Holmen

Quarterly Report • Apr 25, 2018

Mkr	1-18	Quarter 4-17	1-17	Full year 2017
Net sales	4 099	3 908	4 131	16 133
Operating profit	653	421	627	2 166
Profit after tax	507	332	485	1 668
Earnings per share, SEK	6.0	4.0	5.8	19.9
Operating margin, %	15.9	10.8	15.2	13.4
Return on capital employed, %	10.5	6.7	10.2	8.7
Return on equity, %	9.1	6.1	9.2	7.8
Cash flow before investments and working capital	586	588	742	2 310
Debt/equity ratio	0.11	0.13	0.16	0.13

Holmen's interim report January-March 2018

• Operating profit for January–March was SEK 653 million (January–March 2017: SEK 627 million). Operating profit includes a forest property sale of SEK 70 million. Prices for paper and wood products increased, wheras costs for wood and other input goods rose.
• Compared with the fourth quarter of 2017, profit was SEK 232 million higher, mainly as a result of income from the forest property sale and due to that fourth-quarter earnings were affected by a maintenance shutdown.
• Profit after tax for January–March amounted to SEK 507 million (485), which corresponds to earnings per share of SEK 6.0 (5.8).
• Return on capital employed was 10.5 (10.2) per cent.
• Net debt decreased by SEK 368 million to SEK 2 568 million.
• The 2018 AGM approved a dividend of SEK 13 (12) per share and a 2:1 share split, whereby each share is divided into two shares.

CEO comments

During the first quarter we were able to raise prices for most of our products. However, costs of key input goods are rising. Earnings were at a good level for the Holmen Group overall, but the performance of the Paperboard business area is disappointing.

We have a strong market position in Paperboard and over the past year we have established a volume that is 10 per cent higher than before. Despite this, profit decreased as a result of high costs due to rising commodity prices, high consumption of input goods and increased fixed costs. Focus for the new management of the business area is to reduce costs yet developing sales. An opportunity to increase paperboard production by another 20 per cent through investments at Iggesund Mill has been identified. This potential is currently being verified and the goal is to make an investment decision within a year.

Difficult winter conditions this year resulted in major challenges in both harvesting and transporting wood from the forest to our mills. Through significant efforts, we have to a large extent been able to achieve full production at our mills. The cost of purchasing pulpwood has however increased by SEK 60 million compared with the fourth quarter as a result of large volumes being acquired from far away and increasing prices. The cost increase for saw logs in the quarter was limited. Our own forests were also affected by the winter weather, resulting in somewhat higher costs and lower harvesting.

Within Paper, we have been working for a long time on reducing costs and increasing deliveries of magazine and book paper. During the first quarter we have continued to improve the product mix and the share of magazine and book paper is now almost up to 90 per cent. Prices increased but this was offset by higher raw material costs.

When it comes to Wood Products, we have gradually increased the level of value added. During the quarter a wood treatment plant at Braviken entered service, which will increase deliveries to Swedish builders' merchants. Prices have increased over the past two years, more than making up for higher costs for logs.

The cold winter periodically resulted in high electricity prices. In order to benefit from this, we produced more hydro power than usual, realising the potential of balancing rising energy costs in our industry.

The demand for forest land is illustrated by the transaction we completed in the quarter, as we received SEK 70 million more than the land's book value. The property is located far from our production facilities and we intend to reinvest in forest land closer to our own mills.

Demand for forest and forest products is continuing to increase, which is positive for a forest-owning company like Holmen. The challenge for our own industries is to develop operations to maintain competiveness and remain profitable amid rising prices for wood and other input goods. We intend to do this both by developing products that increase the level of value added and by reducing cost per unit produced through higher volumes and lower fixed costs.

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
1-18	4-17	1-17	2017
			5 535
299			1 275
			-4 852
- 7	- 9	- 7	-30
242	158	219	654
87	100	64	415
329	258	283	1 069
			49
13 974	13 824	13 540	13 824
7.5	7.8	8.1	7.4
666	734	713	2 904
	1 465 -1 216 18	1 391 331 -1 224 21	1 451 302 -1 226 10

Demand for saw logs and pulpwood was high in the first quarter and prices increased somewhat.

