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M-real's operating result for July-September excluding non-recurring items was EUR -22 million
 

22/10/2009
M-real Corporation Interim report 1 January-30 September 2009, 22.10.2009 at 12
 
Result for January-September 2009
  • Sales EUR 1,826 million (Q1-Q3/2008: 2,514)
  • Operating result excluding non-recurring items EUR -157 million (16). Operating result including non-recurring items was EUR -215 million (100).
  • Result before taxes from continuing operations excluding non-recurring items EUR -215 million (-91). Result before taxes including non-recurring items totalled EUR -284 million (-7).
  • Earnings per share from continuing operations excluding non-recurring items were EUR -0.64 (-0.31) and including non-recurring items EUR -0.83 (-0.05)
    •  
    Result for the third quarter of 2009
  • Sales EUR 618 million (Q2/2009: 585)
  • Operating result excluding non-recurring items EUR -22 million (-70). Operating result including non-recurring items EUR -24 million (-73).
  •  Result before taxes excluding non-recurring items totalled EUR -70 million (-83). Result before taxes including non-recurring items EUR -72 million (-97).
  •  Earnings per share from continuing operations excluding non-recurring items were EUR -0.22 (-0.24) and including non-recurring items EUR -0.22 (-0.29)
    •  
    Events during the third quarter
  • The result of the Consumer Packaging business area improved significantly.
  • Major pulp mill boiler rebuild implemented in Husum.
  • M-real received a EUR 190 million cash payment as the final settlement from Sappi on 27 August 2009 related to the divestment of the Graphic Papers business at the end of 2008.
  • A letter of intent regarding the new ownership structure of M-real's associated company Metsä-Botnia and the divestment of Metsä-Botnia's operations in Uruguay to UPM-Kymmene was signed on 15 July 2009.
    •  
    Events after the period
  • An agreement on the new ownership structure of M-real's associated company Metsä-Botnia and the divestment of Metsä-Botnia's operations in Uruguay to UPM-Kymmene was signed on 22 October 2009.
    •  
    "The demand picked up especially for paperboard, which combined with the efficiency improvement measures, significantly improved the profitability of Consumer Packaging. The adaptation of M-real after the divestment of Graphic Papers and the streamlining of the remaining paper business have proceeded according to plans. These measures have a considerable negative result impact this year. The profit impact of these successful measures will be seen clearly during the next year."
     
    Mikko Helander, CEO, M-real Corporation
     
     
     
    Result for July-September compared with the previous quarter
    M-real's sales totalled EUR 618 million (Q2/2009: 585). Comparable sales were up 5.7 per cent. The operating result was EUR -24 million (-73), and the operating result excluding non-recurring items was EUR -22 million (-70).
     
    Non-recurring items totalling EUR -2 million were recognised in the operating result consisting of the following:
     
  • EUR 3 million cost related to profit improvement measures of the Husum mill of which EUR 2 million in Office Papers business area and EUR 1 million in Market Pulp and Energy business area.
  • EUR 1 million income related to closure of Hallein Paper in speciality Papers business area.
    •  
    The non-recurring items for the previous quarter totalled EUR -3 million net due to the implemented efficiency improvement measures.
     
    The operating result excluding non-recurring items compared with the previous quarter was improved by increased delivery volumes, higher selling price of pulp and implemented cost savings. The result was weakened by a decrease in the price of uncoated fine paper, the investment and maintenance shutdown at the Husum mill and costs associated with the discontinuation of the standard coated fine paper production.
     
    The total paper business delivery volume was 275,000 tonnes for July-September (269,000). Deliveries by the Consumer Packaging business area totalled 315,000 tonnes (296,000).
     
    Financial income and expenses totalled EUR -47 million (-12). Foreign exchange gains and losses from accounts receivable, accounts payable, financial income and expenses and the valuation of currency hedging were EUR 2 million (2). Net interest and other financial income and expenses stood at EUR -49 million (-14). Other financial expenses do not include valuation gains on interest rate hedges (valuation gain of 7). A loss of EUR -30 million was booked in the financial expenses due to the early repayment of the vendor notes issued to Sappi.
     
