Holmen

Quarterly Report • May 3, 2017

		Quarter		Full Year
SEKm	1-17	4-16	1-16	2016
Net sales	4 131	3 937	3 828	15 513
Operating profit excl. items affecting comparability	627	579	580	2 162
Operating profit	627	579	348	1 930
Profit after tax	485	442	222	1 424
Earnings per share, SEK	5.8	5.3	2.6	16.9
Operating margin, % *	15.2	14.7	15.1	13.9
Return on capital employed, % *	10.2	9.3	9.1	8.6
Return on equity, %	9.2	8.5	4.3	6.9
Cash flow before investments and working capital	742	527	754	2 320
Debt/equity ratio	0.16	0.19	0.21	0.19

Holmen's interim report January–March 2017

*Excluding items affecting comparability of SEK -232 million in 2016. See also page 14.

• Operating profit for January–March 2017 was SEK 627 million (January–March 2016: SEK 580 million excluding items affecting comparability). The improvement in profit was mainly due to higher earnings from paper and wood products.
• Compared with the fourth quarter of 2016, operating profit increased by SEK 48 million due to higher paperboard deliveries, better prices and a better product mix for wood products, as well as seasonally higher hydro power production.
• Profit after tax for January–March amounted to SEK 485 million (222), which corresponds to earnings per share of SEK 5.8 (2.6).
• Return on capital employed increased to 10.2 (9.1) per cent.
• Sales performance was good, with an improved product and market mix. Paperboard production has stabilised at a higher level following investments. In April, Linghem Sawmill was acquired to strengthen the raw material supply for Braviken Sawmill and expand the product offering. The cash-flow yield on own forests was seasonally high, at 5.0 per cent.

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 cubic metres.

		Quarter		Full year
SEKm	1-17	4-16	1-16	2016
Net sales	1 451	1 387	1 368	5 302
of which from own forests	302	318	297	1 278
Operating costs	-1 226	-1 178	-1 157	-4 586
Depreciation and amortisation according to plan	-7	-8	-7	-29
Earnings before change in value of forests	219	201	205	686
Change in value of forests	64	72	62	315
Operating profit	283	273	267	1 001
Investments	10	5	3	30
Book value of company forests	17 493	17 448	17 224	17 448
Return on operating capital, %	6.3	6.2	6.1	5.7
Cash flow yield, %	5.0	4.6	4.8	4.0
Harvesting ow n forests, '000 m3	713	729	715	2 986

Demand for logs and pulpwood in Sweden was normal in the first quarter. Selling prices were largely unchanged.

Profit for January–March before changes in value was SEK 219 million (205). Harvesting was at a normal level, while silviculture costs were seasonally low. Operating profit, which includes changes in value of SEK 64 million, increased by SEK 16 million to SEK 283 million. Operating profit includes revenue from the sale of a minor property. Operating profit was SEK 10 million higher than in the previous quarter.

Paperboard

Holmen is a market leader in the highest quality segments for consumer packaging and board for advanced graphics printing. Production amounts to 500 000 tonnes a year at one Swedish mill and one UK mill.

		Quarter		Full year
SEKm	1-17	4-16	1-16	2016
Net sales	1 403	1 296	1 364	5 252
Operating costs	-1 033	-948	-1 005	-3 870
EBITDA	370	348	358	1 382
Depreciation and amortisation according to plan	-124	-116	-122	-479
Operating profit	246	232	236	903
Investments	94	48	166	413
Operating capital	6 461	6 426	6 587	6 426
EBITDA margin, %	26	27	26	26
Operating margin, %	18	18	17	17
Return on operating capital, %	15	15	14	14
Production, paperboard, '000 tonnes	134	132	117	503
Deliveries, paperboard, '000 tonnes	131	120	129	497

The market for virgin fibre paperboard was stable in the first quarter and prices were largely unchanged.

Holmen's paperboard deliveries totalled 131 000 tonnes for January–March, which was 2 per cent higher than the same period last year.