Holmen's harvest from its own forests amounted to 666 000 cubic metres, which is 7 per cent lower than in January–March 2017 because of difficult winter weather conditions.

Operating profit for January–March was SEK 329 million (283). This includes SEK 70 million in profit from the sale of a forest property with 2 000 hectares actively managed forest land. Profit was positively affected by rising wood prices, but costs were also slightly higher than normal because of the difficult winter weather conditions.

Compared with the fourth quarter, operating profit increased by SEK 71 million owing to the completed forest property sale.

Paperboard

Holmen supplies paperboard to the premium consumer packaging segment. Production, which takes place at one Swedish and one UK mill, amounts to 550 000 tonnes per year.

		Quarter		Full year
SEKm	1-18	4-17	1-17	2017
Net sales	1 473	1 354	1 403	5 526
Operating costs	-1 179	-1 129	-1 033	-4 270
EBITDA	294	226	370	1 257
Depreciation and amortisation according to plan	-128	-120	-124	-492
Operating profit	166	106	246	764
Investments	133	173	94	375
Capital employed	5 592	5 433	5 571	5 433
EBITDA margin, %	20	17	26	23
Operating margin, %	11	8	18	14
Return on capital employed, %	12	8	18	14
Production, paperboard, '000 tonnes	137	129	134	530
Deliveries, paperboard, '000 tonnes	138	129	131	526

Demand for paperboard in Europe was good in the first quarter. Prices increased slightly in some market segments.

Holmen's paperboard deliveries in January–March amounted to 138 000 tonnes, which is an increase of 5 per cent on January–March 2017.

Operating profit for January–March was SEK 166 million (246). The decrease in profit is due to price increases for wood and chemicals, high energy consumption and increased consumption rates. Fixed costs also increased.

Operating profit increased by SEK 60 million compared with the fourth quarter. Costs for input goods increased significantly. The fourth quarter was impacted by a net amount of SEK -130 million from a maintenance shutdown, and extra income from renewable energy.

A maintenance shutdown is planned for the third quarter at Iggesund Mill, with an expected negative earnings impact of around SEK 50 million.

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 1.1 million tonnes a year at two Swedish mills.

		Quarter		Full year
SEKm	1-18	4-17	1-17	2017
Net sales	1 418	1 376	1 277	5 408
Operating costs	-1 262	-1 238	-1 117	-4 781
EBITDA	156	138	159	627
Depreciation and amortisation according to plan	-84	-83	-85	-339
Operating profit*	72	55	74	288
Investments	13	59	19	141
Capital employed	2 238	2 193	2 581	2 193
EBITDA margin, %*	11	10	12	12
Operating margin, %*	5	4	6	5
Return on capital employed, % *	13	10	12	12
Production, '000 tonnes	271	279	269	1 088
Deliveries, '000 tonnes	278	282	265	1 117

Demand for magazine and book paper in Europe was stable in the first quarter. The market balance has improved considerably as a result of production capacity shutdowns and prices have been raised.

Holmen's deliveries totalled 278 000 tonnes for January–March, which was 5 per cent higher than the same period last year. The increase occurred in magazine and book papers, which now account for almost 90 per cent of deliveries.

Operating profit for January–March was SEK 72 million (74). Selling prices were on average 4 per cent higher but the effect was offset by considerable cost increases, mainly for wood.

Operating profit was up by SEK 17 million compared with the fourth quarter. The effect of higher selling prices was largely offset by increased raw material costs.

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 just over 800 000 cubic metres.

