Overview

In 2007, the overall market demand for consumer packaging was healthy in the emerging markets and stable in the majority of the mature markets. The Group net sales remained steady, while an unchanged operational result and an expected significant reduction in royalty income led to the underlying EBIT* coming below the previous year’s level.

The underlying result improved in the Rigid business in Europe, and weakened in the Global Flexibles and Films businesses as well as in Asia-Oceania-Africa. Profitability remained on a good level in the Americas despite softer volumes in the second half of the year.

In the fourth quarter it was decided to book non-cash goodwill and tangible asset impairment losses of EUR 104 million, mostly related to the Rigid plastics production in Europe. These impacted the reported Group EBIT. The cash generation turned positive at year-end, and also net debt reduced significantly.

The Company’s Chief Executive Officer resigned in November. Also a number of changes took place in the Group Executive Team during the year.


Business review by region

The Group net sales were EUR 2,311 million (+2% compared to year 2006). Sales performance was driven by a positive price/mix (+2%), especially in the beginning of the year. Volume development (+1%) picked up in the second half of the year. The impact from currencies (-2%) was negative throughout the year.

The geographical distribution of sales was the following: Europe 53% (52%), Americas 29% (31%) and Asia- Oceania-Africa 18% (17%).


Financial review

For the full-year, the underlying Group EBIT before corporate items was EUR 140 million (EUR 138 million), corresponding to an EBIT margin of 6.1% (unchanged).

Corporate net was EUR -4 million (EUR 20 million). Hence, the underlying EBIT was EUR 136 million (EUR 158 million), corresponding to an EBIT margin of 5.9% (6.9%). The reported EBIT was EUR 28 million including goodwill impairment losses of EUR 47 million, tangible asset impairment losses of EUR 58 million and final restructuring charges of EUR 4 million. In the previous year the reported EBIT of EUR 146 million included restructuring charges of EUR 12 million.

At EUR 43 million (EUR 37 million), the increase in net financial items was mainly due to higher level of debt. The income tax expense was EUR 6 million (EUR 13 million). The reported result for the period was EUR -20 million (EUR 97 million), and earnings per share (EPS) were EUR -0.22 (EUR 0.94).

The average number of outstanding shares used in the EPS calculation was 100,426,461 (99,169,003) excluding 5,061,089 (unchanged) Company’s own shares. On a rolling 12-month basis, the return on investment (ROI) was 1.8% (9.4%) and return on equity (ROE) was -2.4% (11.7%).

* The underlying EBIT excludes goodwill and tangible asset impairment losses and restructuring charges.