximately EUR 60 million of its EUR 400 million bond, which matures in December 2010. A profit of approximately EUR 31 million for the purchase was recognised in financial income. A loss of approximately EUR 30 million was recognised in financial items during the third quarter after Sappi Ltd repaid early its four-year debt of EUR 220 million to M-real. The repayment price was 86.5% of the nominal value of the vendor notes, or approximately EUR 190 million. The result before tax was EUR -329 million (-233), and taxes, including changes in deferred tax liabilities, totalled EUR 10 million (60). The result for continuing operations was EUR -318 million (-172), the result for discontinued operations was EUR -23 million (-338) and the result for the financial period was EUR -342 million (-511). Of the period's results, EUR -116 million (-213) was attributable to parent company members and EUR -226 million (-297) to minority interests. The Group's return on capital employed for continuing operations was -3.3% (0.5), and the return on equity was -20.0% (-8.4). Excluding non-recurring items, the return on capital employed was -1.4% (1.3) and the return on equity was -13.4% (-6.4). Balance sheet and financing Metsäliitto Group's total liquidity was EUR 1.4 billion (1.8) at the end of December. Of this, EUR 0.6 billion (0.6) was in liquid assets and investments, and EUR 0.8 billion (1.2) was in off-balance-sheet binding credit facilities. In addition, the Group can satisfy short-term financial needs with non-binding commercial paper schemes in Finland and abroad, as well as with credit limits amounting to approximately EUR 0.5 billion. The Group's equity ratio was 24.5% at year's end and net gearing totalled 157% (26.0% and 149%, respectively). Interest-bearing net liabilities stood at EUR 2,203 million (2,666). The equity ratio of the parent company, Metsäliitto Cooperative, was 57.2% at the end of December and the net gearing ratio was 50% (54.6% and 45%, respectively). During the year, members' capital decreased by EUR 56.6 million. The actual members' capital decreased by EUR 1.5 million and the additional capital A by EUR 57.3 million. The additional members' capital B increased by EUR 2.1 million. Based on notifications received by the end of 2009, EUR 58.2 (102.6) million of the additional members' capital will fall due on 1 July 2010. At the end of December, Metsäliitto Cooperative had 127,158 (129,267) members. The change in the fair value of investments available for sale in 2009 was approximately EUR -103 million, based mainly on the decrease in the fair value of the Pohjolan Voima shares. The change in the fair value of the shares relates mainly to the decrease of the 12-month moving average value of Nord Pool electricity futures used in the valuation. In connection with the change in the ownership structure of Metsä-Botnia, goodwill of EUR 359 million was recognised in Metsäliitto Group's balance sheet. The shareholder agreement also includes an obligation to redeem Metsä-Botnia shares, ending when UPM's holding decreases to below 11%. The liability arising from the redemption obligation and the corresponding increase in holdings have been taken into account in the consolidated financial statements. In December 2009, M-real decided to exercise its right to partial early redemption of its senior floating rate notes maturing on 15 December 2010. The outstanding nominal amount before the redemption is approximately EUR 340 million. The total par value of redemption is EUR 250 million. The early redemption took place on 25 January 2010 and the redemption price was 100 per cent plus accrued and unpaid interest up to, but not including, the redemption date, according to the terms of the notes. The main reason for the early redemption is M-real's strong liquidity position. The redemption will reduce M-real's net financing costs in 2010 by approximately EUR 11 million. Personnel The Group employed an average of 15,230 people (17,538) in 2009. At the end of December, the number of personnel in the Group was 14,242 (16,729). Divestments of Vapo and the operations in Uruguay decreased the number of personnel by approximately 1,100 people. On the other hand, the change in the consolidation method of Metsä-Botnia increased the number of personnel in the Group by some 520 people. The parent company, Metsäliitto Cooperative, had a headcount of 2,871 people (3,217) at the end of December. Investments Metsäliitto Group's capital expenditure in tangible assets totalled EUR 152 million (268) in 2009. Acquisitions totalled EUR 497 million (4) of which most related to the ownership arrangements of Metsä-Botnia. Divestment of Vapo On 5 May 2009, Metsäliitto Group agreed to sell its entire holding (49.9%) in Vapo to a Finnish consortium led by EPV Energy. The deal was concluded on 24 June 2009 and amounted to EUR 165 million for which the parent company, Metsäliitto Cooperative, recorded a sales gain of EUR 27.3 million. The sales gain of Metsäliitto Group was EUR 8.0 million. Structural changes in 2009 Metsä-Botnia Metsä-Botnia and its shareholders signed a letter of intent regarding the new ownership structure of Metsä-Botnia and the divestment of the operations in Uruguay to UPM-Kymmene Corporation on 15 July 2009. The agreement was signed on 22 October 2009, and the arrangement was concluded on 8 December 2009. In connection with the transaction, Metsäliitto Cooperative's shareholding in Metsä-Botnia increased from 23% to 53%, M-real's holding remained at 30% and UPM's holding decreased from 47% to 17%. As part of the transaction, Metsä-Botnia distributed EUR 999 million to its shareholders as refunds of capital and dividends, and repurchased its own shares from UPM for EUR 168 million. The payments took place mainly using the assets received from the divestment of the operations in Uruguay. In addition, Metsä-Botnia sold 77% of its shares in Pohjolan Voima Oy