STROMSDAL CORPORATION
STOCK EXCHANGE RELEASE
April 27th, 2007, at 3.30 p.m.
INTERIM REPORT FOR JANUARY-MARCH 2007
- January-March net sales were EUR 13.4 million (EUR 14.3 million).
- January-March pre-tax profit was EUR -1.3 million (EUR -0.5 million).
- The company has launched the improved graphical boards with higher whiteness
and better printability, as planned: the new GraphiArt Pro and the improved
GraphiArt Duo.
- During the next two years the company's product range will be focused on the
company's special carton board qualities.
Markets and sales
Competition continued to be tight in the European board markets. Major reasons
are oversupply and weakening of the US dollar against the Euro. Because of the
unfavorable exchange rates, the overseas board supply becomes more competitive
in Europe while the European board supply faces difficulties in overseas
markets.
During the first quarter, the demand for the company's products was
satisfactory. The demand for Tecta food packaging board was good and the sales
were up 50 per cent compared to the same time in previous year.
The company strengthened its customer service by establishing service centers in
Spain and U.K. to enable fast deliveries to the customers, and a service center
in Germany is intended to open during the summer period 2007. In addition to
this the company has put more resources into sales and customer service.
Net Sales and Results
Stromsdal Group's consolidated net sales for January 1 - March 31 totaled EUR
13.4 million (EUR 14.3 million in Q1/2006). Consolidated operating result was
EUR -0.9 million (EUR -0.1 million). Net profit was EUR -1.3 million (EUR -0.5
million).
The quantity of sales decreased slightly compared to the same period in previous
year. The order inflow was at satisfactory level, but the high share of
commodity boards reduced the average sales price.
The production volume reached 15,600 tons (15,400 tons). The production
efficiency was restricted by the additional investment work at the groundwood
mill. On top of this the investment shutdown in the finishing department reduced
the output of company's specialty board grades.
Financial Position
The operative cash flow was EUR -0.4 million (EUR 0.3 million). Cash flow from
investments was EUR -0.3 million (EUR -0.9 million).
The first part, namely EUR 0.5 million, of the investment aid of EUR 1.5 million
granted by the Ministry of Trade and Industry in June 2006 was received by the
company in March 2007. The remaining part, EUR 1.0 million, will be applied in
two parts after qualified investments are done.
During the financing arrangements in 2006 the company agreed with its financiers
on a EUR 2.0 million financing program, of which the company has now used EUR
1.0 million. The company has also agreed with its main financiers on postponing
the repayment of loan capital until the end of 2007.
Capital Expenditure
January-March capital expenditure totaled EUR 0.8 million (EUR 0.5 million). The
biggest single investment item was the groundwood mill improvement done at the
turn of the year. With this investment the target whiteness level of the graphic
boards was reached.
The Turn Around investment program will be continued during the second quarter.
Main emphasis continues to be quality improvements and groundwood mill
productivity. Maintenance and additional investments related to the groundwood
mill bleaching and washing as well as maintenance and improvement works on the
board machine are intended to be completed during the third quarter.
The synergy results of the groundwood mill investments have eliminated the
primary investment need related to the board machine wire section, and therefore
the company has decided to reallocate the corresponding investment funds.
Research and Development
Quality improvements, such as higher whiteness, were made on the graphical
boards during the period. The new GraphiArt Pro and the improved GraphiArt Duo
are both now being launched.
The properties of the Tecta boards are being developed for new application areas
in close co-operation with existing and new customers.
The Annual General Meeting in 2007
The Annual General Meeting of Stromsdal Corporation (AGM) was held on the 29th
of March 2007.
The AGM resolved that, due to the fact that the company made no profits during
the financial period, no dividend shall be distributed.
The AGM elected six members to the Board of Directors for the company for a term
ending on the conclusion of the annual general meeting in 2008: Mr. Juhani Mauri
Erma, Mr. Pauli Olavi Hämäläinen, Mr. Kari Petri Juhani Kangasperko, Mr. Ossi
Kokkonen, Ms. Pirjo Sirpa Helena Repo and Mr. Markku Tapani Toivanen.
At the Board Meeting held after the AGM, the Board of Directors elected Mr.
Juhani Erma as Chairman. The Board of Directors elected Mr. Juhani Erma
(Chairman), Ms. Pirjo Repo and Mr. Markku Toivanen to the Audit Committee. The
Board of Directors elected Mr. Petri Kangasperko (Chairman), Mr. Pauli
Hämäläinen and Mr. Ossi Kokkonen to the Nomination Committee.
