Metsäliitto Group Interim Report 1 January - 30 June 2009 23.7.2009
at 1.45 p.m.
Metsäliitto Group's operating result excluding nonrecurring
items EUR -128 million in the first half of the year
Result for the first half of 2009
* Sales EUR 2,492 million (1-6/2008: EUR 3,386 million).
* Operating result excluding non-recurring items was EUR -128
million (93).
Operating result including non-recurring items was EUR -193 million
(189).
* Result before tax excluding non-recurring items was EUR -181
million (-16).
Result before tax including non-recurring items was EUR -257 million
(80).
Result for the second quarter of 2009
* Sales EUR 1,213 million (4-6/2008: EUR 1,676 million).
* Operating result excluding non-recurring items was EUR -61
million (33).
Operating result including non-recurring items was EUR -56 million
(105).
* Result before tax excluding non-recurring items was EUR -88
million (-18).
Result before tax including non-recurring items was EUR -95 million
(54).
Events in the second quarter
* Metsäliitto sold its holding in Vapo (49.9%) for EUR 165 million
to a Finnish consortium led by EPV Energy and began, jointly with
Vapo, to explore the possibilities for biofuel production in the
Baltic Sea region.
* Metsäliitto Wood Products Industry continued its efforts to
improve the profitability of sawmill operations. Operations at the
Karihaara sawmill in Kemi were suspended until further notice, and
the personnel at other operating sawmills were laid off temporarily
for two to four weeks as an extension to summer vacations.
Events after the review period
* Metsäliitto Group signed a letter of intent with UPM-Kymmene on
15 July 2009 concerning the new ownership structure of
Metsä-Botnia.
"Metsäliitto Group took another important step in its active
restructuring after the second quarter in July, when it signed a
letter of intent concerning the new ownership structure of
Metsä-Botnia. The new arrangement will give Metsäliitto Cooperative a
majority shareholding in Metsä-Botnia. This will enhance the
company's focus on selected core operations. Taken together with the
Vapo deal, the arrangement, when completed, will considerably improve
the balance sheet structure of Metsäliitto Group."
Kari Jordan, President & CEO, Metsäliitto Group
Metsäliitto Group
+-------------------------------------------------------------------+
| Income statement | 2009 | 2008 | 2009 | 2008 | 2008 |
| (Continuing | 1-6 | 1-6 | Q2 | Q2 | 1-12 |
| operations) | | | | | |
|---------------------+--------+---------+--------+--------+--------|
| Sales | 2 492 | 3 386 | 1 213 | 1 676 | 6 434 |
|---------------------+--------+---------+--------+--------+--------|
| Other operating | 84 | 172 | 43 | 113 | 239 |
| income | | | | | |
|---------------------+--------+---------+--------+--------+--------|
| Operating | -2 569 | - 3 178 | -1 227 | -1 591 | -6 189 |
| expenses | | | | | |
|---------------------+--------+---------+--------+--------+--------|
| Depreciation and | -200 | -192 | -85 | -93 | -482 |
| impairment losses | | | | | |
|---------------------+--------+---------+--------+--------+--------|
| Operating result | -193 | 189 | -56 | 105 | 2 |
|---------------------+--------+---------+--------+--------+--------|
| Share of results | -10 | 4 | -8 | 2 | 6 |
| in associates | | | | | |
|---------------------+--------+---------+--------+--------+--------|
| Exchange gains | -4 | 0 | -1 | -2 | 19 |
| and losses | | | | | |
|---------------------+--------+---------+--------+--------+--------|
| Other net | -50 | -113 | -30 | -51 | -260 |
| financial items | | | | | |
|---------------------+--------+---------+--------+--------+--------|
| Result before | -257 | 80 | -95 | 54 | -233 |
| income tax | | | | | |
|---------------------+--------+---------+--------+--------+--------|
| Income tax | 25 | -8 | 7 | -1 | 60 |
|---------------------+--------+---------+--------+--------+--------|
| Result from | -232 | 72 | 88 | 53 | -172 |
| continuing | | | | | |
| operations | | | | | |
+-------------------------------------------------------------------+
Metsäliitto Group
+-------------------------------------------------------------------+
| Profitability | 2009 | 2008 | 2009 | 2008 | 2008 |
| (Continuing operations) | 1-6 | 1-6 | Q2 | Q2 | 1-12 |
|--------------------------+-------+-------+-------+-------+--------|
| Operating result, EUR | -193 | 189 | -56 | 105 | 2 |
| mill. | | | | | |
|--------------------------+-------+-------+-------+-------+--------|
| - " -, excluding | -128 | 93 | -61 | 33 | 45 |
| non-recurring items | | | | | |
|--------------------------+-------+-------+-------+-------+--------|
| Return on capital | -7.5 | 7.9 | -4.6 | 8.7 | 0.5 |
| employed, % | | | | | |
|--------------------------+-------+-------+-------+-------+--------|
| - " -, excluding | -4.9 | 4.2 | -5.1 | 3.1 | 1.3 |
| non-recurring items | | | | | |
|--------------------------+-------+-------+-------+-------+--------|
| Return on equity, % | -28.7 | 6.2 | -23.2 | 9.2 | -8.4 |
