Metsäliitto Group's interim report 1 January - 30 June 2008, 23 July
2008
Metsäliitto Group's operating result, excluding non-recurring items,
EUR 62 million in the first half of the year
Result for the first six months of 2008
- Sales EUR 3,822 million (EUR 3,888 million).
- The operating result excluding non-recurring items was EUR 62
million (161). Operating profit including non-recurring items was EUR
156 million (92).
- Result before tax and excluding non-recurring items was EUR -52
million (58). The result from continuing operations, including
changes in deferred tax liability, was EUR 33 million (-55).
Result for the second quarter of 2008
- Sales EUR 1,892 million (EUR 1,918 million).
- The operating result excluding non-recurring items was EUR 14
million (75). Operating profit including non-recurring items was EUR
86 million (64).
- Result before tax and excluding non-recurring items was EUR -39
million (33). The result from continuing operations, including
changes in deferred tax liability, was EUR 32 million (-4).
Events in the second quarter
- Regarding its programme to improve the profitability of operations
announced in late 2007, M-real increased the annual objective of the
programme from EUR 100 million to EUR 150 million.
- Metsä Tissue started the upgrading of Katrin away-from-home
products in Russia.
- M-real sold a total of 100,000 Pohjolan Voima Oy B2 stocks to
Kymppivoima Oy for EUR 80 million. A sales gain and fair value of EUR
74 million was realised from the deal.
- "The Finnish Government's latest measures to ease taxation of wood
sales provide very welcome assistance to meet the current challenges
in the wood trade. Metsäliitto is in an excellent position to respond
to a considerable upturn in the wood trade throughout Finland for
all species of wood. Significant steps to develop Tissue Paper and
Wood Products Industry businesses continue to be taken. Board and
Paper Industry has found new profit improvement methods based on
business concept streamlining, and the recovery of M-real is
progressing. In the second quarter, the operational circumstances of
the forest industry have become even more difficult, which is why we
will continue our persistent work in order to improve our
profitability."
Kari Jordan, President & CEO, Metsäliitto Group
Metsäliitto Group
Income statement 2008 2007 2008 2007 2007
(Continuing operations) 1-6 1-6 Q2 Q2 1-12
Sales 3 822 3 888 1 892 1 919 7 669
Other operating income 201 61 128 37 136
Operating expenses -3 637 -3 609 -1 822 -1 775 -7 126
Depreciation and impairment -230 -248 -112 -117 -706
losses
Operating profit 156 92 86 64 -27
Share of results in associates 3 3 1 1 12
Net exchange gains / losses -2 -4 -1 1 1
Other financial income & -116 -102 -53 -44 -228
expenses
Result before tax 41 -11 33 22 -242
Income tax -8 -44 -1 -26 -24
Result from continuing operations 33 -55 32 -4 -265
Metsäliitto Group
Profitability 2008 2007 2008 2007 2007
(Continuing operations) 1-6 1-6 Q2 Q2 1-12
Operating profit, EUR mill. 156 92 86 64 -27
- " -, excluding non-recurring items 62 161 14 75 276
Return on capital employed, % 5.6 3.5 6.1 4.8 0.1
- " -, excluding non-recurring items 2.5 5.8 1.3 5.5 5.0
Return on equity, % 2.9 -4.4 5.6 -0.6 -10.9
- " -, excluding non-recurring items -5.2 1.2 -6.7 1.1 1.3
Financial position 2008 2007 2008 2007 2007
30.6 30.6 31.3 31.3 31.12
Equity ratio, % 30.1 29.0 29.2 29.0 28.8
Gearing ratio, % 157 160 161 156 163
Net gearing ratio, % 147 149 142 145 142
Interest-bearing net liabilities, EUR 3 421 3 647 3 329 3 600 3 271
mill.
Business areas
Sales and Operating Wood Board Tissue
profit Wood Products Pulp *) and and
1-6/2008 Supply Industry Industry Paper Cooking
(EUR mill.) Industry Papers
Sales 960 644 810 2 164 461
Other operating income 7 4 16 176 11
Operating expenses -942 -630 -637 -2 112 -423
Depreciation & -3 -21 -69 -153 -29
impairment losses
Operating profit 22 -3 120 75 20
*) Represents 100%. The Metsäliitto Group consolidates 53% of the
Pulp Industry.
