10th Jan 2008 07:01
Powerflute Oyj10 January 2008 10th January 2008 POWERFLUTE OYJ PRE-CLOSE TRADING UPDATE Powerflute Oyj (the 'Company' or 'Powerflute') is pleased to provide thefollowing market update prior to entering into the close period ahead of theCompany's annual results for the twelve months to 31 December 2007. Demand for nordic semi-chemical fluting remains strong, driven by goodfundamentals in the corrugated sector and continuing growth in internationaltrade. As such, and as a result of improved operating processes, the Companyachieved record production output and deliveries in 2007. EBITDA on ordinaryactivities are anticipated to be approximately 60 per cent. above the €12.432million achieved in the 2006 financial year. As outlined in the Company's interim results in September 2007 there was andcontinues to be upward pressure on birch wood input pricing, caused by the short2006/2007 winter and local market uncertainty surrounding the introduction andlong-term impact of the expected Russian export tax. Wood supplies have improvedsomewhat this winter as a result of a colder start, making access to woodreserves easier albeit at higher price levels, although challenges remain forthe rest of this winter. We are developing alternative strategies to providecontinuity of wood supply. During the financial period ended 31 December, the company worked hard tocounter the impact of a continued weakness in the US$ against the •, higher woodcosts and shortages. EBITDA on ordinary activities for the period would havebeen €4 million higher without these adverse effects. Despite upward pressure on input prices, Powerflute has continued to recovercost increases although market conditions have prevented immediate fullrecovery. Notwithstanding this, the sales margin has attained an all time highfor the Company as we enter 2008; with further agreed price increases to comethrough; planned efficiency improvements, notably a new paper machine headboximproving output and quality; additional cost reductions and further investment;margins can still be further improved. Overall, the trading environment and the operating performance of the Companyremains good. The Board of Powerflute continues to evaluate a significant numberof potential attractive acquisition candidates arising from the restructuring ofthe paper and packaging sector. The Board is highly focused on selecting thebest candidates to maximise shareholder value. As separately announced today, the Board is seeking an additional listing forthe Company on First North, an alternative marketplace within OMX NordicExchange Stockholm AB operated by Swedish OMX group. 12.5 per cent. ofPowerflute's Shares were placed in Scandinavian hands by E. Ohman J:orFondkommission AB ("Ohman") of Stockholm at the time of the AIM IPO in May 2007and the Company has seen growing interest towards its Shares particularly fromFinland. A listing sponsored by Ohman on First North will complement ourexisting trading facility on AIM and should add greater liquidity and depth ofdistribution. Results for the year ended 31st December 2007 are expected to be announced inMarch. Ends Enquiries: Powerflute OYJ Dermot Smurfit (Chairman) C/O Billy Clegg Don Coates (Chief Executive Officer) +44 (0)20 7269 7157 Collins Stewart (Europe) Ltd: Nick Ellis +44 (0)20 7523 8350 Philip P. Roe Financial Dynamics: Billy Clegg +44 (0)20 7269 7157 Laura Proudlock +44 (0)20 7269 7268 Notes to editors: Powerflute operates a currently 300,000 tonne per annum rated capacity papermill located near Kuopio, Finland on the shores of Lake Kallavesi, manufacturingspecialised high quality nordic semi-chem fluting. Powerflute was established to make further acquisitions in the paper and paperconversions market, typically of assets which are no longer regarded by theirparent groups as core businesses and where the Board believes that it canfurther develop such assets or companies. Powerflute's Chairman is Dermot Smurfit, (retired Chairman of Smurfit Europe andjoint Deputy Chairman of Jefferson Smurfit Group PLC), Don Coates is the CEO,(previously the CEO of the St Regis Paper Company Limited owned by DS Smith plc)and Ian Hallidayis an Executive Director, (former senior manager at Mondi PaperGroup and Jefferson Smurfit Group). Non-executive directors include JuhaNiemela, (previously the CEO of UPM-Kymmene Corporation, one of the largest pulpand paper groups in the world), Tony Smith (former CEO of Smurfit UK operations)and Christopher Knight. Together, the management team have over 150 years ofexperience in the paper industry. A copy of this announcement has been placed on the Company's website: www.powerflute.com This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
POWR.L