Metsäliitto Group STOCK EXCHANGE RELEASE
6.2.2007
METSÄLIITTO GROUP FINANCIAL STATEMENTS 2006
Metsäliitto Group's operating profit excluding non-recurring items EUR 254
million in 2006
Non-recurring items totalled EUR 276 million in 2006
Result for 2006
. Sales EUR 9,271 million (EUR 8,643 million in 2005), up 7 per cent on the
previous year.
. Operating profit excluding non-recurring items EUR 254 million (EUR 110
million). Operating profit after non-recurring items EUR -22 million (EUR 50
million)
. Result before taxes EUR -222 million (EUR -159 million), mainly due to non-
recurring items relating to M-real's restructuring programme.
Result for the fourth quarter of 2006
. Sales EUR 2,352 million (Q4/05: EUR 2,265 million), up 4 per cent on Q4/05.
. Operating profit excluding non-recurring items EUR 81 million (Q4/05: EUR 42
million). Operating profit after non-recurring items EUR -160 million
(Q4/05: EUR -13 million).
. Result before taxes EUR -220 million (Q4/05: EUR -42 million).
Events in the fourth quarter of 2006
. M-real launched a new restructuring programme, including closures of
production facilities, a new cost savings programme of EUR 100 million,
divestments of asset items and an impairment charge of approximately EUR
200 million. Furthermore, a working capital reduction programme of EUR 100
million was launched.
. Metsäliitto Group sold its Norwegian subsidiary Moelven Industrier ASA.
. The Finnish Competition Authority completed its investigation into round
wood pricing and violation of the restraint of price competition, initiated
in 2004. Metsäliitto denies participation in price co-operation.
"In the latter half of 2006, Metsäliitto Group made important decisions to
improve the Group's profitability. Even though the result turned negative, due to
M-real's restructuring programme, the Metsäliitto Group's result of actual
operation excluding non-recurring items improved clearly on the previous year. We
are on the right track in our effort to build a new Metsäliitto Group, and we
continue our systematic work to create a novel, profitable forest industry
company under Finnish ownership."
Kari Jordan, President and CEO of Metsäliitto Group
Metsäliitto Group
Income statement 2006 2005 2006 2005 2004
(EUR mill.) 1-12 1-12 QIV QIV 1-12
Sales 9271 8643 2352 2265 8598
Other operating income 175 148 47 27 135
Operating expenses -8761 -8182 -2228 -2137 -8066
Depreciation and
impairment losses -707 -559 -331 -168 -522
Operating profit -22 50 -160 -13 144
Share of results in
associates 6 4 2 4 1
Net exchange gains /
losses 6 -27 -0 -4 -2
Other financial income &
expenses -212 -187 -62 -29 -219
Result before tax -222 -159 -220 -42 -76
Income tax -37 15 9 8 -28
Result for the period -259 -144 -211 -34 -104
Metsäliitto Group
Key figures 2006 2005 2006 2005 2004
1-12 1-12 QIV QIV 1-12
Return on capital employed, % 0.1 1.2 -9.4 -0.3 2.5
- " -, excluding
non-recurring items 4.4 2.1 5.5 3.2 2.7
Return on equity, % -10.3 -5.3 -33.9 -5.2 -3.9
- " -, excluding
non-recurring items 0.7 -3.0 4.9 3.2 -3.4
Equity ratio, % 28.0 30.5 28.0 30.5 32.1
Net gearing ratio, % 150 137 150 137 120
Interest-bearing net
liabilities, EUR mill. 3527 3631 3527 3631 3336
Capital expenditure,
EUR mill. 744 692 192 207 358
Personnel, average and 31.12. 28844 29870 25007 29007 29557
Business areas
Sales and Operating profit Wood Paper Tissue and
1-12/2006 Wood Products Pulp *) and Board Cooking
(EUR mill.) Supply Industry Industry Industry Papers
Sales 1445 2045 1311 5624 799
Other operating income 22 25 27 116 12
Operating expenses -1417 -1897 -1022 -5441 -741
Depreciation &
impairment losses -6 -66 -104 -570 -51
Operating profit 44 107 212 -271 19
*) Represents 100%. The Metsäliitto Group consolidates 53% of the Pulp Industry's
figures.
