Holmen

Quarterly Report • Apr 28, 2022

Holmen's Interim Report January-March 2022

		Quarter		Full year
SEKm	1-22	4-21	1-21	2021
Net sales	5 750	4 770	4 703	19 479
Operating profit excl. item affecting comparability	1 617	1 185	849	4 061
Operating profit	1 883	1 006	849	3 731
Profit after tax	1 483	868	675	3 004
Earnings per share, SEK	9.2	5.4	4.2	18.5
Operating margin, %*	28	25	18	21
Book value, forest assets, SEKm	47 199	47 080	43 340	47 080
Cash flow before investments and change in working capital	1 925	704	672	3 375
Debt/equity ratio, %	7	9	9	9

*Excl. the item affecting comparability in Q1-22 (SEK 266 million), Q4-21 (SEK -179 million) and 2021 (SEK -330 million); see page 14 for more information.

• Operating profit for January–March 2022 was SEK 1 883 million (January–March 2021: 849). Operating profit includes net SEK +266 million related to the damaged turbine at Workington, which is being treated as an item affecting comparability. Excluding the item affecting comparability, operating profit increased by SEK 768 million to SEK 1 617 million because of higher selling prices for paper and wood products.
• Compared with the fourth quarter, operating profit excluding the item affecting comparability increased by SEK 432 million, mainly due to price increases for paper and increased deliveries of wood products. Profit for the fourth quarter included just over SEK +200 million from the sale of a British forest property.
• Profit after tax for January–March amounted to SEK 1 483 million (675), which corresponds to earnings per share of SEK 9.2 (4.2).

*Excl. items affecting comparability.

CEO comments

In the first quarter, the European economy was characterised by rising inflation pressure driven by a shortage of raw materials and energy. Good control over our cost base enabled us to handle the situation well and through price increases we were able to increase operating profit to SEK 1 617 million (excluding the item affecting comparability).

Despite rising commodity prices around the world, the price increases for wood have been moderate so far. Profit from the forest, SEK 305 million, was at the same level as the previous year, excluding the effects of property sales. We now see increased competition for wood as activity in the industry increases, while the supply of wood from the east is limited.

Demand for paperboard for consumer packaging was good and many producers have found it difficult to meet customer needs. We increased our prices, but the increase was offset by higher prices for chemicals and logistics. The turbine in Workington was put back into service in the quarter and insurance compensation was received for the additional costs incurred during the period it was out of commission. Adjusted for the effects of the damaged turbine, profit for paperboard was SEK 256 million. We continue to develop the paperboard business aimed at those customer segments with the highest demand for quality.

In the paper market, the supply has been limited by a shortage of energy and fibre, at the same time that demand has been good, with rapidly increasing prices as a result. Our production costs increased, albeit to a much lesser extent than for producers on the continent. As a result of price increases, profit increased to SEK 399 million. We continue to develop our book and magazine paper at the same time as we are exploring segments in the packaging area, where our fresh fibre and fossil-free energy are best utilised.

Interest in building in wood continues to be strong, but the supply of wood products has been limited by disruptions in logistics chains and the supply of raw materials. In Europe, prices bottomed out in January and have gradually increased since then. At the same time, prices in the US increased sharply to record levels, but then culminated once customers replenished their stocks. We succeeded in increasing sales to the US in the quarter, which strongly contributed to the high profit, SEK 529 million. With a strong position in the wood market, we see good opportunities to develop the wood products business in pace with the increasing demand for sustainable building materials.

The energy shortage in Europe continued to worsen in the quarter. In northern Sweden, where we have most of the energy production, however, the electricity price decreased due to limitations in transmission capacity within the country. In the quarter, we acquired the remaining shares in Varsvik Wind Farm north of Stockholm, at the same time as we commissioned the Blåbergsliden Wind Farm. Combined with good control of hydro power and favourable electricity price hedging, operating profit increased to SEK 168 million. We have great potential to develop additional wind farms on our land, but are dependent on permitting processes that currently take far too long.

With our large forest holdings as a foundation, we grow houses. We make renewable packaging, magazines and books from what is left over, while at the same time harnessing the energy that blows through the treetops and flows in the rivers. This business model is a particularly good fit in a world that must be converted to fossil-free at the same time that there is a shortage of raw materials and energy.

Key figures Q1 2022

1 617 28 7

Operating profit, SEKm* Operating margin, %* Debt/equity ratio, %

*Excl. item affecting comparability. Incl. items affecting profitability, operating profit amounts to SEK 1 883 million and the operating margin to 33 per cent.

Forest

Holmen carries out active and sustainable forestry on over 1 million hectares of its own productive forest land. The annual volume from own forest amounts to 2.8 million m3sub.

		Quarter		Full year
SEKm	1-22	4-21	1-21	2021
Net sales	1 809	1 690	1 658	6 509
Of which from own forests	330	336	306	1 376
Operating costs	-1 601	-1 255	-1 409	-5 400
Change in biological assets	117	99	133	464
EBITDA	325	535	382	1 573
Depreciation and amortisation according to plan	-20	-22	-18	-78
Operating profit	305	513	364	1 495
Book value, forest assets	47 199	47 080	43 340	47 080
Deliveries, own forests, '000 m³	674	666	653	2 833

Demand for logs continued to be strong in the first quarter and prices increased somewhat. Demand for pulpwood was normal and prices were stable.

