Munksjö Oyj's Financial Statements Bulletin 2013 - Combination completed and synergy level ahead of plan

Helsinki, Finland, 2014-02-13 13:15 CET (GLOBE NEWSWIRE) --
MUNKSJÖ OYJ, FINANCIAL STATEMENTS BULLETIN
13 FEBRUARY 2014 AT 1.15 PM CET

Munksjö Oyj's Financial Statements Bulletin 2013 - Combination completed and
synergy level ahead of plan

Highlights of the fourth quarter 2013

- The second and final phase of the business combination was completed at the
turn of the month, November.
- Net sales for the fourth quarter increased to EUR 255.7 (159.1) million,
primarily as a result of the combination.
- Adjusted EBITDA was EUR 16.0 (8.8) million.
- Operating result adjusted for non-recurring items amounted to EUR 2.6 (1.9)
million. The non-recurring items, totalling EUR -16.6 (-2.2) million, were
primarily costs for achieving synergy benefits, including the improvement
programme for Graphics and Packaging as well as increased environmental
provisions.
- Operating result was EUR -14.0 (-0.3) million and the net result was EUR
-26.2 (-4.6) million.
- Earnings per share (EPS) were EUR -0.6 (-0.4).

Highlights of the reporting period January-December 2013

- The business combination with Ahlstrom's Label and Processing business area
in Europe and Brazil was completed in two phases; in May and December,
respectively.
- Trading with Munksjö Oyj's shares commenced on the Helsinki Stock Exchange on
7 June.
- Net sales increased to EUR 863.3 (607.1) million, primarily as a result of
the combination.
- Adjusted EBITDA was EUR 55.0 (42.3) million.
- Operating result adjusted for non-recurring items amounted to EUR 15.7 (16.9)
million. Most of the non-recurring items, totalling EUR -49.1 (-9.4) million,
relates to the business combination.
- Operating result was EUR -33.4 (7.5) million and the net result EUR -57.4
(-10.4) million.
- Earnings per share (EPS) were EUR -2.0 (-0.9).
- Interest-bearing net debt at the end of the reporting period was EUR 230.4
million(30 Sep 2013: 257.5, 31 Dec 2012: 217.3), equivalent to a gearing of
54.4% (30 Sep 2013: 66.8%, 31 Dec 2012: 108.9%). The net debt has decreased
with EUR 37.8 million since the end of the second quarter.
- The Board of Directors proposes that the Annual General Meeting would decide
to pay EUR 0.1 per share from the reserve for invested non-restricted equity as
return of equity based on the balance of 31 December 2013.

KEY FIGURES (MEUR) Oct-Dec Full year
2013 2012 2013 2012
Net sales 255.7 159.1 863.3 607.1
EBITDA (adj*) 16.0 8.8 55.0 42.3
EBITDA margin, % (adj*) 6.3 5.6 6.4 7.0
EBITDA -0.6 6.6 5.9 32.8
EBITDA margin, % -0.2 4.2 0.7 5.4
Operating result (adj*) 2.6 1.9 15.7 16.9
Operating margin, % (adj*) 1.0 1.2 1.8 2.8
Operating result -14.0 -0.3 -33.4 7.5
Operating margin, % -5.5 -0.2 -3.9 1.2
Net result -26.2 -4.6 -57.4 -10.4
Earnings per share (EPS), EUR -0.6 -0.4 -2.0 -0.9
Interest-bearing net debt 230.4 217.3 230.4 217.3

*Adjusted for non-recurring items

Munksjö's President and CEO, Jan Åström

"In December Munksjö completed the combination between Munksjö and Ahlstrom
Corporation's specialty papers division, Label and Processing, by making
Ahlstrom's specialty paper mill in Jacarei outside Sao Paulo in Brazil, a part
of the Munksjö Group. The complete group was fully operational during the last
month of 2013.

Munksjö's business continues to develop well, especially the business areas
Decor and Industrial Applications, where the volume growth was five (5) and
seven (7) per cent respectively year on year, and prices have remained stable.
During the year the Group continued to release working capital and the business
combination contributed to a significantly improved capital structure.

In 2014, the focus for Munksjö is to realise the remaining synergies and the
completion of the integration. The work with achieving synergies is continuing
unabated. At year end, the annual synergy run-rate was EUR 11 million. The
realised synergies for 2013 were EUR 5 million. The synergies of EUR 20-25
million will be achieved earlier than expected, since the annual run-rate is
expected to be within the communicated range already during 2014, and are in
their entirety expected to be realised already during 2015.

The programme to significantly improve the profitability of the business area
Graphics and Packaging, is proceeding according to plan. The strategic change
that involves replacing low-margin products in the product portfolio began to
take effect in the fourth quarter. Negotiations, regarding personnel reductions
with the relevant trade unions, are ongoing and the ambition is to finalise
them during the first quarter of 2014.

