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2017 in brief

2017 was another good year for Moelven, operating revenues increased to NOK 10.8 billion and operating profit improved to NOK 420.4 million compared to NOK 295.0 million in 2016. The Group's rate of return on employed capital increased to 14.2%, from 9.9% in 2016. With exports to more than 40 countries and on several continents, Moelven is dependent on developments in the global economy. Combined, approximately 15 per cent of the Group's turnover is in markets beyond Scandinavia. The geographical spread is broad enough to have a diversifying effect. It is mainly sawn timber that is exported.

The international demand for sawn timber was very good in 2017. (Photo: Moelven)

For the Timber division in isolation the export share outside of Scandinavia is 45 per cent, and for the Wood division it is 10 per cent. Both price developments on the international market for sawn timber and exchange rate developments therefore have a major impact on the business. International price levels are rapidly transferred to the domestic market in Scandinavia. In 2017 there has been good international demand for sawn timber. The delivery rate to the Middle East, North Africa and Asia was somewhat reduced in the first six months. This was however not related to the underlying demand for sawn timber, but was due to issues in connection with sea transport and public regulations. These were resolved in the second half of the year. Prices for sawn timber internationally increased compared to the previous year, while currency conditions, in particular against the EUR, contributed to good competitiveness for the export-oriented units. The UK is an important export market for Moelven. Prices in GBP have increased, and compensate the majority of the margin shortfall as a result of the depreciation of the pound following the Brexit referendum.

Moelven Wood Prosjekt AS supplied the facades in untreated cedar to the project “Grilstad Marina” in Trondheim. (Photo: Matthias Herzog)

The Wood division mainly sells its processed wood products on the building materials market in Scandinavia.  Demand from this market has been satisfactory, although activity in rehabilitation, conversion and extension (RCE) in Sweden dropped somewhat and stabilised at a lower level after changes to the tax rules related to deductions in 2016. Price levels for the division as a whole increased for both finished goods and raw materials compared to the previous year.

Timber stocks at the start of the year were satisfactory with regard to planned production levels for the winter of 2017. Access to timber in the first half of the year was normal for the season. In the second half of the year access was somewhat reduced in certain areas as a result of the wet autumn. The situation towards the end of the year, and at the end of 2017 timber stocks were satisfactory and on a par with the same time in 2016. For the Swedish units sawlog prices have been on a par with the previous year throughout 2017, while the Norwegian units have seen a slight increase in sawlog prices. Prices for wood chip and fibre products for the Swedish units have been at the same level as 2016. For the Norwegian units currency conditions and costs related to logistics had a certain negative effect in the second half of the year.

Building Systems operates exclusively in building and construction in Scandinavia. Deliveries are to professional players in both the new building and RCE-markets. Demand for the division's products and services have been satisfactory through the year as a whole. The combined order backlog at the end of the year was NOK 105 million lower than the previous year. Market conditions saw somewhat different developments in Norway and Sweden as the year progressed. In Sweden activity levels have remained high, but with signs of a certain slowdown after some years of very high activity. On the Norwegian side the oil slowdown is a thing of the past and market activity has been increasing.

Climate smart construction and architectural innovation in the project “Ängsnäs Terrass” in Huddinge. Building modules supplied by Moelven Byggmodul AB.


Sustainability and the climate challenges the world is facing are attracting more and more attention. This, in combination with increased knowledge and awareness of wood’s properties and opportunities, have led to greater interest in environmentally friendly building with wood as a building material. Among the Moelven Group’s products and services, the deliveries from Wood and Building systems are most visible to the outside world. This concerns both processed wood building materials, bridges and other load-bearing structures in glulam and module-based apartment buildings. In addition, activity in infrastructure is high. Use of wood in connection with this is also on the increase, and is an important cause of the good demand for sawn timber, which is the main product of the Timber companies.

For the Moelven Group sustainability and environmental impact have been central topics for a long time, and are a natural part of the culture and mindset in a business based on wood as a raw material. In the annual strategy work, the board has nevertheless placed even greater emphasis on sustainability in 2017. Starting from 2017, sustainability reporting in accordance with the GRI standards (Global Reporting Initiative) and climate accounts according to the GHG protocol (GreenHouse Gas) are included in public reporting.

Moelven’s mechanical wood business uses raw materials from sustainable forestry. Read more about this in the Group's Sustainability Report for 2017. (Photo: Johan Alp)

Besides the environmental and sustainability theme, HSE has become steadily more important in the strategy work.

The Group has a long-term target of zero injuries – it should be safe to work at Moelven. However, the development in the injury rate has not been satisfactory, with only a marginal improvement in H1 value from 12.8 in 2016 to 12.4 in 2017. In the strategy plan a subsidiary goal has been established for 2020 that the number of lost time injuries per million worked hours (LTI rate) shall be below five and that the number of reported hazardous conditions / near accidents shall be at least 3,500 (one per employee). The goal for sick leave is to reduce this to below four per cent within the end of the strategy period. The health, safety and environment strategy can be summarized in nine points:

  • Clear goals
  • Clear leadership
  • Increased use of resources
  • Clear sharing of responsibility
  • Increased expertise
  • Underpinning systems
  • Unambiguous processes and rules
  • Incentives and consequences
  • Frequent information.

With regard to business, the Group is in a phase where large parts of operations are doing well and with improving results, while other parts of operations still fail to meet the requirements to profitability and returns that have been defined. It is thus important that the right priorities and choices are made, to have the best possible foundation for sustained profitability. The shareholder values in Moelven are best ensured and developed by the organization focusing on developing the units the company currently possesses, which in all likelihood will reach profitability targets in the course of an economic cycle. New investments must be adjusted to the strategic choices that have been made and take place within the applicable financial framework. Investments and growth will mainly take place on the basis of existing business areas.

