Published: 2011-05-04 11:03:13 CEST
Metsäliitto Cooperative
Interim report (Q1 and Q3)

Metsäliitto Group Interim Report January-March 2011

Metsäliitto Group Interim Report 1–3/2011, Stock Exhange Release 4 May 2011 at noon


Metsäliitto Group’s operating result excluding non-recurring items EUR 130 million


Result for the first quarter of 2011

  • Sales were EUR 1,403 million (1–3/2010: EUR 1,224 million).
  • Operating result excluding non-recurring items totalled EUR 130 million (96). Operating result including non-recurring items totalled EUR 133 million (105).
  • Result before taxes and excluding non-recurring items was EUR 86 million (55). Result before taxes including non-recurring items was EUR 89 million (64). 

Events in the first quarter

  • In February, Metsä-Botnia decided to build a bark gasification plant at the Joutseno pulp mill. Once the plant is completed, the mill will not use fossil fuel at all during normal operation. The total value of the investment is approximately EUR 20 million.
  • In February, M-real announced plans to invest approximately EUR 30 million in expanding the folding boxboard capacity at the Äänekoski and Kyröskoski mills by a total of approximately 70,000 tonnes.
  • Metsäliitto decided to participate in a 46 per cent ownership share in a project in which Lohjan Biolämpö Oy, a company to be established, will build a bioenergy heating plant at the Metsäliitto Wood Product Industry’s Lohja mill. The total cost of the project is approximately EUR 17 million.
  • In March, a decision was made to build a biopower plant at the M-real mill area at Hämeenkyrö. The plant is to generate electricity and process heat for the paper and board mills as well as electricity and municipal heat for Leppäkosken Sähkö. The project will be implemented by Hämeenkyrön Voima Oy and its estimated investment cost is approximately EUR 50 million.
  • In January, M-real announced it will launch a new profit improvement programme which focuses on improving profitability of the paper business operations as well as on decreasing variable costs. It is estimated that the measures will improve M-real’s annual operating result by EUR 70 million.
     

Our result continued to be strong in the first quarter of 2011. Our plans to generate profitable growth in boards and wood products and our investments in the production of renewable energy progressed as planned. Now we focus especially on minimising the negative impacts of cost development.”
Kari Jordan, President & CEO, Metsäliitto Group



Metsäliitto Group
 

Income statement
(Continuing operations)
2011
1–3
2010
1–3
2010
1–12
Sales 1 403 1 224 5 377
 Other operating income 29 31 142
 Operating expenses -1 228 -1 073 -4 686
 Depreciation and impairment losses -71 -78 -336
Operating result 133 105 497
 Share of results in associates 0 -6 -15
 Exchange gains and losses -1 -2 -7
 Other net financial items -44 -34 -129
Result before income tax 89 64 345
 Income taxes -26 -24 -131
Result from continuing operations 63 40 214


Metsäliitto Group
 

Profitability
(Continuing operations)
2011
1–3
2010
1–3
2010
1–12
Operating result, EUR mill. 133 105 497
 - “ -, excluding non-recurring items 130 96 547
 - “ - % of sales 9.3 7.9 10.2
Return on capital employed, % 13.2 10.0 11.8
 - ” -, excluding non-recurring items 12.8 9.1 13.4
Return on equity, % 14.7 11.0 13.9
  - ” -, excluding non-recurring items 13.9 8.6 18.2
       
Financial position 2011
31.3
2010
31.3
2010
31.12
Equity ratio, % 30.4 27.1 29.7
Net gearing ratio, % 112 151 116
Interest-bearing net liabilities, EUR mill. 1 933 2 241 1 939

 

Business segments

 

Sales and Operating result
January – March 2011
(EUR mill.)
 
Wood
Supply
Wood
Products
Industry
 
Pulp
Industry
Board and
Paper
Industry
Tissue and
Cooking Papers
Sales 376 238 340 685 241
 Other operating income 2 2 5 22 3
 Operating expenses -370 -226 -232 -630 -228
 Depreciation & impairment losses -1 -8 -17 -31 -10
Operating result 8 5 96 46 7
 Non-recurring items - - - -3 -
Operating result, excl. non-rec. items 8 5 96 43 7
 - % of sales 2.0 2.2 28.1 6.3 2.7

      

The figures are unaudited

METSÄLIITTO GROUP


INTERIM REPORT 1 JANUARY – 31 MARCH 2011               

Sales and result
Metsäliitto Group’s sales for the first quarter were EUR 1,403 million (1–3/2010: EUR 1,224 million) and operating result was EUR 133 million (105). Operating result excluding non-recurring items totalled EUR 130 million (96). The only non-recurring item, approximately EUR 3 million, was connected to the sale of a land area in Jyväskylä. The non-recurring items of the comparison period were approximately EUR 9 million, of which EUR 10 million related to the dissolution of an IT cost provision, EUR 1 million to the divestment of the blockboard mill in Romania, and EUR -2 million to the closure of the Kyröskoski sawmill.

