DGAP-News: M-real's operating result excluding non-recurring items for the first half of 2011 EUR 75 million

(firmenpresse) - M-real Oyj

04.08.2011 11:01
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M-real Corporation Interim report January-June 2011 on 4.8.2011 at 12.00 EET


Result for the first half of 2011

-- Sales EUR 1,345 million (Q1-Q2/2010: 1,278)
-- Operating result excluding non-recurring items EUR 75 million (82)
Operating result including non-recurring items EUR 14 million (84)
-- Result before taxes excluding non-recurring items EUR 44 million (39)
Result before taxes including non-recurring items EUR -22 million (25)
-- Earnings per share from continuing operations excluding non-recurring items
EUR 0.11 (0.08), and including non-recurring items EUR -0.09 (0.03)

Result for the second quarter of 2011

-- Sales EUR 660 million (Q1/2011: 685)
-- Operating result excluding non-recurring items EUR 32 million (43).
Operating result including non-recurring items EUR -32 million (46)
-- Result before taxes excluding non-recurring items EUR 16 million (28)
Result before taxes including non-recurring items EUR -53 million (31)
-- Earnings per share from continuing operations excluding non-recurring items
EUR 0.04 (0.07), and including non-recurring items EUR -0.17 (0.08)

Events during the second quarter of 2011

-- M-real announced plans to eliminate losses in the paper business, including
divestments of or capacity closures at Alizay, Gohrsmühle and Reflex mills
-- Increase of Simpele mill's folding boxboard capacity by 80,000 tonnes
-- Divestment of the Hallein sulphite pulp mill to Schweighofer Group


'The investment shutdown at Simpele, unfavorable exchange rate development and
cost inflation weakened profitability as expected during the second quarter.
Ongoing measures to reduce costs, increase prices and eliminate the losses of

the paper businesses at Alizay and Speciality Papers business area will, when
realised, improve M-real's profitability considerably in the future. Short-term
profitability is negatively impacted by the softening of the demand, especially
in paper products, caused by the uncertainty of the European general economy,
and the planned measures at Alizay and Speciality Papers. Profitability of
board production is expected to continue good.'
CEO Mikko Helander





Unaudited 2011 2011 2010 2010 2011 2010 2010
KEY FIGURES
Q2 Q1 Q2 Q1 Q1-Q2 Q1-Q2 Q1-Q4
------------------------------------------------
Sales, EUR million 660 685 676 602 1 345 1 278 2 605
--------------------------------------------------------------------------------
EBITDA, EUR million 48 77 61 82 125 143 312
excl. non-recurring items, EUR 62 74 77 72 136 149 305
million
EBITDA, % 7.3 11.2 9.0 13.6 9.3 11.2 12.0
excl. non-recurring items, % 9.4 10.8 11.4 12.0 10.1 11.7 11.7
--------------------------------------------------------------------------------
Operating result, EUR million -32 46 35 49 14 84 146
excl. non-recurring items, EUR 32 43 4339 75 82 173
million
EBIT, % -4.8 6.7 5.2 8.1 1.0 6.6 5.6
excl. non-recurring items, % 4.8 6.3 6.4 6.5 5.6 6.4 6.6
--------------------------------------------------------------------------------
Result before taxes
from continuing operations, EUR -53 31 0 25 -22 25 48
million
excl. non-recurring items, EUR 16 28 24 15 44 39 92
million
--------------------------------------------------------------------------------
Result for the period
from continuing operations, EUR -59 28 -8 19 -31 11 27
million
from discontinued operations, 0 0 0 0 0 0 0
EUR million
------------------------------------------------
Total, EUR million -59 28 -8 19 -31 11 27
--------------------------------------------------------------------------------
Result per share
from continuing operations, EUR -0.17 0.08 -0.03 0.06 -0.09 0.03 0.09
from discontinued operations, 0.00 0.00 0.00 0.00 0.00 0.00 0.00
EUR
------------------------------------------------
Total, EUR -0.17 0.08 -0.03 0.06 -0.09 0.03 0.09
--------------------------------------------------------------------------------
Result per share
excl. non-recurring items, EUR 0.04 0.07 0.05 0.03 0.11 0.08 0.23
--------------------------------------------------------------------------------
Return on equity, % -23.5 10.8 -3.1 7.9 -6.3 2.4 2.8
excl. non-recurring items, % 4.2 9.5 6.8 3.6 7.0 5.3 7.6
--------------------------------------------------------------------------------
Return on capital employed, % -6.1 8.4 3.8 9.1 1.4 6.1 5.7
excl. non-recurring items, % 6.4 7.8 8.1 7.3 7.2 7.3 7.6
--------------------------------------------------------------------------------
Equity ratio at end of period, 33.9 33.6 31.1 32.7 33.9 31.1 32.1
%
Gearing ratio at end of period, 120 125 140 121 120 140 135
%
Net gearing ratio at end of 84 78 89 86 84 89 83
period, %
Interest-bearing net 809 799 845 821 809 845 827
liabilities, EUR million
Gross investments, EUR million 31 12 10 7 43 17 66
--------------------------------------------------------------------------------
Deliveries, 1 000 tonnes
Paper businesses 277 301 278 311 578 589 1 155
Consumer Packaging 315 334 372 321 649 693 1 390
--------------------------------------------------------------------------------
Personnel at the end of period
in continuing operations 4,699 4,515 4,946 4,796 4,699 4,946 4,538EBITDA = Earnings before interest, taxes, depreciation and impairment charges




Result for April-June compared to the previous quarter

M-real's sales totalled EUR 660 million (Q1/2011: 685). Comparable sales were
down 3.6 per cent. The operating result was EUR -32 million (46), and operating
result excluding non-recurring items was EUR 32 million (43).