Efforts on internal improvement work and restructuring in accordance with the action plan that was drawn up in the autumn of 2014 have proceeded with full strength in 2017, and are the main cause of the improved results. In addition, several organizational changes are being implemented, as well as major investment projects that will improve efficiency and profitability. At the Group's two largest sawmills in Sweden, Moelven Valåsen AB and Moelven Notnäs AB, investment projects are being carried out with an overall framework of around SEK 164 million. Besides exploiting the opportunities afforded by new technology, competence development and organizational rationalization have high priority in these projects. Investments will be made in stages, and will be completed by the summer of 2019. At Moelven Byggmodul AB’s factory in Säffle, the investment project for a robotized production line was completed according to plan in the second quarter of 2017. The project, which had a framework of SEK 72 million, almost doubled the overall capacity at the factory and provided more rational production solutions.

Corporate governance

At the Corporate Assembly meeting after the annual general meeting on 26 April 2017, Aud Ingvild Storås was elected as new member of the board of directors to replace Mari Wilhelmsen. Beyond this, there have been no changes to the board in 2017. As of 26 April the board has consisted of Olav Fjell (chairman), Trond Stangeby (deputy chairman), Elisabeth Krokeide, Aud Ingvild Storås, Asbjørn Bjørnstad, Martin Fauchald and Lars Håkan Karlsson.

Corporate governance at the Moelven Group is based on the current Norwegian recommendation for corporate governance of October 2014. The Board's report on the Group's policies and practice for corporate governance in accordance with section 3-3b of the Norwegian Accounting Act has been incorporated into the board’s account of corporate governance on page XX. Comprehensive information on the Group’s governing bodies is published at www.moelven.no, and in note 28.

Corporate structure

Moelven acquired DLH’s Swedish operations in Hässleholm on 21 November 2016. The acquisition included inventory, warehouses and office premises, and gave Moelven improved market access in southern Sweden and strengthened logistics. In March 2017 it was decided to move the entire storage and processing activity in Malmö to Hässleholm. In connection with the move, Malmö AB, which owned the old warehouse building in Malmö, was sold. The company had no employees. Moelven Wood retains a sales office in Malmö.

On 25 September the Board of Moelven Norsälven AB decided to discontinue sawmill operations. This is because the plant’s technical condition is so poor that even significant investments would most likely fail to turn it into a future-oriented and profitable plant. The closing of Moelven Norsälven is part of a structural overall assessment required to create better overall profitability in the Moelven Group.

A total of 42 employees are affected by the closure. Production at the facility stopped at the turn of the year, and liquidation will largely be completed in the first quarter of 2018.

Moelven Våler AS and Moelven Løten AS have established joint management and administration. The main reason for the two companies to enter into an administrative partnership is to save costs and strengthen both companies' competitiveness. The companies will both continue as separate legal entities, but with administrative coordination.

On 10 October the two wholly-owned Timber companies Moelven Ransbysågen AB and Moelven Notnäs AB were merged into one company with the latter as the acquiring company. The merged company is called Moelven Notnäs Ransby AB. The companies have for an extended period shared management and market organization. The operations will continue with two production locations.

With effect from 1 January Moelven Tom Heurlin AB in Ånimskog was transferred from Timber to Wood. In the course of 2017, the company’s activities have been restructured and adapted to Wood’s market strategy within Scandinavia. The company’s planing activities are included in the production and processing of interior panels together with the sister companies Moelven Värmlands Trä AB (Säffle) and Moelven Notnäs Wood AB (Notnäs). The structure process entails downsizing of 16 employees in Ånimskog and 9 in Säffle. The merger between the companies was completed with effect from 27 December, with Moelven Notnäs Wood AB as the acquiring company. Operations continue at three production locations under the company name Moelven Wood Interiör AB.

Moelven Polska Sp. z o.o was established in the fourth quarter of 2017 as a wholly-owned subsidiary of Moelven Industrier ASA. The company is a sales company and will have no production of its own. Moelven Polska Sp. z o.o. will serve the Polish market, primarily with sales of Timber’s products. 

This is the Moelven Group

Ownership structure

The Moelven Group is owned by Glommen Skog SA (29.1 %), Eidsiva Vekst AS (23.8%), Felleskjøpet Agri SA (15.9%), Viken Skog SA (11.9%), Mjøsen Skog SA (11.8%) and AT Skog SA (7.3%). Most of the remaining 0.4 per cent is owned by private individuals.


Moelven is a Scandinavian Group. All production units are located in Scandinavia, which is also the primary market. Moelven's vision is to be the natural choice for people who wish to build and live Scandinavian, and the Group shall take the lead in developing buildings that are based on Scandinavian building traditions. Within this framework, activities are based on a desire and an ability to contribute to creating good spaces – good environments to live and work in, and for all social functions. Good Scandinavian environments are often close to nature in their form and content. Wood and other natural materials are essential parts of what Moelven makes and are dominant in the greater part of the product range. Natural materials are environmentally friendly building materials and building solutions when it comes to houses, modules, bridges and interior products. Moelven offers a wide range of building products and building systems and associated services. The Scandinavian market accounts for 85 per cent of sales revenues, and 85 per cent of the Group's products and services are used for new building or renovation, conversion and extension of homes and commercial property. A large part of the remaining operation consists of sales of biomass for biofuel and for pulp, paper and particle board production. The Group also supplies wood products to the furniture, interior and packaging sectors.


