World Bank Group Archives Folder 1582048

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Folder Title: Pulp and Paper Project - Fifth Industry (05) - Finland - Loan 0222 - P037371 - Subproject - Oulu - Progress Report

Folder ID: 1582048

Project ID: P037371

Dates: 1/1/1958 - 12/31/1970

Fonds: Records of the Europe and Central Asia Regional Vice Presidency

ISAD Reference Code: WB IBRD/IDA ECA

Digitized: 9/19/2018

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~~ 1 n1m1u1m1r1mrn1111~1111111m11r1

Pulp and Paper Pr j Al99S-143 0th 582048 - Sub j O ect - Fifth I er # · 24 pro ect - Oulu - Progress Rndustry (OS)- Flnl~nd L Box# 193462B eport - oan 0222 - P03737

I

DECI~ASSIFIED WBG Archives

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GENERAL

OULU OSAKEYHTIO Operational Report for the Period from. Jan.1,1968 to June 30, 1968

The latest economic survey published by the Econom.ic Department

of the Ministry of Finance was slightly optimistic after a long time.

The upward trend in Western Europe is expected to get stronger

reflecting in a positive way also on our economic life. The exports

are estimated to grow and investment activity to recover.

The deficit in the balance of trade during January-May 1968 de-

creased to 110 million Finnmarks. It is expected to reach equilibrium

by the end of the year, the balance of exchange even to show a surplus.

By the end of the year the growth of the volume of industrial production

is estimated to increase by 5 per cent compared with the corresponding

last year's figure.

The labour market position remained difficult. Unemployment is esti

mated to decrease only very slowly during the latter part of the year.

The salaries and wages were raised by 3. 5 per cent on June 1st on al]

the Company's branches.

The cost of living index rose by 4. 9 per cent (10 points) and the buila

ing cost index by 5, 8 per cent (7 points) during the first half of 1968.

A new law on Trade Income Tax was approved by the Parliament and

confirmed by the President of the Republic on June 24, 1968. It will

come into force from the first of 1969.

The company's administrative council decided in its meeting on May 13,

1968 to build a chlorate plant at the Nuottasaari Mills. The plant will

make self-supporting on chlorate both the Nuottasaari Mills and the

bleacheries of the owner companies from the first of 1970.

/2/

OULU OSAKEYHTIO

MARKETS

The overcapacity in pulp production caused also in 1968 a general

three weeks 'standstill of all pulp mills . This period was absorbed

by vacation arrangements during summertime. An extra curtailment

on unbleached wet kraft was, however, necessary on top of that .

There is a feeling that the bottom in price development as well as

in sales difficulties has been reached and that in the future there

could be seen some strengthening.

2

By June 30th the amount of contracted quantities for delivery in 1968

from Finland was 1 144 187 tons of sulphate pulp and 728 541 tons of

sulphite pulp. Total sales amounted to 1 872 728 tons exceeding by

about 260 000 tons the last year "s corresponding figure. The effect

of these sales was not, however, felt in the "handled II figures. The

total production, exports and sales inventories {in metric tons) were

almost the same as a year ago.

The sawn goods markets were a lot favourable than a year ago . The

total sales from Finland amounted to 675 000 stcls { about 540 000 stds

in 1967). The company's sales amounted to 28 795 stds by June 30th

corresponding 84. 7 per cent of the year's estimate (in 1967 27 435

stds and 72. 2 per cent respectively) . There were no markable changes

in the prices.

In the sales of the chemical products there were no special problems .

The prices of raw materials for refineries seem to become pressed

upwards in Scandinavia due to increased competition betwe:en the

buyers.

/3/

OULU OSAKEYH'J'IO

PRODUCTION

The amount of production was as follows :

3

============--- -================---=============-~---=====--=-===-==-=-=-= Production from Jan. 1st to Jrme 30th 1968 1967 tons /stds tons/stds

Pateniemi saw mill 12 601. 9 14 459.2 Hyryns almi saw mill 5 507.7 5 655.0 Joinery 320.3 1 506.0 Sulphate pulp mill 122 077.0 123 963.0 By-product plant 10 600.2 9 131. 2 Chlorine plant 41 511. 6 36 811. 2 Production units TOT AL 192 618 . 7 191 525. 6 per cent of the productive capacity 89.8 92.7

FINANCIAL SITUATION ======~=========================-=-===~==-======-=---==~===========----=

Long Cheque Short term credits TOTAL term accounts Bills of Sawn goods loans exchange debts 1968 1968 1968 1968 1968 1967 mmk mmk mmk mmk mmk mmk

Jan. 1st 74.52 15.56 3.73 93 . 81 87.23 June 30th 67.30 o. 38 8,62 12.66 88 . 96 93 . 47

