RAUTE CORPORATION STOCK EXCHANGE RELEASE
Translation 8 February 2006 at 10.00 am
RAUTE CORPORATION FINANCIAL STATEMENTS FOR 2006
- Net sales, 106.2 m (108.6 m), decreased by 2%. Operating profit
was 4.5 m (4.4 m) and profit before tax 4.9 m (5.5 m).
- Profit for the period amounted to 3.6 m (4.0 m). The undiluted
earnings per share were 0.94 (1.09).
- The order book at the end of the year, 77 m (55 m), was very
strong.
- The Board of Directors proposes to the Annual General Meeting that
a dividend of 0.70 per share will be paid for 2006.
- Net sales are expected to grow moderately in 2007 and operating
profit to improve over 2006.
MR TAPANI KIISKI, PRESIDENT AND CEO: ENTERING 2007 WITH A RECORD
ORDER BOOK
For Raute, year 2006 had two distinct sides to it. In addition to
succeeding on the market, we caught up with the net sales figures of
2005 and achieved a record order book in the last quarter. The good
operating profit in the last quarter indicates our capability to
make profit and squeeze our production capacity, even though our
profitability did not develop in line with our objectives. The
postponement of a mill-scale order agreed in early 2006 to the final
part of the year resulted in a dip in thirdquarter net sales,
ruining hopes for improved performance.
In the past year our markets were characterized by the demand for
investments focusing heavily on mill-scale projects, as customers
aimed to increase their production capacity. Under these
circumstances, Rautes traditional strength, mill-scale projects,
proved to be a valuable asset. We received four orders for mill-
scale projects and increased our order book at the end of the year
to a record EUR 77 million. Heavy inputs in product development and
previous demonstration of our skills enabled us to maintain our
position as a clear market leader in mill-scale projects.
Technology services fell short of the previous years net sales, as
well as of our growth targets, due to weaker demand for large-scale
modernizations. Growth continued to be good in spare part and
maintenance services, which in particular helps our goal of
increasing the share of contractual maintenance. Customer feedback
and internal operations indicators show that our service capability
has improved.
We aimed at markedly improved profits compared to 2005, but failed
to reach this objective. The biggest single reason came from
additional, one time expenses from the market launches, first
deliveries, of some new products. These products have proved to be
successful and will serve our competitiveness in the future.
Another big reason for the profit not reaching targets was the
rapidly weakening market situation in North America. Our customers
very nearly froze their investments, as well as their inputs in
enhancing maintenance. Moreover, the weak dollar had a negative
effect on our competitiveness and profitability in these markets.
Our primary objective in 2007 continues to be the improvement of
profitability. Our record-high order book offers us good
opportunities to improve our performance, as well as reach moderate
growth. The order book now contains very few projects with first-
delivery risk. We also expect demand to continue at a good level.
I wish to thank our customers, staff, partners, and other
stakeholders for 2006, and hope our cooperation will continue and
get better. Let us make 2007 into a better year for Raute and all of
us.
MARKET SITUATION
Market situation in customer industries
The market situation in Rautes customer industries continued to
be good throughout the year in the companys main market areas,
with the exception of North America. Plywood demand, production,
and prices were at a good level all over the world except for
North America. In Asia and Russia, the market situation for
plywood showed positive development. In the USA, the waning
confidence in overall development of the economy affected the
demand for and prices of construction materials. In addition, the
new production capacity for OSB board (large-flaked particleboard
used for construction especially in North America), which was
rolled out in 2006, competed with plywood in North America.
Positive development continued in the market for LVL (Laminated
Veneer Lumber). The production capacity that has come on line in
recent years has found demand on the market.
The demand for overlaid particleboard and MDF (Medium Density
Fiber) board remained good. Especially in Russia and Eastern
Central Europe, the strongly growing furniture industry kept
production at a high level. Residential construction and
modernization continued at a high level, maintaining good demand
for parquet and decorative veneer.
Demand for wood products technology
The demand for investments in the plywood and veneer industry was
at a good level, with the exception of North America. Demand was
particularly strong in the case of large mill-scale projects,
which were initiated in several market areas in 2006. Raute still
has mill-scale projects in the planning phase for different market
areas.
The LVL industry enjoyed brisk demand for investments. One new
mill-scale project was initiated in the USA last year. In the LVL
industry, significant investment plans to increase production
capacity are under way in several market areas.
Good demand was also seen in Rautes smaller customer groups,
which include overlaying of particleboard and MDF, the parquet
industry, and the decorative veneer industry.
In technology services, demand for spare part and maintenance
services remained at a good level. In Europe, the demand for
modernizations dropped from the previous year. In North America,
modernizations were in less demand due to the plywood industrys
general unwillingness to make investments.
Order intake and order book
Rautes business consists of project deliveries and technology
services. Project deliveries encompass complete mills, production
lines, and single machines and equipment. Technology services
include maintenance, spare part services, modernizations,
consulting, training, and sales of reconditioned machinery.
The order intake in 2006 amounted to EUR 132 million (132 m), of
which project deliveries accounted for EUR 105 million (109 m)
and technology services for EUR 27 million (23 m).