The figures are unaudited
METSÄLIITTO GROUP
INTERIM REPORT 1 January - 30 June 2008
Sales and result
Metsäliitto Group's sales for January-June were EUR 3,822 million
(3,888). The comparable sales were at last year's level. The sales
have been increased by the pulp mill in Uruguay, which has had an
excellent start. However, the sales have been decreased by the
closedown of the Sittingbourne and Wifsta paper mills, and the
divestment of the folding carton business.
The operating result excluding non-recurring items was EUR 62 million
(161). The net amount of non-recurring items was EUR +93 million
(-69). In May, M-Real sold a total of 100,000 Pohjolan Voima Oy B2
stocks to Kymppivoima Oy for EUR 80 million, for which a sales gain
and fair market value of EUR 74 million was realised. Another
significant non-recurring income was booked during the first quarter.
This, the sale of the mill operations in the UK, and pension
liability arrangements amounted to an income of EUR 24 million in
total. Furthermore, different cost provisions were booked during the
first half of the year, totalling approximately EUR 5 million.
Operating result including non-recurring items was EUR 156 million
(92). The Group's net financial expenses were 3.1% of sales (2.7).
Financial income was EUR 10 million (14), shares in associate
companies were EUR 3 million (3) and financial expenses were EUR 127
million (117). Net exchange gains/losses recognised in financial
items were EUR -2 million (-4). At the end of June, the exchange rate
of the US dollar against the euro was 7% weaker and that of the
British pound 8% weaker than at the beginning of the year. On
average, the dollar and the pound weakened during the first half of
the year by 15% compared to the same period last year.
The result before taxes was EUR 41 million (-11) and taxes, including
changes in deferred tax liability, were EUR 8 million (44). The
result for continuing operations was EUR 33 million (-55), the result
for discontinued operations was EUR -25 million (1) and the result
for the financial period was EUR 8 million (-54).
The EUR 25 million sales gain reduction from the sales of the Map
Merchant Group in 2007 has been included in the result for
discontinued operations during the second quarter. As a whole, the
sales' positive effect on cash flow was EUR 364 million, whereas the
gain on sale was EUR 51 million.
The result for January-June attributable to the owners of the parent
company was EUR 19 million (29) and to the minority EUR -11 million
(-83).
The Group's return on capital employed for continuing operations was
5.6% (3.5) and return on equity was 2.9% (-4.4). Excluding
non-recurring items, return on capital employed was 2.5% (5.8) and
return on equity was -5.2% (1.2).
Balance sheet and financing
Metsäliitto Group's total liquidity was EUR 1.4 billion at the end of
June (31 December 2007: 1.6). Of this, EUR 0.2 billion (0.4) was in
terms of liquid assets and investments, and EUR 1.2 billion (1.2) 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 approximately EUR 0.5 billion.
Metsäliitto Group has booked its Pohjolan Voima shares at their fair
market value. As a result of the valuation, the equity ratio on 31
December 2007 increased from 27.0% to 28.8%, and the net gearing
ratio decreased from 157% to 142%.
The Group's equity ratio in June was 30.1% and net gearing was 147%
(31 December 2007: 28.8% and 142%, respectively). Interest-bearing
net liabilities stood at EUR 3,421 million (31 December 2007: 3,271).
The equity ratio of the parent company, Metsäliitto Cooperative, was
56.9% at the end of June and the net gearing ratio was 45% (31
December 2007: 55.0% and 37%, respectively).
Metsäliitto Cooperative's members' capital decreased by EUR 5.6
million in January-June. The actual members' capital grew by EUR 4.4
million, the additional members' capital A decreased by EUR 7.8
million and the additional members' capital B decreased by EUR 2.2
million. At the end of June, Metsäliitto Cooperative had 130,169
members (31 December 2007: 131,032).
At its meeting on 23 April 2008, Metsäliitto Cooperative's
Representative Council decided to pay 6.5% (6.0) of interest on the
subscribed members' capital, 5.5% (5.0) on the additional A series
capital and 4.0% (3.5) on the additional B series capital for 2007.
