Nordkalk Corporation STOCK EXCHANGE RELEASE 26 January 2007 at 2 PM
NORDKALK'S NET SALES INCREASED STRONGLY
FINANCIAL STATEMENTS FOR THE YEAR 2006
. net sales amounted to EUR 303.8 (2005: 269.6) million (+13%)
. profit before taxes and minority interests grew to EUR 24.5 (13.9) million
(+75%)
. construction of a lime kiln was started in Norway
. positive development in Poland and the Baltic countries
. paper mill shutdowns in Finland
. high energy and freight costs
Nordkalk´s total sales during 2006 increased strongly in comparison with year
2005. This is partly due to the fact that year 2005 was burdened by the labour
dispute in the Finnish paper industry. The positive development during the year,
above all concerning profitability, can also be contributed to cost efficiency
and high utilisation of capacity. The economic boom in the industry led to strong
demand for limestone-based products, especially in the building materials and
steel industries.
INDUSTRY
Shutdowns of paper mills in Finland led to decreased sales of the paper pigment
GCC as well as the sales of quicklime used for the manufacture of the paper
pigment PCC. The loss of sales, however, could be partly compensated with
increased sales to the Swedish paper industry. Sales to the pulp mills in Finland
were good.
The steelworks continued to operate at a high production rate. In Poland and
Germany sales to the steel industry have increased strongly and also in Finland
and Sweden an increase in sales can be noted. There was a boom in construction
last year, which led to a strong increase in sales of products to the building
materials industry in all our market areas. The mild weather at the end of the
year extended the season, which had a positive effect on sales. The same applies
to products for soil and road construction. In Poland especially there was a
strong increase in sales of these products. Sales to the chemical industry
increased compared with year 2005.
AGRICULTURE
Total sales to agriculture were slightly better than in 2005. At the beginning of
the year liming conditions were good but the rainy autumn made it impossible to
lime at the end of the season. The farmers' willingness to lime, especially in
Finland and Sweden, is also affected by the official debate on farming subsidies
granted by the EU. Sales to the fodder industry decreased slightly.
ENVIRONMENTAL CARE
Total sales of products for environmental care grew in comparison with 2005. In
Finland and Sweden the use of flue-gas cleaning products increased strongly,
because the long dry season raised the operation of coal-fired power plants.
Sales of water treatment products decreased slightly.
THE FOURTH QUARTER SOMEWHAT BETTER THAN IN 2005
Sales of the fourth quarter grew somewhat and were EUR 80.7 (73.0) million.
Operating profit increased to EUR 8.8 (6.6) million. The economic boom within
industry had a positive effect on the fourth quarter, as had the mild late
autumn, which extended the building season. However, the period was burdened by
the unrealised liming season in agriculture.
FINANCIAL RESULT FOR YEAR 2006
Consolidated net sales totalled EUR 303.8 (269.6) million. Sales increased
practically in all customer segments.
Consolidated operating profit increased 34 per cent and was EUR 36.8 (27.5)
million, which corresponds to 12.1 (10.2) per cent of net sales. The quarter was
burdened by the high energy costs as well as by production problems in Sweden,
which enabled Nordkalk to sell emission rights for EUR 2.4 (1.0) million during
the year.
Depreciation according to plan was EUR 25.8 (26.9) million.
Net financial expenses decreased EUR 1.2 million in comparison with year 2005 and
were EUR 12.3 million. Profit before extraordinary items was EUR 24.5 (13.9)
million, representing 8.1 (5.2) per cent of net sales.
The cash flow from operating activities remained on a good level.
Return on capital employed was EUR 13.8 (10.2) per cent.
Total assets were EUR 345.8 (31.12.2005: 330.9) million. The equity/total assets
ratio fell to 15.2 (26.1) per cent.
INVESTMENTS
Total investments during the period amounted to EUR 22.0 (14.1) million and were
financed from Nordkalk´s own cash flow.
In April a decision was made that the Norwegian NorFraKalk AS, which is owned
half each by the Nordkalk Corporation and Franzefoss Minerals AS, will build a
lime kiln in Norway. The yearly capacity of the new kiln will be 200 000 tons of
quicklime and the estimated start-up will take place in autumn 2007.
In Slawno, Poland, the grinding facility was rebuilt and a new production line
installed.
The investment programme at the lime company Alekseevka in Russia proceeded
according to plan providing new opportunities to increase capacity and expand
product range.
During the third quarter the rebuilding of the lime kiln in Luleå, Sweden was
completed and the kiln was brought on stream in September. Likewise the
rebuilding of the lime kiln was finished in Köping, Sweden.
FINANCING
Nordkalk´s financing was renegotiated in 2006. All the capital loans, total of
EUR 49.1 million, were paid off. Nordkalk aims to reduce its financial costs by
replacing capital loans with bank loans. Financing extends to 2010-2013 under
current credit agreements. The financing is bound to a number of key figures and
their development will affect financing costs.