In project deliveries, Russia accounted for 42 percent, the rest
of Europe for 25 percent, and North America for 16 percent of the
order intake. South America accounted for most of the remaining
order intake of other market areas (17%).
Seventy percent of project delivery orders consisted of four mill-
scale projects to Chile, the USA, France, and Russia. Production
line orders accounted for 26 percent of the order intake, a
significant share of it taken up by six peeling lines to Russia.
Rautes biggest-ever single order for plywood mill production
lines for Vjatsky Fanernyi Kombinat in Russia took effect in the
last quarter. The deal is worth EUR 30 million. The machinery
deliveries are scheduled for the latter half of 2007. A
preliminary letter of intent for the project was signed in
February 2006.
The order book grew strongly throughout the year, amounting to EUR
77 million (55 m) at the end of the year.
Competitive position
Raute is generally speaking in a good competitive position and
looks particularly strong in its traditional technology fields:
the plywood and veneer industry, as well as the LVL industry. The
company's position is based on a comprehensive offering of
technology and services, leading technology in the field that is
maintained by strong product development, and solid references.
Several deliveries with reference value were introduced into
production use in 2006. Examples of these include two peeling
lines to Southeast Asia, which marked Rautes first tropical wood
peeling deliveries in several years. In addition, a new-generation
trim saw line, scarf jointing line, and decorative veneer drying
line were rolled out in Finland. The new products will boost
Rautes competitiveness in these technology and market areas.
In terms of competitiveness, Raute is strongest in mill-scale
deliveries. The four mill-scale orders received in 2006 are a sign
of the companys leading position.
DEVELOPMENT OF OPERATIONS
Raute continued to develop its sourcing by establishing a
subsidiary in Shanghai, China. The new company will strengthen the
Group's purchasing organization, handle subcontracting and
materials purchases in China, and improve the Group's presence on
the Chinese market. Raute (Shanghai) Machinery Co., Ltd obtained
the required business licenses in September and started operations
in the latter part of 2006.
The ERP and financial administration systems of Raute's North
American operations were harmonized to comply with the information
systems used at the main production unit in Nastola. Harmonized
systems will enhance bidding processes, project implementation,
and cooperation between units.
Development also continued on the work distribution and
cooperation among Rautes own operations, the goal being to
improve customer service and operational efficiency. The
consulting and reconditioned machinery services offered by RWS-
Engineering Oy were made into an operational part of Rautes
technology services managed from Finland. To deal with the weak
demand for investments in North America, Raute strengthened its
customer service and delivery capacity in technology services in
the region, and made the resources related to project deliveries a
part of its global project organization.
OTHER EVENTS IN THE PERIOD
Share-based incentive plan
On March 22, 2006, the Board of Directors of Raute Corporation
approved a share-based incentive plan for the strategy period
20062008. The potential reward from the plan will be based on the
Groups operating profit and on the Board of Directors assessment
of the success of the strategy. The incentive plan encompasses the
Groups Executive Board (5 members) and 13 other key employees.
Rewards will be paid in shares and in cash. The cash portion is
meant for the payment of taxes and tax-related costs. Decisions on
the rewards will be made in 2009. The shares are subject to a two-
year transfer prohibition.
On December 31, 2006, the share-based plan accounted for a maximum
of 56,000 Raute Corporations series A shares. Of these, the
President and CEO may hold a maximum of 10,000 and the rest of the
Executive Board jointly a maximum of 20,000 shares. The fair value
of the share-based rewards on December 31, 2006, was EUR 0.3
million. The plans impact on profit before tax in 2006 was EUR
0.1 million.
Dissolution of Eloc Oy and Raute Corporations pension fund
The dissolution of Eloc Oy, an associated company, was completed
on May 31, 2006.
The dissolution of Raute Corporations pension fund was entered in
the Register of Foundations on July 25, 2006.
NET SALES AND RESULT
The Groups net sales were EUR 106.2 million (108.6 m). Net sales
dropped by 2 percent compared to 2005, which was a year of steep
growth. The drop in net sales was caused by lower net sales from
modernizations and the scheduling of project deliveries.
Business activities consisted entirely of the wood products
technology business. Project deliveries accounted for 79 percent
(78%) and technology services for 21 percent (22%) of net sales.
The plywood industrys share of project deliveries was 93 percent
(83%), the LVL industrys 4 percent (17%), and that of other,
smaller customer industries 2 percent.
Net sales from technology services totaled EUR 21.9 million (23.5
m), down by 7 percent from the previous year. In modernizations,
net sales decreased by 23 percent due to the market situation in
Europe. Maintenance services grew by 18 percent in 2006, and spare
part services by 12 percent. Technology services have grown by 26
percent since 2004.
Europes share of the Groups net sales dropped to 29 percent
(40%) and North America's to 16 percent (27%). Russias share was
12 percent (14%) and Asias 5 percent (7%). Other market areas
increased their share to 38 percent (12%), fueled by two mill-
scale project deliveries to Chile.