Financial income amounted to EUR 2 million (2), income from associates was EUR 0 million (-6) and financial expenses totalled EUR 45 million (36). Financial expenses include, among other expenses, approximately EUR 9 million of dividends paid on Metsä-Botnia’s shares under a redemption obligation. Net exchange gains recognised in financial items were EUR -1 million (-2).

The result for the period before taxes was EUR 89 million (64), while taxes, including changes in deferred tax liabilities, totalled EUR 26 million (24). The net result for the report period was EUR 63 million (40).

The Group’s return on capital employed for continuing operations was 13.2 per cent (10.0), and the return on equity was 14.7 per cent (11.0). Excluding non-recurring items, the return on capital employed was 12.8 per cent (9.1) and return on equity was 13.9 per cent (8.6).


Balance sheet and financing
Metsäliitto Group’s total liquidity was EUR 961 million at the end of March (31 December 2010: 1,054). Of this, EUR 447 billion (440) was in liquid assets and investments, and EUR 514 billion (614) was in off-balance-sheet binding credit facilities. In addition, the Group can satisfy short-term financial needs with non-binding commercial paper schemes in Finland and abroad, as well as with credit limits amounting to approximately EUR 0.5 billion.

The Group’s equity ratio at the end of March was 30.4 per cent and net gearing was 112 per cent (31 December 2010: 29.7% and 116%, respectively). Interest-bearing net liabilities were EUR 1,933 million (31 December 2010: 1,939).

M-real’s Annual General Meeting decided to reduce the share premium account in operating capital, as stated on the parent company’s balance sheet on 31 December 2010, by transferring all funds in the account, or approximately EUR 664 million, to the company’s non-restricted equity reserve. The reduction of the share premium account will take place without consideration and it will not impact the company’s number of shares, the rights conferred by the shares, or the proportionate ownership of the shareholders. The reduction will become effective after the completion of the creditor protection procedure referred to in the Limited Liability Companies Act. With the reduction, the prerequisites for future distribution of profits will be improved.

Standard & Poors raised the outlook of M-real's credit rating B from stable to positive. 

The equity ratio of the parent company Metsäliitto Cooperative was 61.5 per cent at the end of March and net gearing ratio was 38 per cent (31 December 2010: 58.6% and 45%, respectively).

During January–March, Metsäliitto’s members’ capital increased by a total of EUR 9.6 million. The actual members’ capital grew by EUR 0.3 million, the additional members’ capital A by EUR 5.0 million and the additional members’ capital B by EUR 4.3 million.

In March, Metsäliitto Cooperative took out an investment loan totalling EUR 100 million from Finnish insurance companies. The loans were used to finance the EUR 100 million syndicated loan that matured in March.


Personnel
The Group employed an average of 13,087 people (12,978) during the first quarter. At the end of March, the number of personnel in the Group was 13,058 (31 December 2010: 12,820). The parent company Metsäliitto Cooperative employed 2,786 people at the end of March (31 December 2010: 2,495).

In March, Metsäliitto Cooperative had 125,780 members (31 December 2010: 126,382).


Investments
Metsäliitto Group’s capital expenditure totalled EUR 35 million (15).

In February, Metsä-Botnia decided to improve energy production at the Joutseno pulp mill by building a bark gasification plant. The total value of the investment is approximately EUR 20 million. The plant will replace the use of natural gas as fuel at the mill, making the mill carbon dioxide neutral in normal operation.

In February, M-real announced plans to invest approximately EUR 30 million in expanding the folding boxboard capacity at the Äänekoski and Kyröskoski mills by a total of approximately 70,000 tonnes. After the planned investments, the annual production capacity would increase to 190,000 tonnes at Kyröskoski and to 240,000 tonnes at Äänekoski. The Kyröskoski investment would be carried out at the end of 2011, and the Äänekoski investment in the spring of 2012.

Metsäliitto decided to participate in a 46 per cent ownership share in a project in which Lohjan Biolämpö Oy, a company to be established, will build a bioenergy heating plant in Lohja. The other shareholders of the company are Lohjan Energiahuolto Oy Loher (49%) and Ääneseudun Energia (5%). The plant will use primarily by-products of the Kerto mill and supplementing forest chips and other wood-derived fuels. The total cost of the investment is approximately EUR 17 million, and the construction is planned to start in the summer of 2011. The new plant will be commissioned at the end of 2012.