|--------------------------+-------+-------+-------+-------+--------|
| - " -, excluding | -19.3 | -2.0 | -21.5 | -3.2 | -6.4 |
| non-recurring items | | | | | |
|--------------------------+-------+-------+-------+-------+--------|
| | | | | | |
|--------------------------+-------+-------+-------+-------+--------|
| Financial position | 2009 | 2008 | 2009 | 2008 | 2008 |
| | 30.6. | 30.6. | 31.3. | 31.3. | 31.12. |
|--------------------------+-------+-------+-------+-------+--------|
| Equity ratio, % | 25.6 | 30.1 | 24.8 | 29.2 | 26.0 |
|--------------------------+-------+-------+-------+-------+--------|
| Net gearing ratio, % | 162 | 147 | 167 | 142 | 149 |
|--------------------------+-------+-------+-------+-------+--------|
| Interest-bearing net | 2 348 | 3 421 | 2 666 | 3 329 | 2 666 |
| liabilities, EUR mill. | | | | | |
+-------------------------------------------------------------------+
+----------------------------------------------------------------------+
|Sales and Operating | | Wood | |Board and|Tissue |
|result | Wood |Products|Pulp *) | Paper | and |
|1-6/2009 |Supply |Industry|Industry|Industry |Cooking|
|(EUR mill.) | | | | |Papers |
|------------------------+---------+--------+--------+---------+-------|
|Sales | 577| 425| 585| 1 208| 435|
|------------------------+---------+--------+--------+---------+-------|
| Other operating income | 4| 3| 14| 61| 4|
|------------------------+---------+--------+--------+---------+-------|
| Operating expenses | -570| -443| -638| -1 340| -377|
|------------------------+---------+--------+--------+---------+-------|
| Depreciation & | -2| -20| -126| -120| -21|
|impairment losses | | | | | |
|------------------------+---------+--------+--------+---------+-------|
|Operating result | 9| -35| -165| -191| 41|
|------------------------+---------+--------+--------+---------+-------|
| Non-recurring items | 0| 0| 75| 56| 0|
|------------------------+---------+--------+--------+---------+-------|
|Operating result | | | | | |
|excl. non-recurring | 9| -35| -90| -135| 41|
|items | | | | | |
+----------------------------------------------------------------------+
*) Represents 100%. The Metsäliitto Group consolidates 53% of the
Pulp Industry.
The figures are unaudited
METSÄLIITTO GROUP
INTERIM REPORT 1 JANUARY - 30 JUNE 2009
Sales and result
Metsäliitto Group's sales for January-June were EUR 2,492 million
(3,386).
Operating result excluding non-recurring items was EUR -128 million
(93). Net nonrecurring items amounted to EUR -65 million (95), EUR 40
million of which was related to the closure of the Metsä-Botnia
Kaskinen mill, EUR 29 million to the closure of the M-real Hallein
paper mill and EUR 4 million to M-real's ongoing efficiency
improvement programmes. A sales gain of EUR 8 million was recognised
at Group level for the Vapo deal.
The second-quarter operating result excluding non-recurring items
totalled EUR -61 million, slightly up from the previous quarter
(Q1/09: -67).
Metsäliitto Group's operating result including non-recurring items
was EUR -193 million (189). Financial income amounted to EUR 20
million (10), income fromassociates was EUR -10 million (4) and
financial expenses totalled EUR 70 million (123). Net exchange
gains/losses recognised in financial items were EUR -4 million (0).
The US dollar strengthened on average 13 per cent in the first half,
while the British pound weakened by 15 per cent and the Swedish krona
by 16 per cent year-over-year.
Income from associates includes a EUR 11 million non-recurring
expense item related to the sale of Myllykoski Paper's Sunila shares.
In the first quarter, M-realmade a market repurchase with a nominal
value of EUR 59.95 million of its EUR 400 million bond, which matures
in December 2010. A profit of approximately EUR 30.8 million for the
purchase was recognised in financial income.
Result before tax was EUR -257 million (80), and taxes, including
changes in deferred tax liabilities, totalled EUR 25 million (-8).
The result for continuingoperations was EUR -232 million (72), the
result for discontinued operations EUR -12million (-64) and the
result for the review period EUR -245 million (8).
Of the period's results, EUR -119 million (19) was attributable to
parent company members and EUR -125 million (-11) to minority
interests.
The Group's return on capital employed for continuing operations was
-7.5% (7.9),and the return on equity was -28.7% (6.2). Excluding
non-recurring items, return oncapital employed was -4.9% (4.2) and
return on equity was -19.3% (-2.0).
Balance sheet and financing
Metsäliitto Group's total liquidity at the end of June was EUR 1.6
billion (31 December 2008: 1.8). Of this, EUR 0.4 billion (0.6) was
in liquid assets andinvestments, and EUR 1.2 billion (1.2) was in
off-balance-sheet binding creditfacilities. In addition, the Group
can satisfy short-term financial needs with nonbinding commercial
paper schemes in Finland and abroad, as well as with credit limits
amounting to approximately EUR 0.6 billion.