The Groups operating profit remained at the previous years
level, amounting to EUR 4.5 million (4.4 m). Profit before tax
was EUR 4.9 million (5.5 m) and profit for the period EUR 3.6
million (4.0 m). Profitability development fell short of targets
due to the unanticipated expenses related to the first deliveries
of some new products, the cost pressure caused by the good overall
economic situation, and North Americas weak market situation.
Operations in North America were unprofitable.
In 2006 net sales and profit benefited from a EUR 0.1 million (-
0.7 m) IFRS-compliant recognition of currency hedges that were
used for economic hedging purposes but fell outside the scope of
hedge accounting. Profit for the previous year was improved by the
release of excess cover totaling EUR 0.4 million in conjunction
with the dissolution of the pension fund.
Net sales in the last quarter totaled EUR 32.5 million (31.5 m)
and operating profit EUR 2.3 million (0.7 m).
FINANCING
The Group's financial position remained strong. At the end of the
year, gearing was -80.3 percent (-41.5%) and equity ratio 60.1
percent (55.7%). The balance sheet totaled EUR 68.5 million (55.4
m). The strong fluctuation in balance sheet items and the key
ratios based on them results from differences in the timing of
customer payments and the cost accumulation from project
deliveries, which is typical of project business.
Liquid assets grew by EUR 12.6 million to EUR 24.0 million (11.4
m) in 2006. Operating cash flow was EUR 15.0 million (7.7 m) and
investing cash flow was EUR -1.5 million (-3.0 m). The financing
cash flow, EUR -0.8 million (-2.9 m), includes EUR 2.3 million
from the payment of year 2005 dividends, as well as EUR 1.4
million in payments received from the stock issue of shares
subscribed for with options.
Interest-bearing liabilities totaled EUR 0.5 million (0.5 m) at
the end of the year. Unused credit limits amounted to EUR 15
million on the same date. The company also has a EUR 10 million
commercial paper program.
RESEARCH AND DEVELOPMENT COSTS AND CAPITAL EXPENDITURE
Research and development costs totaled EUR 3.8 million (3.6 m),
representing 3.5 percent (3.3%) of net sales. The pretax impact on
costs was EUR 3.2 million (3.9 m). EUR 0.5 million (0.2 m) of
development costs was capitalized, while depreciation of
development costs was EUR 0.2 million (0.5 m).
Year 2006 saw exceptionally low investments in production.
Investments totaled EUR 1.9 million (3.8 m), including
capitalized development costs worth EUR 0.5 million (0.2 m). Other
investments focused mainly on upgrading information technology.
PERSONNEL
The Groups headcount at the end of the year was 540 (533).
Finnish Group companies accounted for 76 percent (76%) and foreign
companies for 24 percent (24%) of employees. The number of
personnel converted to full-time employees was approximately 547
(536).
THE GROUPS EXECUTIVE BOARD AND MANAGEMENT OF SUBSIDIARIES
Mr. Tapani Kiiski continued as Chairman of Rautes Executive
Board, and the Boards members included Ms. Arja Hakala, CFO; Mr.
Petri Strengell, Vice President, Technology and Operations; Mr.
Timo Kangas, Vice President, Technology Services; and Mr. Bruce
Alexander, Vice President, North American Operations and President
of Rautes North American companies.
The President of Raute Corporations subsidiary Mecano Group Oy is
Mr. Pasi Kenola, MSc (Eng.) and eMBA, who has held the post since
March 1, 2006.
The President of Raute Corporations subsidiary RWS-Engineering Oy
is Mr. Timo Kangas, Group Vice President, Technology Services, and
member of the Groups Executive Board, who took up the post on
March 10, 2006.
ANNUAL GENERAL MEETING
Raute Corporations Annual General Meeting held on March 22, 2006,
adopted the financial statements for 2005, released those
accountable from liability, and decided to distribute a dividend
of EUR 0.60 per share.
Mr. Jarmo Rytilahti was elected Chairman of the Board, Ms. Sinikka
Mustakallio was elected Vice-Chairman, and Mr. Mika Mustakallio,
Mr. Panu Mustakallio, Mr. Pekka Paasikivi, and Mr. Jorma
Wiitakorpi were elected Board members.
Mr. Kari Miettinen and Ms. Sari Airola, Authorized Public
Accountants, were re-elected as auditors, and
PricewaterhouseCoopers Oy, an authorized public accounting
company, as deputy auditor.
The Annual General Meeting authorized the Board to decide on the
acquisition of the companys own series A shares using
distributable funds, as well as on the disposal of own shares.
CORPORATE GOVERNANCE
All of the Board members are independent of the company. Chairman
Jarmo Rytilahti and two of the members (Pekka Paasikivi and Jorma
Wiitakorpi) are independent of major shareholders.
The chairman of the Appointment Committee is Mr. Jarmo Rytilahti,
while Ms. Sinikka Mustakallio and Mr. Ville Korhonen, a
representative of a major shareholder, act as its members. The
Working Committee is chaired by Mr. Jarmo Rytilahti and its
members are Ms. Sinikka Mustakallio and Mr. Pekka Paasikivi.