Thus, the interest on members' capital for 2007 totals EUR 41.1
million (36.2).
Personnel
The Group employed an average of 20,097 people (22,137) during the
first half of the year. At the end of June, the number of personnel
in the Group was 20,515 (31 December 2007: 20,105). The parent
company Metsäliitto Cooperative employed 3,527 people at the end of
June (31 December 2007: 3,165).
Investments, acquisitions and divestments
Metsäliitto Group's capital expenditure and corporate acquisitions
totalled EUR 110 million (193).
Investments in fixed assets
The modernisation investment of Metsä-Botnia's Äänekoski mill's
chlorine dioxide plant has been completed, and the renewed plant will
be introduced in the maintenance outage in the autumn. The objective
of the investment is to reduce AOX (Adsorbable Organic Halogens)
emission levels. Furthermore, the entire automation system of the
Äänekoski mill will be modernised. The investment will be completed
by the autumn, and the new system will be introduced in the autumn
maintenance outage as well.
Structural changes
The profit improvement and complexity reduction programme M-real
announced in November 2007 has progressed according to plan. As part
of the programme, M-real shut down its BCTMP plant in Lielahti and
paper machine 2 producing coated magazine paper at the Kangas mill.
M-real's Publishing and Commercial Printing business areas were
combined into the Graphic Papers business area and a project to
simplify the coated magazine paper operations and to lighten the
sales and marketing organisation was initiated at the same time. As
part of the programme, M-real announced it is also prepared to take
other measures, such as capacity cuts, if they are required by
changes in the business environment. In May 2008, the aggregate
annual profit improvement target of the programme was increased from
the original EUR 100 million to EUR 150 million. The full effect on
earnings will be reached by the end of 2010.
In February 2008, an additional goal of at least EUR 200 million from
asset sales was announced by M-real. The company plans to reach this
target by the end of the first quarter of 2009. So far, a total of
EUR 162 million of the programme has been implemented, including the
divestments of the New Thames mill and the 100,000 Pohjolan Voima B2
shares. Taking into account the pension commitments regarding the
mill operations in the UK, the positive effect on cash flow by the
divestment of the New Thames mill totalled approximately EUR 82
million, and a gain on sale of approximately EUR 24 million was
booked for the deal. The positive effect on cash flow by the
divestment of the Pohjolan Voima shares was EUR 80 million, and the
non-recurring effect on earnings totalled EUR 74 million.
As announced on 13 June 2008, the divestment of the Reflex mill to
Arjowiggins was suspended. The European Commission granted a
conditional approval for the deal, but the terms and conditions meant
that it was impossible to implement the deal.
Business areas
Wood Supply
Wood Supply sales were EUR 960 million (815) in January-June, and the
operating result came to EUR 22 million (20). The operating result
includes approximately EUR 2 million in non-recurring income (2).
Wood Supply Finland accounted for EUR 654 million (578) of the sales
and EUR 17 million (14) of the operating profit.
During the first half of the year, the domestic wood supply's
purchase volumes in Finland were less than half of the corresponding
figures last year. The entire purchase volume of the forest industry
from private forests totalled approximately 12.5 million cubic metres
(27.5). The national Summer Logging campaign started by Metsäliitto
at the beginning of April aims to increase summer-time harvesting.
The objective is to increase the amount of thinning by a quarter from
last year. The market situation for roundwood out of delivery sales
that is collected by forest owners themselves has been good. In fact,
the proportion of delivery-to-roadside sales constituted one third of
Metsäliitto's procurement.
In Russia, wood supply increased, and the prices remained stable.
Russia has not announced any changes to the planned export tax rise
on roundwood, which will take effect around the turn of the year. In
January-June, Metsäliitto's imports from Russia to Finland amounted
to 1.1 million cubic metres (0.9).
In the Baltics, private forests' wood supply has remained low. At the
beginning of the year, Metsäliitto succeeded in purchasing only
slightly over half of its private forest procurement target. The wood
flow from state owned forests in the Baltics countries has been
normal due to improved road conditions. At the beginning of the year,
wood prices were clearly decreasing.