The Group's equity ratio in June was 25.6 per cent and net gearing
totalled 162 percent (31 December 2008: 26.0% and 149%).
Interest-bearing net liabilities stood at EUR 2,348 million (31
December 2008: 2,666). The equity ratio of the parent company,
Metsäliitto Cooperative, was 58.5 per cent at the end of June and the
net gearing ratio was 34% (31 December 2008: 54.6% and 45%,
respectively).
M-real took out a pension premium loan (TyEL) of EUR 60 million in
the second quarter. After the transaction, M-real has approximately
EUR 260 million of undrawn pension premium loans.
Metsäliitto Cooperative's members' capital grew by EUR 24.0 million
in January-June. No changes took place in the actual members'
capital, but the additional members' capital A increased by EUR 21.9
million and the additional members' capital B by EUR 2.1 million. EUR
84.7 million of the members' capital matured at the beginning of
July. At the end of June, Metsäliitto Cooperative had 127,557 members
(31 December 2008: 129,267).
At its meeting on 22 April 2009, Metsäliitto Cooperative's
Representative Council decided to pay an interest of 5.5 per cent
(6.5) on the subscribed members' capital, 5.0 per cent (5.5) on the
additional A series capital and 4.5 per cent (4.0) on the additional
B series capital. The interest on members' capital totalled EUR 37.4
million (41.1) in 2008.
Personnel
The Group employed an average of 16,017 people (17,828) during the
first half of the year. At the end of June, the number of personnel
in the Group was 15,047 (31December 2008: 16,729). The parent
company, Metsäliitto Cooperative, had a headcount of 2,995 (31
December 2008: 3,217).
Investments
Metsäliitto Group's capital expenditure totalled EUR 74 million
(110).
Divestment of Vapo
On 5 May 2009, Metsäliitto Group agreed to sell its entire holding
(49.9%) in Vapo to a Finnish consortium led by EPV Energy. The deal
was concluded on 24 June 2009and amounted to EUR 165 million for
which the parent company, Metsäliitto Cooperative, recorded a sales
gain of EUR 27.3 million. The sales gain of Metsäliitto Group was EUR
8.0 million.
M-real's structural change
In February 2009, M-real launched a new profit improvement programme
with an annual target of EUR 80 million. The improvement actions
target at savings in the business areas and streamlining the support
functions to reflect the new companystructure and size after the
divestment of Graphic Papers. The full annual effect of the programme
will be visible from 2011. The majority of the profit improvement
measures relating to continuing operations are expected to be
implemented in 2009, and the profit impact is estimated to be EUR
20-25 million in 2009. The related nonrecurring costs booked during
2009 are expected to be about EUR 18 million. M-real launched also a
separate EUR 60 million programme to improve the 2009 cash flow
including, e.g., the reduction of operating net working capital and
cuts in investments.
In 2008, M-real announced to be planning the discontinuation of the
standard coated fine paper production at the Hallein and Gohrsmühle
mills based on earlier examined strategic options. Both mills have
been loss-making for a long period of time. At Hallein, Austria,
paper production was discontinued at the end of April 2009. At the
Gohrsmühle mill, the standard coated fine paper production was
discontinued in April. At Gohrsmühle, Germany, the production of
speciality papers as well as uncoated fine paper reels and folio
sheets has been expanded. M-real continues to explore various options
for the Hallein pulp mill.
Business areas
Wood Supply
Wood Supply sales totalled EUR 577 million (960) in the review period
and operating result amounted to EUR 9 million (22). The operating
result does not include nonrecurring items (2). Wood Supply Finland
accounted for EUR 441 million (654) of the sales and EUR 6 million
(15) of the operating result.
A marked decline in delivery volumes was the main reason for sales
and operating result decreasing year-over-year. In early 2009,
overall delivery volumes in Wood Supply amounted to 12.7 million
square metres (18.5).
In Finland, wood trade was exceptionally slack in the first half of
2009. In the first half of the year, Metsäliitto bought around half
the amount purchased in the corresponding period the year before.
Metsäliitto's market share grew nevertheless. The forest industry's
overall January-June purchases from privately owned forests were
third of the amount purchased in the corresponding period the year
before.
Production cuts at paper and pulp mills forced Metsäliitto to
restrict its purchases of pulpwood in particular. Roundwood and
forest energy acquisitions were active. A campaign aimed at enhancing
the procurement of forest energy got rapidly underway and gave good
results, especially i n the field of energy logs. The company decided
to set up a separate business line for wood energy deliveries in
conjunction with Wood Supply.
In the Russian market, the supply of softwood log matched demand, but
there was an oversupply of pulpwood and birch logs. The supply of
softwood log decreased quickly at the end of the second quarter. Wood
supply at the Metsä-Botnia Svir Timber sawmill was handled according
to plans. Wood supplies from Russia to Finland remained low.