The Group has its headquarters in Moelv in Norway and consists of 37 production companies in 46 production locations, and a number of offices for sales, service and fitting. Most of the production units are companies and workplaces with a strong local presence in rural communities in South East Norway and the western part of Central Sweden. The offices for sales, service and fitting are located in larger population centres around Norway, Sweden, Denmark, the United Kingdom, Germany, the Netherlands and Poland. Production in Norway and Sweden is of approximately the same volume, but the Swedish units export a greater proportion of their production than the Norwegian. Out of a total of 3 546 (3,492) employees at the end of 2017, 1,662 (1,625) work in Norway, 1 856 (1,839) in Sweden, 20 (19) in Denmark and 8 (9) in other countries

The Divisions

The Group is divided into three divisions: Timber, Wood and Building Systems, each of which focuses on one of the main segments of industry, trade and project. There is also an Other Businesses reporting area, which consists of the holding companies with group functions, supply businesses, fibre products and bioenergy companies.


The Timber division consists of 11 production companies and 5 sales offices, supplying industrial timber, components and chip products made from local spruce and pine. The customers are mainly industrial companies that buy intermediate products for their own production of construction timber, glulam, panels, flooring, mouldings, windows, packaging, board and paper products and for bioenergy. About 55 per cent of operating revenues come from Scandinavian customers. At the end of 2017, there were 650 (674) employees, 242 (235) of them in Norway, 400 (430) in Sweden and 8 (9) in other countries.


The Wood division comprises 18 production companies, 3 customer centres and one project sales company. The main products are white and impregnated building wood, external cladding, boards, length-adapted products and chip products, as well as interior products such as mouldings, flooring and interior panels. Wood also trades in purchased products. Around 75 per cent of timber and board production is sold through the building products trade and wood processing industry. Wood is one of the leading suppliers to the Scandinavian market and about 90 per cent of its operating revenues come from Scandinavian customers. At the end of 2017, there were 1 079 (1,039) employees, 586 (581) of them in Norway, 473 (439) in Sweden and 20 (19) in Denmark.

Building systems

The Building Systems division consists of 7 production companies at 12 production locations and a number of sales, service and fitting offices. Building Systems is divided into the business areas Glulam, Building Modules and Interior System, all three of which are market leaders in Norway and Sweden. The division's building and contracting customers buy customised building modules, flexible interior solutions systems and associated services and advanced glulam structures.  In addition to bridges and load-bearing structures, the glulam unit also has considerable sales of standard laminated timber beams through the building products trade, as well as components for the prefabricated house industry. Operating revenues are primarily from Scandinavian customers. At the end of 2017, there were 1 687 (1 647) employees, 783 (757) of them in Norway and 904 (890) in Sweden. In order to ensure adequate flexibility in production capacity to meet seasonal and economic fluctuations in the market, the divisions use hired workers to some extent. Hired workers are not included in the employee figures. Hiring is from staffing companies who comply with the EU temporary agency work directive, and this entails that hired personnel are ensured the same terms as if they were employed by Moelven.

Other business

Other businesses include Moelven Industrier ASA, with shared services for finance, accounting, insurance, communications, HR and ICT. Timber supply and sales of wood chips and energy products are organised as a common function for the Group's timber processing industry and comprises the Group companies Moelven Skog AB, Moelven Virke AS, Vänerbränsle AB and Moelven Bioenergi AS. In addition there is the affiliate Weda Skog AB. At the end of 2017, there were 130 (132) employees, 51 (52) of them in Norway and 79 (80) in Sweden.

Social responsibility

The Board has processed and approved the Groups general strategy and guidelines relating to HSE, social responsibility, the environment and competition law. The discussion of these areas are included in the Board's explanation of principles and practice concerning social responsibility pursuant to the Accounting Act Section 3-3c.

Operating revenues and results

årsberetning Driftsinntekter og resultater konsern NO

Operating revenues in 2017 increased by 4.5 per cent compared to 2016. The main causes are increased sawn timber prices, a changed product mix in Wood, and a higher level of activity in Building Modules and Glulam. Operating income for the year including restructurings, increased by 42.4 per cent. The operating result for 2017 includes a charge from the third quarter of NOK 46.1million. The background for the item is the decision to close Moelven Norsälven AB from the turn of the year, in addition to a resolved dispute related to a larger project in Building Systems. In 2016 a write-down of fixed assets was completed in the Timber division amounting to NOK 16.5 million and a disparagement of the project portfolio in Building Systems amounting to NOK 40.0 million. Corrected for this, the increase in operating income was 32.7 per cent. The operating margin was improved to 3.9 per cent (2.9)

Overall, delivery volumes have been somewhat higher than the previous year. Increased prices for sawn timber and a change product mix to the building products trade further contributed to the increase in operating revenues compared to the previous year. In addition to its own production, the Group buys sawn timber externally. Price developments for sawn timber have thus also affected the Group’s raw material costs. For the timber-consuming part of the Group, raw material costs in Sweden have been at the same level as the previous year throughout 2017, while the Norwegian units saw a certain increase in saw timber prices. Prices for wood chip and fibre products for the Swedish units have been at the same level as 2016. For the Norwegian units currency conditions and costs related to logistics had a certain negative effect in the second half of the year.

The FIFO principle requires that inventory calculations are adjusted in line with developments in raw material costs. Along with an update of real value assessments of inventory, this has provided a positive effect totalling NOK 39.7 million (9.0) for the year. The items do not have any impact on cash flow.
The accumulated financial result for 2017 is positively impacted by NOK 9.6 million as a result of a reversal of previously allocated warranty costs.
The Group employs financial instruments as a hedge against short-term fluctuations in foreign exchange rates, interest rates and power prices. Non-cash items connected to fair value adjustments on unrealised hedging instruments comprised NOK 4.7 million (14.6)
Net financial expenses excluding changes in the value of financial instruments and recognized guarantee provisions were NOK 51,7 million in 2017, compared to NOK 57.0 million the previous year. Lower average net interest-bearing liabilities are the main reason for this.