The Swedish wood market situation has remained stable. Wood
procurement from the storm-felled forests in Central Europe has been
slower than planned. The wood supply in France is good, and prices
are on a slight decrease.
Metsäliitto's deliveries to the mills totalled 18.5 million (18.8)
cubic metres in the entire operating area during the first half of
the year.
Wood Products Industry
Metsäliitto Wood Products Industry sales were EUR 644 million (740)
in January-June, and the operating result came to EUR -3 million
(68). The disproportionate relationship between wood raw material and
the market price of sawn timber in particular is the main reason for
the unprofitable result. Furthermore, productivity has been burdened,
especially by changes in exchange rates and increased logistics
expenses.
Price pressures have continued to exist in sawn timber products, and
pressures have increased in other product groups as well. Due to the
weakened market situation, sawn timber production has been adjusted
at different production facilities. The slowdown in construction and
the builders merchant and DIY business continues.
The objective of Metsäliitto Wood Products Industry's business
strategy is to increase the added value and decrease the proportion
of standard products. The change is most visible in plywood. During
the first half of the year, the new birch plywood upgrading mill in
Suolahti, which manufactures plywood products that are upgraded and
tailored to a higher extent than before, was launched, and the
results of the successful work already show in the result. According
to the strategy, product development was reinforced at the beginning
of the year as well.
In the first quarter, iLevel's European engineering wood operations
were acquired from the American Weyerhauser, and the modernisation of
the Boston unit's upgrading line in Great Britain, aiming at a more
effective manufacturing of a customer-oriented product range, was
launched during the second quarter.
Pulp
During the first half of the year, Metsä-Botnia's sales increased by
19% compared with the corresponding period last year, amounting to
EUR 810 million (682).
The operating result was EUR 120 million (101). The sales and the
operating result were improved, particularly by the successful
production by the mill in Uruguay and the positive price development
of pulp. Earnings were weighted down by a clear weakening of the US
dollar against the euro, a considerable increase in wood raw material
prices and the curtailments of production at the Finnish mills.
During the second quarter, there were several disturbances in the
pulp market. In Latin America, there were difficulties in eucalyptus
production, and there were also difficulties in the procurement of
wood raw material in Finland and Indonesia. At the same time,
capacity was shut down in Finland and Canada.
Foreign currency-denominated market prices for softwood pulp were, on
average, 16% higher in the first half of the year compared with the
corresponding period last year. The average prices of hardwood pulp
increased by 21%. On the other hand, the US dollar dropped over 15%,
so euro-denominated prices did not increase much.
The launch of the pulp mill in Uruguay has been a success. The Fray
Bentos mill reached its nominal production volume in 145 days, which
is a new world record in the launch of pulp mills. The mill's
six-month production was 432,000 tonnes. The environmental values of
the mill have clearly remained below EU standards and the permitted
values set by Uruguay's environmental authorities.
Metsä-Botnia's CEO Erkki Varis will retire on 31 August 2008. His
successor, Ilkka Hämälä, starts on 1 September 2008.
M-real's result includes 30% of pulp production's operating profit.
In total, 53% of the figures for the Pulp Industry are consolidated
into Metsäliitto Group's financial statements.
Board and Paper
Board and Paper Industry's sales totalled EUR 2,164 million (2,253),
and the operating result excluding non-recurring items was EUR -18
million (18).
Increased wood raw material and energy costs, the stronger euro
against the US dollar and British pound, and the curtailments of
production at Metsä-Botnia's mills in Finnish depressed the operating
result excluding non-recurring items compared with last year. The
result was improved by the implemented cost-saving measures and price
increases and the launch of the pulp mill in Uruguay in November
2007.
Non-recurring items totalled EUR 93 million net (63) in January-June.
During the second quarter, the EUR 74 million gain on the sales of
the Pohjolan Voima shares was booked as income, and a EUR 2 million
cost provision dealing with the sales network streamling programme
was booked as an expense. During the first quarter, EUR 24 million
had been booked as income connected to the release of pension
liabilities in Great Britain as a result of the divestment of the New
Thames mill and from some other liabilities related to the shut-down
of the Sittingbourne mill. Different cost provisions totalling EUR 3
million had been booked as expenses.
