2008-02-06 11:09:54 CET
2008-02-06 11:11:05 CET
BIRTINGARSKYLDAR UPPLÝSNINGAR
Metsäliitto Osuuskunta - Financial Statement Release
Metsäliitto Group's result in 2007
Metsäliitto Group Stock Exchange Release 6.2.2008
Operating profit excluding non-recurring items was up by 22 per cent,
amounting to EUR 276 million
Result in 2007
- Sales were EUR 7,669 million (EUR 8,250 million). Comparable sales
were up 5 per cent.
- Operating profit excluding non-recurring items improved by 22 per
cent, amounting to EUR 276 million (EUR 227 million). Operating
profit including non-recurring items was EUR -27 million (EUR 21
million).
- The result before taxes and excluding non-recurring items improved
by 34 per cent, amounting to EUR 55 million (EU 41 million).
Result for October-December
- Sales EUR 1,869 million (EUR 2,095 million). Comparable sales
remained at the same level as last year.
- Operating profit excluding non-recurring items decreased and stood
at EUR 28 million (EUR 71 million). Operating profit after
non-recurring items was EUR -211 million (EUR -100 million).
- Result before taxes and excluding non-recurring items was EUR -33
million (EUR 15 million).
Fourth-quarter events
- The divestment of M-real's Belgian carton plant, M-real Meulemans
SA, finalised the restructuring programme launched in October 2006.
- M-real announced a new profit improvement programme in order to
attain EUR 100 million savings by the end of 2009.
- Metsä-Botnia's plant in Uruguay started operations in November.
- Metsäliitto Cooperative purchased 14.45 per cent of Metsä Tissue's
shares from the Tapiola Group. The acquisition increased
Metsäliitto's holding to 70.55 per cent."Of Metsäliitto Group's business operations, Wood Supply, Wood
Products Industry, Pulp Industry and Tissue and Cooking Papers did
well last year. However, the profit development of the Board and
Paper Industry, i.e. the listed subsidiary M-real, was modest
particularly because of the dramatic increase in the prices of wood
raw material. We will continue to unify the Group and improve its
profitability while knowing that, for example, the EU's emissions and
bioenergy policies and the overall economic developments will create
extremely challenging conditions for the forest industry in the
future."
Kari Jordan, President and CEO of Metsäliitto Group
Metsäliitto Group
Income statement 2007 2006 2007 2006 2005
(Continuing operations) 1-12 1-12 Q4 Q4 1-12
Sales 7 669 8 250 1 869 2 095 7 643
Other operating income 136 172 37 46 146
Operating expenses -7 126 -7 763 -1 767 -1 975 -7 206
Depreciation and impairment -706 -638 -350 -266 -551
losses
Operating profit -27 21 -211 -100 32
Share of results in associates 12 6 7 2 4
Net exchange gains / losses 1 5 5 -1 -27
Other financial income & -228 -198 -66 -58 -168
expenses
Result before tax -242 -166 -265 -157 -159
Income tax -23 -34 36 7 14
Result from continuing operations -265 -200 -229 -150 -145
Metsäliitto Group
Profitability 2007 2006 2007 2006 2005
(Continuing operations) 1-12 1-12 Q4 Q4 1-12
Operating profit, EUR mill. -27 21 -211 -100 32
- " -, excluding non-recurring items 276 227 28 71 88
Return on capital employed, % 0.1 0.8 -13.6 -6.0 0.9
- " -, excluding non-recurring items 5.2 4.2 2.8 5.2 1.9
Return on equity, % -12.0 -8.0 -42.1 -24.1 -5.3
- " -, excluding non-recurring items 1.4 0.3 0.5 3.6 -3.1
Financial position 2007 2006 2007 2006 2005
1-12 1-12 Q4 Q4 1-12
Equity ratio, % 27.0 28.0 27.0 28.0 30.5
Net gearing ratio, % 157 150 157 150 137
Interest-bearing net liabilities, EUR 3 271 3 524 3 271 3 524 3 631
mill.
Business areas
Sales and Operating profit Wood Board Tissue
2007 Wood Products Pulp *) and and
(EUR mill.) Supply Industry Industry Paper Cooking
Industry Papers
Sales 1 735 1 399 1 371 4 440 861
Other operating income 9 9 30 239 8
Operating expenses -1 701 -1 274 -1 112 -4 235 -785
Depreciation & impairment -5 -47 -103 -564 -49
losses
Operating profit 38 87 186 -120 35
*) Represents 100%. The Metsäliitto Group consolidates 53% of the
Pulp Industry.
According to IFRS standards Map Merchant's merchant business has been
treated as discontinued operations. In the income statement Map has
been shown on the line Result from discontinued operations.
The figures are unaudited
METSÄLIITTO GROUP
FINANCIAL STATEMENTS 2007
Sales and result
Metsäliitto Group's sales for 2007 were EUR 7,669 million (8,250). As
a result of divestments and capacity closures, sales fell by 7 per
cent from last year. Comparable sales were up 5 per cent.
The figures for the comparison years have also been adjusted because
of the divestment of the Map Merchant Group paper wholesale business.