and recognised sales gains of approximately EUR 60 million for the sale. The cooperation agreements remained, in their essential parts, in effect without changes after the transaction, and Metsä-Botnia will continue to act as a sales channel for the market pulp of both UPM and M-real. Metsä-Botnia is treated as an associated company in M-real's consolidated financial statements and as a subsidiary in Metsäliitto's consolidated statements, effective from 8 December 2009. Metsäliitto estimated the financial impact of the arrangement in its release on 22 October 2009. The financial impact recognised in the financial statements 2009 differs slightly from that forecast in the release. The arrangement increased Metsäliitto Cooperative's members' funds by approximately EUR 185 million and Metsäliitto Group's members' funds by approximately EUR 250 million. The arrangement has a slightly positive effect on the equity ratio of the parent company, Metsäliitto Cooperative, and a slightly negative effect on its net gearing ratio. The arrangement has a positive impact on the equity ratio and gearing of Metsäliitto Group. M-real In February 2009, M-real launched a new profit improvement programme with an annual target of EUR 80 million. The improvement actions concerned the business areas and streamlining the support functions to reflect the changed company structure. The full annual effect of the programme will be visible from 2011. In addition, a separate approximately EUR 60 million programme to improve the 2009 cash flow was launched in February. The actions included, for example, a reduction in net working capital and cuts in investments. Both programmes proceeded better than expected, and therefore the target of the profit improvement programme was increased from EUR 80 million to EUR 90 million, and the target of the cash flow improvement programme from EUR 60 million to EUR 80 million in October 2009. In 2008, M-real announced it was planning the discontinuation of standard coated fine paper production at the Hallein and Gohrsmühle mills based on earlier examined strategic options. Both mills have been making loss for a long time. At Hallein, paper production was discontinued at the end of April 2009, and at the Gohrsmühle mill in Germany, standard coated fine paper production was also discontinued in April. At Gohrsmühle, the production of speciality papers as well as uncoated fine paper reels and folio sheets has been expanded. Exploring various future options for the Hallein pulp mill continues. In December 2009, M-real announced the reorganisation of the M-real Zanders mills at Gohrsmühle and Reflex and plans to close down two of the four paper machines at the Reflex mill. The closure would decrease the annual production capacity by approximately 80,000 tonnes. In addition, the transfer of the production of carbonless paper to the Gohrsmühle mill has been planned. The negotiations have begun in 2010, and it is expected that the measures will be implemented by the end of the first half of the year. These measures are expected to improve the result by approximately EUR 18 million annually. M-real also announced planned profit improvement measures, the most significant of which are the permanent closure of the Alizay pulp mill in France, an investment of EUR 22 million to improve the energy efficiency of the Husum mill in Sweden, and a EUR 20 million internal profit improvement programme. The Alizay pulp mill has for a long time been unprofitable and the pulp quality is not fully in line with market requirements. The pulp mill has been temporarily shut down since March 2009. As a result of the possible closure of the mill, the result includes non-recurring items amounting to EUR 48 million as cost provisions and write-downs. The planned measures announced in December are expected to improve M-real's annual operating result by EUR 80 million with full effect from 2011 onwards. The result improvement in 2010 is expected to be EUR 40 million. M-real's structural change from a paper company to become more clearly a packaging material producer has proceeded according to plans. The strategic review of the paper businesses continues. Business areas Wood Supply Wood Supply's sales totalled EUR 1,101 million (1,734) in 2009 and operating profit was EUR -9 million (30). Wood Supply Finland accounted for EUR 828 million (1,188) of the sales and EUR -14 million (25) of the operating result. The operating result for 2009 includes a non-recurring expense item of EUR 21 million (+2) due to an infringement fine imposed by the Market Court. The most significant reason for the decline in sales and operating result year on year was that the delivery volumes remained clearly below the level of 2008. Metsäliitto Wood Supply supplied 24 million cubic metres (32) of wood to its customers, approximately 70% of it acquired in Finland, mainly from members of Metsäliitto Cooperative. During the first half of the year, both mills and sawmills curtailed production, which resulted in the demand for wood being lower than normal. Wood supply remained low as well. The price of wood decreased during the first months of the year, but began to steady from May. Log prices recovered to a slight increase towards the end of the year. The wood trade picked up during the final months of the year, especially due to forest owners taking advantage of the 50% tax relief on wood trade income offered by the Finnish state. Purchases and harvesting of pulpwood had to be restricted as a result of the strong production curtailments during the first months of the year. During the spring and summer, the wood supply organisation in Finland was adjusted to the market conditions through temporary layoffs and other measures. The wood supply organisation in Northern Finland was changed to better match the decreased delivery volumes of wood in the area. Metsäliitto's purchases from privately owned forests