A net total of EUR -64 million was recognised as non-recurring items in the
operating result, the most significant of them being:

-- Loss of EUR 49 million in Market Pulp and Energy related to the divestment
of the Hallein pulp mill announced in June
-- EUR 19 million
impairment and cost provisions in Speciality Papers related to the
reorganisation plans at Gohrsmühle announced in May
-- EUR 7 million gain in other operations related to a property sale at
Niemenranta, Tampere
-- EUR 3 million personnel cost provision in Speciality Papers related to the
personnel cuts at the Reflex mill

In the previous quarter, a non-recurring gain of EUR 3 million was recognised
in Other operations from the property sale in Jyväskylä.

Operating result excluding non-recurring items was weaker compared to the
previous quarter due to the investment shutdown at Simpele in May, cost
inflation and lower average selling prices due to the weakening of the US
dollar and British pound. The delivery volume of board decreased from the first
quarter due to the investment shutdown at the Simpele mill. The delivery volume
of paper fell short of the first quarter due to the weakened market situation.

The total paper business delivery volume was 277,000 tonnes for April-June
(301,000). Deliveries by the Consumer Packaging business area totalled 315,000
tonnes (334,000).

Financial income and expenses totalled EUR -17 million (-15). Foreign exchange
rate differences from trade receivables, trade payables, financial items and
the valuation of currency hedging were EUR 0 million (2). Net interest and
other financial income and expenses amounted to EUR -17 million (-17). Other
financial expenses include EUR 1 million of valuation losses on interest rate
hedges (valuation gain of 0).

The result from continuing operations before taxes in April-June was EUR -53
million (31). The result includes an impairment loss of EUR 4 million, related
to the sale of M-real's shares in Myllykoski Paper Oy to UPM-Kymmene, reported
as a non-recurring item in 'Share of results in associated companies' after the
operating result. The result from continuing operations before taxes, excluding
non-recurring items, was EUR 16 million (28). Income taxes, including the
change in deferred tax liabilities, were EUR -6 million (-3).

Earnings per share were EUR -0.17 (0.08). Earnings per share from continuing
operations excluding non-recurring items were EUR 0.04 (0.07). Return on equity
was -23.5 per cent (10.8), and 4.2 per cent (9.5) excluding non-recurring
items. The return on capital employed was -6.1 per cent (8.4); 6.4 per cent
(7.8) excluding non-recurring items.


Result for January-June compared with the corresponding period last year

M-real's sales totalled EUR 1,345 million (1,278). Comparable sales were up 5.2
per cent. Operating result was EUR 14 million (84), and operating result
excluding non-recurring items was EUR 75 million (82).

A net total of EUR -61 million was recognised as non-recurring items in the
operating result for January-June, the most significant items being:

-- Loss of EUR 49 million in Market Pulp and Energy related to the divestment
of the Hallein pulp mill announced in June
-- EUR 19 million
impairment and cost provisions in Speciality Papers related to the
reorganisation plans at Gohrsmühle announced in May
-- EUR 10 million income item in other operations related to sales of
properties in Finland
-- EUR 3 million personnel cost provision in Speciality Papers related to the
personnel cuts at the Reflex mill

The non-recurring items of the corresponding period in the previous year were
EUR +2 million net.

Operating profit excluding non-recurring items compared with the corresponding
period last year was weakened by cost inflation; in particular, costs regarding
wood, chemicals and energy were higher than a year before. In addition, the
strengthening of the Swedish krona and weakening of the US dollar against the
euro had a negative impact. The operating result was improved, the average
selling prices being clearly higher than the previous year.

The total paper business delivery volume in January-June was 578,000 tonnes
(589,000). Board and paper deliveries by Consumer Packaging totalled 649,000
tonnes (693,000). Excluding the negative impact of Simpeleinvestment shutdown
board deliveries increased.The figure for the comparison period includes 23,000
tonnes of deliveries from the Simpele paper mill closed down at the end of
2010.

Financial income and expenses in the period totalled EUR -32 million (-39).
Foreign exchange rate differences from trade receivables, trade payables,
financial items and the valuation of currency hedging were EUR 2 million (-6).
Net interest and other financial income and expenses amounted to EUR -34
million (-33). Other financial expenses include EUR 1 million of valuation
losses on interest rate hedges (valuation gain of 0).

In the review period, the result from continuing operations before taxes was
EUR -22 million (25). The result includes an impairment loss of EUR 4 million,
related to the sale of M-real's shares in Myllykoski Paper Oy to UPM-Kymmene,
reported as a non-recurring item in 'Share of results in associated companies'
after the operating result. 'Share of results in associated companies' included
an impairment loss of EUR 16 million from Myllykoski Paper Oy the previous
year. The result from continuing operations before taxes and excluding
non-recurring items was EUR 44 million (39). Income taxes, including the change
in deferred tax liabilities, were EUR -9 million (-14).

