1 JANUARY–30 JUNE 2009 (compared with corresponding period a year ago)
• Net sales rose 3% to SEK 56,242m (54,852)
• Profit before tax, excluding restructuring costs, was SEK 3,525m (3,649)
• Restructuring costs in Packaging amounted to SEK 439m (0)
• Profit for the period, excluding restructuring costs, was SEK 2,608m (2,919)
• Earnings per share were SEK 3.24 (4.14)
• Cash flow from current operations amounted to SEK 4,687m (695)
(Table included in attached pdf)
Net sales rose 3% compared with the same period a year ago, to SEK 56,242m. Operating profit for the first half of the year, excluding restructuring costs, was SEK 4,504m (4,670). Compared with the first quarter, operating profit excluding restructuring costs improved by 11%, to SEK 2,368m. Currency effects during the second quarter were marginal compared with the first quarter. Profit before tax, excluding restructuring costs, grew to SEK 2,014m, an improvement of 33% compared with the first quarter. Return on capital employed, excluding restructuring costs, was 8% for the first half of the year.
Our focus on strengthening the Group's cash flow – among other things by reducing working capital – continues to generate favourable results. Cash flow from current operations during the first half of the year amounted to SEK 4,687m, an improvement of SEK 3,992m compared with a year ago.
Sales of Personal Care products rose 17% during the second quarter compared with the same period a year ago. Following a relatively weak start of the year, sales grew 3% over the first quarter, while operating profit improved by 16%. Underlying this improvement is strong sales development in Europe, continued favourable performance in our emerging markets, and lower raw material costs. The operating margin strengthened compared with the first quarter and was 12.3% for the second quarter.
Net sales for the Tissue operations improved by 14% during the second quarter compared with the same period a year ago, and operating profit by 76%. The positive trend from the first quarter of the year has continued, and operating profit rose 17% during the second quarter. The increase can be credited to the strong performance of our AFH tissue business in the USA, continued strong performance in the European market, improved profitability in Mexico and Central America, and lower raw material and energy costs. This trend is particularly gratifying, as price pressure has risen and is expected to remain during the second half of the year.
The European Packaging operation weakened further during the second quarter, with continued weak demand and price pressure for corrugated board as well as for testliner. Operating profit was SEK 11m before restructuring costs. Producer inventories of liner have decreased significantly following cutbacks in production and plant closures by the market players. However, additional measures will be needed before supply and demand are in balance.
In our Forest Products business, net sales rose 2% during the second quarter compared with the same period a year ago, and operating profit improved by 16%. Despite a challenging market for publication papers, the favourable earnings trend from the first quarter continued, and operating profit rose 10% during the second quarter. The improvement is mainly attributable to lower energy and raw material costs. In the solid-wood products segment we are now seeing rising prices as a result of an improved market balance.
We will encounter continued difficult market conditions for the packaging operations during the second half of the year and therefore see a risk for an earnings decline for this business. Our Forest Products business is feeling the effects of price pressure for publication papers, while there is potential for price increases for solid-wood products. The economy is also affecting our hygiene business, mainly through a greater focus on price. However, we believe that the effects of this, if any, will be limited.
Jan Johansson, President and CEO