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ROTTNEROS INTERIM REPORT JANUARY - MARCH 2017

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  • Production volume in the first quarter rose by 8% compared with first quarter 2016. Rottneros Mill and the Group in its current structure both set a new quarterly production record.
  • Delivery volume in the first quarter rose by 9% compared with first quarter 2016 and by 9% compared with fourth quarter 2016.
  • Investments in the Agenda 500 development programme are progressing according to plan, in terms of both cost and increased capacity.
  • Rottneros Packaging received its first order, thereby starting commercial production of fibre trays.
  • Net turnover for the first quarter rose by 9% to SEK 472 million (432).
  • Profit after net financial items for the first quarter was negatively impacted by some unplanned expenses and amounted to SEK 56 million (69).
  • Cash flow from operating activities for the first quarter rose to SEK 38 million (29).
  • The list price for NBSK pulp over the first quarter was 3% higher in USD and 9% higher in SEK, compared with first quarter 2016. Compared with fourth quarter 2016, the price level in SEK was at the same level.

Comments by the President : Record quarter for both production and deliveries

The first quarter of 2017 was characterised by strong production and high deliveries. The Group as a whole, as well as Rottneros Mill, set production records for a single quarter. The Group increased production by 8 per cent compared with the first quarter of 2016, despite some disruptions in production at Vallvik Mill. We are clearly moving in the right direction, though more remains to be done to increase availability and production in the future.

Operating profit was held back by some unplanned costs of about SEK 10 million and compared with the first quarter last year, operating profit decreased by SEK 14 million to SEK 57 million. We also encountered some headwinds because our average price denominated in Swedish kronor was only marginally higher than in the first quarter last year because of a less favourable product and customer mix.

While we were pleased at the success of the first quarter, the beginning of the second quarter was affected by an unplanned shutdown at Vallvik Mill. Even though it is frustrating with damages that are caused by factors outside our direct control, the handling of the issue demonstrated the structured and systematic way of working that we have introduced in the mill. The production loss is estimated at 4,500 ton, or 7.5 per cent of the Vallvik Mill quarterly production.

Favourable market trend
Overall, our market is stable and the outlook is promising with a solid balance between supply and demand for the second quarter. New price increases have been announced as of 1 May.

Rottneros Packaging, our relatively new development area, is proceeding according to plan with a positive trend. We received the first order in March. This is an important milestone, and means that we are now starting industrial production. As a result we can now improve the process and quality control.

Focus on increased expertise and sustainability
We continue to have a strong focus on enhancing employee skills, with encouragement from clear and engaging leadership. This long-term initiative will bear fruit over time. Continuous skills development is a crucial piece of the puzzle for us to achieve the highest availability of the mills possible and thereby continue to increase production.

Regarding the environment, we are in the process of integrating sustainability to a greater extent in our production facilities. We see clear benefits from our environment-related investments through reduced emissions and an increasing proportion of self-generated electricity. At Rottneros Mill we will deploy the new biomass boiler this summer, replacing an old oil-fired boiler. Following this investment, energy consumption at both mills will for all practical purposes be fossil-free. The Board has also decided to invest in increased purification at Rottneros Mill.

With the stable market and high volumes in the first quarter, and despite the unplanned shutdown at Vallvik Mill after the end of the quarter, the Group continued the positive trend and we look forward to a year of continuous development in our niches and areas of focus.