Change ( +/- ) Jan. 1st/June 30th - 7. 22 +0 . 38 -6.94 +8.93 -4. 85 +6.24

INCOME FROM PRODUCTS, RECEIVABLES AND VALUE OF CURRENT INVENTORIES ---------------====-=-----=----- ---=====----=------- ================--=

Received Receivables Inventories Jan.lstLJune 30th June 30th June 30th 1968 1967 1968 1967 1968 1967 mmk mmk mmk mmk mmk mmk

Sawn goods 5.86 4.54 3.30 3.15 23 . 22 22.65 Sulphate pulp 48.80 43 . 62 2.18 0.59 6. 69 10,90 Chemical products 5.31 3.04 1. 09 1. 19 2. 36 1. 22 Oulu wall paper 0.05 0.07 0.03 0.06 0.02 0.0 2

Tall oil soap 0.09 0.09 0.05 0. 05 0.01 0.01

Chlorine and caustic soda 4 . 63 5 .08 2. 02 1. 60 0.1 3 o. 27

Joinery products 0.90 1. 04 0.15 0,17 0. 62 0, 57

TOTAL 65.64 57.48 8.82 6 . 81 33.05 35 . 64

/4/

OULU OSAKEYHTIO

PRODUCTION, DELIVERIES; AND INCOME FROM PRODUCTS during the second hali of 1968 are estimated to be as follows:

4

----------------------------------------------------------------------

Sulphate pulp Sawn goods Other products

RM/SO

Production tons/stds

108 000 tons 16 000 stds

Deliveries tons/stds

105 000 tons 27 000 stds

Income mmk

49 mmk 10 II

11 II

70 mmk ==== ====

Oulu, August 19, 19~& )

1,

OULU OSAKEYHTIO /I ( ~ #~l I <~-tl&&~

OULU 0SAKEY1l l'lt5 Oulu, Finland

OULU OSAKEYil'I'JO AnnuaJ Report 1 970

Economic activity inherited from the preceding year continued throughout the year 1970. Gross national p1·oducl grew by about 6 per cent and the volume of industrial production by D per cent. The growth rate of wood and paper industries was 6 per cenl, Lhat of metal industry 8. 5 per cent . The share of the products based on wood in Finland I s tot8.l exports grew again and was 56 per cent. The value oI Lotal exports grew by 16 per cent and amounted to almost 9 682 mmk. The increase of the imports was still higher, i.e. 30 per cent, so that the balance of trade showed a deficit of 1 38 9 mmk .

The pulp mills run at full capacity without production rc·strictions. The total prod·uction amounted to 4 187 000 tons . The inc1.·ease was 1. 2 per cent on the preceding year. Primarily due to domestic consumption, however, the exports of wood pulp de-:: reased by almost 6 per cent. The inventories on Dec. 31st were low, though the invenlories particularly of hardwood pulp showed a slight increase compared with the situation a year ago. The invoiced value of the woodpulp exportc-d through the Finnish Cellulose Union exceeded by about 11 per cent the 196 9 level and amounted to 1 317 mmk.

The production of market saw mills, 6 097 000 cu. m. , was 10. 1. per cent higher than a year ago . Shortage of saw logs restricted the production primarily in northern Finland. Finland's exports of sawn goods increased by 5. 8 per cent in volume terms on the preceding year's exports and amounted to 4 657 000 cu. m. The 1971 markets opened up as early as the beginning of October. As much as 1 770 000 cu. m. of sawn goods, i.e. al•uost the same amount as a year ago, were sold by the end of the year .

The Scandinavian producers raised the woodpulp prices by 5 to 8 per cent in April. This rise was not, however, felt in fact until in the sales cf the latter b .. ;lf of the year . In the sales for de] ivery in 1971 it was possible to raise the level a little.

The labour market situation was exceptionally unsettled. Several illegal struggles occurred especially in lhe wood-processing and metal industries. The President of the Republic prevented the negotiations for a new overall collective agreement from failing with a solution of his own. The paper ind.istry was the first to reach its sectoral agreement on the basis of this so-called UKK-agreement on the 21st of December. Deviating from the earlier practice, the new agreements will be in force for 15 months, i.e . until the end of March 1972. At the end of the year tte metal industry and house building sectors were still threatened by an open labour struggle.

The financing situation was being strained in the course of the year by economic negotiations about maintaining the stabilization policy and about protecting the economic life from overheating as well as Gy the measures taken by the Bank

OULU OSAKEYilTIO 2

of Finland . On the 30th December a law introducing a retroactive countercyclical tax was included to the UXK-agrecment. According to this law a 2. 5 per cent counter-cyclical tax shall be collected on the value of the exports of the wood-processing industry from Scpternber 1, l 96D to August 31, 1970, excluding only the exports of roundwood. The company's share will be about 4 mmk .