Hämeenkyrön Voima Oy, a subsidiary of Pohjolan Voima Oy, decided to build a biopower plant to M-real’s mill site. The plant is to produce electricity and process heat to M-real’s Kyro mill as well as electricity and municipal heating for Leppäkosken Sähkö Oy. The expected investment cost is in total EUR 50 million. Investment by M-real is about EUR 11 million. The permissions needed to build the plant were received in February 2011 and the project is expected to be finalized during autumn 2012.


Business areas

Wood Supply
Wood Supply’s sales totalled EUR 376 million (333) in January–March, and the operating result amounted to EUR 8 million (7). The operating result does not include non-recurring items. Wood Supply Finland accounted for EUR 263 million (237) of the sales and EUR 5 million (4) of the operating result.

Wood sales started slowly at the beginning of the year. The forest industry purchased a total of three million cubic metres of wood from private forests. General supply was at a low level, and the offering mainly consisted of wood from winter thinning. Purchases by Metsäliitto also fell clearly short of the target in the first quarter. The price level of softwood logs took an upward turn at the end of the period, but the price level of pulpwood remained stable.

Wood harvesting succeeded as planned, but wood deliveries fell slightly short of the planned level due to the difficulties in railway transports in Finland and the challenging ice situation. The lack of subsidy for electricity produced with wood slowed down demand for energy wood. During the period under review, Wood Supply’s total delivery volume to production units amounted to 7.7 million cubic metres (7.5).

Measures to sell forest management services were intensified, and the efforts succeeded very well. Metsäliitto was granted Finland’s first PEFC group certificate which comprises forests owned by Group’s associate companies. Previously the group certificates have been granted to smaller geographical areas. The possibility to join Metsäliitto's certificate is offered as a new service to members who have signed a forest management agreement, and they may enrol during the spring. In connection with the Cooperative’s Representative Council election, more than one hundred events for members were organised in the districts.


Wood Products Industry
The sales of Metsäliitto Wood Products Industry totalled EUR 238 million (192) in January–March, and the operating result excluding non-recurring items totalled EUR 5 million (0).

Wood Products Industry’s business operations grew in all customer segments compared to the first quarter of the previous year. Strict cost monitoring and management of capital employed improved the profitability of the operations.

The market balance of sawn timber continued to be weak and the result was unsatisfactory. Demand for value-added products continued to be weak in Europe and partly in Finland as well. However, internal measures improved profitability. The sales of engineered wood products grew, and profitability increased through higher utilisation rates. Profitability of construction products improved even though the long winter complicated sales. Investments in the development of the operations continue.

Wood Products Industry supplied a Finnforest Kerto-Ripa roof system for the Karisma shopping centre being built in Lahti, and the system was installed in record time. In March, Wood Products Industry’s product development received a significant recognition when Metropol Parasol, one of the world’s largest wood buildings, made with Kerto elements, was inaugurated in Seville, Spain.


Pulp
Metsä-Botnia’s sales amounted to EUR 340 million (288), while the operating result was EUR 96 million (57). The operating result does not include non-recurring items. The considerable improvement in sales and operating result was primarily due to the positive development of the prices of pulp. The sales volume of pulp remained at last year’s level at 528,952 tonnes (531,300).

Foreign-currency-denominated market prices for both softwood and hardwood pulp were, on average, 12 per cent higher than in the first quarter last year. The price of softwood pulp in Europe was USD 950 per tonne at the beginning of the period and USD 980 at the end of the period. The corresponding figures for hardwood pulp were USD 850 and USD 850. The stock levels of both producers and customers are normal or low, and the demand for pulp has remained good.

Unplanned downtime reduced the utilisation rate of Metsä-Botnia’s mills slightly in January–February. In addition, traffic at the ports of the Gulf of Bothnia came to a complete standstill due to the difficult ice situation in February. In the latter half of the review period, the utilisation rate of the mills was good, and a new monthly production record, 47,160 tonnes, was set in Äänekoski.

At the beginning of February, Metsä-Botnia’s Board of Directors decided to invest in a gasification plant at the Joutseno mill. The plant will improve the efficiency of renewable energy usage. The investment will replace the fossil fuel used in the lime kiln with bio fuel produced from tree bark. The investment will make the mill a carbon dioxide neutral unit during normal operation. Construction will begin in June 2011, and the new mill will be commissioned at the end of 2012. In the construction phase, the employment impact of the investment is approximately 120 person-years. The total value of the investment is approximately EUR 20 million.