As a result of the divestment, Metsäliitto Group's sales in 2006
decreased by EUR 1,021 million and in 2005 by EUR 1,000 million.
Operating profit excluding non-recurring items was EUR 276 million
(227). Net non-recurring items totalled EUR -303 million (-206), of
which EUR -59 million (0) were recognised during the first quarter of
the year, EUR -11 million (-37) during the second quarter of the year
and EUR +5 million (+3) during the third quarter of the year. Most of
these non-recurring items were related to M-real's profit improvement
programmes.
During the last quarter, net non-recurring items totalled EUR -239
million (-172). The most significant of these items was the
impairment loss of EUR 185 million from the goodwill of M-real's
Office Papers business. M-real also recognised approximately EUR 73
million as other write-downs and cost provisions. These were related
to the closures of the BCTMP mill in Lielahti and paper machine 2 at
the Kangas mill. EUR 19 million was recognised as non-recurring
income.
The operating profit for 2007 including non-recurring items was EUR
-27 million (21).
The Group's net financial expenses were 2.8 per cent of sales (2.3).
Financial income was EUR 26 million (22), shares in associate
companies were EUR 12 million (6) and financial expenses were EUR 254
million (220). Net exchange gains recognised in financial items were
EUR 1 million (5). At the end of the year the exchange rate of the US
dollar against the Euro was 11.8 per cent weaker and that of the
pound sterling 9.2 per cent weaker than at the beginning of the year.
On average, the dollar weakened by 9.2 per cent and the pound by 0.4
per cent during the year.
The result before taxes was EUR -242 million (-166) and taxes,
including changes in deferred tax liability, were EUR 24 million
(34). The result for continuing operations was EUR -265 million
(-200), the result for discontinued operations was EUR 55 million
(-59) and the result for the financial period was EUR -210 million
(-259).
The sales gain from Map Merchant Group before taxes, EUR 77 million,
is included in the result for discontinued operations. The sales
price will be specified later. The sales price may decrease by a
maximum of EUR 30 million, depending on its final adjustment.
Of the result, EUR -9 million (-25) was attributable to the owners of
the parent company and EUR -201 million (-234) to the minority.
The Group's return on capital employed for continuing operations was
0.1 per cent (0.8) and return on equity was -12.0 per cent (-8.0).
Excluding non-recurring items, return on capital employed was 5.2 per
cent (4.2) and return on equity was 1.4 per cent (0.3).
Balance sheet and financing
Metsäliitto Group's total liquidity was EUR 1.6 billion (2.0) at the
close of the year. Of this, EUR 0.4 billion (0.2) was in terms of
liquid assets and investments, and EUR 1.2 billion (1.8) in binding
credit facility agreements not included in the balance sheet. In
addition, the Group can satisfy short-term financial needs with
non-binding commercial paper schemes in Finland and abroad, as well
as credit lines amounting to approximately EUR 0.6 billion.
In December the Group's equity ratio was 27.0 per cent and gearing
157 per cent (28.0% and 150%, respectively). Interest-bearing net
liabilities stood at EUR 3,271 million (3,524). The equity ratio of
the parent company, Metsäliitto Cooperative, was 55.0 per cent at the
close of the year and gearing ratio 37 per cent (51.7% and 23%,
respectively).
Metsäliitto Cooperative's members' capital increased by EUR 21.5
million net from January to December. The actual members' capital
grew by EUR 7.5 million, the additional members' capital A by EUR
13.8 million and the additional members' capital B by EUR 0.2
million. At the close of the year Metsäliitto Cooperative had 131,032
members (131,139).
Personnel
The Group employed an average of 21,596 people (26,363) in 2007. The
reduction in the number of personnel was a result of the divestments
and restructuring. At the end of December the personnel totalled
20,105 (22,593). The parent company, Metsäliitto Cooperative,
employed 3,165 people (3,158) at the end of the year.
Discontinued operations
The divestment of the Map Merchant Group was confirmed in October. In
accordance with IFRS regulations, the result of the discontinued
operations is shown on a separate line in the income statement after
the result of Metsäliitto Group's continuing operations. The income
statements of comparison years have been adjusted accordingly.
M-real's action programmes
M-real's profit improvement and restructuring programmes, which were
launched in October 2006 and February 2007, were finalised at the end
of the year. The targets of both programmes were exceeded. The target
of the programme announced in October 2006 to sell asset items for
EUR 500 million was exceeded by approximately EUR 200 million. The
programme included the closures of the Sittingbourne fine paper mill,
fine paper machines 6 and 7 in Gohrsmühle and, in July, the Wifsta
fine paper mill in Sweden. The objective of the profit improvement
programme for Finnish operations, which was launched in February
2007, was to achieve annual cost savings of approximately EUR 40
million as from the beginning of 2009. The number of personnel was
estimated to decrease by approximately 600. In accordance with the
programme, Tako board mill's board machine line 2 was closed in the
summer.