The AGM elected Authorized Public Accounting Firm Ernst & Young Ltd, with Ms.
Eija Niemi-Nikkola as auditor in charge, the company's auditor for a term ending
at the closing of the next AGM.
The AGM resolved to authorize the Board of Directors to decide on the issuing of
new shares of the company and on the right to transfer shares of the company
that are in the possession of the company.
The authorization includes the right to issue special rights as meant in Chapter
10 Section 1 of the Finnish Companies Act, which rights would entitle the holder
to receive, against payment, new shares in the company or own shares of the
company being in the possession of the company either by paying the subscription
price in cash or by using a receivable from the company to set off the
subscription price.
In addition, the authorization includes the right to decide on a share issue to
the company itself free of charge so that, as a result, the aggregate amount of
shares issued to the company is a maximum of one tenth (1/10) of the total
amount of shares in the company.
The board of directors is entitled to decide on any other issues related with
the share issues.
The authorization is in force for five years as of the decision of the AGM. The
authorization revokes the authorization decided by the shareholders' meeting on
4 April 2006.
The AGM resolved to amend the articles of association of the company to
correspond with the provisions of the new Companies Act that entered into force
on 1 September 2006.
Events after the Period
Financial Director Aarno Laukkanen resigned from Stromsdal in April 2007.
Financial Manager Anna-Liisa Smolander was concurrently nominated as Financial
Director.
The Near Future Risks
The main raw materials for the company are wood and pulp. Price increases and
possible shortages of wood and pulp will have a negative impact on the company's
profitability.
The company sells most of its products in euros, but a certain proportion of
sales is done in US dollars. In order to be protected against exchange rate
fluctuations in company's operations and profitability, the company uses
exchange agreements for a part of its US dollar based receivables.
If the company's profitability and cash flow fail to improve in 2007, the
investment program set as part of the company's Turn Around program may not be
completed on schedule as planned.
For more information on risk management, please refer to the Financial
Statements in the company's Annual Report for 2006.
Prospects for 2007
To compensate increasing expenses the Turn Around program that started in 2006
will continue focusing on cost cutting and efficiency improvements during the
second and third quarter.
About half of the redundancies that were agreed upon in the autumn of 2006, have
been implemented already and the remaining part will be implemented by the end
on June 2007.
The Turn Around program investments to be implemented are targeted at quality
and runnability improvements as well as production efficiency enhancements. The
company expects to see increased sales of its specialty paperboard qualities and
improved profits as a result of these investments. Company's aim is to strongly
grow in specialty paperboard qualities, namely graphical grades like GraphiArt
Pro and GraphiArt Duo as well as Tecta boards.
Steadily increased production costs have long put pressure on raising the
paperboard prices in the market. The current good demand for paperboards
supports the price increases.
Interim financial statements have been prepared in accordance with the valuation
and accounting principles of International Financial Reporting Standards (IFRS),
but not in accordance with all requirements of IAS 34 Interim Financial
Reporting. The figures in this Report are unaudited.
