Poor results for Moelven in 2011
The total operating profit for Moelven in 2011 ended at NOK 13 million. Difficult market conditions internationally and losses on some individual projects were the main causes of the poor operating profit.
The group's total operating income for 2011 was NOK 8,060 million (7,184). Operating income and operating profit for the group in the fourth quarter were NOK 2,011 million (1,885) and NOK minus 2 million (minus 35) respectively.
Hans Rindal, President and CEO of Moelven Industries is not satisfied with the results for 2011 and gives the following explanation to the figures:
- If we first consider operations, there are two circumstances in particular that have affected results. One is losses of about NOK 40 million in the third quarter, linked to projects in our electrical systems business. The other is linked to unusually low gross margins for the export-based activities of the sawmills in Sweden, says Rindal.
He says that this is partly explained by the debt crisis in Europe holding demand in these markets at a lower level than normal:
- This has led to falling prices for industrial timber, while at the same time the Euro has weakened, which has in turn weakened the competitiveness of manufacturers outside the Euro zone. Strong competition on the raw materials market in Sweden has slowed the reduction in raw material prices from their all-time high a year ago. The net effect of this, unfortunately, has been losses in this part of our industry, says Rindal. Hedging losses A third explanation of the poor results after financial costs has been that financial costs increased considerably compared to the previous year. During the fourth quarter, the Moelven group changed its accounting principles from the Norwegian to the international standards, which has meant that financial items vary more than they did previously.
The Building Systems division has seen good activity in a difficult market and activity in the building products division Wood has been normal for the season in Norway and Sweden, but falling in Denmark.
- Parts of our business are doing well in all divisions, but unfortunately not well enough to compensate for our losses through the year, says Rindal. We can confirm however that it is good to have more than one leg to stand on, he says.
In spite of the unsatisfactory results last year and the mixed prospects, the group is planning for normal activity in 2012.
The group's total operating income for 2011 was NOK 8,060 million (7,184). Operating income and operating profit for the group in the fourth quarter were NOK 2,011 million (1,885) and NOK minus 2 million (minus 35) respectively.
Hans Rindal, President and CEO of Moelven Industries is not satisfied with the results for 2011 and gives the following explanation to the figures:
- If we first consider operations, there are two circumstances in particular that have affected results. One is losses of about NOK 40 million in the third quarter, linked to projects in our electrical systems business. The other is linked to unusually low gross margins for the export-based activities of the sawmills in Sweden, says Rindal.
He says that this is partly explained by the debt crisis in Europe holding demand in these markets at a lower level than normal:
- This has led to falling prices for industrial timber, while at the same time the Euro has weakened, which has in turn weakened the competitiveness of manufacturers outside the Euro zone. Strong competition on the raw materials market in Sweden has slowed the reduction in raw material prices from their all-time high a year ago. The net effect of this, unfortunately, has been losses in this part of our industry, says Rindal. Hedging losses A third explanation of the poor results after financial costs has been that financial costs increased considerably compared to the previous year. During the fourth quarter, the Moelven group changed its accounting principles from the Norwegian to the international standards, which has meant that financial items vary more than they did previously.
The Building Systems division has seen good activity in a difficult market and activity in the building products division Wood has been normal for the season in Norway and Sweden, but falling in Denmark.
- Parts of our business are doing well in all divisions, but unfortunately not well enough to compensate for our losses through the year, says Rindal. We can confirm however that it is good to have more than one leg to stand on, he says.
In spite of the unsatisfactory results last year and the mixed prospects, the group is planning for normal activity in 2012.