Operating profit for January–March was SEK 246 million (236). Production has stabilised at a higher level following investments. Earnings for the first quarter last year were affected negatively by SEK 60 million from a rebuilding shutdown and positively by SEK 60 million relating to the outcome of a dispute over water charges.

Compared with the previous quarter, profit increased by SEK 14 million as a result of higher deliveries.

Maintenance shutdowns are expected to have a negative impact of around SEK 50 million on earnings in the second quarter and of slightly more than SEK 100 million in the fourth quarter.

Paper

Holmen produces paper that utilises the properties of fresh fibre to provide cost-effective alternatives to traditional paper choices. Production amounts to 1.1 million tonnes a year at two Swedish mills.

		Quarter		Full year
SEKm	1-17	4-16	1-16	2016
Net sales	1 277	1 265	1 308	5 431
Operating costs	-1 117	-1 095	-1 143	-4 761
EBITDA	159	169	165	669
Depreciation and amortisation according to plan	-85	-92	-108	-380
Operating profit*	74	77	57	289
Investments	19	60	96	259
Operating capital	2 897	2 815	3 406	2 815
EBITDA margin, %*	12	13	13	12
Operating margin, %*	6	6	4	5
Return on operating capital, %*	10	11	7	9
Production, '000 tonnes	269	275	293	1 176
Deliveries, '000 tonnes	265	260	273	1 134

* Excluding items affecting comparability in 2016

Demand for printing paper in Europe decreased by 4 per cent during the January–February period compared with the same period last year. Selling prices were largely unchanged in the first quarter.

Holmen's deliveries for January–March totalled SEK 265 000 tonnes. The product mix has improved through increased sales of magazine and book paper and divestiture of the Spanish newsprint mill. The proportion of magazine and book paper was just over 85 per cent.

Operating profit for January–March was SEK 74 million (57), excluding a 2016 item affecting comparability. The earnings improvement was due to the sale of the Spanish newsprint mill, which was carried out on 30 June 2016.

Compared with the fourth quarter, profit decreased by SEK 3 million.

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. The annual production volume is 900 000 cubic metres following the acquisition of Linghem Sawmill.

		Quarter		Full year
SEKm	1-17	4-16	1-16	2016
Net sales	373	344	353	1 342
Operating costs	-335	-319	-337	-1 262
EBITDA	38	25	16	80
Depreciation and amortisation according to plan	-21	-20	-21	-82
Operating profit	17	4	-5	-3
Investments	7	22	4	52
Operating capital	895	892	953	892
EBITDA margin, %	10	7	4	6
Operating margin, %	5	1	-1	0
Return on operating capital, %	8	2	neg	neg
Production, '000 m3	202	214	185	776
Deliveries, '000 m3	208	196	209	776

Market conditions for wood products in Europe were good in the first quarter and market prices increased slightly.

Holmen's deliveries of wood products for January– March totalled 208 000 cubic metres, which was the same level as the corresponding period last year.

Operating profit for January–March was SEK 17 million (-5). The improvement in earnings was due to higher production, a better product mix and higher prices, while costs were kept unchanged.

Compared with the fourth quarter, operating profit in the first quarter increased by SEK 13 million as a result of higher prices and a better product mix.

The nearby Linghem Sawmill has been acquired to strengthen the raw material supply for Braviken Sawmill and expand the product offering. Linghem Sawmill has a production capacity of 75 000 cubic metres. The acquisition took effect from 28 April 2017 and the purchase price was SEK 48 million.

Renewable energy

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

		Quarter		Full year
SEKm	1-17	4-16	1-16	2016
Net sales	94	86	108	314
Operating costs	-43	-43	-43	-172
Depreciation and amortisation according to plan	-6	-6	-6	-23
Operating profit	45	36	60	120
Investments	1	12	4	23
Operating capital	3 410	3 412	3 428	3 412
Operating margin, %	48	42	55	38
Return on operating capital, %	5	4	7	4
Production hydro and w ind pow er, GWh	335	270	373	1 080

Operating profit for January–March was SEK 45 million (60). The decrease in earnings was due to lower production.

