(For full report including tables, see attached file)
• Profit after net financial items amounted to SEK 28 (138) million for the
full year 2011 before write-downs and one-off costs. Profit after net
financial items amounted to SEK -44 (13) million for the fourth quarter of
2011. Costs of SEK 25 million for the normal maintenance shutdown at
Vallvik Mill have been charged to this quarter.
• The result for the third quarter of 2011 was charged with write-downs of
SEK -118 million and one-off costs of SEK -30 million (SEK -148 million in
total). Loss after net financial items amounted to SEK -120 million for the
full year 2011 after these write-downs and one-off costs.
• As a consequence of the weak market for mechanical pulp, Rottneros Mill is
implementing an improvement programme involving changes to the product
range as well as staff reductions and cutting other production costs.
• The board proposes a dividend of 0.10 (0.20) Swedish kronor per share for
the financial year 2011.
CEO’s statement
2011 was a year of two quite different halves. Demand for sulphate pulp was
good during the first six months of the year, which resulted in prices
increasing to a new record level of USD 1,025 per tonne by midsummer. However,
the price of mechanical pulp remained virtually static despite the good
momentum for chemical pulp. Global stock levels for pulp increased, which was
probably due to purchasers worrying about further price rises. The market
psychology changed during the summer; demand for printing and writing paper was
weak, the financial crisis worsened in Member States in the Eurosystem and high
levels of pulp stock suddenly became a good reason to push pulp prices down.
This price correction did not cease during the third quarter but accelerated
instead during the autumn, and the final months of the year were noticeably
weak. Purchasers of pulp were very inclined to postpone any buying as pulp
would soon be cheaper, and the risk of running out of pulp was considered to be
worth taking in spite of consumer stocks being at a record low. The price of
NBSK (bleached long fibre sulphate pulp) fell to approximately USD 830 per
tonne by the end of the year. Stocks continued to rise despite global pulp
producers taking significant production curtailments. These price fluctuations
occurred against the background of the US dollar weakening during the first
half of the year and then strengthening again during the autumn. For the
Swedish pulp industry this means that the average pulp price for the year was
almost SEK 500 per tonne lower than in 2010, despite record high USD pulp
prices. This obviously had an adverse effect on the result. Before the one-off
items charged to Quarter 3, the full-year result for Rottneros before
depreciation fell from SEK 224 to 98 million.
We completed extensive improvements and investments at Vallvik Mill during the
last quarter of the year; this satisfied the requirements imposed on us by the
authorities, but also boosted production capacity at the factory by almost 20%.
These investments constituted an important reason for our financial
reconstruction and rights issue which took place at the end of 2009. Weak
demand during the third quarter meant that no costly measures were approved to
minimise production losses during the shutdown and start up, which resulted in
volume losses being slightly higher than estimated. These have been included
under the item ‘negative effect on result from annual maintenance shutdown’;
they were previously forecast at SEK 15-20 million, but ended up as SEK 25
million. So far the results of these investments appear to be very promising. A
full evaluation cannot be made until the operation has been running for a
longer period and it has been possible to see the impact of both winter and
summer climates on the process and biological water purification plant.
Negotiations have been concluded in respect of the improvement programme at
Rottneros Mill, which was announced in September, and notices of termination
given and early retirements arranged. The programme will be fully implemented
during the summer. The mill restricted production quite significantly during
the last quarter – approximately one week per month – in order to balance
stocks while avoiding unnecessary price compression through focussing on
volumes.
There was certainly a high level of macroeconomic uncertainty at the start of
2012, at least in those Member States in the Eurosystem and, as regards the
export industry, a disadvantageous relationship between the value of the Euro
and the Swedish krona. On the other hand, our customers’ stock levels are low,
activity is good in China – a country that is becoming increasingly important –
Swedish timber prices are falling and electricity has been at its lowest winter
level for some time. The official pulp price index (PIX) experienced a slight
upturn in January after having continuously fallen since the end of June, so
there are signs that the pulp price has bottomed out this time round.
