Quarterly Report 3/2003 Residential repair and maintenence demand close to normal level. Slower construction market in Norway and Sweden. Revenues and profit after nine months on same level as last year. Sawmills' earnings reduced in 3 rd quarter due to an increase in raw material costs and somewhat lower prices for finished goods.
3 rd Quarter Profit and Loss Account NOK mill. 2003 2002 2001 2003 2002 2001 2002 2001 Operating revenues 1,162.6 1,064.5 1,017.1 3,612.7 3,443.1 3,268.2 4,618.4 4,516.4 Depreciation 37.1 37.7 61.8 110.1 109.8 137.7 147.4 161.4 Cost of goods sold 751.4 647.3 630.9 2,236.2 2,090.4 1,980.7 2,772.7 2,762.7 Operating expenses 355.9 347.9 342.9 1,172.6 1,135.4 1,096.0 1,558.9 1,499.7 Operating profit 18.2 31.6-18.5 93.8 107.5 53.8 139.4 92.7 Income from associates -1.1-1.2-0.5-2.4-0.6 0.3-0.4 0.1 Interest and other financial income 6.7 2.0 6.1 17.0 6.0 18.6 9.2 11.8 Interest and other financial expenses -16.3-11.5-20.1-40.3-36.7-62.2-49.1-65.5 Operating result before tax 7.5 20.9-33.0 68.1 76.2 10.5 99.1 39.1 Taxes - not payable 2.1 6.1-9.3 19.1 21.8 2.9 27.7 12.7 Minority interests 0.1 1.6 0.0-0.1 2.2 0.7 2.8 0.5 Net profit 5.5 16.4-23.7 48.9 56.6 8.3 74.2 26.9 Balance Sheet Change in 3 rd Quarter Per 30.09 Per 31.12 NOK mill. 2003 2002 2001 2003 2002 2001 2002 2001 Intangible assets -1.1-20.0 8.2 13.9 34.0 68.4 32.7 59.0 Tangible assets 25.8-26.3-39.9 892.2 767.7 760.6 803.5 805.4 Financial assets -0.5-3.5 0.9 154.5 139.8 184.7 152.3 147.6 fixed assets 24.2-49.8-30.8 1,060.6 941.5 1,013.7 988.5 1,012.0 Stocks -118.1-166.2-51.2 649.7 606.1 753.9 665.0 743.9 Receivables and deposits 85.6-4.7-31.5 861.7 768.0 634.2 486.7 636.9 current assets -32.5-170.9-82.7 1,511.4 1,374.1 1,370.1 1.151.7 1,380.8 assets -8.3-220.7-113.5 2,572.0 2,315.6 2,383.8 2.140.2 2,392.8 Share capital* 0.0 0.0 0.0 579.8 579.8 579.8 579.8 579.8 Other equity and capital 4.4 45.0-26.4 407.2 353.6 308.6 338.7 299.1 equity 4.4 45.0-26.4 987.0 933.4 888.4 918.5 878.9 Long-term liabilities 4.8-199.0-114.8 876.4 753.8 822.1 578.5 816.7 Current liabilities -17.5-66.7 27.7 708.6 628.4 673.3 643.2 697.2 liabilities -12.7-265.7-87.1 1,585.0 1,382.2 1,495.4 1,221.7 1,513.9 equity and liabilities -8.3-220.7-113.5 2,572.0 2,315.6 2,383.8 2,140.2 2,392.8 Net interest bearing debt -45-181 -110 746 622 805 498 772 Capital employed -41-136 -137 1,733 1,555 1,693 1,418 1,651 Working capital -67-112 -123 1,027 887 976 742 899 Changes in total equity for the Group Opening balance 982.6 918.3 914.8 918.5 878.9 878.8 878.9 878.8 Profit/loss 5.5 16.4-23.7 48.9 56.6 8.3 74.2 26.9 from capital expansion 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Foreign currency translation -1.2 0.1-2.7 19.3 0.1-9.4-2.8-8.0 Provisions for dividend 0.0 0.0 0.0 0.0 0.0 0.0-29.8-29.7 Own shares 0.0 0.2 0.0 0.0 0.0 11.4 0.8 11.4 Minority interests 0.1-1.6 0.0 0.3-2.2-0.7-2.8-0.5 Changes for year/period 4.4 15.1-26.4 68.5 54.5 9.6 39.6 0.1 equity 987.0 933.4 888.4 987.0 933.4 888.4 918.5 878.9 *119,042,384 shares at NOK 5.-, amended to account for 3,089,071 own shares. Moelven Industrier ASA Quarterly Report 3/2003 - page 2
Cash Flow Statement Change in 3 rd Quarter NOK mill. 2003 2002 2001 2003 2002 2001 2002 2001 Net cash flow from operations 103.2 190.2 140.9-36.4 206.3-8.8 405.1 68.2 Cash from operating profit 44.6 69.4 45.1 185.8 181.0 151.1 237.9 194.8 Cash flow from working capital 58.6 120.8 95.8-222.2 25.3-159.9 167.2-126.6 Cash flow from/to investments -58.9-34.2-24.0-133.8-75.7-91.7-110.8-101.9 Cash flow from/to financing 0.4-132.2-111.5 241.9-94.8 65.8-303.2 15.7 Net cash flow for the period 44.7 23.8 5.4 71.7 35.8-34.7-8.9-18.0 Liquid funds 44.7 23.8 5.4 109.1 80.5 30.0 37.4 44.7 Unutilised credit facilities 19.5 102.3-339.4 395.7 550.5 500.6 733.8 555.0 Available liquid funds 64.2 126.1-334.0 504.8 631.0 530.6 769.3 599.7 Add. net investm. as