Holmen

Quarterly Report • May 8, 2019

Holmen Interim Report January–March 2019

		Quarter		Full year
SEKm	1-19	4-18	1-18	2018
Net sales	4 260	3 948	4 099	16 055
Operating profit excl. item affecting comparability	643	613	653	2 476
Operating profit	643	519	653	2 382
Profit after tax	503	543	507	2 268
Earnings per share, SEK	3.0	3.2	3.0	13.5
Operating margin, %*	15.1	15.5	15.9	15.4
Return on capital employed, %*	9.7	9.4	10.5	9.7
Return on equity, %	8.5	9.4	9.1	10.1
Cash flow before investments and working capital Debt/equity ratio	655 0.12	671 0.12	586 0.11	2 500 0.12

*Excluding an item affecting comparability of SEK -94 million in the fourth quarter of 2018.

• Operating profit for January–March was SEK 643 million (January–March 2018: SEK 653 million). Higher paper prices had a positive effect on earnings, but wood costs increased. Earnings for the same period last year included SEK +70 million from sale of a forest property.
• Compared with the fourth quarter of 2018, operating profit excluding item affecting comparability increased by SEK 30 million.
• Profit after tax for January–March amounted to SEK 503 million (507), which corresponds to earnings per share of SEK 3.0 (3.0).
• Return on capital employed was 9.7 per cent (10.5).

Excl. items affecting comparability

CEO comments

Compared with the fourth quarter of 2018, operating profit increased by SEK 30 million to SEK 643 million and return on capital employed was almost 10 per cent. Rising paper prices and seasonally high hydro power production contributed to the improvement in earnings, while disturbances in paperboard production had a negative impact.

Profit from forests has been established at a higher level as a result of rising wood prices and represents almost half the Group's earnings. Wood prices stabilised in the first quarter. In order to use our forest more costeffectively in our own production we have introduced our own train-based logistics solution, which also provides us with greater flexibility on the wood market.

The past year has been challenging for our paperboard business, with rising raw material costs and softening demand from Asia. In the first quarter profit decreased to SEK 112 million as a result of restrictions in production due to continued weak demand from Asia and disturbances in production. Sales to premium customers in Europe has developed well, and the ongoing program to reduce costs in the business area is starting to show results. During the autumn maintenance shutdown bottlenecks at Iggesund Mill will be eliminated, which will allow sale of pulp to be increased.

As a result of previous capacity reductions in printing paper the balance between supply and demand is better and have resulted in higher paper prices in the first quarter of the year. Implemented price increases boosted profit to SEK 119 million. We continue to see good opportunities for developing paper sales in niches within books, magazines and advertising by leveraging the advantages of fresh fibre.

Consumption of wood products developed well in the first quarter but prices decreased due to high supply. As a result of high deliveries and good production we have been able to maintain a good level of profit at SEK 54 million. The investments in order to raise Braviken Sawmill's production to 600 km3 by spring 2020 are continuing. Our strong cost position and good control of raw material means that we are well placed to develop our wood products business even in a weaker market.

The Renewable Energy business area benefited in the first quarter from seasonally high hydro power production and high electricity prices, which boosted profit to SEK 96 million.

The Group's profitability is good, but we are seeing signs of a slowdown in our industry. Our significant forest holdings, considerable hydro power production and strong financial position ensure that our business is well placed, even in more uncertain market conditions, which means we can continue developing our business for the long term.

Forest

Holmen carries out active and sustainable forestry on over a million hectares of its own productive forest land. The annual harvest amounts to 3 million m3.

		Quarter		Full year
SEKm	1-19	4-18	1-18	2018
Net sales	1 642	1 590	1 465	5 944
of which from own forests	273	371	299	1 350
Operating costs	-1 447	-1 368	-1 216	-5 153
Depreciation and amortisation according to plan	-11	-9	-7	-31
Earnings before change in value of forests	184	214	242	760
Change in value of forests	118	112	87	425
Operating profit	302	326	329	1 185
Investments	12	302	18	357
Capital employed	14 992	14 830	13 974	14 830
Return on capital employed, %	8	9	9	8
Harvesting ow n forests, '000 m3	551	732	666	2 831

Demand for logs and pulpwood remained high in the first quarter. The supply of wood has increased and prices have stabilised since the increase during 2018.

