Holmen

Quarterly Report • Apr 29, 2020

		Quarter		Full year
SEKm	1-20	4-19	1-19	2019
Net sales	4 499	4 194	4 260	16 959
Operating profit excl. items affecting comparability	628	587	643	2 345
Operating profit	628	9 357	643	11 115
Profit after tax	491	7 368	503	8 731
Earnings per share, SEK	3.0	45.5	3.0	52.6
Operating margin, %*	14.0	14.0	15.1	13.8
Return on capital employed, %*	5.7	9.0	9.7	8.9
Return on equity, %*	4.9	7.6	8.5	7.8
Cash flow before investments and change in working capital	615	665	655	2 727
Debt/equity ratio, %	9	9	12	9

Holmen Interim Report January–March 2020

*Excluding items affecting comparability 2019.

• Operating profit for January–March was SEK 628 million (January–March 2019: SEK 643 million). Lower selling prices had a negative impact on earnings, but this was largely offset by increased deliveries.
• Compared with the fourth quarter, operating profit excluding items affecting comparability increased by SEK 40 million, mainly due to higher earnings for Forest.
• Profit after tax for January–March amounted to SEK 491 million (503), which corresponds to earnings per share of SEK 3.0 (3.0).
• The COVID-19 outbreak has had a limited impact on the Group's earnings in the first quarter. However, order intake for in particular paper and wood products has decreased over the past month, which will have a negative impact on sales in the second quarter.
• The Group's financial position is strong but, in view of the uncertainty created by COVID-19, the Board has decided to withdraw the previously proposed dividend. In the autumn the Board will assess whether a dividend should be paid and, if so, will convene an extraordinary general meeting.

* Excl. items affecting comparability

* Excl. items affecting comparability

CEO comments

COVID-19 has characterised our work in recent months. We took extensive measures at an early stage regarding both health and production in order to maintain operations, and we also acted quickly to secure stable, long-term financing. We have managed production and deliveries well, resulting in good profit of SEK 628 million in the first quarter. However, order intake for customer segments within paper and wood products in particular has decreased over the past month, which will have a negative impact on sales in the second quarter.

Demand for forest raw material was good in the quarter, but high supply resulted in prices decreasing slightly. Our harvesting was at a normal level and profit was a solid SEK 322 million. The economic slowdown resulting from COVID-19 is starting to show in lower demand for forest raw material, particularly from sawmills. We are able to counter this by shifting part of harvesting to next year.

Demand for paperboard increased in Europe but developed weaker in Asia due to strong competition and the impact of the ongoing epidemic. Our sales were good and, despite logistical challenges, we recorded our highest ever deliveries for a single quarter. Profit was SEK 163 million due to somewhat high costs, driven by efforts to maintain a high level of production and changes to logistics. We are now seeing demand vary between customer segments as economic activity slows down.

The paper market is challenging and is showing decreasing demand, and prices decreased at the start of the year. We maintained deliveries and improved the product mix, which largely offset lower prices. Paper generated a good profit of SEK 83 million but is now entering a period of weaker order intake and greater uncertainty than usual. Our inventory is at a healthy level and we will continually adapt production as market conditions develop.

The wood products market stabilised in the first quarter following a period of oversupply and decreasing prices. Our sales were high which reduced stocks. Earnings turned slightly positive, due to healthy deliveries and slightly lower raw material costs. The expansion of Braviken Sawmill is complete and the ability to increase production by 150 000 m3 will be used when the market conditions are right. Demand for wood products is varying hugely between different markets, depending on the action taken to slow down the spread of the coronavirus. In Sweden demand from builders' merchants is high, while the demand in UK has seen a sharp slowdown.

Supply of electricity in the Nordic region was high in the first quarter, while mild weather reduced demand, leading to low prices. Operating profit from Renewable Energy was good at SEK 95 million, due to high production offsetting low market prices for electricity. Construction of 26 wind turbines at Blåbergsliden with capacity of 143 MW has started. Our production of renewable hydro and wind power will increase by 35 per cent when these turbines enter service at the end of 2021.

Our cash flow is good, our financial position is strong and we have excellent access to long-term financing. However, given the current uncertain situation, the Board does not consider it appropriate to resolve on a dividend at the forthcoming Annual General Meeting. The Board will make a new assessment in the autumn.

Holmen's business is based on the forest. We refine our forest raw material into everything from wood for climate-smart building to renewable packaging, magazines and books, while at the same time we generate hydro and wind power on our own land. Although the coronavirus epidemic is posing challenges for our business in the short term, I am confident that we will cope well without impairing the long-term development of the company.