SHARES
Raute Corporation's series A shares are listed on the Nordic list
of the Helsinki Stock Exchange. The trading code is RUTAV. The
shares have a nominal value of two euro. Raute Corporation has
signed a market making agreement with Nordea Bank Finland plc in
compliance with the Liquidity Providing (LP) requirements issued
by the Helsinki Stock Exchange.
The number of shares at the end of the year totaled 4,004,758, of
which 991,161 were series K shares (20 votes/share) and 3,013,597
series A shares (1 vote/share). A total of 190,150 series A shares
subscribed for through the exercise of B options pertaining to the
1998 option scheme were entered in the Trade Register in 2006.
A total of 1,088,288 (1,529,700) series A shares worth EUR 15.4
million (17.1 m) were traded in 2006. The share price at the end
of the year was EUR 12.85 (14.24). The highest quotation of
series A shares was EUR 17.60 (16.42) and the lowest EUR 11.60
(7.60), while the average price was EUR 14.03 (11.24).
The company's market capitalization at the end of 2006 was EUR
51.5 million (54.3 m), with series K shares valued at the closing
price on December 29, 2006 of series A shares, that is EUR 12.85
(14.24).
Raute Corporations 1998 option scheme expired on September 30,
2006, for B options. The scheme accounted for a total of 212,500
options, of which 190,150 were exercised. The highest trading
price in 2006 for B options was EUR 9.58 (9.20) and the lowest
EUR 4.48 (1.00). A total of 330,650 B options were traded in 2006
(197,500). The total value of trading was EUR 2,452,176
(701,207).
The company's Board of Directors is authorized to buy back and
dispose of a maximum of 400,475 of the company's series A shares.
The Board of Directors has not exercised this authorization.
SHAREHOLDERS
The number of shareholders totaled 974 at the beginning of 2006
and 1,144 at the end of the year. Series K shares are held by 46
private individuals (46). The management held 4.5 percent (4.7%)
of company shares and 9.0 percent (8.9%) of votes. Nominee-
registered shares accounted for 1.3 percent (1.3%) of shares.
The company was given one flagging notification in 2006. The
holding of Varma Mutual Pension Insurance Company (200,000 series
A shares) dropped below the disclosure threshold of one-twentieth
(1/20), when the increase in Raute Corporations share capital,
due to option subscriptions, was entered in the Trade Register on
November 2, 2006.
DIVIDEND FOR 2005
The Annual General Meeting decided to distribute a dividend of EUR
0.60 per share for 2005. A total of EUR 2.3 million was paid in
dividend on April 3, 2006.
ACCOUNTING PRINCIPLES
The companys financial statements have been prepared according to
International Financial Reporting Standards (IFRS). The figures
for 2006 have not been audited. Figures in parentheses refer to
the corresponding figures in the comparison year.
The Group has adopted the changes that IASB made to IAS 39 in 2004
and 2005. The Group has also adopted hedge accounting in
compliance with IAS 39. The share-based incentive scheme complies
with IFRS 2. Exchange differences for intra-group borrowings that
have been treated as net investments in foreign units have been
recognized as translation differences in equity (IAS 21).
In other respects, the Group has followed the accounting
principles described in the financial statements for 2005 when
preparing the financial statements for 2006. The changes in
accounting principles have not had a material impact on the
figures for the report period.
BUSINESS RISKS
Impact of economic fluctuations on business operations
Raute supplies technology and services to mills in the wood
products industry. Business is characterized by sensitivity to
economic fluctuations due to changes in the investment activity of
customer industries. The impact that the cyclical nature of
project deliveries has on the Groups performance is mitigated by
systematically increasing the share of technology services, by
developing the subcontracting network, and by focusing on core
competence. In the long term, the Groups growth opportunities are
increased and the impact of economic fluctuations balanced by
developing operations in customer industries where the companys
market share is still small, and by creating products for new
customer groups, such as the decorative veneer industry.
The Group is prepared for fluctuations in the working capital tied
up in project operations. Raute Corporation has an EUR 10 million
domestic commercial paper program, which allows it to issue
commercial papers maturing in less than one year. The company also
has bilateral non-current credit regulation agreements worth EUR
15 million.
Delivery and technology risks
The majority of Rautes business operations consists of different
kinds of project deliveries, which always expose the company to
risks caused by, for example, the customers end product,
production methods, or customer-specific solutions related to raw
materials. At the quotation and negotiation phase, the company has
to make estimates of the achievement of promised performance
figures and of the costs of implementation. Contract, product
liability, implementation, cost, and capacity risks are managed
using project management procedures that comply with the companys
certified quality system.
Raute emphasizes product development and continuously develops new
technology in order to offer solutions for customers expanding
needs. The functionality and capacity of new solutions cannot be
fully verified until the solutions can be tested under production
conditions in conjunction with first customer deliveries.
Technology risks are reduced by the conditions of delivery
contracts and by restricting the number of simultaneous first
deliveries.
Hedging of foreign currency receivables
Items related to business payments and denominated in foreign
currency are hedged with currency derivatives when contracts take
effect. Forward contracts in Canadian and US dollars related to
the economic hedging of payments from binding sales agreements had
a nominal value of EUR 0.2 million (3.1 m) at the end of the
year. The measurement of these forward contracts in compliance
with IFRS improved the company's net sales and operating profit by
EUR 0.1 million (-0.7 m) compared to the Finnish Accounting
Standards.