Earnings per share were EUR -0.09 (0.03). Earnings per share from continuing
operations excluding non-recurring items were EUR 0.11 (0.08). Return on equity
was -6.3 per cent (2.4), and 7.0 per cent (5.3) excluding non-recurring items.
Return on capital employed was 1.4 per cent (6.1); 7.2 per cent (7.3) excluding
non-recurring items.


Personnel

The number of personnel was 4,699 at the end of June (30 June 2010: 4 946,
31.12.2010: 4,538), of whom 1,959 (2,019, 1,783) people worked in Finland.
During the period, M-real employed an average of 4,653 people (2010: 4,772).


Investments

Gross investments in January-June totalled EUR 43 million (January-June 2010:
17).


Structural change

M-real's structural change from a paper company to a clearer packaging producer
has progressed according to the strategy. The focus of the operations has
increasingly shifted from restructuring to development, as demonstrated by the
investments in Simpele,Äänekoski, Kyro and Kemiart Liners mills scheduled for
2011-2012.

M-real divested the entire share capital in M-real Hallein GmbH to the
Schweighofer Group. M-real Hallein GmbH assets consist of the Hallein pulp
mill, bioenergy plant, paper mill closed in 2009 and the surrounding estate.
The pulp mill's annual capacity is 160,000 tonnes of sulphite pulp and the
amount of personnel is approximately 200. The debt-free value of the
transaction is approximately EUR 34 million and the positive cash impact for
M-real approximately EUR 24 million. The divestment is expected to reduce
M-real's annual sales by approximately EUR 75 million and improve the operating
result by approximately EUR 5 million based on Hallein mill's actual
performance in 2010. The transaction is subject to the approval of Austrian
competition authorities and it is expected to be closed during 3Q 2011.

In June, M-real announced that it will divest its 35% holding in Myllykoski
Paper and the capital loan that it has granted to Myllykoski Paperto
UPM-Kymmene Corporation. The transaction has a EUR 10.5 million positive cash
impact. The transaction is subject to the closing of UPM's acquisition of
Myllykoski Group and Rhein Papier and the approval of competition authorities.
The transaction is expected to be completed during 3Q 2011.

M-real announced its new plans to eliminate financial losses of its paper
business in May. M-real has had several unsuccessful attempts to divest the
Alizay paper mill during recent years. Possibilities to divest the mill are
still being pursued. In May, M-real initiated a public process to find credible
candidates to acquire the Alizay paper mill by the end of September 2011 at the
latest. Should M-real fail to find a credible buyer for the mill within the
given time frame, M-real plans to close the mill down.

M-real also plans to divest the entire Gohrsmühle mill in Germany or
alternatively parts of the mill based on a Paper Park concept. In case the
divestment would turn out to be unsuccessful, M-real has commenced a process to
discontinue the uncoated fine and the unprofitable parts of the speciality
paper operations at Gohrsmühle mill. Should the closures materialise,
Gohrsmühle mill would only produce cast coated label and packaging products
(Chromolux). M-real is also planning to discontinue its remaining carbonless
paper converting operations at the Reflex mill in Germany.

With the implementation of the planned measures in Alizay, Gohrsmühle and
Reflex, M-real's annual sales are estimated to decrease by approximately EUR
390 million and its operating result to improve by about EUR 60 million, based
on the 2010 actual figures. Most of the possible impact on sales and profit is
expected to be seen in 2012 and full impact from 2013 onwards. As a result of
the planned measures, M-real's annual paper production capacity would reduce by
about 500,000 tonnes, of which about 430,000 tonnes would be uncoated fine
paper and 70,000 tonnes coated specialty papers. Implementations of any
measures are subject to the completion of statutory consultation processes with
employees based on applicable local legislation. M-real will be proactive in
the mitigation of the planned measures' negative impacts for the employees.

In total the planned measures in Alizay, Gohrsmühle and Reflex are
preliminarily expected to result in approximately EUR 170 million negative
non-recurring result impacts out of which EUR 22 million was booked in the Q2
2011. The estimated net cash costs are EUR 50 million. The estimates of the
non-recurring financial impacts are preliminary and they will be further
determined when the final decisions for the planned measures are taken.

In January, M-real launched a EUR 70 million profit improvement programme for
2011. The programme focuses on improving the profitability of the paper
business operations as well as on decreasing the variable costs of all
businesses. The earlier-announced profit improvement impact of the cartonboard
investments in Simpele and Kemi and the closure of speciality paper production
at Simpele are included in the new profit improvement programme. The full
effect of the programme on operating profit, EUR 70 million, is expected to be
reached from 2012 onwards. The result improvement in 2011 is expected to be
approximately EUR 30 million. Cost inflation is estimated to accelerate in
2011. M-real's new profit improvement programme and the earlier programmes are
estimated to have a total positive impact of approximately EUR 90 million on
the 2011 result, which is believed to mainly offset the increased cost
inflation.


Financing

At the end of June, M-real's equity ratio was 33.9 per cent (31 December 2010:
32.1) and gearing ratio was 120 per cent (135). The net gearing ratio was 84
per cent (83). 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 gearing ratio at the end of
June was approximately 64 per cent (64) and equity ratio approximately 40 per
cent (38).