Forest

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

		Quarter		Full year
SEKm	1-20	4-19	1-19	2019
Net sales	1 690	1 578	1 642	6 286
of which from own forests	343	398	273	1 348
Operating costs	-1 483	-1 370	-1 447	-5 556
Change in value of forests	124	80	118	487
EBITDA	331	288	313	1 217
Depreciation and amortisation according to plan	-9	-14	-11	-45
Operating profit*	322	274	302	1 172
Investments	22	31	12	77
Book value, forest assets	41 475	41 345	18 830	41 345
Volume of ow n forests, '000 m³	761	821	551	2 714

* Excl. item affecting comparability 2019

Demand for logs and pulpwood was healthy in the first quarter, but prices decreased slightly due to high supply.

Operating profit for January–March was SEK 322 million (302). Harvesting increased from a low level, while selling prices were 5 per cent lower. The change in value was positively affected by the amended accounting of forest assets at the turn of the year.

Compared with the fourth quarter, profit increased by SEK 48 million, mainly due to the higher change in value.

*Excl. items affecting comparability

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	1-20	4-19	1-19	2019
Net sales	1 706	1 490	1 578	6 229
Operating costs	-1 403	-1 165	-1 320	-5 233
EBITDA	302	325	259	996
Depreciation and amortisation according to plan	-139	-138	-146	-562
Operating profit	163	187	112	435
Investments	77	153	84	421
Capital employed	5 715	5 589	5 740	5 589
EBITDA margin, %	18	22	16	16
Operating margin, %	10	13	7	7
Return on capital employed, %	12	13	8	8
Production, paperboard, '000 tonnes	135	132	131	532
Deliveries, paperboard, '000 tonnes	147	125	136	538

Demand for paperboard in Europe was good and prices were stable.

Operating profit for January–March was SEK 163 million (112). The increase in profit was due to higher deliveries and better production.

Compared with the fourth quarter, profit decreased by SEK 24 million. Higher deliveries had a positive impact on profit but costs were slightly higher than normal. The previous quarter included a bonus payment for production of renewable energy.

A maintenance shutdown is expected to have a negative SEK 120 million impact on profit in the fourth quarter of 2020. In 2019 earnings were affected by SEK -210 million due to major maintenance shutdowns.

*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 at two Swedish mills amounts to a little over 1 million tonnes per year.

		Quarter		Full year
SEKm	1-20	4-19	1-19	2019
Net sales	1 445	1 455	1 345	5 757
Operating costs	-1 264	-1 254	-1 129	-4 866
EBITDA	180	202	216	891
Depreciation and amortisation according to plan	-97	-92	-97	-382
Operating profit	83	110	119	509
Investments	62	68	48	187
Capital employed	2 036	1 903	2 316	1 903
EBITDA margin, %	12	14	16	15
Operating margin, %	6	8	9	9
Return on capital employed, %	17	22	22	24
Production, '000 tonnes	265	246	258	975
Deliveries, '000 tonnes	257	259	230	996

Demand for paper decreased in the first quarter and market prices declined. Demand weakened further towards the end of the quarter due to COVID-19.

Operating profit for January–March was SEK 83 million (119). Lower selling prices had a negative impact on earnings, but this was partly offset by higher deliveries and lower wood costs.

Compared with the fourth quarter, profit decreased by SEK 27 million due to lower selling prices; this was partly offset by a better product mix and higher production.

A maintenance shutdown is expected to have a negative SEK 50 million impact on profit in the second quarter of 2020.

Wood Products

Holmen produces wood products for joinery and construction at three sawmills where by-products are used at the Group's paper and paperboard mills. Annual production volume is almost 1 million m3.

		Quarter		Full year
SEKm	1-20	4-19	1-19	2019
Net sales	455	385	478	1 695
Operating costs	-426	-369	-399	-1 535
EBITDA	28	17	79	159
Depreciation and amortisation according to plan	-25	-24	-24	-97
Operating profit	4	-7	54	62
Investments	37	43	42	162
Capital employed	1 020	1 000	985	1 000
EBITDA margin, %	6	4	16	9
Operating margin, %	1	-2	11	4
Return on capital employed, %	1	neg	23	6
Production, '000 m³	227	225	225	877
Deliveries, '000 m³	247	214	232	879

The wood products market stabilised in the first quarter and market prices were largely unchanged following significant decreases in 2019. Demand decreased on some markets towards the end of the quarter due to COVID-19.

