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Year-end Report January-December 2011

2012-01-27, 08:00
 - Regulatory

CEO’s statement

2011 was a year of two quite different halves. Demand for sulphate pulp was good during the first six months of the year, which resulted in prices increasing to a new record level of USD 1,025 per tonne by midsummer. However, the price of mechanical pulp remained virtually static despite the good momentum for chemical pulp. Global stock levels for pulp increased, which was probably due to purchasers worrying about further price rises. The market psychology changed during the summer; demand for printing and writing paper was weak, the financial crisis worsened in Member States in the Eurosystem and high levels of pulp stock suddenly became a good reason to push pulp prices down. This price correction did not cease during the third quarter but accelerated instead during the autumn, and the final months of the year were noticeably weak. Purchasers of pulp were very inclined to postpone any buying as pulp would soon be cheaper, and the risk of running out of pulp was considered to be worth taking in spite of consumer stocks being at a record low. The price of NBSK (bleached long fibre sulphate pulp) fell to approximately USD 830 per tonne by the end of the year. Stocks continued to rise despite global pulp producers taking significant production curtailments. These price fluctuations occurred against the background of the US dollar weakening during the first half of the year and then strengthening again during the autumn. For the Swedish pulp industry this means that the average pulp price for the year was almost SEK 500 per tonne lower than in 2010, despite record high USD pulp prices. This obviously had an adverse effect on the result. Before the one-off items charged to Quarter 3, the full-year result for Rottneros before depreciation fell from SEK 224 to 98 million.

We completed extensive improvements and investments at Vallvik Mill during the last quarter of the year; this satisfied the requirements imposed on us by the authorities, but also boosted production capacity at the factory by almost 20%. These investments constituted an important reason for our financial reconstruction and rights issue which took place at the end of 2009. Weak demand during the third quarter meant that no costly measures were approved to minimise production losses during the shutdown and start up, which resulted in volume losses being slightly higher than estimated. These have been included under the item ‘negative effect on result from annual maintenance shutdown’; they were previously forecast at SEK 15-20 million, but ended up as SEK 25 million. So far the results of these investments appear to be very promising. A full evaluation cannot be made until the operation has been running for a longer period and it has been possible to see the impact of both winter and summer climates on the process and biological water purification plant.

Negotiations have been concluded in respect of the improvement programme at Rottneros Mill, which was announced in September, and notices of termination given and early retirements arranged. The programme will be fully implemented during the summer. The mill restricted production quite significantly during the last quarter – approximately one week per month – in order to balance stocks while avoiding unnecessary price compression through focussing on volumes.

There was certainly a high level of macroeconomic uncertainty at the start of 2012, at least in those Member States in the Eurosystem and, as regards the export industry, a disadvantageous relationship between the value of the Euro and the Swedish krona. On the other hand, our customers’ stock levels are low, activity is good in China – a country that is becoming increasingly important – Swedish timber prices are falling and electricity has been at its lowest winter level for some time. The official pulp price index (PIX) experienced a slight upturn in January after having continuously fallen since the end of June, so there are signs that the pulp price has bottomed out this time round.

The prospects for 2012 are unusually uncertain although they appear to be brighter. The situation seems more promising on leaving the gloomy fourth quarter behind us at a time when timber and electricity prices are falling and also as the fall in PIX prices of pulp in Europe tailed off in December and started to rise slightly in January.

Ole Terland

President and CEO



This interim report has been prepared in accordance with IAS 34 ‘Interim Financial Reporting’, which complies with Swedish law through the application of the Swedish Financial Reporting Board’s Recommendation RFR 1 ‘Supplementary Accounting Rules for Groups’ together with RFR 2 ‘Accounting for Legal Entities’, in respect of the parent company.

The accounting principles, definitions of key ratios and calculation methods are the same as those applied in the last Annual Report, except as regards the following:

  • Amendments to the existing standard IAS 24, which entered into force on 1 January 2011. Revised IAS 24 ‘Related Party Disclosures’ clarifies and simplifies the definition of ‘related party’. Rottneros has applied the revised standard with effect from 1 January 2011. The amended accounting principle has not yet had any effect on recognised amounts, though requires further information in the company’s financial reports.
  • The parent company’s comparative figures have been amended as a consequence of the Swedish Financial Accounting Board having withdrawn UFR 2 . Group contributions are reported for the financial year commencing on 1 January 2011 or later in accordance with RFR 2[IAS27]p2 and also RFR 2[IAS18]p3. This amendment applies retroactively. The amended reporting had a positive effect of SEK 114 million on the net income of the parent company for the full year 2010. The amendment had no effect on the company’s equity.


FORECAST for 2012

The company is not providing an earnings forecast for 2012.



19 April 2012

Interim Report January-March 2012

18 July 2012

Interim Report January-June 2012

19 October 2012

Interim Report January-September 2012

24 January 2013

Year-end Report for 2012


The AGM for Rottneros AB will be held in Stockholm on Thursday 19 April 2012.

The Annual Report for 2011 will be available from the company’s website during Week 11 of 2012.

For more information, please visit Rottneros’ updated website,

Stockholm, 27 January 2012


Ole Terland

President and Chief Executive Officer


This report has not been reviewed by the company’s auditors.


Analyst and press conference

Analysts and journalists are invited to a press conference on 27 January at 10.00.

Location: Rottneros Head Office, World Trade Center, Kungsbron 1, C6, Stockholm, Sweden

Please register with Hella Wopfner,, telephone: +46 8 590 010 12


Rottneros AB (publ)

Corp. ID no. 556013-5872

Box 70 370, SE-107 24 Stockholm, Sweden

Tel. +46 8 590 010 00, fax +46 8-590 010 01


Rottneros discloses the information provided herein pursuant to the Securities Markets Act and/or the Financial Instruments Trading Act. This information was submitted for publication on 27 January 2012 at 08.00. A Swedish and an English version of this report have been drawn up. The Swedish version shall apply in the event of differences between the two reports.

(For full report, see attached file)


Rottneros, a company that was originally established in the 1600s, is an independent and flexible supplier of customised paper pulp of high quality. Rottneros has been able to adapt in order to meet high customer expectations by continually developing its products and maintaining high levels of delivery reliability, technical support and service.

Rottneros has an annual production capacity of almost 400,000 tonnes of pulp at two mills in Sweden. Increasingly intensive product development in line with the requirements of customers will result in profitability that is higher and more stable throughout the business cycle.


Rottneros AB (publ)

Box 70 370, SE-107 24 Stockholm, Sweden

Visiting address: World Trade Center, Kungsbron 1, C6, Stockholm, Sweden

Telephone +46 (0)8-590 010 00, Fax +46 (0)8-590 010 01

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