The operating profit for January–March was SEK 305 million (364). The decrease in earnings is explained by the sale of a forest property last year.

Compared with the fourth quarter, operating profit decreased by SEK 208 million because of the sale of a large forest property in England the previous quarter.

Paperboard

Holmen supplies paperboard to the premium consumer packaging segment. Production, which takes place at one Swedish and one UK mill, amounts to just over 0.5 million tonnes a year.

		Quarter		Full year
SEKm	1-22	4-21	1-21	2021
Net sales	1 579	1 504	1 614	6 261
Operating costs	-1 174	-1 082	-1 238	-5 023
EBITDA*	406	422	376	1 237
Depreciation and amortisation according to plan	-149	-140	-140	-565
Operating profit*	256	281	236	673
Investments	78	126	80	399
Capital employed	5 419	5 169	5 329	5 169
EBITDA margin, %*	26	28	23	20
Operating margin, %*	16	19	15	11
Deliveries, '000 tonnes	126	127	145	544

*Excl. item affecting comparability.

Demand for paperboard continued to be high in the first quarter and market prices increased. European consumption of fresh fibre board increased by 2 per cent compared with the first quarter of 2021.

Operating profit for January–March was SEK 256 million (236), excluding the item affecting comparability. Higher selling prices had a positive impact on earnings, but this was offset by lower deliveries and increased costs for chemicals and logistics.

Operating profit decreased by SEK 25 million compared with the fourth quarter. Selling prices increased, but were offset in part by increased costs. A bonus for green electricity production and certain non-recurring income items had a positive impact on profit for the fourth quarter.

The turbine in the biofuel boiler in Workington that was damaged at the end of June 2021 was put back into service in February 2022. The insurance investigation is now complete and the insurance will cover the damage, less the deductible and certain costs. The damage had a net impact on earnings of SEK -64 million, including SEK -330 million in the second half of 2021 and SEK +266 million in the first quarter of 2022. The effects of the damage have been treated as an item affecting comparability.

A major maintenance shutdown is scheduled for the fourth quarter of 2022, which is expected to have a negative impact on profit of SEK 150 million.

*Excl. items affecting comparability. **Excl. items affecting comparability and twelve-month rolling average.

Paper

Holmen produces paper that utilises the properties of fresh fibre to provide cost-effective alternatives to traditional paper products for advertising, magazines and books. Production amounts to 1 million tonnes a year at two Swedish mills.

		Quarter		Full year
SEKm	1-22	4-21	1-21	2021
Net sales	1 871	1 384	1 284	5 441
Operating costs	-1 392	-1 302	-1 227	-5 000
EBITDA	479	83	56	441
Depreciation and amortisation according to plan	-80	-92	-93	-371
Operating profit	399	-9	-37	70
Investments	28	44	33	129
Capital employed	1 923	1 637	2 022	1 637
EBITDA margin, %	26	6	4	8
Operating margin, %	21	-1	-3	1
Deliveries, '000 tonnes	253	249	257	1 029

The supply of paper in Europe was limited in the first quarter because of the continued shortage of energy and fibre, which led to significant cost increases for many producers. As a result of cost pressures, market prices for paper increased significantly at the turn of the year.

The operating profit for January–March was SEK 399 million (-37). The improvement in earnings is attributable to higher prices, which to some extent were offset by increased costs for electricity, chemicals and logistics.

Compared with the fourth quarter, profit increased by SEK 408 million due to price increases at the turn of the year. The cost of chemicals and logistics increased.

*Twelve-month rolling average.

Wood Products

Holmen produces wood products for joinery and construction purposes. After the acquisition of Martinsons production takes place at five sawmills adjacent to own forest with an annual production of 1.5 million cubic metres.

		Quarter		Full year
SEKm	1-22	4-21	1-21	2021
Net sales	1 445	1 133	1 020	4 872
Operating costs	-865	-736	-756	-3 014
EBITDA	580	397	265	1 857
Depreciation and amortisation according to plan	-51	-47	-47	-189
Operating profit	529	350	218	1 668
Investments	26	82	54	242
Capital employed	2 297	2 278	1 914	2 278
EBITDA margin, %	40	35	26	38
Operating margin, %	37	31	21	34
Deliveries, '000 m³	395	313	372	1 373

Demand for wood products was robust in the first quarter and prices gradually increased after the decrease that occurred in the second half of 2021. In Europe, average prices were somewhat lower than in the fourth quarter, while prices in the US were substantially higher.

The operating profit for January–March was SEK 529 million (218). The increase in earnings is due to significantly higher selling prices than one year ago.

Compared with the fourth quarter, profit increased by SEK 179 million due to higher deliveries, with an increased proportion to the US.

*Twelve-month rolling average.

Renewable Energy

In a normal year Holmen produces 1.7 TWh of renewable hydro and wind power.