Operating profit for January–March was SEK 4 million (54). The decrease in profit was due to lower selling prices.

Compared with the fourth quarter, profit increased by SEK 11 million due to higher deliveries and slightly lower raw material costs.

Renewable Energy

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

		Quarter		Full year
SEKm	1-20	4-19	1-19	2019
Net sales	124	113	114	378
Operating costs *	-23	-33	-12	-16
Depreciation and amortisation according to plan	-7	-8	-6	-26
Operating profit **	95	72	96	336
Investments	14	188	2	203
Capital employed	3 026	3 058	2 992	3 058
Operating margin, % **	76	64	84	89
Return on capital employed, % **	12	10	13	11
Production hydro and w ind pow er, GWh	374	280	319	1 109

* Includes earnings from the sale of a wind farm permit 2019

** Excl. item affecting comparability 2019

The market price for electricity in the Nordic region was low in the first quarter due to high production of hydro and wind power, while electricity consumption was lower than usual due to a mild winter.

Operating profit for January–March was SEK 95 million (96). 15 per cent higher production made a positive contribution to earnings, but this was offset by lower selling prices.

Compared with the fourth quarter, profit increased by SEK 24 million due to seasonally higher production.

The construction of 26 wind turbines with capacity of 143 MW at Blåbergsliden Wind Farm, with expected startup at the end of 2021, is proceeding according to plan. SEK 0.2 billion of the total SEK 1.3 billion investment has been paid.

* Excl. items affecting comparability

Cash flow, financing and net financial items

Cash flow from operating activities for January– March totalled SEK 611 million (264) and capital expenditure totalled SEK 217 million (191).

The Group's net financial debt decreased by SEK 275 million to SEK 3 509 million in the first quarter. Net debt was 9 per cent of equity.

Since the turn of the year the Group's financing has been strengthened by the raising of SEK 1.3 billion in borrowing with maturities of 4.5 to 7 years, while contractual credit commitments increased by just over SEK 1 billion and durations were extended. At 31 March the Group's long-term borrowing amounted to SEK 2.6 billion and short-term borrowing was SEK 2.8 billion. SEK 1 billion in shortterm borrowing was replaced with long-term borrowing after the end of the quarter. Cash and cash equivalents were SEK 1.4 billion and noncurrent financial receivables were SEK 0.5 billion. Credit commitments amounted to SEK 5.1 billion, of which SEK 1.1 billion is available until 2023 and SEK 4.0 billion until 2025. All credit commitments are unused.

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

Net financial items for January–March totalled SEK -10 million (-8).

Tax

Recognised tax for January–March amounted to SEK -127 million (-132). Recognised tax as a proportion of profit before tax was 21 per cent.

Equity

In January–March, the Group's equity decreased by SEK 71 million to SEK 40 040 million. Profit for the period totalled SEK 491 million (503). Other comprehensive income amounted to SEK -563 million (-35), primarily due to the value of derivatives subject to hedge accounting being negatively affected by changes in exchange rates and electricity prices.

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 -155 million (-120).

Exchange rates had a positive effect of SEK 70 million on the Group's profit for January–March, compared with the same period in 2019. For just over the next two years, expected flows in EUR/SEK are hedged at an average of 10.49. For other currencies, 4 months of flows are hedged.

Prices for the Group's estimated net consumption of electricity are 90 per cent hedged for the remainder of 2020 and 65 per cent hedged for 2021. For the period 2022–2023, prices for the Group's estimated net consumption are 25 per cent hedged.

Annual General Meeting

The Board has decided that the AGM 2020 will be held on June 4 instead of as previously planned on March 30, 2020.

The Group's financial position is strong but, in view of the uncertainty created by COVID-19, the Board has decided to withdraw the previously proposed dividend. In the autumn the Board will assess whether a dividend should be paid and, if so, will convene an extraordinary general meeting.

Share buy-backs

At 31 March Holmen held 7 586 639 class B shares, corresponding to 4.5 per cent of the total number of shares. No buy-backs have been made in 2020.

