Source: Tornator Oyj

Timber delivery quantities were below target, which affected net sales


Tornator Oyj Half-year Financial Report

Timber delivery quantities were below target, which affected net sales

SUMMARY 1 January–30 June 2019 (1 January–30 June 2018)            

  • Net sales totalled €38.9 (52.1) million, in which the share of timber deliveries* was €37.1 (49.9) million. Timber deliveries totalled 1.2 (1.7) million cubic metres.
  • The reported IFRS operating profit was €31.1 (28.7) million. Operative operating profit decreased by 38% to €23.8 (38.2) million.
  • Comparable net profit without fair value changes was €+10.7 (+21.7) million and €-20.8 (+13.4) million with fair value changes. The differences were mainly due to changes in the fair values of both forests, €+7.3 (-9.5) million, and financial instruments €-46.8 (-0.9) million.
  • Comparable return on equity was 3.2% (6.7) and return on capital employed 3.7% (6.1). Equity ratio was 40.0% (42.2).
  • The fair value of biological assets (forests) was €1,473.7 million (1,451.0 at 31 December 2018).
  • Tornator continued to purchase forestland in Finland and Estonia. Nearly 5,000 hectares of new forests were acquired with a total investment of more than €18 million.
  • Tornator signed a binding bank loan contract (bridge loan) for €250 million, to refinance a secured bond loan at its maturity in December 2019.
  • Deputy CEO Henrik Nieminen was appointed as the CEO of the company. 

* Timber delivery = A customer harvests marked stands and gains ownership of the timber.

Key figures (the Group)

 H1/2019H1/2018Change, %
Net sales, € million38.952.1-25 %
Operative operating profit, € million23.838.2-38 %
Operative operating profit, %61.173.3-17 %
Operating profit (IFRS),
€ million
31.128.78 %
Comparable net profit, € million10.721.7-51 %
Profit for the period (IFRS), € million-20.813.4-256 %
Comparable return on equity, %3.26.7-53 %
Return on equity, %-6.24.1-250 %
Comparable return on capital employed, %3.76.1-40 %
Return on capital employed, %4.84.65 %
Equity ratio, %40.042.2-5 %
Average number of personnel175183-4 %
IFRS = International Financial Reporting Standards 

Comparable key figures

In addition to the official figures calculated according to the IFRS, the Tornator Group uses figures that are comparable between different years, thus better describing the success of operations. The comparable key figures have been calculated without fair value changes using the following formula:

Operating profit, IFRS 31,1
- Change in fair value of biological assets-7,3
= Operative operating profit 23.8
Profit for the period, IFRS -20.8
- Change in fair value of biological assets-7.3
- Change in fair value of financial instruments+46.8
- Change in deferred taxes of above mentioned items -8.0
= Comparable net profit10.7


CEO Henrik Nieminen:
”The first half of 2019 was challenging for Tornator. In our main business area, timber deliveries, we remained clearly behind our target of steady growth. Caution is emerging in the forest industry due to global economic uncertainty, affecting Tornator's ability to forecast timber delivery trends for the second half of 2019. Due to advance payments for timber sales, the company is generating its normal, strong cash flow, which means that its current and forecast ability to honour loan obligations, for example, is entirely normal. In terms of the big picture, demand and prices remain at a good level in all operating countries, with no collapse following last year's strong growth. The number of major forestland sales around the Baltic Sea in 2018–19, and the related sales prices, are clear signs that demand for wood is still growing in the long term. Several megatrends are fostering increased use of renewable raw materials, such as wood. With regard to mitigating climate change, the key issue is the substitution of fossil-based raw materials and products with renewable ones. Tornator is playing a major role in this respect as a source of sustainably produced, double-certified wood raw material.

During the first half of the year, we continued our growth investments in Finland and Estonia. We acquired a total of over 5,000 hectares of new forestland. Our reputation as a reliable, competitive and responsible buyer has clearly increased the number of direct contacts from forest owners. People value the ease of doing business with Tornator's experienced employees. Naturally, transparent and competitive, commission-free pricing is a major factor in successful transactions. As a new business activity, Tornator now offers forest owners the opportunity to lease forest to Tornator on the basis of long-term lease contracts. This is a new way of maintaining contact with inherited assets without needing to engage in forest management, while gaining an easy and reliable source of steady rental income.

In line with our responsibility programme, we engaged in mire restoration, prescribed burning and the establishment of conservation areas on more than 200 hectares of our land.  

In the spring, Tornator signed a binding bank loan contract for €250 million, to refinance a secured bond loan upon its maturity in December 2019. In addition, Tornator may simultaneously utilise both a €100 million revolving credit facility and a €200 million commercial paper programme at its own discretion. These changes will increase Tornator's capacity to implement its growth strategy.