Board and Paper
The sales of Board and Paper totalled EUR 685 million (602), and the operating result excluding non-recurring items was EUR 43 million (39). A gain of EUR 3 million was recognised in the operating result as a non-recurring item from the sale of a plot in Jyväskylä. The non-recurring item of EUR 10 million in the comparison period is from dissolved IT cost provisions.

Operating result excluding non-recurring items compared to the corresponding period last year was improved by the higher average selling prices of board and papers. The result was weakened by the increase in raw material prices. In particular, the cost of wood, chemicals and energy was at a higher level than in the previous year. In addition, the clear strengthening of the Swedish krona weakened the result.

Operating result including non-recurring items totalled EUR 46 million (49). Net interest and other financial expenses totalled EUR 17 million (16), income from associates was EUR 0 million (-2) and net exchange gains and losses booked as financial items were EUR 2 million (-6).

The result for the review period before taxes was EUR 31 million (25), earnings per share were EUR 0.08 (0.06) and return on capital employed was 8.4 per cent (9.1). Excluding non-recurring items, the result before taxes was EUR 28 million (15), earnings per share were EUR 0.07 (0.03) and the return on capital employed was 7.8 per cent (7.3).

At the end of March, M-real’s equity ratio was 33.6 per cent and net gearing was 78 per cent (31 December 2010: 32.1% and 83%, respectively). Some of M-real’s loan agreements set a 120 per cent limit on the company’s net gearing and a 30 per cent limit on the equity ratio. At the end of March, net gearing calculated as defined in the loan agreements was approximately 60 per cent and the equity ratio about 39 per cent.


Tissue and Cooking Papers
The first-quarter sales of Metsä Tissue, producer of tissue and cooking papers, totalled EUR 241 million (225). The increase in sales was primarily due to the selling prices and structure of sales as well as favourable exchange rate fluctuations. The sales of own brands increased by 13 per cent compared to the previous year.

Operating result was EUR 7 million (19). The result remained low due to the continued increases in the prices of pulp, recycled fibre, other raw materials and energy. Compared to the first quarter of last year, the average price of pulp was 15 per cent higher and the price of recycled pulp 30 per cent higher. Increased transportation costs also weakened the result. The exceptionally harsh winter and the resulting floods in Germany caused challenges in product deliveries and generated additional expenses for the company.

The rebuilt paper machine 5 at the Düren mill in Germany was launched at the end of March. The installation of upgrading lines started during the first quarter. The goal is to have the entire upgrading capacity of the Düren unit in operation by the end of June.

In Slovakia, the company switched to electricity generated with hydropower. In the future, approximately 70 per cent of the mill’s electricity will be generated with hydropower, which supports the company’s sustainable development objectives. The hydropower project is one the subprojects being implemented under the Tissue 20 project. The objective of the subprojects is to improve energy efficiency so that it equals 20 per cent of the company's current energy consumption by 2012.

The company's Serla brand reached its 50th anniversary. The jubilee year opened with sales, marketing and communication measures. Finnish consumers recognised Serla’s strong position as a responsible brand by ranking it the second most popular product that has the Nordic Swan ecolabel. A Swedish consumer survey ranked the most loved brands in Sweden, and Lambi was number 15 among nearly one thousand brands. In Denmark, a consumer panel selected Lambi as their favourite product based on its product characteristics.


Events after the period
At the beginning of April, M-real signed a letter of intent on the sale of the Premium Paper operations at the Reflex mill to an affiliate of German Papierwerke Lenk AG. The agreement would cover the Premium Paper operations and related properties as well as approximately 100 M-real employees.

If the arrangement proceeds as planned, M-real will recognise a EUR 12 million negative non-recurring item. The cash impact would be approximately EUR 1 million negative. The divestment will not have any material impact on M-real’s operating result excluding non-recurring items. It is estimated that the arrangement will become final during the second quarter of 2011.

In April, Metsä Tissue announced an extensive investment programme in Poland. The three-year programme includes, among other things, the construction of two new paper machines and an upgrading line at the Metsä Tissue Krapkowice mill, rebuild of one paper machine, and infrastructure development. The total value of the investment programme is approximately EUR 55 million, and it will enable Metsä Tissue to increase its annual production capacity in Poland by 35,000 tonnes.

M-real announced today its plan to divest the entire Gohrsmühle mill in Germany or parts of the mill separately based on a Paper Park concept. At the same time, M-real initiates a process to discontinue production of uncoated fine paper and unprofitable speciality papers at the Gohrsmühle mill in case the sales options will not materialize. If the closures will be realised, M-real would focus on cast-coated label and packaging materials (Chromolux). In addition, M-real is planning to discontinue the remaining operation, carbonless paper converting, at Reflex mill in Germany.

