M-Real Is E Paperboar Supplier. M Innovative H and Papers Communic End-Uses

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M-Real Is E Paperboar Supplier. M Innovative H and Papers Communic End-Uses Annual Report Annual Report 2008 Report Annual M-real is Europe’s leading primary fibre paperboard producer and a major paper supplier. M-real offers its customers’ innovative high-performance paperboards and papers for consumer packaging, communications and advertising end-uses. Annual Report Annual Report 2008 Report Annual M-real is Europe’s leading primary fibre paperboard producer and a major paper supplier. M-real offers its customers’ innovative high-performance paperboards and papers for consumer packaging, communications and advertising end-uses. M-REAL KEY FIGURES 2008 IN BRIEF pages 02–09>2 M-REAL >4 KEY FIGURES >6 2008 IN BRIEF >8 CEO’S REVIEW BUSINESS AREAS pages 10–>12 CONSUMER PACKAGING17 >14 OFFICE PAPERS >16 OTHER PAPERS >17 MARKET PULP AND ENERGY CORPORATE RESPONSIBILITY, OPERATING ENVIRONMENT pages 18–27>20 CORPORATE RESPONSIBILITY >27 OPERATING ENVIRONMENT FINANCIAL STATEMENTS 2008 pages 28–101>31 TABLE OF CONTENTS FINANCIAL STATEMENTS >40 CONSOLIDATED INCOME STATEMENT >90 PARENT COMPANY INCOME STATEMENT CORPORATE GOVERNANCE pages 102–121>108 BOARD OF DIRECTORS >110 MANAGEMENT TEAM >112 INTERNAL CONTROL, RISK MANAGEMENT AND INTERNAL AUDITING >119 M-REAL´S FINANCIAL COMMUNICATION Consumer Packaging Office Papers M-real Consumer Packaging M-real is the leading primary footprint calculations to report in- M-real’s Consumer Packaging Consumer Packaging’s service fibre paperboard producer and a dividual products’ climate impact. is Europe’s leading producer offering includes quick availabi- major paper supplier in Europe. M-real’s business areas are of primary fibre paperboard. lity of sheeted board, technical The company’s customers include Consumer Packaging, Office Additionally, the business area services, seminars and training. brand owners, carton printers, Papers and Other Papers. The produces speciality papers, Integrated Brand Packaging (IBP) converters, publishers, printing reporting structure includes e.g. wallpaper base papers. offers print management, packa- houses, merchants and office also the Market Pulp and Energy Consumer Packaging renewed ging procurement and carton de- product suppliers. segment. its cartonboard concept in spring sign services in Asia. M-real offers its customers M-real is headquartered in 2008. The cartonboard products Consumer Packaging’s se- high-quality cartonboards and Finland. M-real’s annual sales under the new LITE4U concept are ven mills located in Finland are papers for consumer packaging totalled EUR 3.2 billion in 2008 light and consistent and they have Joutseno, Kaskinen, Kemiart as well as communications and and it has about 6,500 employees. similar surface properties as he- Liners, Kyro, Simpele, Tako advertising end uses. M-real M-real is part of Metsäliitto Group avier boards. The LITE4U grades and Äänekoski. Consumer communicates its paper and bo- and its A and B shares are listed are Carta Integra, Carta Elega, Packaging’s annual sales totalled ard product specific environmen- on the NASDAQ OMX Helsinki Ltd. Carta Solida, Avanta Prima and EUR 1,061 million and the delive- tal data through Paper Profile Simcote. Carta Elega is a totally ries were about 1,35 million ton- declarations. All mills have ISO new grade. nes. Consumer Packaging’s has 9001 quality and ISO 14001 envi- approximately 1,600 employees. ronmental certifications. In 2007, M-real introduced the carbon SHARE OF TOTAL SALES 34% 2 Other Papers Market Pulp and Energy Office Papers Other Papers Market Pulp and Energy M-real’s Office Papers produces, Office Papers’ mills are lo- M-real’s Other Papers produces M-real’s Market Pulp and Energy markets and sells high quality un- cated in Husum, Sweden and in mainly speciality papers for la- segment includes pulp sales to coated fine papers. Office Papers’ Alizay, France. Office Papers’ bels, forms, graphical applica- external parties. After the Graphic products are used for printing and annual sales totalled EUR 804 tions and communications and Papers divestment closed at year copying, as well as for forms, en- million and the deliveries were advertising end uses. The best end 2008 most of the external velopes, manuals and various bu- about 1,1 million tonnes. Office known brand is the cast coated pulp sales are to Sappi based on a siness communications. Paper is Papers has approximately 1,500 paper and board CHROMOLUX, long-term contract. The segment sold in the form of cut size, reels employees. which is the European market also includes energy sales from and folio sheets. leader. Other brands include e.g. the pulp mills or through M-real’s Office Papers reels are sold medley, Spectral and ZETA. energy holdings. directly