METSÄLIITTO GROUP FINANCIAL STATEMENTS 2006
Sales and result
Metsäliitto Group's sales increased by 7 per cent year-on-year, amounting to EUR
9,271 million (8,643). EUR 1,138 million (1,108) of the sales, or 12 per cent,
were generated in Finland. Exports and subsidiaries abroad accounted for 88 per
cent, or EUR 8,133 million (7,535).
Operating profit excluding non-recurring items was EUR 254 million (110). The net
amount of non-recurring items was EUR -276 million (-60).
Non-recurring expenses totalled EUR 319 million, of which EUR 263 million were
entered in the final quarter of the year. Of this amount, EUR 176 million were
goodwill and fixed asset write-downs resulting from impairment testing at M-real.
EUR 60 million of closure expenses and write-downs were entered for the
Sittingbourne paper mill, as well as EUR 15 million of Wifsta's paper mill fixed
assets. Provisions of EUR 12 million were booked relating to efficiency
improvement programmes and personnel reductions. The rest of the non-recurring
expenses, EUR 56 million, were mainly entered in the second quarter, and they
consisted of capital loss from the Pont Sainte Maxence paper mill and efficiency
improvement programmes at some mills in Central Europe.
Non-recurring income totalled EUR 43 million. It consists of gain from the
selling of Moelven Industrier ASA, EUR 13 million, group reserve recognised as
income, EUR 17 million, and gains from selling of property, EUR 13 million.
Operating profit after non-recurring items was EUR -22 million (+50).
Metsäliitto Group's net financial expenses were 2.2 per cent of sales (2.4).
Financial income was EUR 23 million (23), shares in associated companies were EUR
6 million (4) and financial expenses EUR 235 million (210). Exchange rate
differences in financing totalled EUR 6 million (-27). The average exchange rates
for the US dollar and the pound sterling were the same as the previous year.
Result before taxes was EUR -222 million (-159). Taxes, including the change in
the deferred tax liability, totalled EUR -37 million (+15). The result for the
period was EUR -259 million (-144), EUR -25 million (-50) of which was
attributable to the owners of the parent cooperative and EUR -234 million (-94)
to the minority interest.
The Group's return on capital employed was 0.1 per cent (1.2) and the return on
equity was -10.3 per cent (-5.3). Excluding non-recurring items, the return on
capital employed was 4.4 per cent (2.1) and the return on equity was 0.7 per cent
(-3.0).
Balance sheet and financing
Metsäliitto Group's total liquidity was EUR 2.0 billion (1.6) at the end of
December. Of this, EUR 0.2 billion were in liquid assets and investments (0.2)
and EUR 1.8 billion (1.4) in binding credit-facility agreements not included in
the balance sheet. In addition, the Group can satisfy short-term financial needs
with non-binding commercial paper schemes in Finland and abroad as well as credit
lines amounting to EUR 0.7 billion.
The Group's equity ratio was 28.0 per cent (30.5) at the close of the year and
net gearing was 150 per cent (137). Net interest-bearing liabilities decreased by
some EUR 100 million and stood at EUR 3,527 billion (3,631) at the end of
December. EUR 193 million were released from the working capital in 2006, while
in the previous period EUR 131 million were tied to the working capital. Net cash
flow from operations was EUR 620 million (163).
Metsäliitto Cooperative's members' capital increased by EUR 28.2 million from
January to December. The actual members' capital increased by EUR 7.7 million,
additional members' capital A by EUR 14.8 million and additional members' capital
B by EUR 5.7 million. At the close of the year Metsäliitto Cooperative had
131,139 members (131,175).
In March, Metsäliitto Cooperative signed a binding syndicated credit limit
agreement of EUR 560 million. The loan was connected with Finnforest
Corporation's merger with the Metsäliitto Cooperative and was used to renew
previous loan arrangements. The loan period is 5 years.
M-real issued a bond of EUR 500 million in March. The bond will be used for the
repayment of existing loans, and the loan period is seven years.
In June, Metsäliitto Cooperative issued a bond of EUR 195 million for Finnish
investors. The bond is part of Metsäliitto's normal financial policy.
