2010-02-04 11:01:05 CET
2010-02-04 11:03:34 CET
REGULATED INFORMATION
Metsäliitto Osuuskunta - Company Announcement
Metsäliitto Group's Financial Statements for 2009
Metsäliitto 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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