a result of acquis. and sales: Current assets - - - 20.6-1.0-5.1 46.4 Fixed assets - - - 36.7-5.8-0.1 65.0 Liquid funds - - - 0.6-0.9 0.3 19.0 assets - - - 57.9-7.7-4.9 130.4 Equity - - - -0.3-2.3 1.0 31.0 Interest bearing debt - - - 44.3-0.0-5.5 37.0 Interest free debt - - - 13.9-5.4-0.4 62.4 capital - - - 57,9-7.7-4.9 130.4 2001: Acquisition of Kristiania Entreprenør AS, Aicher GmbH and Modulpoolen i Sandsjöfors AB. 2002: Sale of Norra Ny Skog AB and Moelven Iberica SL. Acquisition of Nordisol Akustik i Karlstad AB. 2003: Acquisition of Finnforest Danmark A/S, Plyfa Göteborg AB and Woodpaint i Karlstad AB. Operating revenues Operating profit *) Includes NOK 39 million in non-recurring costs in connection with restructuring efforts. Key figures 3 rd Quarter NOK mill. 2003 2002 2001 2003 2002 2001 2002 2001 Net operating margin (in %) 1.6 3.0-1.8 2.6 3.1 1.6 3.0 2.1 Gross operating margin (in %) 4.8 6.5 4.3 5.6 6.3 5.9 6.2 5.6 Return on capital employed (in %) 4.4 7.8 2.4 7.9 8.9 5.1 9.1 5.7 Earnings per share (in NOK) 0.05 0.14-0.21 0.42 0.49 0.07 0.64 0.23 Cash flow per share (in NOK) 0.38 0.60 0.39 1.60 1.56 1.31 2.05 1.69 Inv. in fixed assets, excl. acquisition (NOK mill.) 60 36 29 132 78 95 119 105 Equity ratio (in%) 38.4 40.3 37.3 38.4 40.3 37.3 42.9 36.7 oper. revenue outside Scandinavia (in %) 22 27 26 22 27 26 25 26 Number of employees 2.930 3,120 3,027 2.902 3,116 3,047 3,108 3,149 Number of shareholders 999 999 2,243 999 998 1,196 999 1,196 Average number of shares 115 953 313 115 953 313 114 780 174 115 953 313 115 953 313 114 914 807 115 953 313 115 449 913 Moelven Industrier ASA Quarterly Report 3/2003 - page 3
THE GROUP The demand for products used for repair and maintenance in the residential housing sector has been at close to normal level in the Scandinavian markets so far this year. There are indications of increased demand for new homes in some regions, but the activity in the non-residential building markets has been lower than normal. Accumulated, revenues and profit of the Moelven group after nine months are at the level of last year, but with a weakening of the results during the third quarter. At the end of September, the Are Group signed an preliminary agreement to sell its woodworking businesses to Moelven. The Board of Moelven will make a final decision concerning the offer to buy the Are Group's businesses after a thorough review of the companies. Compensation for the shares will depend on factors such as the operating result for 2003, which as yet has not been finally determined. Operating revenues and bottom line Operating revenues for the Moelven Group the first nine months of the year totalled NOK 3612.7 million, which is somewhat higher than the previous year (3443.1). Operating profit was NOK 93.8 mill (107.5) and pre-tax profit was NOK 68.1 mill (76.2). Profit per share totalled NOK 0.42 (0.49). Operating revenues for the third quarter totalled NOK 1162.6 million (1064.5), and operating profit was NOK 18.2 million (31.6). Financial expenses in the second quarter totalled NOK 9.7 million (9.5), and pre-tax profit was NOK 7.5 million (20.9). The reduction in profit compared to the previous year is due to the weaker financial result achieved by the Moelven Timber Group, which was only partially offset by an increase in profit by the Moelven Building Group. Balance sheet and financing At the end of the third quarter, the Group had assets totalling NOK 2572.0 million (2315.6), which represents an increase compared to the previous year. Of the total assets, about 60 per cent is associated with businesses in Sweden, and most of the reason for the increase in the value of the assets is the appreciation of the Swedish kroner during the year. Capital employed at the end of the third quarter totalled NOK 1733 million (1555), and net interest-bearing debt was NOK 746 million (622). Equity totalled NOK 987.0 million (933.4), corresponding to an equity ratio of 38.4% (40.3). Equity per share amounted to NOK 8.51 (8.04). Cash flow from operations totalled NOK 185.8 million during the first nine months of the year (181.0) and NOK 44.6 million (69.4) in the third quarter alone. Cash flow per share for the first nine months was NOK 1.60 per share (1.56). Liquid reserves consisting of cash and contractual borrowing rights totalled NOK 504.8 million (631.0), which is a decrease compared to the year before. The reduction was the result of a scheduled repayment plan. An existing EUR loan equal to NOK 240 million - with a due date at the end of 2004 - will be refinanced in the course of the fourth quarter 2003. No instalments will be required for the new five-year loan totalling NOK 400 million. In connection with the planned purchase of the Are Group, the Group's equity will be increased by carrying out a pre-emptive right share issue totalling NOK 118 million. Based on the existing business assumptions, the planned refinancing will give the Group sufficient financial flexibility for the coming years. Investments totalling NOK 132 million (78) were made in the first nine months of the year, and involve primarily normal investments in maintenance. A significant amount has also been invested in fire prevention measures at several timber industry plants. Staff The total number of man-years for staff in the Group the first nine months totalled 2459 man-years (2936), and at the end of the third quarter there were 2902 employees (3120). Absenteeism due to illness was 6.69 percent (6.84), corresponding to 34,136 full workdays (35,723). Moelven Timber Group, Main Figures NOK mill. 3 rd Quarter 2003 2002 2001 2003 2002 2001 2002 2001 Operating revenues Moelven Timber Group 893.6 794.9 750.4 2,674.9 2,554.7 2,460.8 3,380.8 3,324.6 Timber - sawmills 548.4 523.3 501.3 1,787.8 1,758.5 1,780.4 2,360.1 2,398.9 Wood - timber processing 413.7 334.8 286.1 1,050.9 978.8 857.0 1,273.8 1,160.7 Laminated Timber 92.0 87.5 88.7 292.3 265.2 285.7 364.6 383.4 Operating profit/loss Moelven Timber Group 14.2 33.5-38.0 91.6 94.3 6.1 129.1 24.3 Timber - sawmills 2.0 17.8-51.1 75.2 65.6-14.3 93.6 1.2 Wood - timber processing 10.4 16.1 14.5 15.5 34.2 25.6 40.6 32.0 Laminated Timber 1.8-0.4-1.4 0.9-5.5-5.2-5.1-8.9 Moelven Industrier ASA Quarterly Report 3/2003 - page 4
BUSINESS AREAS Timber Industry operating revenues for the Moelven Timber Group the first nine months of the year were NOK 2674.9 million (2554.7), and operating profit totalled NOK 91.6 million (94.3). Operating revenues in the third quarter were NOK 893.6 million (794.9), and operating profit totalled NOK 14.2 mill (33.5). The reduction was largest for the sawmills and was due to a combination of somewhat lower prices for industrial timber in certain markets and higher raw material costs, particularly for the Swedish production units. The processing and distribution business in Moelven Wood had a somewhat minor reduction in profit, primarily due to lower market prices for various building grades. The Laminated Timber division in Norway has reduced its export activities and adapted production capacity to suit the domestic market, which has led to better results. The Swedish laminated timber business still has a significant share of exports generating unsatisfactory profitability, however, changes in staffing have been carried out that should have some effect already in the fourth quarter. Moelven Building Group The building of new, non recidentials buildings offices is still slow in large parts of Sweden and Norway, as a result of a continued high rate of office vacancies, particularly for offices in the major cities. Oil and gas related projects in Norway is an exception, and Moelven Modular Buildings has had major deliveries to this sector thus far this year. For