In December, M-real issued a bond of EUR 400 million. The loan period is four
years, and it will be used for refinancing of existing loans.
Standard & Poor's Ratings Services lowered M-real's long-term credit rating to BB-
in February and to B+ in August. The outlook on credit rating remained negative.
Correspondingly, Moody's Investors Services lowered M-real's credit rating to Ba3
in February and to B2 in July. The outlook remained negative.
Personnel and management
Metsäliitto Group employed an average of 28,844 people (29,870). Of these, 9,171
(9,501) worked in Finland and 19,673 (20,369) in other countries. At the end of
December the personnel totalled 25,007 (29,007). The sale of Moelven reduced the
figure by some 3,200. At the close of the year, the parent company employed 3,158
people (766). The increase is due to the mergers in 2006.
Metsäliitto Cooperative's President & CEO Kari Jordan took the position of
Metsäliitto Group's President and CEO at the beginning of 2006. In October Mikko
Helander, CEO of Metsä Tissue, was appointed as the new CEO of M-real, and M-
real's CEO, Hannu Anttila, was appointed as the Executive Vice President,
Strategy, in the Metsäliitto Group. Hannu Kottonen, head of M-real's Consumer
Packaging division, was appointed as the new CEO of Metsä Tissue.
Investments, acquisitions and divestments
Metsäliitto Group's capital expenditure and corporate acquisitions totalled EUR
744 million (692).
Capital expenditure
The expansion of Wood Products Industry's (Finnforest) Kerto LVL capacity in
Punkaharju was completed early in the year. The production capacity increased by
60,000 cubic metres to 130,000 cubic metres a year.
The modernisation of M-real's paperboard machine in Simpele was completed at the
beginning of April. The annual capacity increased by 45,000 tonnes to 215,000
tonnes.
Metsä-Botnia's Svir Timber sawmill in Russia was inaugurated in June. The sawmill
which was started up in April, has annual production capacity of 200,000 cubic
metres. It employs about 130 people.
The most important investment in pulp production in Finland was the modification
of the Rauma mill bleaching process to allow the production of ECF-bleached pulp.
The investment will raise the mill's production capacity by 45,000 tonnes a year.
The cost estimate for the project, to be implemented in 2006-2007, is EUR 45
million.
Acquisitions
In February Metsä Tissue announced the acquisition of Tento a.s., a leading
Slovakian supplier of tissue paper in central Eastern Europe. The company's main
products are bathroom tissue, household towels and tissue handkerchiefs. The
acquisition was completed in April.
In March, Metsäliitto Wood Products Industry sold the Tiwi particle board
business in Keuruu, and in May it sold the entire share capital of Finnforest
Romania s.r.l., a trading company focusing on wood products. In addition, the
business operations of HSL Elements were sold in September.
In June, M-real sold the Pont Sainte Maxence paper mill in France to the German
company Arques Industries. A EUR 37 million loss from assignment was booked from
the divestment.
In July, Metsäliitto Cooperative and Finndomo signed a contract that transferred
the business operations of the Hartola building module factory to Finndomo as of
1 September 2006. Metsäliitto retained the ownership of one production line in
the factory premises. The line produces, among others, elements for the Hartola
factory.
In October, M-real sold its entire holding in the hydropower company Alakoski Oy.
In December, Metsäliitto sold its subsidiary Moelven Industrier ASA to a
Norwegian consortium. Metsäliitto booked a gain of about EUR 13 million from the
divestment in the result for 2006. The required final approvals from authorities
were received in January 2007.
The Uruguay pulp mill project
The dispute between Uruguay and Argentina concerning the building of Metsä-
Botnia's pulp mill continued in 2006. In April, Metsä-Botnia interrupted the
construction work for ten days to promote achievement of mutual understanding.
Argentina had demanded immediate discontinuation of the project, but the
International Court of Justice in the Hague rejected the claims in July.
The results of the study carried out by IFC, member of the World Bank Group, on
the project's environmental and socioeconomic impacts were published in October.