In November, M-real announced a new programme, according to which the
aim is to improve the profit by at least EUR 100 million by the end
of 2009. The programme includes plans to close down the BCTMP mill in
Lielahti and paper machine 2 producing coated magazine paper at the
Kangas mill, the reorganisation of business areas and the
streamlining of the coated magazine paper business and the sales and
marketing organisation. The personnel are estimated to decrease by a
total of 500, of whom 200 work in Finland and 300 overseas.
Investments, acquisitions and divestments in 2007
Metsäliitto Group's capital expenditure and corporate acquisitions
totalled EUR 493 million (735). The figure includes the share of
Metsä-Botnia's total investments corresponding to Metsäliitto's
holding, EUR 217 million (302).
Investments in fixed assets
Metsäliitto Wood Products Industry will improve the birch plywood
processing technology and, particularly, the solutions it offers to
industrial customers by building a new birch plywood upgrading mill
in Suolahti. The construction of the mill started in the summer and
the mill came into operation at the beginning of 2008. The new unit
will employ some 20 people, and the costs of the project are
estimated to be EUR 15 million.
M-real exercised its purchase option for the gas combi power plant in
Kyröskoski and the land on which the Kyröskoski mills are located.
The acquisition, which was worth approximately EUR 13 million, was
finalised in July.
The bleaching alteration investment at Metsä-Botnia's Rauma mill was
introduced in June. The investment enhanced cost efficiency, improved
the quality of pulp and increased the mill's production capacity. The
total cost of the investment was more than EUR 40 million.
Acquisitions and divestments
In January 2007 M-real sold nine per cent of Metsä-Botnia's shares to
Metsäliitto Cooperative. The deal was worth EUR 240 million, for
which M-real recognised a sales gain of EUR 135 million. The gain is
eliminated in Metsäliitto Group's financial statements.
Metsä-Botnia's Russian subsidiary Svir Timber acquired two Russian
harvesting companies in February. The deal will enhance wood supply
for the Svir Timber sawmill and Metsä-Botnia's long-term strategy in
Russia.
Metsäliitto Cooperative sold its entire holding in Neomarkka plc
during the year in two batches, in May and December.
M-real's carton plants in Finland and Hungary were divested in May
and June. The entire share capital of the subsidiary Tako Carton Plan
Ltd was sold to Pyroll Ltd and the entire share capital of the
Hungarian subsidiary M-real Petöfi Nyomda Kft was sold to the German
STI Group. The aggregate debt-free selling price of these plants was
approximately EUR 35 million. An approximately EUR 2 million loss was
recognised for the deals.
M-real's strategic review continued in July when M-real sold the Map
Merchant Group to Antalis. The EU's Commission accepted the deal on
24 October. The total value of the deal was EUR 382 million, and
M-real has recognised an estimated sales gain of EUR 77 million in
the financial statements.
In October M-real announced that it would sell its Zanders Reflex
mill, which manufactured specialty paper in Germany, to Arjowiggins
Group. The deal was estimated to take place towards the end of 2007
but the required approval from the competition authorities has not
yet been obtained.
Metsäliitto Cooperative sold its Lithuanian wood supply company
Metsäliitto Lietuva UAB to the company's Managing Director in
October. In connection with this, the parties signed a multi-year
wood supply agreement.
In November Metsäliitto Cooperative purchased 14.45 per cent of the
shares of its subsidiary Metsä Tissue from the Tapiola Group. The
acquisition increased Metsäliitto's holding to 70.55 per cent.
Metsäliitto Wood Products Industry improved its opportunities to
serve do-it-yourself and wholesale customers in France and the
Iberian Peninsula by acquiring the business of the French wood
processor Gillet S.A. at the end of November. The company's sales in
2006 were EUR 6 million and it employs 57 people.
The restructuring programme that M-real announced in October 2006 was
finalised in December 2007 when M-real sold the entire share capital
of its carton plant in Belgium, M-real Meulemans SA, to the French
Autajon Group.
Pulp mill project in Uruguay
Metsä-Botnia's pulp mill in Uruguay was granted the start-up permit
on 8 November 2007. A week later the mill was already producing
approximately 2,000 tonnes of pulp per day. The pulp mill is
Metsä-Botnia's sixth mill and the first production plant built
outside Finland. Its annual production capacity is one million tonnes
of eucalyptus pulp, which will be exported to the European and Asian
markets. The construction of the mill started in the spring of 2005
and its budget was approximately USD 1.2 billion.
Business areas
Wood supply
Wood Supply sales in 2007 were EUR 1,735 million (1,444) and
operating profit amounted to EUR 38 million (38). The operating
profit includes about EUR 3 million (10) of non-recurring income,
mainly gains from selling fixed assets. Wood Supply Finland accounted
for EUR 1,196 million (1,150) of the sales and EUR 27 million (21) of
the operating profit. Metsäliitto's Wood Supply business was
reorganised in 2007 and the new organisation was introduced in
September. Supply districts were reinforced while the earlier
regional organisation consisting of five supply areas was abolished.