totalled, including forest energy, over 9 million cubic metres. Purchases focused on softwood and forest energy. The demand for pulpwood also picked up towards the end of the year, especially for birch pulpwood. In order to speed up the roundwood trade, owner-members were paid a double bonus on wood from renewal stands marked for cutting during the first months of the year and early autumn. A campaign aimed at enhancing the procurement of forest energy got underway rapidly bringing good results, especially in the field of small diameter energy wood. During the review year, Metsäliitto made significant agreements on the delivery of forest energy and forest industry by-products to major energy plants. In the Baltics, the trade of wood from privately owned forests was almost at a standstill, and most of the wood was purchased from state-owned forests. In Russia, the wood supply at the Metsä-Botnia Svir Timber sawmill could be handled in spite of a shortage of logs. Imports to Finland and Sweden decreased considerably from both regions. Mainly pulpwood and wood chips from the fellings of Metsäliitto-owned companies were imported from Russia, totalling 0.9 million cubic metres. Streamlining of the operations of the wood supply organisations continued in both the Baltics and Russia. In Sweden and Central Europe, the first half of the year were quiet due to high stock levels and production curtailments. The demand for wood increased during the latter half of the year, and prices of both roundwood and pulpwood began to increase. Metsäliitto has been strongly developing services for all phases of forest ownership for the last few years. A revised bonus system was adopted at the beginning of the review year, and Metsäkori, an offering of Metsäliitto's services, was introduced to owner-members towards the end of the year. New member services include a generational change service and a VAT account. As of the beginning of 2010, Metsäliitto Wood Supply will be organised into four business lines: Wood Supply Finland, International Wood Supply, Wood Energy and Forestry Services. Wood Products Industry The sales of Metsäliitto Wood Products Industry amounted to EUR 806 million (1,162), while the operating result was EUR -47 million (-74). The operating result includes EUR 6 million (21) of non-recurring expenses. The operating result was particularly burdened by weak demand, low prices for sawn timber and the high price of wood raw material acquired during the previous year. In addition to sawn goods, restrictions had to be imposed on processed sawn goods, plywood and engineered wood products. However, the loss could be decreased significantly due to the cost saving measures. Demand was weak in the first part of the year, which resulted in the continuation of the oversupply situation and a decrease in product prices. At the same time, raw material costs were too high compared to the prices of the final products. During the latter half of the year, production curtailments and customers' decreased stock levels resulted in a slight recovery in demand and increased price level. Production was adjusted to the weakened demand by discontinuing the operations of the Teuva sawmill and suspending production at the Kyröskoski and Karihaara sawmills. Upgrading operations in Kaskinen were reduced due to the contract manufacturing of consumer goods aimed at the United Kingdom DIY market being transferred to the UK. Production was curtailed at all sawmills in operation during the latter half of the year due to poor availability of competitively priced wood raw material. The Building Solutions business line focused on developing energy-efficient construction and participated in, for example, the development of the Kerto-framed passive roof element and a multi-storey building system comprising wooden prefabricated elements. In addition, the Kerto-Kate base plate was launched on the market, and the Green Store concept based on Kerto and glulam for eco-efficient construction of commercial and office buildings was launched for sale in the United Kingdom. The operating environment of the industrial customer segment was characterised by rapid cuts in production. Profitability could be maintained and market share could be increased with new speciality products and tailored components. The demand and prices for the products of the Plywood business line's new Suolahti upgrading unit in particular have developed favourably. In the consumer and retail segment, sales remained at the previous year's level and profitability improved slightly compared to the previous year. The Upgrading and Distribution business line continued the development of products for home and garden and related services in the United Kingdom and France. Wood Product Industry continued to centralise its operations by divesting the blockboard mill in Comanesti, Romania, to the Romanian subsidiaries of the Austrian company Holzindustrie Schweighofer. The transaction is subject to approval by the Romanian competition authorities. Pulp The sales of Metsä-Botnia's continuing operations were EUR 886 million (1,184) and the operating result including non-recurring items amounted to EUR -107 million (36). The operating result was burdened by the low price of pulp and the price of wood raw material remaining high during the financial period. The closure of the Kaskinen mill resulted in non-recurring items of EUR -75 million. In addition, EUR -2 million of other non-recurring items was recognised in the period. The US dollar-denominated price of pulp remained low during the first half of the review period. During the latter half of the year, prices increased by an average of 25%-40% in all types compared to the first half of the year. During the year, approximately 2.4 million tonnes of production capacity was closed down. Production units have been closed down in China, North America and Europe. However, towards the end of the