OWNERS
Nordkalk is owned by a Finnish investor group comprising Ahlström Capital Oy
(30.5 %), the Rettig Group Ltd (21.0%), a group of mainly institutional investors
(45.0 %) and the management of the company (3.5 %).
The ownership structure was changed when the funds managed by CapMan sold all
their shares in Nordkalk on 28 December 2006. Ahlström Capital's ownership
increased from 25.7% to 30.5% and Rettig's ownership from 1.9% to 21.0%. The
ownership of Stiftelsen för Åbo Akademi increased to 8.7%, Svenska
litteratursällskapet i Finland's to 7.0% and Furuvik Invest's to 7.3%.
PERSONNEL
The total number of employees in the Nordkalk Group at year-end was 1,304
(1,347). The average number of employees was 1,353 (1,316). The increase is due
to the purchase of the Russian lime company Alekseevka in autumn 2005.
In Finland Nordkalk has participated in the creation of a further qualification
for the mining industry and the first six miners completed their training in
September 2006. At the same time 2-year training for foremen was started.
The 3-year long process "zero tolerance for occupational accidents" in
Lappeenranta, Finland, was accomplished with excellent results. Seventeen
occupational accidents occurred in 2003 and in 2006 the number of accidents fell
to 3. The number of sick-leave days fell from 254 to 11. Based on this
experience, the efforts to decrease accidents will be intensified in the whole of
Nordkalk.
RESEARCH AND DEVELOPMENT
Total R&D expenditure was EUR 3.3 (3.2) million, which represents 1.1 (1.2) per
cent of net sales.
The development activities are aimed to raise the utilisation rate of quarried
raw materials and to create new product concepts and market applications for lime-
based products.
In the field of geology, the focus is on ensuring the raw material base in the
long run and on using Nordkalk's existing limestone reserves in the most
efficient way, based on good knowledge of the geological characteristics of each
deposit.
ENVIRONMENT AND QUALITY
All production plants in Finland and Poland and all operations in Sweden have
been certified according to the ISO 14001 environmental standard. In Estonia and
Poland environmental audits are performed on a regular basis. At all locations,
Nordkalk continues its efforts to minimise the environmental impact of its
operations, such as noise, vibration and dust.
In 2006 the total amount invested in environmental projects was EUR 1.2 (1.1)
million.
All operations in Sweden have been certified according to the ISO 9001:2000
quality standard, as well as parts of the production in Finland. In Poland all
production facilities and sales were certified in 2006.
Training in quality and environmental management systems is offered continuously.
RISKS
A risk analysis was carried out in Nordkalk in 2006. The most significant factors
that can affect the company's activities and economic development in a negative
way are access to raw material, energy prices, environmental requirements,
financial risks, damage to the production facilities and availability of skilled
workforce.
BOARD OF DIRECTORS, PRESIDENT AND AUDITORS
Members of the Board of Directors:
Björn Mattsson chairman
Morten Ahlström member
Jan Inborr member
Jukka Järvelä member until 28 Dec. 2006
Bjarne Mitts member since 18 Jan. 2007
Orvo Siimestö member until 28 Dec. 2006
Christoffer Taxell member
Orvo Siimestö and Jukka Järvelä resigned from the Board of Directors when the
funds managed by CapMan sold their shares in Nordkalk on 28 December 2006. Bjarne
Mitts, President & CEO of the Rettig Group Ltd, was elected as a new member of
the Board of Directors on 18 January 2007.
President of the company is Bertel Karlstedt.
The auditor was KPMG Oy Ab, Authorised Public Accountants, with Sixten Nyman,
APA, as the main responsible auditor.
BOARD'S PROPOSAL FOR THE DISTRIBUTION OF PROFITS
Distributable funds for the Nordkalk parent company amount to EUR 31.9 million.
The Board proposes that no dividend be paid and that the annual profit be posted
to retained earnings in the balance sheet.
PROSPECTS FOR THE YEAR 2007
Nordkalk's net sales and result are expected to increase somewhat during 2007.
Growth is expected especially in Poland and the Baltic countries.