Metsäliitto supplied approximately 36 million cubic metres (35) of
wood to its customers in 2007. Of this, almost two-thirds came from
Finland, mainly from members of Metsäliitto Cooperation. Deliveries
of wood, including wood chips, to mills in Finland totalled
approximately 27.9 million cubic metres (26.8); of this, round wood
accounted for 24.5 million cubic metres (23.1). Wood imports to
Finland totalled 3.6 million cubic metres (3.9).
Wood trade in Finland was brisk from the beginning of the year. The
steep rise in the price of softwood sawn timber raised log prices to
the highest level in 30 years and supply was largely dominated by
logs throughout the year. A summer logging campaign was launched in
the spring to boost pulpwood procurement; as a result, Metsäliitto
procured a third more thinning wood than it generally does in the
corresponding period. A change in the supply/demand trend for sawn
timber reversed the price level of softwood logs to a downward turn
after the summer and the price development for pulpwood levelled off.
In 2007 Metsäliitto purchased more than 18 million cubic metres of
wood (16) from Finland.
Metsäliitto procured a total of 2.8 million cubic metres (3.4) of
wood raw material from Russia. Pulpwood and wood chips were imported
to Finland and Sweden, and logs were delivered to Metsä-Botnia's Svir
Timber sawmill. The export tax, which was introduced at the beginning
of July, was EUR 10 per cubic metre for softwood and heavy birch and
EUR 5 for aspen. Wood imports from Russia to Finland decreased by
approximately a fourth from the previous years' level.
The disappointing winter harvest season overheated the wood trade in
the Baltic countries. Prices of wood, especially pulpwood, were very
high. Despite fierce competition, Metsäliitto was able to fulfil its
contractual obligations and supply logs to local sawmills in the
Baltic countries, as well as pulpwood and wood chips to the Group's
mills in Finland and Sweden. The total wood raw material procurement
volume in the Baltic countries amounted to 2.5 million cubic metres
(2.7).
The mild winter in Central Europe alleviated the price pressure
generated by the fuel wood supply, particularly in France. In Germany
and Austria, the prices of energy wood and pulpwood remained in
check, partly because of the damage caused by the storms early in the
year.
Wood Products Industry
Metsäliitto Wood Products Industry's sales amounted to EUR 1,399
million (2,045) and operating profit was EUR 87 million (107). The
drop was due to the divestment of Moelven Industrier ASA, which had
an approximately EUR 765 million impact on the sales during the
comparison year and an approximately EUR 42 million impact on
operating profit. The operating profit for 2006 also included
approximately EUR 12 million of non-recurring income. The comparable
sales of the Wood Products Industry were up 8 per cent.
The improvement of the value-added level of the product range and
services contributed to the positive development of selling prices,
but the result was weighed down by a sharp increase in log prices and
a weaker demand during the last quarter. The Wood Products Industry
had to restrict the production of sawn timber at the Vilppula and
Soinlahti sawmills towards the end of the year in order to adjust its
production to the changing market situation.
After a re-focus of business operations, Metsäliitto Wood Products
Industry started their active development. This activity is backed up
by investment decisions on the construction of a birch plywood
processing plant in Suolahti, which started operations at the
beginning of 2008, and the revamping of the processing line at the
Boston mill in the UK during the second quarter of 2008.
Other business restructuring measures aiming at the improvement of
added value and services included the acquisition of the Gillet
timber upgrading company in France in November and the acquisition of
iLevel's European engineered wood products business from Weyerhaeuser
in January 2008.
Businesses that did not support the strategy were sold as part of the
re-focusing process. The official approval for the divestment of the
Norwegian subsidiary Moelven Industrier ASA was obtained in January
2007, and Interpan North America, a company specialising in wood
product trading, was sold in December.
Pulp
Pulp Industry's sales stood at EUR 1,371 million (1,311), and
operating profit was EUR 186 million (212). Both sales and operating
profit improved due to the strong development of pulp prices. The USD
price of Northern long-fibre pulp increased by 19 per cent and the
EUR price by 7 per cent during the year. For short-fibre pulp
(eucalyptus and birch), the USD prices increased by 16 per cent and
the EUR prices by 4 per cent. The manifest weakening of the dollar
and the dramatic increases in raw wood material prices had a negative
effect on the result.
The amount of pulp produced was approximately 2.6 million tonnes
(2.5). The figure was approximately 100,000 tonnes below the year's
target; half of the shortfall was due to wood shortage and half to
production disturbances. Softwood pulp accounted for 66 per cent of
the production (69).
Pulp supply and demand was fairly balanced in 2007 and manufacturers'
pulp stocks remained on a normal level. More than 3 million tonnes of
new short-fibre pulp capacity were built; two-thirds of the new
capacity did not commence until towards the end of the year.
The pulp mill investment in Uruguay was finished as planned in early
September but the permission to start up the mill was not granted
until 8 November because of a political dispute between Uruguay and
Argentina. The investment expenses remained below the original
budget. The start-up of the mill was successful and both the
production quantities and quality exceeded the preliminary estimates.
Stringent environmental permit conditions have been fulfilled in all
sectors. We intend to actively contribute to solving all unsettled
political issues related to the mill.
M-real's result includes 30 per cent (2006: 39%) of the Pulp
Industry's operating profit. In total, 53 per cent of the figures for
Pulp Industry are consolidated into Metsäliitto Group's financial
statements.
