Moelven earns 141 million in second quarter

The main reasons for the improved results are better operating conditions, the effect of cost-cutting measures and higher prices for finished goods in the Timber and Wood divisions.

HIGHER OPERATING REVENUES

Operating revenues for the Group in the second quarter totalled NOK NOK 1 937 million (1 772). For the first six months of the year, operating revenues totalled NOK 3 414 million (3 228), while operating profit ended at NOK 164 million (minus 66).

President and CEO Hans Rindal of Moelven Industrier ASA says that the background for the positive results are higher prices for sawn wood and increasing demand for the Group’s products and services in the second quarter as a result of the normal seasonal upswing in business activity.

- The second quarter has been a good period for us, which is at it should be because construction activity usually increases during the summer months. The Building Systems division, which is normally the last division to experience the cyclical increase in demand, also seems to have passed through the low point in the cycle and orders reserves are once again rising. We are far from the top, however, and I think it will take some time before we are back to that level. In terms of capacity and costs, the Group is well adapted to the current market situation, which is a good starting point for growth in activity, even though the growth may be moderate, says Rindal.

SECURE FINANCING

The Group signed a long-awaited refinancing agreement in the second quarter and has thereby secured financing for the coming five-year period.

- With the financing in order, we can now concentrate on developing the industry even further. As a step in this process, the Moelven family has gained three new members: Sør-Tre Bruk AS, Granvin Bruk AS and Eco Timber AS. All of these companies will become business units in the building product division, Wood, and enhance the division’s geographical reach and range of products and services. The objective is for the builders’ merchant sector to experience Moelven as an even better supplier, says Rindal.

Even with the refinancing process behind us and a solid profit in the second quarter, the CEO is still focused on developing the business as it is today, not based on additional acquisitions.

- We have reserve capacity in many areas that we intend to make use of as soon as it is needed. In any event, the financial markets are still not stable and politicians in many countries need to work hard to balance public budgets. These factors will likely affect the construction industry for a long time to come and is something we cannot ignore, says Rindal.

BOTTOM LIKELY REACHED IN 2010

Overall business activity in the construction market is expected to reach bottom in 2010; however, there are major differences in development between various regions and sectors.

The rehabilitation and additions market has been the most stable, and new-build construction seems to be increasing faster than the construction of new commercial and industrial buildings. Deliveries of building materials through chains of builders’ merchants are expected to vary as always according to season, with continuing high activity in the third quarter and a downturn toward the end of the year.

Order reserves in the Building Systems division are on the rise, with the best market developments taking place for the modular building businesses.

Prices in the European market for sawn wood have increased the first six months of the year and market conditions are expected to remain good in the third quarter.

The Board of Moelven expects the annual result for 2010 to be significantly higher than the previous year.