Forward contracts in Canadian and US dollars related to fair value
hedging had a nominal value of EUR 7.0 million (0 m) at the end
of the report period. Hedge accounting had a positive impact of
EUR 20 thousand on the periods result.
Forward contracts in Canadian dollars related to the economic
hedging of financing items had a nominal value of EUR 2.0 million
(6.8 m) at the end of the year.
SOCIETY AND THE ENVIRONMENT
The environment is one of the values that guide Rautes
operations. Raute has been systematically developing the
environmental soundness of its products and services and aims to
reduce the environmental impact of its operations. The Group
abides by the principles of good corporate citizenship, taking
into consideration nature and its protection, as well as the
operating methods of the surrounding society, and by showing
respect to local cultures.
Rautes operations mainly affect the environment indirectly when
the companys technology is used in the production processes of
the wood products industry. Rautes technology enables the wood
products industry to substantially reduce the environmental load
caused by its operations, for example, through more efficient use
of raw materials, additives, and energy.
The Groups own operations do not involve considerable
environmental risks that might have a direct impact on the Group's
business operations or financial position. The Nastola and
Jyväskylä plants manage environmental matters in compliance with a
certified environmental system. At the Canadian plant,
environmental surveys are carried out regularly by an outside
assessor. The operations and ethical principles of the partner and
subcontractor networks are also subjected to systematic
inspection.
Raute aims to continuously reduce energy use, decrease the volume
of waste, and develop the working environment. In 2006, a survey
of potential soil contamination was conducted at the Canadian
plant. According to the survey, the soil does not call for
cleansing measures for the current industrial purposes.
THE BOARDS PROPOSALS TO THE ANNUAL GENERAL MEETING
Raute Corporations Annual General Meeting will be held in Lahti
on March 21, 2007 at 6:00 p.m.
The Board of Directors proposes to the Annual General Meeting that
a dividend of EUR 0.70 per share will be paid for series A and K
shares, that is, a total of EUR 2.8 million, on April 2, 2007. The
record date for dividend payments is March 26, 2007.
The Board of Directors proposes to the Annual General Meeting that
the meeting authorize the Board to decide on the repurchase of a
maximum of 400,000 Raute Corporation series A shares with assets
from the companys non-restricted equity to be used for the
development of the companys capital structure, as consideration
for funding or carrying out acquisitions or other arrangements, or
to be otherwise disposed of or cancelled. The proposed number of
shares is less than ten percent (10%) of the companys overall
shares. The authorization includes the right to acquire shares in
deviation from the proportion of existing shareholdings. The Board
of Directors will decide on the other conditions related to share
repurchases. The authorization is effective until the end of the
next Annual General Meeting.
Furthermore, the Board proposes that the Annual General Meeting
authorize the Board to decide on a directed issue of Raute
Corporations series A shares, as well as on all of the related
conditions, including the recipients and the sum of consideration
to be paid. The Board of Directors may decide to issue either new
shares or company shares held by Raute. The maximum number of
shares issued is 400,000 series A shares. The authorization is
effective until the end of the next Annual General Meeting. As
proposed, the authorization will be used to fund or carry out
acquisitions or other arrangements or for other purposes decided
by the Board of Directors.
OUTLOOK FOR 2007
The market situation in Rautes customer industries is expected to
remain good, except for North America. However, developments in
raw material and energy prices will keep competition tough in the
wood products industry, forcing players in the field to focus on
continuously developing their production. This offers Raute
business opportunities.
Investments in the wood products industry will continue at a good
level in the near future. Rautes customers still have mill-scale
projects in the planning phase for different market areas. Demand
for smaller production line projects and modernizations is picking
up after 2006, which was less active in this respect.
Rautes competitiveness is good thanks to modern technology and
the investments carried out. The share of first deliveries is
smaller than the year before. The potential further weakening of
the US and Canadian dollars against the euro create challenges to
the competitiveness of North American project deliveries.
Thanks to a strong order book and good continued demand the
outlook for 2007 is promising. Net sales are expected to grow
moderately in 2007 and operating profit to improve over 2006.
RAUTE CORPORATION
FINANCIAL STATEMENTS FOR
1.1. - 31.12.2006
(Figures EUR 1 000 )
CONSOLIDATED INCOME 1.10.- 1.10.- 1.1. - 1.1. -
STATEMENT 31.12. 31.12. 31.12. 31.12.