		Quarter		Full year
SEKm	1-22	4-21	1-21	2021
Net sales	183	148	135	488
Operating costs*	9	-28	-21	-113
Depreciation and amortisation according to plan	-24	-8	-7	-28
Operating profit	168	112	107	347
Investments	56	385	14	712
Capital employed	4 315	4 069	3 377	4 069
Operating margin, %	92	76	79	71
Deliveries hydro and wind power, GWh	402	306	369	1 230

*Incl. other operating income.

The energy shortage in Europe worsened during the first quarter. In northern Sweden, where Holmen has most of its energy production, however, the electricity price decreased somewhat due to limitations in transmission capacity within the country.

The operating profit for January–March was SEK 168 million (107). The result was positively impacted by increased wind power production as Blåbergsliden Wind Farm was taken into service, along with the acquisition of the remaining shares in Varsvik Wind Farm. Despite lower spot prices in northern Sweden, Holmen's average selling price increased thanks to favourable hedges and the possibility to manage hydro power production towards times with high price levels.

Compared with the fourth quarter, profit increased by SEK 56 million as a result of the commissioning of Blåbergsliden Wind Farm, the acquisition of Varsvik and higher hydro power production. The effect of lower market prices in northern Sweden was offset by favourable price hedges. The levels in Holmen's water storage reservoirs were normal at the end of the quarter.

In February, the remaining 50 per cent of shares were acquired in the partly owned company Varsvik AB, which thereby could be fully integrated into Holmen's portfolio of renewable power. Along with the commissioning of Blåbergsliden, this acquisition increases Holmen's production of renewable energy by 40 per cent to 1.7 TWh.

*Twelve-month rolling average.

Cash flow, financing and net financial items

Cash flow from operating activities for January– March totalled SEK 1 383 million (595) and cash flow from investing activities totalled SEK -201 million (-132).

The Group's net financial debt decreased by SEK 917 million to SEK 3 184 million in the first quarter. Net debt was 7 per cent of equity.

At 31 March, the Group's long-term borrowing amounted to SEK 3.4 billion and short-term borrowing was SEK 1.8 billion. Cash and cash equivalents totalled SEK 2.2 billion and non-current financial receivables were SEK 0.1 billion. Contractual credit commitments amounted to SEK 5 billion, of which SEK 1 billion is available until 2025 and SEK 4 billion until 2027. All credit commitments are unused.

Standard & Poor's long-term credit rating on Holmen is BBB+ with a stable outlook.

Net financial items for January–March totalled SEK -38 million (-10). Net financial items were negatively impacted by currency revaluation from loans in conjunction with the acquisition of the remaining shares in Varsvik AB in the first quarter of 2022.

Tax

Recognised tax for January–March was SEK -361 million (-164). Recognised tax as a proportion of profit before tax was 20 per cent (20).

Equity

In the first quarter, the Group's equity increased by SEK 401 million to SEK 47 393 million. Profit for the period totalled SEK 1 483 million (675) and other comprehensive income totalled SEK 783 million (-12). The dividend of SEK 1 862 million, which has been approved but has not yet been paid out, reduced equity for the period.

Hedging of exchange rates

The Group hedges parts of future estimated net flows in foreign currencies. Operating profit for January–March includes currency hedges of SEK -27 million (20). For EUR/SEK, 2 years of expected net flows are hedged at an average exchange rate of 10.48. For other currencies, 4–10 months of flows are hedged.

Hedging of electricity prices

Electricity consumption in the Paper business area amounts to 3.2 TWh per year. To reduce the impact of changing electricity prices on Paper's profit, parts of consumption are hedged. In the first quarter, consumption was 95 per cent hedged. For the remainder of 2022, 90 per cent of electricity consumption is hedged and for 2023, 80 per cent. For 2024 and 2025, 45 per cent and 25 per cent, respectively, is hedged.

The Group's production of wind and hydro power amounts to 1.7 TWh in a normal year. In the first quarter, 30 per cent of production was hedged, while future production is not hedged.

Share buy-backs

The 2022 AGM renewed the Board's authorisation to take decisions on purchasing up to 10 per cent of the company's shares. No buy-backs took place during the period. The company owns 0.3 per cent of all shares outstanding.

Dividend

The 2022 AGM set the dividend at SEK 11.50 (10.75) per share, of which SEK 4.00 (3.50) per share related to an extra dividend. The dividend, totalling SEK 1 862 million, was paid on 6 April.

Stockholm, 28 April 2022 Holmen AB (publ)

Henrik Sjölund President and CEO

The report has not been reviewed by the company's auditors.