The study confirmed the results of earlier studies, according to which the mill
will not have significant adverse effects on the environment or the existing
commercial and industrial life in the region. Consequently, the loan and
guarantee applied for from IFC and the political risk insurer MIGA were approved
in late November.
The mill, with a capacity for one million tonnes of pulp a year, is estimated to
start up in the third quarter of 2007. The project's estimated cost is USD 1.1
billion.
Action plan
In October, M-real introduced an extensive restructuring programme. It includes
closures of production facilities, a new cost savings programme of EUR 100
million, divestments of asset items and an impairment charge of approximately EUR
200 million. Furthermore, a working capital reduction programme of EUR 100
million was launched.
The shutdowns will reduce fine paper production capacity by some 500,000 tonnes,
which makes 15 per cent of M-real's total fine paper production. The estimated
non-recurring loss resulting from the shutdowns is estimated at EUR 130 million
and the impact on cash flow is estimated to be about EUR 80 million.
The divestments of asset items aim at EUR 500 million of proceeds, and they
include selling a minimum of 8% of M-real's holdings in Metsä-Botnia to
Metsäliitto and divestment of the folding carton business, among other things.
Organisation
Finnforest Corporation and Metsäliitto-Yhtymän Tehdasmittaus Oy were merged with
the parent company Metsäliitto Cooperative on 31 March 2006. Thomesto Ltd.,
involved in international timber trade, was merged with the parent company on 30
September 2006.
Business areas
Wood Supply
Metsäliitto's wood procurement supplied about 35 million cubic metres (34) of
wood to its customers in 2006. About two thirds of it came from Finland, mainly
from members of Metsäliitto. Including chips, the amount of wood delivered to
production mills in Finland totalled 26.8 million cubic metres (24.5), with round
wood accounting for 23.1 million cubic metres (21.9). Wood imports amounted to
3.9 million cubic metres (3.9).
The sales in Wood Supply came to EUR 1,445 million (1,415) and operating profit
stood at EUR 44 million (33). The operating profit includes about EUR 12 million
of non-recurring income, mainly gains from selling property and forest.
The sales of Wood Supply Finland totalled EUR 1,150 million (1,109) and operating
profit stood at EUR 27 million (25). The sales of wood did not pick up in Finland
until late spring, when the price of softwood logs took an upward turn as the
result of the positive development of sawn timber prices. The tough competition
in the wood market was also reflected on the price of pulpwood.
Demand for wood has increased vigorously in Metsäliitto's operating area in
Russia. One reason for this is the development of local wood-utilising industry.
During the year, the Russian authorities raised the export tax on softwood,
revised the customs clearance procedure for wood and passed a new forest law at
the end of the year.
In the Baltic countries, the price of sawmill chips increased markedly in the
latter half of the year. At the same time, the volume of wood supplied from
private forests was the lowest in the decade so far. In Central Europe, the
demand for energy wood has skyrocketed. In addition to chips and sawdust, demand
has also been targeted at pulpwood.
Wood Products Industry
The sales of Wood Products Industry totalled EUR 2,045 million (1,986) and
operating profit was EUR 107 million (26). The operating profit includes about
EUR 12 million of net realisations of shares and fixed assets.
Wood Products Industry's own measures and a high demand both contributed to the
improvement of result. Repair, renovation and new residential construction
continued at a brisk pace in the Nordic countries and Europe. In the USA,
construction business was also prospering, but the growth slowed down toward the
end of the year. Thanks to a favourable market situation, the prices of sawn
timber and plywood developed positively during the year.
The strategy for Wood Products Industry was specified during the year. Processing
wood acquired from the forests of Metsäliitto's owners and transforming it into
wood-based products and solutions as profitably as possible were defined as the
core business.
Pulp
Pulp industry's turnover for 2006 increased by 39 per cent on the previous year,
amounting to EUR 1,311 million (947). The operating profit was EUR 212 million
(80). The improvement is due especially to increased production and vigorous
development of pulp prices. The previous year's figures are not fully comparable,
as the pulp mills stopped for more than six weeks last year during the labour
dispute in Finnish forest industry.