year, production units that had already been closed down were reopened in Canada and the USA. The production volume of Metsä-Botnia's continuing operations was 1,959,000 tonnes (2,363,000) of pulp. The financial position and liquidity of Metsä-Botnia continued to be good. At the end of the year, the company had a total of EUR 175 million (304) of liquid assets and unutilised credit facilities. Its equity ratio was 46% (64) at the end of the period under review, and the net gearing ratio was 72% (35). Pulp Industry (Metsä-Botnia) has been consolidated in the financial statements of Metsäliitto Group as a subsidiary as of 8 December 2009. Before that, 53% of Metsä-Botnia had been consolidated using the proportional consolidation method (M-real 30% and Metsäliitto 23%). Metsä-Botnia has processed the business operations in Uruguay as discontinued operations in accordance with the IFRS 5 standard. Thus, the business operations in Uruguay are not included in the result figures presented above. The operations in Uruguay have not been a separate segment in terms of Metsäliitto and M-real, so the business operations in Uruguay have been reported as continuing operations in terms of these groups. Board and Paper The sales of Board and Paper totalled EUR 2,432 million (3,236), and the operating result excluding non-recurring items was EUR -150 million (-35). The operating result excluding non-recurring items decreased from the previous year due to the drop in delivery volumes following weaker demand and a decrease in the average selling prices of office papers. The result was improved by price increases in boards and cost savings. M-real's non-recurring items in January-December totalled EUR -117 million net (-26). Of the non-recurring items, EUR 58 million was booked in January-September, and of these EUR 22 million was related to the closure of the Metsä-Botnia Kaskinen mill, EUR 28 million to the closure of the Hallein paper mill and EUR 8 million to various profit improvement measures and cost provisions. In the fourth quarter, M-real booked non-recurring items of EUR -59 million net. The non-recurring items included EUR 113 million of impairment losses, EUR 48 million of write-downs and cost provisions related to the plans to permanently close down the Alizay pulp mill, EUR 13 million of cost provisions related to various profit improvement programmes and EUR 19 million of other non-recurring expense items. Non-recurring income totalled EUR 134 million, related to the reorganisation of Metsä-Botnia's ownership. The operating result including non-recurring items was EUR -267 million (-61). Net interest and other financial expenses totalled EUR 80 million (155), income from associates was EUR -16 million (-1) and net exchange gains and losses booked as financial items were EUR 5 million (13). The financial income of the review period includes a profit of about EUR 31 million from repurchases of a EUR 400 million bond due in December 2010. A loss of approximately EUR 30 million has been booked in the financing expenses due to the premature repayment of the bond issued to Sappi. Results from associates include a EUR 11 million non-recurring expense item related to the sale of Myllykoski Paper's Sunila shares. The result before tax was EUR -358 million (-204), earnings per share from continuing operations were EUR -1.02 (-0.55) and the return on capital employed was -8.9% (-1.3). Excluding non-recurring items, the result before taxes was EUR -230 million (-178), earnings per share were EUR -0.66 (-0.48) and the return on capital employed was -4.5% (-0.5). At the end of December, M-real's equity ratio was 29.6% and net gearing amounted to 84% (30.8% and 90%, respectively). Some of M-real's loan agreements set a 120% limit on the company's net gearing ratio and a 30% limit on the equity ratio. At year end, net gearing calculated as defined in the loan agreements was approximately 63% and the equity ratio was about 35%. Tissue and Cooking Papers Sales of Metsä Tissue, which produces tissue and cooking papers, totalled EUR 890 million (930), and its operating result was EUR 93 million (42). Sales were down some four per cent year-on-year due to changes in exchange rates and lower sales volumes. The sales volumes of the company's own brands, especially Lambi and Serla, increased. Sales volumes of large-scale consumer operations improved during the latter half of the year following softer demand in the first half, which was due, for instance, to the increased demand for hygiene products along with the spread of the H1N1 virus. Pulp costs increased during the second half of the year and were 25% higher at year end than in late spring. Prices of recycled fibre have remained more stable, but its availability has worsened. Metsä Tissue launched several new products and product solutions during the year, such as the design patterned Lambi Limited Collection product concept for consumers and the Katrin hand care programme, special towels and dispensers for large-scale consumers. In addition, the new SAGA brand was launched in the autumn, used for selling and marketing cooking and baking products for households, cooking professionals and converters alike. The development of the Serla, Mola and Tento brands was also continued. It was decided to rebuild paper machine 10 at the Mänttä mill. The investment will be carried out in the first half of 2010. In the review year, Metsä Tissue continued measures to improve energy efficiency. Energy efficiency was audited in Finland and Germany, and the companies in both countries were awarded energy efficiency certificates. In September, Metsä Tissue streamlined its operations by moving from five business lines to three. After the reorganisations, the lines are Consumer, Away-from-Home (large-scale consumer) and Baking & Cooking. The napkin product category will be developed and strengthened further as part of the Consumer and Away-from-Home