DGAP-News: Metsäliitto Group Interim Report 1-6/2011

Metsäliitto-konserni

04.08.2011 11:03
—————————————————————————

Metsäliitto Group Interim Report 1-6/2011, Stock Exhange Release 4 August 2011
at noon

Metsäliitto Group–s operating result excluding non-recurring items was EUR 249
million

Result in the first half of 2011
– Sales amounted to EUR 2,806 million (1-6/2010: EUR 2,641 million).
– Operating result excluding non-recurring items was EUR 249 million (250).
Operating result including non-recurring items was EUR 185 million (246).
– Result before taxes and excluding non-recurring items was EUR 181 million
(185). Including non-recurring items, the result before taxes was EUR 113
million (165).

Result in the second quarter of 2011
– Sales amounted to EUR 1,403 million (4-6/2010: EUR 1,416 million).
– Operating result excluding non-recurring items was EUR 119 million (154).
Operating result including non-recurring items was EUR 51 million (141).
– Result before taxes and excluding non-recurring items was EUR 95 million
(130). Including non-recurring items, the result before taxes was EUR 24
million (102).

Events in the second quarter of 2011
– MetsäTissue announced an extensive investment programme in Poland.
– Metsä-Botnia redeemed 6.7 per cent of its own shares from UPM-Kymmene Oyj.
– M-real–s Simpele folding boxboard mill–s annual capacity was increased by
80,000 tonnes.
– M-real announced it will sell the Hallein pulp mill in Austria.
– M-real signed an agreement on the sale of its 35 per cent ownership share in
Myllykoski Paper Oy.
– M-real announced plans to eliminate losses at the Gohrsmühle and Reflex mills
in Germany and the Alizay paper mill in France.

–We continued to reinforce the business operations through planned investments
and business arrangements. Successful price increases and internal measures to
increase efficiency decreased the negative impacts of increasing costs on
Group–s result. Worsening of paper and pulp markets and general uncertainty in
the economy weaken the outlook for the third quarter.–

Kari Jordan, President&CEO, Metsäliitto Group

Metsäliitto Group

Income statement 2011 2010 2011 2010 2010
(Continuing operations) 1-6 1-6 Q2 Q2 1-12
————————————————————————–
Sales 2 806 2 641 1 403 1 416 5 377
————————————————————————–
Other operating income 49 47 20 16 142
————————————————————————–
Operating expenses -2 482 -2 304 -1 255 -1 231 -4 686
————————————————————————–
Depreciation and impairment losses -189 -138 -117 -60 -336
————————————————————————–
Operating result 185 246 51 141 497
————————————————————————–
Share of results in associates 3 -13 3 -7 -15
————————————————————————–
Exchange gains and losses 0 0 1 2 -7
————————————————————————–
Other net financial items -75 -68 -31 -34 -129
————————————————————————–
Result before income tax 113 165 24 102 345
————————————————————————–
Income taxes -60 -63 -33 -40 -131
————————————————————————–
Result from continuing operations 53 102 -9 62 214
————————————————————————–

Metsäliitto Group

Profitability 2011 2010 2011 2010 2010
(Continuing operations) 1-6 1-6 Q2 Q2 1-12
——————————————————————————
Operating result, EUR mill. 185 246 51 141 497
——————————————————————————
– — -, excluding non-recurring items 249 250 119 154 547
——————————————————————————
– — – % of sales 8.9 9.5 8.5 10.9 10.2
——————————————————————————
Return on capital employed, % 9.4 11.4 5.5 13.4 11.8
——————————————————————————
– — -, excluding non-recurring items 12.8 12.4 12.5 16.2 13.4
——————————————————————————
Return on equity, % 6.3 13.7 -2.2 16.3 13.9
——————————————————————————
– — -, excluding non-recurring items 14.4 16.4 14.5 23.8 18.2
——————————————————————————

——————————————————————————
Financial position 2011 2010 2011 2010 2010
30.6 30.6 31.3 31.3 31.12
——————————————————————————
Equity ratio, % 30.9 27.6 30.4 27.1 29.7
——————————————————————————
Net gearing ratio, % 121 135 112 151 116
——————————————————————————
Interest-bearing net liabilities, EUR mill. 2 051 2 109 1 933 2 241 1 939
——————————————————————————

