Munksjö Oyj's Interim Report for January-September 2014 - Positive organic growth and result development, synergy target achieved

Helsinki, Finland, 2014-10-29 07:00 CET (GLOBE NEWSWIRE) --
MUNKSJÖ OYJ, INTERIM REPORT, 29 October at 7:00 AM CET

Munksjö Oyj's Interim Report for January-September 2014 - Positive organic
growth and result development, synergy target achieved

Highlights of the third quarter 2014

- Net sales were EUR 275.9 (245.1) million. The increase in net sales was due
to organic growth and the business combination between Munksjö AB and Ahlstrom
Corporation's business area Label and Processing completed in 2013.

- Adjusted EBITDA was EUR 23.2 (11.0) million and the adjusted EBITDA margin
was 8.4% (4.5%).

- Operating result adjusted for non-recurring items was EUR 9.5 (-0.2) million.
Non-recurring items amounted to EUR -0.3 (-1.9) million.

- Operating result was EUR 9.2 (-2.1) million and net result EUR -3.4 (-7.3)
million.

- Munksjö signed a new financing agreement in September 2014 to increase
operating flexibility and reduce the cost of financing. The agreement reduces
the financial expenses by approximately EUR 5 million. In connection with the
repayment of the existing financing in the quarter, a previously capitalised
financing cost of EUR 7.1 million was expensed, with no cash flow impact.

- The annual maintenance and vacation shutdowns, during which planned
maintenance operations were scheduled, were carried out to the same extent as
in 2013, with the exception of the business area Graphics and Packaging, where
the shutdowns at this business area's two production facilities were extended
by approximately one week.

Highlights of January-September 2014

- Net sales were EUR 856.3 (607.6) million. The substantial increase in net
sales was primarily due to the business combination completed in 2013.

- Adjusted EBITDA was EUR 76.6 (39.0) million and the adjusted EBITDA margin
was 8.9% (6.4%).

- Operating result adjusted for non-recurring items was EUR 36.6 (13.1)
million. Non-recurring items amounted to EUR -1.9 (-32.5) million.

- Operating result was EUR 34.7 (-19.4) million and net result EUR 5.0 (-31.2)
million. Net result was affected by a previously capitalised financing cost of
EUR 7.1 million, expensed in connection with the repayment of the existing
financing in the third quarter of 2014. The cost had no impact on cash flow.

- Earnings per share (EPS) were EUR 0.09 (-1.28).

- Interest-bearing net debt at the end of the reporting period was EUR 240.8
million (30 September 2013: 256.6; 31 December 2013: 229.3), equivalent to a
gearing of 57.2% (30 September 2013: 66.5%; 31 December 2013: 54.1%).

- Operating cash flow was EUR 24.5 (15.4) million.

KEY FIGURES (MEUR) Jul-Sep Jan-Sep Jan-Dec
2014 2013 2014 2013 2013
Net sales 275.9 245.1 856.3 607.6 863.3
EBITDA (adj.*) 23.2 11.0 76.6 39.0 55.0
EBITDA margin, % (adj.*) 8.4 4.5 8.9 6.4 6.4
EBITDA 22.9 9.1 74.7 6.5 5.9
EBITDA margin, % 8.3 3.7 8.7 1.1 0.7
Operating result (adj.*) 9.5 -0.2 36.6 13.1 15.7
Operating margin, % (adj.*) 3.4 -0.1 4.3 2.2 1.8
Operating result 9.2 -2.1 34.7 -19.4 -33.4
Operating margin, % 3.3 -0.9 4.1 -3.2 -3.9
Net result -3.4 -7.3 5.0 -31.2 -57.4
Earnings per share (EPS), EUR -0.07 -0.19 0.09 -1.28 -1.97
Interest-bearing net debt** 240.8 256.5 240.8 256.5 229.3
* Adjusted for non-recurring items
** Restated to reflect the adoption of IFRS 11 as explained in the notes to the
interim report

Unless otherwise indicated, the figures in parentheses refer to the figures for
the equivalent period in 2013. This interim report is unaudited. It is
published in Swedish, Finnish and English. In case of any discrepancies between
the three versions, the Swedish text shall prevail.

Comment from Munksjö's President and CEO, Jan Åström

"During the third quarter, the annual synergy benefits run rate from the
business combination reached EUR 25 million, which represents the upper level
of the range of EUR 20-25 million established as the target, and no further
non-recurring costs for achieving synergy benefits are expected to affect the
result.

The project team responsible for the monitoring of the integration efforts and
synergy benefits will be able to bring the successfully executed project to
conclusion by the end of the year. From now on, the efforts to develop
operations and improve business efficiency will be an integral part of ongoing
operations.

The annual maintenance and vacation shutdowns announced earlier were carried
out according to plan. During the shutdowns, strategic investments were also
made by installing and commissioning two film presses in the Graphics and
Packaging business area. Commissioning was carried out on schedule, providing
better resources for improving competitiveness by developing the product range.