businesses. The company invested in three napkin machines and associated printing and packaging lines during the review period. Events after the period Metsäliitto announced on 18 January 2010 that it will launch a capital programme with the purpose of strengthening its equity to correspond to the company's current and future business structure. The assets to be accrued will be mainly used for financing new business operations. Through the capital programme aimed at owner members, the members can subscribe for A and B additional shares. In addition, the programme includes the removal of the current upper limit for the obligatory shares. Furthermore, Metsäliitto intents to issue a new C additional share, on the basis of which the owners can, in addition to any interest, gain additional profit as cash payments, the amount of which depends on the rate development of M-real Corporation's B share on the Helsinki Stock Exchange. Metsäliitto members who own A and B additional shares or subscribe for them during the programme are entitled to subscriptions of C additional share. The terms and conditions of C additional shares are otherwise identical to the current B additional shares, and the same annual interest will be paid on them as on the B additional shares. The Supervisory Board approved the changes in rules required to execute the capital programme in its meeting on 18 January 2010 and presented them to the Representative Council for approval. The Board of Directors will decide on the launch of the programme, its exact starting date, and the subscription periods and terms during the first quarter in 2010, following the meeting of the Representative Council. Risks and uncertainties The estimates and statements in this Financial Statements Bulletin are based on current plans and estimates. They involve risks and uncertainties that may cause the results to differ from those expressed in such statements. In the short term, the price of and demand for end products, raw material costs, energy prices and the exchange rate development of the euro have an effect on the results of Metsäliitto Group. The risks related to the Group's business have been explained more extensively in Metsäliitto Group's Annual Report for 2008. Near-term outlook Wood orders for 2010 by Wood Supply customers are close to the normal level, which translates into procurement of considerably larger amounts of wood than in 2009. In Finland, wood procurement is supported by a 25% tax relief on wood trade income, which is valid for sales made by the end of 2010. Wood Products Industry will continue to implement its strategy aiming to increase processing value and invest in customer-oriented development of products and services. Recovery is expected in the construction market during the year, but demand is likely to remain below the normal level. DIY trade volumes are also expected to increase. The price of pulp has increased further in January, and the pulp market is likely to remain strong, at least for the next few months. Increasing world market prices have led to a situation in which pulp mills that have already been closed down have been reopened. This has increased supply and might have a negative impact on the development of pulp prices. The demand for both board and uncoated fine paper is expected to remain favourable during the first quarter. The demand for speciality papers continues to be below the normal level, but demand is expected to improve during the first half of the year. Average prices of folding boxboard and liners are experiencing a slight increase as a result of price increase measures. M-real has additionally announced price increases of 8% in all main markets. The price increases will take effect in March. Prices of speciality papers have remained stable, and no significant changes in average prices are expected. M-real's first-quarter operating result excluding non-recurring items is expected to be better than that of the fourth quarter of 2009. The demand for tissue and cooking papers is expected to remain relatively steady also during 2010. However, raw material prices and transport costs are expected to continue to increase. Metsä Tissue is now seeking growth after significant streamlining efforts. Metsäliitto Group's operating result excluding non-recurring items became positive during the third quarter of the year. The operating result for the fourth quarter was better than expected, and no changes that would have a negative impact on profitability have taken place in the market this year. Metsäliitto estimates that the favourable development will continue in the first quarter and that the operating result excluding non-recurring items will be better than the previous quarter. Proposal for interest on members' capital Metsäliitto Cooperative's Board of Directors has decided to propose to the Supervisory Board that, for 2009, interest of 5.5% (5.5 for 2008) be paid for the statutory capital invested by its members. Interest of 5.0% (5.0) is proposed for additional members' capital A, and interest of 4.5% (4.5) for additional members' capital B. The proposal of the Board of Directors will be dealt with in March by Metsäliitto Cooperative's Supervisory Board, which, in turn, will make a proposal on the interest on members' capital to the Representative Council meeting in May. Espoo, 4 February 2010 Metsäliitto Group Board of Directors Further information: Hannu Anttila, acting Group CFO, Metsäliitto Group, tel. +358 10 465 5111 Anne-Mari Achrén, Group CCO, Metsäliitto Group, tel. +358 10 465 4541 Unaudited METSÄLIITTO GROUP Condensed consolidated statement 2009 2008 2009 2008 2007 of comprehensive income, EUR mill. 1-12 1-12 Change Q4 Q4 1-12 Continuing operations Sales 4 837 6 434 -1 597 1 190 1 453 6 797 Other operating income 353 239 114 237 23 92 Operating expenses -4 858 -6 189 1 331 -1 185 -1 487 -6 256 Depreciation and impairment losses -501 -482 -19 -224 -195 -589 Operating result -169 2 -171 18 -206 44 Share of results in associated -16 6 -22 -4 -5 12 companies Exchange gains and losses 2 19 -16 2 18 5 Other net financial items -147 -260 113 -34 -84 -220 Result before income tax -329 -233 -96 -18 -277 -160 Income tax 10 60 -50 -9 66 -24 Result for the period from continuing operations -318 -172 -146 -27 -211 -183 Discontinued operations Result from discontinued operations -23 -338 315 -9 -62 -27 Result for the period -342 -511 169 -36 -273 -211 Other comprehensive income Cash flow hedges 35 -55 90 11 -44 7 Available for sale financial assets -103 97 -200 -2 21 8 Currency translation differences -15 13 -28 10 -6 -11 Other items 0 -1 1 0 0 -5 Income tax relating to components of other comprehensive income 23 -16 39 0 0 -13 Other comprehensive income, net of tax -60 39 -99 18 -29 -14 Total comprehensive income for the period -402 -472 70 -18 -302 -225 Result attributable to: Members of parent company -116 -213 97 24 -140 -9 Minority interest -226 -297 71 -60 -133 -202 -342 -511 169 -36 -273 -211 Total comprehensive income attributable to: Members of parent company -150 -199 50 28 -160 -18 Minority interest -252 -272 20 -46 -142 -207 -402 -472 70 -18 -302 -225 Unaudited Condensed consolidated balance sheet 2009 2008 2007 31.12. 31.12. 31.12. ASSETS Non-current Goodwill 493 176 319 Other intangible assets 245 88 70 Tangible assets 2 428 2 958 4 021 Biological assets 7 103 83 Investments in associated companies 98 139 133 Available for sale investments 356 493 373 Non-current financial assets 11 234 44 Deferred tax receivables 58 61 46 3 696 4 252 5 090 Current Inventories 669 943 1 132 Accounts receivables and other receivables 799 1 085 1 385 Cash and cash equivalents 558 619 428 2 026 2 647 2 945 Assets classified as held for sale 9 - - Total assets 5 730 6 899 8 035 MEMBERS' FUNDS AND LIABILITIES Members' funds Members' funds 927 1 104 1 328 Minority interest 471 682 978 1 399 1 786 2 306 Non-current liabilities Deferred tax liabilities 382 328 404 Post-employment benefit obligations 122 131 195 Provisions 128 111 83 Borrowings 1 976 2 854 3 011 Other liabilities 115 26 50 2 722 3 449 3 742 Current liabilities Current borrowings 798 690 747 Accounts payable and other liabilities 806 974 1 240 1 604 1 664 1 987 Liabilities classified as held for sale 6 - - Total liabilities 4 331 5 113 5 729 Total members' funds and liabilities 5 730 6 899 8 035 Unaudited Equity attributable to members of parent company Change in members' Fair Re- funds Mem- Trans- value tained bers' Share lation and earn- EUR mill. capital pre- differ- other ings Minor- mium ences reserves Total ity Total account inte- rest Members' funds 574 30 -7 148 583 1 328 978 2 306 1.1.2008 Dividends paid -35 -35 -13 -48 Change in members' 11 11 11 capital Change in share 0 0 premium account Change in fair 0 0 value reserve Transfer from unrestricted 6 -6 0 0 to restricted equity Business 0 -10 -10 arrangements Total comprehensive income 3 12 -214 -199 -272 -472 for the period Members' funds 585 30 -5 165 329 1 104 682 1 786 31.12.2008 Members' funds 585 30 -5 165 329 1 104 682 1 786 1.1.2009 Dividends paid -29 -29 -1 -30 Change in members' -101 -101 -101 capital Change in share 0 0 premium account Change in fair 0 0 value reserve Transfer from unrestricted 0 0 to restricted equity Business 20 82 102 44 146 arrangements Total comprehensive income -7 -27 -116 -150 -252 -402 for the period Members' funds 484 30 9 221 184 927 471 1 399 31.12.2009 Unaudited Condensed consolidated cash flow statement 2009 2008 2007 1-12 1-12 1-12 Result for the period -342 -511 -211 Total adjustments 469 832 857 Change in working capital 231 88 -34 Cash flow arising from operations 359 410 612 Net financial items -84 -239 -265 Income taxes paid 0 -58 -78 Net cash flow arising from operating activities 275 113 270 Acquisitions -497 -4 -45 Investments in tangible and intangible assets -152 -268 -447 Divestments of assets and other 940 511 447 Net cash flow arising from investing activities 209 239 -45 Change in members' funds -57 -1 29 Change in long-term loans and other financial items -529 -101 -19 Dividends paid -40 -55 -51 Net cash flow arising from financing activities -544 -157 -41 Changes in cash and cash equivalents -60 195 184 Cash and cash equivalents at beginning of period 619 428 246 Translation difference -1 -4 -3 Changes in cash and cash equivalents -60 195 184 Cash and cash equivalents in assets classified as held for sale -1 - - Cash and cash equivalents at end of period 558 619 428 Unaudited BUSINESS SEGMENTS Wood Supply 1-12/09 1-12/08 Q4/09 Q4/08 Sales 1 101 1 734 292 362 EBITDA -5 35 -16 5 - " -, excl. non-recurring items 16 33 5 4 Depreciation and impairment -4 -5 -1 -1 Operating result -9 30 -17 4 - " -, excl. non-recurring items 12 28 4 3 Capital expenditure 2 4 1 0 Personnel at end of period 945 1 140 945 1 140 Wood Products Industry 1-12/09 1-12/08 Q4/09 Q4/08 Sales 806 1 162 193 239 EBITDA -2 -18 7 -30 - " -, excl. non-recurring items -2 -11 7 -23 Depreciation and impairment -45 -57 -16 -25 Operating result -47 -74 -9 -55 - " -, excl. non-recurring items -41 -53 -3 -34 Capital expenditure 10 36 3 7 Personnel at end of period 3 758 4 199 3 758 4 199 Pulp Industry 1-12/09 1-12/08 Q4/09 Q4/08 Sales 1195 1 591 297 359 EBITDA 366 347 378 23 - " -, excl. non-recurring items 71 347 67 23 Depreciation and impairment -173 -138 -23 -36 Operating result 193 209 355 -13 - " -, excl. non-recurring items -43 209 44 -13 Capital expenditure 53 99 7 21 Personnel at end of period 1 106 1 815 1 106 1 815 Board and Paper Industry 1-12/09 1-12/08 Q4/09 Q4/08 Sales 2 432 3 236 606 722 EBITDA 88 254 132 -18 - " -, excl. non-recurring items 44 192 51 4 Depreciation and impairment -356 -315 -185 -143 Operating result -267 -61 -52 -161 - " -, excl. non-recurring items -150 -35 7 -51 Capital expenditure 73 128 18 39 Personnel at end of period 4 903 6 