Metsäliitto continued its measures to improve efficiency of its wood
supply operations.
In the Baltic countries, the wood trade of private forest owners was
at a standstill throughout the first part of the year. Most of the
wood was felled from state-owned forests. Metsäliitto's deliveries to
Finland and Sweden decreased clearly, and the wood supply
organisations were adjusted to match the new volumes.
Swedish wood trade was slow in both roundwood and pulpwood. The wood
supply of M-real's Husum mill was carried out as planned.
Wood Products Industry
The sales of Metsäliitto Wood Products Industry amounted to EUR 425
million (644), while operating result was EUR -35 million (-3). The
operating result does not include non-recurring items. The drop in
sales and the poor profitability resulted from weak demand, a low
price level and the high costs of raw material purchased earlier
years.
Wood Products Industry faced an extremely difficult market situation
throughout the first half of the year, with sales volumes and price
levels remaining at a low level. The weak demand was noticeable
especially in some industrial customer segments, such as the
transport equipment industry. Construction and DIY sales picked up in
the second quarter due to a seasonal increase in demand, among other
things. The production restrictions on sawn goods led to the price of
pine sawn goods increasing at the end of the review period.
Temporary layoffs and other cost-saving measures were continued to
improve profitability. In addition to sawn goods, restrictions were
imposed on processed sawn goods, plywood and engineered wood
products. Operations at the Karihaara sawmill in Kemi were suspended
until further notice, and the personnel at all other operating
sawmills were laid off temporarily for two to four weeks as an
extension to summer vacations. Upgrading operations in Kaskinen will
be reduced due to the contract manufacturing of consumer goods aimed
at the United Kingdom DIY market being transferred to the UK.
In line with its strategy, Metsäliitto Wood Products Industry raised
the share of upgrading by introducing plywood products with
increasingly advanced coatings to satisfy the needs of industrial
customers. The Building Solutions division continued its development
work related to low-energy construction.
Pulp
Pulp industry sales were EUR 585 million (810) in January-June, and
the operating result amounted to EUR -90 million (120). The
non-recurring items recognised in the first quarter totalled EUR -75
million and were related to the closure of the Kaskinen mill.
Operating result including non-recurring items was EUR -165 million
(120).
The market situation and the continued rapid decline in the price of
pulp at the beginning of the second quarter played a major role in
the decrease in net sales and the result. The result was also
weakened by production curtailment shutdowns at all the mills in
Finland. Some of the shutdowns resulted from market conditions, while
others were annual maintenance shutdowns. Thanks to the extensive
maintenance work carried out during the one-month shutdown at the
Joutseno mill, the volume of renewable energy sold by the mill will
increase by 20 per cent.
Foreign currency-denominated market prices for softwood pulp were, on
average, 33 per cent lower compared with the first half last year.
The average prices of hardwood pulp fell by 38 per cent. Pulp prices
were at their lowest in April, when softwood pulp sold for USD 580
and birch and eucalyptus pulp for USD 480. Prices have risen since,
standing at USD 630 for softwood pulp and USD 500 for birch and
eucalyptus pulp at the end of June. New, higher prices have been
announced for July.
The close-down of old pulp mills continued around the world in the
second quarter, and several mills restricted production due to the
market conditions. At the end of the review period, global pulp
stocks had dropped to near normal levels.
M-real's result includes 30 per cent of the Pulp Industry's operating
result. 53 per cent of the Pulp Industry's figures are consolidated
into Metsäliitto Group's financial statements. The letter of intent
published in July will also change the consolidation of Metsä-Botnia.
The deal is expected to be concluded in the last quarter.
Metsä-Botnia will become an associate of M-real and a subsidiary of
Metsäliitto and will consequently be fully consolidated into the
Group's figures.
Board and Paper
The sales of Board and Paper totalled EUR 1,208 million (1,688), and
the operating result excluding non-recurring items was EUR -135
million (13).
The operating result excluding non-recurring items decreased from
last year's corresponding period due to the drop in delivery volumes
following weaker demand, as well as the decrease in the values of
product, wood and pulp inventories. The result was improved by price
increases and cost savings.
The demand for folding boxboard increased steadily in the second
quarter, and operating levels approached normal levels. Price
increases are under consideration to be implemented in the main
markets. The order volumes of uncoated fine paper have increased, but
prices have declined. It now seems, however, that the decline in
prices is coming to an end.
The demand for coated papers remains weak, but following the
discontinuation of standard fine paper production in Hallein and
Gohrsmühle, coated papers are no longer significant to M-real.
M-real's net non-recurring items in January-June totalled EUR -56
million (95). Of these, EUR 22 million were related to the closure of
the Metsä-Botnia Kaskinen mill, EUR 29 million to the closure of the
Hallein paper mill, EUR 3 million to the streamlining of the sales
network and EUR 2 million to various cost provisions.
Operating result including non-recurring items was EUR -191 million
(108). Net interest and other financial expenses totalled EUR 10
million (70), income from associates was EUR -13 million (-1) and net
exchange gains/losses recognised as financial items were EUR 2
million (1).
