JONKOPING, Sweden, Jan. 29, 2002 (PRIMEZONE) -- Munksjo:
Unchanged Sales During the Period
-- Invoiced sales decreased with 1% to SEK 5,989 million (6,076).
Improved Demand During the Fourth Quarter
-- The strong demand during the year 2000, which led to an
inventory built up by our customer has in combination with the
slowdown in the international business activity given a
substantial drop in demand within our major product areas. During
the fourth quarter 2001 the demand has gradually improved.
Higher Operating Earnings for Paper. Substantial Drop for Business Area Pulp
-- Operating earnings decreased with 222 SEK million to SEK 453
million (675), whereof the main part (SEK 197 million) refers to
lower earnings in business area Pulp due to lower prices and the
realised investment stop in Aspa.
-- Operating earnings for the fourth quarter were SEK 146 million
(229). Business area Paper's earnings were SEK 105 million (90)
with an operating margin of 13%, which is on the same level as the
best quarterly earnings ever.
-- The operating margin was 7.6% (11.1). The operating margin during
the fourth quarter was 9.6% (13.9).
-- The result after financial items was SEK 340 million (570).
-- Return on equity was 9.1% and return on capital employed was
9.9%.
Earnings and Book Value Per Share
-- EPS was SEK 5.08 (8.71) and the book value per share was
SEK 55.38 (55.61).
Proposed Dividend
-- The Board of Directors has decided to propose that an unchanged
dividend of SEK 3.25 (SEK 3.25 plus a bonus of SEK 0.50) is to be
distributed.
Q4 Q3 Q2 Q1
2001 2001 2001 2001 2001 2000
Invoiced Sales, SEKm 1 513 1 411 1 447 1 618 5 989 6 076
Operating Earnings, SEKm 146 62 80 165 453 738
Exc. items affecting
comparability, SEKm 146 62 80 165 453 675
Result after financial items,
SEKm 120 34 49 137 340 633
Exc. items affecting
comparability, SEKm 120 34 49 137 340 570
Earnings per share after tax,
SEK 1,85 0,44 0,67 2,12 5,08 9,76
Exc. items affecting
comparability, SEK 1,85 0,44 0,67 2,12 5,08 8,71
The Group
The strong demand during 2000, which led to an inventory built up by our customers, has in combination with the slowdown in the international business activity, given substantial drop in demand within our major product areas. This has, in line with our previous forecasts, given a substantially reduced capacity utilisation during the year, especially within the decor paper area. During the fourth quarter the demand has gradually improved. Through manage the weak demand with shutdown of machines, previously established price levels have been kept.
Invoiced sales decreased with 1% to SEK 5,989 million (6,076). Business areas Hygiene (+7%), Packaging (+2%) and Paper (+1%) report sales growth. The sales dropped by 18% for business area Pulp.
Operating earnings decreased with SEK 222 million to SEK 453 million (675), whereof SEK 197 million refers to lower earnings in business area Pulp. Business area Paper has improved earnings with SEK 19 million (+8%) to SEK 249 million.
The operating margin for the Group decreased to 7.6% (11.1). The lower margin was mainly due to lower pulp prices, low capacity utilisation within Paper, shutdown for investments in Aspa (April/May) and Jonkoping (August) and difficulties to increase prices within Packaging to compensate higher raw material- and energy costs. The operating margin during the fourth quarter was 9.6% (13.9).
Business area Paper has during the year had a weakening demand due to inventory reduction by our customers in combination with a slowdown in business activity. Compared to last year the volume decrease during the first quarter was 4%, the second quarter 17% and during the third quarter the volume dropped by 13%. The demand has gradually improved during the fourth quarter but still with a volume drop of 12% compared to last year. However, the sales growth was 1%, operating earnings improved with SEK 19 million and with an operating margin of 8% (7). During the fourth quarter the operating margin was 13% (10).
Business area Packaging has not been able to compensate higher raw material- and energy costs, which have reduced margins compared with last year. However, during the fourth quarter the margins have improved and a price increase has been announced on the unit's main markets to further restore margins.