The focus areas of Tornator's new strategy period 2019–21 are as follows: profitably growing, competitively developing and responsibly influencing. We have identified three change themes and special priorities based on these strategic goals: digitalisation, services and our brand. We have reinforced our organisation and arranged training to enable our deeper understanding and development of these themes in particular. The purpose of the new strategy is to take Tornator closer to achieving its vision: "Tornator – The forerunner in responsible use of forests"

Notable events during the reporting period

Timber deliveries were considerably below last year's record figure, at some 1.2 (1.7) million cubic metres, or €37.1 (49.9) million. Due to extra harvesting as a consequence of snow damage in our forests in 2018, we are undertaking somewhat more silvicultural work than normal. However, all such work was performed according to plan during the spring.

In total, the Group recorded €1.0 (1.3) million in real estate net sales. Net sales of silviculture services totalled €0.8 (0.9) million.

The strong fall in market interest rates affected the fair values of Tornator’s financial instruments negatively. The profit effect since the beginning of the year was €-46.8 (-0.9) million. At the end of June, the fair value of interest rate derivatives totalled €-134.9 million (-90.9 on 31 December 2018). Market interest rates continued to fall after the reporting period. The fair value of forests at the end of June was €1,473.7 million (1,451.0 on 31 December 2018).

Business environment

In Finland, wood trade was lively in January–March, but stabilized during the spring. Total industrial wood harvesting in January–June was some 33.4 million cubic metres, which is 1.0 million cubic metres (-3%) less than in the previous year.

The wood market stabilization was partly reflected also in wood prices. In January–June, the average prices of sawlogs were slightly lower than during the same period in the previous year, whereas those of pulpwood were slightly higher.

Demand for leisure building plots was modest. Demand for forest estates by forest funds and other forestland investors continued to be very high, while supply lagged significantly behind.

In Estonia, wood demand was normal and market prices for wood decreased slightly from the peaks of the previous year. The forest estate markets showed signs of overheating, with demand clearly exceeding supply. 

In Romania too, demand for wood was normal and prices were slightly lower than the record levels of 2018. The forest estate market was quiet. 


The financial position of the Group remained good and cash flow from operations was €10.0 (32.8) million. The single largest item affecting cash flow was income tax, which totalled €-3.4 million in the reporting period, and €+7.4 in the comparison period due to the refund of pre-paid taxes from 2017. The Group’s net financial expenses in January–June were €-57.7 (-12.0) million. Interest-bearing liabilities totalled €629.1 million (611.0 on 31 December 2018), of which €293.0 million (258.1 on 31 December 2018) were long-term and €336.1 million (352.9 on 31 December 2018) were short-term.

The company has used interest rate derivatives to hedge against market interest rate changes. The change in the fair value of debt and derivatives was €46.8 million negative (€0.9 million negative), including €-48.7 (-2.8) million for derivatives and €+2.0 (+2.0) million for long-term loans. In the change in the fair value of derivatives, the share of accrued interest booked on interest expenses was €+4.6 (+3.9) million.

During the reporting period, Tornator’s net cash flow from investing activities was €-19.3 (-19.9) million. Net cash flow from financing activities was €+5.0 (-13.5) million. Liquid investments and cash and cash equivalents on 30 June 2019 were €10.7 million (15.0 on 31 December 2018). In addition, the company has a commercial paper program and a revolving credit facility totalling €220 million as available financing, and a €10 million bank account overdraft.

During the reporting period, Tornator signed a binding bank loan contract (bridge loan) for €250 million, to refinance a secured bond loan at its maturity in December 2019.

Estimate of future development

Wood demand and harvesting will face challenges in the second half, due to increased uncertainty in the operating environment. A stronger-than-forecasted slowdown in the global economy could cause a contraction in forest industry production and a negative impact on wood delivery volumes and Tornator's net sales.   

The situation in the forest estate market is expected to remain similar to the first half. Real estate sales will probably remain subdued.

Silvicultural work will be continued according to the normal annual cycle and the fertilisation programme will be carried out as planned.

The company estimates that its debt service capacity will remain stable for the remainder of the year.