Operating profit for January–March was SEK 302 million (329). Profit was boosted by selling prices being 10 per cent higher. Earnings for the first quarter of 2018 included SEK +70 million from the sale of a forest property.

Compared with the fourth quarter of 2018, profit decreased by SEK 24 million, mainly as a result of a high share of logs in harvest in 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	1-19	4-18	1-18	2018
Net sales	1 578	1 362	1 473	5 785
Operating costs	-1 320	-1 064	-1 179	-4 590
EBITDA	259	298	294	1 196
Depreciation and amortisation according to plan	-146	-123	-128	-507
Operating profit*	112	175	166	689
Investments	84	153	133	471
Capital employed	5 740	5 316	5 592	5 316
EBITDA margin, %	16	22	20	21
Operating margin, %	7	13	11	12
Return on capital employed, %	8	13	12	12
Production, paperboard, '000 tonnes	131	131	137	538
Deliveries, paperboard, '000 tonnes	136	119	138	525

*Excl. item affecting comparability 2018

Demand for paperboard in Europe during the first quarter was at the same level as a year ago. Prices were largely unchanged.

Operating profit for January–March was SEK 112 million (166). The decrease in profit was due to production disruptions and higher wood costs.

Compared with the fourth quarter of 2018, profit decreased by SEK 63 million as a result of production disruptions and increased wood costs.

Maintenance shutdowns are expected to negatively impact profit by SEK 70 million in the second quarter and by SEK 150 million in the third quarter of 2019.

*Excl. items affecting comparability

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 just over 1 million tonnes a year at two Swedish mills.

		Quarter		Full year
SEKm	1-19	4-18	1-18	2018
Net sales	1 345	1 357	1 418	5 571
Operating costs	-1 129	-1 214	-1 262	-4 905
EBITDA	216	143	156	665
Depreciation and amortisation according to plan	-97	-83	-84	-336
Operating profit	119	61	72	329
Investments	48	79	13	173
Capital employed	2 316	2 072	2 238	2 072
EBITDA margin, %	16	11	11	12
Operating margin, %	9	4	5	6
Return on capital employed, %	22	11	13	15
Production, '000 tonnes	258	271	271	1 069
Deliveries, '000 tonnes	230	246	278	1 036

Demand for book paper in Europe was stable in the first quarter, while demand for magazine paper decreased. Prices rose at year-end.

Operating profit for January–March was SEK 119 million (72). Selling prices were more than 10 per cent higher but the effect was partly offset by cost increases for wood and other input goods.

Compared with the fourth quarter of 2018, profit increased by SEK 58 million as a result of price increases and maintenance costs decreasing from a high level. Wood costs increased slightly.

Wood Products

Holmen produces wood products for use in joinery and construction at three sawmills, whose by-products are used at the Group's paper and paperboard mills. Annual production volume is almost 1 million cubic metres.

		Quarter		Full year
SEKm	1-19	4-18	1-18	2018
Net sales	478	419	426	1 747
Operating costs	-399	-346	-365	-1 410
EBITDA	79	73	61	337
Depreciation and amortisation according to plan	-24	-22	-23	-92
Operating profit	54	51	38	246
Investments	42	11	40	76
Capital employed	985	927	900	927
EBITDA margin, %	16	17	14	19
Operating margin, %	11	12	9	14
Return on capital employed, %	23	22	17	27
Production, '000 m3	225	234	212	873
Deliveries, '000 m3	232	198	215	828

Demand for wood products in Europe was good in the first quarter but selling prices decreased slightly owing to high supply.

Operating profit for January–March was SEK 54 million (38). The improvement in profit was due to gradual price increases in the previous year and increased production.

Profit was up by SEK 3 million compared with the fourth quarter of 2018. Deliveries increased but the impact on earnings was offset by a decrease in selling prices.

Renewable Energy

In a normal year Holmen produces 1.2 TWh of renewable hydro and wind power.

		Quarter		Full year
SEKm	1-19	4-18	1-18	2018
Net sales	114	76	122	319
Operating costs	-12	-33	-27	-114
Depreciation and amortisation according to plan	-6	-7	-6	-24
Operating profit	96	37	89	181
Investments	2	10	5	22
Capital employed	2 992	3 052	3 095	3 052
Operating margin, %	84	49	73	57
Return on capital employed, %	13	5	11	6
Production hydro and w ind pow er, GWh	319	275	385	1 145

Operating profit for January–March was SEK 96 million (89). The improvement in profit was due to higher electricity prices and lower property tax. Production was lower than normal and just over 15 per cent lower than last year.

