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Turnover up, continued focus on combined combustion of wood and peat

The turnover of the Vapo Group in the January -September 2010 period was EUR 512.3 million (EUR 407.2 million in January-September 2009, increase 25.8 per cent). Operating profit amounted to EUR 27.3 million, or 5.3 per cent of turnover (EUR 21.5 million, 5.3 per cent). 
• Benefits of domestic-origin fuels understood in Finland.
• Demand for local fuels – peat and wood – remained good.
• Vapo cut peat prices due to good peat production conditions
• Heat and Power business grew as planned.
• Oversupply situation in pellets persisted in European markets.
• New Home & Garden product range drove sales growth in Finland and Sweden.
• Positive earnings trend at Vapo Timber Oy continued for fifth quarter in succession.
• Decisions on the taxation of peat and other fuels and the weather will affect operations and earnings in the final quarter.

Demand for local fuels –peat and wood – remained good. Peat production in the summer was in line with the long-term average, but in coming years adequate harvesting areas will be required to rebuild inventory levels. 
Wood and peat have maintained their position in the energy markets. Vapo enhanced its Wood Energy business line. Demand for peat is being overshadowed by the planned tax on energy peat.
The oversupply situation in pellets persisted in European markets. Production cutbacks remained in place at production plants. The upcoming reform of energy taxation in Finland will improve the competitive position of pellets. Even after the tax increase on light fuel oil in Finland, the corresponding tax in Sweden is twice as high.
The Heat and Power business grew as planned. Vapo’s own energy generation and deliveries went as normal. Two heating plants and two pellet plants are under construction in Finland, one heating plant in Sweden and three pellet heating plants in Poland.
Growth in the Home and Park business line was constrained by the contraction in the construction industry. The new Home and Garden product range increased sales both in Finland and Sweden.
Demand was up in the Professional Growing business line, although low inventory levels of garden peat impacted deliveries.
The positive earnings trend at Vapo Timber Oy continued for the fifth quarter in succession. Sawn timber production went almost as normal in the January-September period. Timber sales volumes were four times the level of the previous year.
Outlook for the final quarter 2010

Demand for local fuels is likely to remain at a good level up to the end of the year, but from the start of next year demand for peat is forecast to decline, and wood usage to increase. In energy generation, Vapo will continue to focus on combined combustion of wood and peat. All in all, the turnover of the Vapo Group is forecast to increase over the previous year and profitability to improve.
For further information please contact: Mr. Matti Hilli, Managing Director, Tel. +358 20 790 5611