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Questions and answers related to Q1 report

May 5, 2014 1:45 PM

Why did the EBITA decrease so much y-o-y? (Compared to Q1 2013)

  • Net sales declined as order backlog at the end of last year was on low level
  • Good order intake in Q1, revenue will be recognized with a delay of 3-6 months
  • EBITA declined in capital business, services’ EBITA stable
  • Cost accrual of approximately EUR 10 million linked to an individual major pulp project had negative impact on the Q1/2014 result

Service order intake decreased in Q1, why? Is the trend expected to continue?

  • Weakness in North America, delays in customers’ decision making impacts Mill improvements in particular • Long term outlook for services intact

Service revenue decreased y-o-y in Q1, why? Is the trend expected to continue?

  • Decrease in EMEA
  • Decrease in Energy & Environmental
  • Long term outlook for services intact

What is the situation related to pulp mill project in Brazil?

  • Cost accrual of approximately EUR 10 million linked to an individual major pulp project had negative impact on the Q1/2014 result
  • Still some open issues with the project, this is now our best estimate for the situation
  • Mill is up and running, which limits the risks

Order intake was strong –is this bigger change in the market or more related to postponements from Q4/H2?

  • Some orders were postponed in H2, and have now been seen as orders in Q1
  • Pulp order intake is always lumpy, large single orders, large impact on quarterly figures
  • Activity has improved in Board and Paper, and Energy, like we said in Financial Statements Bulletin (published on February 6)

Has the margin on the order backlog improved?

  • We have now better possibilities to be selective on new orders
  • Pricing environment has remained challenging

How much of the EUR 100 million cost savings was seen in Q1?

  • SG&As declined EUR 12 million y-o-y
  • We expect to see cost savings of EUR 100 million by the end of 2014
  • Personnel expenses have declined EUR 19 million y-o-y, total personnel down 12%/ 1,413 persons compared to Q3/2013

What is needed to upgrade the short-term outlook for Tissue to good? We heard that there is full capacity utilization in Karlstad.

  • In Tissue we have good customer activity and good capacity utilization in Karlstad, but the capacity utilization rate in China is unfortunately low

What are the assumptions for the guidance for 2014?

  • Guidance is based on our order backlog and internal estimates for 2014

Can you reach EBITA-margin between 6-9% based on current volume assumptions?

  • Historical margins are based on different market situation: large paper machines, boom in China, good market situation in boilers
  • Prices now lower than in 2008-2010
  • Based on these volumes, not possible to reach 6-9% EBITA-margin, which requires internal efficiency, cost savings related to quality and purchasing, modularity in production

What were the one-offs?

  • Q1: Non-recurring items related to the profitability improvement program amounted to EUR 6 million (EUR 0 million)