Rottneros results down mainly on currency effects in HY1
Despite higher deliveries and an increase in pulp prices, Rottneros posted a loss of SEK24m in the first half of 2013. This was mainly due to negative currency effects, the manufacturer said.
The market environment remains challenging for Rottneros. In its half-year report, the company said it had mainly suffered from currency effects that had had negative impacts on the company’s business development. The Swedish pulp manufacturer not only posted red figures in this period of time, but results were also lower compared to one year before. With sales revenues amounting to SEK723m, down by 3.5% year-on-year, Rottneros booked an operating loss of SEK22m and a net loss of SEK24m in the first half of 2013 compared to profits of SEK33m and SEK23m in the first six months of 2012.
"It is primaliry our dependency on currencies and the strong Swedish kronor that is exasperating the forestry industry and its profitability”, said President and CEO Carl-Johann Jonsson when talking about the market situation in the pulp sector. The company explained that pulp prices increased from January to June reaching $860/t at the end of June, in line with last year’s level. However, Rottneros had not been able to benefit from this favourable development since the strong Swedish kronor had prevented the increases from being felt. In Swedish kronor, the average pulp price was SEK302 lower in the first half-year than in the same stretch last year.
Higher electricity costs resulting from a 10% increase in prices year-on-year are also said to have burdened results.
Rottneros said that business results were furthermore affected by costs relating to salary, pension and payroll overheads under contracts for the outgoing President and CEO Ole Terland. Terland has left the company after that Arctic Paper had acquired a majority stake in Rottneros and was succeeded by Carl-Johan Jonsson as from 1 July. Arctic Paper has been holding 54% of the Rottneros shares since February this year.
As to pulp deliveries, Rottneros was able to increase volumes in the first half of this year. The company sold 173,300 t of pulp from January to June 2013, over 6,000 t more than in the same period last year. The company said that especially groundwood pulp deliveries had risen, as a result of a stronger market for this product, reaching 30,700 t compared to 24,500 t in the first half of 2012.
Looking ahead to the next months, Rottneros said that players in the softwood pulp market would benefit from the conversion of a number of mills to dissolving pulp production and from the closure of some plants. This would allow supply and demand to be more balanced. As regards the hardwood pulp segment, the planned capacity expansions in South America in the next two years might affect stability in the market, according to the company.
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