Munksjö's year as a complete company has started and the organisation is now
set to deliver on synergy and profitability targets."

Outlook

During the first half of 2014, demand for Munksjö's products is expected to be
generally stable, but some improvement in certain product areas can be seen.
Prices are expected to remain at the same level at the beginning of 2014 as in
the fourth quarter of 2013.

The synergy benefits of EUR 20-25 million will be achieved earlier than
expected, since the annual run-rate is expected to be within the communicated
range already during 2014, and are in their entirety expected to be realised
already during 2015.

The production facility in Aspa, Sweden will prolong the intervals between the
maintenance stops from 12 to 18 months. This means that Aspa's maintenance
shutdown will take place already in early April 2014. Otherwise, the yearly
shutdowns for the holiday, during which planned maintenance operations are
scheduled, are expected to be carried out to the same extent as in 2013.

Synergy benefits and integration

Annual synergy benefits rising from the business combination are related to
procurement, production efficiency, economies of scale and improved
organisational performance and efficiency, and are still expected to be between
EUR 20-25 million.

Integration efforts were launched in May when the first phase of the business
combination was completed and are proceeding according to plan. At year end,
the annual synergy benefits run-rate was EUR 11 million. The synergies were
achieved within procurement and improved efficiency within the organisation. It
is within these areas, including the improvement programme in the business area
Graphics and Packaging, that synergies are expected to be further developed
during 2014.

EUR 5 million in synergy savings were realised and recorded in the 2013
financial results.

An annual synergy savings level within the communicated range is expected to be
reached already during 2014. The previously communicated 60 per cent after the
first 12 months is expected to be surpassed.

Non-recurring items to achieve synergies are estimated to EUR 10-15 million and
the majority; approximately EUR 11 million was recorded in the financial result
for 2013. Of these costs EUR 4 million impacted the cash flow in 2013, while
the rest of the costs are expected to affect the cash flow during 2014.

Annual cost savings as a result of the separation of the specialty paper
operations from Ahlstrom's other business operations (stand-alone cost
savings), will amount to EUR 11 million annually and are hence within the
previously communicated range of EUR 10-15 million.

The Munksjö Group

Oct-Dec Full year ACQUIRED Oct-De 27
OPERATIONS c May-De
c
MEUR 2013 2012 2013 2012 MEUR 2013 2013
Reported 1) Reported 1)
Net sales 255.7 159.1 863.3 607.1 Net sales 105.0 257.0
EBITDA (adj*) 16.0 8.8 55.0 42.3 EBITDA 3.6 6.9
(adj*)
EBITDA 6.3 5.6 6.4 7.0 EBITDA 3.4 2.7
margin, % margin, %
(adj*) (adj*)
EBITDA -0.6 6.6 5.9 32.8 EBITDA -3.6 -3.5
EBITDA, -0.2 4.2 0.7 5.4 EBITDA, -3.4 -1.4
margin % margin %
Operating 2.6 1.9 15.7 16.9 Operating -1.9 -4.9
result result
(adj*) (adj*)
Operating 1.0 1.2 1.8 2.8 Operating -1.8 -1.9
margin, % margin, %
(adj*) (adj*)
Operating -14.0 -0.3 -33.4 7.5 Operating -9.1 -15.3
result result
Operating -5.5 -0.2 -3.9 1.2 Operating -8.7 -6.0
margin, % margin, %
Net result -26.2 -4.6 -57.4 -10.4 Delivery 90,914 223,414
volumes,
tonnes
Capital 8.2 5.4 22.6 14.8
expenditure
Employees, 2,641 1,669 2,216 1,679
FTE
Pro forma II (incl. LP Europe and Coated Specialties) 2)
Net sales 265.2 288.5 1,120.3 1,154.6
EBITDA** 16.8 23.3 64.1 76.6
(adj*)
EBITDA** 6.3 8.1 5.7 6.6
margin, %
(adj*)
EBITDA** 1.0 21.1 42.3 39.8
EBITDA**, 0.4 7.3 3.8 3.4
margin %
Delivery 208,875 222,439 885,232 897,371
volumes,
tonnes

* Adjusted for non-recurring items
** Includes stand-alone cost savings and synergies obtained after 27 May 2013.
Further information under the heading Pro forma information in the notes.
1) Includes LP Europe from 27 May 2013 and Coated Specialties from 2 December
2013.
2) Includes LP Europe and Coated Specialties from 1 January 2012.

Reported

Fourth quarter 2013

Net sales increased to EUR 255.7 (159.1) million, primarily as a result of the
business combination. The acquired business contributed an additional EUR 105.0
million to net sales.

