SCA Interim Report 1 January - 31 March

Interim Report 1 January - 31 March 2000 00:1 99:1 99:4 Net sales, SEK M 15,992 16,242¹ 15,662 Earnings after financial items, SEK M2 1,670 1,128 1,711 Earnings per share, SEK 4.79 3.55 5.10 Earnings per share excl. goodwill 5.53 4.20 5.94 amortization, SEK2 Cash flow from current operations per 3.79 4.01 11.16 share, SEK2 1 Including net sales in SCA's former fine paper operations. 2 Adjusted historically to reflect new issue. * Earnings after financial items rose 48%, compared with the year-earlier. * Operating profit rose 57% for Packaging, 33% for Forest Products and 9% for Hygiene Products. * Operating cash surplus improved to 18% (16) of net sales. FIRST QUARTER 2000 COMPARED WITH FOURTH QUARTER 1999 * Despite sharply rising raw material and energy prices, a moderate quarter in terms of volume and a strong Swedish krona, earnings after financial items, as a result of price increases and productivity gains, were only marginally lower. * Price increases in Hygiene Products and Packaging are beginning to yield increasingly improved effects. NET SALES AND EARNINGS Continued strong global economic growth, with rising industrial production and increased private consumption, contributed to favorable demand for paper during the first quarter and increased fiber consumption in all parts of the world. In Europe, the weak euro has resulted in increased export demands for paper and packaged goods. Combined with a strong demand situation, the weak euro resulted in rapidly rising costs for recycled paper and for dollar-based raw materials such as market pulp and oil. The pulp price expressed in euro has risen by about 60% since the first quarter of 1999 while the price of, for example, brown recovered paper in Germany nearly rose fivefold. Since year-end, the price increase for pulp is 16% and the recovered paper price in Germany has doubled. Consolidated net sales amounted to SEK 15,992 M (16,242), a decline of 2% compared with the year-earlier period. Adjusted for the effect of the fine paper operations, which were included in the first quarter of the preceding year, net sales by the Group's core operations increased 17%. Acquisitions accounted for 9 percentage points and organic growth accounted for 8 percentage points. Packaging operations showed the largest increase in net sales, but Hygiene Products and Forest Products also reported substantial gains. The increase in net sales by Hygiene Products was primarily attributable to company acquisitions, while about half of the increase in Packaging's net sales was attributable to acquired companies. Exchange rate movements reduced the Group's net sales by about 2%. Group operating profit amounted to SEK 1,951 M (1,454), an increase of 34% compared with the year-earlier period. Currency movements had marginal negative effects on earnings. All business areas reported improved operating profits. The operating profit for Hygiene Products amounted to SEK 673 M (615), an increase of 9%. Packaging reported operating profit of SEK 665 M (424), an increase of 57%, and operating profit by Forest Products rose 33% to SEK 607 M (458). Operating profit attributable to SCA's ownership share in Modo Paper amounted to SEK 258 M, which was more than twice as high as operating profit reported last year for SCA's former fine paper operations, which totaled SEK 108 M. Financial items amounted to an expense of SEK 281 M (expense: 326). The improvement was attributable to lower interest rates. Group earnings after financial items amounted to SEK 1,670 M (1,128), an improvement of 48% compared with the first quarter of 1999. Net earnings after tax totaled SEK 1,109 M (746). Earnings per share after full tax and full dilution amounted to SEK 4.79 (3.55), an improvement of 35%. Earnings per share, after full tax and dilution, excluding goodwill amortization, amounted to SEK 5.53 (4.20). The lower increase in earnings per share than earnings after tax is attributable to the effect of the new issue in 1999. Return on shareholders' equity was 13% (11). The return on capital employed was 12% (11). Comparisons with fourth quarter of 1999 The trend of rising prices for pulp and recovered paper during the fourth quarter of 1999 continued into 2000, with even sharper increases during the first quarter. To compensate for higher prices and sharply rising