For further information please contact:

Henrik Sjölund, President and CEO, tel +46 8 666 21 05 Anders Jernhall, Executive Vice President and CFO, tel +46 8 666 21 22 Stina Sandell, Senior Vice President Sustainability and Communications, tel +46 73 986 51 12

		Quarter		Full year
Income statement, SEKm	1-22	4-21	1-21	2021
Net sales	5 750	4 770	4 703	19 479
Other operating income	840	759	401	1 690
Change in inventories	-12	177	-84	1
Raw materials and consumables	-2 773	-2 830	-2 438	-10 110
Personnel costs	-723	-657	-692	-2 720
Other operating costs	-992	-1 000	-864	-3 814
Change in value of biological assets	117	99	133	464
Profit from investments in associates and joint ventures	8	4	2	0
Depreciation and amortisation according to plan	-332	-315	-312	-1 261
Operating profit	1 883	1 006	849	3 731
Finance income	1	2	2	9
Finance costs	-40	-11	-12	-48
Profit before tax	1 844	996	839	3 691
Tax	-361	-129	-164	-688
Profit for the period	1 483	868	675	3 004
Earnings per share, SEK
Basic	9.2	5.4	4.2	18.5
Diluted	9.2	5.4	4.2	18.5
Operating margin, %*	28	25	18	21
Return on capital employed, %*	13	10	7	9
Return on equity, %	13	8	6	7
*Excl. item affecting comparability.

		Quarter		Full year
Statement of comprehensive income, SEKm	1-22	4-21	1-21	2021
Profit for the period	1 483	868	675	3 004
Other comprehensive income
Revaluation of forest land	-	3 345	-	3 345
Revaluations of defined benefit pension plans	-21	-46	38	-12
Tax attributable to items that will not be reclassified to profit for the period	4	-677	-8	-683
Items that will not be reclassified to profit for the period	-17	2 623	31	2 650
Cash flow hedging	993	418	-219	504
Translation difference on foreign operation	-2	60	158	180
Hedging of currency risk in foreign operation	8	-13	-33	-39
Share in joint ventures' other comprehensive income	-	7	-1	3
Tax attributable to items that will be reclassified to profit for the period	-199	-85	52	-97
Items that will be reclassified to profit for the period	800	388	-43	551
Total other comprehensive income after tax	783	3 011	-12	3 201
Total comprehensive income	2 266	3 878	663	6 204

		Jan-Mar
Change in equity in summary, SEKm	2022	2021
Opening equity	46 992	42 516
Profit for the period	1 483	675
Other comprehensive income	783	-12
Total comprehensive income	2 266	663
Share saving program	-3	0
Dividend	-1 862	-
Closing equity	47 393	43 179

	2022	2021
Balance sheet, SEKm	31 Mar	31 Dec
Non-current assets
Forest assets
Biological assets	29 324	29 204
Forest land	17 876	17 876
Intangible non-current assets	534	539
Property, plant and equipment	10 107	9 711
Right-of-use assets	257	240
Investments in associates and joint ventures	1 680	1 756
Other shares and participating interests	2	2
Non-current financial receivables	77	268
Deferred tax assets	2	3
Total non-current assets	59 859	59 598
Current assets
Inventories	4 075	3 818
Trade receivables	2 712	2 393
Current tax receivable	2	70
Other operating receivables*	3 213	1 676
Current financial receivables	27	39
Cash and cash equivalents	2 243	507
Total current assets	12 271	8 503
Total assets	72 130	68 101
Equity	47 393	46 992
Non-current liabilities
Non-current financial liabilities	3 402	3 911
Non-current liabilities relating to right-of-use assets	176	173
Pension obligations	42	24
Non-current provisions	407	409
Deferred tax liabilities	11 881	11 610
Total non-current liabilities	15 907	16 127
Current liabilities
Current financial liabilities	1 825	736
Current liabilities relating to right-of-use assets	86	71
Trade payables	3 173	2 836
Current tax liability	148	80
Other operating liabilities**	3 598	1 259
Total current liabilities	8 830	4 982
Total liabilities	24 737	21 109
Total equity and liabilities	72 130	68 101
Debt/equity ratio, %	7	9
Equity/assets ratio, %	66	69
Capital employed	50 577	51 093
Net financial debt	3 184	4 101

*The fair value of electricity derivatives is included at SEK 1 938 million (838).

**Incl. approved, but not paid, dividend of SEK 1 862 million (-).

		Quarter		Full year
Cash flow statement, SEKm	1-22	4-21	1-21	2021
Operating activities
Profit before tax	1 844	996	839	3 691
Adjustments for non-cash items
Depreciation and amortisation according to plan	332	315	312	1 261
Change in value of biological assets	-117	-99	-133	-464
Other*	-16	-388	-73	-451
Paid income taxes	-119	-120	-274	-662
Cash flow from operating activities
before changes in working capital	1 925	704	672	3 375
Cash flow from changes in working capital
Change in inventories	-54	-189	114	-236
Change in trade receivables and other operating receivables	-801	177	-285	-156
Change in trade payables and other operating liabilities	313	-94	93	247
Cash flow from operating activities	1 383	598	595	3 229
Investing activities
Acquisition of non-current assets	-208	-706	-214	-1 775
Disposal of non-current assets	4	347	74	443
Change in non-current financial receivables	3	9	7	25
Cash flow from investing activities	-201	-349	-132	-1 307
Financing activities
Amortization of liabilities associated with to right-of-use assets	-21	-30	-26	-110
Change in financial liabilities and current financial receivables	575	-107	-356	86
Dividends paid to the shareholders of the parent company	-	-	-	-1 741
Cash flow from financing activities	554	-137	-381	-1 764
Cash flow for the period	1 735	112	82	158
Opening cash and cash equivalents	507	394	346	346
Exchange difference in cash and cash equivalents	0	1	2	2
Closing cash and cash equivalents	2 243	507	429	507