Stockholm, 29 April 2020 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

Group

		Quarter		Full year
Income statement. SEKm	1-20	4-19	1-19	2019
Net sales	4 499	4 194	4 260	16 959
Other operating income	299	412	288	1 370
Change in inventories	-97	0	74	-220
Raw materials and consumables	-2 471	-2 362	-2 477	-9 398
Personnel costs	-597	-597	-581	-2 316
Other operating costs	-845	-1 056	-750	-3 597
Profit from investments in associates and joint ventures	0	0		0
Depreciation and amortisation according to plan	-285	-283	2 -291	-1 141
Impairment losses	-	-109	-	-109
Change in value of biological assets	124	9 158	118	9 566
Operating profit	628	9 357	643	11 115
Finance income	4	3	3	13
Finance costs	-13	-12	-11	-47
Profit before tax	618	9 348	635	11 081
Tax	-127	-1 980	-132	-2 351
Profit for the period	491	7 368	503	8 731
Earnings per share. SEK
basic	3.0	45.5	3.0	52.6
diluted	3.0	45.5	3.0	52.6
Operating margin, % *	14.0	14.0	15.1	13.8
Return on capital employed, % *	5.7	9.0	9.7	8.9
Return on equity, %	4.9	132.1	8.5	37.9
* Excl. Items affecting comparability.
		Quarter		Full year
Statement of comprehensive income. SEKm	1-20	4-19	1-19	2019
Profit for the period	491	7 368	503	8 731
Other comprehensive income
Revaluation of forest land	-	13 055	-	13 055
Revaluations of defined benefit pension plans	-28	62	19	14
Tax attributable to items that w ill not be reclassifed to profit for the period	6	-2 695	-3	-2 687
Items that will not be reclassifed to profit for the period	-23	10 422	15	10 382
Cash flow hedging	-738	289	-209	-37
Translation difference on foreign operation	43	25	116	141
Hedging of currency risk in foreign operation	-5	2	-4	-2
Share in joint ventures' other comprehensive income	-	0	2	-6
Tax attributable to items that w ill be reclassifed to profit for the period	159	-62	46	8
Items that will be reclassifed to profit for the period	-540	254	-50	105
Total other comprehensive income after tax	-563	10 676	-35	10 487
Total comprehensive income	-72	18 043	468	19 218

Change in equity, SEKm		Jan-March
		2019
Opening equity	40 111	23 453
Profit for the period	491	503
Other comprehensive income	-563	-35
Total comprehensive income	-72	468
Share saving program	1	1
Closing equity	40 040	23 922

Group

	2020	2020
Balance sheet, SEKm	31 March	31 December
Non-current assets
Forest assets
Biological assets	28 109	27 979
Forest land	13 367	13 366
Intangible non-current assets	68	70
Property, plant and equipment	8 837	8 906
Right-of-use assets	251	183
Investments in associates and joint ventures	1 620	1 620
Other shares and participating interests	2	1
Non-current financial receivables	492	452
Deferred tax assets	1	1
Total non-current assets	52 747	52 579
Current assets
Inventories	3 439	3 460
Trade receivables	2 368	2 005
Current tax receivable	3	0
Other operating receivables	542	799
Current financial receivables	19	14
Cash and cash equivalents	1 415	483
Total current assets	7 787	6 761
Total assets	60 534	59 340
Equity	40 040	40 112
Non-current liabilities
Non-current financial liabilities	2 320	2 017
Non-current liabilities relating to right-of-use assets	242	171
Pension provisions	70	46
Other provisions	623	637
Deferred tax liabilities	10 112	10 299
Total non-current liabilities	13 367	13 170
Current liabilities
Current financial liabilities	2 788	2 485
Current liabilities relating to right-of-use assets	11	13
Trade payables	2 332	2 259
Current tax liability	77	112
Provisions	153	158
Other operating liabilities	1 765	1 030
Total current liabilities	7 127	6 058
Total liabilities	20 493	19 228
Total equity and liabilities	60 534	59 340
Debt/equity ratio, %	9	9
Equity/assets ratio, %	66	68
Capital employed	43 549	43 895
Net financial debt	3 509	3 783