During the early part of the year the pulp price gradually has been reduced. The price has been reduced from USD 710/tonne at the beginning of the year to USD 450/tonne during the third quarter. A price increase has been made during the fourth quarter to approx USD 470/tonne. The business area reports an 18% operating margin during this tough markets conditions. Aspa has during April/May had a production shutdown for investment, which has reduced our deliveries with approx 20,000 tonnes. The investment increases the capacity to 185,000 tonnes, reduces costs and increases flexibility. The start up has been successful and according to plan.
Business area Hygiene has had a high capacity utilisation and a continuing satisfactory result.
The result after financial items (excl items affecting comparability) for the Group were SEK 340 million (570). Return on equity was 9.1% (17.0) and return on capital employed was 9.9 (15.7).
Paper (52% of Group sales)
The market growth for decor paper, which is used in laminate products like flooring, furniture, interior and building materials, exceeded 15% during the year 2000, which was above the long-term growth, that is estimated to be approx 8%. The strong growth led to an inventory built up by our customers. This in combination with weakening business activities has given a drop in demand with approx 15% during this year. The demand has gradually improved during the fourth quarter. The weak demand has been managed by lower capacity utilisation. The established price level has been kept during the quarter.
Within other speciality paper grades the thin paper has had a positive development with volume growth in excess of 3%.
The delivered volumes for the business area during the period were 11% lower than last year and 12% lower during the fourth quarter.
The mill in Jonkoping has during August/September had a shutdown for investment, as the paper machine No 13 has been rebuilt for decor paper production. The machine will in the beginning run electrotechnical paper and other grades until the decor paper market improves.
Invoiced sales increased with 1% to SEK 3,187 million (3,155). Operating earnings were SEK 249 million (230). Higher prices and improved production efficiency have, despite low volumes and increased raw material- and energy costs, made it possible to improve earnings with SEK 19 million. Operating margin during the fourth quarter was 13% (10).
Paper Q4 Q3 Q2 Q 1
2001 2001 2001 2001 2001 2000
Invoiced sales, SEKm 813 735 748 891 3 187 3 155
Operating earnings, SEKm 105 29 43 72 249 230
Operating margin, % 13 4 6 8 8 7
Deliveries, thousand of tonnes 44 40 44 50 178 201
Packaging (28% of Group sales)
The Norwegian and the Swedish markets have been stable while the Polish market, which during the second quarter substantially weakened, has remained soft.
After the acquisition of the packaging group Norpapp in the middle of 1999 and the expansion in Poland, the business area has changed from being a net seller of containerboard to a net buyer due to increased converting capacity.
The prices for boxes during the year have not been able to compensate for cost increases mainly on paper and energy. The converting units therefore continued to report an unsatisfactory margin. A price increase has been announced on the unit's main markets to restore margins.
In December the Swedish companies OnWell and Borjesson were acquired. The companies are operating within the field of display products and offset printing. The turnover is approx SEK 35 million (EUR 3.5 million) and the number of employees is 20. Munksjo Packaging will through the acquisitions be the leader in the growing market for display products with offset print in Sweden. The increased capacity will strengthen and give the Group a continuing strong development in offset printed packaging.
Invoiced sales were SEK 1,742 million (1,698). Operating earnings were SEK 92 million (116). Operating earnings for Poland are included in the result with SEK 0 million (-14).
Packaging Q4 Q3 Q2 Q 1
2001 2001 2001 2001 2001 2000
Invoiced sales, SEKm 436 406 460 440 1 742 1 698
Operating earnings, SEKm 29 20 21 22 92 116
Operating margin, % 7 5 5 5 5 7
Deliveries, corrugated
board million sq.m 57 54 59 59 229 236
Incl. Poland as from 2001 and adjusted figures for 2000.
Pulp (12% of Group sales)
The pulp market has during the fourth quarter improved. During the early part of the year the price has gradually been reduced. The price has been reduced from USD 710/tonne at the beginning of the year to USD 450/tonne during the third quarter. A price increase has been made in the fourth quarter to approx 470 USD/tonne. The Norscan inventory has continued to decrease and amounted at the end of December to 1.7 million tonnes.
During April/May Aspa has had a production shutdown for investment, which has reduced our deliveries with approx 20,000 tonnes. The investment will increase the capacity to 185,000 tonnes, reduce costs and increase flexibility. The start up has been successful and according to plan. The mill is already running at an annual capacity of 180,000 tonnes. During the fall some short stops have been made to make adjustments that referred to the investment. The production during the fourth quarter was 42,500 tonnes (44,500). The total production for the period has been 159,600 tonnes (172,800).