årsberetning timber tabell 1 E

Activity and demand in the Timber division’s main markets was consistently good in 2017, with normal seasonal variations throughout the year. Both deliveries and production volumes increased compared to 2016. The figures for 2017 are affected both by production at Moelven Norsälven AB closing down in the fourth quarter, and that Moelven Tom Heurlin AB was transferred to Wood as of 1 January 2017. Average prices also increased in 2017. Most of the exports take place from the division's Swedish units, and the bulk is settled in EUR. For 2017 as a whole, EUR has been stronger against SEK than in 2016. The UK is an important export market for Timber. Prices in GBP have increased, and compensate the majority of the margin shortfall as a result of the depreciation of the pound following the Brexit referendum. Deliveries to the Middle East, North Africa and Asia were somewhat reduced due to challenges related to sea transport and public regulations. The situation was largely resolved in the course of the second half of the year.

Operating conditions in 2017 were generally good, particularly in the first quarter with a milder winter than in 2016. Several units have improved efficiency as a result of the ongoing improvement work. In Sweden both Moelven Notnäs AB and Moelven Valåsen AB have completed investment projects in 2017 to ensure competitive and future-oriented cost efficiency, and have achieved good results. On the Norwegian side Moelven Våler AS and Moelven Løten AS have been administratively been coordinated into one unit.

Several units remain that fail to generate satisfactory results, and improvement work to bring these up to acceptable profitability levels is central in the division’s action and strategy plans. In all improvement work, as for the projects at Notnäs and Valåsen, much emphasis is on assessing how new technology may be adopted to ensure future-oriented development opportunities for the company with regard to capacity and value creation.

Timber stocks at the start of the year were satisfactory with regard to planned production levels for the winter of 2017. Access to timber in the first half of the year was normal for the season. In the second half of the year access was somewhat reduced in certain areas as a result of the wet autumn. The situation improved towards the end of the year, and at the end of 2017 timber stocks were satisfactory and on a par with the same time in 2016. For the Swedish units timber prices have been on a par with the previous year throughout 2017, while the Norwegian units have seen a slight increase in saw timber prices. Prices for wood chip and fibre products for the Swedish units have been at the same level as 2016. For the Norwegian units, currency conditions and costs related to logistics had a certain negative effect in the second half of the year.

Due to price developments the profits have seen a positive effect of a value adjustment to inventories totalling NOK 15.1 million. The corresponding price adjustment in 2016 was NOK -1.6 million.

The result for 2017 includes impairment of fixed assets and cost provisions from the third quarter related to the closure of Moelven Norsälven AB totalling NOK 29.0 million.

In 2016 an impairment of NOK 16.5 million was carried out as a consequence of the restructuring of Moelven Tom Heurlin AB prior to transfer to the Wood division in the fourth quarter of 2016.


årsberetning wood tabell 2 E

Around 80 per cent of the sawn timber and building products production of Wood is sold through the building products trade in Scandinavia. The remainder is mainly sold to industrial customers, both in the form of sawn timber, chip products and processed goods. Sales of custom products such as surface-treated or cut-to-length products are on the increase. Commissioning and building of new homes is at a high level in both countries. The same applies in renovation, conversion and extension, even after a certain decline related to the oil slowdown in Norway and changed tax rules for renovation, conversion and extension deductions in Sweden. In 2017 demand from the building products trade in Scandinavia was satisfactory. The increase in operating revenues is mainly due to a change in product mix and increased finished product prices. Raw material costs have also increased, and have made rationalization measures necessary in order to maintain results.

The planing mills in the division use mainly sawlogs as raw material, and raw material costs for these units has therefore increased as a result of the price developments for sawlogs.
Timber stocks at the start of the year were satisfactory with regard to planned production levels for the winter of 2017. Access to timber in the first half of the year was normal for the season. In the second half of the year access was somewhat reduced in certain areas as a result of the wet autumn. The situation improved towards the end of the year, and at the end of 2017 timber stocks were satisfactory and on a par with the same time in 2016. For the Swedish units timber prices have been on a par with the previous year throughout 2017, while the Norwegian units have seen a slight increase in saw timber prices. Prices for wood chip and fibre products for the Swedish units have been at the same level as 2016. For the Norwegian units, currency conditions and costs related to logistics had a certain negative effect in the second half of the year.

Due to price developments, the profits for 2017 have been credited with a price adjustment to inventories totalling NOK 24.6 million. The corresponding price adjustment in 2016 amounted to NOK 10.6 million.

Building Systems

årsberetning byggsytemer tabell 3 E

Both activity levels and operating results improved compared to 2016. At the end of the year the order backlog for the division was good overall, but NOK 105 million less than at the same time the previous year. The increase in operating revenues compared to 2016 is due to increased activity in Glulam and Building Modules in both Norway and Sweden. The operating revenues for 2016 include NOK 268 million from the electrical installations business, which now has been completely discontinued.

The improvement in operating income compared to the previous year is mainly due to an improved result in Building Modules, in addition to income and expense corrections related to certain larger projects. Operating income for 2017 is charged with expense corrections totalling NOK 17.2 million as a result of a concluded dispute, and the operating income for 2016 is charged with income corrections totalling NOK 40 million as a result of a review of the project portfolio.

For Glulam 2017 has been a year of high activity and good demand for both standard glulam and projects in both Norway and Sweden. Delivery volumes increased compared to the corresponding period last year, and production capacity with the current business model is practically fully utilised. Partly due to increased emphasis on sustainability and increased knowledge about the fire properties of glulam and the opportunities it provides, demand for glulam for load bearing structures in different types of buildings is increasing.

On the Swedish market there has nevertheless been significant pressure on prices due to strong competition.