		Quarter		Full year
Change in net financial debt, SEKm	1-22	4-21	1-21	2021
Opening net financial debt	-4 101	-4 271	-4 181	-4 181
Cash flow from operating activities	1 383	598	595	3 229
Cash flow from investing activities (excl. financial receivables and acquisition)	-202	-358	-139	-1 332
Acquisition	-267	-	-	-
Dividends paid	-	-	-	-1 741
Liabilities arising from new right-of-use agreements	-38	-49	-9	-67
Revaluations of defined benefit pension plans	-17	-14	35	17
Foreign exchange effects and changes in fair value	60	-7	-25	-27
Closing net financial debt	-3 184	-4 101	-3 724	-4 101

*The adjustments consist primarily of change in provisions, interests in earnings of associated companies, currency effects and revaluations of financial instruments as well as capital gains/losses on sale of fixed assets.

Parent company

		Quarter		Full year
Income statement, SEKm	1-22	4-21	1-21	2021
Operating income	5 483	4 869	4 480	19 107
Operating costs	-4 486	-4 735	-4 197	-17 649
Operating profit	997	134	282	1 458
Net financial items	-4	-11	-43	316
Profit after net financial items	993	122	239	1 774
Appropriations	-115	351	157	768
Profit before tax	878	473	396	2 541
Tax	-183	-98	-84	-451
Profit for the period	696	375	313	2 090

		Quarter		Full year
Statement of comprehensive income, SEKm	1-22	4-21	1-21	2021
Profit for the period	696	375	313	2 090
Other comprehensive income
Cash flow hedging	1 016	422	-222	505
Tax attributable to other comprehensive income	-209	-87	46	-104
Items that will be reclassified to profit for the period	807	334	-177	401
Total comprehensive income	1 502	709	136	2 491

	2022	2021
Balance sheet, SEKm	31 Mar	31 Dec
Non-current assets	18 786	18 898
Current assets	10 599	7 025
Total assets	29 385	25 923
Restricted equity	5 915	5 915
Non-restricted equity	6 712	7 076
Untaxed reserves	3 061	2 852
Provisions	1 620	1 386
Liabilities	12 077	8 695
Total equity and liabilities	29 385	25 923

Sales to Group companies accounted for SEK 87 million (209) of operating income for January–March.

Balance sheet appropriations include net group contributions totalling SEK 95 million (217).

The parent company's investments in property, plant and equipment and non-current intangible assets totalled SEK 21 million (5).

Notes

1. Accounting policies

This report was prepared in accordance with IAS 34, Interim Financial Reporting. Information in accordance with IAS 34:16A can be found in the financial statements and their accompanying notes, as well as in other parts of the interim report. The consolidated accounts are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU and the Swedish Annual Accounts Act. The parent company's accounts are prepared in accordance with RFR 2 Accounting for Legal Entities and the Swedish Annual Accounts Act. New or revised IFRSs and interpretative statements from IFRIC have not had any material effect on the earnings or position of the Group or the parent company. The figures in tables are rounded off.

2. Purchase price allocation

In February Holmen acquired the remaining 50 per cent of shares in the partly owned company Varsvik AB. The 17 wind turbines in Varsvik provide 51 MW and production totals 150 GWh in a normal year. The table below shows the assets and liabilities of the acquired company. The acquisition is expected to have a positive impact on the Group's profit after tax.

Acquisition of net assets, SEKm
Tangible non-current assets	373
Deferred tax, net	50
Working capital	-61
Net financial debt	-172
Identified assets, net	190

3. Forest assets

The Group's forest assets are recognised at fair value based on the transaction prices for forest properties in those areas where the Group has forest land. Valuation is usually carried out at the end of the year. The total value of the forest assets is allocated across growing trees and forest land. The value of the growing trees, which are recognised in accordance with IAS 41 biological assets, is determined by calculating the present value of expected cash flows and is updated regularly during the year. Changes in value are recognised in the income statement. The value of forest land is recognised in accordance with IAS 16 and is updated when the total value of forest assets is calculated, as well as with acquisitions and disposals. Changes in value are recognised in other comprehensive income.

The value of the biological assets at 31 March was SEK 29 324 (31 Dec. 2021: 29 204). The change in value of biological assets, calculated as the net of the change as a result of harvesting and the unrealised change in fair value, totalled SEK 117 million in the first quarter and is recognised in the Group's operating profit. The recognised value of forest land at 31 March was SEK 17 876 million (31 Dec. 2021: 17 876).