The change in the fair value of investments available for sale was
approximately EUR +7 million, mainly due to the increase in the value of the
Pohjolan Voima shares, during the period under review.

Net interest-bearing liabilities amounted to EUR 809 million at the end of June
(827). Foreign-currency-denominated loans accounted for 6 per cent; 77 per cent
were floating-rate, and the rest were fixed-rate. At the end of June, the
average interest rate on loans was 5.9 per cent and the average maturity of
long-term loans 2.2 years. The average interest rate was increased by a
decrease in the portion of Metsäliitto Group's internal short-term financing.
The interest rate maturity of loans was 11.9 months at the end of June. During
the period, the interest rate maturity varied between seven and twelve months.

Cash flow from operations amounted to EUR 56 million (Q1-Q2/2010: 0). Working
capital increased by EUR 5 million (71). In the cash flow statement, the net
financial expenses for the period include a dividend of EUR 45 million paid by
Metsä-Botnia.

At the end of the period under review, an average of 4.5 months of the net
foreign currency exposure was hedged. The degree of hedging varied between four
and five months during the period. Approximately 26 per cent of the
non-euro-denominated equity was hedged at the end of the period under review.

Liquidity continues at a good level. At the end of the period under review,
liquidity was EUR 270 million, of which EUR 7 million consisted of undrawn
pension premium (TyEL) loans and EUR 263 million of liquid assets and
investments. In March, Metsäliitto Cooperative made an early repayment of the
EUR 49 million vendor note received in connection to the restructuring of
Metsä-Botnia ownership in 2009. In June, M-real's liquidity decreased when
Botnia redeemed its own shares from UPM Kymmene Corporation in accordance with
the partnership, decreasing Botnia's deposits in M-real's subsidiary MetsäFinance. At the end of June, EUR 45 million of the liquid assets and
investments are assets deposited by other Metsäliitto Group businesses in
M-real's subsidiary MetsäFinance. 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 EUR 517 million.

Standard&Poors raised the outlook of M-real's credit rating B- from stable to
positive.


Shares

In January-June, the highest price for M-real's A share on NASDAQ OMX Helsinki
Ltd. was EUR 3.34, the lowest EUR 2.60, and the average price EUR 3.09. At the
end of June, the price of the A share was EUR 3.10. At the end of 2010, the
price of the A share was EUR 2.85, while the average price in 2010 was EUR
2.85.

In January-June, the highest price of M-real's B share was EUR 3.33, the lowest
EUR 2.50, and the average price EUR 2.99. At the end of June, the price of the
B share was EUR 2.94. At the end of 2010, the price of the B share was EUR
2.54, while the average price in 2010 was EUR 2.44.

The trading volume of the A shares was EUR 4 million, or 3 per cent of the
share capital. The trading volume of the B shares was EUR 367 million, or 42
per cent of the share capital. The market value of the A and B shares totalled
EUR 971 million at the end of June.

At the end of June, Metsäliitto Cooperative owned 39 per cent of the shares,
and the voting rights conferred by these shares amounted to 61 per cent.
International investors held 11 per cent of the shares.

The company does not hold any treasury shares.


Reduction of the share premium account

The Annual General Meeting decided to reduce the share premium account in
operating capital, as stated on the parent company's balance sheet on 31
December 2010, by transferring all funds in the account, or EUR 663,812,052.56,
to the company's non-restricted equity reserve. The reduction of the share
premium account will take place without consideration and it does not impact
the company's number ofshares, the rights conferred by the shares, or the
proportionate ownership of the shareholders. The reduction will become
effective after the completion of the creditor protection procedure referred to
in the Limited Liability Companies Act. The creditor protection procedure is
expected to be completed in August 2011. The reduction improves the company's
capability to pay dividends in the future.

Events after the period

M-real Corporation's negotiations to divest its Premium Papers business to a
sister company of German Papierwerke Lenk AG were suspended in July. M-real
announced in April 2011 the Memorandum of Understanding (MoU) regarding the
divestment of the Germany based Reflex mill's Premium Papers business to a
sister company of Papierwerke Lenk AG. The transaction was expected to be
closed by the end of Q2 2011. The parties will evaluate possibilities to
continue negotiations later and M-real will also consider other options to
divest its Premium Papers business.

Near-term outlook

Indications of economic slowdown in the United States and Europe have weakened
the outlook in paper and pulp market.

Due to the uncertainty of the European general economy, cartonboard order
inflows have weakened from the record level of late 2010 and early 2011 but are
still strong. The capacity utilisation rates of M-real's board mills are still
high, and the demand for board and profitability of board production continues
to be good. In order to compensate for cost inflation, M-real successfully
increased the prices of liner in April and announced a price increase of 7-9
per cent in folding boxboard regarding new contracts. The realisation of the
price increases in folding boxboard will be resolved in the late summer and
early autumn. The production shutdown related to the investment in the
modernisation of the coating section at the Kemi mill in September-October will
have a negative impact on the result of Consumer Packaging. Worsened paper
market situation weakensÄänekoski Paper's and Kyro Paper's profitability that
has a negative result impact in Consumer Packaging business area.

