Finland's Vapo Timber swings to 2011 operating loss of €9.3M from €7M profit a year earlier, cites 6% rise in raw material costs, 7% decline in selling prices

LOS ANGELES , February 21, 2012 () – Vapo Timber, headquartered in Hankasalmi, Finland, has reported an operating loss of €9.3 million for 2011, swinging from a €7 million profit in 2010, timber industry magazine TTJ reported on Feb. 20.

Vapo Timber is part of the Vapo Group, and operates three sawmills in Finland at Hankasalmi, Kevätniemi in Lieksa and Nurmes. The sawmills export about 60% of production and have an combined annual capacity of 750,000 m3. Production was 533,000 m³ in 2011, down from 541,000 m3 in 2010.

Vapo Timber said raw material costs increased by 6% during 2011 while selling prices fell 7%. The division noted that the cost-effectiveness of its sawmills declined towards the end of last year after production curtailments were implemented at two mills in December. A new production line at Hankasalmi is expected to improve efficiency and cost-effectiveness.

Vapo Timber reported sales of €121.3 million compared with €135.4 million in 2010.

Vapo Group, which produces biofuels, energy and peat, recorded an operating loss of €41.9 million, mainly as a result of impairments in wood pellet operations of €33.7 million. The group said poor conditions in the wood pellet market had led to the closure of three wood pellet plants, and recorded operating losses of €7 million from its wood pellet operations.

The primary source of this article is TTJ, The Timber Industry Magazine, Sidcup, U.K., on Feb. 20, 2012.

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