Non-recurring items in M-real's 4Q 2010 results

January 13, 2011 by timbercommunity

M-real Corporation, part of Metsäliitto Group, is expected to book in its 4Q 2010 operating result a total of EUR -41 million net non-recurring items. The company also start a program to improve M-real's annual operating result by EUR 70 million with full effect from 2012 onwards.

The main items are:

* EUR 28 million impairment of fixed assets in Speciality Papers business area
* EUR 15 million impairment of fixed assets in Market Pulp and Energy
* EUR 15 million impairment of fixed assets and cost provisions in Consumer Packaging related to closure of Simpele paper machine
* EUR 9 million reversal of impairment of fixed assets in Office Papers
* EUR 7 million profit on sale in Speciality Papers related to partial divestment of Reflex mill
 

The impairment charges will reduce M-real's annual depreciations by approximately EUR 4 million from 2011 onwards. The non-recurring items have in total a positive net cash effect of approximately EUR 5 million.
 

M-real Corporation also starts a new profit improvement programme for the year 2011. The programme focuses on improving the paper business profitability as well as decreasing variable costs of all businesses. The earlier announced profit improvement impact of Simpele and Kemi cartonboard investments and the closure of the speciality paper production at Simpele are included in the new profit improvement programme.

The planned measures are expected to improve M-real's annual operating result by EUR 70 million with full effect from 2012 onwards. The planned measures would improve 2011 result by approximately EUR 30 million. The result in 2011 is thus expected to improve in total by approximately EUR 90 million including the impact of the new programme and the previous years' profit improvement programmes.

“M-real has good possibility to mostly cover the accelerated cost inflation by own profit improvement measures. In addition to the earlier implemented measures and this new programme, further profit improvement actions will be searched. The focus of the earlier profit improvement programmes has been on decreasing fixed costs. M-real has, in upcoming years, significant profit improvement potential especially in variable costs, concerning primarily chemical, energy and logistic costs”, says Mikko Helander, CEO of M-real.