Newsdetails

· Best ever half-year results
· Good order intake and high capacity utilization
· Ongoing price increase on procurement markets
· Positive outlook for 2nd half-year


The Mayr-Melnhof Group benefited as expected from the positive economic climate in the Euro zone as well as the ongoing economic dynamics in Eastern Europe and neighboring regions during the first half of 2007. Both cartonboard production and converting registered strong order intake and high capacity utilization. Based on new records in production and sales performance, the Group has so far participated in the positive environment above market average.

With a 9.7 % increase in the profit for the period to EUR 59.8 million, the Group attained its best ever half-year result. Due to the price drive on procurement markets lasting already for several months, this earnings improvement was primarily volume induced. 

Due to a significant rise in recovered paper prices, MM Karton sells at higher prices since mid-year, which should allow for compensation of the preceding increase. At MM Packaging, passing on this rise in cartonboard prices to customers constitutes a top priority.

General forecasts for the coming months are still positive. Nevertheless we rather expect a slow-down in the economic environment on our European main markets with a continuing price rise on the procurement markets.

 
GROUP INDICATORS - IFRS
consolidated, in millions of EUR

                                               1st HY 2007          1st HY 2006               +/-
Sales                                            837.2                   731.1               +14.5 %
Operating profit                               85.5                     79.5                + 7.5 %
Operating margin (%)                      10.2 %                 10.9 %
Profit before tax                              87.7                     79.0                +11.0 %
Income tax expense                       -27.9                    -24.5   
Profit for the period                         59.8                      54.5                 +9.7 %
Net profit margin                              7.1 %                    7.5 %
thereof minority interests                  1.3                        1.0
Basic and deluted earnings
per share (in EUR)¹⁾                         2.66                      2.43
Cash eranings                               101.5                     95.2                  +6.6 %
Cash earnings margin (%)               12.1 %                 13.0 %
Employees                                  8,360                  7,969 ²⁾

1) adapted to number of shares after share split 1:2
2) as of Dec. 31, 2006

At 820,000 tons, cartonboard volumes sold were 6.8 % above the previous year’s level
(1st half of 2006: 768,000 tons). Of this amount, Europe accounted for approximately 86 % and non-European markets for 14 % (1st half of 2006: 79 %; 21 %).

Sales rose by 12.2 % to EUR 449.3 million as a result of higher sales volume and implemented price increases. Due to the recent cost increase, particularly with regard to recovered paper, the operating profit grew with 8.2 % to EUR 36.8 million more moderately than sales, leading to an operating margin of 8.2 % after 8.5 % in the previous year.

MM PACKAGING

Against the backdrop of the continued positive demand development in all market areas and high capacity utilization of the plants, MM Packaging converted approximately 319,000 tons of cartonboard during the first half of 2007. This is equivalent to an increase of about 24 % compared to the first half of 2006 (257,000 tons). This dynamic growth in volume resulted from the new rotogravure plants, the recent acquisitions in Russia and Tunisia as well as new business.

The strong sales growth by 18.9 % or EUR 73.7 million to EUR 463.1 million is mainly attributable to higher volume. The latest acquisitions contributed about one third to this increase. Due to non-recurring operating income in the previous year from a real estate divestment and start up costs at the new rotogravure plants as well as higher cartonboard prices, the operating income could not fully match the sales growth, with an increase of 7.0 % to EUR 48.7 million. As a result, the operating margin declined from 11.7 % to 10.5 %.

OUTLOOK

Considering the high order backlog and the ongoing sound market environment, we expect at least for the third quarter a continuation of the good capacity utilization and volume development in cartonboard production as well as converting.

In line with the positive economic situation and ongoing strong demand, price increase tendencies in several of our input factors continue. In addition to increasing recovered paper prices, great attention will have to be paid to the development of the crude oil price and related costs.

According to plan, cartonboard is sold at higher prices since mid-year, which should allow for a compensation of the cost increases which have so far accrued in cartonboard production. In cartonboard converting, the focus lies in passing on the cartonboard price increases to the customers.

In both divisions we will continue to pursue an expansion course.
The report on the 1st Half-year of 2007 is available on our homepage http://www.mayr-melnhof.com.
Results of the 3rd Quarter of 2007 will be published on November 15, 2007.