to converters or printers. Other Papers’ Reflex and Market Pulp and Energy’s Cut size papers are sold to paper Gohrsmühle mills are located annual sales totalled EUR 644 merchants, original office equip- in Germany and Hallein mill in million. ment manufacturers and office Austria. product resellers. Office Papers’ Other Papers’ annual sales main brands are Data Copy, totalled EUR 622 million and the Evolve and Modo Papers. deliveries were about 0,7 million tonnes. Other Papers has approx- imately 2,000 employees. SHARE OF TOTAL SALES SHARE OF TOTAL SALES SHARE OF TOTAL SALES 26% 20% 20% 3 Key Figures 2008 2007 Change (%) Sales, EUR million 3,236 3,499 -8 Operating result excl. non-recurring items, EUR million -35 75 % of sales -1.1 2.1 Operating result, EUR million -61 -49 % of sales -1.9 -1.4 Result from continuing operations before tax, EUR million -204 -191 % of sales -6.3 -5.5 Result for the period, EUR million -508 -195 Return on capital employed, % -1.3 -0.8 Return on equity, % -10.4 -8.5 Interest-bearing net liabilities, EUR million 1,254 1,867 -33 Gearing ratio, % 152 124 Net gearing ratio, % 90 99 Equity ratio, % 30.8 34.4 Earnings per share, EUR -1.58 -0.59 Earnings per share, from continuing operations, EUR -0.55 -0.51 Equity per share, EUR 4.05 5.58 -27 Dividend per share, EUR 0.00* 0.06 -100 Market capitalisation 31 Dec., EUR million 232 1,070 -78 Gross capital expenditure, EUR million 128 259 -51 Gross capital expenditure, from continuing operations EUR million 105 208 -50 Cash flow arising from operating activities, EUR million -97 127 -176 Personnel 31 Dec. 6,546 9,508 -31 Personnel 31 Dec., in continuing operations 6,546 7,241 -10 *) Board of Directors propose that no dividend is paid for the financial year 2008. 4 KEY FIGURES Sales Operating result EUR million EUR million 6,000 50 5,000 0 4,000 -50 3,000 -100 2,000 -150 1,000 0 -200 2004* 2005 2006 2007 2008 2004* 2005 2006 2007 2008 Operating result, excluding Return on capital employed non-recurring items, EUR million % 80 1 0 60 -1 40 -2 20 -3 0 -4 -20 -5 -40 -6 2004* 2005 2006 2007 2008 2004* 2005 2006 2007 2008 * 2004 does not include the impacts of the Map Merchant and Graphic Papers divestments M-real cost structure in 2008* Q Delivery costs 14% Q Wood 21% Q Chemicals, pigments and fillers 17% Q Energy 11% Q Other variables 6% Q Wages and salaries 16% Q Other fixed 15% * Total annual costs in industrial operations approximately EUR 2.5 billion 5 KEY FIGURES 2008 in brief JANUARY FEBRUARY MARCH APRIL MAY JUNE 1 February 19 February 29 February 21 May 27 May M-real Corporation di- BCTMP mill in Lielahti The transaction of Started in November M-real’s asset divest- vested its New Thames and PM2 at the Kangas M-real’s New Thames 2007, the profi t impro- ment programme offi ce paper mill located mill, producing magazi- paper mill was closed. vement and complexity proceeded when M-real in Kemsley, UK, to DS ne paper, was decided to M-real does not have signifi cant reduction programme and Kymppivoima Oy uncovered pension liabilities in Smith Plc for EUR 82 be shut down as part of a the UK. M-real has been freed target was raised from signed a sales contract million. As part of transacti- new profi t improvement from approximately EUR 35 EUR 100 million to EUR according to which M- million payment obligations in on it was agreed that DS Smith and complexity reducti- 150 million of annual real sells Kymppivoima produces offi ce paper for M-real the years 2008-2015 concerning until the end of 2008 after which on programme started the pension liabilities and other profi t improvements. 100 000 B2 shares in closure costs of the Sittingbourne DS Smith converts the mill to in November 2007. The full profi tability impact will Pohjolan Voima (PVO) for mill closed in 2007. The combined be seen from 2010 onwards as containerboard production. The closures reduced the amount impact of the sales agreement profi t improvement and business EUR 80 million. of personnel by 137. and the pension liabilities ar- concept simplifi cation measures The transaction did not have im- rangement on M-real’s fi nancial are implemented in all business pact on M-real’s self-suffi ciency result is positive, about EUR 24 areas. in electricity. million. 6 2008 IN BRIEF JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER 25 June 29 September 31 December M-real fair valued M-real announced The sale comprises the Kirkniemi The sale of Graphic and Kangas mills in Finland, the according to IAS 39 its the sale of its Graphic Stockstadt mill in Germany and Papers business to the ownership in Pohjolan Papers Business Area to the Biberist mill in Switzerland. South African Sappi Voima (PVO) to EUR 439 the South African Sappi As part of the transaction, M-real Limited was closed. and Sappi have also entered million.
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