STROMSDAL CORPORATION
BOARD OF DIRECTORS
For further information, please contact
Mikael Åbacka
Managing Director
Tel. +358 (0)17 688 641
ATTACHMENT
DISTRIBUTION
Helsinki Stock Exchange
Major media
STROMSDAL OYJ ATTACHMENT 27.4.2007
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| CONSOLIDATED INCOME STATEMENT, | | | | |
| IFRS | | | | |
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| | | 1-3/2007 | 1-3/2006 | 1-12/2006 |
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| | | MEUR | MEUR | MEUR |
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| NET SALES | | 13,4 | 14,3 | 53,1 |
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| Changes in inventories of | | | | |
| finished goods +/- | | 0,2 | -0,0 | -0,2 |
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| Other income | | 0,1 | 0,2 | 0,8 |
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| Materials and services | | -9,9 | -10,0 | -37,6 |
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| Employee benefits expense | | -2,8 | -2,3 | -10,1 |
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| Depreciation | | -0,9 | -0,8 | -3,4 |
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| Other expenses | | -1,1 | -1,4 | -5,1 |
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| OPERATING PROFIT/LOSS | | -0,9 | -0,1 | -2,5 |
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| Share of associated companies´ | | 0,0 | 0,0 | 0,0 |
| profits/losses | | | | |
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| Financial income and expenses | | -0,3 | -0,4 | -1,2 |
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| PROFIT/LOSS BEFORE TAXES | | -1,3 | -0,5 | -3,6 |
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| Income tax | | 0,0 | -0,0 | -0,1 |
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| PROFIT/LOSS FOR THE FINANCIAL | | -1,3 | -0,5 | -3,8 |
| YEAR | | | | |
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| EARNINGS/SHARE (EPS), diluted and | | -0,08 | -0,17 | -0,45 |
| undiluted | | | | |
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| CONSOLIDATED BALANCE SHEET, IFRS | | 31.3.2007 | 31.3.2006 | 31.12.2006 |
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| | | MEUR | MEUR | MEUR |
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| ASSETS | | | | |
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| NON-CURRENT ASSETS | | | | |
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| Other intangible assets | | 0,8 | 1,0 | 0,9 |
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| Tangible assets | | 21,8 | 22,8 | 22,2 |
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| Investments in associated | | 0,5 | 0,5 | 0,5 |
| companies | | | | |
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| Available-for-sale financial | | 0,0 | 0,0 | 0,0 |
| assets | | | | |
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| Receivables | | 0,6 | 0,6 | 0,6 |
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| Deferred tax assets | | 0,1 | 0,2 | 0,1 |
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| TOTAL NON-CURRENT ASSETS | | 23,8 | 25,1 | 24,3 |
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| CURRENT ASSETS | | | | |
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| Inventories | | 6,0 | 4,6 | 5,9 |
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| Trade and other receivables | | 9,5 | 10,6 | 10,1 |
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| Cash and cash equivalents | | 0,5 | 0,2 | 0,7 |
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| TOTAL CURRENT ASSETS | | 16,0 | 15,4 | 16,7 |
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| TOTAL ASSETS | | 39,8 | 40,5 | 41,0 |
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| SHAREHOLDERS´ EQUITY AND | | | | |
| LIABILITIES | | | | |
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| SHAREHOLDERS´ EQUITY | | | | |
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| Share capital | | 10,1 | 5,2 | 10,1 |
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| Issue premium fund | | 1,9 | 0,4 | 1,9 |
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| Reserve fund | | 0,0 | 0,6 | 0,0 |
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| Other funds | | 2,0 | 2,2 | 2,0 |
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| Exchange rate difference | | 0,1 | 0,1 | 0,1 |
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| Profit/loss from the previous | | -4,7 | -5,7 | -0,9 |
| year | | | | |
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| Profit/loss for the financial | | -1,3 | -0,5 | -3,8 |
| year | | | | |
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| TOTAL SHAREHOLDERS´ EQUITY | | 8,1 | 2,4 | 9,4 |
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--------------------------------------------------------------------------------
| NON-CURRENT LIABILITIES | | | | |
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| Deferred tax liability | | 0,0 | 0,0 | 0,0 |
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| Provisions | | 0,2 | 0,2 | 0,2 |
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| Interest-bearing liabilities | | 12,8 | 14,2 | 12,8 |
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| Other liabilities | | 0,1 | 0,0 | 0,1 |
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| TOTAL NON-CURRENT LIABILITIES | | 13,1 | 14,4 | 13,2 |
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| CURRENT LIABILITIES | | | | |
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| Accounts payable and other | | 9,5 | 12,4 | 10,1 |
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| Liabilities recognised in profit | | 0,0 | 0,0 | 0,0 |
| or loss | | | | |
