YEAR-END REPORT JANUARY-DECEMBER 2010
• Profit after net financial items amounted to SEK 138 (-69) million for the full year 2010. Operating profit amounted to SEK 138 (-166) million for the full year 2010. Profit after net financial items amounted to SEK 13 (0) million for the fourth quarter of 2010.
• Cash flow from operating activities amounted to SEK 202 (84) million for the full year 2010, corresponding to SEK 1.33 (3.10) per share.
• Interest-bearing net assets of SEK 116 million were reported on 31 December 2010, compared with SEK 10 million at the beginning of the year.
• A new financing agreement has been concluded with Danske Bank, which enters into force on 31 January 2011. This new agreement does not have any covenants, which entails a significant increase in Rottneros’ operational freedom to act while reducing costs.
• The board proposes a dividend of SEK 0.20 (0.00) per share.
CEO’s statement
Rottneros’ profit before tax amounted to SEK 13 million for the fourth quarter. This reduction in profit compared with a profit of SEK 64 million for the third quarter was primarily due to the planned shutdown of production at Vallvik and the strengthening of the Swedish kronor. In addition to an increase in costs per se, the very high electricity prices in December meant that production at Rottneros Mill had to stop at several occasions in December.
The pulp market has been more stable than many had expected in the late summer. The European price index for long-fibre chemical pulp (NBSK) only fell by 3% over seven months and the price in US dollars is still high. Global NBSK stocks are relatively low, demand is high and the Chinese purchasers returned during the third quarter after a quiet summer. The US dollar was traded for SEK 8 in the summer, but has now been wavering just under SEK 7 for a time. The strengthening of the Swedish kronor has had a significant effect on the Swedish export industry, including Rottneros. Some slight price increases have been announced in China, and an upward adjustment of prices is likely to be seen both in Europe and North America in 2011 unless the US dollar becomes stronger.
Vallvik Mill went ahead with its extended autumn shutdown during the fourth quarter, when new production equipment was connected up as planned. This had a direct effect on the result of around SEK 35 million, all of which was charged to the last quarter of the year. The Board approved the final investment phase for Vallvik Mill just before Christmas, the aim of which is to reduce environmental impact and increase production capacity. This investment will be completed in conjunction with the autumn shutdown in 2011 and will bring to an end the programme presented in conjunction with the new share issue in the autumn of 2009. This means that all of the major ‘mandatory’ investments at both of our mills – related to the environment or maintenance – will have been completed and consequently there should be relatively low investment requirement over the next few years. However, there may be aggressive, profitable investments in new products or to increase capacity.
The search for the best re-use of the CTMP-equipment from the Utansjö Mill continues. Joint ventures, such as the one outlined for South Africa, as well as a direct divestiture are actively considered.
The good result in 2010, the reasonable market outlook, the investment programme, which will soon be completed, the company’s freedom from debt and the new financing agreement with Danske Bank mean that the Board is proposing the resumption of the issue of share dividends.
Ole Terland
President and CEO