Group

	Quarter			Full year
Cash flow statement, SEKm	1-20	4-19	1-19	2019
Operating activities
Profit before tax	618	9 348	635	11 081
Adjustments for non-cash items	-	-	-	-
Depreciation and amortisation according to plan	285	283	291	1 141
Impairment losses	-	109	-	109
Change in value of biological assets	-124	-9 158	-118	-9 566
Other *	38	191	-38	108
Paid income taxes	-202	-108	-115	-147
Cash flow from operating activities before changes in working capital	615	665	655	2 727
Cash flow from changes in working capital
Change in inventories	80	91	-123	210
Change in trade receivables and other operating receivables	-256	145	-493	-135
Change in trade payables and other operating liabilities	173	-168	225	83
Cash flow from operating activities	611	733	264	2 884
Investing activities
Acquisition of non-current assets	-218	-491	-193	-1 062
Disposal of non-current assets	2	1	1	21
Change in non-current financial receivables	0	17	0	36
Cash flow from investing activities	-217	-472	-191	-1 006
Financing activities
Change in financial liabilities and current financial receivables	534	-37	308	898
Buy-back of ow n shares	-	-	-	-1 430
Dividends paid to the shareholders of the parent company	-	-	-	-1 134
Cash flow from financing activities	534	-37	308	-1 665
Cash flow for the period	928	223	380	213
Opening cash and cash equivalents	483	261	278	278
Exchange difference in cash and cash equivalents	4	-1	1	1
Closing cash and cash equivalents	1 415	483	659	492

	Quarter			Full year
Change in net financial debt, SEKm	1-20	4-19	1-19	2019
Opening net financial debt	-3 784	-4 065	-2 807	-2 807
New accounting principles IFRS 16 Leases	-	-	-205	-205
Cash flow from operating activities	611	733	264	2 884
Cash flow from investing activities (excl financial
receivables)	-217	-490	-191	-1 041
Buy-back of ow n shares	-	-	-	-1 430
Dividends paid	-	-	-	-1 134
Liabilities arising from new right-of-use agreements	-89	-10	-13	-76
Revaluations of defined benefit pension plans	-25	62	18	12
Foreign exchange effects and changes in fair value	-5	-14	3	21
Closing net financial debt	-3 509	-3 784	-2 932	-3 784

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

Parent company

	Quarter			Full year
Income statement, SEKm	1-20	4-19	1-19	2019
Operating income	4 128	3 911	3 877	15 620
Operating costs	-3 971	-4 005	-3 629	-15 238
Operating profit	157	-94	248	382
Net financial items	-13	-52	-6	22
Profit after net financial items	144	-146	242	404
Appropriations	416	502	344	1 936
Profit before tax	560	356	586	2 340
Tax	-121	-103	-126	-493
Profit for the period	439	253	461	1 847
		Quarter		Full year
Statement of comprehensive income, SEKm	1-20	4-19	1-19	2019
Profit for the period	439	253	461	1 847
Other comprehensive income
Cash flow hedging	-740	293	-211	-34
Tax attributable to other comprehensive income	158	-63	45	7
Items that will be reclassifed to profit for the period	-582	231	-166	-27
Total comprehensive income	-143	484	295	1 820
		2019
Balance sheet, SEKm	2020 31 March	31 December
Non-current assets	16 345	16 203

Current assets	6 552	5 648
Total assets	22 897	21 852
Restricted equity	5 915	5 915
Non-restricted equity	4 600	4 741
Untaxed reserves	1 826	1 646
Provisions	1 281	1 454
Liabilities	9 276	8 096
Total equity and liabilities	22 897	21 852

Of operating income for January‒March, SEK 20 million (29) relates to sales to Group companies.

Balance sheet appropriations include group contributions totalling SEK 595 million (532). The parent company's investments in property, plant and equipment and non-current intangible assets totalled SEK 20 million (15).

Notes

1. 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.

2. External sales by market

Jan-March 2020		Forest Paperboard	Paper	Wood Products	Renewable Energy	Group
Scandinavia	769	55	160	155	124	1 139
Rest of Europe	0	1 312	1 051	163	0	2 526
Asia	0	281	165	35	0	481
Rest of the w orld	0	58	69	101	0	353
Total	769	1 706	1 445	455	124	4 499
Jan-March 2019		Forest Paperboard	Paper	Wood Products	Renewable Energy	Group
Scandinavia	744	43	117	174	114	1 077
Rest of Europe	0	1 297	1 173	356	0	3 569
Asia	0	220	110	53	0	383
Rest of the w orld	0	18	-56	-105	0	-769
Total	744	1 578	1 345	477	114	4 260

3. Composition of share capital

		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		-7 586 639	-7 586 639
Total number of shares issued		161 925 685	569 143 897

4. Financial instruments

	Carrying amount		Fair value
Financial instruments, SEKm	2020	2019	2020	2019
	31 March	31 December	31 March	31 December
Assets at fair value	99	326	99	326
Assets at acquisition cost	4 267	2 928	4 267	2 928
Liabilities at fair value	785	179	785	179
Liabilities at acquisition cost	7 384	6 730	7 384	6 730

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.