Pulp supply and demand were balanced during the year and manufacturers' pulp
stocks remained on a normal level. In North America, competitors closed down 1.6
million tonnes of outdated pulp production capacity. In late 2006, new mills were
started up in Chile and Brazil, producing up to two million tonnes of new pulp to
the market. During the year 2007 the industry will get another two million tonnes
of new capacity. Metsä-Botnia's pulp mill in Uruguay will account for about one
million tonnes of it.
The price of pulp rose steadily during the year. In Europe, softwood pulp was
selling at USD 600 per tonne in January and at USD 730 per tonne in December,
while the corresponding figures for hardwood pulp were USD 590 and USD 670.
M-real's result includes 39 per cent of pulp production's operating profit. Of
the figures for pulp production, 53% are consolidated into Metsäliitto Group's
financial statements.
Paper and Board
The sales in Paper and Board totalled EUR 5,624 million (5,241). Western European
producers of coated fine paper managed to increase their deliveries in Europe
slightly from the previous year. However, the delivery volumes for coated
magazine paper and uncoated fine paper remained largely the same as before.
Deliveries of folding boxboard increased compared with the previous year, and the
development of demand was favourable in Eastern Europe.
The average market price of papers in Europe remained on the previous year's
level. The market prices for folding boxboard remained also unchanged.
M-real's operating profit excluding non-recurring items was EUR 45 million (4).
The business result was enhanced by improved delivery volumes and slightly higher
sales prices for uncoated fine papers and coated magazine papers. The result was
affected negatively by increasing energy prices, temporary shutdowns due to
investments and overhaul, contracted sales prices for folding boxboard and coated
fine paper, and the Finnish paper workers' strike in May. Increases in raw
material prices were mainly compensated by improved production efficiency.
Non-recurring items totalled EUR -316 million net (+32), of which EUR 260 million
were entered in the final quarter of the year. The largest item, EUR 176 million,
resulted from goodwill and fixed asset impairments. Closure expenses and write-
downs entered in connection with the closure of the Sittingbourne paper mill
amounted to EUR 60 million, and EUR 15 million were entered from Wifsta's fixed
assets. EUR 12 million of provisions were posted relating to efficiency
improvement programmes and personnel reductions. The rest of the non-recurring
items were mainly entered in the second quarter, and they consisted of the loss
from assignment from the Pont Sainte Maxence paper mill and the efficiency
improvement programmes at some mills in Central Europe.
Operating profit after non-recurring items was EUR -271 million (+36). The
operating profit for the previous year was enhanced remarkably by the EUR 81
million gain from selling 8 per cent of Metsä-Botnias holdings.
Financial income was EUR 23 million (25), shares in associated companies' profits
were EUR 0 million (-2) and financial expenses EUR 160 million (140). Exchange
rate differences in financing were EUR 0 million (-33).
The result before taxes was EUR -408 million (-114), earnings per share were EUR
-1.21 (-0.25) and return on capital employed -5.2 per cent (1.2). The result
excluding non-recurring items was EUR -92 million (-142), earnings per share were
-0.27 per cent (-0.35) and return on capital employed was 1.4 per cent (0.5).
Equity ratio was 30.9 per cent at the end of December, and net gearing was 126
per cent (12/05: 36.6% and 95%). The selling of Metsä-Botnia's holding, announced
in January 2007, has been estimated to improve the net gearing by some 20
percentage points.
Tissue and Cooking Papers
Tissue and Cooking Paper's sales totalled EUR 799 million (696). The growth of
sales resulted from increased volumes and higher average prices. The Tento
consolidation as of the beginning of May boosted the sales by about EUR 60
million.
Comparable sales volume grew by more than five percent year-on-year, which was
better than the general growth in tissue paper market. Because of the price
increases during the year, average sales prices were about two per cent up on the
year before. However, the price increases were not sufficient to compensate the
remarkable rise in raw material, energy and transport costs.
Operating profit in January-December was EUR 19 million, which falls EUR 5
million short of the previous year's figure (24). The increases in pulp prices
and energy costs alone raised the costs by EUR 18 million compared with 2005.
The acquisition of Tento in spring 2006 has met the expectations, and the
integration process has proceeded as planned. During the year, a paper machine
was upgraded and a new processing line was installed. After the implementation,
production volumes have grown and the mill's profitability has improved.