energy costs, all of SCA business areas pursued a highly active price policy. Despite a time displacement between higher raw material costs and adjustments in prices for end-products, earnings after financial items were only marginally lower. Negative effects on the operating margins of Hygiene Products and Packaging were limited to about 1 percentage point. Earnings for Forest Products were marginally lower while the share in earnings of the fine paper operations increased by 60%. Net sales rose 2%. Negative effects of currency movements amounted to about 1%. Operating profit was 4% lower. Earnings after financial items were down 2%, about 1% of which was due to currency movements. CASH FLOW The operating cash surplus amounted to SEK 2,837 M (2,559), equal to 18% (16) of net sales. Operating cash flow amounted to SEK 1,319 M (1,470). Working capital increased by SEK 1,105 M (559) during the period. This year, the seasonal increase in working capital was reinforced by an exceptionally low level of tied-up working capital, 10.3% of annual sales, at year-end. The low level was the result of very high deliveries in the fourth quarter, due to customer inventory needs prior to the millennium shift and expectations for price hikes. At the end of the quarter tied-up working capital amounted to 11.6% of annual sales, compared with 12.5%, adjusted for the fine paper operations, on the same date a year earlier. Current capital expenditures, net, totaled SEK 402 M (442). Cash flow from current operations, that is before strategic investments and dividends, amounted to SEK 880 M (845), equal to SEK 3.79 (4.01) per share. Company acquisitions, strategic capital investments in machinery and plant, as well as structural costs, totaled SEK 665 M (3,890). Strategic capital expenditures in machinery and plant amounted to SEK 469 M (543), mainly in Hygiene Products but also in Packaging. Divested units amounted to SEK 30 M (30). 1 SEK M 0003 9903 Net sales 15,992 16,242 Operating cash surplus 2,837 2,559 % of net sales 18 16 Current capital -402 -442 expenditures, net % of net sales 3 3 Changes in working capital -1,105 -559 Other operating cash flow -11 -88 changes Operating cash flow 1,319 1,470 2 Tax payment etc -246 -288 Free cash flow 1,073 1,182 per share, SEK 4.63 5.61 Interest payment after -193 -337 taxes Cash flow from current 880 845 operations per share, SEK 3.79 4.01 Strategic investments and -635 -3,860 divestments Cash flow before dividend 245 -3,015 1 Figures for 1999 adjusted to conform with cash flow statement adopted by SCA on July 1, 1999. 2 Tax attributable to operating profit. FINANCING Net debt at the close of the period amounted to SEK 23,522 M, which was SEK 551 M lower than year-end 1999. The change reflects the net of cash flow from current operations amounting to SEK 880 M, net expenditures for strategic investments and divestments totaling SEK 635 M and positive effects of currency movements amounting to SEK 306 M. The strengthening of the Swedish krona reduced equity by approximately SEK 360 M. The decline was caused by SCA's policy of hedging Group assets outside Sweden, which is based on the principle whereby currency movements should largely not affect the debt/equity ratio. The debt/equity ratio amounted to 0.66 (0.91). The interest coverage multiple was 7.0 (4.5). HYGIENE PRODUCTS BUSINESS AREA Net sales amounted to SEK 7,402 M (6,609), an increase of 12% compared with the year-earlier period. Acquired companies accounted for most of the increase. Operating profit rose 9% to SEK 673 M (615). The improvement was attributable to acquisitions. The sharp increase in raw materials and energy costs, compared with the first quarter of 1999, was offset largely by higher prices, volume growth and productivity improvements. The restructuring program for the business area's production plants is now virtually complete and the effects reflected in lower production costs are now successively yielding effects on earnings of the business area's operating units. Volume growth compared with the first quarter of 1999 amounted to 12%, of which 9% was attributable to acquisitions. The institutional segment showed stronger organic growth, 6%, than the consumer products, 3%. Despite higher sales prices, operating profit during the first quarter was down 10%, compared with the previous quarter, due to the