		Quarter		Full year
SEKm	1-18	4-17	1-17	2017
Net sales	426	385	373	1 562
Operating costs	-365	-347	-335	-1 397
EBITDA	61	38	38	165
Depreciation and amortisation according to plan	-23	-22	-21	-86
Operating profit	38	16	17	80
Investments	40	30	7	100
Capital employed	900	862	858	862
EBITDA margin, %	14	10	10	11
Operating margin, %	9	4	5	5
Return on capital employed, %	17	7	8	9
Production, '000 m3	212	214	202	827
Deliveries, '000 m3	215	206	208	852

Demand for wood products was strong in the first quarter and selling prices increased.

Holmen's deliveries of wood products for January– March 2018 were 215 000 cubic metres. This was an increase of 3 per cent compared with the same period last year as a result of the acquisition of Linghem Sawmill.

Operating profit for January–March was SEK 38 million (17). The improvement in profit was due to higher prices, which was partly offset by higher costs for logs.

Compared with the fourth quarter, operating profit increased by SEK 22 million as a result of higher selling prices and lower maintenance costs.

At the end of the first quarter, the new wood treatment plant at Braviken Sawmill entered service. The aim is to increase deliveries to builders' merchants in Sweden.

Renewable Energy

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

		Full year
SEKm	1-18	Quarter 4-17	1-17	2017
Net sales	122	86	94	315
Operating costs	-27	-43	-43	-157
Depreciation and amortisation according to plan	-6	-6	-6	-24
Operating profit	89	36	45	135
Investments	5	10	12	26
Capital employed	3 095	3 115	3 156	3 115
Operating margin, %	73	42	48	43
Return on capital employed, %	11	5	6	4
Production hydro and w ind pow er, GWh	385	318	335	1 169

Operating profit for January–March was SEK 89 million (45). Electricity prices were high in the quarter, which together with a high production level and reduced property tax, was the reason for the improvement in earnings.

Compared with the fourth quarter, operating profit increased by SEK 53 million as a result of seasonally higher production and higher electricity prices.

By the end of the first quarter, the levels in Holmen's water storage reservoirs were slightly lower than normal.

Cash flow, financing and net financial items

Cash flow from operating activities for the first quarter totalled SEK 523 million. Investment payments totalled SEK 208 million.

Partly owned wind power company Varsvik AB has loans amounting to just over SEK 450 million. In the first quarter, Holmen acquired the loan from the lending bank at nominal value, which increased the Group's non-current financial receivables.

The Group's net financial debt decreased by SEK 368 million to SEK 2 568 million in the first quarter. At 31 March, the debt/equity ratio was 0.11. Financial liabilities including pension provisions totalled SEK 3 374 million, SEK 2 237 million of which were current liabilities. Cash, cash equivalents and financial receivables totalled SEK 806 million. The Group has unused contractually agreed credit facilities of SEK 4 120 million, maturing in 2020–2021.

Net financial items for the first quarter were SEK -8 million (-14).

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

Tax

Recognised tax for January–March was SEK -137 million (-127). Recognised tax as a proportion of profit before tax was 21 (21) per cent.

Equity

In January–March, the Group's equity increased by SEK 352 million to SEK 22 387 million. Profit for the period totalled SEK 507 million. Other comprehensive income amounted to SEK -150 million.

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 -100 million (-5). The fair value of currency hedges not yet recognised as income amounted to SEK -476 million at 31 March.

Currency had no impact on Holmen's operating profit in the first quarter of 2018 compared with the same period of 2017. For just over the next two years, expected flows in EUR/SEK are hedged at an average of 9.74. For EUR/GBP, 10 months of expected flows are hedged at 0.89. For other currencies, 4 months of flows are hedged.

Prices for the Group's estimated net consumption of electricity in Sweden are 80–90 per cent hedged for 2018–2020 and 65 per cent for 2021.

Personnel

The average number of employees (full-time equivalents) in the Group was 2 880 (2 874).

Dividend

At the 2018 AGM, the dividend was set at SEK 13 (12) per share. A dividend totalling SEK 1 092 million was paid on 17 April.

Share split

The 2018 AGM approved a share split, meaning that each share, irrespective of series, will be divided into two shares (2:1 split) of the same series. The record date for the share split was set at 2 May 2018.