Board and Paper
Board and Paper Industry's sales totalled EUR 4,440 million (4,604)
for the continuing operations, and operating profit excluding
non-recurring items was EUR 49 million (18).
Compared with the previous year, the operating profit was boosted by
cost-saving measures and the 9 per cent increase in the price of
uncoated fine paper. In addition, the Consumer Packaging business
area clearly improved its profitability, mainly due to higher
delivery volumes.
Operating profit was reduced by the weakening U.S. dollar, which was
9 per cent lower on average, the sharp increase in pulpwood prices
and the lowering of the average selling price of coated magazine
paper.
Net non-recurring items totalled EUR -169 million (-247) in
January-December. M-real's first-quarter operating profit included a
non-recurring income of EUR 135 million from the sale of
Metsä-Botnia's shares to Metsäliitto Cooperative and a total of EUR
62 million as non-recurring expenses. The most important expense
items were the EUR 14 million and EUR 29 million cost provisions for
completing the closure of the mills at Sittingbourne and Wifsta
respectively. In addition, EUR 16 million was recognised as an
impairment loss. During the second quarter M-real recognised a total
of EUR 13 million as non-recurring expenses, of which EUR 11 million
represented cost provisions and write-downs of fixed assets related
to the profit improvement programme for the company's operations in
Finland. The remaining EUR 2 million represented losses on the sale
of the carton plants. During the third quarter the cost provision for
completing the closure of the Sittingbourne mill was reduced by EUR 7
million.
Net non-recurring items totalled EUR -239 million during the last
quarter. The most significant of these items was the impairment loss
of EUR 185 million from the goodwill of M-real's Office Papers
business. In addition, M-real recognised net write-downs and cost
provisions of approximately EUR 73 million, for example, in relation
to the closures of the BCTMP mill in Lielahti and paper machine 2 at
the Kangas mill. Approximately EUR 18 million was recognised as
non-recurring income from the sale of fixed assets.
Operating profit including non-recurring items was EUR -120 million
(-229). Net interest and other financial expenses totalled EUR 147
million (121), shares in associate companies were EUR -3 million (0)
and net exchange gains/losses recognised as financial items were EUR
-3 million (-1).
The result for continuing operations before taxes was EUR -273
million (-351), earnings per share were EUR -0.76 (-1.03) and the
return on capital employed was -2.6 per cent (-4.7). Excluding
non-recurring items, the result before taxes was EUR -104 million
(-104), earnings per share were EUR -0.32 (-0.47) and return on
capital employed was 1.4 per cent (0.9).
M-real's equity ratio was 32.1 per cent at the end of December and
net gearing ratio was 112 per cent (31 December 2006: 30.9% and 126%
respectively). In some of M-real's borrowing arrangements a limit of
120 per cent has been set for gearing and a limit of 30 per cent for
the equity ratio. At the end of the year, gearing calculated in the
manner defined in the borrowing agreements was approximately 95 per
cent (111) and the equity ratio about 37 per cent (36).
Tissue and Cooking Papers
Sales of Metsä Tissue, which produces tissue and cooking papers,
stood at EUR 861 million (799), and its operating profit was EUR 35
million (19). The operating profit includes a non-recurring expense
of approximately EUR 2 million related to the closure of the
processing plant in the Canary Islands. Comparable sales were up
approximately 4 per cent.
Most of the increase in cost level was transferred to selling prices,
and the sale of the company's own brands, such as Lambi, Serla,
Katrin, Mola and Tento, increased. Metsä Tissue is the market leader
in Scandinavia, the Baltic countries and Poland, and its business in
Western and Eastern Europe is growing strongly.
The consumer market for tissue paper is in the middle of considerable
change. The retail sector, which is the main distributor of consumer
products, continues to concentrate. The increasing size and
internationalisation of retail chains are enhancing the purchasing
power of retailers in relation to manufacturers. No corresponding
internationalisation has yet taken place in the large-scale consumer
market, where most distributors continue to be local actors.
Other factors affecting the market include increasing costs and the
demands for increasingly precise logistics solutions and more
extensive environmental and corporate responsibility.
Metsä Tissue's investments during the year totalled EUR 25 million.
The biggest investments were made in an increase in the quality level
of de-inking in Sweden and the development of processing in Germany
and Finland.
Events after the review period
On 6 February 2008 M-real announced an additional divestment target
of a minimum of EUR 200 million, which will be pursued during next 12
months. The target includes the sale of the New Thames mill announced
in the beginning of February 2008.
In February, 2008 M-real made an agreement to sell its New Thames
office paper mill located in Kemsley, UK, to DS Smith Plc. The debt
selling price was GBP 60 million. It is estimated that the
transaction will have a positive impact of about EUR 60 million on
cash flow, of which about EUR 40 million will arise when the
transaction is completed and about EUR 20 million in the following 12
months. In addition, M-real will be freed from about EUR 35 million
closure costs previously provided for the period 2008-2015 related to
the closure of the Sittingbourne mill. No significant capital gain or
loss is expected to arise from the transaction. The transaction has
no significant impact on M-real's operating profit excluding
non-recurring items. The sale will be booked in the result for the
first quarter of 2008. The transaction is subject to approval by the
competition authorities.