In Building Modules activity has been good in all market segments in Sweden. Towards the end of the year there was a certain reduction in demand, but the level remains high. This applies in particular to the residential and project markets, although the demand for housing has dropped to more normal levels. Demand is also good for rental modules, but competition from foreign players is on the increase and contributes to pressure on prices.

In Norway the picture has been more complex. The market for Moelven’s residential concept was consistently good throughout the year, while the market for projects and standard modules picked up in the course of the year as a consequence of increasing investment in infrastructure. In 2017 the operations in both Norway and Sweden have undertaken investments for continued specialization and industrialization of wood module production.

For Interior system – Moelven Modus – in 2017 the Norwegian market has been characterized by increased demand after the oil slowdown had braked activity the previous year. In Sweden market activity has generally been high for some time, but the boom has led to the increased establishment of competing companies and pressure on prices.

At the end of the year demand was good in both the new building and RCE- market, but with strong competition. The particularly applies to the major cities of Oslo, Stockholm, Gothenburg and Malmø. Increased focus and emphasis on sustainable and climate-smart solutions has contributed to an increase of interest in using wood as a building material and having visible wood in the finished projects among both architects and customers.

Other businesses

årsberetning øvrige tabell 4 E

Fluctuations in operating revenues in the area of Other Businesses are largely fluctuations in the level of activity within timber supply and sales of wood chips and energy products. The main activity is internal sales, which do not materially affect the results within the business area. In order to safeguard the supply of timber and market opportunities for wood chip and energy products in regions without local demand for pulp wood and wood chips, train solutions have been established for the transport of these. The business is based on fixed agreements on both the customer and supplier sides.

Investments, balance sheet and financing

In the course of 2017 development and improvement investments of NOK 126 million (71) have been made. Upgrades and maintenance investments were NOK 231 million (204), and overall investments for the year were NOK 357 million (275). The increase in investments in 2017 compared to 2016 is partly due to the investment program in the group’s current strategy plan, and partly that postponed projects have been implemented. For the year as a whole depreciation amounted to NOK 295.7 million (306.6). The year’s depreciations include an impairment of the fixed assets at Moelven Norsälven AB of NOK 17.6 million. The depreciations for 2016 include an impairment of the fixed assets at Moelven Tom Heurlin AB which was completed in the fourth quarter of NOK 16.5 million. At the turn of the year the book value of the group’s total assets was NOK 5,044.6 million (4,766.8).

Cash flow from operating activities was NOK 676.2 million (NOK 421.5 million), corresponding to NOK 5.22 per share (NOK 3.25). Beyond the result and normal fluctuations in working capital items, the improvements compared to last year are mainly due to reduced working capital in projects. Cash flow from working capital items was NOK 48.7 million (-121.88).

Net interest-bearing liabilities were NOK 760.5 million (NOK 1 026.9 million) at the turn of the year. Financial leases are included in net interest-bearing liabilities in the amount of NOK 19.8 million (NOK 22.3 million). Cash reserves including short-term credit facilities were NOK 1 172.0 million (NOK 874.7 million). In the Group's main financing the available loan facility varies in time with the natural fluctuations in the Group's tied-up capital through the year.

Equity at the end of the year amounted to NOK 2,092.5 million (NOK 1,813.4 million), equivalent to NOK 16.08 (NOK 13.95) per share. The equity ratio was 41.5 per cent (38.0 per cent). The dividend for 2016 of NOK 0.48 per share, totalling NOK 62.2 million, was paid and charged to equity in the second quarter. Parts of the Group's equity are linked to ownership interests in foreign subsidiaries, principally in Sweden, and are thereby exposed to exchange rate fluctuations. The extent and consequences of likely variations in exchange rates are within acceptable risk limits. Year to date the change is NOK 41.1 million (-67.3). Approximately half of the Group's assets are recognized in SEK. The total assets thus also change based on the exchange rate, and the equity ratio in percent is therefore less impacted by exchange rate fluctuations than the nominal equity.


The Group's profits and balance sheet are affected by several external factors that can be influenced by Moelven to a greater or lesser extent.

For some of the risk areas that affect the Group, there are functioning financial markets where the risk of fluctuations can be reduced. This applies, for example, to interest rates, exchange rates and electricity. The Group's financial policy is that it is the industrial activities rather than financial transactions that shall create the conditions necessary for profitability. The main aim of the guidelines for the use of financial instruments is to reduce fluctuations and create more predictability. In other areas, such as raw materials, finished goods and projects, other methods of hedging risk must be used. As far as possible, fixed price contracts or index linking of contracts is used, for example. The Group's composition of units directed at different primary markets also has the effect of reducing risk. The primary markets are seldom affected by economic fluctuations at the same time, while the cost side can still benefit from economies of scale.

årsberetning Risiko Sensitivitetsanalyse N

Prices of finished goods

The units of the Moelven Group operate in markets with free competition and many players. The creation of prices therefore occurs freely in the marketplace, and assuming unchanged volumes a change in process will affect the group as shown on the sensitivity table.

Sawlog prices

The Moelven Group's units annually use around 4.2 million cubic metres sawn spruce and pine in production. The total value is approximately NOK 2,500 million, including transport costs. Spruce and pine account for approximately equal portions of the round timber. Moelven does not own any forest, but buys all its timber from external suppliers. These suppliers are in turn dependent on functioning markets within an acceptable transport distance, as well as satisfactory price levels for both sawlogs and pulpwood. The cost of timber is by far the biggest single cost for the Group, and changes in timber prices have an immediate and substantial impact on margins. This involves both a price risk and a volume risk. The Group therefore focuses on entering into price agreements that as far as possible correlate timber prices with expected changes in the price of finished goods.