4. External net sales by market

		Forest Paperboard	Paper	Wood	Renewable	Group
Jan-Mar 2022				Products	Energy
Scandinavia	672	60	145	620	183	1 679
Rest of Europe	-	1 149	1 558	385	-	3 092
Asia	-	279	103	87	-	469
Rest of the world	-	91	66	352	-	510
Total Net sales	672	1 579	1 871	1 445	183	5 750

		Forest Paperboard	Paper	Wood	Renewable	Group
Jan-Mar 2021				Products	Energy
Scandinavia	641	48	90	521	135	1 436
Rest of Europe	8	1 149	907	316	-	2 380
Asia	-	290	196	53	-	539
Rest of the world	-	126	90	130	-	348
Total Net sales	649	1 614	1 284	1 020	135	4 703

5. Composition of share capital

Share structure	Votes	No. of shares	No. of votes	Quotient value	SEKm
A share	10	45 246 468	452 464 680	26	1 180
B share	1	117 265 856	117 265 856	26	3 058
Total number of shares		162 512 324	569 730 536		4 238
Holding of own B shares bought back		-586 639	-586 639
Total number of shares issued		161 925 685	569 143 897

6. Financial instruments

	Carrying amount			Fair value
	2022	2021	2022	2021
SEKm	31 Mar	31 Dec	31 Mar	31 Dec
Assets at fair value	2 194	1 097	2 194	1 097
Assets at acquisition cost	4 985	3 183	4 985	3 183
Liabilities at fair value	277	151	277	151
Liabilities at acquisition cost	8 389	7 454	8 389	7 454

Holmen measures financial instruments at fair value or acquisition cost in the balance sheet depending on classification. In addition to items in net financial debt, with the exception of pension obligations and liabilities related to right-of-use assets, financial instruments include trade receivables and trade payables. Financial instruments measured at fair value in the balance sheet belong to measurement level 2 pursuant to IFRS 13.

7. Alternative performance measures

Holmen uses performance measures to supplement measures defined by IFRS or directly in the income statement and balance sheet in order to clarify the company's financial position and performance.

Earnings measures

Operating profit is the principal measure of earnings that is used to monitor financial performance. This includes all income and costs except for financial items and tax. Depreciation/amortisation of non-current assets is also included. EBITDA (earnings before interest, taxes, depreciation and amortisation) is used as a supplementary measure. To clarify how these earnings measures are affected by matters outside normal business operations, such as impairment, closure, major restructuring measures and breakdowns, as well as alterations to assumptions in the valuation of biological assets, the term 'items affecting comparability' is used. The purpose is also to increase comparability between different periods. The effects of maintenance and rebuilding shutdowns are not treated as an item affecting comparability. Operating profit for the first quarter of 2022 includes net SEK +266 million relating to the insurance compensation and costs and loss of revenue associated with the turbine breakdown at the paperboard mill in Workington. Operating profit for 2021 included SEK -330 million as an item affecting comparability related to the turbine breakdown. A description of the items that are recognised as affecting comparability in previous periods is provided on page 92 of Holmen's annual report for 2021.

		Quarter		Full year
SEKm	1-22	4-21	1-21	2021
EBITDA	1 950	1 500	1 161	5 321
Depreciation and amortisation according to plan	-332	-315	-312	-1 261
Operating profit excl. items affecting comp.	1 617	1 185	849	4 061
Items affecting comparability	266	-179	-	-330
Operating profit	1 883	1 006	849	3 731

Measure of margin, return and indebtedness

Operating profit, excluding items affecting comparability, as a proportion of sales is known as the operating margin. EBITDA as a proportion of sales is known as the EBITDA margin. The performance measure of return on capital employed is used to measure operating profit, excluding items affecting comparability, as a proportion of capital employed. Capital employed is calculated as fixed assets plus working capital less the net sum of deferred tax liabilities and deferred tax assets. This corresponds to equity plus net financial debt. Average capital employed is calculated based on quarterly data.

	2022	2021
SEKm	31 Mar	31 Dec
Fixed assets*	59 779	59 328
Working capital**	2 676	3 372
Deferred tax assets	2	3
Deferred tax liabilities	-11 881	-11 610
Capital employed	50 577	51 093

*Forest assets, non-current intangible assets, property, plant and equipment, right-of-use assets, investments in associates and joint ventures and other shares and participations.

**Inventories, trade receivables, current tax receivable, other current operating receivables, trade payables, current tax liability, provisions and other operating liabilities.

The debt/equity ratio is calculated as net financial debt divided by equity. The equity/assets ratio is calculated as equity divided by total assets. Net financial debt consists of the following components:

	2022	2021
SEKm	31 Mar	31 Dec
Non-current financial liabilities	3 402	3 911
Non-current liabilities relating to right-of-use assets	176	173
Current financial liabilities	1 825	736
Current liabilities relating to right-of-use assets	86	71
Pension obligations	42	24
Non-current financial receivables	-77	-268
Current financial receivables	-27	-39
Cash and cash equivalents	-2 243	-507
Net financial debt	3 184	4 101

8. Transaction with related parties

There were no transactions between Holmen and related parties that had a significant effect on the company's financial position and performance.

9. Material risks and uncertainties

The Group's and the parent company's material risks and uncertainties relate primarily to changes in demand and the prices of its products, the cost of key input goods, and changes in exchange rates. Russia's invasion of Ukraine has affected several markets. Holmen's sales to Russia and Ukraine were marginal in 2021 and ceased completely after the invasion. As a result of the war, Holmen's costs for chemicals have increased and transports to customers have become more expensive. At the same time, the risk of a shortage of critical input goods has increased. The war has reduced the supply of wood products in Europe since Russia is a major exporter, while also limiting the supply of paper, since some paper producers have found it difficult to cope with sharply increasing energy prices. For a more detailed description of material risks and uncertainties, see Holmen's annual report for 2021, pages 43–47 and Note 27.