Business Areas

Sales and Operating result Wood Wood Pulp Board Tissue
January-June 2011 Supply Product Industr and and
(EUR mill.) s y Paper Cooking
Industr Industry Papers
y
——————————————————————————–
Sales 770 502 678 1 345 478
——————————————————————————–
Other operating income 4 3 11 37 5
——————————————————————————–
Operating expenses -758 -476 -476 -1 257 -453
——————————————————————————–
Depreciation&-1 -16 -32 -111 -20
impairment losses
——————————————————————————–
Operating result 15 13 181 14 10
——————————————————————————–
Non-recurring items – – 4 61 –
——————————————————————————–
Operating result, excl. non-rec. 15 13 185 75 10
items
——————————————————————————–
– % of sales 1.9 2.6 27.2 5.6 2.1
——————————————————————————–

The interim report is unaudited

METSÄLIITTO GROUP

INTERIM REPORT 1 JANUARY-30 JUNE 2011

Sales and result
Metsäliitto Group–s sales for January-June were EUR 2,806 million (1-6/2010:
EUR 2,641 million). Operating result excluding non-recurring items was EUR 249
million (250), or 8.9 per cent of the sales (9.5).

Net non-recurring items were EUR -64 million, of which income accounted for EUR
11 million and expenses accounted for EUR 75 million. The non-recurring income
was primarily generated by the sale of land areas. EUR 49 million of the
non-recurring expenses is associated with the sale of M-real–s Hallein mill and
EUR 22 million is associated with the write-downs and provisions of the
Gohrsmühle and Reflex paper mills.

Sales in the second quarter of the year were EUR 1,403 million (4-6/2010:
1,416). Operating result excluding non-recurring items was EUR 119 million
(154), or 8.5 per cent of the sales (10.9). Operating result including
non-recurring items was EUR 51 million (141).

Operating result including non-recurring items in January-June was EUR 185
million (246). Financial income was EUR 5 million (3) and financial expenses
were EUR 80 million (71). During the first quarter, dividends of approximately
EUR 9 million paid on Metsä-Botnia–s shares under the obligation to redeem were
recognised in financial expenses.

The results from associates were EUR 3 million (-13). The figure includes a
non-recurring impairment loss of approximately EUR 4 million (16) associated
with the sale of M-real–s 35 per cent ownership share and subordinated loan in
Myllykoski Paper Oy.

The result for the period before taxes was EUR 113 million (165) and taxes,
including changes in deferred tax liability, were EUR 60 million (63). The net
result for the period was EUR 53 million (102).

Excluding non-recurring items, the Group–s return on capital employed was 12.8
per cent (12.4) and return on equity was 14.4 per cent (16.4). Including
non-recurring items, the return on capital employed was 9.4 per cent (11.4) and
return on equity was 6.3 per cent (13.7).

Balance sheet and financing
Metsäliitto Group–s total liquidity was EUR 852 million at the end of June (31
December 2010: 1,054). This consisted of EUR 301 million (440) of liquid assets
and investments and EUR 551 million (614) of binding credit facility agreements
not included in the balance sheet. In addition, the Group can satisfy
short-term financial needs with non-binding commercial paper schemes in Finland
and abroad, as well as with credit limits amounting to approximately EUR 0.5
billion.

The Group–s equity ratio at the end of June was 30.9 per cent and net gearing
was 121 per cent (31 December 2010: 29.7 per cent and 116 per cent,
respectively). Interest-bearing net liabilities stood at EUR 2,051 million (31
December 2010: 1,939).

The equity ratio of the parent company Metsäliitto Cooperative was 62.3 per
cent at the end of June and net gearing was 37 per cent (31 December 2010: 58.6
per cent and 45 per cent, respectively).

During January-June, Metsäliitto–s members– capitals increased by a total of
EUR 43.0 million. The actual members– capital grew by EUR 2.9 million, the
additional members– capital A by EUR 29.6 million and the additional members–
capital B by EUR 10.5 million. EUR 14.0 million of the additional members–
capital fell due on

1 July 2011 (1 July 2010: EUR 35.6 million).

M-real–s Annual General Meeting decided to reduce the share premium account in
operating capital, as stated on the parent company–s balance sheet on 31
December 2010, by transferring all funds in the account, or approximately EUR
664 million, to the company–s non-restricted equity reserve. The reduction of
the share premium account will take place without consideration and it does not
impact the company–s number of shares, the rights conferred by the shares, or
the proportionate ownership of the shareholders. The reduction will become
effective after the completion of the creditor protection procedure referred to
in the Limited Liability Companies Act, estimated to be completed in August
2011. With the reduction, the prerequisites for future distribution of profits
will be improved.

Personnel
The Group employed an average of 13,229 people during the first half of the
year (1-6/2010: 13,098). At the end of June, the number of personnel in the
Group was 13,581 (31 December 2010: 12,820). The parent company Metsäliitto
Cooperative employed 2,965 people at the end of June (31 December 2010: 2,495).