Share buy-backs

At the 2018 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.

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 2017, pages 32–35 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.

Interim report January–March 2018

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 from the most recently published annual accounts, with the exception of new accounting standards IFRS 9 'Financial Instruments' and IFRS 15 'Revenue from Contracts with Customers,' which came into force on 1 January 2018. Under IFRS 9, impairments of financial assets should be based on a model based on expected future losses. Hedge accounting rules have changed, with requirements for hedging relations to be the same as the Group's risk management targets. Under IFRS 15, income should be recognised when the customer gains control over the goods in question. Other changes in IFRS 15 include the accounting of rights of return and discounts. The new policies have only a marginal effect on Holmen's accounting and no effects have been recognised in equity as a result of their introduction. The figures in tables are rounded off.

Stockholm, 25 April 2018 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	1-18	4-17	1-17	2017
Net sales	4 099	3 908	4 131	16 133
Other operating income	328	327	267	1 136
Change in inventories	-18	-23	19	-128
Raw materials and consumables	-2 238	-2 134	-2 372	-8 945
Personnel costs	-574	-598	-548	-2 252
Other operating costs	-776	-914	-682	-3 189
Profit from investments in associates and joint ventures	- 2	1	- 6	-12
Depreciation and amortisation according to plan	-254	-246	-247	-991
Change in value of biological assets	87	100	64	415
Operating profit	653	421	627	2 166
Finance income	2	0	0	2
Finance costs	-11	-14	-14	-55
Profit before tax	644	407	613	2 113
Tax	-137	-75	-127	-445
Profit for the period	507	332	485	1 668
Earnings per share, SEK
basic	6.0	4.0	5.8	19.9
diluted	6.0	4.0	5.8	19.9
Operating margin, % *	15.9	10.8	15.2	13.4
Return on capital employed, % *	10.5	6.7	10.2	8.7
Return on equity, %	9.1	6.1	9.2	7.8
* Excl. items affecting comparability.
		Q Quarter		Full year
Statement of comprehensive income, SEKm	1-18	u 4-17	1-17	2017
Profit for the period	507	332	485	1 668
Other comprehensive income
Revaluations of defined benefit pension plans	-57	53	58	121
Tax attributable to items that w ill not be reclassifed to profit for the period	10	-12	-11	-24
Items that will not be reclassifed to profit for the period	-47	42	47	97
Cash flow hedging	-262	-68	-22	31
Translation difference on foreign operation	112	70	-10	36
Hedging of currency risk in foreign operation	-10	-38	1	-49
Tax attributable to items that w ill be reclassifed to profit for the period	57	22	6	3
Items that will be reclassifed to profit for the period	-103	-14	-26	21
Total other comprehensive income after tax	-150	28	22	119
Total comprehensive income	358	360	507	1 786

Change in equity, SEKm		Jan-March
	2017	2017
Opening equity	22 035	21 243
Profit for the period	507	485
Other comprehensive income	-150	22
Total comprehensive income	358	507
Dividends paid	-	-1 008
Share saving program	- 5	3
Closing equity	22 387	20 745

Share structure
		Votes No. of shares		No. of votes Quotient value	SEKm
A share	10	22 623 234	226 232 340		50 1 131.2
B share	1		62 132 928 62 132 928		50 3 106.6
Total number of shares		84 756 162	288 365 268		4 237.8
Holding of ow n B shares bought back		-760 000	-760 000
Total number of shares issued		83 996 162	287 605 268