Compared with the fourth quarter of 2018, profit increased by SEK 59 million as a result of seasonally higher production and higher prices.

At the end of the quarter, the levels in Holmen's water storage reservoirs were normal.

Cash flow, financing and net financial items

Cash flow from operating activities for January–March totalled SEK 264 million (523). Cash flow was negatively affected by increased working capital. Capital expenditures totalled SEK 191 million (87).

The Group's net financial debt increased by SEK 125 million to SEK 2 932 million in the first quarter. The introduction of a new accounting policy (IFRS 16 Leases) has resulted in a SEK 218 million increase in debt. At 31 March, the debt/equity ratio was 0.12. Financial liabilities including pension provisions totalled SEK 4 088 million, SEK 2 829 million of which were current liabilities. Cash and cash equivalents and financial receivables totalled SEK 1 156 million, of which SEK 458 million consisted of loans to a partly owned wind power company. The Group has unutilised committed credit facilities of SEK 4 160 million, of which just under SEK 300 million matures in 2020 and the remainder in 2021.

Net financial items for the first quarter were SEK -8 million (-8).

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

Tax

Recognised tax for January–March was SEK -132 million (-137). Recognised tax as a proportion of profit before tax was 21 per cent (21).

Equity

In January–March, the Group's equity increased by SEK 469 million to SEK 23 922 million. Profit for the period totalled SEK 503 million (507). Other comprehensive income amounted to SEK -35 million (-150).

Hedging of exchange rates and electricity prices

The Group hedges parts of future estimated net flows in foreign currencies. Operating profit for the first quarter includes currency hedges of SEK -120 million (-100).

Exchange rates had a positive effect of SEK 30 million on the Group's profit for January–March, compared with the same period in 2018. For just over the next two years, expected flows in EUR/SEK are hedged at an average of 10.08. For other currencies, approximately 4 months of flows are hedged.

Prices for the Group's estimated net consumption of electricity in Sweden are 80 per cent hedged for 2019–2020 and 65 per cent hedged for 2021.

Personnel

The average number of employees (full-time equivalents) in the Group was 2 859 (2 879).

Dividend

At the 2019 AGM, the dividend was set at SEK 6.75 (6.5) per share. A dividend totalling SEK 1 134 million was paid on 18 April.

Share buy-backs

At the 2019 AGM, the Board's authorisation to purchase up to 10 per cent of the company's shares was renewed. No buy-backs took place during the period. The company owns 0.9 per cent of all shares outstanding.

Share saving programme

The share saving programme that was introduced following a resolution by the 2016 AGM expires in May 2019. Entitlement to performance shares is linked to the Group's average return on capital employed for 2016–2018, which was 9.0 per cent. This means that there will be full allocation of performance shares. A total of around 170 000 matching and performance shares will be allocated to participants in May 2019. Allocation will take place by means of free transfers of class B treasury shares. After this the company will hold approximately 1 350 000 class B treasury shares.

The 2019 AGM approved a new similar share saving programme that covers up to 60 senior executives in the company. The programme will expire upon publication of the interim report for January–March 2022. The company's commitment to providing shares over the course of the programme, up to 190 000 class B shares, will be met through free transfers of treasury shares.

Material risks and uncertainties

The Group 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. For a more detailed description of material risks and uncertainties see Holmen's annual report for 2018, pages 32–35 and note 26. The UK's exit from the EU could affect the markets on which Holmen sells its products. Holmen also has paperboard production in the UK. Holmen is following developments in the negotiations closely, but the outcome and consequences are hard to predict.

Transactions 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.

Accounting policies

This report has been prepared in accordance with the Swedish Annual Accounts Act and Securities Market Act, and, for the Group, in accordance with IAS 34 Interim Financial Reporting. The parent company and Group's accounting policies are unchanged compared with the latest issued annual accounts, apart from the new accounting standard IFRS 16