Compared with the fourth quarter, operating profit rose by SEK 9 million as a result of seasonally higher production. Production was, however, 10 per cent lower than normal for the season.

The levels in Holmen's water storage reservoirs had returned to a normal level for the season by the end of the quarter.

Cash flow, financing and net financial items

Cash flow from operating activities for the first quarter totalled SEK 693 million. Cash flow from investing activities was SEK -107 million.

For January–March, the Group's net financial debt decreased by SEK 657 million to SEK 3 288 million. At 31 March, the debt/equity ratio was 0.16. Financial liabilities including pension provisions totalled SEK 4 661 million, SEK 3 955 million of which were current liabilities. Cash and cash equivalents and financial receivables totalled SEK 1 372 million, which was higher than normal as a result of a dividend of SEK 1 008 million being paid immediately after the end of the quarter. The Group has unused long-term contractually agreed credit facilities of SEK 3 815 million, maturing in 2020– 2021.

Net financial items for the first quarter were SEK -14 million (-15). The cost of borrowing averaged 1.4 per cent (1.3).

Standard & Poor's has a positive outlook on Holmen's 'BBB' long-term credit rating.

Tax

Recognised tax for January–March was SEK -127 million (-111). Recognised tax as a proportion of profit before tax was 21 per cent (33).

Equity

In January–March, the Group's equity decreased by SEK 498 million to SEK 20 745 million. Profit for the period totalled SEK 485 million and the dividend, recognised but not yet paid, was SEK 1 008 million. In addition to this, there is other comprehensive income of SEK 22 million, mainly as a result of an actuarial revaluation of the pension liability.

Hedging 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 -5 million (36). The fair value of currency hedges not yet recognised as income amounted to SEK 9 million at the end of the quarter.

For the next two years, 90 per cent of expected flows in EUR/SEK are hedged at an average of 9.52. For EUR/GBP, 90 per cent of one year's expected flows are hedged at 0.87. For other currencies, 4 months of flows are hedged. Currency effects on Group earnings were limited compared with both the previous quarter and the first quarter of 2016.

Prices for the Group's estimated net consumption of electricity in Sweden are 80–90 per cent hedged for 2017–2020 and 60 per cent hedged for 2021.

Personnel

The average number of employees (full-time equivalents) in the Group was 2 874 (3 193). The decrease is largely due to the sale of the newsprint mill in Spain and implemented rationalisations.

Share buy-backs

At the 2017 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.

Dividend

The 2017 AGM approved a dividend of SEK 12 (10.5) per share. The dividend, totalling SEK 1 008 million, was paid on 3 April.

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 2016, pages 36–39 and note 26.

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 the Group's accounting policies are unchanged from the latest published annual report. The figures in tables are rounded off. Information in accordance with IAS 34:16A has been submitted in the financial statements and in other parts of this interim report.

Stockholm, 3 May 2017 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, EVP and CFO, tel. +46 8 666 21 22 Ingela Carlsson, Communications Director, tel. +46 70 212 97 12