    The result from continuing operations in July-September before taxes was EUR -72 million (-97). The result from continuing operations before taxes excluding non-recurring items was EUR -70 million (-83). Income taxes, including the change in deferred tax liabilities, came to EUR -1 million (+4).
     
    Earnings per share were EUR -0.23 (-0.30). Earnings per share from continuing operations excluding non-recurring items were EUR -0.22 (-0.24). The return on equity was -27.2 per cent (-32.1); excluding non-recurring items, -26.6 per cent (-27.2). Return on capital employed was -2.3 per cent (-10.2); excluding non-recurring items -2.0 per cent (-8.3).
     
    Result for January-September compared with the corresponding period last year
    M-real's sales totalled EUR 1,826 million (2,514). Comparable sales were down 23.8 per cent. The operating result was EUR -215 million (+100), and the operating result excluding non-recurring items was EUR -157 million (+16).
     
    Non-recurring items in the operating result for January-September totalled EUR -58 million net, including the following key items:
  • EUR 28 million cost provisions and write-downs in the Speciality Papers business area connected to the closure of the Hallein paper mill.
  • EUR 22 million cost provisions and write-downs associated with the closure of the Metsä-Botnia Kaskinen mill. This total consists of EUR 16 million related to the Consumer Packaging business area and EUR 6 million to the Market Pulp and Energy business area.
  • EUR 3 million cost under Other operations related to the streamlining of the sales network.
  • EUR 3 million cost related to profit improvement measures of the Husum mill of which EUR 2 million in Office Papers business area and EUR 1 million in Market Pulp and Energy business area.
    •  
    The non-recurring items of the corresponding period in the previous year were EUR 84 million net.
     
    Compared to the corresponding period last year, the operating result excluding non-recurring items was weakened by the reduced delivery volumes caused by weakened demand and the reduced value of product, wood and pulp inventories. The result was improved by the implemented price increases and cost savings.
     
    The total paper business delivery volume was 866,000 tonnes for January-September (1,368,000). Consumer Packaging deliveries totalled 885,000 tonnes (1,041,000).
     
    Financial income and expenses over the period totalled EUR -55 million (-106). Foreign exchange gains and losses from accounts receivable, accounts payable, financial income and expenses and the valuation of currency hedging were EUR 4 million (2). Net interest and other financial income and expenses stood at EUR -59 million (-108). Other financial expenses include EUR 9 million of valuation gains on interest rate derivatives (valuation gain of 3). The financial income of the review period includes a profit of about EUR 31 million from repurchases of M-real's EUR 400 million bond due in December 2010. A loss of EUR -30 million was booked in the financial expenses due to the early repayment of the vendor notes issued to Sappi.
     
    The result from continuing operations over the review period before taxes was EUR -284 million (-7). The result includes a non-recurring item of EUR -11 million in the line "share of results in associated companies" from the Sunila pulp mill divested by Myllykoski Paper during the second quarter. The result from continuing operations before taxes and excluding non-recurring items was EUR -215 million (-91). Income taxes, including the change in deferred tax liabilities, came to EUR +13 million (0).
     
    Earnings per share were EUR -0.88 (-0.89). Earnings per share from continuing operations excluding non-recurring items were EUR -0.64 (-0.31). The return on equity was -29.7 per cent (-0.6); excluding non-recurring items -22.9 per cent (-7.2). Return on capital employed was -8.5 per cent (4.9); excluding non-recurring items -5.6 per cent (1.3).
     
    Personnel
    On 30 September 2009, the company had 5,649 employees (31 December 2008: 6,546), of which 2,097 (2,258) worked in Finland. In January-September 2009, M-real employed an average of 6,103 people (2008: 9,087). The numbers include 30 per cent of Metsä-Botnia's personnel.
     