Leases, which came into force on 1 January 2019 and replaces IAS 17 Leases and related interpretations IFRIC 4, SIC-15 and SIC-27. This standard requires assets and liabilities attributable to leases, with some exceptions, to be recognised in the balance sheet. The leasing cost allocated by depreciation and interest expenses is recognised in the income statement. Holmen's agreements affected by the new regulations mainly relate to office rent, leased vehicles and vessels. Holmen has used the simplified forward-looking method, which has involved an asset and liability being set at the same value in connection with the transition. Consequently, no effects on equity have been recognised as a result of this standard's introduction. Assets and liabilities were recognised at SEK 205 million at 1 January 2019. At 31 March 2019, assets amounted to SEK 218 million and liabilities SEK 218 million, SEK 29 million of which were recognised as current. Deprecation/amortisation of assets in the first quarter totalled SEK 23 million and other external costs decreased to a corresponding degree. The interest expense on debt was SEK 1 million based on an interest rate of approximately 1 per cent. Key performance indicators affected by the new accounting policy are net debt, capital employed and EBITDA. The effect on these is marginal, however. The figures in tables are rounded off.

Stockholm, 8 May 2019 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
Income statement, SEKm	1-19	4-18	1-18	2018
Net sales	4 260	3 948	4 099	16 055
Other operating income	288	373	328	1 284
Change in inventories	74	354	-18	439
Raw materials and consumables	-2 477	-2 454	-2 238	-9 027
Personnel costs	-581	-595	-574	-2 306
Other operating costs	-750	-936	-776	-3 443
Profit from investments in associates and joint ventures	2	-8	-2	-9
Depreciation and amortisation according to plan	-291	-249	-254	-1 012
Impairment losses	-	-25	-	-25
Change in value of biological assets	118	112	87	425
Operating profit	643	519	653	2 382
Finance income	3	3	2	13
Finance costs	-11	-9	-11	-38
Profit before tax	635	513	644	2 356
Tax	-132	30	-137	-89
Profit for the period	503	543	507	2 268
Earnings per share, SEK
basic	3.0	3.2	3.0	13.5
diluted	3.0	3.2	3.0	13.5
Operating margin, %	15.1	15.5	15.9	15.4
Return on capital employed, %	9.7	9.4	10.5	9.7
Return on equity, %	8.5	9.4	9.1	10.1

Statement of comprehensive income, SEKm		Quarter		Full year
		4-18	1-18	2018
Profit for the period	503	543	507	2 268
Other comprehensive income
Revaluations of defined benefit pension plans	19	-34	-57	-52
Tax attributable to items that w ill not be reclassifed to profit for the period	-3	7	10	10
Items that will not be reclassifed to profit for the period	15	-27	-47	-42
Cash flow hedging	-209	195	-262	306
Translation difference on foreign operation	116	-31	112	55
Hedging of currency risk in foreign operation	-4	0	-10	-8
Tax attributable to items that w ill be reclassifed to profit for the period		-42	57	-69
Items that will be reclassifed to profit for the period	46 -50	122	-103	284
Total other comprehensive income after tax	-35	94	-150	242
Total comprehensive income	468	638	358	2 510

		Jan-March
Change in equity, SEKm		2018
Opening equity	23 453	22 035
Profit for the period	503	507
Other comprehensive income	-35	-150
Total comprehensive income	468	358
Share saving program	1	-5
Closing equity	23 922	22 387

Share structure		Votes No. of shares		No. of votes Quotient value	SEKm
A share	10	45 246 468	452 464 680		25 1 131.2
B share	1	124 265 856	124 265 856		25 3 106.6
Total number of shares		169 512 324	576 730 536		4 237.8
Holding of ow n B shares bought back		-1 520 000	-1 520 000
Total number of shares issued		167 992 324	575 210 536

Balance sheet, SEKm	2019	2018
	31 March	31 december
Non-current assets
Intangible non-current assets	69	68
Property, plant and equipment	9 043	9 077
Biological assets	18 526	18 400
Right-of-use assets	218	-
Investments in associates and joint ventures	1 714	1 740
Other shares and participating interests	1	1
Non-current financial receivables	474	468
Deferred tax assets	1	1
Total non-current assets	30 047	29 755
Current assets
Inventories	3 855	3 628
Trade receivables	2 320	1 929
Current tax receivable	300	328
Other operating receivables	923	959
Current financial receivables	23	35
Cash and cash equivalents	659	278
Total current assets	8 082	7 157
Total assets	38 129	36 912
Equity	23 922	23 453
Non-current liabilities
Non-current financial liabilities	1 028	1 033
Non-current liabilities relating to right-of-use assets	189	-
Pension provisions	42	61
Other provisions	462	483
Deferred tax liabilities	5 801	5 839
Total non-current liabilities	7 523	7 416
Current liabilities
Current financial liabilities	2 800	2 494
Current liabilities relating to right-of-use assets	29	-
Trade payables	2 350	2 232
Current tax liability	35	13
Provisions	194	197
Other operating liabilities	1 276	1 108
Total current liabilities	6 684	6 044
Total liabilities	14 207	13 459
Total equity and liabilities	38 129	36 912
Debt/equity ratio, times	0.12	0.12
Equity/assets ratio, %	63	64
Capital employed Net financial debt	26 854 2 932	26 261 2 807