EBITDA adjusted for non-recurring items increased to EUR 16.0 (8.8) million
while the adjusted EBITDA margin was 6.3% (5.6%). Operating result adjusted for
non-recurring items amounted to EUR 2.6 (1.9) million and the adjusted
operating margin 1.0% (1.2%). The non-recurring items, totalling EUR -16.6
(-2.2) million, was primarily costs for achieving synergies and the improvement
programme for Graphics and Packaging as well as increased environmental
provisions.

The operating result was EUR -14.0 (-0.3) million with a net result of EUR
-26.2 (-4.6) million.

January-December 2013

Net sales increased to EUR 863.3 (607.1) million, primarily as a result of the
combination. The acquired business contributed an additional EUR 257.0 million
to net sales.

EBITDA adjusted for non-recurring items increased to EUR 55.0 (42.3) million
while the adjusted EBITDA margin was 6.4% (7.0%). Operating result adjusted for
non-recurring items was EUR 15.7 (16.9) million and the adjusted operating
margin 1.8% (2.8%). Most of the non-recurring items totalling EUR -49.1 (-9.4)
million relates to the business combination. For non-recurring items in
January-December 2013, see the table below.

EUR
million

Transaction costs -13.4
Commitment in relation to Osnabrück -13.5
Inventory valuations -2.4
Cost for achieving the foreseen synergy benefits -11.0
Environmental provisions -6.3
Other costs -2.5
Total
-49.1

The transaction costs are primarily costs for financial and legal advice as
well as market studies and similar activities for the assessment of the
transaction.

Munksjö made a commitment to pay certain costs arising from the divestments of
some businesses in Osnabrück, Germany, required by the European Commission as a
condition for regulatory approval. This commitment is included in the
non-recurring items in the amount of EUR 13.5 million. This cost was booked in
the second quarter of 2013. The equivalent impact on cash flow during 2013 was
EUR 2.5 million. Inventory valuation refers to the non-cash revaluation of
inventories at the time of acquisition.

The costs for achieving the synergy and integration benefit levels are costs
for achieving the communicated synergies including the improvement programme
for Graphics and Packaging. The environmental provisions in respect of the
closed production facilities in Italy and the USA have increased. Other
non-recurring items include, among other things, minor restructuring costs
deemed to be unrelated to the synergy benefits programme.

The operating loss was EUR -33.4 (7.5) million with a net loss of EUR -57.4
(-10.5) million.

Pro forma II

Fourth quarter 2013

Pro forma II net sales decreased to EUR 265.2 (288.5) million. Compared to
2012, the Brazilian Real has weakened significantly against the Euro, which
affected the euro-translated sales of the Brazilian operations. The Brazilian
operation is part of the business area Release Liners.

Adjusted pro forma II EBITDA decreased to EUR 16.8 (23.3) million and the
adjusted pro forma II EBITDA margin to 6.3% (8.1%). The result for the fourth
quarter 2012 includes a positive impact on the result of approximately EUR 8
million as result of the release of certain accruals related to personnel
liabilities and production costs.

January-December 2013

Pro forma II net sales decreased to EUR 1,120.3 (1,154.6) million. Net sales
for the business area Industrial Applications increased but remained at the
same level as in the previous year for business area Decor. Net sales for
Release Liners decreased short of the 2012 level. Compared to 2012 the
Brazilian real weakened significantly against the euro, which affects the
euro-translated sales and profit of the Brazilian operations. Net sales by
Graphics and Packaging decreased short of the 2012 level.

The business areas Decor and Industrial Applications showed higher adjusted
EBITDA margins than in 2012 whereas the equivalent margins for the business
areas Release Liners and Graphics and Packaging were weaker. Somewhat lower raw
material prices in 2013 had a positive impact on profitability but a less
favourable product mix diluted this effect. The holiday shutdown in the third
quarter went according to plan in terms of scope, but its negative impact on
financial result was slightly greater than in 2012.

Adjusted pro forma II EBITDA decreased to EUR 64.1 (76.6) million and the
adjusted pro forma II EBITDA margin to 5.7% (6.6%). The fourth quarter 2012,
includes a positive impact on the result of approximately EUR 8 million, the
release of certain accruals related to personnel liabilities and production
costs. The result for the first quarter 2013 includes a positive impact on the
result of approximately EUR 3 million as result of the release of certain
accruals related to personnel liabilities.

Webcast and conference call information

Finnish callers: +358 (0)9 2313 9201
Swedish callers: +46 (0)8 5052 0110
US callers: +1 334 323 6201
UK callers: +44 (0)20 7162 0077
Conference ID: 940958

To join the conference call, participants are requested to dial one of the
numbers above 5-10 minutes prior to the start of the event.
Direct link to the webcast :
http://qsb.webcast.fi/m/munksjo/munksjo_2014_0213_q4/#/stream

For further information, please contact

Jan Åström, President and CEO, tel. +46 10 250 1001
Kim Henriksson, CFO, tel. +46 10 250 1015

Attachments:Munksjö Oyj_Financial Statements Bulletin_2013.pdf

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