    Investments
    Gross investments in January-September totalled EUR 55 million (Q1-Q3/2008: 89). Investments include a EUR 15 million share of Metsä-Botnia's capital expenditure (23). Metsä-Botnia's investment share is based on M-real's 30 per cent ownership.
     
    Structural change
    In February 2009, M-real launched a new profit improvement programme with an annual target of EUR 80 million. The improvement actions target at savings in the business areas and streamlining the support functions to reflect the changed company structure. The full annual effect of the programme will be visible from 2011. The majority of the profit improvement measures regarding continuing businesses are expected to be completed during 2009. The profit impact is estimated to be EUR 25-30 million in 2009. The related non-recurring costs have mainly been booked by the end of September.
     
    A separate EUR 60 million programme to improve the 2009 cash flow was also launched in February. The actions include, e.g., the reduction of net working capital and cuts in investments.
     
    Both programmes have proceeded better than expected, and therefore the target of the profit improvement programme was increased to EUR 90 million and the target of the cash flow improvement programme to EUR 80 million in October 2009.
     
    In 2008, M-real announced it was planning the discontinuation of standard coated fine paper production at the Hallein and Gohrsmühle mills based on earlier examined strategic options. Both mills have been loss-making for a long period of time. At Hallein, paper production was discontinued at the end of April 2009. At the Gohrsmühle mill, standard coated fine paper production was discontinued in April. At Gohrsmühle, the production of speciality papers as well as uncoated fine paper reels and folio sheets has been expanded.
     
    The organisation of M-real was revised following the closure of the Hallein paper mill and the discontinuation of standard coated fine paper production at the Gohrsmühle mill. The Other Papers business area was renamed Speciality Papers. The new structure took effect on 17 June 2009.
     
    On 15 July 2009, M-real's associated company Oy Metsä-Botnia Ab and its owners, M-real, Metsäliitto Cooperative and UPM-Kymmene Oyj, signed a letter of intent regarding the divestment of the pulp mill and forests located in Fray Bentos, Uruguay, to UPM. The final agreement was signed on 22 October 2009. The transaction is described more in detail in the chapter Events after the reporting period.
     
    M-real's structural change to concentrate more clearly on producing packaging materials has proceeded as planned. The strategic review of the paper business continues.
     
    Management changes
    Matti Mörsky started as M-real's CFO on 4 May 2009.
     
    On 17 June 2009, Heikki Husso was appointed Head of the Speciality Papers business area, and Soili Hietanen was appointed Head of the Market Pulp and Energy business area. Hietanen is also responsible for contract manufacturing between M-real and Sappi.
     
    Mika Joukio, Head of the Consumer Packaging business area, was appointed as Deputy to the CEO of M-real in addition to his current position as of 15 September 2009.
     
    Financing
    At the end of September 2009, M-real's equity ratio was 28.5 per cent (31 December 2008: 30.8) and the gearing ratio 170 per cent (152). Net gearing ratio was 121 (90). Some of M-real's loan agreements set a 120 per cent limit on the company's net gearing ratio and a 30 per cent limit on the equity ratio. Calculated as defined in the loan agreements, the net gearing ratio at the end of September was approximately 94 per cent (74) and the equity ratio some 34 per cent (36).
     
    The change in the fair value of investments available for sale was approximately EUR -93 million in January-September based mainly on the decrease in the value of the Pohjolan Voima shares.
     
    At the end of September, net interest-bearing liabilities totalled EUR 1,262 million (1,254). Foreign-currency-denominated loans accounted for 14 per cent; 87 per cent were floating-rate and the rest were fixed-rate. At the end of September, the average interest rate on loans was 5.1 per cent and the average maturity of long-term loans 2.7 years. The interest rate maturity was 5.1 months at the end of September. During the period the interest rate maturity has varied between 2 and 6 months.
     