	Carrying amount		Fair value
Financial instruments, SEKm	2019	2018	2019	2018
	31 March	31 December	31 March	31 December
Assets at fair value	340	557	340	557
Assets at acquisition cost	3 475	2 695	3 475	2 695
Liabilities at fair value	419	381	419	381
Liabilities at acquisition cost	6 348	5 726	6 348	5 726

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 the pension liability, financial instruments cover trade receivables and trade payables. Financial instruments measured at fair value in the balance sheet belong to measurement level 2 pursuant to IFRS 13.

		Full year
Cash flow statement, SEKm	1-19	Quarter 4-18	1-18	2018
Operating activities
Profit before tax	635	513	644	2 356
Adjustments for non-cash items*	135	222	40	540
Paid income taxes	-115	-65	-99	-396
Cash flow from operating activities
before changes in working capital	655	671	586	2 500
Cash flow from changes in working capital
Change in inventories	-123	-457	10	-705
Change in trade receivables and other operating receivables	-493	337	-44	230
Change in trade payables and other operating liabilities	225	181	-29	262
Cash flow from operating activities	264	732	523	2 286
Investing activities
Acquisition of non-current assets	-193	-558	-208	-1 140
Disposal of non-current assets	1	9	121	135
Change in non-current financial receivables	0	15	-456	-431
Cash flow from investing activities	-191	-533	-543	-1 436
Financing activities
Change in financial liabilities and current financial receivables	308	-47	-87	161
Dividends paid to the shareholders of the parent company	-	-	-	-1 092
Cash flow from financing activities	308	-47	-87	-930
Cash flow for the period	380	151	-107	-81
Opening cash and cash equivalents	278	126	356	356
Exchange difference in cash and cash equivalents	1	0	3	3
Closing cash and cash equivalents	659	277	252	278

		Full year
Change in net financial debt, SEKm	1-19	Quarter 4-18	1-18	2018
Opening net financial debt	-2 807	-2 963	-2 936	-2 936
Cash flow from operating activities	264	732	523	2 286
Cash flow from investing activities (excl financial
receivables)	-191	-549	-87	-1 005
Dividends paid	-	-	-	-1 092
New accounting principles**	-218	-	-	-
Revaluations of defined benefit pension plans	18	-28	-56	-47
Foreign exchange effects and changes in fair value	3	1	-35	-13
Closing net financial debt	-2 932	-2 807	-2 592	-2 807

* The adjustments consist primarily of depreciation according to plan, impairment losses, change in value of biological assets,

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.

** Implementation of IFRS 16 Leases.

Parent company

Quarter Income statement, SEKm 1-19 4-18 1-18 Operating income 3 877 4 007 3 728 Operating costs -3 633 -3 424 -3 629 Operating profit 248 373 304 Net financial items -6 305 116 678 420 Profit after net financial items 242 Appropriations 344 -1 508 38 Profit before tax 586 -831 458 Tax -126 260 -73 -571 385 Profit for the period 461 Quarter Statement of comprehensive income, SEKm 4-18 1-18 1-19 Profit for the period 461 -571 385 Other comprehensive income -211 198 -255 Cash flow hedging Tax attributable to other comprehensive income -42 56 45 156 -199 Items that will be reclassifed to profit for the period -166 -415 187 Total comprehensive income 295		Full year
			2018
			15 012
			-13 605
			1 407
			434
			1 841
			-1 373
			467
			47
			514
			Full year
			2018
			514
			326
			-70
			255
			769

Balance sheet, SEKm	2019 31 March	2018 31 december
Non-current assets	16 015	21 205
Current assets	6 626	5 942
Total assets	22 641	27 147
Restricted equity	5 915	5 915
Non-restricted equity	5 776	5 480
Untaxed reserves	1 200	1 012
Provisions	1 344	1 407
Liabilities	8 406	13 333
Total equity and liabilities	22 641	27 147

Of operating income for January‒March SEK 29 million (33) relates to sales to Group companies.