In the first quarter, M-real made a market repurchase with a nominal
value of EUR 59.95 million of its EUR 400 million bond, which matures
in December 2010. A profit of some EUR 31 million was recognised in
the first-quarter result for the purchases. Income from associates
includes a EUR 11 million non-recurring expense item related to the
sale of Myllykoski Paper's Sunila shares.
The result before tax was EUR -212 million (38), earnings per share
were EUR -0.61 (0.10) and return on capital employed was -11.5 per
cent (7.3). Excluding nonrecurring items, the result before taxes was
EUR -145 million (-57), earnings per share were EUR -0.42 (-0.18) and
the return on capital employed was -7.3 per cent (1.4).
At the end of June, M-real's equity ratio was 29.4 per cent and net
gearing amounted to 116 per cent (31 December 2008: 30.8% and 90%,
respectively). Some of M-real's loan agreements set a 120 per cent
limit on the company's net gearing ratio and a 30 per cent limit on
the equity ratio. At the end of June, net gearing calculated as
defined in the loan agreements was approximately 91 per cent and the
equity ratio about 34 per cent.
Tissue and Cooking Papers
The January-June sales of Metsä Tissue, which produces tissue and
cooking papers, totalled EUR 435 million (461), and its operating
result was EUR 41 million (20).
Sales were down some six per cent year-over-year due to changes in
exchange rates (-4%) and lower sales volumes (-2%). The volumes of
the company's own brands remained unchanged compared to the previous
year. Both the company's own brands and private label brands were
supported with summer campaigns and seasonal products.
Operating result improved thanks to the efficiency improvement
measures implemented in 2007 and 2008 and to lower raw material
costs. The operating result does not include non-recurring items.
In the second quarter, Metsä Tissue announced its intention to
rebuild paper machine 10 at the Mänttä mill. The investment will be
carried out in the first half of 2010 and it will further improve the
quality of the Lambi, Serla and Katrin brands sold in the Nordic
countries.
Metsä Tissue has raised its energy efficiency and promoted
sustainable development by enhancing its own operations. Energy
efficiency was audited in Finland and Germany, and the companies in
both countries were awarded energy efficiency certificates.
Risks and uncertainties
The estimates and statements in this interim report are based on
current plans and estimates, they involve risks and uncertainties
that may cause the outlook 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 2008.
Events after the review period
Metsäliitto Group and UPM-Kymmene signed a letter of intent on 15
July 2009 concerning the sale of Metsä-Botnia's Uruguayan operations
to UPM. The companies also agreed that UPM would reduce its ownership
in Metsä-Botnia to approximately 17 per cent, with Metsäliitto
getting a majority share in the company. Among other things, the
letter of intent includes Metsäliitto Group's shares in the Fray
Bentos pulp mill and in Forestal Oriental, a company specialised in
the cultivation of eucalyptus.
Following the arrangement, Metsäliitto Cooperative will own about 53%
of Metsä-Botnia, M-real around 30% and UPM around 17%. Currently,
Metsäliitto Cooperative has a 23%, M-real a 30% and UPM a 47% holding
in Metsä-Botnia.
The transaction will have a net cash effect of some EUR -100 million
on Metsäliitto and it will increase net debt by approximately EUR 150
million. Cash proceeds to be received by M-real is around EUR 300
million.
The deal will improve Metsäliitto Group's net gearing by some 23
percentage points and the equity ratio by approximately 2 percentage
points. M-real's net liabilities will decrease by some EUR 550
million and its net gearing by some 40 percentage points. The
company's equity ratio will improve over 3 percentage points.
A definitive agreement still requires the Boards of both parties to
approve it, the actual agreement to be signed, negotiations with
financing parties to be concluded and the competition authorities to
give their approval. The transaction is expected to be closed in the
last quarter of 2009.
Metsäliitto, M-real and UPM-Kymmene published detailed stock exchange
releases about the deal on 15 July 2009.
Near-term outlook
The demand for forest energy and logging sites predominated by
roundwood will remain good in Finland. The pulpwood market is also
expected to return to normal. Wood Supply will monitor development in
the market for finished goods.
Prices of pine sawn goods have increased, and, due to smaller supply,
the demand and supply should stay in better balance. Nevertheless,
sawn goods production must be restricted if availability of wood raw
material that is competitive in relation to the price level of
finished goods is not sufficient in the autumn. The demand for
plywood is not expected to improve this year, while the demand for
KertoLVL depends partly on the extent to which stimulus measures will
boost infrastructure construction. The costly raw materials purchased
during earlier years have been mainly utilised which is expected to
improve the result for the second half of the year.
Globally, pulp stocks are returning to normal, and the recent price
increases suggest slight signs of positive profit development for the
second half of the year. However, the near future is overshadowed by
the low utilisation rates of European and North American paper mills,
as well as the support measures by the United States and Canada for
their own pulp industries.