Members
At the end of the review period, the Metsäliitto Cooperative had 125,586
members (31 December 2010: 126,382). Since the beginning of the year, 947 new
members have joined the Cooperative and 1,743 members have resigned.

Investments
Metsäliitto Group–s capital expenditure totalled EUR 102 million (42).

Metsä-Botnia–s investments underway are progressing as scheduled. Kemi–s new
causticisation and water stations will be introduced in the last quarter of the
year. The construction of a bark gasification plant that will improve the use
of bioenergy has begun in Joutseno, and the new plant will be introduced by the
end of 2012.

M-real–s expansion investment at the Simpele folding boxboard mill was
completed. The investment increased the mill–s annual capacity by 80,000
tonnes. In addition, M-real announced its plans to invest approximately EUR 30
million in expanding the annual folding boxboard capacity at theÄänekoski and
Kyröskoski mills by a total of approximately 70,000 tonnes. The Kyröskoski
investment will be carried out at the end of 2011, and theÄänekoski investment
in the spring of 2012.

MetsäTissue launched an extensive investment programme in Poland. The
three-year programme includes, among other things, the construction of two new
tissue paper machines and an upgrading line at the Krapkowice mill, the rebuild
of one paper machine, and infrastructure development. The total value of the
investment programme is nearly EUR 60 million, and it will enable MetsäTissue
to increase its annual production capacity of tissue paper in Poland by 35,000
tonnes.

New ownership shares in Metsä-Botnia
Metsä-Botnia redeemed its own shares from UPM on the basis of a shareholder
agreement signed by Metsä-Botnia–s shareholders in 2009. The number of the
shares to be redeemed equalled 6.7 per cent of the company–s entire share
capital, and the redemption price was approximately EUR 140 million. The
arrangement became effective on 30 June 2011.

After the redemption, Metsäliitto Cooperative owns 56.8 per cent of
Metsä-Botnia, M-real owns 32.2 per cent and UPM 11.0 per cent. The arrangement
does not have a significant impact on Metsäliitto Group–s key figures.

In the same context, UPM also granted Metsäliitto Group an option to buy the
remaining Metsä-Botnia shares it owns. The option will be valid for two years,
and the agreed share price for executing the option is approximately EUR 150
million.

Structural changes
In June, M-real signed an agreement on the sale of the entire share capital of
M-real Hallein GmbH to Scweighofer Group. The agreement covers the Hallein pulp
mill, the biopower plant, the paper mill closed in 2009 and the surrounding
estate. The completion of the arrangement is subject to the approval by
Austria–s competition authorities and estimated to be completed in the third
quarter of 2011.

In May, M-real announced it will divest the entire Gohrsmühle mill in Germany
or alternatively parts of the mill based on a Paper Park concept. Concurrently,
M-real launched a process to discontinue the production of uncoated fine paper
and unprofitable speciality papers at the Gohrsmühle mill in case the sales
alternatives do not materialise. If the planned closings are implemented,
M-real will focus on cast coated label and packaging products (Chromolux) at
the Gohrsmühle mill. M-real is also planning to discontinue the remaining
business operations, or refining carbonless paper converting operations, at the
Reflex mill.

In May, M-real initiated a public process to find credible candidates to
acquire the Alizay paper mill by the end of September 2011. Should M-real fail
to divest the Alizay paper mill within the given timeframe, the plan is to
close down the mill.

On the whole, according to preliminary estimates made in May, the measures
being planned for Alizay, Gohrsmühle and Reflex will have a non-recurring
negative result impact of approximately EUR 170 million. The estimated net cash
expenses are EUR 50 million. The estimates on financial impacts are preliminary
and will be specified as the final decisions on the planned measures have been
made. In the second quarter EUR 22 million was booked as non-recurring
write-downs and provisions of the Gohrsmühle and Reflex paper mills.

Business areas

Wood Supply
Wood Supply sales for January-June were EUR 770 million (1-6/2010: 670) and
operating result was EUR 15 million (15). The operating result does not include
non-recurring items. Wood Supply Finland accounted for EUR 521 million (463) of
the sales and EUR 9 million (8) of the operating result.

Sales in the second quarter were EUR 394 million (4-6/2010: 337) and operating
result was EUR 7 million (8).

Wood sales, which were sluggish in the first months of the year, picked up in
May. Metsäliitto–s purchase volume from privately owned forests was near the
target level in the second quarter. Harvesting conditions were good, and stands
marked for felling were harvested as planned. Wood deliveries also worked as
planned. Metsäliitto Wood Supply–s delivery volume to production units in the
first half of the year was 15.5 million cubic metres (14.7).