Pargas, 26 January 2007
Nordkalk Corporation
Björn Mattsson
Morten Ahlström
Jan Inborr
Bjarne Mitts
Christoffer Taxell
Bertel Karlstedt, President
Audited
FURTHER INFORMATION:
Bertel Karlstedt, President, tel +358-204 55 6406 or +358-40 553 3859
Kim Nordell, Director, Business Control, tel +358-204 55 6337 or +358-400 823 392
Nordkalk is the leading producer of high quality limestone-based products in
Northern Europe. The products are used mainly in the paper, steel and building
materials industries as well as in environmental care and agriculture. The
product brand is Nordkalk.
www.nordkalk.com
INCOME STATEMENT
MEUR 10-12/ 10-12/ 1-12/ 1-12/
2006 2005 2006 2005
Net sales 80.7 73.0 303.8 269.6
Cost of goods sold, selling
and administrative expenses -71.9 -66.3 -267.0 -242.1
Operating profit 8.8 6.6 36.8 27.5
% 10.9 % 9.1 % 12.1 % 10.2 %
Financial income and expenses -3.2 -3.0 -12.3 -13.5
Profit before extraordinary 5.6 3.6 24.5 13.9
items
% 7.0 % 4.9 % 8.1 % 5.2 %
Profit before taxes and 5.6 3.6 24.5 13.9
minority interest
Taxes -1.6 -1.7 -7.6 -4.6
Minority interest -0.7 -0.9 -3.1 -2.7
Net profit for the period 3.3 1.0 13.7 6.7
BALANCE SHEET
MEUR 31 Dec. 31 Dec.
2006 2005
Fixed assets
Intangible assets 9.4 8.9
Tangible assets 248.2 237.4
Investments 1.4 1.9
Fixed assets and long-term 259.0 248.3
investments, total
Current assets
Inventories 34.0 34.5
Receivables 42.4 38.7
Cash and bank balances 10.4 9.4
Current assets, total 86.8 82.6
Assets total 345.8 330.9
Shareholders' equity
Shareholders' equity 39.1 24.5
Capital loan 0.0 49.1
Shareholders' equity, total 39.1 73.6
Minority interest 13.5 12.8
Provisions 1.1 1.0
Liabilities
Long-term liabilities 237.0 190.6
Short-term liabilities 55.1 52.8
Liabilities total 292.1 243.4
Shareholders' equity and 345.8 330.9
liabilities, total
FINANCIAL ANALYSIS
MEUR 1-12/ 1-12/
2006 2005
Cash flow from operating activities 43.9 32.4
Cash used in investing activities -20.8 -14.6
Change in interest-bearing debt 26.8 -12.3
Change in capital loan -49.1 -5.7
Translation differences and other 0.2 -0.1
changes
Change in cash and bank 1.1 -0.2
Cash and bank at the beginning of 9.4 9.6
period
Cash and bank at the end of period 10.4 9.4
KEY FIGURES
31 Dec. 31 Dec.
2006 2005
Capital employed Meur 266.5 271.4
Interest-bearing liabilities Meur 213.9 185.0
Net Interest-bearing liabilities Meur 203.5 175.6
Return on equity (ROE) % 24.3 10.9
Return on capital employed (ROC) % 13.8 10.2
Equity/total assets ratio % 15.2 26.1
Gearing % 386.9 203.2 *
Gross capital expenditure Meur 22.0 14.1
Gross capital expenditure as % of % 7.2 5.2
net sales
Depreciation Meur 25.8 26.9
Personnel on average 1 353 1 316
Personnel at the end of period 1 304 1 347
* Capital loan included in equity
PLEDGED ASSETS AND CONTINGENT LIABILITIES
MEUR 31 Dec. 31 Dec.
2006 2005
Real estate mortgages and other
pledges
for own debts 412.0 322.6
Contingent liabilities
Guarantees 9.6 1.2
Pension fund liability 0.0 0.0
Other contingent liabilities 0.0 0.0
Total 421.6 323.9
NOMINAL VALUES OF DERIVATIVE INSTRUMENTS
MEUR 31 Dec. 31 Dec.
2006 2005
Nominal value
Foreign exchange forward 77.7 64.6
contracts
of which closed contracts 1.7 0.5
Forward contracts of electricity 13.4 13.0
of which closed contracts 0.0 0.0
Interest rate swap 125.0 76.5
of which closed contracts 0.0 0.0
Market value
Foreign exchange forward -0.5 -1.4
contracts
Forward contracts of electricity 0.8 2.4
Interest rate swap 1.3 -0.5
The principle observed in calculating market value:
Foreign exchange forward contracts, forward contract of electricity
and
interest rate swap are valued at market values on the balance sheet
date.
Derivative instruments are used to reduce currency, purchase and
interest risk of the Group.
EXCHANGE RATES
Rates at end of period Average rates
31 Dec. 31 Dec. 1-12/ 1-12/
2006 2005 2006 2005
Euro 1.00000 1.00000 1.00000 1.00000
SEK (Sweden) 9.04040 9.38850 9.25332 9.27964
EEK (Estonia) 15.64660 15.64660 15.64660 15.64660
PLN (Poland) 3.83100 3.86000 3.89513 4.02259
NOK (Norway) 8.23800 7.98500 8.04628 8.01287
RUR (Russia) 34.68000 33.92000 34.11158 35.20359