Invoiced sales were SEK 763 million (931). Operating earnings were SEK 139 million (336). The operating margin was 18% despite of the low price level due to continued low production costs.
Pulp Q4 Q3 Q2 Q1
2001 2001 2001 2001 2001 2000
Invoiced sales, SEKm 192 191 165 215 763 931
Operating earnings, SEKm 26 21 18 74 139 336
Operating margin, % 14 11 11 34 18 36
Deliveries, thousand of tonnes 44 44 34 39 161 166
Hygiene (8% of Group sales)
The consumer market for hygiene paper remained stable in Sweden and Norway. A high capacity utilisation has given the business area a continued satisfactory result. The Swedish operation reports continuing good margins and the Norwegian operation an improved, but not yet satisfactory, profit level. During the summer a new converting line has been installed in Jonkoping. The start up was successful and according to plan.
Invoiced sales were 7% higher than last year. Operating earnings were SEK 36 million (39).
Hygiene Q4 Q3 Q2 Q1
2001 2001 2001 2001 2001 2000
Invoiced sales, SEKm 115 109 114 123 461 431
Operating earnings, SEKm 8 7 6 15 36 39
Operating margin, % 7 6 5 12 8 9
Deliveries, thousand of tonnes 12 10 12 12 46 48
Financing
Operating cash flow at 31 December was SEK 372 million (514). The reduced operating cash flow is due to lower earnings and increased paid taxes, which has been compensated by reduced working capital and lower current investments in fixed assets.
The 2000 year dividend, paid out to shareholders during 2001, amounts to SEK 163 million (108).
The Group's net debt has increased from the beginning of the year with SEK 167 million to SEK 1,561 million. The translation of debt in foreign currencies has, due to the weakening of the Swedish crown, increased the debt with SEK 182 million.
The equity/assets ratio was 43.0% (45.2) and the debt/equity ratio 0.65 (0.58).
Investments
Investments for the period amounted to SEK 343 million (245). The main investments are the rebuild of a paper machine in Jonkopping to decor paper production, SEK 81 million (realised during the third quarter) and the investment in Aspa, SEK 87 million, as a part of the Aspa 200,000 tonne project (realised during the second quarter).
The investments during 2002 will be substantially lower than during 2001.
Personnel
The average number of employees in the Group was 3,056. The average number of employees has increased by 10 compared with 31 December 2000.
Outlook
During the fourth quarter the Group's largest business area, Paper, faced improved demand in the most important product areas. Our forecast is that we will continue to have a gradually improved demand. In order to maintain a stable price level, the low demand will actively be managed by capacity shut downs.
In the packing area, business conditions should give continued stable volumes during the next quarters, however with normal seasonal activities.
For the Group's hygiene products the present market situation in Sweden is expected to continue. In Norway the strong currency will increase price competition from import, e.g. from Sweden.
The pulp market has during the fourth quarter been stable. The price has been established at approx 470 USD/tonne. Further price increases challenged by the collapse of Enron and increased inventory levels, that has put pressure on spot prices. In summary, during the next quarters the Group will face a continued gradual improved market for pulp and decor paper.
The Group's strategy of focusing on growth areas, which is estimated to enable a long-term annual growth in the range of 10-20%, remains. The Group is well positioned for continued growth, satisfactory profitability and cash flow.
The Parent Company
The parent company's invoiced sales for the period were SEK 15 million (16) and the result after financial items was SEK -70 million (-134).
Dividend
The Board of Directors and the Managing Director has decided to propose to the Annual General Meeting that a dividend of SEK 3.25 per share (3.25 + plus a bonus of 0.50) is to be distributed.
Annual General Meeting
The Annual General Meeting will be held Wednesday, 8 May 2002 at 2 p.m. at the Elmia Conference and Concert Hall in Jonkoping, Sweden.
Annual Report
The annual report will be distributed in early April and may be requested from Munksjo AB by telephone +46 36 303474, fax +46 36 162633, or the company's homepage at www.munksjo.se.
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