Plenty of wood was available in Russia. In the Baltic countries, the wood
volume from state-owned forests was steady in the first half of the year, and
in addition, wood sales from private forests started up. Wood sales in Sweden
also picked up in the second quarter.

The development of Metsäliitto–s member services continued. June marked the
release of a new service, an online store for members eligible for wood sales
bonuses.

The result of the Cooperative–s Representative Council election was published
in May, and the four-year term of the Representative Council and the district
committees began on 1 July.

Wood Products Industry
Metsäliitto Wood Products Industry–s sales in January-June were EUR 502 million
(1-6/2010: 448) and operating result excluding non-recurring items was EUR 13
million (11). Operating result including non-recurring items was EUR 13 million
(10).

Sales in the second quarter were EUR 264 million (4-6/2010: 256) and operating
result excluding non-recurring items was EUR 8 million (11).

Compared to the same period last year, there was substantial business growth in
all customer segments during the first six months of the year. Internal
measures ensured that profitability remained at a reasonable level.

The market balance for sawn timber continued to be weak in the second quarter.
In further processed products, the economic uncertainty and consumers cutting
back on their spending also taxed the demand.

Investments in further processed products and the focus on different industrial
segments improved the profitability of engineered wood products compared to the
previous year. The profitability of constructionproducts also improved,
although sales in the second quarter were weaker than expected.

Pulp
During the first half of the year, Metsä-Botnia–s sales increased by 3 per cent
compared with the corresponding period last year, amounting to EUR 678 million
(1-6/2010: 656). Operating result excluding non-recurring items was EUR 185
million (167). Including non-recurring items, the operating result was EUR 181
million (169).

The price development of pulp, which had been positive for a long period, kept
Metsä-Botnia–s profitability at a good level. Foreign currency-denominated
market prices of softwood pulp were, on average, 9 per cent higher in the first
half of the year compared with the corresponding period last year. The average
prices of hardwood pulp increased by 5 per cent.

Metsä-Botnia–s sales in the second quarter were EUR 339 million (4-6/2010:
368). Operating result excluding non-recurring items totalled EUR 89 million
(110).

Demand and supply of softwood pulp were for the most part in balance in the
second quarter, but at the end of the review period, the suppliers– pulp
inventories grew as supply exceeded demand. Customers– hardwood pulp inventory
levels were high in the Asian markets in particular.

The utilisation rates of the Metsä-Botnia mills were for the most part good in
the second quarter, which resulted in exceeded production targets at the
beginning of the period. However, the utilisation rates declined due to process
issues at the end of the period. The annual shutdowns planned for the spring
were postponed to the autumn due to the labour market disturbance that lasted
almost two months.

Board and Paper
Board and Paper–s sales in January-June were EUR 1,345 million (1-6/2010:
1,278) and operating result excluding non-recurring items was EUR 75 million
(82).

The operating result was weakened by the increase in the prices of wood,
chemicals and energy. In addition, the strengthening of the Swedish krona and
the weakening of the US dollar against the euro had a negative impact. The
operating result was improved by the average sales prices which were
significantly higher than last year.

Sales in the second quarter were EUR 660 million (4-6/2010: 676) and operating
result excluding non-recurring items was EUR 32 million (43).

Net non-recurring items were EUR -61 million in January-June, of which income
accounted for EUR 10 million and expenses accounted for EUR 71 million. The
non-recurring gain was primarily generated by the sale of land areas. EUR 49
million of the non-recurring expenses is associated with the sale of M-real–s
Hallein mill and EUR 22 million is associated with the write-downs and
provisions of the Gohrsmühle and Reflex paper mills.

Operating result including non-recurring items was EUR 14 million (84). Net
interest and other financial expenses were EUR 34 million (33) and the exchange
gains and losses recognised in financial items were EUR 2 million (-6).

The results from associates were EUR -4 million (-20). The figure includes a
non-recurring impairment loss of approximately
EUR 4 million (16) associated with the sale of M-real–s 35 per cent ownership
share and capital loan in Myllykoski Paper Oy.

Excluding non-recurring items, the result before taxes for the period was EUR
44 million (39), earnings per share were EUR 0.11 (0.08) and the return on
capital employed was 7.2 per cent (7.3). Including non-recurring items, the
result before taxes was EUR -22 million (25), earnings per share were EUR -0.09
(0.03) and the return on capital employed 1.4 per cent (6.1).