Operating result including non-recurring items was EUR 75 million
(81). Net interest and other financial expenses totalled EUR 73
million (66), income from associates was EUR -1 million (-1) and net
exchange gains/losses booked as financial items were EUR -1 million
(-3).
Profit before tax was 0 million euro (11), earnings per share was
-0.09 (0.01) and return on investment was 4.0 percent (4.1).
Excluding non-recurring items, the result before taxes was EUR -93
million (-52), earnings per share were EUR -0.30 (-0.22) and returnon capital employed was -0.5% (1.3).
At the end of June, M-real's equity ratio was 36.5% and net gearing
was 100% (31 December 2007: 34.4% and 99%, respectively). In some of
M-real's borrowing arrangements, a limit of 120% has been set for net
gearing and a limit of 30% for the equity ratio. At the end of June,
net gearing calculated in the manner defined in the borrowing
agreements was approximately 86% and the equity ratio about 42%.
Tissue and Cooking Papers
In January-June, sales of Metsä Tissue, which produces tissue and
cooking papers, stood at EUR 461 million (421), and its operating
result was EUR 20 million (14). Sales grew by about 9% year on year.
Growth was promoted by increased production volumes (+3%) and the
increase in selling prices and the changes in sales structure (+6%).
The sales of Metsä Tissue`s own brands - Lambi, Katrin, Serla and
Mola - grew strongly.
Metsä Tissue strengthens the market position of the the Katrin
away-from-home product concept in Central Eastern Europe and
Scandinavia. Three rewinders will be transferred to Krapkowice
(Poland) from Mariestad (Sweden). A new rewinder for away-from-home
products will be assembled in Mariestad and the mill`s investments
also involve efficiency-boosting measures.
A new, state-of-the-art storage of 36,000 square metres will be built
in Düren, Germany. The new storage will enhance the operations by
centralising four local storages into a single location.
The investments carried out at the Mänttä mills (Finland) improved
product quality and enhanced the efficiency of the production line.
The visual look of the Serla product family's packages have been
modernised as well.
Business operations in Russia will be expanded, as Metsä Tissue
started manufacturing Katrin products locally. Launching its own
upgrading operations further strengthens Metsä Tissue's position in
the Russian market.
Risks and uncertainties
Since the estimates and statements in this interim report are based
on current plans and projections, they involve risks and
uncertainties that may cause actual results to materially differ from
those expressed in such statements. The risks related to the Group's
business have been explained more extensively in Metsäliitto Group's
annual report for 2007.
Outlook
The Finnish Government's latest measures to ease taxation of wood
sales are expected to stimulate the wood trade in Finland.
Metsäliitto is in an excellent position to respond to a considerable
upturn in the wood trade provided that the price of wood raw material
is internationally competitive. Demand for all wood species is good
in Finland and the price continues to be at a high level. Due to the
low wood sale volumes and storage levels, the supply of wood to the
Group's mills in the next quarter will be difficult, particularly in
terms of pulpwood.
During the rest of the year, the market situation of the Wood
Products Industry will continue to be challenging. Regarding the
business lines, Solid Wood's operating profit for the entire year
will be in the red. On the other hand, the operations of other
business lines are estimated to remain profitable. Achieving market
balance requires that the production capacity is adjusted to suit the
demand for sawn timber in particular.
Metsä-Botnia's results for the rest of the year are burdened by high
wood prices and the weak dollar. Curtailments of production caused by
the availability of wood raw material will continue during the latter
half of the year as well.
The demand for M-real's board and magazine paper in the main market
is estimated to remain good in the third quarter. Regarding fine
paper, however, some kind of weakening in the demand is to be
expected. Measures aimed at increasing product prices will continue
in all businesses. The price increases of folding boxboard and coated
magazine paper have been announced in the main market, and prices are
expected to rise towards the end of the year. Price increases are
sought actively for fine paper as well, but their successful
implementation seems more challenging.Despite successful profit improvement programmes, M-real will not be
fully able to cover this year's cost inflation through its own
actions. New profit improvement programmes will be launched during
this year. As stated in the press release published on 10 July 2008,
M-real's operating result excluding non-recurring items in 2008 will
remain weaker than last year due to increasing production costs, the
stronger euro and the difficult fine paper market situation.