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| Provisions | | 0,0 | 0,0 | 0,0 |
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| Interest-bearing liabilities | | 9,1 | 11,3 | 8,4 |
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| TOTAL CURRENT LIABILITIES | | 18,6 | 23,7 | 18,5 |
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| TOTAL LIABILITIES | | 31,7 | 38,2 | 31,6 |
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| TOTAL SHAREHOLDERS´ EQUITY AND | | 39,8 | 40,5 | 41,0 |
| LIABILITIES | | | | |
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| CASH FLOW STATEMENTS, IFRS | | 1-3/2007 | 1-3/2006 | 1-12/2006 |
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| | | MEUR | MEUR | MEUR |
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| BUSINESS OPERATIONS | | | | |
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| Operating profit/loss | | -0,9 | -0,1 | -2,5 |
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| ADJUSTMENTS TO OPERATING | | | | |
| PROFIT/LOSS: | | | | |
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| Depreciation | | 0,9 | 0,8 | 3,4 |
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| Non-cash transactions | | 0,0 | -0,0 | -0,4 |
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| Change in net working capital: | | | | |
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| Increase/decrease in accounts and | | 0,6 | -0,1 | 0,4 |
| other receivables | | | | |
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| Increase/decrease in inventories | | -0,1 | 0,1 | -1,2 |
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| Increase/decrease in accounts and | | -0,5 | -0,1 | -1,2 |
| other payables | | | | |
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| Interest paid | | -0,3 | -0,3 | -1,2 |
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| Dividend received | | 0,0 | 0,0 | 0,0 |
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| Other financial items paid | | -0,0 | -0,0 | -0,2 |
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| Taxes paid | | 0,0 | 0,0 | -0,0 |
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| NET CASH FLOW | | -0,4 | 0,3 | -2,9 |
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| INVESTMENTS | | | | |
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| Purchase of tangible assets | | -0,8 | -0,5 | -2,1 |
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| Purchase of intangible assets | | -0,0 | -0,1 | -0,1 |
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| Invevestment aid | | 0,5 | 0,0 | 0,0 |
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| Sale of tangible assets | | 0,0 | 0,0 | 0,0 |
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| Sale of long-term investments | | 0,0 | 0,0 | 0,0 |
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| Increase/decrease of long-term | | 0,0 | -0,3 | -0,3 |
| receivables | | | | |
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| TOTAL CASH FLOW FROM INVESTMENTS | | -0,3 | -0,9 | -2,5 |
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| CASH FLOW BEFORE FINANCING ITEMS | | -0,6 | -0,6 | -5,5 |
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| FINANCING | | | | |
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| Share issue | | 0,0 | 0,0 | 6,7 |
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| Increase of long-term loans | | 1,0 | 0,2 | 1,2 |
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| Increase/decrease of subordinated | | 0,0 | 0,0 | 0,0 |
| loans | | | | |
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| Instalments of long-term loans | | -0,2 | -0,2 | -1,2 |
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| Increase/decrease in short-term | | -0,4 | 0,3 | -0,7 |
| loans | | | | |
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| Instalments of finance leasing | | -0,0 | -0,0 | -0,4 |
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| TOTAL FINANCING | | 0,4 | 0,3 | 5,7 |
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| Change in cash and cash | | -0,2 | -0,3 | 0,3 |
| equivalents | | | | |
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| Cash and cash equivalents 1.1. | | 0,7 | 0,5 | 0,5 |
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| Cash and cash equivalents | | 0,5 | 0,2 | 0,7 |
| 31.3/31.12. | | | | |
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| CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 1 Jan - 31 March 2006 |
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| MEUR | Share | Issue | Re- | Other | Exchange | Retained | Tot. |
| | capi- | premium | serve | funds | differ- | earnings | |
| | tal | fund | fund | | ence | | |
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| Share- | 5,2 | 0,4 | 0,6 | 2,2 | 0,1 | -5,7 | 2,8 |
| holders´ | | | | | | | |
| equity | | | | | | | |
| 1.1.2006 | | | | | | | |
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| Exchange | | | | | 0,0 | | 0,0 |
| differ- | | | | | | | |
| ence | | | | | | | |
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| Net | | | | | | -0,5 | -0,5 |
| profit/ | | | | | | | |
| loss of | | | | | | | |
| the | | | | | | | |
| financial | | | | | | | |
| year | | | | | | | |
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| Share- | 5,2 | 0,4 | 0,6 | 2,2 | 0,1 | -6,2 | 2,4 |
| holders´ | | | | | | | |
| equity | | | | | | | |
| 31.3.2006 | | | | | | | |
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| CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 1 Jan - 31 March 2007 |
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| MEUR | Share | Issue | Re- | Other | Exchange | Retained | Tot. |
| | capi- | premium | serve | funds | differ- | earnings | |
| | tal | fund | fund | | ence | | |