Prices of chips and biomass

The price of cellulose chips and biomass, which come from saw and planing production in Timber and Wood, is of great significance for the Group's revenues. Even though work is constantly going on to improve the utilisation of raw material, only about half of each log becomes industrial timber after passing through a sawmill. The remaining half is cellulose chipping and sawdust, in addition to various dry fractions. Part of this is used for our own energy production, while the rest is sold to the particle board, bioenergy and fibre industries. Since a change in the profit margin for these products has a direct influence on the Group's results, the distance to the customers and access to efficient logistics solutions for road and rail transport are of great importance.

Electricity prices

The price of electric power is another important factor that affects the Group's profitability. About 230 GWh of electric power a year is bought via the Group's electricity suppliers on the Nasdaq OMX Commodities exchange.

According to the Group's finance policy, the need for electric power shall be secured against price fluctuations so as to ensure stability and predictability. The anticipated power requirement is hedged within stated maximum and minimum levels by trading futures on Nasdaq OMX with a 5 year maximum horizon.

Interest rate risk

The Group's net interest-bearing debt is subject to interest rate risk. The bulk of the debt in SEK, which is why interest rates in Sweden are most important for the development of the Group's interest expense. The Group companies will be financed with loans from the parent company. All external borrowing is done by the parent company, which also makes hedging in accordance with financial policy. The hedging instruments that can be used are ordinary interest rate swaps, FRAs and composite swaps of types that are normally used for such purposes. The extent of hedging is measured in terms of the combined duration of outstanding debt and hedging arrangements. The total duration should be minimum of 12 months and maximum 60 months shall not be entered into hedging agreements with a maturity of more than 10 years

Exchange rate risk

About 15 per cent of the Group's operating revenues come from markets outside Scandinavia and carry exchange rate risks.

Additionally, there is significant internal and external trade within the group with both raw materials and finished products between Sweden and Norway. The most important currency crosses are EUR/SEK, GBP/SEK, SEK/NOK and EUR/NOK. Moelven uses forward contracts to counteract large cash flow fluctuations as a result of variations in exchange rates. Because of the hedging strategy that has been chosen, changes must be long-term so as to have the full effect on the Group's profitability, and during the hedging period operational adaptations may be made to compensate for the external changes. During the hedging period, operational adaptations may be made to compensate for the external changes. About half of the Group's total balance sheet is connected to activities in Sweden. The balance sheet figures will therefore be affected by the prevailing exchange rate between the Swedish and Norwegian kroner. A large part of equity is secured against this in that share investment in most of the Group's Swedish subsidiaries is financed in Swedish krona. At the end of 2017, the total equity that is exposed to exchange rate risk amounted to SEK 1,028.7 million (SEK 804.9 million).

Credit risk

It is the Group's policy that credit sales over a certain size shall be secured in the form of either guarantees or credit insurance. In practice, credit insurance is used most. There are internal guidelines and follow-up routines for unsecured sales, which only occur when no other security is possible.

Liquidity risk

The Group's foreign capital financing consists of the long-term credit facility with a total ceiling of NOK 850 million and SEK 750 million. Once the loan agreement’s option to extend the term was used in the second quarter of 2017, maturity is in June 2020 with the possibility for a further extension of one year until June 2021.

The loan agreement includes normal default clauses with regard to dividends, equity, net equity value and debt ratio. As at 31 December 2017, the Group's key figures were better than the levels at which the default clauses are triggered. In addition to the long-term drawing facilities, the group also has short term credit facilities in its bank systems, amounting altogether to about NOK 312 million, which is renewed annually.

Risk of damage and interruption to production

The Group has a policy for industrial insurance that is centrally managed and which is followed by all companies. This policy gives guidelines for insurance cover, preventive measures, risk review and preparation of continuity plans. The continuity plans become key plans if a fire/damage should occur. The plans cover immediate efforts, disaster management and the ability to continue deliveries to customers. Through its industrial insurance, the Group is covered for financial loss exceeding NOK 3 million per individual claim.


In an increasingly connected world with increasing digitization both in general in society but also in businesses like Moelven, an ongoing assessment of IT risk is important. Interconnected value chains increase efficiency, productivity and quality, but also increase vulnerability to digital service outages. With increasing threats both domestically and internationally and recent years’ media reported incidents following IT attacks against businesses and public institutions, Moelven devoted extra attention to IT security and risk last year. Moelven follows basic principles of IT security, and constantly works to identify and monitor risks, protect systems and data, maintain IT security and prepare and manage any incidents and recover from these.

Risk of loss of reputation

Moelven places great emphasis on maintaining a good reputation. This is measured regularly using a brand survey that is conducted by external partners. There is financial risk linked to any loss of Moelven's reputation. The reputation risk is not quantified. Openness is what characterises the way the Group relates outwardly to society and the media and inwardly to employees of the Group. This applies whether it concerns positive or negative circumstances for Moelven, in line with Moelven's brand platform.

Risk of loss of environmental costs

The activities of the Moelven Group follow the prevailing legislation and regulations with regard to emissions and waste management. The Group has made provisions in the accounts for all known obligations in connection with environmental protection. The purpose of the Group's environmental policies is to minimize the risk of negative impact on the natural environment and thus the potential environmental cost as well.

From 2017 the group has intensified focus on sustainability with an aim to be climate positive.

Employees, health, safety and the environment

For a detailed description of the HSE area, please refer to the Board's explanation of principles and practice concerning social responsibility pursuant to the Accounting Act Section 3-3c.

Effect on the external environment

For a detailed description of how the group's activities impact the external environment, please refer to the Board's explanation of principles and practice concerning social responsibility pursuant to the Accounting Act Section 3-3c.


Innovation is defined as the entire process from an idea arises until the customer has bought a new product that represents an added value, or a new production process is implemented.