The weakening growth prospects in Europe are not expected to have any
significant influence on the sales volumes of tissue and cooking
papers. Increasing raw material costs, regarding energy and transport
in particular, will cause cost pressures, the transfer of which into
selling prices will further continue.
Metsäliitto Group's operating result excluding non-recurring items in
the first half of 2008 was weaker than in last year's first half.
This is due to increased production costs, the difficult wood raw
material situation, the weak market situation of sawn timber, the
decrease in the sales volume of fine paper, the stronger euro, and
the fact that price increases for coated fine paper have been
delayed. As stated in the press release published on 10 July 2008,
due to the reasons mentioned above, Metsäliitto's operating result,
excluding non-recurring items, for the whole of 2008 will remain
below last year's level. The operating result for the third quarter
of 2008, excluding non-recurring items, is expected to remain on the
same level as the second quarter.
Espoo, 23 July 2008
Metsäliitto Group
Board of Directors
For further information:
Ilkka Pitkänen, Group CFO, Metsäliitto Group, tel. +358 10 465 4260
Anne-Mari Achrén, Group CCO, Metsäliitto Group, tel. +358 10 465 4541
Unaudited
METSÄLIITTO GROUP
Income statement 2008 2007 2008 2007 2007
(EUR mill.) 1-6 1-6 Change Q2 Q2 1-12
Sales 3 822 3 888 -66 1 892 1 919 7 669
Other operating income 201 61 140 128 37 136
Materials and services -2 572 -2 458 -114 -1 297 -1 216 -4 988
Employee costs -534 -587 53 -263 -288 -1 126
Other operating expenses -531 -564 33 -262 -271 -1 012
Depreciation and -230 -248 18 -112 -117 -706
impairment losses
Operating profit 156 92 64 86 64 -27
Share of results in 3 3 0 1 1 12
associates
Net exchange gains / -2 -4 2 -1 1 1
losses
Other financial income 10 14 -4 5 8 19
Other financial expenses -127 -117 -10 -58 -53 -247
Result before tax 41 -11 52 33 22 -242
Income taxes -8 -44 36 -1 -26 -24
Result from continuing 33 -55 88 32 -4 -265
operations
Result from discontinued -25 1 -26 -24 -1 55
operations
Net result for the period 8 -54 62 8 -5 -211
Attributable to:
Owners of parent company 19 29 -10 10 26 -9
Minority interest -11 -83 72 -2 -31 -202
8 -54 62 8 -5 -211
Unaudited
Balance sheet 2008 2007 2007
30.6. 30.6. 31.12.
ASSETS
Non-current assets
Intangible assets 437 602 389
Tangible assets 3 805 4 132 4 021
Biological assets 77 77 83
Shares in associated and other companies 575 453 506
Interest-bearing receivables 16 38 32
Deferred tax receivables 44 83 46
Other non-interest-bearing receivables 10 6 12
4 963 5 391 5 090
Current assets
Inventories 1 144 1 159 1 132
Interest-bearing receivables 30 6 27
Non-interest-bearing receivables 1 442 1 657 1 358
Cash and cash equivalents 183 227 428
2 799 3 050 2 945
Assets classified as held for sale 32
TOTAL 7 762 8 473 8 035
MEMBERS' FUNDS AND LIABILITIES
Members' funds 1 335 1 375 1 328
Minority interest 992 1 078 978
Total members' funds 2 326 2 453 2 306
Non-current liabilities
Deferred tax liabilities 426 449 404
Retirement benefit obligations 176 233 195
Provisions 57 93 83
Other non-interest-bearing liabilities 40 60 50
Interest-bearing liabilities 2 907 3 328 3 011
3 606 4 164 3 742
Current liabilities
Non-interest-bearing liabilities 1 086 1 256 1 240
Interest-bearing liabilities 743 589 747
1 829 1 845 1 987
Total liabilities 5 435 6 009 5 729
Liabilities classified as held for sale 11
TOTAL 7 762 8 473 8 035
Change in members'
funds Mem- Share Trans- Fair Retain- Mino- Total
EUR mill. bers' pre- lation value ed rity
capi- mium differ- and ear- inte-
tal acc- ences other nings rest
ount reser-
ves
Adjusted members' 577 30 6 136 628 1 194 2 571
funds January 1, 2007
Currency flow hedges
recorded in equity 2 3 4
transferred to sales -6 -10 -16
Interest flow hedges