	2018	2017
Balance sheet, SEKm	31 March	31 December
Non-current assets
Intangible non-current assets	88	90
Property, plant and equipment	9 082	9 078
Biological assets	17 920	17 831
Investments in associates and joint ventures	1 731	1 749
Other shares and participating interests	2	2
Non-current financial receivables	524	42
Deferred tax assets	1	1
Total non-current assets	29 349	28 793
Current assets
Inventories	2 941	2 905
Trade receivables	2 240	2 089
Current tax receivable	36	36
Other operating receivables	739	658
Current financial receivables	30	32
Cash and cash equivalents	252	356
Asset held for sale	-	23
Total current assets	6 239	6 098
Total assets	35 588	34 891
Equity	22 387	22 035
Non-current liabilities
Non-current financial liabilities	1 049	552
Pension provisions	88	39
Other provisions	635	662
Deferred tax liabilities	5 638	5 650
Total non-current liabilities	7 410	6 903
Current liabilities
Current financial liabilities	2 237	2 775
Trade payables	1 957	1 957
Current tax liability	61	21
Provisions	143	144
Other operating liabilities	1 392	1 056
Total current liabilities	5 790	5 952
Total liabilities	13 200	12 856
Total equity and liabilities	35 588	34 891
Debt/equity ratio, times	0.11	0.13
Equity/assets ratio, %	63	63
	24 956	24 972
Net financial debt	2 568	2 936

	Carrying amount		Fair value
Financial instruments, SEKm	2018	2017	2018	2017
	31 March	31 December	31 March	31 December
Assets at fair value	257	200	257	200
Assets at acquisition cost	3 046	2 498	3 046	2 498
Liabilities at fair value	694	351	694	351
Liabilities at acquisition cost	5 482	5 234	5 482	5 234
H o lm en m easures financial instrum ents at fair value o r acquisitio n co st in the balance sheet depending o n classificatio n. In additio n to item s in net

financial debt, with the exceptio n o f the pensio n liability, financial instrum ents co ver trade receivables and trade payables. Financial instrum ents m easured at fair value in the balance sheet belo ng to m easurem ent level 2 pursuant to IFR S 13.

		Full year
Cash flow statement, SEKm	1-18	Quarter 4-17	1-17	2017
Operating activities
Profit before tax	644 40	407 135	613 119	2 113 418
Adjustments for non-cash items * Paid income taxes	-99	46	11	-221
Cash flow from operating activities
before changes in working capital	586	588	742	2 310
Cash flow from changes in working capital
Change in inventories	10	-47	19	73
Change in trade receivables and other operating receivables	-44	223	-52	22
Change in trade payables and other operating liabilities	-29	129	-15	104
Cash flow from operating activities	523	893	693	2 509
Investing activities
Acquisition of non-current assets	-208	-297	-144	-702
Disposal of non-current assets	121	14	37	58
Change in non-current financial receivables	-456	-	-	-
Cash flow from investing activities	-543	-283	-107	-644
Financing activities
Change in financial liabilities and current financial receivables	-87	-632	496	-710
Dividends paid to the shareholders of the parent company	-	-	-	-1 008
Cash flow from financing activities	-87	-632	496	-1 718
Cash flow for the period	-107	-21	1 082	147
Opening cash and cash equivalents	356	376	210	210
Exchange difference in cash and cash equivalents	3	1	- 1	- 1
Closing cash and cash equivalents	252	356	1 292	356

		Quarter
Change in net financial debt, SEKm	1-18	4-17	1-17	2017
Opening net financial debt	-2 936	-3 585	-3 945	-3 945
Cash flow from operating activities	523	893	693	2 509
Cash flow from investing activities (excl financial
receivables)	-87	-283	-107	-644
Dividends paid	-	-	-	-1 008
Revaluations of defined benefit pension plans	-56	54	57	120
Foreign exchange effects and changes in fair value	-35	-15	14	32
Closing net financial debt	-2 592	-2 936	-3 288	-2 936
* The adjustm ents co nsist prim arily o f depreciatio n acco rding to plan, im	pairm ent lo	sses, change in value o	f bio lo	gical assets,

change in pro visio ns, interests in earnings o f asso ciated co m panies, currency effects and revaluatio ns o f financial instrum ents as well as capital gains/lo sses o n sale o f fixed assets.

