YEAR-END RELEASE FOR JANUARY-DECEMBER 2007 INTERIM REPORT OCTOBER-DECEMBER 2007
· After writedown of the book value of fixed assets at Utansjö Mill of SEK 284 million the Group posts a loss after net financial items for 2007 of SEK -384 (-23) million.
· After writedown of the book value of fixed assets at Utansjö Mill of SEK 284 million the Group posts a loss after net financial items for the fourth quarter of 2007 of SEK -321 (21) million.
· Higher costs for wood have reduced earnings by SEK 182 million compared 2006.
· After completing its main study, Rottneros has decided to go ahead with plans to establish a presence in South Africa. The Board has asked the CEO to sign necessary agreements, primarily partnership agreements. This will be followed by final negotiations on the funding of the project.
· On 31 January 2008 Rottneros’ CEO, Lars Blecko, stepped down and was succeeded by Ole Terland.
· The company will not be providing a forecast for the full year 2008.
· On 9 January 2008 it was announced that Rottneros’ Board of Directors has asked the Group’s CEO to conclude negotiations with the relevant trade unions and implement the previously agreed closure of Utansjö Mill. The intention is for production to cease at the mill in the second quarter of 2008.
· The Board declared that no dividend will be distributed for the financial year 2007.
ROTTNEROS IN BRIEF
Rottneros, with origins dating back to the 1600s, is a non-integrated, flexible supplier of customised, high-quality paper pulp. Through continuous product development, high delivery reliability, technical support and service, Rottneros is able to adapt to the changing requirements of discerning customers.
Rottneros has a total annual production capacity of some 700,000 tonnes of pulp, produced at five mills in Sweden and Spain, making the Group one of the ten largest suppliers of market pulp in the world. The company works to achieve a more stable and higher level of profitability over the course of the economic cycle through increasingly intensive product development in line with customer demands. The Group has introduced a comprehensive financial hedging policy to even out cyclical fluctuations in earnings.
EVENTS AFTER THE END OF THE YEAR
On 9 January it was announced that Rottneros’ Board of Directors has asked the Group’s CEO to conclude negotiations with the relevant trade unions and implement the previously agreed closure of Utansjö Mill. The intention is for production to cease at the mill in the second quarter of 2008. The decision to close Utansjö Mill, which will affect 140 employees, was taken already in August 2006, when co-determination negotiations with trade union representatives were initiated. In March 2007 the company announced that it intended to continue operations at Utansjö throughout 2008.
The cost of winding up operations at Utansjö is estimated at SEK 90 million, which will be charged to earnings in the first quarter of 2008 in the form of a provision. The winding up will have a positive effect on the casflow for the Rottneros Group by the release of working capital. In March 2007 Rottneros and NCT, a South African forestry company, signed a letter of intent to explore the possibility of building a jointly-owned mill for production of CTMP mechanical pulp in South Africa. The value of the fixed assets at Utansjö, which include a newly invested pulp line for production of CTMP pulp, depends on the final implementation of the South African project, as the CTMP line in Utansjö is intended to be used as a basis for the new operation in South Africa.
After completing its main study, Rottneros has decided to go ahead with plans to establish a presence in South Africa, and the Board has asked the CEO to go into final negotiations and sign necessary agreements, primarily partnership agreements. This will be followed by final negotiations on the funding of the project.
Under the main structure of the agreement, Rottneros undertakes to complete the construction of a production plant with a capacity of 165,000 tonnes for the production of CTMP pulp from eucalyptus wood. The CTMP facility in Utansjö will be used as a basis for the new plant and the investment will be project-financed through the jointly owned company. It is hoped that the new plant can be taken into use at the end of 2009. The pulp will primarily be exported to Southeast Asia and Europe, and will be sold through Rottneros’ marketing organisation. NCT will supply the wood. Rottneros will receive an associate company share in a company that is well placed to achieve good profitability and constitutes a strategic investment.
(For full report see attached file.)