546 4 903 6 546 Unaudited Tissue and Cooking Papers 1-12/09 1-12/08 Q4/09 Q4/08 Sales 890 930 229 234 EBITDA 135 98 31 24 - " -, excl. non-recurring items 135 99 31 24 Depreciation and impairment -42 -56 -11 -14 Operating result 93 42 21 10 - " -, excl. non-recurring items 93 43 21 10 Capital expenditure 35 33 17 16 Personnel at end of period 3 152 3 222 3 152 3 222 Other operations 1-12/09 1-12/08 Q4/09 Q4/08 Sales 170 328 4 90 EBITDA 69 29 21 5 - " -, excl. non-recurring items 21 24 0 5 Depreciation and impairment -11 -20 0 -5 Operating result 59 9 20 -1 - " -, excl. non-recurring items 11 4 -1 -1 Capital expenditure 20 44 0 11 Personnel at end of period 378 1 204 378 1 204 Other operations include Vapo Group (49,9%) until June 24, 2009 and Metsäliitto's service and holding functions. Internal sales and eliminations 1-12/09 1-12/08 Q4/09 Q4/08 Sales -1 758 -2 547 -431 -553 EBITDA -319 -261 -313 -18 - " -, excl. non-recurring items -40 -259 -40 -18 Depreciation and impairment 129 109 12 28 Operating result -190 -152 -300 10 - " -, excl. non-recurring items 45 -150 -27 10 Metsäliitto Group 1-12/09 1-12/08 Q4/09 Q4/08 Sales 4 837 6 434 1 190 1 453 EBITDA 332 484 242 -10 - " -, excl. non-recurring items 246 425 121 18 Depreciation and impairment -501 -482 -224 -195 Operating result -169 2 18 -206 - " -, excl. non-recurring items -75 45 44 -75 Capital expenditure 152 268 40 78 Personnel at end of period 14 242 16 729 14 242 16 729 EBITDA = Operating result before depreciation and impairment losses Unaudited Quarterly data 2009 2009 2009 2009 2008 2008 2008 2008 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Sales Wood Supply 292 232 251 327 362 412 474 487 Wood Products Industry 193 188 224 202 239 279 329 315 Pulp Industry 297 313 282 303 359 421 413 398 Board and Paper Industry 606 618 585 623 722 826 829 859 Tissue and Cooking Papers 229 226 217 218 234 235 231 230 Other operations 4 3 72 92 90 62 83 92 Internal sales and -431 -425 -418 -487 -553 -640 -683 -671 eliminations Group sales 1 190 1 155 1 213 1 278 1 453 1 595 1 676 1 710 Operating result Wood Supply -17 -1 4 5 4 4 12 10 Wood Products Industry -9 -3 -10 -25 -55 -16 -1 -2 Pulp Industry 355 2 -42 -122 -13 102 44 75 Board and Paper Industry -52 -24 -73 -117 -161 -8 71 37 Tissue and Cooking Papers 21 31 22 19 10 13 11 9 Other operations 20 2 27 10 -1 3 1 6 Eliminations -300 0 16 94 10 -78 -32 -52 Group operating result 18 7 -56 -137 -206 19 105 84 - % of sales 1.5 0.6 -4.6 -10.7 -14.2 1.2 6.3 4.9 Share of results in associated companies -4 -1 -8 -2 -6 8 2 2 Exchange gains and losses 2 4 -1 -2 18 0 -2 2 Other net financial items -34 -63 -30 -20 -84 -63 -51 -62 Result before income tax -18 -53 -95 -163 -277 -35 54 26 Income tax -9 -6 7 19 66 2 -1 -7 Result for the period from continuing operations -27 -59 -88 -144 -211 -33 53 19 Result from discontinued operations -9 -2 -3 -10 -62 -212 -45 -19 Result for the period -36 -61 -91 -153 -273 -245 8 0 Acquisitions Oy Metsä-Botnia Ab, a joint venture included in the Group's Pulp Industry segment, had a pulp mill and forest assets in Uruguay. Metsä-Botnia's shareholders M-real Corporation, UPM-Kymmene Corporation and Metsäliitto Cooperative signed an agreement on the sale of the business operations in Uruguay to UPM on 22 October 2009. The transaction was concluded on 8 December 2009. In connection with it, Metsäliitto Cooperative sold UPM a holding of 5.5% in Botnia South America S.A. At the same time, the shares of ownership in Metsä-Botnia were rearranged. Metsä-Botnia repurchased 9.2% of its own shares, as a result of which Metsäliitto Cooperative's direct ownership increased from 23.0% to 25.3% and M-real's ownership from 30.0% to 33.0%. Metsäliitto Cooperative purchased a 24.7% share in Metsä-Botnia from UPM. In addition, Metsäliitto Cooperative purchased a 3.0% share in Metsä-Botnia from M-real in an intra-group acquisition. After the arrangement, Metsäliitto Cooperative owns 53.01% of Metsä-Botnia, M-real 30.03% and UPM 16.96%. Metsä-Botnia's shareholder agreement includes an obligation to redeem Metsä-Botnia shares, ending when UPM's holding has decreased below 11%. The liability arising from the redemption obligation is measured at fair value. The corresponding increase in Metsäliitto Cooperative's holding by 5.96% has been taken into account in the consolidated financial statements. According to a preliminary acquisition cost calculation, the acquisitions resulted in goodwill of EUR 358.8 million, including the following items: (i) Synergy benefits, 80% of goodwill. The synergy benefits arise from the potential for cost savings and improvement of efficiency due to harmonisation, and benefits of using Metsä-Botnia's pulpwood in optimising Metsäliitto's Wood Supply and Wood Products Industry businesses. (ii) Personnel, 20% of goodwill. The competence of the personnel concerning pulp production and end uses of fibre will benefit the other business functions of the Group in, e.g., the production of pulp, paper and board. The personnel's knowledge of the pulp market will aid the operation of other Group companies in the pulp market as buyers as well as sellers. The acquisition cost calculation is preliminary because according to IFRS it is possible to adjust it if additional information is received within one year from the acquisition date. The other operating expenses of the Group include EUR 2.5 million of costs related to this reorganisation as a whole. The result of the Metsä-Botnia group has been consolidated into Metsäliitto Group as a joint venture line by line until 7 December 2009 (Metsäliitto Cooperative's ownership 23% and M-real's 30%). As a result of the restructuring carried out at the end of 2009, Metsä-Botnia became a subsidiary of Metsäliitto Cooperative on 8 December 2009. The minority interest is 29.43%. The result for the financial period of the Metsä-Botnia group since 8 December 2009 (EUR 3.0 million) is included in