ESPOO, Finland, Feb. 6, 2002 (PRIMEZONE) -- Metsa Tissue:
-- Metsa Tissue's profit before extraordinary items was EUR 27.1
million (loss of EUR 21.7 million in 2000).
-- Turnover was up by 6.6 per cent at EUR 649.6 million
(609.2 million).
-- Earnings per share were EUR 0.80 (loss of EUR 0.64).
-- The equity ratio was 31.5 per cent (24.9).
-- The Board of Directors proposes that a dividend of EUR 0.10 per
share be paid for the 2001 financial period.
-- The profit and cash flow targets set for 2001 were achieved.
Turnover and Results
Consolidated turnover rose 6.6 per cent on the previous year to reach EUR 649.6 million (609.2 million). Of the increase, roughly 2 percentage points is attributable to growth in sales volumes and about 5 percentage points to higher sales prices.
Operations showed an operating profit of EUR 36.5 million, compared with an operating loss of EUR 11.9 million for this period last year. Operating profit was 5.6 per cent of turnover (-1.9). The improved financial result is due primarily to greater business stability, higher sales prices for products and lower costs. Operating profit was reduced by provisions of EUR 6.1 million made for reorganization of operations over the next two years.
Depreciation was EUR 40.1 million (37.4 million). The increase in depreciation is due largely to the investments completed at the end of 2000.
Net financial expenses were EUR 9.3 million, 1.4 per cent of turnover (9.8 million and 1.6 per cent). Financial expenses were reduced through loan repayments and by the fall in interest rates towards the end of the year.
Profit before extraordinary items was EUR 27.1 million, 4.2 per cent of turnover (loss of 27.1 million, -3.6 per cent). In previous years, the part separated to the minority in Metsa Tissue's Polish subsidiary has totalled EUR 2.4 million. Following redemption of a minority interest in this subsidiary, these losses have been re-entered in the consolidated profit and loss account during 2001.
Profit after taxes and minority interests was EUR 24.1 million (loss of 19.3 million). In the accounts, tax for the period is reduced by deferred tax receivables of EUR 5.8 million on tax-deductible losses in respect of the subsidiaries in Germany.
Main events during the financial period
The ruling issued by the European Commission at the end of January 2001 prevented M-real from selling its majority interest in Metsa Tissue to the Swedish group SCA. Metsa Tissue thus continues operations as a stock exchange listed company.
The main emphasis during 2001 was on making basic operations more stable and more efficient. Programmes aimed at improving cost-effectiveness were implemented at all mills, among the measures being development of the product portfolio and rationalization investments. The effects of bringing greater stability and efficiency to operations have been particularly apparent in continental Europe.
As a result of the We Build Value process introduced last June, strategic goals were set for the group, its organizational structure was developed, and the values that now guide activities were defined together with the company's employees. The group's internal business practices and organizational structure were changed with effect from 1 July 2001 by replacing the existing strong local organizations by a structure that provides greater support for the group's unified international operations.
Key Figures
Earnings per share for the financial year were EUR 0.80 (loss of 0.64). Capital invested in business operations at the end of the year was EUR 342.3 million (378.9 million). The return on capital employed was 10.3 per cent (-3.1). Return on equity was 20.2 per cent (-14.9).
Financial Situation and Liquidity
The cash flow from business operations was good during 2001, and the group's financial solidity improved considerably. The cash flow from operations before investments was EUR 85.7 million (-15.4 million). The equity ratio was 31.5 per cent (24.9) and the gearing ratio was 123.2 per cent (198.8).
The group's interest-bearing liabilities fell thanks to the good cash flow and stood at EUR 200.9 million at the end of the year (258.6 million).
Liquidity was good throughout the year. Liquid funds at 31 December were EUR 26.3 million (18.8 million). In addition, the group had EUR 74.8 million in unutilized credit facilities (14.5 million), of which EUR 70.5 million were committed and EUR 4.3 million uncommitted.
Of the group's interest-bearing liabilities, 94 per cent were tied to a maximum of 12-month variable market interest rates and the rest to fixed interest rates. The average rate of interest on the group's interest- bearing liabilities at the end of the financial period was 3.76 per cent (5.40).
The Market
Tissue sales in Europe are currently just over 5 million tonnes annually. The tissue markets served by Metsa Tissue represent around 3.5 million tonnes. Metsa Tissue's share of these markets is roughly 10 per cent. As a result of the weakening of the general economic situation, growth in demand for tissue has momentarily slowed down somewhat. In terms of volumes, the market is growing by 0-1 per cent a year in the Nordic countries, by 1-2 per cent in continental Europe, and by 5-7 per cent in Poland. The increase in tissue manufacturing capacity has recently exceeded growth in demand.
The European tissue market has been considerably fragmented, with almost every country forming its own market. Extremely fierce competition in the retail trade, particularly in continental Europe, coupled with consolidations in this business and the introduction of the euro in January 2002, provide a basis for greater harmony in the marketplace.
Having risen sharply during the previous year, prices for the main raw materials fell during 2001. The price of chemical pulp, Metsa Tissue's main raw material, in euros was on average 16 per cent below that for the previous year. There was also an appreciable drop in the prices of recycled paper in continental Europe following the previous year's peak levels.