Investigations by competition authorities
In spring 2004, the Finnish Competition Authority initiated an investigation into
round wood pricing and alleged violation of the restraint of price competition.
In its report in December 2006, the Finnish Competition Authority deems that
forest industry companies violated competition legislation seriously in 1997-
2004. It proposes competition infringement fines to Metsäliitto and Stora Enso,
EUR 21 million and EUR 30 million respectively. Metsäliitto denies participation
in price co-operation or any other serious cartel and considers the fine
unreasonable. The Market Court will make the final decision.
No provisions relating to this issue were included in Metsäliitto Group's
financial statements.
The European Commission competition authority closed the investigations into M-
real's fine paper and magazine paper in August 2006 and November 2006
respectively, without any findings. In connection with the European Commission's
investigations, purchasers of magazine paper filed several class-action suits in
the USA in 2004. In November 2006, the plaintiffs in the most significant class
action withdrew their claims against M-real and some other defendants. M-real is
still involved in two class actions as a defendant.
Events after the period
The Sittingbourne fine paper mill in England was closed down in January 2007.
Fine paper machines 6 and 7 at Gohrsmühle in Germany will be run down by the end
of February, and the Wifsta fine paper mill in Sweden will be closed down by the
end of June 2007. Relating to the shutdowns, expenses of EUR 76 million were
entered in the financial statements of 2006. In the first quarter of 2007, an
expense reserve of EUR 50-60 million will be booked to complete the shutdowns.
The impact of the closures on cash flow is estimated to be about EUR -80 million,
slightly more than half of it in 2007 and the rest in 2008-2010.
In January, M-real sold 9 per cent of its Metsä-Botnia shares to Metsäliitto
Cooperative for EUR 240 million and posted a gain of EUR 135 million.
Outlook
Wood prices rose vigorously in 2006, both in Finland and in nearby regions. In
Western Europe, too, the market situation changed remarkably as the result of
increasing use of energy wood. The use of wood will be at a high level, and
demand for wood will be good in Metsäliitto's entire operating area. In Finland,
delivery sales will be in high demand, as well as stumpage with the trees
harvestable in summer.
The prospects for wood products industry continue to be good. Metsäliitto Wood
Products Industry will focus on enhancing the use of existing resources and
raising the degree of processing in 2007. Particular attention will be paid to
production costs and more efficient utilisation of raw material.
In 2007, new mills will be started up in Brazil and Uruguay, with capacity of 2.3
million tonnes of eucalyptus pulp. Slightly less than half of the volume entering
the market will be produced at Metsä-Botnia's pulp mill in Uruguay. The impact of
the capacity increase will influence the market in the course of 2008.
Demand for fine paper was good in the fourth quarter of 2006. Demand for board
was moderate, whereas demand for magazine paper was low. The completed shutdowns
of mills and the shutdowns to be carried out in 2007 are anticipated to have a
positive effect on the demand and supply for paper.
The amount of money spent on print advertising in Europe, which is one of the
main indicators for the development of paper consumption, increased in 2006 in
line with the general economic growth. Moderate growth is expected to continue in
2007. Measures to raise fine paper prices are in process. Price increases for
folding boxboard and coated magazine paper will be challenging in the short term.
The overcapacity in tissue paper production has made price increases quite
challenging. The centralisation of trade also hinders price increases. The
pressures for price increases are mainly the result from higher raw material and
energy prices. Raw material prices are expected to remain high in the near
future.
Excluding the non-recurring items resulting from restructuring, Metsäliitto Group
estimates its result for 2007 to improve clearly over 2006.
Proposal for interest on members' capital
The Board of Directors of the Metsäliitto Cooperative has decided to propose to
the Supervisory Board that an interest of 6.0% (6.5) be paid on the subscribed
members' capital for 2006. The proposed interest for additional members' capital
A is 5.0% (5.5) and for additional members' capital B 3.5% (4.0)
The Supervisory Board of the Metsäliitto Cooperative will deliberate the proposal
of the Board of Directors in March and then submit a proposal for the
Representative Council to decide on in April.