    In January-September, cash flow from operations amounted to EUR 35 million (Q1-Q3/2008: 102). Working capital was down by EUR 131 million (up 19).
                         
    At the end of the period, an average of 4.4 months of net foreign currency exposure was hedged. The degree of hedging has varied between 4 and 5 months during the period. Approximately 95 per cent of the non-euro-denominated equity was hedged at the end of the period.
     
    Liquidity continues at a good level. At the end of the review period, liquidity was EUR 1,278 million, of which EUR 828 million consisted of committed credit facilities, and EUR 450 million of liquid assets and investments. The amount of committed credit facilities include the undrawn EUR 500 million syndicated revolving credit facility due in December 2009, which was cancelled after the review period in October. In addition, the Group had other interest-bearing receivables totalling EUR 64 million. To meet its short-term financing needs, the Group also had at its disposal uncommitted domestic and foreign commercial paper programmes and credit facilities amounting to about EUR 570 million.
     
    In connection with the divestment of Graphic Papers in December 2008, M-real received EUR 220 million in interest-bearing vendor notes from Sappi. In August, M-real agreed with Sappi that Sappi will repay the vendor notes at the price of 86.5 per cent of their nominal value. The cash payment of EUR 190 million received by M-real from Sappi in August strengthened the Group's liquidity. This early repayment resulted in an approximately EUR 30 million loss that was booked in M-real's financial expenses in the third quarter of 2009.
     
    In the second quarter, M-real drew a EUR 60 million pension premium (TyEL) loan. After this drawdown, M-real still has a total of about EUR 260 million of undrawn pension premium (TyEL) loans. 
     
    In the first quarter, M-real repurchased its own bonds (EUR 400 million bond due in December 2010) with a nominal value of EUR 59.95 million. A gain of approximately EUR 31 million from the purchases was recorded in the first quarter result.
     
    M-real's liquidity is ensured and actions to secure long-term financing are ongoing.
     
    Standard & Poor's downgraded M-real's credit rating from B- to CCC+ on 16 January 2009. The outlook of the rating remains negative. The downgrade has an about EUR 2 million impact on current annual financing costs.
    On 13 February 2009, Moody's Investors Service downgraded M-real's B3 credit rating to Caa1. The outlook of the rating remains negative. The downgrade has an about EUR 2 million impact on current annual financing costs.
     
    Shares
    In January-September 2009, the highest price for M-real's B share on the NASDAQ OMX Helsinki was EUR 0.92, the lowest EUR 0.19, and the average price EUR 0.50. At the end of September, the price of the B share was EUR 0.80.
     
    The trading volume of B shares was EUR 214 million, 138 per cent of the share capital. The market value of the A and B shares totalled EUR 292 million at the end of September.
     
    At the end of September, Metsäliitto Cooperative owned 38.6 per cent of the shares and held 60.5 per cent of the voting rights conferred by these shares. International investors' holdings increased to 18 per cent.
     
    On 5 February 2009, Financier de l'Echiquier SA's holding in M-real decreased to 4.8 per cent of the share capital and 1.6 per cent of the voting rights.
     
    The company does not hold any of its own shares.
     
    Events after the reporting period
    M-real Corporation, a part of Metsäliitto Group, announced on 15 July 2009 that its associated company, Oy Metsä-Botnia Ab, and its owners, M-real, Metsäliitto Cooperative and UPM-Kymmene Oyj, have signed a letter of intent regarding the new ownership structure of Metsä-Botnia and the divestment of Metsä-Botnia's Uruguayan operations to UPM. The master agreement regarding this transaction was signed on 22 October 2009.
     
    Pursuant to the agreement, Metsä-Botnia will sell all its holdings in Uruguayan operations to UPM. The agreed total value of the pulp mill and forest assets in Uruguay is approximately EUR 1.6 billion. In addition, Metsä-Botnia will sell 77 per cent of its holding in Pohjolan Voima Oy to UPM for a consideration of EUR 66 million. Concurrently, Metsä-Botnia will distribute dividends and capital repayments to its shareholders, of which M-real's share is about EUR 300 million.
     
