In the second quarter, Moelven earned NOK 56 million from operations. That is NOK 85 million less than in the same period last year. After financial costs, profit for the quarter was NOK 28 million.
Operating revenues for the group in the second quarter were NOK 2,170 million (1,937 million). In the first half, operating revenues were NOK 4,123 million (3,414 million) and operating profit NOK 29 million (164 million).
LITTLE PRICE DIFFERENCE BETWEEN RAW MATERIALS AND FINISHED GOODS
The reason for the drop in operating profit from last year was largely the relatively high raw material prices for the timber consuming units compared with the price level in the finished goods markets.
"Even though the prices of raw materials came down during the first half, the combination of these factors led to a weakening in operating profits for both the Timber and Wood divisions. Prices of industrial timber passed their peak in the third quarter of 2010; during the second quarter of 2011 they have been considerably lower than at the same time last year. The costs of raw materials have not gone down correspondingly," says Hans Rindal, CEO of Moelven Industrier ASA.
Rindal explains that this has meant difficult conditions for the Timber division in particular.
"The market for finished goods is still a little unstable. However, periods of low gross margins, because the raw material and finished goods markets are moving towards each other, are normal for this division. In the second quarter, we have after all moved back into a position where all three divisions have positive operating results and the group as a whole is earning money again, even though I would like to have seen more," says Rindal.
All three divisions have increased sales, compared with the year before. For the Wood building product division, much of the cause is acquisitions. For the Building System division, it is a clear sign of improved market conditions, particularly in the professional building market in Sweden and Norway.
"In total, this gives us a picture of increased activity but reduced earnings. That is a picture we are not entirely satisfied with. But we expect to see a better balance between the prices of finished goods and raw materials in the second half than we had in the first. We also believe there will be good activity during the summer in the domestic market for timber based building products, but with a normal seasonal reduction towards the end of the year. Orders in hand in the Building Systems division are at a good, normal level, which will ensure us good activity through the second half of the year," says Rindal.
Moelven expects that the group will see profits improve in the second half of the year, but that the annual profits will be at a lower level than last year.