At the end of June, M-real–s equity ratio was 33.9 per cent and net gearing was
84 per cent (31 December 2010: 32.1 per cent and 83 per cent, respectively).
Some of M-real–s loan agreements set a 120 per cent limit on the company–s net
gearing and a 30 per cent limit on the equity ratio. At the end of June, net
gearing calculated in the manner defined in the borrowing agreements was
approximately 64 per cent and the equity ratio about 40 per cent.

M-real Corporation–s own interim report is published on 4 August 2011 at 12:00.

Tissue and Cooking Papers
The January-June sales of MetsäTissue, producer of tissue and cooking papers,
totalled EUR 478 million (456). The increase in sales was primarily due to the
structure of sales as well as exchange rate fluctuations. The sales of own
brands increased by 10 per cent compared to the corresponding period in the
previous year.

Operating result excluding non-recurring items was EUR 10 million (31).
Including non-recurring items, the operating result was EUR 10 million (24).
The prices of pulp, recycled fibre and other raw materials and energy continued
to increase, and therefore the operating result was weaker than that in the
corresponding period last year. The additional expenses related to the launch
of production at the Düren mill in Germany also burdened the operating result.

Sales in the second quarter were EUR 237 million (4-6/2010: 231) and operating
result excluding non-recurring items was EUR 3 million (12).

MetsäTissue–s investment programme at the Düren mill is progressing on
schedule. The rebuild of paper machine 5 and the production facilities were
completed and the upgrading lines were started. The mill focuses solely on the
production of baking and cooking papers marketed under the SAGA brand.

MetsäTissue–s three-year investment programme at the Krapkowice mill in Poland
has progressed to the construction stage. The programme published in April
includes the construction of two new paper machines and an upgrading line, a
rebuild of one paper machine and infrastructure development.

In June, MetsäTissue signed an exclusive licence agreement with
Georgia-Pacific. The licence agreement authorises MetsäTissue to manufacture,
sell and market Lotus soft tissue products aimed at consumers in Russia. The
transaction is planned for completion at the end of the third quarter. The
sales of Lotus consumer products in Russia were approximately EUR 20 million
last year.

In Finland, Lambi launched a toilet paper grade with a new embossing and a
thicker and softer paper quality. Katrin introduced a new plastic-free Green
Spa sauna seat cover which is the world–s first completely biodegradable sauna
seat. It was also awarded the Nordic Swan label endorsement. Furthermore,
Mola–s and Tento–s product grades were renewed.

Events after the period
M-real–s negotiations to divest its Premium Papers business to a sister company
of German Papierwerke Lenk AG were suspended until further notice at the
beginning of July. The parties are evaluating possibilities to continue the
negotiations at a later date, and M-real is also considering other options to
divest its Premium Papers business.

The feasibility study of a biodiesel plant planned by Metsäliitto and Vapo is
proceeding. Four alternative locations for the plant were reviewed initially,
and an environmental impact assessment was carried out on two of the locations.
As the study has progressed further, Ajos in Kemi, Finland, has been specified
as a potential location. The area was not included in the already assessed
alternatives, which is why an environmental impact assessment will now commence
separately for it.

The advantages of the plant concept under review are that it can be duplicated
and that it is independent of the regional industrial production. The review
found Ajos in Kemi to be a suitable location based on its logistical advantages
and from the perspective of the raw material and end products.

The biodiesel project of Metsäliitto and Vapo laid out in the feasibility study
is one of three projects submitted by the Finnish Ministry of Employment and
the Economy to the European Commission to apply for NER300 funding from the EU.
The Forest BtL project, owned by Vapo and Metsäliitto, is responsible for the
project preparations.

Risks and uncertainties
The estimates and statements in this Interim Report are based on current plans
and estimates. They involve risks and uncertainties that may cause the results
to differ from those expressed in such statements. In the short term, the price
of and demand for end products, raw material costs, energy prices and the
exchange rate development of the euro have an effect on the results of
Metsäliitto Group.

In March, the state enterprise Metsähallitus filed a claim for damages at the
District Court of Helsinki, demanding that Metsäliitto, UPM and Stora Enso
jointly pay a maximum of approximately EUR 340 million in compensation due to
prohibited cooperation with regard to prices in the raw wood market. The claim
is related to the 3 December 2009 decision by the Market Court which states
that the aforementioned companies have violated the act on competition
restrictions. Metsäliitto considers the claim for damages unfounded, and the
company has not recognised any provisions regarding it.

The risks related to the Group–s business have been explained more extensively
in Metsäliitto Group–s Annual report for 2010.

Near-term outlook
The wood consumption at the Group–s production units is estimated to remain at
the normal level in the third quarter. Metsäliitto actively buys all timber
grades. In Finland, the focus in July and August is on stands marked for summer
felling.