    Pursuant to the agreement, Metsä-Botnia will acquire its own shares from UPM and will cancel them. As a result, M-real's ownership in Metsä-Botnia increases by 3.0 percent-units. M-real and Metsäliitto Cooperative have agreed that Metsäliitto Cooperative will acquire such 3.0 percent holding of Metsä-Botnia from M-real. The agreed total value of Metsä-Botnia without its Uruguayan operations and Pohjolan Voima Oy shares is approximately EUR 1.9 billion. Metsäliitto Cooperative will pay its share purchase from M-real with a market priced vendor note of EUR 50 million, having a maturity of 3 years.
     
    Upon the closing of the transaction, M-real will change the consolidation method of Metsä-Botnia in its consolidated financial accounts and process its ownership in Metsä-Botnia as an associated company according to IAS 28. When closed, the transaction will reduce M-real's net debt compared to the end of the third quarter in 2009 by approximately EUR 500 million when taking into account the cash consideration of EUR 300 million, the market priced receivable of EUR 50 million from Metsäliitto and the change in the consolidation method for the consolidated financial statements of M-real. Earlier the net debt reduction was estimated at EUR 550 million. This change in the estimation results from Metsä-Botnia's decreased net debt and weakened US dollar exchange rate. M-real will use the funds for paying off its debts. The transaction will not have a significant impact on M-real's equity. The closing of the transaction and the change in the consolidation method of Metsä-Botnia are estimated to decrease M-real's annual sales by approximately EUR 250 million and to slightly improve the result before taxes compared to 1-3Q 2009.
     
    The transaction is still subject to the conclusion of negotiations with financing parties and approvals by competition authorities. The transaction is expected to be completed latest during the first quarter of 2010. After the closing of the transaction M-real owns 30 per cent, Metsäliitto Cooperative 53 per cent and UPM 17 per cent of Metsä-Botnia.
     
    The Board of Directors of M-real has reviewed and approved the transaction without those of its members who are dependent on Metsäliitto Cooperative. Upon request of the Board of Directors of M-real, Handelsbanken Capital Markets has issued a Fairness Opinion, according to which the transaction is financially fair from the point of view of M-real's shareholders. Castrén & Snellman Oy, Attorneys-at-law, has acted as the company's legal advisor.
     
    Near-term outlook
    The demand for folding boxboard improved during the third quarter, and the operating rates were at a good level. The demand is believed to remain good also during the fourth quarter. However, seasonally the fourth quarter is typically slightly weaker than the third quarter. Folding boxboard prices are being increased in the UK, and price increases of approximately 10 per cent have also been announced for other markets. Linerboard prices have been increased in the main markets.
     
    Also the order inflow of uncoated fine paper improved during the third quarter. The demand seems to continue at a relatively good level. Following the divestment of the New Thames mill last year and the subsequent production conversion, M-real's operating rates have been slightly better than the average operating rates in the market. Producers' low average operating rates seem to continue to maintain the price pressure.
     
    Following the discontinuation of the standard coated fine paper production, the expansion of uncoated fine paper and speciality paper production has progressed according to plan in the Speciality Papers business area. The demand for speciality papers is still below the normal level but seems to be improving gradually. The prices of speciality papers have mainly remained stable, and no significant changes in the average price are expected.
     
    The increase in the price of pulp has continued. The weakening of the US dollar has decreased the effect of the price increase in euros. It is believed the increase in prices will continue also during the fourth quarter.
     
    The adaptation of M-real after the divestment of Graphic Papers has proceeded according to plans, and it is expected to result in significant cost savings before the end of the year, e.g., due to the reorganisation of IT functions.
     