		Quarter		Full year
Income statement, SEKm	1-17	4-16	1-16	2016
Net sales	4 131	3 937	3 828	15 513
Other operating income	267	354	536	1 559
Change in inventories	19	169	-8	203
Raw materials and consumables	-2 372	-2 379	-2 136	-8 801
Personnel costs	-548	-574	-583	-2 268
Other operating costs	-682	-747	-953	-3 432
Profit from investments in associates and joint ventures	-6	-6	-5	-18
Depreciation and amortisation according to plan	-247	-249	-269	-1 018
Impairment losses	-	-	-123	-122
Change in value of biological assets	64	72	62	315
Operating profit	627	579	348	1 930
Finance income	0	0	0	13
Finance costs	-14	-15	-15	-84
Profit before tax	613	564	333	1 859
Tax	-127	-122	-111	-436
Profit for the period	485	442	222	1 424
Earnings per share, SEK	5.8	5.3	2.6	16.9
Operating margin, % *	15.2	14.7	15.1	13.9
Return on capital employed, % *	10.2	9.3	9.1	8.6
Return on equity, %	9.2	8.5	4.3	6.9
* Excl. items affecting comparability.
		Quarter		Full year
Statement of comprehensive income, SEKm	1-17	4-16	1-16	2016
Profit for the period	485	442	222	1 424
Other comprehensive income
Revaluations of defined benefit pension plans	58	79	33	-159
Tax attributable to items that will not be reclassifed to profit for the period	-11	-14	-6	29
Items that will not be reclassifed to profit for the period	47	65	27	- 130
Cash flow hedging	-22	252	-58	190
Translation difference on foreign operation	-10	-11	-146	-165
Hedging of currency risk in foreign operation	1	9	29	1
Tax attributable to items that will be reclassifed to profit for the period	6	-57	6	-52
Items that will be reclassifed to profit for the period	-26	194	-170	- 26
Total other comprehensive income after tax	22	259	-142	- 157
Total comprehensive income	507	701	80	1 267

			Jan-March
Change in equity, SEKm			2017	2016
Opening equity			21 243	20 853
Profit for the period			485	222
Other comprehensive income			22	-142
Total comprehensive income			507	80
Dividends paid *			-1 008	-
Share saving program			3	-
Closing equity			20 745	20 933
* Approved by the 2017 AGM but not paid out at the end of the quarter.
Share structure
	Votes No. of shares	No. of votes Quotient value		SEKm

Total number of shares issued		83 996 162	287 605 268
Holding of ow n B shares bought back		-760 000	-760 000
Total number of shares		84 756 162	288 365 268	4 237.8
B share	1		62 132 928 62 132 928	50 3 106.6
A share	10	22 623 234	226 232 340	50 1 131.2

	2017	2016
Balance sheet, SEKm	31 March	31 December
Non-current assets
Intangible non-current assets	94	87
Property, plant and equipment	9 225	9 387
Biological assets	17 493	17 448
Investments in associates and joint ventures	1 772	1 773
Other shares and participating interests	2	2
Non-current financial receivables	39	39
Deferred tax assets	3	4
Total non-current assets	28 629	28 740
Current assets
Inventories	2 974	2 981
Trade receivables	2 179	2 174
Current tax receivable	21	132
Other operating receivables	610	564
Current financial receivables	41	89
Cash and cash equivalents	1 292	210
Total current assets	7 116	6 151
Total assets	35 745	34 891
Equity	20 745	21 243
Non-current liabilities
Non-current financial liabilities	574	882
Pension provisions	132	201
Other provisions	649	673
Deferred tax liabilities	5 631	5 613
Total non-current liabilities	6 985	7 368
Current liabilities
Current financial liabilities	3 955	3 200
Trade payables	1 753	1 766
Current tax liability	55	6
Provisions	191	228
Other operating liabilities *	2 061	1 079
Total current liabilities	8 015	6 279
Total liabilities	15 000	13 648
Total equity and liabilities	35 745	34 891
Debt/equity ratio, times	0.16	0.19
Equity/assets ratio, %	58.0	60.9
Operating capital	29 662	30 799
Capital employed	24 034	25 190
Net financial debt	3 288	3 945

* Includes SEK 1 008 million in liabilities relating to an approved but as yet unpaid dividend at 31 March 2017

	Carrying amount		Fair value
Financial instruments, SEKm	2017	2016	2017	2016
	31 March	31 December	31 March	31 December
Assets at fair value	136	213	136	213
Assets at acquisition cost	3 545	2 459	3 545	2 459
Liabilities at fair value	333	385	333	385
Liabilities at acquisition cost	6 205	5 721	6 205	5 721

Holmen measures financial instruments at fair value or acquisition cost in the balance sheet depending on classification. In addition to items in net financi 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 7.