In Wood Products Industry increasing raw material prices and the challenge of
implementing corresponding price increases to end products will weaken the
result outlook for the third quarter. Cost control remains a key theme, and
sawmill operations may have to be adjusted to the situation.

In the pulp market, seasonal weakening is to be expected and the prices are
expected to decline slightly. Furthermore, carrying out maintenance shutdowns
in the autumn will decrease the utilisation rates of the mills in the second
half of the year.

Demand for folding boxboard and liner seems to continue to be good. M-real–s
order books for folding boxboard have normalised from the exceptionally high
level of the end of last year and the beginning of this year. In April, M-real
successfully increased the prices of liner, and in May it announced a 7-9 per
cent increase in the price of folding boxboard in new agreements. In the short
term, profitability of M-real–s paper business is burdened by the plans,
published in May, to eliminate losses of Alizay mill and Speciality Papers
business area. In addition, the weakened market situation of all paper grades
burdens the result.

Demand for uncoated fine paper and speciality paper is believed to continue at
the current, rather modest level. In June, M-real announced a 5-8 per cent
price increase for office paper, effective in September. The price level of
speciality paper is likely to remain the same.

Demand for tissue and cooking papers is estimated to continue to be steady, and
the sales of own brands are expected to increase further. Measures to improve
the result will continue, and the production costs and other additional
expenses arising will be compensated for by increasing sales prices.

Indications of economic slowdown in the United States and Europe have weakened
the outlook in paper and pulp market.

Metsäliitto Group–s operating result excluding non-recurring items in the third
quarter in 2011 is estimated to be clearly weaker than in the second quarter.
This is due to the weakening market situation of paper and pulp, Metsä-Botnia–s
investment and maintenance shutdowns as well as the planned measures at
M-real–s Alizay mill and Speciality Papers business area.

Espoo, 4 August 2011

Metsäliitto Group

Board of Directors

Further information:
Vesa-Pekka Takala, Group CFO, Metsäliitto Group, tel. +358 10 465 4260
Anne-Mari Achrén, Group CCO, Metsäliitto Group, tel. +358 10 465 4541

Unaudited

METSÄLIITO GROUP

Condensed consolidated statement 2011 2010 Change 2011 2010 2010
of comprehensive income, EUR 1-6 1-6 Q2 Q2 1-12
mill.
——————————————————————————–
Continuing operations
——————————————————————————–
Sales 2 806 2 641 166 1 403 1 416 5 377
——————————————————————————–
Other operating income 49 47 2 20 16 142
——————————————————————————–
Operating expenses -2 482 -2 304 -178 -1 255 -1 231 -4 686
——————————————————————————–
Depreciation and impairment -189 -138 -51 -117 -60 -336
losses
——————————————————————————–
Operating result 185 246 -61 51 141 497
——————————————————————————–
Share of results in associated 3 -13 16 3 -7 -15
companies
——————————————————————————–
Exchange gains and losses 0 0 0 1 2 -7
——————————————————————————–
Other net financial items -75 -68 -7 -31 -34 -129
——————————————————————————–
Result before income tax 113 165 -52 24 102 345
——————————————————————————–
Income taxes -60 -63 3 -33 -40 -131
——————————————————————————–
Result for the period 53 102 -49 -9 62 214
from continuing operations
——————————————————————————–

Discontinued operations
——————————————————————————–
Result from discontinued 0 0 0 0 0 0
operations
——————————————————————————–
Result for the period 53 102 -49 -9 62 214
——————————————————————————–

Other comprehensive income
——————————————————————————–
Cash flow hedges -13 -1 -12 -11 -2 19
——————————————————————————–
Available for sale financial 8 24 -16 8 6 30
assets
——————————————————————————–
Currency translation differences -8 18 -26 -11 6 25
——————————————————————————–
Other items 0 0 0 -2 -3 0
——————————————————————————–
Income tax relating to 0 -1 2 1 1 -7
components
of other comprehensive income
——————————————————————————–
Other comprehensive income, net -13 40 -53 -15 8 67
of tax
——————————————————————————–

——————————————————————————–
Total comprehensive income for 41 142 -102 -25 70 281
the period
——————————————————————————–

Result attributable to:
——————————————————————————–
Members of parent company 33 79 -46 19 57 170
——————————————————————————–
Non-controlling interests 21 23 -3 -29 5 44
——————————————————————————–
53 102 -49 -9 62 214
——————————————————————————–
Total comprehensive income
attributable to:
——————————————————————————–
Members of parent company 25 103 -78 9 61 204
——————————————————————————–
Non-controlling interests 16 39 -23 -34 9 77
——————————————————————————–
41 142 -102 -25 70 281
——————————————————————————–