M-real's internal profit improvement programmes, combined with
declining wood and chemicals costs, will ease the challenges related
to profitability. The letter of intent concerning the sale of
Metsä-Botnia's Uruguayan operations, published in July, will improve
M-real's financial position, if it becomes definitive. However, the
2009 fullyear result will be weighed down by the considerable
operational expenses incurred from reducing operations and making
them more profitable. Despite some recent signs of improvement,
M-real's operating result for 2009, excluding non-recurring items,
will be clearly weaker than last year's result, due to the company's
weak performance in the first part of the year.
The downturn notwithstanding, the sales volumes of tissue and cooking
paper are expected to remain stable. The recession has had a bigger
impact on the away-fromhome business than the consumer business. The
latter has, in fact, shown growth potential in some segments and
product categories. Higher raw material expenses and cautious growth
expectations are predicted to make the latter half of the year more
challenging than the first half.
Demand is expected to remain challenging. Metsäliitto Group will
continue to seek profitability and cash flow through its efficiency
improvement measures and restructuring. Despite some recent, minor
positive signs, the 2009 operating result excluding non-recurring
items will be clearly weaker than last year.
Espoo, 23 July 2009
Metsäliitto Group
Board of Directors
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
The figures are unaudited.
METSÄLIITTO GROUP
Condensed consolidated 2009 2008 2009 2008 2008
statement 1-6 1-6 Change Q2 Q2 1-12
of comprehensive income
Continuing operations
Sales 2 492 3 386 -894 1 213 1 676 6 434
Other operating income 84 172 -88 43 113 239
Operating expenses -2 569 -3 178 609 -1 227 -1 591 -6 189
Depreciation and impairment -200 -192 -9 -85 -93 -482
losses
Operating result -193 189 -382 -56 105 2
Share of result in -10 4 -14 -8 2 6
associated companies
Exchange gains and losses -4 0 -4 -1 -2 19
Other net financial items -50 -113 63 -30 -51 -260
Result before income tax -257 80 -337 -95 54 -233
Income tax 25 -8 33 7 -1 60
Result for the period
from continuing operations 232 72 -304 -88 53 -172
Discontinued operations
Result from discontinued -12 -64 52 -3 -46 -338
operations
Result for the period -245 8 -252 -91 8 -511
Other comprehensive income
Cash flow hedges 15 20 -5 18 27 -55
Available for sale -128 71 -199 -62 -1 97
financial assets
Currency translation -2 3 -5 -12 12 13
differences
Other items 0 1 -1 -2 0 -1
Income tax relating to
components 31 -27 58 10 -6 -16
of other comprehensive
income
Other comprehensive income,
net of tax -85 67 -152 48 32 39
Total comprehensive income
for the period -329 74 -404 -139 40 -472
Result attributable to:
Members of parent company -119 19 -138 -35 10 -213
Minority interest -125 -11 -114 -56 -2 -297
-245 8 -252 -91 8 -511
Total comprehensive income
attributable to:
Members of parent company -156 51 -206 -58 30 -199
Minority interest -173 24 -197 -81 10 -272
-329 74 -404 -139 40 -472
Unaudited
Condensed consolidated balance sheet 2009 2008 2008
30.6. 30.6. 31.12.
ASSETS
Non-current
Goodwill 165 327 176
Other intangible assets 77 110 88
Tangible assets 2 141 3 805 2 958
Biological assets 5 77 103
Investments in associated companies 102 137 139
Available for sale investments 330 438 493
Non-current financial assets 228 26 234
Deferred tax receivables 71 44 61
3 120 4 963 4 252
Current
Inventories 668 1 144 943
Accounts receivables and other receivables 791 1 472 1 085
Cash and cash equivalents 350 183 619
1 850 2 799 2 647
Assets classified as held for sale 731 - -
Total assets 5 660 7 762 6 899
MEMBERS' FUNDS AND LIABILITIES
Members' funds
Members' funds 937 1 335 1 104
Minority interest 510 992 682
1 447 2 326 1 786
Non-current liabilities
Deferred tax liabilities 249 426 328
Post-employment benefit obligations 124 176 131
Provisions 92 57 111
Borrowings 2 393 2 907 2 854
Other liabilities 19 40 26
2 876 3 606 3 449
Current liabilities
Current borrowings 378 743 690
Accounts payable and other liabilities 718 1 086 974
1 096 1 829 1 664
Liabilities classified as held for sale 240 - -
Total liabilities 4 213 5 435 5 113
Total members' funds and liabilities 5 660 7 762 6 899
Unaudited
Equity attributable to members of
parent company
Change in Fair
members' Tran- value
funds Share slation and
Members' premium differ- other Retained Minority
EUR mill. capital account ences reserves earnings Total interest Total
Members' 574 30 -7 148 583 1 328 978 2 306
funds
1.1.2008
Dividends -38 -38 -13 -52
paid
Change in -6 -6 -6
members'
capital
Change in 0 0
share premium
account
Change in 0 0
fair value
reserve
Transfer from
unrestricted 6 -6 0 0
to restricted
equity
Business 0 4 4
arrangements
Total
comprehensive 1 30 19 51 24 74
income
for the
period
Members' 569 30 -6 184 558 1 335 992 2 326
funds
30.6.2008
Members' 585 30 -5 165 329 1 104 682 1 786
funds
1.1.2009
Dividends -35 -35 -1 -37
paid
Change in 24 24 24
members'
capital
Change in 0 0
share premium
account
Change in 0 0
fair value
reserve
Transfer from
unrestricted 0 0
to restricted
equity
Business 2 -2 0 3 3
arrangements
Total
comprehensive -1 -35 -119 -156 -173 -329
income
for the
period
Members' 609 30 -4 128 174 937 510 1 447
funds
30.6.2009
The change in the fair value of investments available for sale is
based mainly on the decrease in the value of the Pohjolan Voima
shares. The change in the fair value of the Pohjolan Voima shares
relates mainly to the decrease of the 12 month moving average value
of Nord Pool electricity futures used in the valuation.