During the past years, M-real has had several unsuccessful attempts with a number of candidates divest the Alizay paper mill in France. Sales options are sought further. M-real invites credible candidates to a public process which aims at a divestment of the Alizay paper mill by the end of September 2011. Should M-real fail to find a credible buyer for the mill in the process within the given time frame, M-real would be forced to consider closing of the Alizay paper mill.

If the planned measures will be implemented, Metsäliitto Group’s annual sales is expected to reduce by about EUR 390 million and the operating result to improve by about EUR 60 million based on 2010 actual performances. Most of the annual financial impact is expected to be realised in 2012, and in full impact from 2013 onwards. As a result from the planned measures M-real’s annual paper production capacity would reduce by about 500,000 tonnes of which about 430,000 tonnes would be uncoated fine paper and 70,000 tonnes coated specialty papers. Implementations of the planned measures are subject to finalisation of the statutory labour negotiations processes with the employees based on the local legislations. As part of the statutory labour negotiations, also other future alternatives for the closed units will be investigated. These negotiations will be started at Gohrsmühle and Reflex as soon as possible. In regard with Alizay, the statutory labour negotiations relating to possible closure will be initiated in case the divestment process is unsuccessful. M-real strives with its own actions to mitigate the negative impacts the the possible measures inflict on the employees.

All in all, the planned measures at Alizay, Gohrsmühle and Reflex are estimated to result in approximately EUR 170 million non-recurring impact on result. The cash costs are estimated be EUR 50 million. In connection with the planned measures, Board and Paper Industry’s result in The positive impact from the release of working capital is expected to be EUR 80 million the second quarter 2011 is estimated to include EUR 20 million non-recurring impairments and cost provisions. Above estimates of the non-recurring financial impacts are preliminary and they will be further determined when the final decisions for the planned measures are taken.


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 results to differ from those expressed in such statements. In the short term, especially the price of and demand for end products, raw material costs, energy prices and the exchange rate development of the euro have an effect on the results of Metsäliitto Group.

In March, the state enterprise Metsähallitus filed a claim for damages at the District Court of Helsinki, demanding that Metsäliitto, UPM-Kymmene and Stora Enso jointly pay a maximum of EUR 340 million in compensation due to prohibited cooperation with regard to prices in the raw wood market. The claim is related to the 3 December 2009 decision by the Market Court which states that the aforementioned companies have violated the act on competition restrictions. Metsäliitto’s view is that the claim for damages is unfounded, and the company has not recognised any provisions regarding it.

The risks related to the Group’s business have been explained more extensively in Metsäliitto Group’s Annual Report for 2010.


Near-term outlook
The use of wood at the Group's production units will continue at the normal level. Metsäliitto will actively purchase stands marked for felling that can be harvested in the summer and all timber grades.

After the quiet first quarter in Wood Products Industry, the operating result is expected to strengthen during the second quarter. Demand forecasts for both heavy and light transportation equipment industry have improved significantly. Construction is also expected to recover.

In the second quarter, demand for pulp is expected to continue at a good level and the market situation is expected to be stable. New capacity will enter the market in short fibre pulp, in particular, during the spring.

The demand for tissue and cooking papers is estimated to remain stable. The continued increases in production and transportation costs and the impact of new indirect taxes will be transferred to the prices of Metsä Tissue’s all product categories.

Demand for board is also expected to remain good during the next few months. M-real successfully increased the prices of liner in April. The production downtime relating to the expansion investment of the Simpele folding boxboard machine, to be carried out in May, will have a negative impact on the result in the second quarter. Demand for and price level of uncoated fine paper and special paper seems to continue unchanged.

Metsäliitto Group's operating result excluding non-recurring items in the second quarter of the year is expected to be approximately at the same level as in the previous quarter.


Proposal for interest on members’ capital
Metsäliitto Cooperative’s Board of Directors has proposed to the Supervisory Board that interest of 5.5 per cent (5.5 for 2009) be paid on the statutory capital invested by the members for 2010. Interest of 5.0 per cent (5.0) is proposed for additional members’ capital A, and interest of 4.5 per cent (4.5) for additional members’ capital B and C.

The proposal was discussed in March by Metsäliitto Cooperative’s Supervisory Board, which, in turn, made a proposal on the interest on members’ capital to the Representative Council meeting convening on 4 May 2011.



