(For table, see attached file)
• Profit after net financial items amounted to SEK 36 (37) million for the
second quarter of 2012. Profit after net financial items amounted to
SEK 32 (56) million for the first half of 2012.
• Cash flow from operating activities amounted to SEK 67 (55) million for the
second quarter of 2012 and to SEK 35 (30) million for the first half of
2012.
• Over 20,000 tonnes of chemical sulphate pulp were produced at Vallvik Mill
in June. This is the highest ever monthly production at the mill and well
over the old record. A new daily record of 740 tonnes was also noted.
• In May 2012, the Board of Rottneros decided to enter into negotiations
concerning the termination of continuous groundwood pulp production at
Rottneros Mill. Negotiations have been concluded and approximately 50
employees at the mill were issued with notices of pending redundancy.
CEO’s statement
Rottneros generated an operating profit of SEK 36 million during the second
quarter, which we are pleased about given the prevailing macro-economic
downturn and global uncertainty. The quarterly result corresponds to a return
on capital employed of 14 per cent for the quarter. The result is the same as
for the second quarter of last year, although the cost of pulp at that time was
USD 1,000 per tonne compared with just over SEK 800 this year. Including the
stronger dollar, the price of pulp in Swedish kronor was almost SEK 500 per
tonne lower during the second quarter of the year compared with last year.
Consequently we have largely achieved this result by improving productivity and
reducing costs.
Vallvik Mill has beaten its production record, which demonstrates in its
monthly rate that the factory can handle a rate corresponding to the level for
which we are applying for a temporary environmental permit: 242,000 tonnes per
year. A decision is expected during the third quarter and should apply for a
period of three years. The investment programme implemented following the new
share issue in late 2009 is now paying for itself. Higher and more stable
production has reduced the consumption of chemicals and energy, increased green
electricity certificate production, and having fewer employees obviously leads
to a lower production cost per tonne. Yet we cannot live on this; it is
revenues that count at the end of the day. Thankfully, most of Vallvik’s sales
are outside the troubled printing paper segment, so the revenue side has fared
pretty well despite macro-economic weaknesses.
The decline in the European consumption of printing paper means that the demand
for suitable fine groundwood pulp continues to dwindle. As the last dedicated
manufacturer, we have now been forced to issue notices of pending redundancy
notices to our staff on the groundwood line at Rottneros Mill. Our continuous
production of groundwood pulp is scheduled to cease in March 2013. This will
not affect CTMP production. The intention is not to scrap or sell the
groundwood line, but to modify it during the autumn so that it can also
manufacture coarse groundwood pulp. If there are customers in the future who
are profitable for us within either the board or printing paper sectors,
production can thus be continued intermittently. Furthermore it is also
conceivable that continuous production could also resume should there once
again be a change in the competitive conditions – in plain terms price,
availability and quality including composition reliability – especially
relative to recycled fibres. We have been forced to initiate this drastic
process owing to the Swedish model which, unlike the countries where many of
our competitors operate, have no temporarily dismissal rules and because of
Swedish employment protection legislation. The downsizing does not necessitate
any impairment losses or reservations for redundancy expenses or other closure
costs.
We envisage a high level of macroeconomic uncertainty for the remainder of the
year with virtually unpredictable value interrelations between the dollar, the
euro and the krona. This results in commodity markets being generally tricky to
predict, and particularly the pulp market. When making an international
comparison, European pulp prices are not high and the price gap between the
various grades of pulp is also unusually low, which leads us to believe that
demand for our long-fibre pulp will be fairly good for the remainder of the
year. We do not envisage any price increases for raw materials (such as
pulpwood and chemicals) over the year and nor for energy besides normal
seasonal fluctuations during the late autumn.
Ole Terland
President and CEO
(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
