OREANDA-NEWS. March 20, 2013. RusForest Group’s results were affected by the inclusion of income and expenses of the acquired subsidiaries (Kansky, Adar and the NTG companies), making the data for 2012 not comparable to the figures reported in 2011.

RusForest generated revenue of SEK 152.9 million (USD 23.7 million) and SEK 564.3 million (USD 87.3 million) for the three and twelve months ended December 31, 2012, respectively. 4Q revenue was up 38% from prior year, as the company said in a press release received by Lesprom Network.

4Q EBITDA was SEK -84.4 million (USD 13 million) and SEK -278.3 million (USD 43 million) for the twelve months ended December 31, 2012.

The Group shipped 75,715 cubic metres of sawnwood in 4Q 2012 compared with 66,895 cubic metres in 3Q 2012. The increase is mainly due to better shipments in Arkhangelsk. The sawnwood revenue decreased in line with average price reduction from SEK 100.1 million (USD 15.5 million) in 3Q 2012 to SEK 92.2 million (USD 14.3 million) in 4Q 2012. This was attributable to a product mix with a large share of low-quality sawnwood grades.

The share of pulpwood sales decreased from 15% in 4Q 2011 to 1% in 4Q 2012 due to downscaling of harvesting operations in Ust-Ilimsk and Arkhangelsk, the main regions with a local market for pulpwood, and problems with the local pulp industry in the Arkhangelsk region.
In November 2012, the Company shutdown the Shenkursk sawmill, and it was recognized as an asset held for sale at December 31, 2012. Therefore, Shenkursk revenue and shipment volumes were excluded from continued operations data.

RusForest’s cost of sales for 4Q 2012 was SEK 187.5 million (USD 29 million) compared to SEK 141.1 million (USD 21.8 million) in 4Q 2011. The Group increased shipments of sawnwood by almost 50%. The gross loss was 32% of net revenue (net of distribution expenses) in 4Q 2011 and slightly improved to 28% in 4Q 2012. The Group has still not reached good capacity utilization levels in the core operating units and continues to suffer losses from non-core units.

In Q4 2012, due to deterioration of the pulp market in Arkhangelsk, RusForest applied zero valuation to remaining stocks of pulplogs in Severny Les, attaching value only to the small share of pulplogs at the railway terminal with high probability of sales.

The adjustment resulted in a SEK 7.3 million (USD 1.1 million) loss. Expenses for purchases of sawnwood in the amount of SEK 6.7 million (USD 1 million) represented sawnwood purchased from the Ust-Ilimsk sawmill (leased out to a third party) and resold with a commission by RusForest Trading House.

Other expenses of SEK 27.1 million (USD 4.2 million) included a SEK 11.7 million (USD 1.8 million) provision for doubtful receivables from the pulpmills (Solombala, Kondopoga) in the Arkhangelsk region. These pulpmills are the main customers for RusForest's pulplogs and woodchips in the region.

The Group’s net loss for 4Q 2012 was SEK 639.2 million (USD 99 million) compared to SEK 97.2 million (USD 15 million) in 4Q 2011. Included in the current quarter was loss of SEK 499.2 million (USD 77.3 million) related to the recognized impairment of assets following revision of RusForest cash generating units.

RusForest is a Swedish forestry company operating in Eastern Siberia and the Arkhangelsk region of Russia.