As a result of improved profits, we were able to enter into a long-term
financing agreement in September, offering about a 1.5 percentage point
reduction in annual interest rates.

While uncertainties regarding the European economy have increased, Munksjö's
market position remains stable both in terms of prices and order intake."

Outlook

The market situation and demand for Munksjö's products are expected to remain
stable during the fourth quarter of 2014 following a third quarter with
seasonally lower volumes. Prices in local currencies are expected to remain at
the same level as in the third quarter. Cash flow is expected to continue to
improve during the fourth quarter.

At the end of September, the annual synergy benefits run rate derived from the
business combination reached EUR 25 million. Further initiatives have been
planned and taken to achieve the 12 per cent EBITDA margin over a business
cycle established as the goal for financial performance.

Seasonal shutdowns in December are expected to be carried out to the same
extent as in 2013.

A global leader in specialty paper - combining Munksjö AB with Ahlstrom
Corporation's business area Label and Processing

Munksjö Oyj was formed when the Swedish company Munksjö AB and the business
area Label and Processing of the Finnish company Ahlstrom Corporation were
combined. The company consists of four business areas: Decor, Release Liners,
Industrial Applications and Graphics and Packaging. The business areas are also
the reporting segments.

In addition to the financial result for the reporting period, the report
contains pro forma financial information of the business combination. As the
combination was completed during 2013, pro forma information is only prepared
up until the fourth quarter 2013. This information is presented for
illustrative purposes only. Further information on how the pro forma
information was compiled is available in the Financial Statements Bulletin,
published on 13 February 2014.

Synergy benefits and integration

At the end of the third quarter, the annual synergy benefits run rate derived
from the business combination was approximately EUR 25 million, which is in
line with the previously communicated target level of EUR 20-25 million. The
annual synergy benefits arising from the business combination are related to
procurement, production efficiency, economies of scale and improved
organisational performance and efficiency.

The result for the third quarter of 2014 includes realised synergies of
approximately EUR 6.0 million. During the third quarter of 2014 the synergies
were achieved primarily within the business area Graphics and Packaging.

The project team responsible for monitoring the integration efforts and synergy
benefits will already be disbanded at the end of the current year.

Non-recurring items to achieve the synergy benefits are estimated not to exceed
the already expensed EUR 11.5 million, which is at the lower end of the
previously communicated range of EUR 10-15 million.

No synergy related non-recurring items were recorded during the third quarter
of 2014. The cash flow effect was EUR -1.0 million in the third quarter. The
table below shows the quarterly development of synergies, non-recurring items
and its impact on cash flow.

MEUR Annual synergy run rate at Realised Non-recurr Cash flow effect of
the end of the reporting synergies ing costs non-recurring costs
period in result
Q2-Q4/ 11.0 5.0 11.0 -4.0
2013
Q1/201 20.0 5.0 0.5 -1.5
4
Q2/201 23.0 5.5 - -1.0
4
Q3/201 25.0 6.0 - -1.0
4

The Munksjö Group

Jul-Sep Jan-Sep Jan-Dec ACQUIRE 27 27
D May-Sep May-Dec
OPERAT
IONS
MEUR 2014 2013 2014 2013 2013 MEUR 2013 2013
Reported Reporte
1) d 1)
Net 275.9 245.1 856.3 607.6 863.3 Net 152.0 257.0
sales sales
EBITDA 23.2 11.0 76.6 39.0 55.0 EBITDA 3.3 6.9
(adj.*) (adj.*
)
EBITDA 8.4 4.5 8.9 6.4 6.4 EBITDA 2.2 2.7
margin, margin
% , %
(adj.*) (adj.*
)
EBITDA 22.9 9.1 74.7 6.5 5.9 EBITDA 0.1 -3.5
EBITDA, 8.3 3.7 8.7 1.1 0.7 EBITDA, 0.1 -1.4
margin margin
% %
Operatin 9.5 -0.2 36.6 13.1 15.7 Operati -3.0 -4.9
g result ng
(adj.*) result
(adj.*
)
Operatin 3.4 -0.1 4.3 2.2 1.8 Operati -2.0 -1.9
g ng
margin, margin
% , %
(adj.*) (adj.*
)
Operatin 9.2 -2.1 34.7 -19.4 -33.4 Operati -6.2 -15.3
g result ng
result
Operatin 3.3 -0.9 4.1 -3.2 -3.9 Operati -4.1 -6.0
g ng
margin, margin
% , %
Net -3.4 -7.3 5.0 -31.2 -57.4 Deliver 132,500 223,400
result y
volume
s,
tonnes
Capital 16.4 7.6 30.5 14.4 22.6
expendi
ture
Employee 2,766 2,594 2,767 2,073 2,216
s, FTE
Pro forma 2)
Net 275.9 265.1 856.3 855.1 1,120.3
sales
EBITDA** 23.2 12.1 76.6 47.3 64.1
(adj.*)
EBITDA** 8.4 4.6 8.9 5.5 5.7
margin,
%
(adj.*)
EBITDA** 22.9 9.8 74.7 41.3 42.3
EBITDA** 8.3 3.7 8.7 4.8 3.8
, margin
%
Delivery 223,800 218,300 677,800 676,400 885,300
volumes
, tonnes

* Adjusted for non-recurring items
** Includes stand-alone cost savings and synergies obtained after 27 May 2013
1) Includes LP Europe from 27 May 2013 and Coated Specialties from 2 December
2013
2) Includes LP Europe and Coated Specialties from 1 January 2012. As the
combination was completed during 2013, the pro forma information is only
consolidated until the fourth quarter 2013. From the first quarter 2014 the
reported figure is used.