Espoo, 4 May 2011

Metsäliitto Group
Board of Directors



Further information:
Vesa-Pekka Takala, Group CFO, Metsäliitto Group, tel. +358 10 465 4260
Anne-Mari Achrén, Group CCO, Metsäliitto Group, tel. +358 10 465 4541



Unaudited

METSÄLIITTO GROUP

Condensed consolidated statement
of comprehensive income, EUR mill.
2011
1–3
2010
1–3
 
  Change
2010
1–12
Continuing operations        
Sales 1 403 1 224 179 5 377
Other operating income 29 31 -2 142
Operating expenses -1 228 -1 073 -155 -4 686
Depreciation and impairment losses -71 -78 7 -336
Operating result 133 105 29 497
Share of results in associated companies 0 -6 6 -15
Exchange gains and losses -1 -2 1 -7
Other net financial items -44 -34 -10 -129
Result before income tax 89 64 26 345
Income taxes -26 -24 -3 -131
Result for the period
from continuing operations
 
63
 
40
 
23
 
214
         
Discontinued operations        
Result from discontinued operations 0 0 0 0
Result for the period 63 40 22 214
         
Other comprehensive income        
Cash flow hedges -2 1 -3 19
Available for sale financial assets 0 18 -18 30
Currency translation differences 3 13 -10 25
Other items 2 2 0 0
Income tax relating to components
of other comprehensive income
 
0
 
-3
 
2
 
-7
Other comprehensive income, net of tax 3 32 -30 67
         
Total comprehensive income
for the period
 
66
 
73
 
-7
 
281
         
Result attributable to:        
Members of parent company 13 21 -8 170
Non-controlling interests 49 19 31 44
  63 40 22 214
         
Total comprehensive income
attributable to:
       
Members of parent company 16 42 -26 204
Non-controlling interests 49 31 19 77
  66 73 -7 281

 

Unaudited

Condensed consolidated balance sheet 2011
      31.3.
2010
    31.3.
2010
    31.12.
ASSETS      
Non-current      
Goodwill 504 499 503
Other intangible assets 260 262 242
Tangible assets 2 248 2 385 2 281
Biological assets 8 7 8
Investments in associated companies 77 92 80
Available for sale investments 338 372 338
Non-current financial assets 15 12 18
Deferred tax receivables 60 63 63
  3 510 3 692 3 534
Current      
Inventories 827 747 798
Accounts receivables and other receivables 934 876 892
Cash and cash equivalents 447 193 440
  2 208 1 816 2 131
Assets classified as held for sale 8 - 8
       
Total assets 5 726 5 508 5 672
       
 
MEMBERS’ FUNDS AND LIABILITIES
 
 
 
 
 
 
Members’ funds      
Members’ funds 1 179 989 1 154
Non-controlling interests 553 499 524
  1 732 1 488 1 678
Non-current liabilities      
Deferred tax liabilities 400 393 409
Post-employment benefit obligations 114 120 115
Provisions 36 64 48
Borrowings 2 016 1 896 1 927
Other liabilities 33 139 36
  2 600 2 612 2 534
Current liabilities      
Provisions 25 38 19
Current borrowings 381 554 471
Accounts payable and other liabilities 987 817 969
  1 393 1 408 1 460
Liabilities classified as held for sale - - -
Total liabilities 3 994 4 021 3 994
Total members’ funds and liabilities 5 726 5 508 5 672

 

Unaudited

                                                                                   Equity attributable to members of parent company 

Change in members’ funds 
EUR million
Members’
capital

Share
premium
account
Translation
differ-
ences
Fair value
and other
reserves
Retained
earnings
Total Non-
controlling
interests
Total
Members’ funds 1.1.2010 484 30 9 221 184 927 471 1 399
Result for the period         21 21 19 40
Other comprehensive income                
 Cash flow hedges       3   3 -2 1
 Available for sale financial assets       8   8 11 18
 Currency translation differences     9     9 4 13
 Other items         2 2 0 2
 Income tax relating to components
 of other comprehensive income
     
1
 
-3
   
-2
 
0
 
-3
Other comprehensive income total     10 8 2 20 12 32
Total comprehensive income     10 8 24 42 31 73
                 
Transactions with owners                
 Dividends paid         -1 -1 -4 -5
 Change in members’ capital 21         21   21
 Change in share premium account                
 Transfer from unrestricted to
 restricted equity
               
 Business arrangements             0 0
Members’ funds 31.3.2010 505 30 19 229 207 989 499 1 488
                 
                 
Members’ funds 1.1.2011 539 31 25 247 312 1 154 524 1 678
Result for the period         13 13 49 63
Other comprehensive income                
 Cash flow hedges       -1   -1 -1 -2
 Available for sale financial assets       0   0 1 0
 Currency translation differences     2     2 1 3
 Other items         2 2 0 2
 Income tax relating to components
 of other comprehensive income
     