Unaudited
Condensed consolidated cash flow statement 2009 2008 2008
1-6 1-6 1-12
Result for the period -245 8 -511
Total adjustments 209 248 832
Change in working capital 103 -187 88
Cash flow arising from operations 67 68 410
Net financial items -8 -126 -239
Income taxes paid 6 -57 -58
Net cash flow arising from operating activities 65 -115 113
Investments in tangible and
intangible assets -74 -110 -272
Divestments of assets and other 155 154 511
Net cash flow arising from investing activities 80 44 239
Change in members' funds 24 -3 -1
Change in long-term loans
and other financial items -376 -114 -101
Dividends paid -40 -55 -55
Net cash flow arising from financing activities -391 -173 -157
Changes in cash and cash equivalents -246 -243 195
Cash and cash equivalents at beginning of period 619 428 428
Translation difference 1 -1 -4
Changes in cash and cash equivalents -246 -243 195
Cash and cash equivalents
in assets classified as held for sale -25 - -
Cash and cash equivalents at end of period 350 183 619
Unaudited
BUSINESS SEGMENTS
Wood Supply 1-6/09 1-6/08 Q2/09 Q2/08 1-12/08
Sales 577 960 251 474 1 734
EBITDA 10 24 4 13 35
- " -, excl. non-recurring items 10 22 4 12 33
Depreciation and impairment -2 -3 -1 -1 -5
Operating result 9 22 4 12 30
- " -, excl. non-recurring items 9 20 4 11 28
Investments 1 3 0 2 4
Personnel at end of period 990 1 263 990 1 263 1 140
Wood Products Industry 1-6/09 1-6/08 Q2/09 Q2/08 1-12/08
Sales 425 644 224 329 1 162
EBITDA -15 18 0 9 -18
- " -, excl. non-recurring items -15 18 0 9 -11
Depreciation and impairment -20 -21 -10 -10 -57
Operating result -35 -3 -10 -1 -74
- " -, excl. non-recurring items -35 -3 -10 -1 -53
Investments 4 16 3 10 36
Personnel at end of period 3 871 4 643 3 871 4 643 4 199
Pulp Industry 1-6/09 1-6/08 Q2/09 Q2/08 1-12/08
Sales 585 810 282 413 1 591
EBITDA -38 188 -9 79 347
- " -, excl. non-recurring items -21 188 -9 79 347
Depreciation and impairment -126 -69 -33 -34 -138
Operating result -165 120 -42 44 209
- " -, excl. non-recurring items -90 120 -42 44 209
Investments 20 43 10 20 99
Personnel at end of period 1 753 2 014 1 753 2 014 1 815
The Metsäliitto Group consolidates 53% of the Pulp Industry
(M-real 30% and Metsäliitto Cooperative 23%).
Board and Paper Industry 1-6/09 1-6/08 Q2/09 Q2/08 1-12/08
Sales 1 208 1 688 585 829 3 236
EBITDA -71 223 -23 127 254
- " -, excl. non-recurring items -33 128 -20 55 192
Depreciation and impairment -120 -115 -51 -57 -315
Operating result -191 108 -73 71 -61
- " -, excl. non-recurring items -135 13 -70 -1 -35
Investments 32 51 16 30 128
Personnel at end of period 6 080 7 035 6 080 7 035 6 546
Unaudited
Tissue and Cooking Papers 1-6/09 1-6/08 Q2/09 Q2/08 1-12/08
Sales 435 461 217 231 930
EBITDA 62 49 33 23 98
- " -, excl. non-recurring items 62 49 33 23 99
Depreciation and impairment -21 -29 -10 -13 -56
Operating result 41 20 22 11 42
- " -, excl. non-recurring items 41 20 22 11 44
Investments 11 10 7 7 33
Personnel at end of period 3 278 3 385 3 278 3 385 3 222
Other operations 1-6/09 1-6/08 Q2/09 Q2/08 1-12/08
Sales 164 169 73 77 315
EBITDA 23 16 8 6 29
- " -, excl. non-recurring items 23 16 8 6 24
Depreciation and impairment -10 -9 -5 -5 -20
Operating result 13 7 3 1 9
- " -, excl. non-recurring items 13 7 3 1 4
Investments 22 20 11 12 48
Personnel at end of period 425 1 403 425 1 403 1 204
Other operations include Vapo Group (49,9%) and Metsäliitto's service
and
holding functions.