Parent company

		Full year
Income statement, SEKm	1-18	Quarter 4-17	1-17	2017
Operating income	3 728	3 617	3 814	14 910
Operating costs	-3 424	-3 575	-3 511	-14 069
Operating profit	304	42	303	841
Net financial items	116	301	-2	416
Profit after net financial items	420	343	301	1 257
Appropriations	38	141	108	787
Profit before tax	458	483	409	2 044
Tax	-73	-30	-89	-197
Profit for the period	385	454	320	1 847
Statement of comprehensive income, SEKm	Quarter			Full year
	1-18	4-17	1-17	2017
Profit for the period	385	454	320	1 847
Other comprehensive income
Cash flow hedging	-255	-63	-30	38
Tax attributable to other comprehensive income	56	14	7	-8
Items that will be reclassifed to profit for the period	-199	-49	-23	29
Total comprehensive income	187	405	297	1 876

	2017	2017
Balance sheet, SEKm	31 March	31 December
Non-current assets	17 079	16 658
Current assets	4 984	4 888
Total assets	22 063	21 545
Restricted equity	5 915	5 915
Non-restricted equity	5 984	5 803
Untaxed reserves	2 145	2 032
Provisions	1 339	1 392
Liabilities	6 681	6 403
Total equity and liabilities	22 063	21 545

Sales to Group companies accounted for SEK 33 million (27) of operating income for January–March.

Balance sheet appropriations include group contributions of SEK 150 million (110).

The parent company's investments in property, plant and equipment and intangible non-current assets totalled SEK 13 million (9).

	2018		2017			Full year
Quarterly figures, SEKm	Q1	Q4	Q3	Q2	Q1	2017
Income statement
Net sales	4 099	3 908	3 947	4 148	4 131	16 133
Operating costs	-3 278	-3 342	-3 250	-3 472	-3 315	-13 379
Profit from investments in associates and joint ventures	- 2	1	- 5	- 3	- 6	-12
Earnings before depreciation and change in value	820	567	692	672	810	2 742
Depreciation and amortisation according to plan	-254	-246	-249	-249	-247	-991
Change in value of forests	87	100	150	102	64	415
Operating profit	653	421	593	525	627	2 166
Net financial items	- 8	-15	-13	-12	-14	-53
Profit before tax	644	407	580	513	613	2 113
Tax	-137	-75	-124	-119	-127	-445
Profit for the period	507	332	456	394	485	1 668
Earnings per share, SEK	6.0	4.0	5.4	4.7	5.8	19.9
Net sales *
Forest	1 465	1 391	1 286	1 407	1 451	5 535
Paperboard	1 473	1 354	1 361	1 408	1 403	5 526
Paper	1 418	1 376	1 387	1 369	1 277	5 408
Wood Products	426	385	397	407	373	1 562
Renew able Energy	122	86	76	60	94	315
Elimination of intra-group net sales	-805	-684	-560	-503	-467	-2 214
Group	4 099	3 908	3 947	4 148	4 131	16 133
EBITDA by business area
Forest	249	167	124	166	226	683
Paperboard Paper	294 156	226 138	352 156	309 175	370 159	1 257 627
Wood Products	61	38	48	42	38	165
Renew able Energy	95	43	40	25	51	159
Group-w ide	-35	-45	-27	-44	-33	-149
Group	820	567	692	672	810	2 742
Operating profit/loss by business area
Forest	329	258	267	261	283	1 069
Paperboard	166	106	229	184	246	764
Paper	72	55	69	90	74	288
Wood Products	38	16	26	21	17	80
Renew able Energy	89	36	34	20	45	135
Group-w ide	-41	-50	-32	-50	-38	-170
Group	653	421	593	525	627	2 166
Operating margin, %
Paperboard	11.3	7.8	16.9	13.0	17.5	13.8
Paper	5.1	4.0	5.0	6.5	5.8	5.3
Wood Products	9.0	4.2	6.5	5.1	4.6	5.1
Group	15.9	10.8	15.0	12.7	15.2	13.4
Return on capital employed, %
Forest	9.5	7.5	7.8	7.7	8.4	7.8
Paperboard	12.1	7.8	16.7	13.2	17.7	13.9
Paper	13.0	9.8	11.6	14.2	11.7	11.9
Wood Products	17.3	7.4	11.4	9.4	8.1	9.1
Renew able Energy	11.5	4.7	4.3	2.5	5.7	4.3
Group	10.5	6.7	9.4	8.5	10.2	8.7
Key indicators
Return on equity, %	9.1	6.1	8.5	7.5	9.2	7.8
Deliveries
Harvesting ow n forests, '000 m³	666	734	697 133	760 133	713 131	2 904 526
Paperboard, '000 tonnes	138	129
Paper, '000 tonnes	278	282	287	283	265	1 117
Wood products, '000 m³ Ow n production of hydro and w ind pow er, GWh	215 385	206 318	215 285	222 231	208 335	852 1 169

