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May 5, 2016

Metsä Wood sawing operations profits weakened in Q1 due to lower delivery prices

Metsä Wood sawing operations profits weakened in Q1 due to lower delivery prices

Metsä Wood’s sales decreased at EUR 208.7 million during the Q1/2016 (January-March), compared to the EUR 209.4 million during the same period in 2015. The operating result excluding non-recurring items was EUR 5.8 million, compared to the EUR 7.9 million during Q1/2015.

Metsä Wood’s delivery volumes of spruce and pine sawn timber increased markedly from the corresponding period in the previous year. The deliveries of both timber grades to North Africa increased, and the deliveries of spruce sawn timber to Asia, and China in particular, were at a materially higher level than in the comparison period.

Metsä Wood’s profitability of sawing operations weakened as a result of the considerably lower delivery prices of sawn timber. Average prices were reduced due to the low price level in North Africa, in particular. Also, sales in construction and industrial products increased slightly in the first quarter of 2016

Metsä Wood’s delivery volumes of Kerto LVL products grew markedly due to deliveries to Australia and North America, in particular. The delivery volumes of birch and softwood plywood products decreased from the comparison period.

The increase in imports from outside Europe has weakened the market balance of panel products in Europe, says Metsä Wood. The production of birch plywood was adjusted at both company's mills for one week in March.

The average delivery prices in local currencies of Kerto products and plywood were at the level of the comparison period in the previous year. The statutory labour negotiations launched in November 2015 to implement the new target organisation model at all Kerto LVL and plywood mills were completed.

For the near-term outlook, Metsä expects an improvement in the market balance and sales prices of sawn timber. According to the company, the market situation in Northern Africa will create uncertainty in the demand for pine sawn timber. The demand for Kerto® LVL products is expected to continue to be brisk, and competition in plywood products is expected to remain tense.

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