Internal sales
and eliminations 1-6/09 1-6/08 Q2/09 Q2/08 QI-IV/08
Sales -903 -1 347 -418 -677 -2 534
EBITDA 36 -139 14 -59 -261
- " -, excl. non-recurring items 15 -137 6 -59 -259
Depreciation and impairment 98 54 26 27 109
Operating result 134 -85 40 -32 -152
- " -, excl. non-recurring items 67 -83 31 -32 -150
Metsäliitto Group 1-6/09 1-6/08 Q2/09 Q2/08 1-12/08
Sales 2 492 3 386 1 213 1 676 6 434
EBITDA 7 380 29 198 484
- " -, excl. non-recurring items 41 285 24 126 425
Depreciation and impairment -200 -192 -85 -93 -482
Operating result -193 189 -56 105 2
- " -, excl. non-recurring items -128 93 -61 33 45
Investments 74 110 38 66 272
Personnel at end of period 15 047 18 192 15 047 18 192 16 729
EBITDA = Operating result before depreciation and impairment losses.
Unaudited
Quarterly data 2009 2009 2008 2008 2008 2008
Q2 Q1 Q4 Q3 Q2 Q1
Sales
Wood Supply 251 327 360 414 474 487
Wood Products Industry 224 202 239 279 329 315
Pulp Industry 282 303 359 421 413 398
Board and Paper Industry 585 623 722 826 829 859
Tissue and Cooking Papers 217 218 234 235 231 230
Other operations 73 90 87 60 77 91
Internal sales and eliminations -418 -485 -548 -639 -677 -670
Group sales 1 213 1 278 1 453 1 595 1 676 1 710
Operating result
Wood Supply 4 5 4 4 12 10
Wood Products Industry -10 -25 -55 -16 -1 -2
Pulp Industry -42 -122 -13 102 44 75
Board and Paper Industry -73 -117 -161 -8 71 37
Tissue and Cooking Papers 22 19 10 13 11 9
Other operations 3 10 -1 3 1 6
Elimineringar 40 94 10 -78 -32 -52
Group operating result -56 -137 -206 19 105 84
- % of sales -4.6 -10.7 -14.2 1.2 6.3 4.9
Share of results in
associated companies -8 -2 -6 8 2 2
Exchange gains and losses -1 -2 18 0 -2 2
Other net financial items -30 -20 -84 -63 -51 -62
Result before income tax -95 -163 -277 -35 54 26
Income tax 7 19 66 2 -1 -7
Result for the period from
continuing operations -88 -144 -211 -33 53 19
Result from
discontinued operations -3 -10 -62 -212 -45 -19
Result for the period -91 -153 -273 -245 8 0
Unaudited
Change in tangible assets 1-6/09 1-6/08 1-12/08
Book value at beginning of period 2 958 4 021 4 021
Company acquisitions 1 - 4
Investments 68 105 255
Decrease -245 -85 -686
Assets classified as held for sale -447 - -
Depreciation and impairment charges -187 -180 -438
- " - , discontinued operations - -38 -149
Translation differences and other changes -7 -19 -49
Book value at end of period 2 141 3 805 2 958
Depreciation and impairment charges of discontinued operations
include the
Graphic Papers business.
Commitments Q2/09 Q2/08 Q4/08
On own behalf (incl. leasing liabilities) 353 319 318
On behalf of associated companies 4 3 3
On behalf of others 6 2 4
Total 363 324 325
Commitments related to fixed assets Q2/09 Q2/08 Q4/08
Payments due under 1 year 7 9 0
Payments due in subsequent years 2 1 1
Open derivative contracts Q2/09 Q2/08 Q4/08
Interest rate derivatives 1 074 1 498 1 158
Currency derivatives 2 160 2 680 2 346
Other derivatives 347 214 232
Total 3 581 4 392 3 735
The market value of open derivative contracts at the end of the
review period was EUR -9 million (12/08: EUR 33 million). Open
derivative contracts also include closed contracts to a total amount
of EUR 715 million (12/08: EUR 787 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.
The Group has adopted the following standards from the beginning of
2009:
IAS 1 (Revised), 'Presentation of Financial Statements'. The revised
standard is aimed at improving users' ability to analyse and compare
the information given in financial statements by separating changes
in equity of an entity arising from transactions with owners from
other changes in equity. Non-owner changes in equity are presented in
the statement of comprehensive income.
IFRS 8, 'Operating Segments'. The new standard replaces IAS 14. The
new standard requires a 'management approach', under which segment
information is presented on the same basis as that used for internal
reporting purposes. The segments reported by the Group as from Jan 1,
2009 are Wood Supply, Wood Products Industry, Pulp Industry, Board
and Paper Industry, Tissue and Cooking Papers and Other operations.
The figures for the comparative periods have been changed according
to the new segments.