sharp increase in raw materials and energy costs. The efforts to increase end-product prices are becoming increasingly successful, which will affect the remainder of the year. The margin decline during the first quarter was limited to an average of 1%, compared with the fourth quarter of 1999. The decline in consumer products was somewhat higher than in the institutional segment. Tissue prices in the institutional market rose about 5% during the first quarter. Additional price increases have been announced for the second quarter. In the consumer segment, prices rose 3-5% in the Nordic region, France and the Iberian Peninsula. Price increases of 6-10% have been announced for the second quarter in Continental Europe and the U.K. Consumer products Earnings from consumer products increased 24% to SEK 311 M (250). Acquired companies accounted for the increase. SCA's market shares for baby diapers and feminine hygiene products showed favorable development in key markets. Minor price adjustments were made during the first quarter, but competitive conditions have so far been a restraining factor in pricing policies. Compared with the fourth quarter of 1999, earnings attributable to consumer products declined 18% due to sharply rising costs for raw materials and expenses incurred for advertising and promotion for the launch of new tissue (TAD grade) and incontinence products. In addition, the higher sales prices did not totally offset the increase in costs for raw materials. AFH and incontinence products Operating profits attributable to AFH and incontinence products amounted to SEK 362 M (365), largely unchanged compared with the first quarter of 1999. Higher sales prices and volume growth compensated for the sharp increase in costs for raw materials. Earnings during the first quarter were marginally lower than earnings reported in the fourth quarter of 1999. The decline was due to higher raw materials costs and lower volumes. Price increases have been announced for incontinence products, but implementation of the adjusted prices has been delayed due to long contract terms. Higher prices were introduced within AFH which, however, had a temporary restraining effect on volume development. SEK M 00:1 99:1 99:4 Net sales 7,402 6,609 7,275 Operating surplus 1,036 905 1,117 Operating profit 673 615 747 Operating surplus 14 14 15 margin, % Operating margin, % 9 9 10 Volume growth, % 2 Consumer products 4.3¹ 18.8 1.6¹ 8.3¹ 2 AFH and incontinence 1.6¹ 6.4 2.0¹ 3.2¹ products ¹ Compared with the immediately preceding quarter. 2 Compared with corresponding period previous year. PACKAGING BUSINESS AREA Net sales for the period amounted to SEK 5,776 M (4,745), an increase of 22%, about half of which was attributable to acquired companies. Operating profit amounted to SEK 665 M (424), an increase of 57%. Of the increase, acquired companies accounted for about 18 percentage points. Most of the remaining part of the improvement was attributable to liner operations and is a result of sharply higher sales prices. Compared with the fourth quarter of 1999, operating profit was down 10%. The decline was due to weaker results from both liner and corrugated board operations. Within liner operations, higher volumes and increased prices for both kraftliner and testliner have not yet been fully able to compensate for the very sharp increase in raw material and energy costs. Corrugated board operations were able to offset most of the increase in raw material costs through higher prices for corrugated board products. However, volumes in certain market segments and regions, particularly Great Britain, were weak in the early part of year 2000. Corrugated board packaging The strong industrial economy, supported by strong domestic demand in Europe, high private consumption and increased exports, which are attributable in part to the weak euro, resulted in continued favorable demand for packaging materials. In the beginning of the year, total deliveries of corrugated board in Europe increased approximately 4%, compared with the weak (-2%) start in 1999. Exceptionally strong growth was noted on the European Continent, particularly in France, Italy and Spain, while the British market showed some decline. Prices were increased about 7% during the first quarter. Most of the higher paper prices from last autumn have now been offset by increased sales