recorded in equity 2 3 5
transferred to -1 -2 -3
financial items
Commodity hedges
recorded in equity -1 0 -1
transferred to 3 5 8
purchases
Assets classified as
held for sale
recognised to fair -8 -24 -31
value
transferred to 0
financial items
Translation -4 -5 -9
differences
Net investment hedges 5 6 11
Other items 1 -3 -2
Tax on equity -1 2 5 6
components
Recognised directly in 0 0 0 -6 1 -22 -28
equity
Result for the period 29 -83 -54
Total 0 0 0 -6 29 -105 -82
Dividends paid -35 -13 -47
Increase in members' 10 10
capital, other changes
Change in share 0
premium account
Change in revaluation 3 -3 0
reserve
Transfer from 0
unrestricted to
restricted equity
Business arrangements 2 2
Total 10 0 0 -3 -38 -11 -36
Adjusted members' 586 30 6 133 620 1 078 2 453
funds June 30, 2007
Change in members'
funds Mem- Share Trans- Fair Retain- Mino- Total
EUR mill. bers' pre- lation value ed rity
capi- mium differ- and ear- inte-
tal acc- ences other nings rest
ount reserves
Adjusted members' 574 30 -7 148 583 978 2 306
funds January 1,
2008
Currency flow hedges
recorded in equity 3 4 6
transferred to -3 -5 -8
sales
Interest flow hedges
recorded in equity 0 0 0
transferred to 0 -1 -1
financial items
Commodity hedges
recorded in equity 10 10 21
transferred to 1 1 2
purchases
Assets classified as
held for sale
recognised to fair 41 58 99
value
transferred to -11 -17 -28
financial items
Translation -6 -6 -12
differences
Net investment 10 4 14
hedges
Other items 0 0 1
Tax on equity -3 -11 -14 -27
components
Recognised directly 0 0 1 30 0 35 67
in equity
Result for the 19 -11 8
period
Total 0 0 1 30 19 24 74
Dividends paid -38 -13 -52
Increase in members' -6 -6
capital, other
changes
Change in share 0
premium account
Change in 0
revaluation reserve
Transfer from 6 -6 0
unrestricted to
restricted equity
Business 4 4
arrangements
Total -6 0 0 6 -44 -10 -54
Members' funds June 569 30 -6 184 558 992 2 326
30, 2008
Unaudited
Cash flow statement 2008 2007 2007
(EUR mill.) 1-6 1-6 1-12
Cash flow from operations
Result for the period 8 -54 -211
Adjustments total 248 400 859
Change in working capital -187 -165 -34
Cash generated from operations 68 181 614
Finance costs, net -126 -123 -265
Income taxes paid -57 -42 -78
Net cash from operations -115 15 272
Cash flow from investments
Acquisitions -2 -9 -46
Purchases of assets -108 -184 -447
Sold assets and others 154 85 447
Net cash from investments 44 -109 -45
Cash flow from financing
Increase in equity -3 12 29
Change in long-term loans and
other financial items -114 112 -21
Dividends paid -55 -51 -51
Net cash flow from financing -173 74 -42
Change in cash and cash equivalents -243 -21 184
Cash at beginning of period 428 246 246
Translation difference -1 -1 -3
Change in cash and cash equivalents -243 -21 184
Cash in assets classified as held for sale 0 3 0
Cash at end of period 183 227 428
Unaudited
BUSINESS SEGMENTS
Consumer Packaging I-II/08 I-II/07 QII/08 QII/07 I-IV/07
Sales 479 478 244 242 934
EBITDA 85 85 34 35 172
Depreciation & impairment -46 -44 -23 -23 -93
losses
Operating profit 39 41 11 12 79
Papers I-II/08 I-II/07 QII/08 QII/07 I-IV/07
Sales 1 436 1 511 695 732 2 991
EBITDA 121 82 38 53 204
Depreciation & impairment -115 -117 -57 -60 -452
losses
Operating profit 6 -36 -19 -7 -248
Wood products I-II/08 I-II/07 QII/08 QII/07 I-IV/07
Sales 644 740 329 385 1 399
EBITDA 18 91 9 52 134
Depreciation & impairment -21 -23 -10 -11 -47
losses
Operating profit -3 68 -1 41 87
EBITDA = Result before depreciation and impairment losses
Others I-II/08 I-II/07 QII/08 QII/07 I-IV/07
Operating profit 114 18 95 17 55
of which
Wood Supply 22 20 12 10 38
Tissue and Cooking Papers 20 14 11 7 35
Others and Group eliminations 72 -16 72 0 -18
M-real includes 30% of the Pulp Industry's (Metsä-Botnia) operating
profit and Metsäliitto a further 23% in the segments Consumer
Packaging and Papers.