the Group result for 2009. Metsäliitto Group's sales for 2009 would have amounted to EUR 4,644.2 million and the result for the period before minority interest to EUR -616.9 million, had the acquisition of business operations carried out during the financial year been consolidated into the consolidated financial statements from the beginning of the financial year 2009, taking all the items related to this transaction as a whole into consideration. These figures have been calculated using the accounting policies applied by the Group and by adjusting the result of the subsidiary by taking into consideration additional depreciation that would have been made had the intangible and tangible assets been measured at fair cost as of 1 January 2009, and the tax effects of such depreciation. Acquisition of Oy Metsä-Botnia Ab total Fair value Book value EUR mill. measured at before consolidation consolidation -------------------------------------------------------------------------------- Brand (included in intangible assets) 135 Customer relationships (included in intangible 42 assets) Other intangible assets 16 16 Buildings and structures 247 206 Machinery and equipment 516 365 Other tangible assets 22 22 Biological assets 6 6 Long-term financial assets 22 22 Inventories 125 123 Trade and other receivables 126 126 Cash and cash equivalents 9 9 -------------------------------------------------------------------------------- Total assets 1 266 895 Deferred tax liabilities 164 68 Retirement benefit obligations 3 3 Provisions 18 18 Financial liabilities 332 332 Trade and other payables 87 87 -------------------------------------------------------------------------------- Total liabilities 604 507 Net assets 662 388 Previously owned share of net assets 229 Minority's share of net assets 195 Net assets acquired 238 Acquisition cost 405 Costs directly attributable to the acquisition 4 Redemption of Oy Metsä-Botnia Ab shares 89 Redemption obligation 99 -------------------------------------------------------------------------------- Acquisition cost total 597 Goodwill 359 Cash transaction 498 Assets of subsidiary acquired -9 -------------------------------------------------------------------------------- Cash flow on acquisition -489 The fair value of the brand identified in the consolidation of business operations has been specified based on estimated discounted additional cash flows. The fair value of customer relationships has been specified based on the estimated duration of the customer relationships and discounted net cash flows from existing customer accounts. Tangible assets are measured at fair value based on the market prices of corresponding assets, taking into consideration the age, wear and other similar factors of the acquired assets. Inventories are measured at fair value, and the book values of other items substantially correspond to the fair value. Unaudited Change in tangible assets 2009 2008 2007 ------------------------------------------------------------- Book value at beginning of period 2 958 4 021 4 197 Company acquisitions 472 4 22 Investments 143 255 430 Decrease -772 -686 -72 Assets classified as held for sale -3 - - Depreciation and impairment charges -449 -438 -362 - " - , discontinued operations - -149 -118 Translation differences and other changes 78 -49 -76 ------------------------------------------------------------- Book value at end of period 2 428 2 958 4 021"Assets classified as held for sale" include the tangible assets of the Wood Products Industry's blockboard mill in Romania. In 2008 "Depreciation and impairment charges of discontinued operations" include the depreciation and impairment charges of the Graphic Papers business and in 2007 the depreciations of the Map Merchant Group. Commitments Q4/09 Q4/08 Q4/07 ------------------------------------------------------------- On own behalf (incl. leasing liabilities) 456 318 347 On behalf of associated companies 6 3 3 On behalf of others 4 4 4 ------------------------------------------------------------- Total 466 325 355 Commitments related to fixed assets Q4/09 Q4/08 Q4/07 ------------------------------------------------------- Payments due under 1 year 0 0 38 Payments due in subsequent years 1 1 7 Open derivative contracts Q4/09 Q4/08 Q4/07 Interest rate derivatives 831 1 158 1 693 Currency derivatives 1 766 2 346 3 268 Other derivatives 254 232 160 --------------------------------------------- Total 2 850 3 735 5 121 The market value of open derivative contracts at the end of the review period was EUR -28 million (12/08: EUR 33 million). Open derivative contracts also include closed contracts to a total amount of EUR 537 million (12/08: EUR 787 million). Accounting policies The Financial Statements Bulletin was prepared in accordance with the IAS 34 standard Interim Financial Reporting and the accounting policies presented in Metsäliitto Group's Annual Report for 2008. The Group has adopted the following standards from the beginning of 2009: IAS 1 (Revised), 'Presentation of Financial Statements'. The revised standard is aimed at improving users' ability to analyse and compare the information given in financial statements by separating changes in equity of an entity arising from transactions with owners from other changes in equity. Non-owner changes in equity are presented in the statement of comprehensive income. IFRS 8, 'Operating Segments'. The new standard replaces IAS 14. The new standard requires a 'management approach', under which segment information is presented on the same basis as that used for internal reporting purposes. The segments reported by the Group as from 1 January 2009 are Wood Supply, Wood Products Industry, Pulp Industry, Board and Paper Industry, Tissue and Cooking Papers and Other operations. The figures for the comparative periods have been changed according to the new segments. [HUG#1380532] |
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