In the short term, the profitability of M-real's paper businesses is negatively
impacted by the plans to eliminate the financial losses of the Alizay mill and
Speciality Paper business area. In addition, the weakened market situation for
all paper grades will negatively impact the result. In order to compensate for
cost inflation, M-real announced a price increase of 5-8 per cent for office
paper in June, aiming to implement it by the end of the year.

The weakening of the demand for paper also causes uncertainty in the pulp
market. Pulp deliveries are estimated to decrease slightly in the next few
months and the euro-denominated average price to be slightly lower in 3Q
compared to the level of 2Q. In addition, the extensive maintenance shutdowns
at Botnia's pulp mills will have a negative impact on M-real's 3Q
profitability.

Cost inflation has clearly accelerated in 2011. M-real's launched a EUR 70
million profit improvement programme for 2011 in January. The new profit
improvement programme and the earlier programmes are estimated to have a total
positive impact of approximately EUR 90 million on the 2011 result, which is
believed to mainly offset the increased cost inflation.

M-real's 3Q 2011 operating result, excluding non-recurring items, is expected
to weaken clearly from 2Q 2011 due to the worsened paper and pulp market
situation, planned measures at Alizay and Speciality Papers as well as
investment and maintenance shutdowns at Botnia's pulp mills. Profitability of
board production is expected to be good also in 3Q 2011.


Near-term business risks

Risks of the economic growth of the euro zone slowing down or coming to a
standstill and of the demand for board and paper products experiencing another
downturn have increased. Should the demand for M-real's main products
considerably decrease, there would be a risk of prices declining.

M-real has a good opportunity to cover the increased cost inflation mainly with
its ownprofit improvement measures. However, there is a risk that the cost
levels of production factors will increase more than the current estimates,
which would have a negative impact on profitability.

M-real has announced significant new plans to eliminate the losses of its paper
business. Implementing the reorganisation of operations carries a risk of not
being able to carry out the plans as pursued. There is still a risk of the
profit-making ability of the units concerned weakening significantly further as
the implementation of the plans proceeds.

The company's short-term and medium-term financial position is secure. As a
result of increasing uncertainty and regulation in the financial market, the
operation of the credit and bond markets may become more difficult, which may
hamper the company's ability to acquire long-term debt financing at a
competitive price.

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
35-36 of M-real's 2010 annual report.


M-REAL CORPORATION


Further information:

Matti Mörsky, CFO, tel. 010 465 4913
Juha Laine, Vice President, Investor Relations and Communications, tel. 010 465
4335




More information is available starting from 1 pm on 4 August 2011. A conference
call held in English for investors and analysts starts at 3 p.m. (EET).
Conference call participants are requested to dial in and register a few
minutes prior to the start of the conference call on the following numbers:

Europe: +44 (0)20 7162 0025
US: +1 334 323 6201

The conference ID is 891243.





BUSINESS AREAS AND MARKET DEVELOPMENT



Consumer Packaging business area

2011 2011 2010 2010 2010 2011 2010 2010
Consumer Packaging Q2 Q1 Q4 Q3 Q2 Q1-Q2 Q1-Q2 Q1-Q4
--------------------------------------------------------------------------------
Sales, EUR million 279 299 303 305 310 578 567 1 175
EBITDA, EUR million 50 63 49 48 51 113 103 200
excl. non-recurring 51 63 52 48 51 114 103 203
items
Operating result, EUR 38 50 24 34 38 88 77 135
million
excl. non-recurring 39 50 38 34 38 89 77 149
items
excl. non-recurring 14.0 16.7 12.5 11.1 12.3 15.4 13.6 12.7
items, %
Return on capital 20.5 27.8 13.7 18.1 21.1 24.3 26.7 19.4
employed, %
excl. non-recurring 20.9 27.8 22.0 18.1 21.1 24.5 26.7 21.5
items, %
Deliveries, 1,000 tonnes 315 334 344 353 372 649 693 1 390
Production, 1,000 tonnes 317 344 362 353 363 662 705 1 420
Personnel at the end of 1 622 1 441 1 441 1 461 1 679 1 622 1 679 1 441
period
(Personnel figures of Kaskinen pulp mill have been moved to
Market Pulp and Energy's personnel)



Result for April-June compared to the previous quarter
The operating result excluding non-recurring items for the Consumer Packaging
business area decreased from the previous quarter and was EUR 39 million
(Q1/2011: 50). The result was weakened by the investment shutdown at Simpele,
the weakening of the coated fine paper market and lower average selling prices
due to the weakening of the US dollar and pound sterling.

The result included EUR 1 million of non-recurring expenses. The result for the
previous quarter did not include non-recurring items.

The deliveries of European folding boxboard producers were 1 per cent lower
compared with the previous quarter. Consumer Packaging's deliveries of folding
boxboard were down by 3 per cent due to the Simpele investment shutdown.

Result for January-June compared with the corresponding period last year
The operating result excluding non-recurring items for the Consumer Packaging
business area improved from the corresponding period last year and totalled EUR
89 million (77). The most significant factor improving the result was the
average sales price of board which had increased due to the price increases
achieved. The result was weakened by increasing prices of raw materials and
energy and the weakening of the US dollar against the euro.

The result included EUR 1 million of non-recurring expenses. The result for the
corresponding period last year did not include non-recurring items.