Decisions of the Annual General Meeting

The Annual General Meeting of Tornator Oyj, held on 7 March 2019, decided that dividend be paid as proposed by the Board of Directors: €7.0 per share, totalling €35 million. The AGM approved the financial statements for 2018 and discharged the members of the Board of Directors and the CEO from liability.  In addition, Deloitte Oy were elected as auditors. The AGM elected the following members and deputies to the new Board of Directors:

Ordinary memberDeputy member
Mikko KoivusaloMarkus Aho
Erkko RyynänenAri Mäkinen
Jari SuominenJari Suvanto
Mikko MursulaIlja Ripatti

Organisation of the Board of Directors

On 7 March 2019, the new Board of Directors elected Mikko Koivusalo as Chairman and Mikko Mursula as Vice Chairman. In addition to these two Board members, Erkko Ryynänen was elected as a member of the Remuneration Committee, which reports to the Board. Regarding the Oversight Committee which oversees agreements between the company and the shareholders, Mikko Mursula was elected Chairman, Mikko Koivusalo and Erkko Ryynänen as members, and Jari Suominen as a deputy member.

The minutes of the Annual General Meeting are available in full on the company’s website at www.tornator.fi/en/investors.

Changes in management

Henrik Nieminen (MSc (Econ); eMBA), the Deputy CEO of Tornator Oyj, was appointed as the new CEO as of 17 June 2019. Mr Nieminen has served as Tornator's Chief Financial Officer (CFO) since the company was founded in 2002. By mutual agreement, the Board of Directors and the former CEO, Sixten Sunabacka, resolved that Mr Sunabacka would vacate the position of CEO and continue with Tornator as Senior Adviser until the end of the year. Tornator's Financial Controller, Antti Siirtola (MSc (Econ)), was appointed as Tornator’s new Chief Financial Officer (CFO) and a member of the Management Group, with effect from 1 July 2019. Mr Siirtola has been working for the company since 2013, and before joining Tornator Siirtola worked as Authorised Public Accountant auditor with EY.

Heikki Penttinen (MSc (Econ)) was appointed Tornator's new Director of Development and a member of the Management Group on 14 March 2019. Mr Penttinen's responsibilities include development and digitalisation. Before joining Tornator, Mr Penttinen served in roles such as head of CGI's virtual and mobile solutions unit. Antero Luhtio, Director, Real Estate, left Tornator at his own request on 31 March 2019.

Notable events after the end of the reporting period

No notable events occurred after the end of the reporting period.

Major shareholders, 30 June 2019

Stora Enso Oyj41.00%
Ilmarinen Mutual Pension Insurance Company23.13%
Varma Mutual Pension Insurance Company15.33%
OP Henkivakuutus Oy5.21%
OP-Forest Owner Fund5.00%
Veritas Pension Insurance2.50%
Finnair Pension Foundation2.18%
Riffu Oy0.75%
Danilostock Oy0.75%

Attachements: Half-year report 1 Januay - 30 June 2019

Half-year report is also available at our website www.tornator.fi/en

For further information please contact:
CEO Henrik Nieminen, tel. +358 40 869 7613
CFO Antti Siirtola, tel. +358 40 773 0975


Tornator is a leading company specialised in sustainable forestry in Europe. It owns forests in Finland, Estonia and Romania. In 2018, the Group’s net sales were some €113 million, and the balance sheet value was about €1.6 billion. The Group has about 180 employees. In total, its forests directly provide work for the company’s employees as well as contractors and their staff worth some 1,000 person-years. The parent company’s shareholders are Finnish investors, mostly institutions. Tornator’s mission is “generating sustainable well-being from the forest”.



Condensed consolidated income statement

€’0001 Jan - 30 Jun 20191 Jan - 30 Jun 20181 Jan – 31 Dec 2018
Net sales38,87252,096112,825
Other operating income1,8951,5356,567
Change in inventories of finished goods and work in progress-773-576-998
Materials and services-7,143-6,676-16,975
Personnel expenses-4,366-3,886-8,447
Depreciation and amortisation-1,543-1,673-3,094
Other operating expenses-3,171-2,656-5,979
Change in fair value of biological assets and harvesting7,312-9,45832,576
Operating profit31,08528,706116,475
Financial income11293180
Financial expenses-11,057-11,251-22,726
Change in fair value of financial instruments-46,752-865-1,613
Net financial items-57,697-12,023-24,159
Profit before tax-26,61216,68392,317
Income taxes7,546-431-3,062
Change in deferred taxes-1,744-2,887-10,373
Profit for the period-20,81113,36578,881
To shareholders of the parent company-20,81113,36578,881

Consolidated statement of comprehensive income

Profit for the period-20,81113,36578,881
Other comprehensive income for the period after taxes:   
Items not recognised later through profit and loss    
Items derived from the redefinition of net defined benefit costs (or asset items)0021
Items that may later be recognised through profit and loss   
Translation difference-581-45-49
Investments in unlisted securities11
Comprehensive income for the period total-21,39213,32178,853
To shareholders of the parent company-21,39213,32178,853