The Wood Products Industry's Building Solutions business line was
reinforced in January 2008 when Metsäliitto Wood Products Industry
purchased the US-based Weyerhaeuser's European iLevel business. The
deal includes the sale and distribution of and technical support for
iLevel's engineered wood products. Engineered wood products refer to
structural components manufactured from wood by gluing, such as
I-joists used in load-bearing structures. The purchased business
employs more than 30 people.
Risks and uncertainties
Since the forward-looking statements in this report are based on
current plans, estimates and projections, they involve risks and
uncertainties which may cause actual results to differ from those
expressed in such forward-looking statements. Information regarding
the risk factors is presented in the Metsäliitto Group's Annual
Report.
Outlook
Metsäliitto's wood reserves at the beginning of the year were good,
and wood trade during the current year is expected to continue last
year's brisk trend. The need for pulpwood in Finland is expected to
remain on a high level, and the development of the market situation
for sawn timber will affect the demand for logs. The demand/supply
relationship of pulpwood in Russia and the Baltic countries is
beginning to level off, so that wood prices in these countries are
expected to decrease. Mild weather conditions may further jeopardise
the supply of pulpwood.
The building sector is estimated to continue its strong growth in
Eastern Europe and Russia, whereas a slowdown in this sector can be
seen in Western Europe. The prospects for the Wood Products
Industry's industrial customers are currently good, but the strong
Euro and the economic outlook for the USA may have an adverse impact
on the situation. However, the long-term outlook for the Wood
Products Industry is positive as there are a number of factors
supporting the use of wood in building and the future of wood use,
including the fact that wood is a highly ecological building
material. The availability of competitively priced roundwood will be
a critical factor for the result for 2008.
Two to three million tonnes of new short-fibre pulp capacity will
enter the pulp market during the first half of the year. However,
thanks to the sustained development of production efficiency and
product quality, Metsä-Botnia's competitiveness is good. The
successful start-up of the Uruguay mill will reinforce the company's
economic outlook for 2008 and the operating profit is expected to
exceed the year 2007 level.
The seasonal demand for M-real's main products is expected to improve
slightly during the first quarter of 2008. Average utilisation rates
will be very high at the beginning of the year. Measures are under
way to boost the prices of coated magazine paper and folding
boxboard. Price increases are also being negotiated for fine papers.
Transferring the increasing raw material, energy and transportation
costs to selling prices, enhancing the competitiveness of production,
product development and marketing continue to be the biggest
challenges for the Tissue business this year. However, the increasing
demand for tissue papers is stabilising the business.
Metsäliitto Group's operating result excluding non-recurring items in
the first quarter of 2008 is expected to remain weaker than in last
year's first quarter. Thanks to the profit improvement measures that
have already been taken or are ongoing, Metsäliitto Group estimatesthat the operating profit excluding non-recurring items will be
higher for the entire year 2008 than for 2007, provided that no
significant changes in the business environment will take place.
Proposal for interest on members' capital
Metsäliitto Cooperative's Board of Directors has decided to propose
to the Supervisory Board that, for 2007, interest of 6.5 per cent
(6.0) be paid for the statutory capital invested by its members.
Interest of 5.5% (5.0) is proposed for additional members' capital A,
and interest of 4.0% (3.5) 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 April.
Espoo, 6 February 2008
Metsäliitto Group
Board of Directors
For further information, please contact:
Ilkka Pitkänen, Group CFO, Metsäliitto Group, tel. +358 10 469 4260
Lauri Peltola, Group CCO, Metsäliitto Group, tel. +358 50 570 5606
Unaudited
METSÄLIITTO GROUP
Income statement 2007 2006 2007 2006 2005
(EUR mill.) 1-12 1-12 Change Q4 Q4 1-12
Sales 7 669 8 250 -581 1 869 2 095 7 643
Other operating income 136 172 -36 37 46 146
Materials and services -4 988 -5 279 291 -1 265 -1 563 -4 634
Employee costs -1 126 -1 327 201 -278 -337 -1 308
Other operating expenses -1 012 -1 157 145 -224 -75 -1 264
Depreciation and -706 -638 -68 -350 -266 -551
impairment losses
Operating profit -27 21 -48 -211 -100 32
Share of results in 12 6 6 7 2 4
associates
Net exchange gains / 1 5 -4 5 -1 -27
losses
Other financial income 26 22 4 3 6 22
Other financial expenses -254 -220 -34 -69 -64 -190
Result before tax -242 -166 -76 -265 -157 -159
Income taxes -23 -34 11 36 7 14
Result from continuing -265 -200 -65 -229 -150 -145
operations
Result from discontinued
operations 55 -59 114 56 -61 1
Net result for the period -210 -259 49 -173 -211 -144
Attributable to
Owners of parent company -9 -25 16 -59 -52 -50
Minority interest -201 -234 33 -114 -159 -94
-210 -259 49 -173 -211 -144
Unaudited
Balance sheet 2007 2006 2005
31.12. 31.12. 31.12.