prices. Due to continued rising raw materials costs, additional price increases in the same range have been announced for the second quarter. Containerboard Deliveries of kraftliner by European producers rose more than 20% in January and February. Liner prices in the U.S. were increased by USD 55/ton during February and March. Prices i Europe for white grades were increased in March, followed in April by a price hike of about EUR 50/ton, equal to about 10%, for unbleached kraftliner. An additional price increase of EUR 50/ton for white grades has been announced for May. Demand for test liner was exceptionally strong during the first quarter, stimulated by high consumption, kraftliner substitutions and stockpiling in anticipation of the 13% price adjustment, or EUR 50/ton, in March. Total inventory levels for liner products are low, but a major shift has been made from seller inventories, which have now reached record-low levels, to relatively well-stocked buyer inventories. Recovered fiber prices increased dramatically toward the end of the first quarter. Full effects of these price adjustments will probably be noted during the second quarter. SEK M 00:1 99:1 99:4 Net sales 5,776 4,745 5,587 Operating surplus 1,002 699 1,075 Operating profit 665 424 737 Operating surplus 17 15 19 margin, % Operating margin, % 12 9 13 Production Liner products, kton 647 550 620 Deliveries Liner products, kton 647 557 602 Corrugated board, 920 823 908 Mm2 FOREST PRODUCTS BUSINESS AREA Net sales by the business area amounted to SEK 3,095 M (2,741), an increase of 13%. Operating profit rose to SEK 607 M (458), an increase of 33%. Compared with the fourth quarter of 1999, the operating profit was marginally lower. Pulp, timber and solid wood products Operating profit rose 88% to SEK 269 M (143). The improvement was attributable to a sharp increase in earnings from pulp operations due to higher sales prices. Sawmill operations reported a modest improvement in earnings, compared with the year-ago period, as a result of higher prices and volumes and lower raw material prices. Excluding capital gains of SEK 0 M (14), earnings from forestry operations were unchanged compared with the first quarter of 1999. Compared with the fourth quarter of 1999, operating profit was down 3%. The decline reflected net effects of strong pulp operations, supported by the full impact of higher pulp prices and a seasonal decline in earnings from forestry operations. Publication papers Strong advertising trends and improved conditions in the publishing sector created strong underlying demand in the global market for publication papers. Deliveries of newsprint to the European market were up 6%. Demand for SC-paper increased 8% during the period, and deliveries of LWC-paper were up 17%. The order books are filled, and the industry's capacity utilization is high. Prices for newsprint and SC-paper remain unchanged, while price increases for LWC-paper were successfully introduced. Additional price increases for LWC-paper are expected in July. Operating profit from publication paper operations was marginally higher than the corresponding period 1999, amounting to SEK 338 M (315), an increase of 7%. The increase was primarily attributable to improved volumes, which more than compensated for higher raw material costs. First quarter earnings declined 3%, compared with the fourth quarter of 1999, due to marginally lower delivery volumes and higher pulp prices. SEK M 00:1 99:1 99:4 Net sales 3,095 2,741 3,087 Operating surplus 869 709 896 Operating profit 607 458 625 Operating surplus 28 26 29 margin, % Operating margin, % 20 17 20 Production Publication paper, 319 302 318 kton Solid wood products, 170 146 212 km 3 Deliveries Publication paper, 311 290 337 kton Solid wood products, 184 142 200 km 3 MODO PAPER AB As a result of favorable market conditions characterized by volume growth and rising prices, combined with synergy benefits in the new company, SCA's share in earnings of Modo Paper during the first quarter amounted to SEK 218 M, compared with SEK 136 M in the fourth quarter of 1999. SCA's share of Modo Paper's operating profit was SEK 258 M, compared with operating profit of SEK 108 M from SCA's original fine paper operations in the year-earlier period. For more detailed information, reference is made to Modo Paper's interim report, which will be