    M-real's internal profit improvement programmes have proceeded as targeted. The implemented efficiency improvements and decreases in production costs in 2009 help the profitability situation. Performance in 2009 has been negatively affected by significant extraordinary operating costs related to adapting operations to a smaller scale and more profitable entity. The costs related to these announced adaptation measures during the fourth quarter will be significantly lower than during the previous quarters. The positive effect of successful measures on performance will however be seen clearly during the next year.
     
    The third quarter was notably better than the first half of the year. The fourth quarter is also expected to be clearly better than the profitability level of the first two quarters. As a result of the weak performance during the first half of the year, the operating result for 2009 as a whole excluding non-recurring items will fall clearly short of the previous year.
     
    The agreement on the new ownership structure of M-real's associated company Metsä-Botnia and the divestment of Metsä-Botnia's operations in Uruguay to UPM-Kymmene Oyj is expected to be closed latest during the first quarter of 2010.
     
    Near-term business risks
    The weakening of the global economy and general uncertainty have had a negative impact on the operating conditions of the European paper and board industry. In spite of several signs of improvement, there is still the risk that the slowdown of the global economy and the weak demand for paper will be prolonged. A prolonged period of weak demand may delay the improvement of profitability.
     
    North-American subsidies to pulp industry have led restarts of idled capacity. The possible material increase in pulp supply can result as discontinuation of the global pulp price increase or even as a global pulp price decline.
     
    The overall situation of the financial market has recently improved, but the availability of corporate financing on reasonable terms remains challenging. M-real's financial situation improved following the early repayment of Sappi's vendor notes and will improve further once the arrangement of Metsä-Botnia's operations in Uruguay is closed latest during the first quarter of 2010.
     
    The company's strategic review has proceeded consistently in phases. Together with successful cost saving programmes, the company has achieved significant savings and rationalisation of operations. It has been announced that the strategic review of the paper business, cost cuts and streamlining of operations will continue. If the measures to be implemented are unable to reach the desired effect on costs, there is the risk of continued weak profitability of the paper business. 
     
    There is a risk of a strengthening euro in relation to the US dollar and the British pound. This would have a negative impact on operating conditions in the European paper and board industry.
     
    Because the forward-looking estimates and statements of these financial statements are based on current plans and estimates, they contain risks and other uncertain factors that may cause the results to differ from the statements concerning them.
     
    In the short term, M-real's result will be particularly affected by the price of, and demand for, finished products, raw material costs, the price of energy, and the exchange rate development of the euro.
     
    More information about longer-term risk factors can be found on pages 37-38 of M-real's 2008 annual report.
     
     
    M-REAL CORPORATION
     
    Further information:
    Matti Mörsky, CFO, tel. +358 10 465 4913
    Juha Laine, Vice President, Investor Relations and Communications, tel. +358 10 465 4335
     
    More information available starting from 1 pm on 22 October 2009. A telephone conference for investors and analysts in English starts at 3 pm.
      
     
    BUSINESS AREAS AND MARKET TRENDS
     
    Result for July-September compared with the previous quarter
    The operating result excluding non-recurring items for the Consumer Packaging business area improved from the previous quarter and was EUR 31 million (Q2/2009: 5). The result was improved by an increase in the delivery volumes, lower costs and implemented cost saving measures.
     
    No non-recurring items were booked in the result. The result for the previous quarter included a non-recurring item EUR -1 million cost provision related to personnel reductions.
     
    The deliveries of European folding boxboard producers were 9 per cent higher compared with the previous quarter. Consumer Packaging's deliveries of folding boxboard were up by 12 per cent.
     
    Result for January-September compared with the corresponding period last year
    The operating result excluding non-recurring items for the Consumer Packaging business area weakened compared to the corresponding period last year and totalled EUR 35 million (38). The most significant factor weakening the result was the general decline in demand. Price increases, the implementation of cost saving measures and the strengthening of the US dollar improved the result.
     
    The result includes EUR -17 million non-recurring items related to the closure of Metsä-Botnia's Kaskinen pulp mill and personnel reductions. The result for the corresponding period last year included non-recurring items of EUR -1 million.
     