	2022		2021			Full year
Quarterly figures, SEKm	Q1	Q4	Q3	Q2	Q1	2021
Income statement
Net sales	5 750	4 770	4 877	5 129	4 703	19 479
Operating costs	-3 925	-3 373	-3 591	-3 982	-3 676	-14 622
Change in value of forests	117	99	164	69	133	464
Profit from associates and JV	8	4	-3	-3	2	0
EBITDA*	1 950	1 500	1 447	1 213	1 161	5 321
Depreciation and amortisation according to plan	-332	-315	-318	-315	-312	-1 261
Operating profit excl. items affecting comparability	1 617	1 185	1 129	898	849	4 061
Items affecting comparability	266	-179	-151	-	-	-330
Operating profit	1 883	1 006	978	898	849	3 731
Net financial items	-38	-9	-9	-11	-10	-39
Profit before tax	1 844	996	969	887	839	3 691
Tax	-361	-129	-206	-189	-164	-688
Profit for the period	1 483	868	763	698	675	3 004
Earnings per share, SEK Net sales	9.2	5.4	4.7	4.3	4.2	18.5
Forest	1 809	1 690	1 444	1 717	1 658	6 509
Paperboard	1 579	1 504	1 555	1 588	1 614	6 261
Paper	1 871	1 384	1 413	1 360	1 284	5 441
Wood Products	1 445	1 133	1 288	1 431	1 020	4 872
Renewable Energy	183	148	99	106	135	488
Elimination of intra-group net sales	-1 137	-1 090	-922	-1 072	-1 007	-4 092
Group	5 750	4 770	4 877	5 129	4 703	19 479
EBITDA by business area*
Forest	325	535	342	315	382	1 573
Paperboard	406	422	255	185	376	1 237
Paper	479	83	193	109	56	441
Wood Products	580	397	629	566	265	1 857
Renewable Energy	193	120	69	73	114	375
Group-wide	-32	-56	-41	-35	-31	-163
Group	1 950	1 500	1 447	1 213	1 161	5 321
Operating profit/loss by business area*
Forest	305	513	323	296	364	1 495
Paperboard	256	281	112	44	236	673
Paper	399	-9	100	16	-37	70
Wood Products	529	350	582	518	218	1 668
Renewable Energy	168	112	62	66	107	347
Group-wide	-40	-63	-49	-42	-39	-193
Group	1 617	1 185	1 129	898	849	4 061
Operating margin, %*
Paperboard	16	19	7	3	15	11
Paper	21	-1	7	1	-3	1
Wood Products	37	31	45	36	21	34
Group	28	25	23	18	18	21
Return
Capital employed, %*	13	10	10	8	7	9
Equity, %	13	8	7	7	6	7
Deliveries
Own forests, '000 m³	674	666	637	877	653	2 833
Paperboard, '000 tonnes	126	127	135	138	145	544
Paper, '000 tonnes	253	249	260	263	257	1 029
Wood products, '000 m³	395	313	281	406	372	1 373
Hydro and wind power, GWh	402	306	258	297	369	1 230

*Excl. item affecting comparability.

