STOCKHOLM, Sweden, April 26, 2002 (PRIMEZONE) -- Sveaskog:
Quarter
Pro forma * Pro forma *
Remaining Remaining
units units
MSEK 2002 Q 1 2001 Q 4 2001 Q 1
Net sales 1,958 1,848 1,927
Operating profit 328 287 255
Profit after 231
financial items
* Pro forma accounting is described on page 5.
Sveaskog AB now owns just over 99% of the shares in AssiDoman AB. AssiDoman is consolidated in the new Sveaskog Group with effect from year-end 2001. Pro forma accounts have been prepared for 2001.
Operating profit for comparable units improved compared with the previous quarter by MSEK 41 or 14%, primarily due to lower group-wide costs. Earnings for Forestry operations and Timber fell slightly while Cartonboard improved its result. Gains on property sales also decreased.
Changes in the Group
Through a public offer, Sveaskog AB acquired approximately 95% of the shares in AssiDoman AB at the end of December 2001. Sveaskog's holding has subsequently risen to just over 99%. Compulsory redemption procedures are under way for the remaining shares.
AssiDoman was consolidated in Sveaskog's balance sheet at 31 December 2001. Starting from 2002, AssiDoman's operations is also reported in Sveaskog. AssiDoman's structure was changed substantially in 2001 through the sale and distribution of industrial operations, which affected the figures for 2001. For this reason pro forma accounts have been prepared for sales and operating profit for the new group. The pro forma accounts show sales and operating profit for both the Group as a whole and for remaining units.
The new Sveaskog primarily conducts forestry and timber sales based on its holding of approximately 3.3 million ha of productive forest land. The forestry operations also include property management as well as commercial activities related to hunting, fishing and recreation. The Group also includes an extensive sawmill business and the cartonboard mill in Frovi. The forestry operations are conducted under the Sveaskog name. The industrial operations are conducted under the names AssiDoman Timber and AssiDoman Cartonboard.
Sveaskog's external reporting includes, in addition to a description of the Group, a breakdown of operations in the Forestry Operations, Timber and Cartonboard business areas.
Sveaskog has been assigned by its owner to implement an extensive property sales programme. Planning for implementation of the programme started in the first quarter of 2002. Property sales in the first quarter were limited.
Sales, earnings and profitability The global economy is still in recession. International growth is expected to gather pace in the autumn, mainly due to an expansive economic policy, and this will lead to rising utilisation of resources. However, economic development is not clear-cut and there is a risk that the international business climate will remain weak over a longer period.
Demand within Sveaskog's product areas was largely stable during the period. The pulp and paper industry was less affected by the general economic slowdown than before which led to favourable demand for softwood fibre. A more balanced market for sawn timber led to higher demand for sawlogs. The market situation for liquid packaging board and packaging board was comparatively satisfactory.
Net sales for the quarter amounted to MSEK 1,958, compared with MSEK 1,848 pro forma in the previous quarter. Sales were largely unchanged for all business areas. Sales for the two quarters do not include any sold or distributed units.
Operating profit (excl. property sales) for remaining units amounted to MSEK 326, an increase of MSEK 48 or 17% compared with the previous quarter, mainly due to lower group-wide costs. Earnings for Forestry operations and Timber fell slightly while Cartonboard's earnings improved.
Compared with the first quarter of 2001, earnings improved by MSEK 75 or 30% due to lower group-wide costs and improved earnings for Forestry and Cartonboard.
Total operating profit amounted to MSEK 328 compared with MSEK 362 in the previous quarter and MSEK 733 for the first quarter of 2001. The result for 2001 included sold and distributed units.
Operating profit for the first quarter included capital gains on property sales of MSEK 2, compared with MSEK 9 in the previous quarter.
Profit after net financial items amounted to MSEK 231 in the first quarter. Net financial items amounted to MSEK -97.
Net tax for the period is estimated at MSEK -64, corresponding to an average tax rate of 28%. Net profit amounted to MSEK 167.
Return on net operating assets (excl. property sales) amounted to 6% during the period, compared with the set target of 5%. Return on equity amounted to 5%.
Interest cover was 3.0, compared with the target of 2.0.
The number of employees decreased due mainly to sale of operations. The average number of employees in remaining units amounted to 2,246 compared with 2,432 in the previous year and 2,374 in the first quarter of 2001.
Cash flow, investments and financial position Cash flow from operating activities amounted to MSEK -16 in the first quarter. In the same period investments in fixed assets amounted to MSEK 51, mostly within Cartonboard.
Interest-bearing net debt amounted to MSEK 8,863 at 31 March 2002, compared with a net debt of MSEK 7,913 at year-end 2001. The main reason for the higher net debt was the acquisition of additional shares in AssiDoman AB.
The debt/equity ratio amounted to 0.72, compared with the target of approximately 1.0. The Group's visible equity ratio at the end of the quarter was 48%.
Business areas
Forestry operations
Forestry operations include the operating areas Forestry, Timber Market, Properties, and Hunting, Fishing and Recreation.
In northern Sweden the market situation for pulpwood was characterised by good access to softwood pulpwood but a continuing shortage of hardwood fibre. The market for timber was balanced as a whole but with some surplus of spruce timber in the northern parts of the area.
In southern Sweden there was a sudden change during the period from a surplus to what almost amounted to a shortage of softwood pulpwood. The market situation for timber was characterised by a continued trend towards a surplus of pine timber and a shortage of spruce timber.
Prices only changed marginally in the different market areas.
Total wood deliveries were largely unchanged compared with the previous quarter. On the other hand, the proportion of deliveries from the Group's own forests fell. Compared with the first quarter of 2001, both total deliveries and the proportion from own forests were almost unchanged.
Operating profit amounted to MSEK 285, compared with MSEK 290 in the previous quarter. This change was mainly attributable to lower wood volumes from own forests. Compared with the first quarter of 2001, earnings improved by MSEK 7.
Timber
The European market for sawn timber was balanced in the first quarter. The picture for whitewood products was positive with good demand and price increases in local currency in the majority of markets. The strengthening of the Swedish krona, however, counteracted the positive price effects. Timber's deliveries in the first quarter were lower than in the previous quarter. This was due, among other things, to decreased deliveries of processed products. Compared with the first quarter of 2001, deliveries rose.
The operating loss for the period was MSEK 5 compared with a loss of MSEK 1 in the previous quarter. This decline was mainly due to lower volumes, a changed delivery mix and higher costs. Compared with the first quarter of 2001, earnings fell by MSEK 7, due to a changed delivery mix and higher costs.
Cartonboard
Following a weak start to the year, the market situation for packaging board stabilised, although conditions vary between different countries. Demand for liquid packaging board were good and some price increases were noted.
Operating profit amounted to MSEK 67 compared with MSEK 51 in the previous quarter. This MSEK 16 improvement was mainly due to higher production and lower costs. Compared with the first quarter of 2001, earnings improved by MSEK 27 due to higher prices and volumes.
Stockholm, April 2002
Lars Skold President
Sveaskog AB (publ.) (556558-0031)
This interim report has not been reviewed by the company's auditors.
Financial calendar Interim report for January - June 28 August 2002 Interim report for January - September xx October 2002
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