ASSETS
Non-current assets
Intangible assets 389 617 818
Tangible assets 4 021 4 197 4 256
Biological assets 83 71 51
Shares in associated and other companies 204 197 186
Interest-bearing receivables 32 52 68
Deferred tax receivables 46 77 96
Other non-interest-bearing receivables 12 13 15
4 787 5 225 5 490
Current assets
Inventories 1 132 1 095 1 293
Interest-bearing receivables 27 145 5
Non-interest-bearing receivables 1 358 1 617 1 706
Cash and cash equivalents 428 246 194
2 945 3 103 3 199
Assets classified as held for sale 103
TOTAL 7 732 8 431 8 689
MEMBERS' FUNDS AND LIABILITIES
Members' funds 1 235 1 289 1 328
Minority interest 847 1 064 1 317
Total members' funds 2 082 2 353 2 646
Non-current liabilities
Deferred tax liabilities 325 382 439
Retirement benefit obligations 195 238 270
Provisions 83 91 74
Other non-interest-bearing liabilities 50 56 90
Interest-bearing liabilities 3 011 3 455 2 915
3 664 4 222 3 788
Current liabilities
Non-interest-bearing liabilities 1 240 1 314 1 273
Interest-bearing liabilities 747 512 983
1 987 1 826 2 256
Total liabilities 5 650 6 048 6 044
Liabilities classified as held for sale 30
TOTAL 7 732 8 431 8 689
Change in Fair
members' funds Trans- value
EUR mill. Share lation and
Mem- pre- differ- other Retained Mi-
bers' mium ences reserves earnings nority Total
capital account inte-
rest
Members' funds 558 32 6 42 690 1 317 2 646
1.1.2006
Currency flow
hedges
recorded in 6 10 16
equity
transferred 1 1 2
to sales
Interest flow
hedges
recorded in 2 2 4
equity
transferred 0 0 0
to financial
items
Commodity
hedges
recorded in -3 -5 -8
equity
transferred 1 0 1
to purchases
Assets
classified as
held for sale
recognised 1 1
to fair value
transferred 0 0
to financial
items
Translation -1 -2 -3
differences
Net investment 1 1 2
hedges
Other items 2 1 3
Tax on equity -2 -2
components
Recognised 0 0 0 5 2 8 16
directly in
equity
Result for the -25 -233 -259
period
Total 0 0 0 5 -23 -225 -243
Dividends paid -37 -24 -62
Increase in 19 -1 18
members'
capital, other
changes
Change in -2 -2
share premium
account
Change in 0
revaluation
reserve
Transfer from 2 -2 0
unrestricted
to restricted
equity
Business -4 -4
arrangements
Total 19 -2 0 1 -39 -28 -50
Members' funds 577 30 6 48 628 1 064 2 353
31.12.2006
Change in Fair
members' funds Trans- value
EUR mill. Share lation and
Mem- pre- differ- other Retained Mi-
bers' mium ences reserves earnings nority Total
capital account inte-
rest
Members' funds 577 30 6 48 628 1 064 2 353
1.1.2007
Currency flow
hedges
recorded in 3 5 8
equity
transferred -9 -13 -22
to sales
Interest flow
hedges
recorded in 0
equity
transferred 0
to financial
items
Commodity
hedges
recorded in 6 6 12
equity
transferred 3 6 9
to purchases
Assets
classified as
held for sale
recognised 0
to fair value
transferred 0
to financial
items
Translation -26 -19 -45
differences
Net investment 17 16 33
hedges
Other items -4 -1 -5
Tax on equity -4 -1 -5 -10
components
Recognised 0 0 -13 2 -4 -5 -20
directly in
equity
Result for the -9 -202 -211
period
Total 0 0 -13 2 -13 -207 -231
Dividends paid -29 -13 -42
Increase in -2 -2
members'
capital, other
changes
Change in 0
share premium
account
Change in 0
revaluation
reserve
Transfer from 3 -3 0
unrestricted
to restricted
equity
Business 4 4
arrangements
Total -2 0 0 3 -32 -9 -40
Members' funds 574 30 -7 54 583 847 2 082
31.12.2007
Unaudited
Cash flow statement 2007 2006
(EUR mill.) 1-12 1-12
Cash flow from operations
Result for the period -211 -259
Adjustments total 859 898
Change in working capital -34 193
Cash generated from operations 614 833
Finance costs, net -265 -189
Income taxes paid -78 -54
Net cash from operations 272 590
Cash flow from investments
Acquisitions -46 -136
Purchases of assets -447 -608
Sold assets and others 447 69
Net cash from investments -45 -675
Cash flow from financing
Increase in equity 29 98
Change in long-term loans and
other financial items -21 104
Dividends paid -51 -62
Net cash flow from financing -42 140
Change in cash and cash equivalents 184 55
Cash at beginning of period 246 194
Translation difference -3 -2
Change in cash and cash equivalents 184 55
Cash in assets classified as held for sale 0 -1
Cash at end of period 428 246
Unaudited
BUSINESS SEGMENTS
Consumer Packaging I-IV/07 I-IV/06 QIV/07 QIV/06 I-IV/05
Sales 934 971 225 241 864
EBITDA 172 154 31 32 134
Depreciation & impairment -93 -96 -28 -27 -89
losses
Operating profit 79 58 3 5 45
Papers I-IV/07 I-IV/06 QIV/07 QIV/06 I-IV/05
Sales 2 991 3 118 740 778 2 988
EBITDA 204 172 41 21 224
Depreciation & impairment -452 -388 -282 -197 -274
losses
Operating profit -248 -216 -241 -176 -50
Wood products I-IV/07 I-IV/06 QIV/07 QIV/06 I-IV/05
Sales 1 399 2 045 321 482 1 986
EBITDA 134 173 12 60 111
Depreciation & impairment -47 -66 -13 -14 -85
losses
Operating profit 87 107 -1 46 26
EBITDA = Result before depreciation and impairment losses
Others I-IV/07 I-IV/06 QIV/07 QIV/06 I-IV/05
Operating profit 55 71 28 25 10
of which
Wood Supply 38 44 7 14 33
Tissue and Cooking Papers 35 19 13 5 24
Others and Group -18 8 8 6 -47
eliminations
M-real includes 30% (2006: 39%) of the Pulp Industry's (Metsä-Botnia)
operating profit and Metsäliitto a further 23% (2006: 14 %) in the
segments Consumer Packaging and Papers.