		Quarter
Cash flow statement, SEKm	1-17	4-16	1-16	Full year 2016
Operating activities
Profit before tax	613	564	333	1 859
Adjustments for non-cash items *	119	92	517	965
Paid income taxes	11	-129	-95	-504
Cash flow from operating activities
before changes in working capital	742	527	754	2 320
Cash flow from changes in working capital
Change in inventories	19	-167	131	-62
Change in trade receivables and other operating receivables	-52	16	-133	-189
Change in trade payables and other operating liabilities	-15	-79	-211	-109
Cash flow from operating activities	693	297	542	1 961
Investing activities
Acquisition of non-current assets	-144	-150	-276	-785
Disposal of non-current assets	37	154	15	662
Change in non-current financial receivables	-	-	-	-
Cash flow from investing activities	-107	3	-262	-123
Financing activities
Change in financial liabilities and current financial receivables	496	-282	-331	-966
Dividends paid to the shareholders of the parent company	-	-	-	-882
Cash flow from financing activities	496	-282	-331	-1 848
Cash flow for the period	1 082	19	-51	-10
Opening cash and cash equivalents	210	193	221	221
Exchange difference in cash and cash equivalents	-1	-2	-1	-1
Closing cash and cash equivalents	1 292	210	169	210

		Quarter
Change in net financial debt, SEKm	1-17	4-16	1-16	Full year 2016
Opening net financial debt	-3 945	-4 320	-4 799	-4 799
Cash flow from operating activities	693	297	542	1 961
Cash flow from investing activities (excl financial
receivables)	-107	3	-262	-123
Dividends paid	-	-	-	-882
Revaluations of defined benefit pension plans	57	80	33	-158
Foreign exchange effects and changes in fair value	14	-7	10	56
Closing net financial debt	-3 288	-3 945	-4 476	-3 945

* 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.

Parent company

				Full year
Income statement, SEKm	Quarter 1-17 4-16 1-16 3 814 3 703 3 628 -3 511 -4 183 -3 297 303 -480 330 1 075 -285 -2 301 595 45 108 115 86 409 710 131 -89 -60 -97 650 34 320 Quarter 1-17 4-16 1-16 320 650 34 238 -49 -30 -52 11 7	2016
Operating income				14 616
Operating costs				-14 281
Operating profit				335
Net financial items				759
Profit after net financial items				1 094
Appropriations				404
Profit before tax				1 499
Tax				-301
Profit for the period				1 197
Statement of comprehensive income, SEKm				Full year 2016
Profit for the period				1 197
Other comprehensive income
Cash flow hedging				211
Tax attributable to other comprehensive income				-46
Items that will be reclassifed to profit for the period	-23	185	-38	164
Total comprehensive income	297	835	-4	1 362

	2017	2016
Balance sheet, SEKm	31 March	31 December
Non-current assets	17 451	17 653
Current assets	5 980	4 950
Total assets	23 431	22 602
Restricted equity	5 915	5 915
Non-restricted equity	4 213	4 921
Untaxed reserves	2 292	2 290
Provisions	1 489	1 503
Liabilities	9 523	7 974
Total equity and liabilities	23 431	22 602

Sales to Group companies accounted for SEK 27 million (18) of operating income for January–March.

Balance sheet appropriations include group contributions of SEK 110 million (200).

The parent company's investments in property, plant and equipment and intangible non-current assets totalled SEK 9 million (8).