Unaudited

Condensed consolidated balance sheet 2011 2010 2010
30.6. 30.6. 31.12.
—————————————————————-
ASSETS
Non-current
Goodwill 531 502 503
Other intangible assets 246 250 242
Tangible assets 2 157 2 344 2 281
Biological assets 9 8 8
Investments in associated companies 77 84 80
Available for sale investments 346 370 338
Non-current financial assets 15 13 18
Deferred tax receivables 59 64 63
———————
3 440 3 635 3 534
———————
Current
Inventories 811 708 798
Accounts receivables and other receivables 880 923 892
Cash and cash equivalents 301 401 440
———————
1 993 2 032 2 131
———————
Assets classified as held for sale 71 21 8

—————————————————————-
Total assets 5 504 5 688 5 672
——————————————————————————————————————————–
MEMBERS– FUNDS AND LIABILITIES
Members– funds
Members– funds 1 209 1 056 1 154
Non-controlling interests 488 507 524
———————
1 697 1 563 1 678
———————
Non-current liabilities
Deferred tax liabilities 405 395 409
Post-employment benefit obligations 109 115 115
Provisions 37 82 48
Borrowings 1 875 1 563 1 927
Other liabilities 21 36 36
———————
2 447 2 191 2 534
———————
Current liabilities
Provisions 24 27 19
Current borrowings 488 964 471
Accounts payable and other liabilities 809 943 969
———————
1 321 1 934 1 460
———————
Liabilities classified as held for sale 39 – –
Total liabilities 3 807 4 125 3 994
Total members– funds and liabilities 5 504 5 688 5 672
—————————————————————-

Unaudited

Equity
attributable to members of parent company

Change in Member Share Trans- Fair Retain Total Non- Total
members– funds s– premiu lation value ed control
EUR million capita m differ and earnin ling
l accoun – other gs interes
t ences reserv ts
es
——————————————————————————–
Members– funds 484 30 9 221 184 927 471 1 399
1.1.2010
——————————————————————————–
Result for the 79 79 23 102
period
——————————————————————————–
Other
comprehensive
income
Cash flow hedges 4 4 -4 -1
Available for 10 10 14 24
sale financial
assets
Currency 12 12 6 18
translation
differences
Other items 0 0 0 0
Income tax 2 -4 -1 0 -1
relating tocomponents
of other
comprehensive
income
——————————————————————————–
Other 14 10 0 26 16 40
comprehensive
income total
——————————————————————————–
Total 14 10 79 103 39 142
comprehensive
income

Transactions with
owners
Dividends paid -32 -32 -4 -35
Change in 57 57 57
members– capital
Change in share
premium account
Transfer from 9 -9 0 0
unrestricted to
restricted equity
Business 0 0
arrangements
Members– funds 541 30 23 240 222 1 056 507 1 563
30.6.2010
——————————————————————————–

——————————————————————————–

Members– funds 539 31 25 247 312 1 154 524 1 678
1.1.2011
——————————————————————————–
Result for the 33 33 21 53
period
Other
comprehensive
income
Cash flow hedges -8 -8 -5 -13
Available for 3 3 4 8
sale financial
assets
Currency -4 -4 -4 -8
translation
differences
Other items 0 0 0 0
Income tax -1 1 0 0 0
relating to
components
of othercomprehensive
income
——————————————————————————–
Other -5 -3 0 -8 -5 -13
comprehensive
income total
——————————————————————————–
Total -5 -3 33 25 16 41
comprehensive
income

Transactions with
owners
Dividends paid -32 -32 -20 -52
Change in 43 43 43
members– capital
Change in share
premium account
Transfer from 1 -1 0 0
unrestricted to
restricted equity
Business 0 0 0
arrangements
Change in shares
of
non-controlling 19 19 -31 -13
interests
——————————————————————————–
Members– funds 582 31 21 245 330 1 209 488 1 697
30.6.2011
——————————————————————————–

Unaudited

Condensed consolidated cash flow statement 2011 2010 2010
1-6 1-6 1-12
——————————————————————
Result for the period 53 102 214
Total adjustments 296 231 495
Change in working capital -75 -154 -136
——————————————————————
Cash flow arising from operations 274 179 573
——————————————————————
Net financial items -77 -81 -163
Income taxes paid -53 -16 -100
——————————————————————
Net cash flow arising from operating activities 144 83 310
——————————————————————

Acquisitions -103 0 0
Investments in tangible and -102 -42 -138
intangible assets
Divestments of assets and other 19 22 89
——————————————————————
Net cash flow arising from investing activities -185 -20 -49
——————————————————————

