Vinstlyft för Metsä-Serla 1998, 1999 blir svagare

By 5 - Finnish forestry group Metsa-Serla on Friday reported an 80 percent jump in 1998 profit after financial items, but said this year would be much weaker.
  Profit after financial items was 1.82 billion markka, in line with the 1.81 billion median of analysts' forecasts which ranged between 1.65 billion and 2.00 billion markka.
  Shares shrugged off an overall market fall by adding 1.6 percent to 6.30 euros, but some analysts remained wary of the sector and said the rise was more a result of hopes for a recovery for the sector a year ahead.
  ”Metsa Serla has always tried to be positive, so what they are saying (about a weaker 1999) does not feel good at the moment,” said Orjan Hallberg, an analyst at Handelsbanken in Stockholm. He recommended reducing weight in the sector.
  The group's year was marked by a strong start followed by a rapid fourth quarter weakening as slower economic growth worldwide hit the forest industry.
  ”Because of the weakened market outlook for the first part of the year, Metsa-Serla's net profit in 1999 is likely to fall markedly short of the previous year's result,” it said.
  Metsa Serla's 1998 net profit fell to 1.08 billion markka from 1.29 billion since net extraordinary gains normalised to 97 million markka from a heavy 994 million in 1997.
  Metsa Serla said it expected a pulp price recovery in the second half of the year.
  ”Canadians will not be able to close mills during the winter since restarting cold machines would be too expensive, but in spring, we will see what the new market situation will be,” Chief Executive Jorma Vaajoki told a news conference.
  The price of long-fibre pulp, the highest quality, is currently below $500 a tonne, which Vaajoki said is the lower limit for profitability in pulp production.
  Even Metsa Serla, which has some of the most modern and efficient mills, posted a loss at its pulp division in the fourth quarter of last year.
  The company said listed subsidiary Metsa Tissue doubled in size through acquisition.
  Metsa-Serla's parent group, forest owners' cooperative Metsaliitto, said all its units were on the lookout for acquisitions but nothing concrete was being netotiated.
  Metsaliitto head Antti Oksanen said said Metsaliitto was in many ways close to Swedish Sodra, which is also a cooperative, but a merger was not in the pipeline.
   Although Metsa-Serla's profit before financial items rose, the group failed to meet its profitability target of return on capital employed of 12 percent over the business cycle. Full-year ROCE was 11 percent.
  Group net sales rose nine percent to 20.9 billion markka, with 40 percent coming from the biggest division, paper, which saw net sales up 12 percent at 8.1 billion markka.
   Its operating profit surged to 1.07 billion from 292 million markka and made up 47 percent of the group's operating profit.
   **For full Metsa-Serla earnings release in English, Reuters Finnish Business News users double click on nHSE536143
  **For full Metsa Tissue earnings release in English, Reuters Finnish Business News users double click on nHSE546CAD
  **For full Metsaliitto earnings release in Finnish, Reuters Finnish Business News users double click on nHSE5478D4 REUTERS