	2017		2016			Full year
Quarterly figures, SEKm	Q1	Q4	Q3	Q2	Q1	2016
Income statement
Net sales	4 131	3 937	3 810	3 937	3 828	15 513
Operating costs	-3 315	-3 176	-3 139	-3 275	-3 036	-12 626
Profit from investments in associates and joint ventures	-6	-6	-7	-5	-5	-22
Earnings before depreciation and change in value	810	756	665	658	787	2 865
Depreciation and amortisation according to plan	-247	-249	-247	-252	-269	-1 018
Change in value of forests	64	72	103	77	62	315
Operating profit excl. items affecting comparability	627	579	520	483	580	2 162
Items affecting comparability*	-	-	-	-	-232	-232
Operating profit	627	579	520	483	348	1 930
Net financial items	-14	-15	-14	-28	-15	-71
Profit before tax	613	564	507	455	333	1 859
Tax	-127	-122	-112	-91	-111	-436
Profit for the period	485	442	395	364	222	1 424
Earnings per share, SEK	5.8	5,3	4.7	4.3	2.6	16.9
Net sales
Forest	1 451	1 387	1 192	1 355	1 368	5 302
Paperboard	1 403	1 296	1 308	1 285	1 364	5 252
Paper	1 277	1 265	1 266	1 592	1 308	5 431
Wood products	373	344	324	322	353	1 342
Renew able energy	94	86	49	71	108	314
Elimination of intra-group net sales		-440	-328	-688	-672	-2 128
	-467
Group	4 131	3 937	3 810	3 937	3 828	15 513
Operating profit/loss by business area**
Forest		273	234	227	267	1 001
	283
Paperboard	246	232	235	200	236	903
Paper	74	77	82	73	57	289
Wood products	17	4	-1	-1	-5	-3
Renew able energy	45	36	5	19	60	120
Group-w ide	-38	-44	-34	-35	-35	-148
Group	627	579	520	483	580	2 162
Operating margin, % **
Paperboard	17.5	17.9	18.0	15.6	17.3	17.2
Paper	5.8	6.1	6.5	4.6	4.4	5.3
Wood products	4.6	1.3	-0.4	-0.2	-1.4	-0.2
Group	15.2	14.7	13.7	12.3	15.1	13.9
EBITDA by business area**
Forest	226	209	138	157	211	716
Paperboard	370	348	354	321	358	1 382
Paper	159	169	170	164	165	669
Wood products	38	25	19	20	16	80
Renew able energy	51	42	11	24	66	143
Group-w ide	-33	-38	-28	-29	-29	-124
Group	810	756	665	658	787	2 865
Return on operating capital, % **
Forest	6.3	6.2	5.3	5.2	6.1	5.7
Paperboard	15.3	14.5	14.6	12.2	14.3	13.9
Paper	10.4	10.8	11.3	9.3	6.6	9.4
Wood products	7.7	1.9	neg	neg	neg	neg
Renew able energy	5.3	4.3	0.6	2.2	7.1	3.5
Group	8.3	7.6	6.9	6.3	7.5	7.0
Key indicators
Return on capital employed, % **	10.2	9.3	8.4	7.7	9.1	8.6
Return on equity, %	9.2	8.5	7.7	7.1	4.3	6.9
Deliveries
Harvesting ow n forests, '000 m³	713	729	724	818	715	2 986
Paperboard, '000 tonnes	131	120	126	121	129	497
Paper, '000 tonnes	265	260	260	341	273	1 134
Wood products, '000 m³	208	196	184	188	209	776
Ow n production of hydro and w ind pow er, GWh	335	270	178	258	373	1 080

* Items affecting comparability in operating profit in Q1 2016 refers to the sale of the mill in Spain and the effects of a fire.

** Excl. items affecting comparability.

***Income and costs from the sale of newsprint from the divested Spanish mill are recognised under the 'Group-wide' segment from Q3 2016.