*Sales in the Forest and Renewable Energy business areas take place in Sweden only. For the Paperboard business area, 75 per cent of sales in the first quarter were to Europe, while 20 per cent went to Asia and 5 per cent to the rest of the world. For the Paper business area, sales to Europe accounted for 90 per cent while sales to Asia accounting for 10 per cent. For the Wood Products business area, sales to Europe accounted for 70 per

cent, while other sales were mainly to North Africa and the Middle East.

Full year review, SEKm	2017	2016	2015	2014	2013	2012	2011	2010	2009	2008
Income statement
Net sales	16 133	15 513	16 014	15 994	16 231	17 852	18 656	17 581	18 071	19 334
Operating costs	-13 379	-12 626	-13 348	-13 270	-13 919	-15 224	-15 501	-15 077	-15 191	-16 614
Profit from investments in associates and joint ventures	-12	-22	7	- 7	3	47	84	28	45	50
Earnings before depreciation and change in value	2 742	2 865	2 673	2 717	2 315	2 676	3 240	2 531	2 925	2 771
Depreciation and amortisation according to plan	-991	-1 018	-1 240	-1 265	-1 370	-1 313	-1 260	-1 251	-1 320	-1 343
Change in value of forests	415	315	267	282	264	350	-	52	16	-16
Operating profit excl. items affecting comparability	2 166	2 162	1 700	1 734	1 209	1 713	1 980	1 332	1 620	1 412
Items affecting comparability	-	-232	-931	-450	-140	-193	3 593	264	-	-361
Operating profit	2 166	1 930	769	1 284	1 069	1 520	5 573	1 596	1 620	1 051
Net financial items	-53	-71	-90	-147	-198	-227	-244	-208	-255	-311
Profit before tax	2 113	1 859	679	1 137	871	1 294	5 328	1 388	1 366	740
Tax	-445 1 668	-436 1 424	-120 559	-230 907	-160 711	559	-1 374	-684	-360	-98
Profit for the year						1 853	3 955	704	1 006	642
Diluted earnings per share, SEK	19.9	16.9	6.7	10.8	8.5	22.1	47.1	8.4	12.0	7.6
EBITDA by business area*
Forest	683	716	668	563	694	614	769	794	616	674
Paperboard	1 257	1 382	1 346	1 161	878	959	1 186	1 141	780	688
Paper	627	669	514	725	429	862	1 002	229	1 218	1 176
Wood Products Renew able Energy	165 159	80 143	86 198	160 233	45 391	-10 374	-26 425	49 516	52 435	47 346
Group-w ide	-149	-124	-138	-126	-121	-123	-116	-198	-176	-160
Group	2 742	2 865	2 673	2 717	2 315	2 676	3 240	2 531	2 925	2 771
Operating profit by business area*
Forest	1 069	1 001	905	817	924	931	739	818	605	632
Paperboard	764	903	847	674	433	596	863	817	419	320
Paper Wood Products	288 80	289 - 3	-74 9	141 37	-309 -75	94 -130	228 -136	-618 20	340 21	280 13
Renew able Energy	135	120	176	212	371	355	406	495	414	327
Group-w ide	-170	-148	-163	-146	-136	-132	-120	-200	-178	-159
Group	2 166	2 162	1 700	1 734	1 209	1 713	1 980	1 332	1 620	1 412
Deliveries
Harvesting ow n forests, '000 m³	2 904	2 986	3 213	3 297	3 465	3 211	2 988	2 999	2 897	2 649
Paperboard, '000 tonnes	526	497	499	493	469	485	474	464	477	494
Paper, '000 tonnes Wood products, '000 m³	1 117 852	1 134 776	1 325 730	1 305 725	1 574 686	1 651 660	1 668 487	1 732 285	1 745 313	2 044 266
Ow n production of hydro and w ind pow er, GWh	1 169	1 080	1 441	1 113	1 041	1 353	1 235	1 149	1 090	1 128
Balance sheet
Non-current assets	28 751	28 701	29 524	30 221	30 652	30 664	30 334	26 028	25 694	26 506
Current assets	5 710	5 852	5 607	5 964	5 774	6 005	6 642	6 950	6 075	7 268
Financial receivables	430	338	325	249	327	377	240	454	407	828
Total assets	34 891	34 891	35 456	36 434	36 753	37 046	37 217	33 432	32 176	34 602
Equity	22 035	21 243	20 853	20 969	20 854	20 813	19 773	16 913	16 504	15 641
Deferred tax liability Financial liabilities and interest-bearing provisions	5 650 3 366	5 613 4 283	5 508 5 124	5 480 6 156	5 804 6 443	5 504 6 967	6 630 6 499	5 910 6 227	5 045 6 091	4 819 8 332
Operating liabilities	3 840	3 752	3 971	3 829	3 653	3 762	4 313	4 382	4 536	5 809
Total equity and liabilities	34 891	34 891	35 456	36 434	36 753	37 046	37 217	33 432	32 176	34 602
Cash flow
Operating activities	2 509	1 961	2 526	2 176	2 011	2 254	2 101	1 523	2 873	1 660
Investing activities	-644	-123	-832	-834	-869	-1 920	-1 733	-1 597	-818	-1 124
Cash flow after investments	1 865	1 838	1 693	1 342	1 142	334	368	-74	2 054	536
Key indicators
Return on capital employed, % *	9	9	6	6	4	7	9	6	7	6
Return on equity, % Return on equity, % *	8 8	7 8	3 7	4 6	3 4	9 6	23 8	4 4	6 6	4 4
Debt/equity ratio	0.13	0.19	0.23	0.28	0.29	0.32	0.32	0.34	0.34	0.48
Dividend
Dividend, SEK	13	12	10.5	10	9	9	8	7	7	9