The prospects for 2012 are unusually uncertain although they appear to be
brighter. The situation seems more promising on leaving the gloomy fourth
quarter behind us at a time when timber and electricity prices are falling and
also as the fall in PIX prices of pulp in Europe tailed off in December and
started to rise slightly in January.
Ole Terland
President and CEO
ACCOUNTING PRINCIPLES
This interim report has been prepared in accordance with IAS 34 ‘Interim
Financial Reporting’, which complies with Swedish law through the application
of the Swedish Financial Reporting Board’s Recommendation RFR 1 ‘Supplementary
Accounting Rules for Groups’ together with RFR 2 ‘Accounting for Legal
Entities’, in respect of the parent company.
The accounting principles, definitions of key ratios and calculation methods
are the same as those applied in the last Annual Report, except as regards the
following:
• Amendments to the existing standard IAS 24, which entered into force on 1
January 2011. Revised IAS 24 ‘Related Party Disclosures’ clarifies and
simplifies the definition of ‘related party’. Rottneros has applied the
revised standard with effect from 1 January 2011. The amended accounting
principle has not yet had any effect on recognised amounts, though requires
further information in the company’s financial reports.
• The parent company’s comparative figures have been amended as a consequence
of the Swedish Financial Accounting Board having withdrawn UFR 2 . Group
contributions are reported for the financial year commencing on 1 January
2011 or later in accordance with RFR 2[IAS27]p2 and also RFR 2[IAS18]p3.
This amendment applies retroactively. The amended reporting had a positive
effect of SEK 114 million on the net income of the parent company for the
full year 2010. The amendment had no effect on the company’s equity.
FORECAST for 2012
The company is not providing an earnings forecast for 2012.
FORTHCOMING FINANCIAL INFORMATION
19 April 2012 Interim Report January-March 2012
18 July 2012 Interim Report January-June 2012
19 October 2012 Interim Report January-September 2012
24 January 2013 Year-end Report for 2012
The AGM for Rottneros AB will be held in Stockholm on Thursday 19 April 2012.
The Annual Report for 2011 will be available from the company’s website during
Week 11 of 2012.
For more information, please visit Rottneros’ updated website,
www.rottneros.com.
Stockholm, 27 January 2012
Ole Terland
President and Chief Executive Officer
This report has not been reviewed by the company’s auditors.
Analyst and press conference
Analysts and journalists are invited to a press conference on 27 January at
10.00.
Location: Rottneros Head Office, World Trade Center, Kungsbron 1, C6,
Stockholm, Sweden
Please register with Hella Wopfner, hella.wopfner@rottneros.com, telephone: +46
8 590 010 12
Rottneros AB (publ)
Corp. ID no. 556013-5872
Box 70 370, SE-107 24 Stockholm, Sweden
Tel. +46 8 590 010 00, fax +46 8-590 010 01
www.rottneros.com
Rottneros discloses the information provided herein pursuant to the Securities
Markets Act and/or the Financial Instruments Trading Act. This information was
submitted for publication on 27 January 2012 at 08.00. A Swedish and an English
version of this report have been drawn up. The Swedish version shall apply in
the event of differences between the two reports.
(For full report, see attached file)
Rottneros, a company that was originally established in the 1600s, is an
independent and flexible supplier of customised paper pulp of high quality.
Rottneros has been able to adapt in order to meet high customer expectations by
continually developing its products and maintaining high levels of delivery
reliability, technical support and service.
Rottneros has an annual production capacity of almost 400,000 tonnes of pulp at
two mills in Sweden. Increasingly intensive product development in line with
the requirements of customers will result in profitability that is higher and
more stable throughout the business cycle.
Rottneros AB (publ)
Box 70 370, SE-107 24 Stockholm, Sweden
Visiting address: World Trade Center, Kungsbron 1, C6, Stockholm, Sweden
Telephone +46 (0)8-590 010 00, Fax +46 (0)8-590 010 01
info@rottneros.com www.rottneros.com