****Deliveries from own mills, i.e. not deliveries from the divested Spanish mill from Q3 2016.

Full year review, SEKm	2016	2015	2014	2013	2012	2011	2010	2009	2008	2007
Income statement Net sales	15 513	16 014	15 994	16 231	17 852	18 656	17 581	18 071	19 334	19 159
Operating costs	-12 626	-13 348	-13 270	-13 919	-15 224	-15 501	-15 077	-15 191	-16 614	-15 637
Profit from investments in associates and joint ventures	-22	7	-7	3	47	84	28	45	50	12
Earnings before depreciation and change in value	2 865	2 673	2 717	2 315	2 676	3 240	2 531	2 925	2 771	3 534
Depreciation and amortisation according to plan	-1 018	-1 240	-1 265	-1 370	-1 313	-1 260	-1 251	-1 320	-1 343	-1 337
Change in value of forests	315	267	282	264	350	-	52	16	-16	89
Operating profit excl. items affecting comparability	2 162	1 700	1 734	1 209	1 713	1 980	1 332	1 620	1 412	2 286
Items affecting comparability	-232	-931	-450	-140	-193	3 593	264	-	-361	557
Operating profit	1 930	769	1 284	1 069	1 520	5 573	1 596	1 620	1 051	2 843
Net financial items	-71	-90	-147	-198	-227	-244	-208	-255	-311	-261
Profit before tax	1 859	679	1 137	871	1 294	5 328	1 388	1 366	740	2 582
Tax	-436	-120	-230	-160	559	-1 374	-684	-360	-98	-1 077
Profit for the year	1 424	559	907	711	1 853	3 955	704	1 006	642	1 505
Diluted earnings per share, SEK	16.9	6.7	10.8	8.5	22.1	47.1	8.4	12.0	7.6	17.8
Operating profit by business area*
Forest	1 001	905	817	924	931	739	818	605	632	702
Paperboard	903	847	674	433	596	863	817	419	320	599
Paper	289	-74	141	-309	94	228	-618	340	280	623
Wood products	-3	9	37	-75	-130	-136	20	21	13	146
Renew able energy	120	176	212	371	355	406	495	414	327	272
Group-w ide	-148	-163	-146	-136	-132	-120	-200	-178	-159	-56
Group	2 162	1 700	1 734	1 209	1 713	1 980	1 332	1 620	1 412	2 286
EBITDA by business area*
Forest	716	668	563	694	614	769	794	616	674	639
Paperboard	1 382	1 346	1 161	878	959	1 186	1 141	780	688	954
Paper	669	514	725	429	862	1 002	229	1 218	1 176	1 537
Wood products Renew able energy	80 143	86 198	160 233	45 391	-10 374	-26 425	49 516	52 435	47 346	169 289
Group-w ide	-124	-138	-126	-121	-123	-116	-198	-176	-160	-54
Group	2 865	2 673	2 717	2 315	2 676	3 240	2 531	2 925	2 771	3 534
Deliveries
Harvesting ow n forests, '000 m³	2 986	3 213	3 297	3 465	3 211	2 988	2 999	2 897	2 649	2 575
Paperboard, '000 tonnes	497	499	493	469	485	474	464	477	494	516
Paper, '000 tonnes	1 134	1 325	1 305	1 574	1 651	1 668	1 732	1 745	2 044	2 025
Wood products, '000 m³	776	730	725	686	660	487	285	313	266	262
Ow n production of hydro and w ind pow er, GWh	1 080	1 441	1 113	1 041	1 353	1 235	1 149	1 090	1 128	1 193
Balance sheet
Non-current assets	28 701	29 524	30 221	30 652	30 664	30 334	26 028	25 694	26 506	26 153
Current assets	5 852	5 607	5 964	5 774	6 005	6 642	6 950	6 075	7 268	6 549
Financial receivables	338	325	249	327	377	240	454	407	828	541
Total assets	34 891	35 456	36 434	36 753	37 046	37 217	33 432	32 176	34 602	33 243
Equity	21 243	20 853	20 969	20 854	20 813	19 773	16 913	16 504	15 641	16 932
Deferred tax liability	5 613	5 508	5 480	5 804	5 504	6 630	5 910	5 045	4 819	5 482
Financial liabilities and interest-bearing provisions	4 283	5 124	6 156	6 443	6 967	6 499	6 227	6 091	8 332	6 518
Operating liabilities	3 752	3 971	3 829	3 653	3 762	4 313	4 382	4 536	5 809	4 310
Total equity and liabilities	34 891	35 456	36 434	36 753	37 046	37 217	33 432	32 176	34 602	33 243
Cash flow
Operating activities	1 961	2 526	2 176	2 011	2 254	2 101	1 523	2 873	1 660	2 476
Investing activities	-123	-832	-834	-869	-1 920	-1 733	-1 597	-818	-1 124	-1 315
Cash flow after investments	1 838	1 693	1 342	1 142	334	368	-74	2 054	536	1 161
Key indicators
Return on capital employed, % *	9	6	6	4	7	9	6	7	6	10
Return on equity, %	7	3	4	3	9	23	4	6	4	9
Return on equity, % * Debt/equity ratio	8 0.19	7 0.23	6 0.28	4 0.29	6 0.32	8 0.32	4 0.34	6 0.34	4 0.48	9 0.35
Dividend Dividend, SEK	12	10.5	10	9	9	8	7	7	9	12