Espoo, 6 February 2007
Metsäliitto Group
Board of Directors
For further information, please contact:
Ilkka Pitkänen, Group CFO, Metsäliitto Group, tel. +358 10 469 4260
Lauri Peltola, Group CCO, Metsäliitto Group, tel. +358 50 570 5606
METSÄLIITTO GROUP
Income statement 2006 2005 2004
(EUR mill.) 1-12 1-12 Change 1-12
Sales 9271 8643 628 8598
Other operating income 175 148 27 135
Materials and services -6037 -5377 -660 -5343
Employee costs -1451 -1424 -27 -1423
Other operating expenses -1273 -1381 108 -1301
Depreciation and impairment
losses -707 -559 -148 -522
Operating profit -22 50 -72 144
Share of results in associates 6 4 2 1
Net exchange gains/losses 6 -27 33 -2
Other financial income 23 23 0 17
Other financial expenses -235 -210 -25 -236
Result before tax -222 -159 -63 -76
Income taxes -37 15 -52 -28
Result for the period -259 -144 -115 -104
Attributable to
Owners of parent company -25 -50 25 -24
Minority interest -234 -94 -140 -80
-259 -144 -115 -104
Balance sheet 2006 2005 2004
(EUR mill.) 31.12. 31.12. 31.12.
ASSETS
Non-current assets
Intangible assets 617 818 802
Tangible assets 4197 4256 4148
Biological assets 71 51 201
Financial assets
Interest bearing 52 68 59
Deferred tax receivables 77 96 102
Other non-interest bearing 210 201 283
5225 5490 5596
Current assets
Inventories 1095 1293 1172
Receivables
Interest bearing 145 5 66
Non-interest bearing 1617 1706 1564
Cash and cash equivalents 246 194 252
3103 3199 3055
Assets classified as held for sale 103 0 0
TOTAL 8431 8689 8651
MEMBERS' FUNDS AND LIABILITIES
Members' funds 1289 1328 1351
Minority interest 1064 1317 1428
Total members' funds 2353 2645 2779
Non-current liabilities
Deferred tax liabilities 382 439 505
Retirement benefit obligations 238 270 271
Provisions 91 74 45
Interest bearing 3455 2915 2946
Other non-interest bearing 56 90 37
4222 3788 3805
Current liabilities
Interest bearing 512 983 768
Non-interest bearing 1314 1273 1299
1826 2256 2067
Total liabilities 6048 6044 5872
Liabilities classified as held for
sale 30 0 0
TOTAL 8431 8689 8651
Change in members' funds
(EUR mill.) Members' Retained Minority
capital Reserves earnings interest Total
Members' funds Jan. 1, 2005
505 62 783 1428 2778
Translation differences 6 6
Dividends paid -34 -24 -58
Increase in members' capital
53 53
Change in reserves 2 2
Transfers 9 -9 0
Other changes 8 8
Result for the period -50 -94 -144
Members' funds Dec. 31, 2005
558 74 696 1317 2645
Members' funds Jan. 1, 2006
558 74 696 1317 2645
Translation differences 1 1
Dividends paid -37 -24 -61
Increase in members' capital
19 5 24
Change in reserves -2 -2
Transfers 2 -2 0
Other changes 1 4 5
Result for the period -25 -234 -259
Members' funds
Dec. 31, 2006 577 78 634 1064 2353
Cash flow statement 2006 2005 2004
(EUR mill.) 1-12 1-12 1-12
Cash flow from operations
Result for the period -259 -144 -104
Adjustments total 928 727 697
Change in working capital 193 -131 35
Cash generated from operations 863 452 628
Finance costs, net -189 -237 -224
Income taxes paid -54 -52 -81
Net cash from operations 620 163 323
Cash flow from investments
Acquisitions -136 -68 -34
Purchases of assets -608 -538 -298
Sold assets and others 69 185 181
Net cash from investments -675 -420 -151
Cash flow from financing
Increase in equity 98 61 348
