Rottneros still in the red in FY2012 but results improved

Swedish NBSK and CTMP pulp manufacturer Rottneros was still in the red in 2012 but it seems to be recovering from the loss suffered in the fiscal year 2011.

Rottneros recorded a net loss of SEK13m (€1.5m) in the financial year 2012, up from a SEK144m (€16.5m) net loss in 2011. Net revenue in 2012 stood at SEK1,437m (€165.5m), down by 5% compared to the previous year. Operating result was positive at SEK6m (€690,000).

Total pulp production at Rottneros’ mills in 2012 amounted to 330,400 t which was 2% above the volume produced in 2011. Deliveries increased 6% year on year to 331,400. Rottneros attributed higher pulp shipments in the financial 2012 to an increase in demand especially in the second half of the year.

“This is not a great result but we are pleased to have been able to produce a profit in a year that was tough for many pulp manufacturers,” said Ole Terland, CEO of Rottneros, referring to company’s result after net financial items in full-year 2012. Swedish manufacturers had not only had to struggle with an increasingly weak global economy but were also affected by a very strong Swedish krona during the autumn, he added.

According to Rottneros, the average price for NBSK pulp fell by 15% in dollar terms and by 11% per tonne in Swedish krona compared to 2011. Following a period of rising prices in the first half of 2012, pulp prices fell by $70-100/t during the summer and autumn. Demand from the paper industry improved in the last quarter of the year, allowing producers to increase their sales prices again.

On the cost side, Rottneros has seen a reduction in fixed and variable costs in 2012 compared to previous year. It was primarily the cost of timber that fell but also electricity was less expensive in 2012 at SEK0.28KWh, down from an average price of SEK0.43/KWh in 2011, according to the company.

As far as regards its strategy for 2013, Rottneros said it will concentrate its pulp supplies more and more on customers with special requirements, thus reducing its exposure to the “constrained and less specialised printing paper market.” In this vein, groundwood pulp activities at the Rottneros mill will continue in 2013. Originally, the company planned to stop manufacturing groundwood pulp due to a rapid decline in demand from the European printing paper industry, the company explained. However, Rottneros managed to develop a new grade of groundwood pulp for the board industry and has secured major supply contracts which allow for continuous production in 2013.

Rottneros expects the year 2013 to be more or less the same as the previous year. “Total global manufacturing capacity for softwood pulp will fall rather than rise in 2013 as several pulp mill are being built or converted for other grades. Together with the increase in demand, capacity utilisation is likely to increase, and price trends should therefore continue to rise,“ said CEO Ole Terland.

In November 2012, Arctic Paper has made a public takeover bid for all Rottneros shares. The offer period has been extended until 4 February 2013 due to poor support by Rottneros’ shareholders, the Swedish pulp manufacturer explained. Currently, Arctic Paper is the biggest shareholder in Rottneros holding 39.4 % of the share capital.