Reported

Third quarter 2014

Net sales were EUR 275.9 (245.1) million. The improvement in net sales was due
to organic growth and the business combination completed in 2013.

EBITDA adjusted for non-recurring items increased to EUR 23.2 (11.0) million
and the adjusted EBITDA margin was 8.4% (4.5%).

Operating result adjusted for non-recurring items was EUR 9.5 (-0.2) million
and the adjusted operating margin 3.4% (-0.1%). Non-recurring items amounted to
EUR -0.3 (-1.9) million and were costs for the work in connection with the
Statement of Objections from the European Commission. For more information
about the Statement of Objections see the heading Other issues in this report.

The annual maintenance and vacation shutdowns, during which planned maintenance
operations were scheduled, were carried out to the same extent as in 2013, with
the exception of the business area Graphics and Packaging, where the shutdowns
at this business area's two production facilities were extended by
approximately one week.

The operating result was EUR 9.2 (-2.1) million and net result EUR -3.4 (-7.3)
million.

January-September 2014

Net sales were EUR 856.3 (607.6) million. The substantial improvement in net
sales was primarily due to the business combination completed in 2013.

EBITDA adjusted for non-recurring items increased to EUR 76.6 (39.0) million
and the adjusted EBITDA margin was 8.9% (6.4%).

Operating result adjusted for non-recurring items was EUR 36.6 (13.1) million
and the adjusted operating margin 4.3% (2.2%). Non-recurring items amounted to
EUR -1.9 (-32.5) million. Of these costs, EUR 1.4 million were related to the
work in connection with the Statement of Objections from the European
Commission and EUR 0.5 million to the efforts to achieve synergy benefits. For
more information about the Statement of Objections see the heading Other issues
in this report.

The operating result was EUR 34.7 (-19.4) million and net result EUR 5.0
(-31.2) million.

Reported figures compared to pro forma figures

Third quarter 2014

Net sales were EUR 275.9 (265.1) million.

Adjusted EBITDA increased to EUR 23.2 (12.1) million and the adjusted EBITDA
margin was 8.4% (4.6%).

January-September 2014

Net sales were EUR 856.3 (855.1) million.

EBITDA adjusted for non-recurring items increased to EUR 76.6 (47.3) million
while the adjusted EBITDA margin was 8.9% (5.5%). The result for the first
quarter of 2013 included a positive impact on the result of around EUR 3
million which was due to the release of certain accruals related to personnel
liabilities.

Webcast and conference call

A combined news conference, conference call and live webcast for investors,
analysts and media will be arranged on the publishing day 29 October 2014 at
10:00 am CET (11:00 am EET, 9:00 am UK time) at restaurant Savoy, room
Kabinetti 2 (Eteläesplanadi 14, 7th floor, Helsinki). The report will be
presented by President and CEO Jan Åström. The event will be held in English.

The conference call and live webcast can be followed on the Internet and an
on-demand version of the webcast will be available on the same webpage later
the same day. To join the conference call, participants are requested to dial
one of the numbers below 5-10 minutes prior to the start of the event.

Webcast and conference call information

Finnish callers: +358 (0)9 2313 9201
Swedish callers: +46 (0)8 5052 0110
US callers: +1 334 323 6201
UK callers: +44 (0)20 7162 0077
Conference ID: 948557
Link to the webcast: http://qsb.webcast.fi/m/munksjo/munksjo_2014_1029_q3/

For further information, please contact

Jan Åström, President and CEO, Tel. +46 10 250 1001
Kim Henriksson, CFO, Tel. +46 10 250 1015

Munksjö - Materials for innovative product design

The Munksjö Group is an international specialty paper company with a unique
product offering for a large number of industrial applications and
consumer-driven products. Founded in 1862, Munksjö is among the leading
producers in the world of high-value added papers within attractive market
segments such as Decor paper, Release Liners, Electrotechnical paper, Abrasive
backings and Interleaving paper for steel. Given Munksjö's global presence and
way of integrating with its customers' operations, the company forms a global
service organisation with approximately 2,900 employees. Production facilities
are located in France, Sweden, Germany, Italy, Spain, Brazil and China. Munksjö
Oyj is listed on NASDAQ OMX Helsinki. Read more at www.munksjo.com.

Attachments:Munksjö Oyj_Interim Report Q3 2014.pdf

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