2005-07-29
Labour dispute in Finland weakens M-real's second quarter operating result
M-real Corporation Stock Exchange Bulletin 29.7.2005 at 1.00 p.m.
In the second quarter M-real Group's
operating result, excluding non-recurring items, fell to a loss of EUR
57 million from a profit of EUR 30 million in the previous quarter.
Compared with the previous quarter, the operating result was weakened
mainly by the fall in paperboard and coated magazine paper deliveries
due to the labour dispute that disrupted the Finnish paper industry.
Additionally, the operating result was weakened by destocking as well
as by the weakening in the operating result of the associated company
Metsä-Botnia, both also in the wake of the dispute.
The operating result included a
non-recurring expense provision of EUR 15 million relating to the
profitability improvement programme in Sweden. The labour dispute in
Finland weakened the operating result by about EUR 70 million. The
operating result was a loss of EUR 72 million (profit of 115 million).
The operating result in the previous quarter included total
non-recurring income of EUR 85 million. The result before taxes was
weakened by a valuation loss on interest rate derivatives of EUR 17
million due to the sharp fall in the level of interest rates.
Key figures for the second quarter of 2005:
- Turnover: EUR 1,259 million (Q1: 1,344 million)
- Operating result: a loss of EUR 72 million (profit of 115 million)
- Result before taxes: a loss of EUR 143 million (profit of 77 million)
- Result for the report period: a loss of EUR 121 million (profit of
76).
- Earnings per share: EUR 0.37 negative (0.23 positive)
- Return on capital employed: 5.7 per cent negative (9.9 positive)
- Equity ratio: 38.4 per cent (38.6%)
- Gearing ratio: 85 per cent (81%)
- Comparable volume of paperboard delivered: 231,000 (281,000); volume
of paper delivered: 999,000 (1,019,000)
Key figures for the second quarter of 2005, excluding non-recurring
items:
- Operating result: a loss of EUR 57 million (profit of 30 million)
- Result before taxes: a loss of EUR 124 million (a loss of 8 million)
- Earnings per share: EUR 0.32 negative (0.03 negative)
- Return on capital employed: 0.3 per cent negative (3.0 positive)
Demand for paper fell in the second quarter, especially for coated fine
paper. Demand was nonetheless at the level of the same period a year
earlier. M-real's paper deliveries decreased by 2 per cent and
paperboard deliveries by 18 per cent.
The average selling price of coated magazine paper rose compared with
the previous quarter, mainly due to the price increases agreed in the
beginning of the year. The price of coated fine paper was unchanged.
The price of office paper declined slightly, though the price in Europe
has stabilized due to lower imports.
Profitability also weakened for the first half of the year. The
operating result was weakened not only by the labour dispute but also
by a stronger euro, the fall in the price of uncoated fine paper, the
rise in the prices of oil-based raw materials and higher energy costs,
measured against the same period of last year.
Commenting on the progress of M-real's cost-savings programme and the
market situation for its main products, President & CEO Hannu
Anttila said: "M-real's EUR 230 million savings and efficiency-boosting
programme is on track to reach its targets, the latest indication of
this being the efficiency-boosting programme at the units in Sweden,
where we're aiming to achieve annual savings of at least EUR 22
million."
"Now that the labour dispute in the Finnish paper industry has come to
an end, there is a more favourable market balance for most paper
grades, and I believe that this will support price increases in the
latter part of the year, especially in magazine paper. In coated fine
paper measures aimed at increasing prices will continue. The outlook
for uncoated fine paper is also slightly more positive than before."
M-real's operating rates in the latter part of the year will be high,
particularly at the paperboard and magazine paper mills. The
third-quarter result will be improved by the growth in volumes, but it
will also be negatively affected by the production losses in the early
days of July due to the labour dispute at the mills in Finland. The
third-quarter result, excluding non-recurring items, will improve
substantially on the second quarter, but the full-year result will be
in the red.
M-real
Corporation Q2/2005 SE Bulletin
M-REAL CORPORATION
Corporate Communications
For further information, contact Hannu Anttila, President and CEO, tel.
+358 10 469 4343 or Juhani Pöhö, Executive Vice President and
CFO, tel. +358 10 469 5283