Balance sheet appropriations include group contributions totalling SEK 532 million (150). The parent company's investments in property, plant and equipment and non-current intangible assets totalled SEK 15 million (13).

	2019		2018			Full year
Quarterly figures, SEKm	Q1	Q4	Q3	Q2	Q1	2018
Income statement
Net sales	4 260	3 948	3 844	4 164	4 099	16 055
Operating costs	-3 446	-3 189	-3 133	-3 385	-3 278	-12 984
Profit from investments in associates and joint ventures	2	-8	1	0	-2	-9
Earnings before depreciation and change in value	816	751	712	780	820	3 063
Depreciation and amortisation according to plan	-291	-249	-252	-256	-254	-1 012
Change in value of forests	118	112	131	95	87	425
Operating profit excl. items affecting comparability	643	613	591	618	653	2 476
Items affecting comparability *	-	-94	-	-	-	-94
Operating profit	643	519	591	618	653	2 382
Net financial items	-8	-6	-6	-5	-8	-25
Profit before tax	635	513	585	614	644	2 356
Tax	-132	30	-127	145	-137	-89
Profit for the period	503	543	458	759	507	2 268
Earnings per share, SEK	3.0	3.2	2.7	4.5	3.0	13.5
Net sales**
Forest	1 642	1 590	1 345	1 543	1 465	5 944
Paperboard	1 578	1 362	1 413	1 538	1 473	5 785
Paper	1 345	1 357	1 419	1 376	1 418	5 571
Wood Products	478	419	412	491	426	1 747
Renew able Energy	114	76	55	66	122	319
Elimination of intra-group net sales	-898	-857	-799	-849	-805	-3 311
Group	4 260	3 948	3 844	4 164	4 099	16 055
EBITDA by business area ***
Forest	195	223	136	183	249	791
Paperboard	259	298	277	327	294	1 196
Paper	216	143	197	169	156	665
Wood Products	79	73	102	101	61	337
Renew able Energy	102	44	28	39	95	205
Group-w ide	-35	-30	-28	-38	-35	-132
Group	816	751	712	780	820	3 063
Operating profit/loss by business area ***
Forest	302	326	260	271	329	1 185
Paperboard	112	175	151	197	166	689
Paper	119	61	112	85	72	329
Wood Products	54	51	79	77	38	246
Renew able Energy	96	37	22	33	89	181
Group-w ide	-42	-36	-33	-44	-41	-154
Group	643	613	591	618	653	2 476
Operating margin, % ***
Paperboard	7.1	12.9	10.7	12.8	11.3	11.9
Paper	8.9	4.5	7.9	6.1	5.1	5.9
Wood Products	11.4	12.1	19.3	15.8	9.0	14.1
Group	15.1	15.5	15.4	14.9	15.9	15.4
Return on capital employed, % ***
Forest	8.1	8.9	7.3	7.7	9.5	8.3
Paperboard	8.1	12.9	10.8	14.0	12.1	12.4
Paper	21.8	11.1	19.6	15.0	13.0	14.7
Wood Products	21.8	22.2	34.6	33.8	17.3	27.1
Renew able Energy	12.7	4.8	2.8	4.2	11.5	5.8
Group	9.7	9.4	9.2	9.8	10.5	9.7
Key indicators
Return on equity, %	8.5	9.4	8.1	13.6	9.1	10.1
Deliveries
Harvesting ow n forests, '000 m³	551	732	671	761	666	2 831
Paperboard, '000 tonnes	136	119	127	141	138	525
Paper, '000 tonnes	230	246	256	256	278	1 036
Wood products, '000 m³	232	198	185	230	215	828
Ow n production of hydro and w ind pow er, GWh	319	275	224	261	385	1 145

* Items affecting comparability in operating profit in Q4 2018 relate to restructuring costs in paperboard business area.