The deliveries of European folding boxboard producers increased by 1 per cent
compared to the corresponding period last year. Consumer Packaging's deliveries
of folding boxboard were up 3 per cent.




Office Papers business area

2011 2011 2010 2010 2010 2011 2010 2010
Office Papers Q2 Q1 Q4 Q3 Q2 Q1-Q2 Q1-Q2 Q1-Q4
--------------------------------------------------------------------------------
Sales, EUR million 166 184 181 164 153 350 313 658
EBITDA, EUR million 7 4 9 17 6 11 17 43
excl. non-recurring 7 4 10 17 6 11 17 44
items
Operating result, EUR -3 -6 9 9 -4 -9 -4 14
million
excl. non-recurring -3 -6 0 9 -4 -9 -4 5
items
excl. non-recurring -1.8 -3.3 0.0 5.5 -2.6 -2.6 -1.3 0.8
items, %
Return on capital -2.5 -4.4 6.5 8.5 -4.0 -3.5 -2.0 2.8
employed, %
excl. non-recurring -2.4 -4.4 0.0 8.5 -4.0 -3.5 -2.0 1.1
items, %
Deliveries, 1,000 tonnes 222 241 248 212 212 463 449 909
Production, 1,000 tonnes 226 232 238 228 209 457 444 910
Personnel at the end of 1 196 1 190 1 208 1 213 1 252 1 196 1 252 1 208
period



Result for April-June compared to the previous quarter
The operating result excluding non-recurring items for Office Papers improved
compared to the previous quarter and was EUR -3 million (Q1/2011: -6). The
result was improved by lower pulp and energy costs.

The result does not include non-recurring items. The result for the previous
quarter did not include non-recurring items.

Total deliveries by European uncoated fine paper producers were down 5 per cent
compared to the previous quarter. The delivery volume of Office Papers
decreased by 8 per cent.

Result for January-June compared with the corresponding period last year
The operating result for Office Papers, excluding non-recurring items, weakened
compared to the corresponding period last year and totalled EUR -9 million
(-4). The result was weakened by the higher prices of pulp, otherraw materials
and energy as well as the strengthening of the Swedish krona against the euro.
The most significant factor improving the result was the average sales price
which had increased due to the price increases.

The result does not include non-recurring items. The result for the
corresponding period last year did not include non-recurring items.

Total deliveries by European uncoated fine paper producers decreased by 3 per
cent year-over-year. The delivery volume of Office Papers increased by 3 per
cent.



Speciality Papers business area

2011 2011 2010 2010 2010 2011 2010 2010
Speciality Papers Q2 Q1 Q4 Q3 Q2 Q1-Q2 Q1-Q2 Q1-Q4
--------------------------------------------------------------------------------
Sales, EUR million 73 78 66 75 80 151 162 303
EBITDA, EUR million -14 -7 0 5 -18 -21 -22 -17
excl. non-recurring -5 -7 -7 -3 -2 -12 -6 -16
items
Operating result, EUR -29 -9 -31 4 -21 -38 -27 -54
million
excl. non-recurring -7 -9 -8 -7 -5 -16 -11 -26
items
excl. non-recurring -9.6 -11.5 -12.1 -9.3 -6.3 -10.6 -6.8 -8.6
items, %
Return on capital -207.3 -50.1 -155.6 18.0 -76.3 -138.7 -87.6 -49.1
employed, %
excl. non-recurring -49.5 -50.1 -43.0 -24.5 -18.8 -57.0 -32.8 -23.6
items, %
Deliveries, 1,000 55 60 49 57 66 115 140 246
tonnes
Production, 1,000 55 59 46 52 67 113 151 235
tonnes
Personnel at the end 994 1 006 1 007 1 132 1 165 994 1 165 1 007
of period
(Personnel figures of Hallein pulp mill have been moved to
Market Pulp and Energy's personnel)



Result for April-June compared to the previous quarter
The operating result excluding non-recurring items for Speciality Papers
improved slightly compared to the previous quarter and was EUR -7 million
(Q1/2011: -9). The result was boosted by a higher average selling price. The
result was weakened by the lower delivery volume and higher raw material costs.

The result included non-recurring items of a total of EUR -22 millionin
impairment losses and cost provisions related to the restructuring plans at
Gohrsmühle and personnel cuts at Reflex announced on 4 May. The result for the
previous quarter did not include non-recurring items.

The delivery volume of Speciality Papers fell by 8 per cent.

Result for January-June compared with the corresponding period last year
The operating result for Speciality Papers, excluding non-recurring items,
weakened compared to the corresponding period last year and totalled EUR -16
million (-11). The result was weakened by the higher prices of pulp and other
raw materials and the lower delivery volume of paper. The result was improved
by the implemented price increases and cost saving measures.

The result includes non-recurring items of a total of EUR -22 million. The
result for the corresponding period the previous year included a non-recurring
item of EUR -16 million related to the planned shutdown of the two paper
machines at the Reflex mill and the reorganisation of the Reflex and Gohrsmühle
organisations.

The delivery volume of Speciality Papers fell by 18 per cent.