Condensed consolidated balance sheet

€’00030 June 201930 June 201831 Dec 2018
Non-current assets   
Intangible assets1,7031,9951,944
Property, plant and equipment107,10099,919103,734
Biological assets1,473,6651,378,0681,450,960
Other investments111111111
Non-current assets total1,582,5801,488,9141,556,749
Current assets    
Trade and other receivables26,23212,79215,534
Investments in unlisted securities1,2212,6081,042
Cash and cash equivalents9,43413,19913,957
Current assets total42,58128,85334,255
TOTAL ASSETS1,625,1611,517,7681,591,004
Equity attributable to shareholders of the parent company   
Share capital50,00050,00050,000
Other equity596,083586,942652,475
Total equity646,083636,942702,475
Non-current liabilities   
Deferred tax liabilities162,931153,696161,187
Financial liabilities293,001517,737258,130
Lease liabilities1,73300
Other non-current liabilities229265229
Non-current liabilities total598,423764,678512,560
Current liabilities   
Financial liabilities336,07594,440352,862
Lease liabilities24700
Trade and other payables44,33321,70821,981
Current liabilities total380,655116,148375,970
Total liabilities979,078880,826888,530
TOTAL EQUITY AND LIABILITIES1,625,1611,517,7681,591,004


Statement of changes in equity


€’000Share capitalShare PremiumTranslation differenceFair value reserveRetained earningsTotal
Equity 1 January 201950,00029,995-8,5970631,076702,475
Comprehensive income      
Profit for the period    -20,811-20,811
Other items of comprehensive income
(after taxes)
Translation difference  -581  -581
Comprehensive income for the period00-5810-20,811-21,392
Transactions with shareholders      
Dividends    -35,000-35,000
Total transactions with shareholders0000-35,000-35,000
Equity 30 June 201950,00029,995-9,1780575,265646,083
Equity 1 January 201850,00029,995-8,547-157580,830652,121
Comprehensive income      
Profit for the period    -20,811-20,811
Other items of comprehensive income
(after taxes)
Translation difference  -45  -45
Investments in unlisted securities   1 1
Comprehensive income for the period00-45113,36513,321
Transactions with shareholders      
Dividends paid    -28,500-28,500
Total transactions with shareholders0 00-28,500-28,500
Equity 30 June 201850,00029,995-8,547-156565,695636,942
Equity 1 January 201850,00029,995-8,547-157580,830652,121
Comprehensive income      
Profit for the period    78,88178,881
Transfers between items   156-1560
Other items of comprehensive income
(after taxes)
Remeasurement of net defined
benefit liability (or asset)
Translation difference  -49  -49
Investments in unlisted securities   1 1
Comprehensive income for the period00-4915778,74678,853
Transactions with shareholders      
Dividends paid    -28,500-28,500
Total transactions with shareholders    -28,500-28,500
Equity 31 December 201850,00029,995-8,5970631,076702,475



Condensed consolidated cash flow statement

€’0001 Jan - 30 Jun 20191 Jan - 30 Jun 20181 Jan – 31 Dec 2018
Cash flow from operating activities    
Cash receipts from customers38,67947,232102,690
Proceeds from sale of tangible assets9801,3363,547
Cash receipts from other operating income1,9311,7926,753
Cash paid to suppliers and employees-16,789-13,976-30,646
Cash flow from operating activities before financial items and taxes24,80136,38482,344
Interest paid and other financial expenses-11,597-11,261-21,903
Interest received11293180
Income taxes paid-3,3647,5657,470
Net cash flow from operating activities9,95232,78268,092
Cash flow from investing activities    
Investments in biological assets-16,280-16,550-47,882
Investments in tangible assets, forestland-2,012-2,045-5,918
Investments in other tangible and intangible assets-815-681-2,051
Investments in associates and other investments0-3-3
Investments in unlisted securities-179-6700
Proceeds from sale of unlisted securities00896
Net cash flow from investing activities-19,286-19,948-54,958
Cash flow from financing activities   
Withdrawal of long-term loans35,00025,00025,000
Repayment of long-term loans-38-33-4,575
Repayment of short-term loans-15,000-10,000-5,000
Repayment of leasing liabilities-124  
Dividends paid-15,000-28,500-28,500
Net cash flow from financing activities4,839-13,533-13,075
Net increase/decrease in cash and cash equivalents-4,495-70058
Cash and cash equivalents at beginning of period13,95713,90113,901
Effect of exchange rate changes on cash and cash equivalents-29-2-2
Cash and cash equivalents at end of period9,43413,19913,957