* 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	1-18	4-17	1-17	2017
EBITDA	820	567	810	2 742
Depreciation and amortisation according to plan	-254	-246	-247	-991
Change in value of forests	87	100	64	415
Operating profit	653	421	627	2 166
		Quarter		Full year
SEKm	1-18	4-17	1-17	2017
Earnings before change in value of forests	242	158	219	654
Change in value of forests	87	100	64	415
Operating profit of forest	329	258	283	1 069

Margin, return and debt measures

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 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 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	2018 31 March	2017 31 December
Fixed capital *	28 823	28 751
Working capital **	1 769	1 870
Deferred tax assets	1	1
Deferred tax liabilities	-5 638	-5 650
Capital employed	24 956	24 972

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:

	2018	2017
SEKm	31 March	31 December
Non-current financial liabilities	1 049	552
Current financial liabilities	2 237	2 775
Pension provisions	88	39
Non-current financial receivables	-524	-42
Current financial receivables	-30	-32
Cash and cash equivalents	-252	-356
Net financial debt	2 568	2 936

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 industry operations are run with a focus on profitability and greater value added.

Press and analyst conference

On the publication of the interim report, a press and analyst conference will be held at 14.30 CET on Wednesday 25 April. 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 14.25 CET.

Financial reports

15 August 2018	Interim report January–June 2018
24 October 2018	Interim report January–September 2018
31 January 2019	Year-end report 2018

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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 25 April 2018 at 13.00.