2006 2005 2006 2005
NET SALES 32 494 31 503 106 206 108 627
Other operating income 72 89 199 708
Operating expenses -29 396 -30 184 -99 231 -102 054
Depreciation, amortization -871 -715 -2 660 -2 877
and impairment charges
OPERATING PROFIT 2 299 695 4 513 4 403
% of net sales 7 % 2 % 4 % 4 %
Financial income 199 255 745 1 131
Financial expenses -86 0 -371 -73
PROFIT BEFORE TAX 2 412 950 4 887 5 461
% of net sales 7 % 3 % 5 % 5 %
Income tax *) -717 -32 -1 255 -1 423
PROFIT FOR THE PERIOD 1 696 918 3 632 4 038
% of net sales 5 % 3 % 3 % 4 %
BREAKDOWN OF PROFIT
Minority interest 0 3 0 -114
Owners of the parent 1 696 915 3 632 4 152
company
EARNINGS PER SHARE, EUR
Basic 0,44 0,24 0,94 1,09
Diluted 0,44 0,24 0,94 1,07
NUMBER OF SHARES
Weighted average, 1 000 pcs 3 867 3 815 3 867 3 815
Diluted, 1 000 pcs 3 867 3 872 3 867 3 872
*) Income tax include the tax liability estimated for the report
period.
BALANCE SHEET 31.12. 31.12.
2006 2005
ASSETS
FIXED ASSETS AND OTHER NON-
CURRENT ASSETS
- intangible assets 2 924 2 757
- property, plant and
equipment 12 542 13 939
- available-for-sale
investments 395 395
- receivables 0 48
- deferred tax assets 487 210
Fixed and other non-current
assets total 16 348 17 349
CURRENT ASSETS
- inventories 4 933 5 026
- accounts receivable and
other financial assets 23 184 21 666
- financial assets at fair
value
through profit or loss 10 194 8 975
- cash and cash equivalents 13 812 2 419
Current assets total 52 124 38 086
TOTAL ASSETS 68 472 55 435
SHAREHOLDERS' EQUITY AND
LIABILITIES
SHAREHOLDERS' EQUITY
- share capital 8 010 7 629
- other shareholders'
equity 21 299 18 294
Owners of the parent
company 29 309 25 923
Minority interest 0 224
Total shareholders' equity 29 309 26 147
LIABILITIES
Non-current liabilities
- provisions 262 475
- deferred tax liabilities 1 084 1 300
- interest-bearing long-
term liabilities 317 357
Current liabilities
- provisions 1 726 1 927
- income tax liabilities 113 105
- pension obligations 335 380
- interest-bearing short-
term liabilities 150 176
- customer deposits 19 726 8 500
- trade and other payables 15 450 16 068
Total liabilities 39 163 29 288
TOTAL EQUITY AND
LIABILITIES 68 472 55 435
CONSOLIDATED 1.1. - 1.1. -
31.12. 31.12.
CASH FLOW STATEMENT 2006 2005
CASH FLOW FROM OPERATING
ACTIVITIES
Payments received:
- receipts from sales 116 046 108 934
- receipts from other
operating income 155 483
Payments made:
- expenses -100 100 -99 840
- interests and other
financial expenses paid -190 -80
Interests and other
financial income received 660 764
Dividend income received 24 56
Income taxes paid -1 614 -2 636
Net cash from (+) / used in
(-) operating activities 14 982 7 681
(A)
CASH FLOW FROM INVESTING
ACTIVITIES
Capital expenditure:
- capital expenditure in
tangible and intangible
assets -1 809 -3 554
- purchases of available-
for-sale as financial
assets -49
Subsidiary shares:
- acquisition of subsidiary
shares 0 -304
Proceeds:
- proceeds from sale of
tangible and intangible
assets 292 713
- proceeds from sale of
investments 20 180
Net cash from (+) / used in
(-) investing activities -1 545 -2 965
(B)
CASH FLOW FROM FINANCING
ACTIVITIES
Change:
- change in short-term
loans 0 -1 537
- change in long-term loans -67 212
- change in long-term and
short-term receivables 95
Proceeds from issuance of
shares 1 436
Dividends paid -2 290 -1 526
Net cash from (+) / used in
(-) financing activities -826 -2 851
(C)
NET CHANGE IN CASH AND CASH
EQUIVALENTS (A+B+C)
increase (+)/decrease (-) 12 611 1 865
CASH AND CASH EQUIVALENTS*)
- at the beginning of the
period 11 395 9 530
- at the end of the period 24 006 11 395
*) Cash and cash equivalents comprise of trading assets as well as
cash and bank receivables
CONSOLIDATED STATEMENT Share Share Other Ex- Retai- Total
OF CHANGES capital premium funds change ned
IN SHAREHOLDERS' EQUITY rate earnings
diff.
1.1.2005 7 629 5 429 0 902 10 726 24 686
Other increase / decrease 14 -1 435 32 -1 389
Increase in share capital
(warrants) 0
Dividends paid -1 526 -1 526
Profit for the period 4 152 4 152
31.12.2005 7 629 5 429 14 -533 13 384 25 923
CONSOLIDATED STATEMENT OF Owners Minority Total
CHANGES of the interest
IN SHAREHOLDERS' EQUITY parent
company
1.1.2005 24 686 353 25 039
Other increase / decrease -1 389 -15 -1 404
Increase in share capital 0
(warrants)
Dividends paid -1 526 -1 526
Profit for the period 4 152 -114 4 038
31.12.2005 25 923 224 26 147
CONSOLIDATED STATEMENT Share Share Other Ex- Retai- Total
OF CHANGES capital premium funds change ned
IN SHAREHOLDERS' EQUITY rate earnings
diff.