Moelven's innovation focus is mainly to engage in development and innovation linked to a specific application of a product or in a production process. The group does itself engage in basic research, but participates in projects where this is deemed appropriate. The R&D projects must contribute to strengthen the various business areas in the group and reduce business risk. This may also entail participation in innovation projects outside of our own value chain, but in projects that support Moelven’s operations and opportunities for growth. One example is the ongoing project at Moelven Töreboda AB to develop and improve building systems and acoustics in tall wooden buildings. The project is being carried out in cooperation with Företagsforskarskolen Prowood, where the purpose is to support and increase the competitive strength of the Swedish timber industry. Two doctoral fellows have been hired for the project, which gives the business unique access to the remaining academic community.

In order for the group’s mission statement to “give people good rooms” is to be upheld over time, it is essential that products and processes continuously develop in step with the outside world. Responsibility for is with corporate management. The group must facilitate innovation and provide resources, support and coordination. The innovation processes are conducted in the individual business areas where expertise is greatest. Where there are larger parts of the Moelven group that will benefit from the innovation area, joint projects are carried out.

Norwegian Wood Cluster SA (NWC) is a newly-established industrial cluster in the forestry and timber industry value chain. NWC is owned by Hunton Fiber AS, Forestia AS, Boligpartner AS, Moelven Industrier ASA, Gausdal Bruvoll SA, Mjøsen Skog SA, Glommen Skog SA, Statskog SF and NTNU.

Operations started up on 1 September 2017 when the newly-appointed cluster manager Engebret Dæhlin took up position. NWC has offices in Mustad Industrial Park in Gjøvik.

In the start-up phase a significant proportion of the cluster manager’s activity and focus has been to get to know and build relations among both the cluster members and prioritized external stakeholders, as well as within the timber industry in general. A strategy has been adopted for NWC with the following prioritized target areas: 

  • Strengthened employee expertise
  • Strengthened R&D expertise
  • Increased degree of advanced industrialization
  • More research- and market-based innovation

This forms the basis of the cluster’s activities and projects that will be implemented throughout 2018. Moelven’s participation in Norwegian Wood Cluster will provide us with a platform for development along with other players and be an important contribution to the group’s R&D work going forward.

Product development and innovation

The laminated timber area has been at the forefront of developing new products and technical solutions for many years. The more than 80 metre tall Mjøstårnet is under construction in Brumunddal. Mjøstårnet will be the world’s tallest wooden building, and is a result of expertise that has been developed through many years in joints, oscillation, dynamics and fire resistance. The Trä8 system, which is a key component of Mjøstårnet, has been under development at Moelven Töreboda AB for several years. Trä8 is a glulam-based building system for tall wooden buildings. In addition to the actual glulam structure, the system takes into account modern requirements with regard to fire safety, acoustics and engineering methods. The structures in Mjøstårnet are scaled to withstand a full fire in a fire cell without causing the building to collapse.

«Mjøstårnet» in Brumunddal is already before completion the world’s tallest wooden building. When completed, the building will be more than 80 meters tall and an international landmark building.
(Photo: Rune F. Andersen)

In Timber the company Moelven Profil AS produces parts for door and window systems from pine and spruce. In recent years demand for heartwood parts has increased by 30%. In order to accommodate the market, the company has established the “heartwood project.” The heartwood project is a pilot project that aims to apply new X-ray technology to determine the heartwood proportion in pine. The project has received financial support from Innovation Norway.

In Wood product development is of great importance in order for the choice of products to both follow the shifting market trends and satisfy requirements toward quality and functionality.

The goal is to offer customers the market's best, most diverse and most modern product range in wood. Innovation work is divided into two main directions. One aims to develop modern products that contribute towards inspiration and new trends at the end-user. Development may focus both on design, use of material, environmental properties and degree of processing. One example is surface-treated cladding where demand has increased rapidly. Because surface treatment takes place industrially and in a controlled environment, the production process becomes more environmentally sustainable while also providing more added value for the end user. The other main direction aims to simplify work with the products at the building site. Examples of such solutions are preprocessed internal panels with concealed nails, various floor solutions, sheet products with reduced widths to ease handling, ready cut lengths, etc.

Process development and innovation

The Moelven group continually works to rationalize and improve processes at all stages from purchasing to finished product. For the project part of the glulam business, the use of new technology to process individual elements in the load-bearing structures is a precondition to provide complex, high-quality systems. For the part of glulam that is directed at the building products trade and for the processing units in Wood, the logistics systems are of great importance. Reduced costs and the environmental impact of efficient transport are important. The customers’ access to a wide range of products with short delivery times must be ensured.

For the timber-consuming units in Timber and Wood, it is primarily the optimisation of the production processes that is of key importance. The goal of safeguarding the values inherent in the raw materials is key with regard to both environmental and financial sustainability. The use of X-ray photography, camera sorting and mechanical strength sorting are tools that contribute to optimizing raw material utilization. At Moelven Valåsen AB a two year project is ongoing called “The smart digital sawmill,” where the objective is to increase the level of digitization in the sawmill to increase the recovery factor, increase capacity by reducing the number of production stops and reduce energy consumption. This is done by increasing the number of sensors in production and connecting these in order to further utilize data. In the project at Valåsen, Moelven has actively focused on ensuring that infrastructure, systems, data and patterns that are developed and put into operation are documented, centralized and owned by Moelven such that these may be developed by ourselves and not least deployed at other units in Moelven Industrier. The group has therefore chosen to use sensor technology and tools for capture, advanced analysis and machine learning from well-known and market leading manufacturers. This thus supports an architecture and strategy where all of Moelven’s companies may benefit from and take part in the results and technology the project has built the first stage of. Further development and deployment is planned for the second half of 2018.