    The deliveries of European folding boxboard producers fell by 16 per cent compared with the corresponding period last year. Consumer Packaging's deliveries of folding boxboard were down by 12 per cent.
     
     
     
     
    Result for July-September compared with the previous quarter
    The operating result excluding non-recurring items for the Office Papers business area improved compared to the previous quarter and was EUR -13 million (Q2/2009: -18). The result was improved by an increase in delivery volumes and the implemented cost saving measures. A decrease in the average sale prices impacted the result.
     
    A non-recurring item totalling EUR -2 million was recognised in the operating result in connection with the profit improvement measures at the Husum mill. The result for the previous quarter did not include non-recurring items.
     
    Total deliveries by European uncoated fine paper producers were down by 1 per cent compared to the previous quarter. The delivery volume of Office Papers increased by 5 per cent.
     
    Result for January-September compared with the corresponding period last year
    The operating result excluding non-recurring items for Office Papers weakened compared to the corresponding period last year and totalled EUR -48 million (-15). The result was weakened by lower average selling prices and weaker demand for products. The result was improved by lower raw material costs and implemented cost saving measures.
     
    A non-recurring item totalling EUR -2 million was recognised in the operating result in connection with the profit improvement measures at the Husum mill. The result for the corresponding period last year did not include non-recurring items.
     
    Total deliveries by European uncoated fine paper producers fell by 15 per cent compared to the corresponding period last year. The delivery volume of Office Papers fell by 30 per cent. This figure includes the impact of the divestment of the New Thames mill.
     
     
     
     
    Result for July-September compared with the previous quarter
    The operating result excluding non-recurring items for the Speciality Papers business area improved compared to the previous quarter and was EUR -11 million (Q2/2009: -22). The result was improved by higher selling prices and implemented cost saving measures. The result was weakened by the costs associated with discontinuation of the standard coated fine paper production.
     
    The result includes a EUR 1 million non-recurring income related to closure of Hallein paper mill. The result for the previous quarter included a non-recurring item of EUR -1 million connected to the closure of the Hallein paper mill.
     
    The delivery volume of Speciality Papers fell by 5 per cent; this figure includes the discontinuation of the standard coated fine paper production.
     
    Result for January-September compared with the corresponding period last year
    The operating result excluding non-recurring items for Speciality Papers weakened compared to the corresponding period last year and totalled EUR -45 million (-7). The result was weakened by a sharp decline in the demand, declined delivery volumes and the costs associated with discontinuation of the coated fine paper production, accounting for approximately half of the losses for the year. The result was improved by higher average selling prices and implemented cost savings measures.
     
    The result includes total EUR -28 million in non-recurring items related to the closure of Hallein paper mill. The result for the corresponding period last year included non-recurring items of EUR +23 million.
     
    The delivery volume of Speciality Papers fell by 48 per cent; this figure includes the discontinuation of the standard coated fine paper production.
     
     
     
     
    Result for July-September compared with the previous quarter
    The operating result excluding non-recurring items for the Market Pulp and Energy business area improved compared with the previous quarter and was EUR -14 million (Q2/2009: -19). The result was improved by the higher selling price of pulp and lower wood costs.
     
    The result includes a EUR -1 million non-recurring item related to implemented profit improvement measures at Husum mill. The result for the previous quarter did not include non-recurring items.
     
    Result for January-September compared with the corresponding period last year
    The operating result excluding non-recurring items for the Market Pulp and Energy business area weakened compared to the corresponding period last year and totalled EUR -45 million (34). The result was weakened by lower selling price of pulp and production curtailments of pulp mills due to low demand. The result was improved by lower wood costs.
     
    In addition, cost provisions and write-downs of EUR 7 million associated with the closure of the Metsä-Botnia Kaskinen mill and the implemented profit improvement measures at Husum mill were recognised as non-recurring items in the result.
     
    The result for the corresponding period last year included EUR +74 million non-recurring items.
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
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