1.1.2006 7 629 5 429 14 -533 13 384 25 923
Other increase / decrease 808 808
Increase in share capital 381 1 069 -14 1 436
(warrants)
Share-based payment 50 50
Foreign currency -250 -250
gains/losses from the net
investment
Dividends paid -2 290 -2 290
Profit for the period 3 632 3 632
31.12.2006 8 010 6 498 -201 275 14 727 29 309
CONSOLIDATED STATEMENT OF Owners Minority Total
CHANGES of the interest
IN SHAREHOLDERS' EQUITY parent
company
1.1.2006 25 923 224 26 147
Other increase / decrease 808 -224 *) 584
Increase in share capital 1 436 1 436
(warrants)
Share-based payment 50 50
Foreign currency
gains/losses from the net
investment -250 -250
Dividends paid -2 290 -2 290
Profit for the period 3 632 3 632
31.12.2006 29 309 0 29 309
*) Associated company
Eloc Oy, dissolution
THE DEVELOPMENT OF Q4 Q3 Q2 Q1 1.1. - 1.1. -
31.12. 31.12.
QUARTERLY RESULTS 2006 2006 2006 2006 2006 2005
NET SALES 32 494 18 666 28 543 26 503 106 206 108 627
Other operating income 72 30 72 25 199 708
Operating expenses -29 396 -18 404 -26 629 -24 803 -99 231 -102 055
Depreciation, -871 -616 -579 -595 -2 660 -2 877
amortization and
impairment charges
OPERATING PROFIT 2 299 -324 1 408 1 130 4 513 4 403
% of net sales 7 % -2 % 5 % 4 % 4 % 4 %
Financial income 199 184 -46 409 745 1 131
Financial expenses -86 -92 -5 -189 -371 -73
Share of the associated
companies' result
PROFIT BEFORE TAX 2 412 -233 1 357 1 350 4 887 5 461
% of net sales 7 % -1 % 5 % 5 % 5 % 5 %
Income taxe -717 -66 -50 -423 -1 255 -1 423
PROFIT FOR THE PERIOD 1 696 -299 1 307 927 3 632 4 038
% of net sales 5 % -2 % 5 % 3 % 3 % 4 %
BREAKDOWN OF PROFIT
Minority interest 0 0 0 0 0 -114
Owners of the parent 1 696 -299 1 307 927 3 632 4 152
company
EARNINGS PER SHARE, EUR
Basic 0,44 -0,08 0,34 0,24 0,94 1,09
Diluted 0,44 -0,08 0,33 0,24 0,94 1,07
NUMBER OF SHARES
Weighted average, 1 000 3 867 3 834 3 822 3 816 3 867 3 815
pcs
Diluted, 1 000 pcs 3 867 3 957 3 931 3 925 3 867 3 872
PERSONNEL 31.12. 31.12.
2006 2005
Personnel
- effective on average 546 536
- in books on average 547 537
- in books at the end of 540 533
the period
SEGMENT INFORMATION *) 1.1. - 1.1. -
31.12. 31.12.
BY GEOGRAPHICAL LOCATION 2006 % 2005 %
*) Raute's primary reporting segment is the business segment. All
continuing operations are categorized in the wood products
technology segment. The secondary reporting segment is
geographical location.
NET SALES
Europe 30 620 29 43 954 40
Russia 12 470 12 15 534 14
North America 17 107 16 28 817 27
Asia 5 593 5 8 107 7
Rest of the world 40 416 38 12 215 12
TOTAL 106 206 100 108 627 100
ASSETS
Europe 63 832 93 48 655 89
Russia 190 0 200 0
North America 4 158 7 6 375 11
Asia 148 0 155 0
Rest of the world 144 0 50 0
TOTAL 68 472 100 55 435 100
CAPITAL EXPENDITURE
Europe 1 801 97 3 654 96
Russia 0 0 0 0
North America 51 3 142 4
Asia 0 0 1 0
Rest of the world 0 0 1 0
TOTAL 1 852 100 3 798 100
NET SALES 1.1. - 1.1. -
31.12. 31.12.
BY MARKET AREA 2006 % 2005 %
Finland 10 417 10 30 444 28
Rest of Europe 20 203 19 13 510 12
Russia 12 470 12 15 534 14
North America 17 107 16 28 817 27
Asia 5 593 5 8 107 7
South America 39 160 37 4 556 4
Oceania 501 1 2 366 2
Other 755 1 5 293 6
TOTAL 106 206 100 108 627 100
OFF BALANCE SHEET 31.12. 31.12.
COMMITMENTS AND DERIVATIVES 2006 2005
COMMITMENTS
Security of own debts
- mortgages 11 134 11 134
Security for Group's
liabilities
- guarantees 646 4 111
Other own liabilities
Leasing and rent
liabilities:
- for the current
accounting period 218 179
- for the following
accounting periods 527 122
CURRENCY DERIVATIVES
Currency derivatives are
used for hedging purposes.