In 2017 a new control system was employed at several units for operator visualization and control. This has resulted in improved efficiency and productivity. Furthermore, a pilot project has been established for the implementation of a common maintenance system. Here too, the purpose is to standardize and coordinate this type of work to a greater extent. Next to profitability improvements from the actual improvement work at each individual unit, this work is about exploiting the overall expertise the group possesses, to share this across units and standardize the solutions that provide the best result.

For the module and interior businesses it is important to exploit the competitive advantage inherent in the module concept rather than traditional building concepts: Industrial production of the modules indoors and shorter overall building time because several processes can take place simultaneously, and the modules can be quickly assembled at the building site. Development and refinement of technical solutions for production, connection of technical installations and assembly at the building site is important to operate profitable industrial production of module-based building solutions, and to exploit the advantages the concept provides. In connection with the conversion of Moelven Byggmodul AB's production facility in Säffle, new and improved production equipment was developed in cooperation with local suppliers. Besides capacity and efficiency improvements, the utilization of robot technology has enabled major improvements in HSE and logistics. The project, which has been very successful, was completed in the spring of 2017 and was the reason Moelven Byggmodul AB was named “Lean builder of the year” at Byggegalan in Stockholm on 27 March. The award is presented by Lean Forum Bygg and the Byggindustrin journal.

The industrial mindset that has formed the basis of the project in Säffle is used as a template for future similar investment projects.

Moelven Byggmodul AB in Säffle was named «Lean builder of the year» at Byggegalan in Stockholm on 27 March. The award is presented by Lean Forum Bygg and the Byggindustrin journal.
(Photo: Tommy Hellström)

Corporate governance

Corporate governance at the Moelven Group is based on the current Norwegian recommendation for corporate governance of October 2014. The Board's report on the Group's policies and practice for corporate governance in accordance with section 3-3b of the Norwegian Accounting Act has been incorporated into the report on corporate governance. For further information about the Board and senior executives, refer to note 28.

Allocation of the net profit for the year

The Board of Directors' dividend policy is based on Moelven's shareholders receiving a predictable and satisfactory cash return on their share investment. The policy provides guidelines for how much of the profit, or of distributable equity in years with a loss, shall be distributed as a dividend. The Group's net profit for 2017 was NOK 293.0 million (179.1). The equity ratio was 41.5 per cent (38.0 per cent). The Group has adequate equity to disburse a dividend in accordance with the applicable dividend policy. Based on the results for 2017 and taking into account the normal seasonal variations in the Group's employed capital and equity ratio, the Board proposes a dividend of NOK 0.68 per share to the annual general meeting. This totals NOK 88,088,073.

The parent company Moelven Industrier ASA, which distributes a dividend for the Group, had a net profit of NOK 120.2 million for the year in 2017 after the receipt of group contributions and share dividends from subsidiaries. The company will have sufficient distributable equity and liquidity for the distribution of the dividend at the adjusted time for the decision on dividends.

Events after the balance sheet date

No events have occurred after the balance sheet date that affects the accounts that have been presented.

Going concern assumption

In accordance with the requirements in the Norwegian accounting legislation, the Board of Directors confirms that the prerequisites have been met for preparation of the accounts under the assumption that the Company will continue as a going concern and that the annual accounts have been prepared under this assumption.


The growth in the global economy is continuing. In Norway the mainland economy is approaching normal levels after a period of poor developments. In Sweden activity levels remain high, even though the strong growth is showing signs of levelling off in certain markets.  The rest of Europe continues with a marginal positive growth rate.  In the USA the economy is still improving, although the growth rate is somewhat lower than previously. Moelven has only occasional deliveries to the United States, but the group nevertheless sees a positive effect from an improved global market balance. Growth in China is declining, while there are indications of higher activity in the rest of Asia. The Middle East and North Africa are still characterized by unrest and regulations from public authorities that complicate international trade. However, the underlying demand is good in the latter markets.

Positive and stable developments in the international market for industrial wood are expected.

The currency situation continues to contribute to maintain competitive ability in export markets, particularly for the Group's Swedish businesses where trading is in EUR or USD. Prices in GBP have increased, and thus compensate some of the margin shortfall as a result of the depreciation of the pound following the Brexit referendum.

In Norway demand for processed products is expected to remain on a par with 2017, albeit with regional differences. Building activity in and around the major cities, with the exception of south-west Norway, is expected to remain high. In Sweden the need for new homes remains high and activity in the new building market is strong, but growth is showing signs of levelling off. Activity in the renovation, conversion and extension market remains good. No major changes are expected in the markets, and the Swedish market is expected to be at the same level as 2017 overall.

Timber inventories and access to timber at the start 2018 are acceptable with regard to planned production.

For glulam it is expected that the positive trend of choosing wood for load bearing structures will continue.

In both Norway and Sweden demand is good for module-based buildings for housing purposes. Demands toward short construction times are increasing. This applies equally to homes, schools and care facilities.

In Sweden the market for system interiors is strong in the areas around Stockholm, Gothenburg and Malmø. On the Norwegian side of the border the market in the Oslo region is strong. In the rest of the country the market for new commercial buildings is showing signs of improvement following a slow period. Good activity is expected to continue in Norway and Sweden in renovation, conversion and extension.

The Group's composition, with divisions that experience different impacts from economic fluctuations and units that operate in different markets, provides the Group with a good starting point for further improvements.  For 2018 the board expects activity levels and results comparable to 2017. Return on employed capital was 14.2 per cent in 2017, which is a marked improvement from 9.9 per cent in 2016. The group has a long-term goal of a return on capital employed of 13 per cent over an economic cycle. The programme for operational improvement and structuring of the Group in line with the long-term strategy plan therefore continues unabated and will contribute to continued improved profitability for the underlying operations. The Board is of the opinion that the Group has adequate solvency and access to liquidity over the long term to develop the Group in line with the strategy plan.

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