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| Share- | 10,1 | 1,9 | 0,0 | 2,0 | 0,1 | -4,7 | 9,4 |
| holders´ | | | | | | | |
| eauity | | | | | | | |
| 1.1.2007 | | | | | | | |
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| Exchange | | | | | 0,0 | | 0,0 |
| differ- | | | | | | | |
| ence | | | | | | | |
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| Net | | | | | | -1,3 | -1,3 |
| profit/ | | | | | | | |
| loss of | | | | | | | |
| the | | | | | | | |
| financial | | | | | | | |
| year | | | | | | | |
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| Share- | 10,1 | 1,9 | 0,0 | 2,0 | 0,1 | -5,9 | 8,1 |
| holders´ | | | | | | | |
| equity | | | | | | | |
| 31.3.2007 | | | | | | | |
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| CONTINGENT LIABILITIES AND | | 31.3.2007 | 31.3.2006 | 31.12.2006 |
| PLEDGES GIVEN | | | | |
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| FOR GROUP´S OWN DEBT | | MEUR | MEUR | MEUR |
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| Mortgages on buildings and | | 5,7 | 5,7 | 5,7 |
| leases | | | | |
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| Mortgages on company assets | | 7,7 | 7,7 | 7,7 |
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| Pledges given | | 8,4 | 9,6 | 8,3 |
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| Pledged shares | | 0,5 | 0,3 | 0,5 |
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| Leasing-liabilities | | 0,1 | 0,1 | 0,0 |
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| OHTER PLEDGES GIVEN | | | | |
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| Pledged deposits | | 0,0 | 0,0 | 0,0 |
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| Mortgages on company assets | | 0,0 | 0,5 | 0,0 |
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| TOTAL | | 22,4 | 24,0 | 22,2 |
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| OUTSTANDING DERIVATIVES | | | | |
| CONTRACTS | | | | |
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| PAR VALUE | | | | |
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| Foreign currency hedging | | 1,0 | 1,0 | 0,0 |
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| GROUP´S KEY FIGURES | | 31.3.2007 | 31.3.2006 | 31.12.2006 |
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| Earnings/share, euros | | -0,08 | -0,17 | -0,45 |
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| Shareholder´s equity/share, | | 0,50 | 0,86 | 0,58 |
| euros | | | | |
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| Equity ratio, % | | 20,43 | 5,83 | 22,92 |
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| Current ratio | | 0,9 | 0,6 | 0,9 |
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| Gross investments, Meur | | 0,8 | 0,5 | 1,5 |
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| Interest bearing liabilities, | | 21,8 | 25,5 | 21,2 |
| Meur | | | | |
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| Number of shares average | | 16213178 | 2735100 | 8314531 |
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| Number of share 31 March | | 16213178 | 2735100 | 16213178 |
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| AVERAGE GROUP PERSONNEL | | 208 | 195 | 207 |
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Business segmentation is not being presented, as Stromsdal Group only has one
business segment. Geographical sales segmentation is presented below for the net
sales.
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| NET SALES BY MARKET AREA |
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| | 3/2007 | | 3/2006 | | 12/2006 | |
| | (1000 Eur) | % |(1000 Eur)| % |(1000 Eur) | % |
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| Finland | 1 112 | 8 | 798 | 6 | 3 011 | 6 |
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| EU | 8 688 | 65 | 9 070 | 63 | 32 778 | 62 |
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| Rest of | 3 208 | 24 | 3 229 | 23 | 13 661 | 26 |
| Europe | | | | | | |
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| USA and | 0 | 0 | 0 | 0 | 491 | 1 |
| Canada | | | | | | |
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| Asia | 79 | 1 | 63 | 0 | 305 | 0 |
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| Other | 297 | 2 | 1 105 | 8 | 2 896 | 5 |
| countries | | | | | | |
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| Total | 13 383 | 100 | 14 265 | 100 | 53 142 | 100 |
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| Largest shareholders | | |
| March 9, 2007 | Shares and votes, | % |
| | number | |
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| 1. | Suomen Teollisuusijoitus Oy | 2 500 000 | 15,4 |
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| 2. | Svenska Handelsbanken AB (Publ) | 2 500 000 | 15,4 |
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| 3. | Juankosken Kehitysmasuuni Oy | 1 891 694 | 11,7 |
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| 4. | Finnvera | 1 875 000 | 11,6 |
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| 5. | ABB Oy | 912 150 | 5,6 |
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| 6. | Enterpack Oy | 698 253 | 4,3 |
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| 7. | Savon Voima Oyj | 625 000 | 3,9 |
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| 8. | Santava Oy | 375 000 | 2,3 |
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| 9. | Seligson & Co Phoenix | 325 060 | 2,0 |
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| 10 | Pellonmaa Niilo | 270 000 | 1,7 |
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| | Others | 4 241 021 | 26,1 |
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| | Total | 16 213 178 | 100,0 |
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