* Excl. items affecting comparability.

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. It includes all income and costs, as well as depreciation/amortisation of non-current assets. 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 'profit before changes in value' 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 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.

		Quarter		Full year
SEKm	1-17	4-16	1-16	2016
EBITDA	810	756	788	2 865
Depreciation and amortisation according to plan	-247	-249	-269	-1 018
Change in value of forests	64	72	62	315
Operating profit excl. items affecting comp.	627	579	580	2 162
Items affecting comparability	-	-	-232	-232
Operating profit	627	579	348	1 930
		Quarter		Full year
SEKm	1-17	4-16	1-16	2016
Earnings before change in value of forests	219	201	205	686
Change in value of forests	64	72	62	315
Operating profit of forest	283	273	267	1 001

For 2016, earnings were negatively impacted by SEK 232 million from the sale of the mill in Spain, and insurance compensation for reconstruction following a fire at Hallsta Paper Mill, which were treated as items affecting comparability.

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. For the Group, the key figure 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 net financial debt plus equity. For the business areas, the key figure of return on operating capital is used to measure operating profit, excluding items affecting comparability, as a proportion of operating capital. Operating capital is calculated as capital employed plus the net sum of deferred tax liabilities and deferred tax assets, which corresponds to non-current assets plus working capital. For the Forest business area, the key figure of yield is used, which is calculated as profit before changes in value in relation to the carrying amount of biological assets.

	2017	2016
SEKm	31 March	31 December
Equity	20 745	21 243
Net financial debt	3 288	3 945
Capital employed	24 034	25 190
Deferred tax assets	-3	-4
Deferred tax liabilities	5 631	5 613
Operating capital	29 662	30 799

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:

	2017	2016
SEKm	31 March	31 December
Non-current financial liabilities	574	882
Current financial liabilities	3 955	3 200
Pension provisions	132	201
Non-current financial receivables	-39	-39
Current financial receivables	-41	-89
Cash and cash equivalents	-1 292	-210
Net financial debt	3 288	3 945

Holmen in brief

Holmen's strategy is to own forest and energy assets and to develop industrial operations in paperboard, paper and wood products. The substantial forest and energy assets are intended to deliver stable revenue that grows over time. Large-scale industrial operations at efficient facilities aim to generate good profitability through the processing of forest raw material into high-performance paperboard, cost-effective printing paper and wood products for use in joinery and construction.

Press and analyst conference

Following publication of the interim report, a press and analyst conference will be held at 15.00 CET on Wednesday, 3 May. Venue: Tändstickspalatset, Kreugersalen. Västra Trädgårdsgatan 15, Stockholm. Holmen President and CEO Henrik Sjölund will present and comment on the report. The presentation will be held in English.

The conference is also directly available as a webcast on Holmen's website, www.holmen.com. You may also participate in the conference by telephone, by calling 08 505 564 74 (within Sweden), +44 (0)203 364 53 74 (from the rest of Europe) or +1 855 753 22 30 (from the US) no later than 14.55 CET.

Financial reports

17 August 2017	Interim report January–June 2017
24 October 2017	Interim report January–September 2017
30 January 2018	Year-end report 2017

_________________________________________________________________________________________ This information is information that Holmen AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, on 3 May 2017 at 12.45 CET.

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.