5. Alternative performance measures

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

Earnings measures

Operating profit is the principal measure of earnings that is used to monitor financial performance. This includes all income and costs except for financial items and tax. Depreciation/amortisation of non-current assets is also included. EBITDA (earnings before interest, taxes, depreciation and amortisation) is used as a supplementary measure. To clarify how these earnings measures are affected by matters outside normal business operations, such as impairment, disposal, closure, major restructuring measures and alterations to assumptions in the valuation of biological assets, the term 'items affecting comparability' is used. The purpose is also to increase comparability between different periods. The effects of maintenance and rebuilding shutdowns are not treated as an item affecting comparability. On page 86 of Holmen's 2019 annual report a description is given of the items that are reported as affecting comparability in previous periods.

		Quarter		Full year
SEKm	1-20	4-19	1-19	2019
EBITDA	912	871	934	3 486
Depreciation and amortisation according to plan	-285	-283	-291	-1 141
Operating profit excl. items affecting comp.	628	587	643	2 345
Items affecting comparability	-	8 770	-	8 770
Operating profit	628	9 357	643	11 115
		Quarter		Full year
SEKm	1-20	4-19	1-19	2019
Profit after tax	491	7 368	503	8 731
Items affecting comparability	-	-6 943	-	-6 943
Profit after tax excl. items affecting comp.	491	426	503	1 789

Measure of margin, return and indebtedness

Operating profit, excluding items affecting comparability, as a proportion of sales is known as the operating margin. EBITDA as a proportion of sales is known as the EBITDA margin. The performance measure of return on capital employed is used to measure operating profit, excluding items affecting comparability, as a proportion of capital employed. Capital employed is calculated as fixed assets plus working capital less the net sum of deferred tax liabilities and deferred tax assets. This corresponds to equity plus net financial debt. Average capital employed is calculated based on quarterly data. The change in the method of calculating the value of forest assets implemented from 31 December 2019 has not affected average capital employed or average equity for 2019.

	2020	2019
SEKm	31 March	31 December
Fixed capital*	52 254	52 125
Working capital**	1 403	2 067
Deferred tax assets	1	1
Deferred tax liabilities	-10 112	-10 299
Capital employed	43 549	43 895

*Forest assets, non-current intangible assets, property, plant and equipment, right-of-use assets,

investments in associates and joint ventures and other shares and participations. **Inventories, trade receivables, current tax asset, other current operating receivables, trade payables,

current tax liability, provisions, other provisions and operating liabilities.

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

	2020	2019
SEKm	31 March	31 December
Non-current financial liabilities	2 320	2 018
Non-current liabilities relating to right-of-use assets	242	171
Current financial liabilities	2 788	2 485
Current liabilities relating to right-of-use assets	11	13
Pension provisions	70	46
Non-current financial receivables	-489	-451
Current financial receivables	-19	-14
Cash and cash equivalents	-1 415	-483
Net financial debt	3 509	3 784

6. 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.

7. Material risks and uncertainties

The Group's and the parent company's material risks and uncertainties relate primarily to changes in demand and the prices of its products, the cost of key input goods, and changes in exchange rates. For a more detailed description of material risks and uncertainties see Holmen's annual report for 2019, pages 40–43 and note 26. The COVID-19 outbreak has had a limited impact on the Group's earnings and financial position. The impact going forward is difficult to predict and depends largely on how long economic activity is restricted. For the second quarter we see weaker than normal orders for paper and wood products. The Group is working continually to take action to minimise the impact, while putting the health and safety of our employees first.