Market Pulp and Energy business area

2011 2011 2010 2010 2010 2011 2010 2010
Market Pulp and Energy Q2 Q1 Q4 Q3 Q2 Q1-Q2 Q1-Q2 Q1-Q4
--------------------------------------------------------------------------------
Sales, EUR million 117 110 106 107 126 227 221 434
EBITDA, EUR million -1 13 19 19 23 12 37 75
excl. non-recurring items 11 13 19 23 23 24 37 79
Operating result, EUR -43 7 -1 12 16 -35 25 36
million
excl. non-recurring items 5 7 12 16 16 13 25 53
excl. non-recurring items, % 4.3 6.4 11.3 15.0 12.7 5.7 11.3 12.2
Return on capital employed, -27.8 4.7 -0.4 7.6 11.4 -11.5 9.0 6.0
%
excl. non-recurring items, % 3.3 4.7 7.9 10.1 11.4 4,1 9.0 8.9
Deliveries, 1,000 tonnes 195 174 168 167 194 369 355 690
Personnel at the end of 305 302 301 304 297 305 297 301
period
(Personnel figures of Kaskinen and Hallein pulp mills have been included
in Market Pulp and Energy's personnel)



Result for April-June compared to the previous quarter
The operating result excluding non-recurring items for the Market Pulp and
Energy business area weakened compared with the previous quarter and was EUR 5
million (Q1/2011: 7). The result was weakened by the slightly lower selling
price of pulp. The result was improved by the higher delivery volume.

The result includes non-recurring items of a total of EUR -49 million related
to the divestment of the Hallein pulp mill. The result for the previous quarter
did not include non-recurring items.

Result for January-June compared with the corresponding period last year
The operating result of the Market Pulp and Energy business area, excluding
non-recurring items, weakened compared to the corresponding period last year
and totalled EUR 13 million (25). The result was weakened by the higher cost of
wood, chemicals, other raw materials and energy. The result was improved by the
higher delivery volume. The average selling price of pulp was on a par with the
previous year.

The result includes non-recurring items of a total of EUR -49 million related
to the divestment of the Hallein pulp mill. The result for the corresponding
period last year did not include non-recurring items.




Condensed consolidated statement of comprehensive income
2011 2010 2010 2011 2011
EUR million Q1-Q2 Q1-Q2 Change Q1-Q4 Q1 Q2
--------------------------------------------------------------------------------
Continuing operations
Sales 1 345 1 278 67 2 605 685 660
Other operating income 37 32 5 108 22 15
Operating expenses -1297 -1201 -96 -2 479 -651 -646
Share of results in associated 40 34 6 78 21 19
companies *)
Depreciation and impairment losses -111 -59 -52 -166 -31 -80
--------------------------------------------------------------------------------
Operating result 14 84 -70 146 46 -32
% of sales 1.0 6.6 5.6 6.7 -4.8
Share of results in associated -4 -20 16 -24 0 -4
companies
Net exchange gains and losses 2 -6 8 -9 2 0
Other net financial items -34 -33 -1 -65 -17 -17
--------------------------------------------------------------------------------
Result before income tax -22 25 -47 48 31 -53
% of sales -1.6 2.0 1.8 4.5 -8.0
Income taxes -9 -14 5 -21 -3 -6
--------------------------------------------------------------------------------
Result for the period from continuing -31 11 -42 27 28 -59
operations
% of sales -2.3 0.9 1.0 4.1 -8.9
Discontinued operations
Result from discontinued operations 0 0 0 0 0
--------------------------------------------------------------------------------
Result for the period -31 11 -42 27 28 -59
--------------------------------------------------------------------------------

Other comprehensive income
Cash flow hedges -7 -10 3 10 -3 -4
Available for sale financial assets 7 20 -13 28 2 5
Translation differences -6 6 -12 12 0 -6
Share of results in associated 0 3 -3 2 0 0
companies
Income tax relating to components of 0 2 -2 -2 0 0
other comprehensive income
--------------------------------------------------------------------------------
Other comprehensive income, net of -6 21 -27 50 -1 -5
tax

Total comprehensive income for the -37 32 -69 77 27 -64
period

Result for the period attributable to
Shareholders of parent company -31 11 -42 28 28 -59
Non-controlling interests 0 0 0 -1 0 0
--------------------------------------------------------------------------------
Total comprehensive income for the
period attributable to
Shareholders of parent company -37 32 -69 78 27 -64
Non-controlling interests 0 0 0 -1 0 0
--------------------------------------------------------------------------------
Total -37 32 -69 77 27 -64
Earnings per share for result
attributable to shareholders of
parent company (EUR/share)
from continuing operations -0.09 0.03 -0.12 0.09 0.08 -0.17
from discontinued operations 0.00 0.00 0.00 0.00 0.00 0.00
--------------------------------------------------------------------------------
Total -0.09 0.03 -0.12 0.09 0.08 -0.17

*) Metsä-Botnia's net result is included from 8.12.2009 on in operating result
at row 'Share of results in associated companies'