-1
 
0
   
0
 
0
 
0
Other comprehensive income total     1 -1 2 3 0 3
Total comprehensive income     1 -1 15 16 49 66
                 
Transactions with owners                
 Dividends paid         -1 -1 -20 -21
 Change in members’ capital 10         10   10
 Change in share premium account                
 Transfer from unrestricted to
 restricted equity
               
 Business arrangements     0     0   0
 Acquisitions of                
 non-controlling interests             0 0
Members’ funds 31.3.2011 549 31 27 246 326 1 179 553 1 732



Unaudited       

Condensed consolidated cash flow statement 2011
     1–3
2010
      1–3
2010
    1–12
Result for the period 63 40 214
Total adjustments 131 91 495
Change in working capital -83 -164 -136
Cash flow arising from operations 110 -33 573
Net financial items -41 -26 -163
Income taxes paid -18 -8 -100
Net cash flow arising from operating activities 52 -67 310
       
       
Acquisitions 0 0 -21
Investments in tangible and
intangible assets
 
-35
 
-15
 
-138
Divestments of assets and other 10 12 89
Net cash flow arising from investing activities -25 -4 -70
       
Change in members’ funds 10 21 52
Change in other equity 0 0 4
Change in long-term loans
and other financial items
 
-3
 
-316
 
-376
Dividends paid -25 0 -40
Net cash flow arising from financing activities -19 -295 -360
       
Changes in cash and cash equivalents 7 -365 -120
       
Cash and cash equivalents at beginning of period 440 558 558
Translation difference 0 1 3
Changes in cash and cash equivalents 7 -365 -120
Cash and cash equivalents
in assets classified as held for sale
 
0
 
-
 
0
Cash and cash equivalents at end of period 447 193 440

 


BUSINESS SEGMENTS
 

Wood Supply    QI/11    QI/10 QI–IV/10
Sales 376 333 1 353
EBITDA 8 8 25
 - ” -, excl. non-recurring items 8 8 25
Depreciation and impairment -1 -1 -4
Operating result 8 7 21
- ” -, excl. non-recurring items 8 7 21
- ” -, % of sales 2,0 2,0 1,6
Capital expenditure 1 0 3
Personnel at end of period 1 058 1 024 1 078

 

Wood Products Industry    QI/11    QI/10  QI–IV/10
Sales 238 192 902
EBITDA 14 8 67
 - ” -, excl. non-recurring items 14 9 63
Depreciation and impairment -8 -9 -45
Operating result 5 -2 23
- ” -, excl. non-recurring items 5 0 28
- ” -, % of sales 2,2 -0,1 3,1
Capital expenditure 2 3 16
Personnel at end of period 2 977 2 673 2 703

 

Pulp Industry    QI/11    QI/10  QI–IV/10
Sales 340 288 1 365
EBITDA 113 78 444
 - ” -, excl. non-recurring items 113 78 453
Depreciation and impairment -17 -21 -63
Operating result 96 57 381
- ” -, excl. non-recurring items 96 57 379
- ” -, % of sales 28,1 19,7 27,8
Capital expenditure 10 1 14
Personnel at end of period 883 903 881

  

Board and Paper Industry    QI/11    QI/10  QI–IV/10
Sales 685 602 2 605
EBITDA 77 82 312
 - ” -, excl. non-recurring items 74 72 305
Depreciation and impairment -31 -33 -166
Operating result 46 49 146
- ” -, excl. non-recurring items 43 39 173
- ” -, % of sales 6,3 6,5 6,6
Capital expenditure 12 7 66
Personnel at end of period 4 515 4 796 4 538

 

Tissue and Cooking Papers     QI/11   QI/10  QI–IV/10
Sales 241 225 938
EBITDA 16 29 94
 - ” -, excl. non-recurring items 16 29 99
Depreciation and impairment -10 -10 -44
Operating result 7 19 50
- ” -, excl. non-recurring items 7 19 59
- ” -, % of sales 2,7 8,5 6,3
Capital expenditure 9 4 49
Personnel at end of period 3 211 3 162 3 198

 

Other operations     QI/11   QI/10  QI–IV/10
Sales 1 0 3
EBITDA -1 -2 -7
 - ” -, excl. non-recurring items -1 -2 -6
Depreciation and impairment 0 0 -2
Operating result -2 -2 -9
 - ” -, excl. non-recurring items -2 -2 -7
Capital expenditure 1 0 23
Personnel at end of period 443 369 422

Other operations include among others Metsäliitto’s service and holding functions.