Moelven Interior Layout, rehabilitation projects comprise a larger share than normal of the division's activities. operating revenues for the Moelven Building Group the first nine months of the year were NOK 959.9 million (904.6), and operating profit was NOK 28.6 mill (28.6). The end result has been reduced by a nonrecurring costs of NOK 7 million (0.0), primarily stemming from the decision to sell the modular building business in Kirkenes. The sale went through during the first quarter. In the third quarter, operating revenues totalled NOK 279.2 million (276.0), and operating profit totalled NOK 9.8 million (6.1). The increase in profit is due to the excellent job done on several offshore projects and careful cost management in most of the businesses, and comes about despite the fact that the modular building business in Säffle has not achieved satisfactory results. Other businesses In addition to the Group's shared service functions, this area includes other activities that are not part of the Group's core business. Operating revenues the first nine months of the year totalled NOK 33.8 million (46.6), with an operating loss of NOK -26.4 million (-15.4). During the third quarter, operating revenues totalled NOK 9.7 million (11.0), with an operating loss of NOK -9.8 million (-8.0). The weaker result is primarily related to the liquidation of businesses that are not associated with the Group's core business areas. Outlook No major fluctuations are anticipated beyond normal seasonal variations for the fourth quarter when it comes to the markets for wood products and building systems. However, there is some uncertainty about the price level toward the end of the year for individual product groups in the Moelven Timber Group. The board expects that the bottom line for the year will be somewhat lower than for the previous year. Moelv, 22 October 2003 Board of Moelven Industrier ASA Moelven Building Group, Main Figures NOK mill. 3 rd Quarter 2003 2002 2001 2003 2002 2001 2002 2001 Operating revenues Moelven Building Group 279.2 276,0 269,8 959.9 904,6 821,7 1.241,5 1.230,0 Modular Buildings 158.6 443,1 136,2 545.1 480,2 393,4 655,8 520,0 Modular System Interiors 121.0 133,1 133,7 416.1 425,3 429,5 586,9 641,9 Operating profit/loss Moelven Building Group 9.8 6,1 19,9 28.6 28,6 47,1 41,7 71,9 Modular Buildings 2.6-2,4 10,1 9.8 6,3 18,9 10,3 30,4 Modular System Interiors 7.2 8,5 9,8 18.8 22,3 28,2 31,4 41,4 Moelven Industrier ASA Quarterly Report 3/2003 - page 5
Sender: Moelven Industrier ASA P.O.Box 134, N-2391 Moelv Tel.: +47 62 34 70 00 Fax: +47 62 36 92 80 Internet: www.moelven.com post@moelven.com HUGIN Online: http://huginonline.no/moe/ Moelven Industrier is a Scandinavian industrial group that supplies products and associated services to the European building market. Most of the manufacturing activities take place in Norway and Sweden, while close to 30% of sales go to markets outside of Scandinavia. The Group's businesses employ more than 3000 persons and have a total annual turnover of some NOK 4.6 billion. The Group's close to forty business units are organised into two business areas: the Moelven Timber Group and the Moelven Building Group. Finnforest Corporation, owned by Metsäliitto, is Europe's biggest international mechanical wood group with a turnover of EUR 1.8 billion. Moelven Industrier ASA is Finnforest's majority-owned Norwegian-based subsidiary. Operations are grouped into two industrial divisions: Engineered Wood and Solid Wood. Finnforest's main geographical markets are Market West, Market East, Scandinavia and Finland, Its customers include industrial end users, DIY stores, building suppliers and timber merchants, building contractors and developers. Finnforest Corporation operates in over 20 countries and employs over 7,500 people. Moelven Industrier ASA Quarterly Report 3/2003 - page 6