Production
1 000 units I-II/08 I-II/07 QII/08 QII/07 I-IV/07
Paper, t 1 821 2 011 865 992 3 935
Paperboard, t 608 613 294 302 1 210
Sawn goods, m3 874 1 046 471 533 1 837
Processed timber, m3 292 335 141 169 580
Engineered Wood -products, m3 426 440 206 217 849
Pulp & CTMP, t (M-real) 870 824 424 398 1 679
Pulp, t (Metsä-Botnia) 1 616 1 346 776 670 2 616
Sawn goods, m3 (Metsä-Botnia) 82 115 48 64 188
Unaudited
Quarterly data 2008 2008 2007 2007 2007 2007
(EUR mill.) QII QI QIV QIII QII QI
Sales
Consumer Packaging 244 235 225 231 242 236
Papers 695 742 740 740 732 779
Wood Products 329 315 321 338 386 354
Others & internal sales 624 638 583 604 558 600
Group sales 1 892 1 930 1 869 1 913 1 918 1 969
Operating profit
Consumer Packaging 11 28 3 35 12 29
Papers -19 24 -241 29 -7 -29
Wood Products -1 -2 -1 20 41 27
Others 95 20 28 8 18 1
Group operating profit 86 70 -211 92 64 28
- % of sales 4.5 3.6 -11.3 4.8 3.3 1.4
Share of results
in associates 1 2 7 2 1 2
Net exchange gains / losses -1 -1 5 0 1 -5
Other fin. income & expenses -53 -63 -66 -59 -45 -58
Result before tax 33 8 -265 35 21 -33
Income taxes -1 -7 36 -16 -25 -18
Result from continuing operations 32 1 -229 19 -4 -51
Result from discontinued -24 -1 56 -2 -1 2
operations
Net result for the period 8 0 -173 17 -5 -49
Unaudited
Change in tangible assets QII/08 QII/07 I-IV/07
Book value at beginning of period 4 021 4 197 4 197
Company acquisitions 0 3 22
Increase 105 193 430
Decrease -85 -120 -72
Depreciation and impairment charges -218 -222 -480
Assets classified as held for sale - - -
Translation differences and other changes -19 81 -76
Book value at end of period 3 805 4 132 4 021
Commitments QII/08 QII/07 QIV/07
On own behalf (incl. leasing liabilities) 319 365 347
On behalf of associated companies 3 3 3
On behalf of others 2 4 4
Total 324 373 355
Commitments related to fixed assets QII/08 QII/07 QIV/07
Payments due under 1 year 9 85 38
Payments due in subsequent years 1 7 7
Open derivative contracts QII/08 QII/07 QIV/07
Interest rate derivatives 1 498 1 984 1 693
Currency derivatives 2 680 3 001 3 268
Other derivatives 214 205 160
Total 4 392 5 190 5 121
The market value of open derivative contracts at the end of the
review period was EUR 43 million (12/07: EUR 29 million). Open
derivative contracts also include closed contracts to a total amount
of EUR 485 million (12/07: EUR 793 million).
Accounting policies
The Financial Statements Bulletin was prepared in accordance with the
IAS 34 standard Interim Financial Reporting and the accounting
policies presented in Metsäliitto Group's Annual Report 2007.
Taxes include taxes corresponding to the result for the period under
review.
