Holmen posts lower results in Q1, all divisions affected
Holmen posted lower results in all of its business areas in the first quarter of 2013 compared to the same period last year. The company attributes the negative development to declining sales prices in many business segments and a strong Swedish krona.
The decline in overall sales, which dropped by SEK620m year-on-year to SEK4.16bn, could not be compensated and led to a net profit of SEK42m compared to SEK389m in the first quarter of last year. The operating profit was significantly down, too, standing at SEK98m at the end of March, while SEK560m were recorded in the first three months of 2012.
Holmen attributed the developments mainly to declining sales prices in many segments and a strong Swedish krona. Holmen Paper was hardest hit by these circumstances with its operating result falling significantly from SEK34m to a loss of SEK254m and with sales standing at SEK1.78bn. Impairment losses and restructuring costs of SEK140m are included in the result.
The company said that weak demand for printing paper, in particular, and a reduction in deliveries had made it slip into the red. The division's total deliveries amounted to 388,000 t compared to 406,000 t in the first quarter of 2012. While shipments to outside Europe had gone down, deliveries of MF Magazine and book paper had risen by almost 10%, Holmen reported. As announced earlier, the company plans to increase its focus on specialty paper grades in Sweden and has therefore decided to close the 200,000 tpy newsprint PM 51 machine at its Braviken paper mill in the third quarter of this year.
Holmen Timber booked a loss, too. The division's operating result was almost stable year-on-year but negative at SEK-35m. The market for sawn timber is said to be weak and deliveries fell by 5.8% to 163,000 t. Lower costs for wood, however, provided for some relief. Demand for timber and pulpwood in Sweden has developed normally with harvesting being high, according to Holmen. However, Holmen Skog experienced a drop in its operating result of 7.2% to SEK232m. Sales prices had decreased by 10%, Holmen said.
Iggesund Paperboard suffered a net decline in its operating profit which was down from SEK214m in the first quarter of 2012 to SEK60m this year. According to Holmen, the division had to struggle with unfavourable currency effects, lower production (-6.3%) and high production costs, but benefited from stable demand and rising shipments to Europe. At the end of the quarter, the biofuel boiler at the division's Workington mill was commissioned shifting Iggesund’s energy supply from fossil natural gas to bio-energy.
Holmen Energi's sales in the first quarter of 2013 were in line with last year's turnover at SEK497m and the division's operating profit was almost stable, too, at SEK127m compared to SEK130m in the same period last year. Production dropped by 4% while selling prices increased.
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