Production
1 000 units I-IV/07 I-IV/06 QIV/07 QIV/06 I-IV/05
Paper, t 3 935 4 119 949 1 000 3 985
Paperboard, t 1 210 1 121 294 279 985
Sawn goods, m3 1 837 3 893 404 885 4 136
Processed timber, m3 580 1 179 111 268 1 181
Engineered Wood -products, m3 849 935 197 228 990
Pulp & CTMP, t (M-real) 1 679 1 754 400 449 1 533
Pulp, t (Metsä-Botnia) 2 616 2 520 593 654 2 177
Sawn goods, m3 (Metsä-Botnia) 188 164 32 54
Unaudited
Quarterly data 2007 2007 2007 2007 2006 2006 2006 2006
(EUR mill.) QIV QIII QII QI QIV QIII QII QI
Sales
Consumer Packaging 225 231 242 236 241 236 237 257
Papers 740 740 732 779 778 767 772 801
Wood Products 321 338 386 354 482 499 555 510
Others & internal 583 604 558 600 594 494 495 532
sales
Group sales 1 869 1 913 1 918 1 969 2 095 1 996 2 059 2 100
Operating profit
Consumer Packaging 3 35 12 29 5 21 5 27
Papers -241 29 -7 -29 -176 7 -64 17
Wood Products -1 20 41 27 46 21 26 14
Others 28 8 18 1 25 16 14 17
Group operating -211 92 64 28 -100 65 -19 75
profit
- % of sales -11.3 4.8 3.3 1.4 -4.8 3.3 -0.9 3.6
Share of results
in associates 7 2 1 2 2 2 2 0
Net exchange gains / 5 0 1 -5 -1 3 -5 8
losses
Other fin. income & -66 -59 -45 -58 -58 -56 -41 -42
expenses
Result before tax -265 35 21 -33 -157 14 -63 41
Income taxes 36 -16 -25 -18 7 -19 0 -23
Result from
continuing operations -229 19 -4 -51 -150 -5 -63 18
Result from
discontinued
operations 56 -2 -1 2 -61 -2 2 2
Net result for the -173 17 -5 -49 -211 -7 -61 20
period
Unaudited
Change in tangible assets I-IV/07 I-IV/06
Book value at beginning of period 4 197 4 256
Company acquisitions 22 92
Increase 430 693
Decrease -72 -600
Depreciation and impairment charges -480 -530
Assets classified as held for sale 0 -28
Translation differences and other changes -76 315
Book value at end of period 4 021 4 197
Commitments QIV/07 QIV/06
On own behalf (incl. leasing liabilities) 330 408
On behalf of associated companies 5 5
On behalf of others 5 3
Total 340 416
Commitments related to fixed assets QIV/07 QIV/06
Payments due under 1 year 38 195
Payments due in subsequent years 7 20
Open derivative contracts QIV/07 QIV/06
Interest rate derivatives 1 693 2 377
Currency derivatives 3 268 3 838
Other derivatives 160 173
Total 5 121 6 387
The market value of open derivative contracts at the end of the
review period was EUR 29 million (31.12.2006: EUR -4 million). Open
derivative contracts also include closed contracts to a total amount
of EUR 793 million (31.12.2006: EUR 871 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 2006.
Taxes include taxes corresponding to the result for the period under
review.
New and changed standards
IFRS 7 Financial Instruments: Disclosures, and the complementary
Amendment to IAS 1, 'Presentation of Financial Statements - Capital
Disclosures', effective from 1 January 2007. The adoption of this new
standard will result in additional disclosures relating to financial
instruments but does not affect their classification or valuation.
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