This year, Moelven’s second quarter profits from its operations amounted to NOK 48 million. That is 35 million less than in the corresponding period last year. But before impairments and cost corrections, underlying operations showed an improved performance.

Acting CEO Morten Kristiansen of Moelven Industrier ASA believes that the underlying results show that the Group is in good shape.

“Basically we can see a better second quarter this year than in the same period last year, and we see the results of efficiency measures in several of our businesses. Further efficiency measures were initiated during the quarter and have led to an impairment loss in Q2 of NOK 48 million in operating profit, related to the decision on the sale or liquidation of the operations of Moelven Nössemark Trä AB. Apart from this one-off effect, a review of the project portfolio in the electrical business led to cost corrections of NOK 22 million. For the Group overall, the accounts for 2015 have been charged with an accumulated amount of NOK 78 million in impairments and downgrading of the value of projects,” said Kristiansen.

Acceptable result

Prices in the international sawn timber market were generally lower than in the second quarter last year, but the Timber division still managed an acceptable operating profit before non-recurring items of NOK 26 million. After impairments, Timber posted a loss for the quarter.

In the Building Systems division, the improved performance was especially due to the modular buildings and interior solutions businesses in Sweden. The Wood division showed the greatest improvement in profits.

Higher activity levels

All divisions had a higher level of activity than in the corresponding period in 2014. The Group experienced satisfactory demand for products from the woodworking part of our business (Wood and Timber divisions). There was also a good level of activity with a healthy and well-balanced backlog in Building Systems, particularly for housing modules. Revenues in the quarter increased on the same period last year by 10% to MNOK 2628 (2390).

“However, the seasonal increase in activity and turnover was more normal in 2015 than in 2014, when the price increases announced for the construction business from 1 April 2014 led to a higher turnover at the end of the first quarter of last year,” added Morten Kristiansen.

Good prospects

Demand for industrial timber is expected to remain strong in many markets. Continued high activity in the timber market is also expected in the third quarter.

Continued weak growth is expected in housing construction in Norway. In Sweden, housing construction is increasing, albeit from a low level. A significant portion of Moelven’s deliveries go to the renovation, modernisation and extension (RME) market, which is more stable than the new construction market. Activity levels are expected to follow normal seasonal variations, with a high level in Q3 and a decrease towards the end of Q4.

Activity levels in major construction projects in Scandinavia are expected to be on a par with 2014, with normal seasonal variations during the year.

Improvement efforts continue

An action plan has been initiated, involving various measures and projects with close monitoring. The goal is to improve performance in ongoing operations, enhance competitiveness and growth in the long term and reduce the risk of losses in individual projects.

“This work will continue with high intensity along with efforts to increase the efficiency of capital use. The Board expects the combined measures to significantly increase the Group’s cash flow throughout the economic cycle and over time help to achieve the Group’s goal of return on capital employed of 13.0 percent,” said Kristiansen.