Business Areas
Turnover for the Consumer business area rose by 13.1 per cent to EUR 359.3 million (317.8 million). Operating profit was EUR 21.9 million, 6.1 per cent of turnover (-10.9 million and -3.4 per cent). The growth in turnover is due largely to price rises introduced in the second half of the previous year. Sales volumes were up slightly in continental Europe but were unchanged in the Nordic countries. The growth in sales volumes was achieved by new high-quality products. The company's own brand names strengthened their position in the Nordic market. In Poland, the position of the company's Mola brand products improved in line with the targets.
The Away-from-Home business area produced a turnover of EUR 173.5 million, an increase of 4.9 per cent on the previous year's EUR 165.4 million. Operating profit was EUR 12.1 million, 7.0 per cent of turnover (0.7 million and 0.4). In terms of volumes, product sales were almost the same as the previous year, despite the fall-off in demand on away- from-home markets following the events of 11 September. The improvement in operating profit was achieved primarily through more focused activities and decreases in costs. Katrin products accounted for a greater proportion of total sales.
Turnover from Other Operations fell to EUR 121.0 million (133.3 million). Operating profit was EUR 3.7 million, 3.1 per cent of turnover (loss of 0.6 million and -0.5). The Baking & Cooking business area increased its sales of further converted products in proportion to total sales and focused on baking and cooking papers. Sales volumes were up slightly on the previous year, while profitability was also somewhat better. The volume of tissue base paper sales was unchanged on the year before, but there was a clear fall in prices during the first half of the year.
Sales by the Table Top business area were 10 per cent up on the year before. Cost-effectiveness was improved and, having previously made a heavy loss, operations showed a profit. The business area worked to develop both marketing and sales, with particular attention to its Fasana brand products.
Investments
In Metsa Tissue's long-range plan, 2001 was designated a year in which existing resources would be utilized to the full. This meant there would be no major new investments, and investments in fixed assets accordingly comprised smallish replacement and rationalization projects designed to improve cost-effectiveness.
Investment during the period totalled EUR 21.1 million (22.7 million), of which EUR 5.1 million (0.5 million) was used for share acquisitions and EUR 16.0 million (22.2 million) for acquisition of fixed assets.
During the period, Metsa Tissue redeemed the 20.4 per cent minority interest in its Polish subsidiary Metsa Tissue S.A. for EUR 5.1 million on the basis of an agreement signed in 1997. This brought Metsa Tissue's interest in the company up to 99.7 per cent.
In addition to the actual investments, in spring 2000 the Katrinefors mill and the city of Mariestad embarked on an investment project to build a power plant to use the mill's deinking waste and wood chips as fuel. The project, which cost EUR 23 million, is being carried out by Katrinefors Kraftvarme AB, in which Metsa Tissue has a 50 per cent interest. Energy generation at the new power plant began towards the end of 2001 as planned. Metsa Tissue's responsibility in the project is limited to a long-term purchasing agreement.
Personnel
The Metsa Tissue group had an average of 3,000 employees (3,205) during the financial period. The number at the end of December was 2,923 (3,048).
Employees by Country:
31 Dec. 2000 31 Dec. 2001 Average(2001)
Finland 673 672 704
Other Nordic countries 700 685 718
Germany 1,279 1,280 1,274
Poland 358 253 268
Other countries 38 33 36
Total 3,048 2,923 3,000
General meeting of shareholders, Board of Directors and auditors
Metsa Tissue Corporation held its Annual General Meeting on 13 March 2001. The following persons were elected members of the Board of Directors: Ari Heinio, Curt Lindbom, Jouko M. Jaakkola, Jussi Lansio, Antti Oksanen, Arimo Uusitalo and Jorma Vaajoki. The term of office of members of the Board of Directors extends until the end of the Annual General Meeting to be held in 2002. The Board elected Antti Oksanen as its Chairman and Arimo Uusitalo as its Vice Chairman. Jorma Vaajoki resigned his membership of the Board on 30 November 2001.
SVH Pricewaterhouse Coopers Oy (authorized public accountants) were re- elected as the company's auditors, with Goran Lindell, APA, responsible for the audit.
Hannu Anttila was President and CEO of Metsa Tissue during the year.
Outlook for 2002
Growth in demand for tissue products in the near future is expected to be slower, on average, than in recent years because of the general economic situation. New production capacity on the European tissue market, together with increasing competition within the retail trade, will make the market more difficult. The trend towards consolidation in the retail business is expected to continue.
Metsa Tissue will continue its programmes introduced at all mills designed to improve cost-effectiveness and further develop its converting operations. Increasing emphasis will be given to product development. Prices for the main raw materials are expected to show a modest rise during the next year.
Metsa Tissue has set itself the target for 2002 of improving profit before extraordinary items compared with 2001. The group intends to further improve its solidity.
Proposal for the Distribution of Profit
At 31 December 2001, Metsa Tissue Corporation had distributable funds of EUR 12,439,000. The company's Board of Directors has decided to propose to the Annual General Meeting to be held on 19 March 2002 that a dividend of EUR 0.10 per share be paid for the financial period ending 31 December 2001.
The figures presented in this report are unaudited.
Enclosures:
Consolidated profit and loss account and balance sheet Key figures Quarterly figures
Metsa Tissue Corporation's Interim Report for January - March 2002 will be published on Friday, 26 April 2002.
Interim Reports, Annual Report 2000, the company's stock exchange bulletins and other financial information are also available on the Internet at www.metsatissue.com
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