released on May 2, 2000. PERSONNEL The number of SCA Group employees at the close of the period was 33,518 (34,554). The change reflects a net of company acquisitions and separation of the fine paper operations. MARKET OUTLOOK Growth remains strong in both the European and American economies, and demand for SCA Group products is expected to remain favorable during the year. Continued rising prices for recycled fiber and pulp could temporarily result in a certain pressure on margins in the hygiene products and packaging areas. Concurrently, however, it appears that price hikes at the end of the chain are gaining ever-increasing success. The current trend of raw material costs is a clearly speculative element that most likely will be corrected with a decline in transfers of inventories. SHARE DISTRIBUTION 00-03-31 Series A Series B Total Registered number of 62,133,309 168,166,615 230,299,924 shares Unconverted - 1,375,697 1,375,697 debenture loans Outstanding warrants - 1,741,206 1,741,206 Total after full 62,133,309 171,283,518 233,416,827 conversion Calculated in accordance with the recommendations of the Swedish Financial Analysts Association, effects of the outstanding convertible debenture and warrant programs amount to a maximum dilution of 0.7%, which was taken into account when calculating earnings per share for the period. Stockholm 28 April 2000 SVENSKA CELLULOSA AKTIEBOLAGET SCA (publ) Sverker Martin-Löf President and CEO This report is unaudited. The interim report for 1 January - 30 June will be released on 28 July 2000. Copies of the Interim Report are available at SCA U.K. Holdings Limited, SCA Packaging House, 543, New Hythe Lane, Aylesford, Kent ME20 7PE, attention, Tony Staples, telephone 0044 1622 883 025. Statement of Earnings 1 January - 31 March 2000 1999 SEK M EUR M SEK M EUR M Net sales 15,992 1,884 16,242 1,813 Operating expenses -13,123 -1,546 -13,709 -1,530 Operating surplus 2,869 338 2,533 283 Depreciation according to plan, -974 -115 -949 -107 properties and plant Depriciation according to plan, -172 -20 -135 -15 goodwill Share in earnings of Modo Paper 218 26 - - AB¹ Share in earnings of other 10 1 5 1 associated companies Operating profit 1,951 230 1,454 162 Financial items -281 -33 -326 -36 Earnings after financial items 1,670 197 1,128 126 Income taxes -549 -65 -372 -42 Minority interest -12 -1 -10 -1 Net earnings after tax 1,109 131 746 83 Operating margin 12% 9% Return on shareholders' 13% 11% equity Return on capital 12% 11% employed ¹ As of 1 October 1999, Modo Paper AB is included as a share in earnings. For earlier periods, SCA's original fine paper operations are included in net sales, operating expenses, etc. Business Areas Net sales 1 January - 31 March SEK M 2000 1999 Hygiene Products 7,402 6,609 Packaging 5,776 4,745 Forest Products 3,095 2,741 Fine papers, paper - 2,621 merchanting¹ Other operations 382 375 Intra-Group deliveries -663 -849 Total net sales 15,99 16,24 2 2 See also additional information on page 17. ¹ As of 1 October 1999, Modo Paper AB is included as a share in earnings. Accordingly, net sales are not reported after this date. Earnings 1 January - 31 March SEK M 2000 1999 Hygiene Products 673 615 Packaging 665 424 Forest Products 607 458 2 Fine paper, paper merchanting 218 108 Other operations -40 -16 Operating profit before goodwill 2,123 1,589 amortization 3 Goodwill amortization -172 -135 Total operating profit 1,951 1,454 Financial items -281 -326 Earnings after financial items 1,670 1,128 See also additional information on page 17. 2 Pertains to share in earnings of Modo Paper AB as of the fourth quarter 1999, but refers to operating profit for earlier periods. 3 Goodwill 2000 1999 amortization: Hygiene Products 46 19 Packaging 47 37 Fine paper, paper - 0 merchanting 4 Common 79 79 Group 172 135 4 Goodwill reported on a Groupwide basis pertains to surplus values in companies acquired in 1990, with operations that were integrated in SCA's various business areas. Goodwill attributable to later acquisitions has been allocated to the business area that made the purchase. Balance sheet 2000-03-31 1999-12-31 SEK M EUR M SEK M EUR M Assets Tangible assets 43,911 5,293 44,571 5,215 Goodwill 10,200 1,229 10,431 1,220 Other intangible assets 879 106 904 106 Long-term receivables 85 10 102 12 Shares and participations 5,148 620 5,057 592 Receivables