Group

Quarterly figures, SEKm	2020		2019			Full year
	Q1	Q4	Q3	Q2	Q1	2019
Income statement
Net sales	4 499	4 194	4 144	4 361	4 260	16 959
Operating costs	-3 710	-3 403	-3 468	-3 644	-3 446	-13 961
Change in value of forests	124	80	147	143	118	487
Profit from investments in associates and joint ventures	0	0	1	-2	2	0
EBITDA	912	871	824	857	934	3 486
Depreciation and amortisation according to plan	-285	-283	-283	-283	-291	-1 141
Operating profit excl. items affecting comparability	628	587	541	574	643	2 345
Items affecting comparability *	-	8 770	-	-	-	8 770
Operating profit	628	9 357	541	574	643	11 115
Net financial items	-10	-9	-8	-9	-8	-34
Profit before tax	618	9 348	533	565	635	11 081
Tax	-127	-1 980	-124	-114	-132	-2 351
Profit for the period	491	7 368	409	451	503	8 731
Earnings per share, SEK	3.0	45.5	2.5	2.7	3.0	52.6
Net sales**
Forest	1 690	1 578	1 418	1 647	1 642	6 286
Paperboard	1 706	1 490	1 588	1 573	1 578	6 229
Paper	1 445	1 455	1 486	1 470	1 345	5 757
Wood Products	455	385	381	450	478	1 695
Renew able Energy	124	113	73	78	114	378
Elimination of intra-group net sales	-920	-828	-801	-858	-898	-3 385
Group	4 499	4 194	4 144	4 361	4 260	16 959
EBITDA by business area **
Forest	331	288	308	308	313	1 217
Paperboard	302	325	238	174	259	996
Paper	180	202	243	230	216	891
Wood Products	28	17	10	53	79	159
Renew able Energy	102	80	48	132	102	362
Group-w ide	-32	-41	-24	-40	-35	-140
Group	912	871	824	857	934	3 486
Operating profit/loss by business area **
Forest	322	274	298	298	302	1 172
Paperboard	163	187	99	36	112	435
Paper	83	110	147	133	119	509
Wood Products	4	-7	-14	29	54	62
Renew able Energy	95	72	42	126	96	336
Group-w ide		-49	-30	-47	-42	-168
	-39
Group	628	587	541	574	643	2 345
Operating margin, % **
Paperboard	9.6	12.6	6.3	2.3	7.1	7.0
Paper	5.8	7.5	9.9	9.1	8.9	8.8
Wood Products	0.8	-1.9	-3.7	6.4	11.4	3.7
Group	14.0	14.0	13.0	13.2	15.1	13.8
Return on capital employed, % **
Forest	3.9	7.3	7.9	7.9	8.1	7.8
Paperboard	11.6	13.4	7.1	2.5	8.1	7.8
Paper	16.9	21.9	27.6	23.9	21.8	23.8
Wood Products	1.4	neg	neg	11.6	22.7	6.3
Renew able Energy	12.5	9.6	5.6	16.9	12.7	11.2
Group	5.7	9.0	8.3	8.6	9.7	8.9
Key indicators
Return on equity, % **	4.9	7.6	7.2	7.7	8.5	7.8
Deliveries
						2 714
Volume of ow n forests, '000 m³	761	821	654	688	551
Paperboard, '000 tonnes	147	125	139	138	136	538
Paper, '000 tonnes	257	259	256	251	230	996
Wood products, '000 m³	247	214	209	224	232	879
Ow n production of hydro and w indpow er, GWh	374	280	247	263	319	1 109
Personal

* Items affecting comparability in operating profit for Q4 2019 relate to the revaluation of forest assets, an impairment loss of an

associated company and provisions.

