Lower Costs And Price Rise Improves Results

In the first quarter of the year M-real Group's operating result, a profit of 115m Euros, compared to a loss of 14m Euros previously.

In the first quarter of the year M-real Group's operating result, a profit of 115m Euros, compared to a loss of 14m Euros previously.

Compared with the previous quarter, the result was improved mainly by lower fixed costs as well as a rise in the average price of coated magazine paper.

Fourth-quarter profitability was burdened by the costs of annual maintenance shutdowns in Finland, said the company.

The operating result included net non-recurring income of 85m Euros (net expenses of 34m Euros in the previous quarter), the main item being a capital gain of 80m Euros booked on the sale of an eight per cent holding in Metsa-Botnia.

The operating result net of non-recurring items improved also on the same period of last year thanks to the increased volume of paper and paperboard delivered as well as lower fixed costs.

Turnover was 1,344m Euros, compared with 1,365m Euros in the previous quarter.

The operating result, excluding non-recurring items, was 30m Euros, compared to the previous 19m Euros.

The result before taxes, excluding non-recurring items, showed a loss of 8m Euros, as against a previous loss of 3m Euros.

Of the company's business areas - publishing, commercial printing and office papers improved profitability, said the company.

Demand for paper declined and demand for paperboard increased on the previous quarter, said M-real.

Its paper deliveries were down two per cent, with comparable paperboard deliveries remaining at the level of the previous quarter.

Selling prices of folding boxboard and coated magazine paper rose.

Commenting on the market situation for M-real's main products, president and chief executive officer, Hannu Anttila, said: "We've succeeded in increasing the prices of folding boxboard and magazine paper in the first part of the year.

Price increases for coated fine papers in the first quarter proceeded more slowly than planned, but we believe that the increases will go through later this spring.

The market situation within office papers remains challenging.

Firming up of the company's capital structure is on track - in just over a year, we've succeeded in reducing interest-bearing net debt by nearly 1.3 billion Euros.

Henceforth, we can focus even more on measures improving the efficiency of our operations and lowering costs." The second-quarter result is estimated to fall somewhat short of the first quarter due to seasonal factors and weaker-than-forecast price development for fine papers, he commented.

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