and inventories 18,594 2,241 18,312 2,143 Financial receivables and 1,929 233 4,207 492 investments Cash and bank balances 1,184 143 1,630 191 Total assets 81,930 9,875 85,214 9,971 Equity, provisions and liabilities Shareholder's equity 34,848 4,200 34,133 3,994 Minority interests 580 70 587 69 Provisions for pensions 923 111 1,029 120 Other provisions 7,488 903 7,603 890 Interest-bearing debt 25,712 3,099 28,881 3,379 Operating liabilities and 12,379 1,492 12,981 1,519 other noninterest-bearing debt Total equity, provisions 81,930 9,875 85,214 9,971 and liabilities Debt/equit 0.66 0.69 y times times Equity/ass 43% 41% ets Cash flow statement 1 JANUARY - 31 MARCH 3 SEK M2 2000 1999 Operating cash surplus 2,837 2,559 Changes in working capital -1,105 -559 Current capital expenditures -402 -442 Other operating cash flow changes -11 -88 Operating cash flow 1,319 1,470 Financial items -281 -326 Income taxes paid -153 -180 Other -5 -119 Cash flow from current operations 880 845 Strategic capital expenditures -469 -543 Strategic structural expenditures -120 - Company acquisitions -76 -3,347 Divestments 30 30 1 Net cash flow 245 -3,015 4 Net debt at beginning of period -24,073 -24,756 Net cash flow 245 -3,015 Currency effects 306 686 5 Other effects - 162 4 Net debt at end of period -23,522 -26,923 4 Debt payment capacity 38% 31% 1 Additional information in accordance with Swedish Financial Accounting Standards Council's recommendation regarding reporting of cash flow: Net cash flow 245 -3,015 Change in interest-bearing debt -620 2,646 Change in cash and bank balances -375 -369 Cash and bank balances at beginning of period 1,630 1,819 Change in cash and bank balances -375 -369 Currency effects on cash and bank balances -71 -41 Cash and bank balances at end of period 1,184 1,409 2 Operating surplus adjusted for significant non-cash items in accordance with the principles being applied by SCA effective at midyear 1999. 3 Figures for 1999 adjusted in accordance with SCA's new cash flow statement. 4 Calculated pro forma with pension liabilities included in net debt. 5 The effects of pension liabilities are included in net debt. Quarterly data Group 2000 1999 SEK M I IV III II I Net sales 15,992 15,662 16,603 16,389 16,242 Operating surplus 2,869 3,053 2,783 2,627 2,533 Depreciation according to -974 -998 -931 -961 -949 plan, properties and plant Depreciation according to -172 -188 -147 -132 -135 plan, goodwill Share in earnings of Modo 218 136 - - - Paper AB¹ Share in earnings of other associated companies 10 21 5 11 5 Operating profit 1,951 2,024 1,710 1,545 1,454 Financial items -281 -313 -315 -258 -326 Earnings after financial 1,670 1,711 1,395 1,287 1,128 items Income taxes -549 -555 -497 -425 -372 Minority interest -12 -24 -15 -21 -10 Net earnings after tax 1,109 1,132 883 841 746 Earnings per share, SEK 4.79 5.10 4.19 4.01 3.55 Earnings per share, 5.53 5.94 4.89 4.63 4.20 excluding goodwill amortization, SEK ¹ As of 1 October 1999, Modo Paper AB is included as a share in earnings. For earlier periods, SCA's original fine paper operations are included in net sales, operating expenses, etc. Quarterly data Business Areas Net sales 2000 1999 SEK M I IV III II I Hygiene Products 7,402 7,275 6,764 6,679 6,609 Packaging 5,776 5,587 4,862 4,664 4,745 Forest Products 3,095 3,087 2,892 2,812 2,741 Fine paper, paper - - 2,558 2,616 2,621 merchanting¹ Other operations 382 383 440 487 375 Intra-Group deliveries -663 -670 -913 -869 -849 Total net sales 15,992 15,662 16,60316,389 16,242 See also additional information on page 18. Operating surplus 2000 1999 SEK M I IV III II I Hygiene Products 1,036 1,117 948 907 905 Packaging 1,002 1,075 823 793 699 Forest Products 869 896 797 742 709 Fine paper, paper - - 228 236 222 merchanting¹ Other operations -38 -35 -13 -51 -2 Total net sales 2,869 3,053 2,783 2,627 2,533 See also additional information on page 18. ¹ As of 1 October 1999, Modo Paper AB is included as a share in earnings. For earlier periods, SCA's original fine paper operations are included in net sales, operating expenses, etc. Quarterly data Business Areas Operating profit 2000 1999 SEK M I IV III II I Hygiene Products 673 747 649 602 615 Packaging 665 737 550 505 424 Forest Products 607 625 552 488 458 Fine paper, paper 218 136 125 122 108 merchanting¹ Other operations -40 -33 -19 -40 -16 Operating profit before goodwill amortization 2,123 2,212 1,857 1,677 1,589 2 Goodwill amortization -172 -188 -147 -132 -135 Total operating profit 1,951 2,024 1,710 1,545 1,454 See also additional information on page 18. 