“On our way into growth markets supported by strong cash flow”
“We close the second quarter of 2012 with a mixed report. Both cash flow and liquidity continued to improve year-on-year whereas operational EBIT remained at about the level of the first quarter, as we also guided in April.
“In operations we had significant scheduled maintenance stoppages in Biomaterials, and late in the quarter we added production curtailments in Printing and Reading and Building and Living to fight the clearly weakening market conditions. It is clear that the continuing issues in the eurozone started to have a more material impact on our key markets during the later part of the second quarter, especially in the Building and Living and Printing and Reading Business Areas. In Printing and Reading the cyclical weakness is amplified by the ongoing structural change towards digitalisation of media and advertising that we have seen in Europe since 2007.
“The reality, as for most of the past five years since 2007, is that the environment is not going to get any easier. We need to double our own efforts to get through the short-term and long-term challenges. Operationally, every Business Area needs not only to complete the announced restructuring programmes, and the literally hundreds of cost and productivity improvement efforts, but also to add more of them and implement them faster. We also must and will continue to adjust our manufacturing capacity to the market demand, as we have been doing since late in the second quarter. This is crucial not only to maximise our margins with a focused market and product mix, but also to further demonstrate that we can get through the market cycles with continued solid cash generation.
“This cash flow is critical for us to continue to move the Group into higher-return growth markets with strong and defendable competitive positions. Completion of the Ostrołęka light-weight board machine, Skoghall Mill upgrade and Montes del Plata Pulp Mill are all steps on this transformation path. They will be followed by the strategic consumer board investment in Guangxi, China. This is our road into a new, growth market future.”