Condensed consolidated balance sheet
30.6. 30.6. 31.12.
EUR million 2011 % 2010 % 2010 %
--------------------------------------------------------------------------------
ASSETS
Non-current assets
Goodwill 13 0.5 13 0.4 13 0.4
Other intangible assets 24 0.8 34 1.1 26 0.8
Tangible assets 961 33.9 1 108 36.0 1 063 34.1
Investments in associated companies 253 8.9 226 7.3 265 8.5
Available for sale investments 321 11.3 324 10.5 314 10.1
Other non-current financial assets 16 0.6 65 2.1 67 2.1
Deferred tax receivables 4 0.1 4 0.1 3 0.1
------------------------------------------
1 592 56.1 1 774 57.5 1 751 56.1
Current assets
Inventories 377 13.3 336 10.9 391 12.6
Accounts receivables and other 536 18.9 598 19.4 567 18.2
receivables
Cash and cash equivalents 262 9.2 366 11.9 408 13.1
------------------------------------------
1 175 41.4 1 300 42.2 1 366 43.9
Assets classified as held for sale 70 2.5 8 0.3

--------------------------------------
Total assets 2 837 100.0 3 082 100.0 3 117 100.0
--------------------------------------------------------------------------------


SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity
Equity attributable
to shareholders of parent company 957 33.7 948 30.8 994 31.9
Non-controlling interests 5 0.2 6 0.2 5 0.2
------------------------------------------
Total equity 962 33.9 954 31.0 999 32.1

Non-current liabilities
Deferred tax liabilities 181 6.4 169 5.5 179 5.8
Post-employment benefit obligations 79 2.8 81 2.6 85 2.7
Provisions 21 0.7 68 2.2 35 1.1
Borrowings 880 31.0 1 072 34.8 1 016 32.6
Other liabilities 11 0.4 29 0.9 26 0.8
------------------------------------------
1 172 41.3 1 419 46.0 1 341 43.0
Current liabilities
Provisions 16 0.6 13 0.4 7 0.2
Current borrowings 268 9.4 265 8.6 334 10.7
Accounts payable and other 380 13.4 431 14.0 436 14.0
liabilities------------------------------------------
664 23.4 709 23.0 777 24.9
Liabilities classified as
held for sale 39 1.4
Total liabilities 1 875 66.1 2 128 69.0 2 118 67.9
--------------------------------------------------------------------------------
Total shareholders' equity and 2 837 100.0 3 082 100.0 3 117 100.0
liabilities
--------------------------------------------------------------------------------

Assets classified as held for sale and related liabilities include M-real
Hallein GmbH and Myllykoski Paper Oy and in previous year paper machine 2 in
Kangas paper mill.



Condensed consolidated cash flow statement
2011 2010 2010 2011
EUR million Q1-Q2 Q1-Q2 Q1-Q4 Q2
--------------------------------------------------------------------------------
Result for the period -31 11 27 -58
Total adjustments 92 60 108 73
Change in working capital -5 -71 -86 31
--------------------------------------------------------------------------------
Cash flow arising from operations 56 0 49 46
--------------------------------------------------------------------------------
Net financial items 1 -55 -102 -26
Income taxes paid -5 -10 -16 -3
--------------------------------------------------------------------------------
Net cash flow arising from operating activities 52 -65 -69 17
--------------------------------------------------------------------------------
Investments in intangible and tangible assets -43 -17 -66 -31
Divestments of assets and other 62 14 86 8
--------------------------------------------------------------------------------
Net cash flow arising from investing activities 19 -3 20 -23
--------------------------------------------------------------------------------


Changes in non-current loans and in other financial -216 -62 -39 -149
items
Dividends paid 0 -2 -2 0
--------------------------------------------------------------------------------
Net cash flow arising from financing activities -216 -64 -41 -149
--------------------------------------------------------------------------------
Changes in cash and cash equivalents -145 -132 -90 -155
--------------------------------------------------------------------------------
Cash and cash equivalents at beginning of period 408 497 497 418
Translation difference in cash and cash equivalents 0 1 1 0
Changes in cash and cash equivalents -145 -132 -90 -155
Assets held for sale -1 0 0 -1
--------------------------
Cash and cash equivalents at end of period 262 366 408 262

Net financial items for January June include dividend ofEUR 45 million paid by
Metsä-Botnia.
Net financial items for January June include some EUR 15 million payments
related to equity hedging (Q1-Q2/2010 some EUR 12 million). Net financial items
of financial year 2010 include some EUR 27 million payments related to equity
hedging.





Statement of changes in shareholders' equity Q1-Q2
2010
Equity attributable to shareholders of parent
company
EUR million Share Share Trans- Fair Retain Total Non-co Total
capita pre- lation value ed ntrol-
l mium differ and earnin ling
accoun - other gs inter-
t ences reserv ests
es
--------------------------------------------------------------------------------
Shareholders' 558 667 2 194 -504 916 8 924
equity,
1 January 2010
--------------------------------------------------------------------------------
Comprehensive
income for the
period
Result for the 11 11 0 11
period
Other comprehensive income
Cash flow hedges -10 -10 -10
Available for sale 20 20 20
investments
Translation 6 6 0 6
differences
Share of other 2 1 3 3
comprehensive
income of
associated
companies
Income tax 4 -2 2 2
relating to
components of
other
comprehensive
income

Unternehmensinformation / Kurzprofil:
Bereitgestellt von Benutzer: EquityStory
Datum: 04.08.2011 - 11:01 Uhr
Sprache: Deutsch
News-ID 456151
Anzahl Zeichen: 65537

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