Norwegian sawmiller and glulam producer Moelven has reported a sharp plunge in annual operating profits to NKr13m (2010: NKr243m).
“Difficult market conditions internationally and losses on some individual projects were the main causes of the poor operating profit,” Moelven said.
Group sales in 2011 grew to NKr8.06bn (2010: NKr7.1bn).
“Unsually low” gross margins for the export-based activities of the group’s Swedish sawmills were a factor in the poor profits.
Moelven president and CEO Hans Rindal said the European debt crisis was holding demand in its international markets at a lower than normal level.
“This has led to falling prices for industrial timber, while at the same time the euro has weakened, which has in turn weakened the competitiveness of manufacturers outside the eurozone,” he said.
“Strong competition on the raw materials market in Sweden has slowed the reduction in raw material prices from their all-time high a year ago. The net effect of this, unfortunately, has been losses in this part of our industry.”
Despite the challenges, Moelven is planning for normal activity this year and has a contingency plan should production capacity need to be reduced.