*** Excl. Items affecting comparability. **Sales in the forest and renewable energy business areas take place in Sweden only. For the paperboard business area, 79 per cent of sales during first quarter were to Europe, while 14 per cent went to Asia and 8 per cent to the rest of the world. For the paper business area, sales to Europe accounted for 86 per cent while sales to Asia accounted for 8 per cent and 6 per cent to the rest of the world. For the wood products business area, sales to Europe accounted for 84 per cent, to 9 per cent to Asia and other sales were mainly to North Africa and the Middle

Group

Full year review, SEKm	2018	2017	2016	2015	2014	2013	2012	2011	2010	2009
Income statement Net sales	16 055	16 133	15 513	16 014	15 994	16 231	17 852	18 656	17 581	18 071
Operating costs	-12 984	-13 379	-12 626	-13 348	-13 270	-13 919	-15 224	-15 501	-15 077	-15 191
Profit from investments in associates and joint ventures	-9	-12	-22	7	-7	3	47	84	28	45
Earnings before depreciation and change in value	3 063	2 742	2 865	2 673	2 717	2 315	2 676	3 240	2 531	2 925
Depreciation and amortisation according to plan	-1 012	-991	-1 018	-1 240	-1 265	-1 370	-1 313	-1 260	-1 251	-1 320
Change in value of forests	425	415	315	267	282	264	350	-	52	16
Operating profit excl. items affecting comparability	2 476	2 166	2 162	1 700	1 734	1 209	1 713	1 980	1 332	1 620
Items affecting comparability	-94	-	-232	-931	-450	-140	-193	3 593	264	-
Operating profit	2 382	2 166	1 930	769	1 284	1 069	1 520	5 573	1 596	1 620
Net financial items	-25	-53	-71	-90	-147	-198	-227	-244	-208	-255
Profit before tax	2 356	2 113	1 859	679	1 137	871	1 294	5 328	1 388	1 366
Tax	-89	-445	-436	-120	-230	-160	559	-1 374	-684	-360
Profit for the year	2 268	1 668	1 424	559	907	711	1 853	3 955	704	1 006
Diluted earnings per share, SEK	13.5	9.9	8.5	3.4	5.4	4.3	11.1	23.6	4.2	6.0
EBITDA by business area*
Forest	791	683	716	668	563	694	614	769	794	616
Paperboard	1 196	1 257	1 382	1 346	1 161	878	959	1 186	1 141	780
Paper	665	627	669	514	725	429	862	1 002	229	1 218
Wood Products	337	165	80	86	160	45	-10	-26	49	52
Renew able Energy	205	159	143	198	233	391	374	425	516	435
Group-w ide	-132	-149	-124	-138	-126	-121	-123	-116	-198	-176
Group	3 063	2 742	2 865	2 673	2 717	2 315	2 676	3 240	2 531	2 925
Operating profit by business area*
Forest	1 185	1 069	1 001	905	817	924	931	739	818	605
Paperboard	689	764	903	847	674	433	596	863	817	419
Paper	329	288	289	-74	141	-309	94	228	-618	340
Wood Products	246	80	-3	9	37	-75	-130	-136	20	21
Renew able Energy	181	135	120	176	212	371	355	406	495	414
Group-w ide	-154	-170	-148	-163	-146	-136	-132	-120	-200	-178
Group	2 476	2 166	2 162	1 700	1 734	1 209	1 713	1 980	1 332	1 620
Deliveries
Harvesting ow n forests, '000 m³	2 831	2 904	2 986	3 213	3 297	3 465	3 211	2 988	2 999	2 897
Paperboard, '000 tonnes	525	526	497	499	493	469	485	474	464	477
Paper, '000 tonnes	1 036	1 117	1 134	1 325	1 305	1 574	1 651	1 668	1 732	1 745
Wood products, '000 m³ Ow n production of hydro and w ind pow er, GWh	828 1 145	852 1 169	776 1 080	730 1 441	725 1 113	686 1 041	660 1 353	487 1 235	285 1 149	313 1 090
Balance sheet
Non-current assets	29 287	28 751	28 701	29 524	30 221	30 652	30 664	30 334	26 028	25 694
Current assets	6 845	5 710	5 852	5 607	5 964	5 774	6 005	6 642	6 950	6 075
Financial receivables	781	430	338	325	249	327	377	240	454	407
Total assets	36 912	34 891	34 891	35 456	36 434	36 753	37 046	37 217	33 432	32 176
Equity	23 453	22 035	21 243	20 853	20 969	20 854	20 813	19 773	16 913	16 504
Deferred tax liability	5 839	5 650	5 613	5 508	5 480	5 804	5 504	6 630	5 910	5 045
Financial liabilities and interest-bearing provisions	3 587	3 366	4 283	5 124	6 156	6 443	6 967	6 499	6 227	6 091
Operating liabilities	4 033	3 840	3 752	3 971	3 829	3 653	3 762	4 313	4 382	4 536
Total equity and liabilities	36 912	34 891	34 891	35 456	36 434	36 753	37 046	37 217	33 432	32 176
Cash flow
Operating activities Investing activities	2 286 -1 005	2 509 -644	1 961 -123	2 526 -824	2 176 -815	2 011 -872	2 254 -1 957	2 101 -1 791	1 523 -1 585	2 873 -714
Cash flow after investments	1 281	1 865	1 838	1 702	1 361	1 139	297	310	-62	2 158
Key indicators
Return on capital employed, %* Return on equity, %	10 10	9 8	9 7	6 3	6 4	4 3	7 9	9 23	6 4	7 6
Return on equity, %*	10	8	8	7	6	4	6	8	4	6
Debt/equity ratio	0.12	0.13	0.19	0.23	0.28	0.29	0.32	0.32	0.34	0.34
Dividend
Dividend, SEK	6.75	6.5	6	5.25	5	4.5	4.5	4	3.5	3.5