Change in members– funds 43 57 52
Change in shares of non-controlling interests -41 -2 -17
Change in long-term loans -33 -238 -376
and other financial items
Dividends paid -66 -40 -40
——————————————————————
Net cash flow arising from financing activities -98 -222 -360
——————————————————————

——————————————————————
Changes in cash and cash equivalents -139 -160 -120
——————————————————————

——————————————————————
Cash and cash equivalents at beginning of period 440 558 558
Translation difference -1 3 3
Changes in cash and cash equivalents -139 -160 -120
Cash and cash equivalents 1 0 0
in assets classified as held for sale
Cash and cash equivalents at end of period 301 401 440
——————————————————————

BUSINESS AREAS

Wood Supply 1-6/11 1-6/10 Q2/11 Q2/10 QI-IV/10
————————————————————————
Sales 770 670 394 337 1 353
————————————————————————
EBITDA 16 17 8 9 25
– — -, excl. non-recurring items 16 17 8 9 25
Depreciation and impairment -1 -2 -1 -1 -4
Operating result 15 15 7 8 21
– — -, excl. non-recurring items 15 15 7 8 21
– — -, % of sales 1.9 2.2 1.8 2.4 1.6
Capital expenditure 1 0 1 0 3
————————————————————————
Personnel at end of period 1 080 1 047 1 080 1 047 1 078
————————————————————————

Wood Products Industry 1-6/11 1-6/10 Q2/11 Q2/10 QI-IV/10
————————————————————————
Sales 502 448 264 256 902
————————————————————————
EBITDA 30 28 16 20 67
– — -, excl. non-recurring items 30 29 16 20 63
Depreciation and impairment -17 -18 -8 -9 -45
Operating result 13 10 8 11 23
– — -, excl. non-recurring items 13 11 8 11 28
– — -, % of sales 2.6 2.5 3.1 4.4 3.1
Capital expenditure 5 7 3 3 16
————————————————————————
Personnel at end of period 3 100 2 773 3 100 2 773 2 703
————————————————————————

Pulp Industry 1-6/11 1-6/10 Q2/11 Q2/10 QI-IV/10
————————————————————————
Sales 678 656 339 368 1 365
————————————————————————
EBITDA 213 197 100 119 444
– — -, excl. non-recurring items 217 206 104 128 453
Depreciation and impairment -32 -28 -15 -7 -63
Operating result181 169 85 112 381
– — -, excl. non-recurring items 185 167 89 110 379
– — -, % of sales 27.2 25.4 26.3 29.8 27.8
Capital expenditure 16 4 6 4 14
————————————————————————
Personnel at end of period 960 956 960 956 881
————————————————————————

Board and Paper Industry 1-6/11 1-6/10 Q2/11 Q2/10 QI-IV/10
————————————————————————
Sales 1 345 1 278 660 676 2 605
————————————————————————
EBITDA 125 143 47 61 312
– — -, excl. non-recurring items 136 149 62 77 305
Depreciation and impairment -111 -59 -80 -26 -166
Operating result 14 84 -32 35 146
– — -, excl. non-recurring items 75 82 32 43 173
– — -, % of sales 5.6 6.4 4.8 6.4 6.6
Capital expenditure 43 17 31 10 66
————————————————————————
Personnel at end of period 4 699 4 946 4 699 4 946 4 538
————————————————————————

Tissue and Cooking Papers 1-6/11 1–6/10 Q2/11 Q2/10 QI-IV/10
————————————————————————-
Sales 478 456 237 231 938
————————————————————————-
EBITDA 30 49 13 19 94
– — -, excl. non-recurring items 30 52 13 23 99
Depreciation and impairment -20 -24 -10 -14 -44
Operating result 10 24 3 5 50
– — -, excl. non-recurring items 10 31 3 12 59
– — -, % of sales 2.1 6.9 1.4 5.3 6.3
————————————————————————-
Capital expenditure 31 11 22 7 49
————————————————————————-
Personnel at end of period 3 286 3 254 3 286 3 254 3 198
————————————————————————-

Other operations 1-6/11 1-6/10 Q2/11 Q2/10 QI-IV/10
————————————————————————
Sales 2 2 1 2 3
————————————————————————
EBITDA -3 -4 -2 -2 -7
– — -, excl. non-recurring items -3 -4 -2 -2 -6
Depreciation and impairment -1 -1 0 0 -2
Operating result -4 -5 -2 -2 -9
– — -, excl. non-recurring items -4 -5 -2 -2 -7
————————————————————————