Nominal values of forward
contracts in foreign
currency
Economic hedging
- related to financing 2 065 6 830
- related to hedging of net
sales 174 3 071
Hedge accounting
- related to the hedging of
net sales 7 000
Fair values of forward
contracts in foreign
currencies
Economic hedging
- related to financing 2 -41
- related to the hedging of
net sales -8 -104
Hedge accounting
- related to the hedging of
net sales -50
Purchased currency options
- nominal values 1 963
- fair values 13
No loans or pledges given or other commitments made on behalf of
the company's management, shareholders or associated companies.
GROUP 1.1. - 1.1. -
31.12. 31.12.
KEY RATIOS 2006 2005
Return on investment, ROI 18,6 % 20,7 %
Return on equity, ROE 13,1 % 15,8 %
Quick ratio 2,7 2,0
Gearing -80,3 % -41,5 %
Equity ratio 60,1 % 55,7 %
Order book, EM 77 55
Order intake, EM 132 132
Exported portion of net
sales 90,2 % 72,0 %
Change in net sales % -2,2 % 49,0 %
Gross capital expenditure,EM 1,9 3,8
Gross capital expenditure 1,7 % 3,5 %
of net sales
Research and development EM 3,8 3,6
- capital expenditure, EM 0,5 0,2
- expenses, EM 3,2 3,4
Research and development of
net sales 3,5 % 3,3 %
SHARE RELATED 1.1. - 1.1.-
31.12. 31.12.
KEY RATIOS 2006 2005
Earnings per share (EPS),
EUR
- basic 0,94 1,09
- diluted 0,94 1,07
Equity to share, EUR 7,32 6,80
Dividend per share, EUR 0,70 *) 0,60
Dividend per profit, % 74,5 % 55,1 %
Effective dividend return,% 5,4 % 4,2 %
Share price at the end of
period, EUR 12,85 14,24
Number of shares
-weighted average, 1 000 pcs 3 867 3 815
-diluted, 1 000 pcs 3 867 3 872
*)The Board of Directors'
proposal
THE LARGEST REGISTERED Number of Number of Total
SHAREHOLDERS
on 31 December 2006 K-shares A-shares number of
(20 votes ( 1 vote shares
per share) per share)
1. Sundholm Göran 500 000 500 000
2. Varma Mutual Pension
Insurance Company 195 000 195 000
3. Suominen Jussi Matias 48 000 74 759 122 759
4. Suominen Tiina Sini-
Maria 48 000 74 759 122 759
5. Mustakallio Kari Pauli 60 480 60 009 120 489
6. Kirmo Kaisa Marketta 50 280 65 092 115 372
7. Suominen Pekka Matias 48 000 64 159 112 159
8. Siivonen Osku Pekka 50 640 59 539 110 179
9. Keskiaho Leena 33 600 51 116 84 716
10. Särkijärvi Riitta 60 480 22 009 82 489
11. Mustakallio Risto 42 240 35 862 78 102
12. Mustakallio Ulla Sinikka 47 240 30 862 78 102
13. Mustakallio Mika 39 750 34 670 74 420
14. Op Suomi Pienyhtiöt
Mutual Fund 67 900 67 900
15. Mustakallio Marja Helena 42 240 20 662 62 902
16. Mustakallio Kai Henrik 47 240 12 000 59 240
17. Kirmo Lasse 30 000 26 200 56 200
18. Särkijärvi Timo Juha 12 000 43 256 55 256
19. Särkijärvi-Martinez Anu
Riitta 12 000 43 256 55 256
20. Suominen Jukka Matias 24 960 27 964 52 924
TOTAL 697 150 1 509 074 2 206 224
percentage of total amount
of shares 70,3 % 50,1 % 55,1 %
percentage of total voting
rights 67,7 %
Administrative registered 52 440 52 440
OTHER SHAREHOLDERS 294 011 1 452 083 1 746 094
TOTAL 991 161 3 013 597 4 004 758
MANAGEMENT'S STAKE 98 990 81 838 180 828
percentage of total amount
of shares 10,0 % 2,7 % 4,5 %
RAUTE CORPORATION
Board of Directors
FURTHER INFORMATION:
Mr. Tapani Kiiski, President and CEO, Raute Corporation,
+358 3829 3560, mobile phone +358 400 814 148
Ms. Arja Hakala, CFO, Raute Corporation, +358 3 829 3293, mobile
phone +358 400 710 387
RAUTE IN BRIEF:
Raute is a technology company serving the wood products industry
worldwide. Its most important customers are the plywood and LVL
industries. The company is the world market leader as a supplier
of mill-scale projects to these customer industries. The full-
service concept also includes technology services, with which
Raute supports its customers throughout the entire life cycle of
their investment. Rautes head office and main production plant
are in Nastola, Finland. Its other production plants are in the
Vancouver area of Canada and in Jyväskylä and Kajaani, Finland.
Net sales in 2006 were EUR 106 million and the number of personnel
540. More information about the company can be found at
www.raute.com.
DISTRIBUTION:
Helsinki Exchanges, Main media, www.raute.com
RAUTE CORPORATION FINANCIAL STATEMENTS FOR 2006
| Source: Raute Oyj