*Excl. items affecting comparability.

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

Use of 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 is used as a supplementary measure to illustrate the cash flow that a business area generates before investments and changes in working capital, excluding items affecting comparability. For the Forest business area, the measure 'earnings before change in value of forests' is used, which summarises operating profit/loss excluding changes in the fair value of biological assets. To clarify how these earnings measures are affected by matters outside normal business operations, such as impairment, disposal, closure, major restructuring measures and fire, 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. No items are reported as affecting comparability in 2019. On page 74 of Holmen's 2018 annual report a description is given of the items that are reported as affecting comparability in previous periods.

	Quarter		Full year
1-19	4-18	1-18	2018
			3 063
			-1 012
			425
			2 476
	-94	-	-94
	519	653	2 382
	Quarter		Full year
1-19	4-18	1-18	2018
			760
			425
302	326	329	1 185
	816 -291 118 643 - 643 184 118	751 -249 112 613 214 112	820 -254 87 653 242 87

Measure of margin, return and indebtedness

Operating profit, excluding items affecting comparability, as a proportion of sales is known as the operating margin. Profit before depreciation/amortisation 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 capital plus working capital less the net sum of deferred tax liabilities and deferred tax assets. This is corresponds to equity plus net financial debt.

SEKm	2019 31 March	2018 31 december
Fixed capital*	29 572	29 286
Working capital**	3 082	2 812
Deferred tax assets	1	1
Deferred tax liabilities	-5 801	-5 839
Capital employed	26 854	26 261

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:

	2019	2018
SEKm	31 March	31 december
Non-current financial liabilities	1 028	1 033
Non-current liabilities relating to right-of-use assets	189	-
Current financial liabilities	2 800	2 494
Current liabilities relating to right-of-use assets	29	-
Pension provisions	42	61
Non-current financial receivables	-474	-468
Current financial receivables	-23	-35
Cash and cash equivalents	-659	-278
Net financial debt	2 932	2 807

*Non-current intangible assets, property plant and equipment, biological assets, right-of-use assets, investments in associates and joint ventures and other investments. **Inventories, trade receivables, current tax asset, other current operating receivables, trade payables, current tax liability, provisions, other provisions and operating liabilities.

Holmen in brief

Holmen's business concept is to own and add value to the forest. The forest holdings form the basis of the business – an ecocycle in which the raw material grows and is refined into everything from wood for climatesmart building to renewable packaging, magazines and books. The forest is managed to provide a good annual return and stable value growth while our production operations are run with a focus on profitability and greater value added.

Press and analyst conference

On the publication of the interim report, a webcast press and analyst conference will be held at 14.00 CET on Wednesday 8 May. Holmen President and CEO Henrik Sjölund 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 13.55 on:

• 46 8 566 427 03 (within Sweden) + 44 3 333 0092 68 (from the rest of Europe) +1 833 526 8347 (from the US).

Financial reports

15 August 2019	Interim report January–June 2019
18 October 2019	Interim report January–September 2019
30 January 2020	Year-end report 2019

_________________________________________________________________________________________ This information is information 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, on Wednesday 8 May 2019 at 11.30.

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.