A combination of a normal low season and discrepancy between the cost of raw materials and sales prices for key products meant that Moelven lost NOK 27 million in Q1.
This meant that the result is NOK 49 million less than for the same period in 2010. Operating revenues for Q1 increased compared with last year, ending at NOK 1,953 million (1,477).
Moelven Industrier ASA CEO Hans Rindal explained that demand for the group’s products and services has traditionally dipped during the low season.
“The start of the year was more difficult than we expected, and the result is unsatisfactory. But there are signs of improvement thanks to the season and the economy recovering. We therefore expect to return with a positive result at the end of Q2,” stated Rindal.
HIGH PRODUCTION DESPITE LOW SEASON
Production and deliveries have remained higher than for the same period last year, despite the low season. The CEO explains this aspect as follows:
“The increase in operating revenues is mainly due to increased activities on the Swedish market for building modules, and the acquisition of Sør-Tre Bruk AS, Granvin Bruk AS and Eco Timber AS, completed at the end of Q2 last year. Even though the level of activity has increased, the result for the sawmills is affected by low prices for industrial wood internationally. The Wood building products division normally produces for stock during Q1 in anticipation of increased activity during the summer, which has a negative effect on the result. Activities increased in the Building Systems Division, which supplies the Scandinavian project market. But start-up costs come early in projects, which are sound and necessary preparations for increased deliveries later in the year, and the result trend through the quarter shows that we are on the right track,” concluded Rindal.
The trend for Q1 2011 was in line with the board’s expectations, but the result was unsatisfactory for the group overall. Reduced raw material costs and rising prices will increase margins in the Timber and Wood divisions in Q2. An improvement in results is expected for the Building Systems Division as a result of increased orders.
The board expects a positive accumulated result for the first six months, and an overall result for the year a little less than for last year.