** Excl. Items affecting comparability.

Group

Full year review, SEKm	2019	2018	2017	2016	2015	2014	2013	2012	2011	2010
Income statement Net sales	16 959	16 055	16 133	15 513	16 014	15 994	16 231	17 852	18 656	17 581
Operating costs	-13 961	-12 984	-13 379	-12 626	-13 348	-13 270	-13 919	-15 224	-15 501	-15 077
Change in value of forests	487	425	415	315	267	282	264	350	-	52
Profit from investments in associates and joint ventures	0	-9	-12	-22	7	-7	3	47	84	28
EBITDA	3 486	3 488	3 157	3 179	2 940	2 999	2 579	3 026	3 239	2 583
Depreciation and amortisation according to plan	-1 141	-1 012 2 476	-991 2 166	-1 018 2 162	-1 240 1 700	-1 265 1 734	-1 370 1 209	-1 313 1 713	-1 260 1 980	-1 251 1 332
Operating profit excl. items affecting comparability Items affecting comparability	2 345 8 770	-94	-	-232	-931	-450	-140	-193	3 593	264
Operating profit	11 115	2 382	2 166	1 930	769	1 284	1 069	1 520	5 573	1 596
Net financial items	-34	-25	-53	-71	-90	-147	-198	-227	-244	-208
Profit before tax	11 081	2 356	2 113	1 859	679	1 137	871	1 294	5 328	1 388
Tax	-2 351	-89	-445	-436	-120	-230	-160	559	-1 374	-684
Profit for the year	8 731	2 268	1 668	1 424	559	907	711	1 853	3 955	704
Diluted earnings per share, SEK	52.6	13.5	9.9	8.5	3.4	5.4	4.3	11.1	23.6	4.2
EBITDA by business area*
Forest	1 217	1 216	1 099	1 030	935	845	958	964	769	846
Paperboard	996	1 196	1 257	1 382	1 346	1 161	878	959	1 186	1 141
Paper	891	665	627	669	514	725	429	862	1 002	229
Wood Products	159	337	165	80	86	160	45	-10	-26	49
Renew able Energy	362	205	159	143	198	233	391	374	425	516
Group-w ide	-140	-132	-149	-124	-138	-126	-121	-123	-116	-198
Group	3 486	3 488	3 157	3 179	2 940	2 999	2 579	3 026	3 239	2 583
Operating profit by business area*
Forest	1 172	1 185	1 069	1 001	905	817	924	931	739	818
Paperboard	435	689	764	903	847	674	433	596	863	817
Paper	509	329	288	289	-74	141	-309	94	228	-618
Wood Products Renew able Energy	62 336	246 181	80 135	-3 120	9 176	37 212	-75 371	-130 355	-136 406	20 495
Group-w ide	-168	-154	-170	-148	-163	-146	-136	-132	-120	-200
Group	2 345	2 476	2 166	2 162	1 700	1 734	1 209	1 713	1 980	1 332
Deliveries
Volume of ow n forests, '000 m³	2 714	2 831	2 904	2 986	3 213	3 297	3 465	3 211	2 988	2 999
Paperboard, '000 tonnes	538	525	526	497	499	493	469	485	474	464
Paper, '000 tonnes	996	1 036	1 117	1 134	1 325	1 305	1 574	1 651	1 668	1 732
Wood products, '000 m³	879	828	852	776	730	725	686	660	487	285
Ow n production of hydro and w ind pow er, GWh	1 109	1 145	1 169	1 080	1 441	1 113	1 041	1 353	1 235	1 149
Balance sheet
Forest assets	41 345	18 701	17 971	17 595	17 340	17 032	16 654	16 344	15 871	12 261
Other non-current assets	10 781	10 586	10 780	11 106	12 184	13 189	13 998	14 320	14 463	13 767
Current assets	6 264	6 845	5 710	5 852	5 607	5 964	5 774	6 005	6 642	6 950
Financial receivables Total assets	950 59 340	781 36 912	430 34 891	338 34 891	325 35 456	249 36 434	327 36 753	377 37 046	240 37 217	454 33 432
Equity	40 111	23 453	22 035	21 243	20 853	20 969	20 854	20 813	19 773	16 913
Deferred tax liability Financial liabilities and interest-bearing provisions	10 299 4 732	5 839 3 587	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
Operating liabilities	4 196	4 033	3 840	3 752	3 971	3 829	3 653	3 762	4 313	4 382
Total equity and liabilities	59 340	36 912	34 891	34 891	35 456	36 434	36 753	37 046	37 217	33 432
Cash flow
Operating activities	2 884	2 286	2 509	1 961	2 526	2 176	2 011	2 254	2 101	1 523
Investing activities **	-1 050	-1 005	-644	-123	-824	-815	-872	-1 957	-1 791	-1 585
Cash flow after investments	1 834	1 281	1 865	1 838	1 702	1 361	1 139	297	310	-62
Key indicators
Return on capital employed, %*	9	10	9	9	6	6	4	7	9	6
Return on equity, %*	8	10	8	8	7	6	4	6	8	4
Debt/equity ratio, %	9	12	13	19	23	28	29	32	32	34
Dividend
Dividend, SEK		6.75	6.5	6	5.25	5	4.5	4.5	4	3.5

*Excl. items affecting comparability.

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

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 14.30 CET on Wednesday 29 April. Holmen President and CEO Henrik Sjölund, together with Executive Vice President and CFO Anders Jernhall, will present and comment on the report. The presentation will be held in English.

The press and analyst conference will be webcast and may be followed via: www.holmen.com/reports. You may also participate in the conference by telephone, by calling no later than 14.25 CET on:

+46 8 566 427 04 (within Sweden) +44 3 333 300 90 31 (from the rest of Europe) +1 833 526 83 81 (from the US)

Financial reports

13 August 2020	Interim report January–June 2020
21 October 2020	Interim report January–September 2020
5 February 2021	Year-end report 2020

_________________________________________________________________________________________ This information such that Holmen AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 11.30 CEST on Wednesday, 29 April 2020.