1 Pertains to share in earnings of Modo Paper AB as of the fourth quarter 1999, but refers to operating profit for earlier periods. 2 Goodwill amortization: Hygiene Products 46 45 27 19 19 Packaging 47 63 40 31 37 Fine paper, paper - - 1 1 0 merchanting Common 79 80 79 81 79 Group 172 188 147 132 135 Quarterly data Business Areas Operating surplus margins 2000 1999 Percent I IV III II I Hygiene Products 14 15 14 14 14 Packaging 17 19 17 17 15 Forest Products 28 29 28 26 26 Fine paper, paper n a n a 9 9 8 merchanting¹ See also additional information on page 19. Operating margins excluding goodwill amortization 2000 1999 Percent I IV III II I Hygiene Products 9 10 10 9 9 Packaging 12 13 11 11 9 Forest Products 20 20 19 17 17 Fine paper, paper n a n a 5 5 4 merchanting¹ See also additional information on page 19. 1 As of 1 October 1999, Modo Paper AB is included as a share in earnings. Accordingly, margins are not reported after this date. Quarterly data Group 2 Margins 2000 1999 Percent I IV III II I Operating surplus 17.9 19.5 16.8 16.0 15.6 margin Operating margin, excl. goodwill 13.3 14.1 11.2 10.2 9.8 amortization Operating margin 12.2 12.9 10.3 9.4 9.0 Financial net margin -1.8 -2.0 -1.9 -1.6 -2.0 Profit margin 10.4 10.9 8.4 7.8 7.0 2 Since fine paper and paper merchanting are reported as a share in earnings of Modo Paper AB as of 1 October 1999, the margin figures are not fully comparable over time. Five-year summary Full year 1999 1998 1997 1996 1995 Earnings after financial 5,521 5,169 4,457 3,573 5,731 items, SEK M Earnings per share after 16.85 16.11 13.20 10.11 16.57 tax, SEK Earnings per share after tax 19.66 18.06 14.97 11.50 18.01 , excl. goodwill amortization, SEK Debt/equity ratio, times 0.69 0.83 0.85 0.79 0.80 Return on capital employed, 12 13 12 10 16 % Return on shareholders' 12 13 12 10 17 equity, % Additional information - Business Areas Net sales 1 January - 31 March SEK M 2000 1999 Hygiene Products 7,402 6,609 Consumer products 4,443 3,775 AFH and incontinence 2,959 2,834 products Forest Products 3,095 2,741 Pulp, timber and solid 1,411 1,185 wood products Publication paper 1,684 1,556 Operating profit 1 January - 31 March SEK M 2000 1999 Hygiene Products 673 615 Consumer products 311 250 AFH and incontinence 362 365 products Forest Products 607 458 Pulp, timber and solid 269 143 wood products Publication paper 338 315 ADDITIONAL INFORMATION - BUSINESS AREAS QUARTERLY DATA NET SALES 2000 1999 SEK M I IV III II I Hygiene Products 7,4027,2756,7646,6796,609 Consumer products 4,4434,2843,8943,7743,775 AFH and incontinence 2,9592,9912,8702,9052,834 products Forest Products 3,0953,0872,8922,8122,741 Pulp, timber and solid 1,4111,3041,2721,1871,185 wood products Publication paper 1,6841,7831,6201,6251,556 Operating surplus 2000 1999 SEK M I IV III II I Hygiene Products 1,0361,117 948 907 905 Consumer products 571 624 449 406 424 AFH and incontinence 465 493 499 501 481 products Forest Products 869 896 797 742 709 Pulp, timber and solid 353 377 328 227 211 wood products Publication paper 516 519 469 515 498 Operating profit 2000 1999 SEK M I IV III II I Hygiene Products 673 747 649 602 615 Consumer products 311 380 260 218 250 AFH and incontinence 362 367 389 384 365 products Forest Products 607 625 552 488 458 Pulp, timber and solid wood 269 278 255 141 143 products Publication paper 338 347 297 347 315 Additional information - Business Areas Quarterly data Operating surplus margins 2000 1999 Percent I IV III II I Hygiene Products 14 15 14 14 14 Consumer products 13 15 12 11 11 AFH and incontinence 16 17 17 17 17 products Forest Products 28 29 28 26 26 Pulp, timber and solid 25 29 26 19 18 wood products Publication paper 31 29 29 32 32 Operating margins excluding goodwill amortization 2000 1999 Percent I IV III II I Hygiene Products 9 10 10 9 9 Consumer products 7 9 7 6 7 AFH and incontinence 12 12 14 13 13 products Forest Products 20 20 19 17 17 Pulp, timber and solid 19 21 20 12 12 wood products Publication paper 20 19 18 21 20 ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/2000/04/28/20000428BIT00810/bit0001.doc http://www.bit.se/bitonline/2000/04/28/20000428BIT00810/bit0002.pdf