  

Internal sales and eliminations QI/11 QI/10 QI-IV/10
Sales -478 -415 -1 790
EBITDA -22 -19 -101
 - ” -, excl. non-recurring items -22 -19 -94
Depreciation and impairment -4 -3 -13
Operating result -26 -23 -114
- ” -, excl. non-recurring items -26 -23 -107

  

Metsäliitto Group QI/11 QI/10 QI-IV/10
Sales 1 403 1 224 5 377
EBITDA 204 183 833
 - ” -, excl. non-recurring items 201 174 846
Depreciation and impairment -71 -78 -336
Operating result 133 105 497
- ” -, excl. non-recurring items 130 96 547
- ” -, % of sales 9,3 7,9 10,2
Capital expenditure 35 15 159
Personnel at end of period 13 087 12 927 12 820

EBITDA = Operating result before depreciation and impairment losses

 

 

Quarterly data 2011
QI
2010
QIV
2010
QIII
2010
QII
2010
QI
Sales          
 Wood Supply 376 365 318 337 333
 Wood Products Industry 238 224 231 256 192
 Pulp Industry 340 365 344 368 288
 Board and Paper Industry 685 665 662 676 602
 Tissue and Cooking Papers 241 246 236 231 225
 Other operations 1 1 1 2 0
 Internal sales -478 -475 -446 -454 -415
Sales total 1 403 1 391 1 345 1 416 1 224
           
Operating result          
 Wood Supply 8 4 3 8 7
 Wood Products Industry 5 2 11 11 -2
 Pulp Industry 96 98 114 112 57
 Board and Paper Industry 46 -4 66 35 49
 Tissue and Cooking Papers 7 14 11 5 19
 Other operations -2 -1 -3 -2 -2
 Eliminations -26 -30 -32 -29 -23
Operating result total 133 82 170 141 105
 - % of sales 9.5 5.9 12.6 10.0 8.6
           
Share of results in
associated companies
 
0
 
-1
 
-1
 
-7
 
-6
Exchange gains and losses -1 -1 -6 2 -2
Other net financial items -44 -27 -35 -34 -34
Result before income tax 89 52 128 102 64
Income tax -26 -29 -39 -40 -24
Result from continuing operations 63 23 89 62 40
           
Result from discontinued operations 0 0 0 0 0
Result for the period 63 23 89 62 40

 

 

Operating result excl. non-rec. items QI/11 QIV/10 QIII/10 QII/10 QI/10
Wood Supply 8 4 3 8 7
Wood Products Industry 5 12 5 11 0
Pulp Industry 96 99 114 110 57
Board and Paper Industry 43 37 54 43 39
Tissue and Cooking Papers 7 14 13 12 19
Other operations & eliminations -28 -24 -34 -31 -25
Operating result total 130 142 155 154 96
 - % of sales 9.3 10.2 11.5 10.9 7.9

  

 
Change in tangible assets
 
QI/11
 
QI/10
 
QI–IV/10
Book value at beginning of period 2 281 2 428 2 428
Business acquisitions - - 5
Investments 34 14 135
Decrease -3 -12 -23
Assets classified as held for sale - - -6
Depreciation and impairment charges -67 -74 -314
Translation differences and other changes 4 29 56
Book value at end of period 2 248 2 385 2 281

In December 2010, assets classified as held for sale include part of the old equipment of the Metsä-Botnia’s Kaskinen pulp mill shut down in 2009.

 

 
Commitments
 
QI/11
 
QI/10
 
QIV/10
On own behalf (incl. leasing liabilities) 717 464 717
On behalf of associated companies 4 6 4
On behalf of others 6 3 4
Total 727 474 724

 

 
Open derivative contracts
 
QI/11
 
QI/10
 
QIV/10
Interest rate derivatives 1 020 829 1 003
Currency derivatives 1 474 1 775 1 660
Other derivatives 118 234 127
Total 2 612 2 838 2 790

The market value of open derivative contracts at the end of the review period was EUR 8 million (QIV/10: EUR -20 million). Open derivative contracts also include closed contracts to a total amount of EUR 555 million (QIV/10: EUR 522 million).


Accounting policies
This Interim Report was prepared in accordance with the IAS 34 standard Interim Financial Reporting and the accounting policies presented in Metsäliitto Group’s Annual Report 2010.


 

 
Calculation of key ratios
   
 
 
Return on capital employed (%)
 
=
 
(Result from continuing operations before tax + interest expenses, net exchange gains/losses and other financial expenses) per
(Balance total - non-interest-bearing liabilities (average))
 
Return on equity (%)
 
=
 
(Result from continuing operations before tax - income taxes) per
(Members’ funds (average))
 
Equity ratio (%)
 
=
 
(Members’ funds) per
(Balance total - advance payments received)
 
Net gearing ratio (%)
 
=
 
(Interest bearing borrowings - liquid funds - interest-bearing receivables) per
(Members’ funds)

 


MLQ1-2011 - tiedote_EN.pdf