Full year review, SEKm	2021	2020	2019	2018	2017	2016	2015	2014	2013	2012
Income statement
Net sales	19 479	16 327	16 959	16 055	16 133	15 513	16 014	15 994	16 231	17 852
Operating costs		-14 622 -13 250 -13 961 -12 984 -13 379 -12 626 -13 348 -13 270 -13 919 -15 224
Change in value of forests	464	579	487	425	415	315	267	282	264	350
Profit from associates and JV	0	-6	0	-9	-12	-22	7	-7	3	47
EBITDA*	5 321	3 651	3 486	3 488	3 157	3 179	2 940	2 999	2 579	3 026
Depreciation and amortisation according to plan	-1 261	-1 172	-1 141	-1 012	-991	-1 018	-1 240	-1 265	-1 370	-1 313
Operating profit excl. items affecting
comparability	4 061	2 479	2 345	2 476	2 166	2 162	1 700	1 734	1 209	1 713
Items affecting comparability	-330	-	8 770	-94	-	-232	-931	-450	-140	-193
Operating profit	3 731	2 479	11 115	2 382	2 166	1 930	769	1 284	1 069	1 520
Net financial items	-39	-42	-34	-25	-53	-71	-90	-147	-198	-227
Profit before tax	3 691	2 437	11 081	2 356	2 113	1 859	679	1 137	871	1 294
Tax	-688	-458	-2 351	-89	-445	-436	-120	-230	-160	559
Profit for the year	3 004	1 979	8 731	2 268	1 668	1 424	559	907	711	1 853
Diluted earnings per share, SEK	18.5	12.2	52.6	13.5	9.9	8.5	3.4	5.4	4.3	11.1
EBITDA by business area*
Forest	1 573	1 422	1 217	1 216	1 099	1 030	935	845	958	964
Paperboard	1 237	1 366	996	1 196	1 257	1 382	1 346	1 161	878	959
Paper	441	454	891	665	627	669	514	725	429	862
Wood Products	1 857	309	159	337	165	80	86	160	45	-10
Renewable Energy	375	242	362	205	159	143	198	233	391	374
Group-wide	-163	-143	-140	-132	-149	-124	-138	-126	-121	-123
Group	5 321	3 651	3 486	3 488	3 157	3 179	2 940	2 999	2 579	3 026
Operating profit by business area*
Forest	1 495	1 367	1 172	1 185	1 069	1 001	905	817	924	931
Paperboard	673	812	435	689	764	903	847	674	433	596
Paper	70	73	509	329	288	289	-74	141	-309	94
Wood Products	1 668	185	62	246	80	-3	9	37	-75	-130
Renewable Energy	347	215	336	181	135	120	176	212	371	355
Group-wide	-193	-174	-168	-154	-170	-148	-163	-146	-136	-132
Group	4 061	2 479	2 345	2 476	2 166	2 162	1 700	1 734	1 209	1 713
Deliveries
Own forests, '000 m³	2 833	2 841	2 699	2 816	2 883	2 945	3 132	3 207	3 361	3 085
Paperboard, '000 tonnes	544	544	538	525	526	497	499	493	469	485
Paper, '000 tonnes	1 029	883	996	1 036	1 117	1 134	1 325	1 305	1 574	1 651
Wood products, '000 m³	1 373	1 052	879	828	852	776	730	725	686	660
Hydro and wind power, GWh	1 230	1 352	1 109	1 145	1 169	1 080	1 441	1 113	1 041	1 353
Balance sheet
Forest assets	47 080	43 202	41 345	18 701	17 971	17 595	17 340	17 032	16 654	16 344
Other non-current assets	12 251	11 784	10 781	10 586	10 780	11 106	12 184	13 189	13 998	14 320
Current assets	7 956	6 878	6 264	6 845	5 710	5 852	5 607	5 964	5 774	6 005
Financial receivables	814	679	950	781	430	338	325	249	327	377
Total assets	68 101	62 543	59 340	36 912	34 891	34 891	35 456	36 434	36 753	37 046
Equity	46 992	42 516	40 111	23 453	22 035	21 243	20 853	20 969	20 854	20 813
Deferred tax liability	11 610	10 570	10 299	5 839	5 650	5 613	5 508	5 480	5 804	5 504
Financial liabilities and interest-bearing provisions	4 915	4 860	4 732	3 587	3 366	4 283	5 124	6 156	6 443	6 967
Operating liabilities	4 584	4 597	4 196	4 033	3 840	3 752	3 971	3 829	3 653	3 762
Total equity and liabilities	68 101	62 543	59 340	36 912	34 891	34 891	35 456	36 434	36 753	37 046
Cash flow
Operating activities	3 229	2 457	2 884	2 286	2 509	1 961	2 526	2 176	2 011	2 254
Investing activities **	-1 332	-1 924	-1 050	-1 005	-644	-123	-824	-815	-872	-1 957
Cash flow after investments	1 897	533	1 834	1 281	1 865	1 838	1 702	1 361	1 139	297
Return on capital employed, %*	9	6	9	10	9	9	6	6	4	7
Return on equity, %	7	5	35	10	8	7	3	4	3	9
Debt/equity ratio, %	9	10	9	12	13	19	23	28	29	32
Ordinary dividend, SEK	7.5	7.25	3.5	6.75	6.5	6	5.25	5	4.5	4.5
Extra dividend, SEK	4	3.5	-	-	-	-	-	-	-	-
Average number of employees	3 474	2 974	2 915	2 955	2 976	2 989	3 315	3 359	3 718	3 945

*Excl. items affecting comparability.

**Net after disposals and before changes in non-current financial receivables.

Holmen in brief

Holmen's extensive forest holdings are the foundation of our business. Using our own production facilities, the growing trees are refined into everything from wood for climate-smart building to renewable packaging, magazines and books, while at the same time we generate hydro and wind power on our own land. A business that not only creates value for shareholders and customers, but also contributes to a better climate and thriving rural communities.

Press and analyst conference

On the publication of the interim report, a webcast press and analyst conference will be held at 10.00 CEST on Thursday 28th of April. Holmen President and CEO Henrik Sjölund, together with Executive Vice President and CFO Anders Jernhall, will present and comment on the report. The presentation will be held in English.

The press and analyst conference will be webcast and may be followed via: www.holmen.com/reports

You may also participate in the conference by telephone, by calling no later than 09.55 CEST on:

Within Sweden: +46 8 505 100 31 From the rest of Europe: +44 2 071 070 613 From the US: +1 631 570 56 13

Financial reports

19 August 2022 Interim report January–June 2022 20 October 2022 Interim report January–September 2022 31 January 2023 Year-end report 2022

This information such that Holmen AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 07.30 CEST on Thursday, 28 April 2022.

This is a translation of the Swedish interim report of Holmen Aktiebolag (publ.). In the event of inconsistency between the English and the Swedish versions, the Swedish version shall prevail.