Change in long-term loans and
other financial items 74 196 -425
Dividends paid -62 -58 -62
Net cash flow from financing 110 199 -139
Change in cash and cash equivalents 55 -58 33
Cash at beginning of period 194 252 219
Change in cash and cash equivalents
55 -58 33
Cash in assets classified as held
for sale -1
Cash at end of period 248 194 252
BUSINESS SEGMENTS
Consumer Packaging I-IV I-IV IV IV I-IV
/06 /05 /06 /05 /04
Sales 971 864 241 231 1045
EBITDA 154 134 32 42 187
Depreciation & impairment
losses -96 -89 -27 -22 -90
Operating profit 58 45 5 20 97
Papers I-IV I-IV IV IV I-IV
/06 /05 /06 /05 /04
Sales 3118 2988 778 775 2944
EBITDA 172 224 21 61 237
Depreciation & impairment
losses -388 -274 -197 -83 -260
Operating profit -216 -50 -176 -22 -23
MAP Merchant Group I-IV I-IV IV IV I-IV
/06 /05 /06 /05 /04
Sales 1437 1390 376 357 1368
EBITDA 27 25 6 2 24
Depreciation & impairment
losses -69 -7 -65 -2 -7
Operating profit -42 18 -59 0 17
Wood Products I-IV I-IV IV IV I-IV
/06 /05 /06 /05 /04
Sales 2045 1986 482 497 1923
EBITDA 173 111 60 40 94
Depreciation & impairment
losses -66 -85 -14 -31 -71
Operating profit 107 26 46 9 23
EBITDA = Result before depreciation and impairment losses
Others I-IV I-IV IV IV I-IV
/06 /05 /06 /05 /04
Operating profit 71 10 24 -20 31
of which
Wood Supply 44 33 14 12 29
Tissue and Cooking Papers 19 24 5 4 38
Others and Group
eliminations 8 -47 5 -36 -36
M-real includes 39% of the Pulp Industry's (Metsä-Botnia) operating profit and
Metsäliitto a further 14% in the business segments Consumer Packaging and Papers.
Production
1 000 units I-IV I-IV IV IV I-IV
/06 /05 /06 /05 /04
Paper, t 4119 3985 1000 1048 4008
Paperboard, t 1121 985 279 272 1330
Sawn goods, m3 3893 4136 885 1160 4185
Processed timber, m3 1179 1181 268 291 1166
EW products, m3 935 990 228 238 911
Pulp & CTMP, t (M-real) 1754 1533 449 421 1533
Pulp, t (Metsä-Botnia) 2520 2177 654 647 2450
Quarterly data 2006 2006 2006 2006 2005 2005 2005 2005
(EUR mill.) IV III II I IV III II I
Sales
Consumer Packaging 241 236 237 257 231 196 199 238
Papers 778 767 772 801 775 735 732 747
MAP Merchant Group 376 342 354 365 357 341 351 341
Wood Products 482 499 555 510 497 468 553 468
Others & internal sales
475 402 396 425 405 317 299 393
Group sales 2352 2246 2314 2358 2265 2057 2134 2187
Operating profit
Consumer Packaging 5 21 5 27 20 15 -17 27
Papers -176 7 -64 17 -22 13 -51 10
MAP Merchant Group -59 3 7 7 0 5 7 6
Wood Products 46 21 26 14 9 3 15 -1
Others 24 16 14 17 -20 9 -11 32
Group operating profit -160 68 -11 82 -13 45 -56 74
- % of sales -6.8 3.0 -0.5 3.5 -0.6 2.2 -2.6 3.4
Share of results
in associates 2 2 2 0 4 1 -2 0
Net exchange gains/losses
0 4 -6 8 -4 0 -12 -11
Other fin. income &
expenses -62 -60 -45 -45 -29 -33 -79 -45
Result before tax -220 14 -60 45 -42 13 -149 18
Income taxes 9 -21 -1 -24 8 -5 20 -7
Result for the period -211 -7 -61 21 -34 8 -129 11
Metsäliitto is the tenth largest forest industry group in the world with sales of
EUR 9.3 billion and 25,000 employees. Its five business areas include wood
supply, wood products industry, pulp, paper and board and tissue and cooking
papers. The Group's parent company Metsäliitto Cooperative and subsidiaries Metsä-
Botnia, M-real and Metsä Tissue operate in 30 countries.