The investment activity was lively in the country and the employment situation improved considerably. In South-Finland there was a considerable shortage of skilled workers in some places . Migration to both South-Finland and to Sweden continued to be strongest from especially the difficult employment area of NorthFinland. The total migration deficit of the country was 45 000 persons.

The liv:ng cost index grew 3 r 2 per cent during the year and was 225 points in December. The rise of the building cost index was 4.-3 per cent, the index 139.3 points.

The owner companies were responsible for the acquisition of raw wood .

'l'he turnover was 204 . 92 mmk, being about 10. 9 per cent higher than in 1969. It was shared by the different units as follows: Nuottasaari mills 83. 8 per cent, P ateniemi and Hyrynsalmi saw mills 10. 9 per cent, joinery 2. 7 per cent, particle board plant 1. 1 per cent, and shipping 1 . 5 per cent.

The volume of the Company, s market production grew 3. 7 per cent from the preceding year, which was primarily caused by the new products, the particle board and the chlorate. The volume of total delivt!ries for exports, home market, and own use was 9. 4 per cent lower than last year . The pulp inventories grew by 5 719 tons and were 10 846 tons at the end of the year. The corresponding f igures for sawn good s inventories were 18 362 cu . m . and 81 294 cu . m . The s a les of the Company's chemical products remained at the same level as the volume of the preceding year but exceeded the value by more than 18 per cent .

T he Company's share in Finland's mar ket production of sawn goods was 2. 3 per cent and that in total exports 2. 1 per cent. The Company's share in the market production of sulphate pulp was 16 . 9 per cent, in the exports of sulphate pulp 14. 8 per cent, and in that of the bleached sulphate pulp 21 . 5 per cent.

A sum of 30 . 4 mmk was used during the year for new investments and fundamental repairs carried over as an asset. The particle board plant, the expansion the semi-bleaching plant and the expansion of the tall oil refinery were the main investment projects completed and taken into operation during the year. A decision was made to raise the annual productive capacity of the chlorine plant from 36 000 tons to 50 000 tons and the main machinery for the expansion was ordered. A further decision was made to build a new 160 megawatt power plant in order to ren ew the old boilers and in order to be able io take care of the electric power supply of the whole company and its owner companies . Two vessels, 6 950 dwt,

O ULU OSAKEYIITIO 3

were ordered from Oy Wartsilii Ab, Tu!'ku dock . Accoeding to the contract the vessels wiJl be eeady in Autumn 197 2.

The Company"s totaJ expenditure on wages and salaries amounted to 28. 8 mrnk, of which the amount paid to the salal'ies employees was 7 . 6 mmk .

OULU 0Si\KEYHTIO

AD1VI1N1STnATIVE COUNCIL

Mr. V. J. Sukselai11c•11, chairman, Mr . Tauno Angervo, vice chairman, Mr. Esko I<.. Leinonen ( until his death on Nov. 6, 1970), Mr . Olli Paloheimo, Mr. Antero Piha, Mr. Heikki Valvannc (from Nov . 24., 1970) and Mr . Bjorn Weckman. De put i cs : Mr . Kalervo Laine, Mr . K . N . Maatta, Mr . J . w. Rangell, and Mr . Aku Sumu.

The Administrative Council met five times.

BOARD OF' DIRECTORS

Mr. Mikko Tahtinen, chairman, Mr . Aarne Pelkonen, vice chairman, and Mr . Reijo Merikanto. Deputies: Mr. Antti v . Pitkanen and Mr. Olli Sarantola.

The Board of Directors met twelve times .

MANAGING DI REC TOR

Mr. Reijo Merikanto

AUDITORS

Mr. Maune Luotonen, Mr. Eino Juntunen, Mr. Jorma Kauppi, Mr . Osmo Luutonen, and Mr. Veikko Makkonen. Deputies : Mr. Kaine Eirola and Mr . Tiino Vaarnavuo .

Mr . Jaakko Heikkonen was responsible for the general audit.

4

OULU OSAKEYHTJO 5

The following statis1 ics illustrate the Company, s ac1 ivities:

ACQUISITJON OF HAW WOOD ----------------=============== =========-------- --- ·- ------------------------

Saw logs and sleepers

Pine pulpwood (piled measure)

Birch II

Firewood

Pole wood

rr

u-no

cu.ft . 9 738 10£1

cu . m. 1 202 928

If 400 000 ,,

poles 2 545

196!-J 19GB

7 349 382 6 852 303

1 238 319 1 203 380

349 695

2 205

4 736

275 871

3 066

7 220

---------------=------=--===----============================:================

PRODUCTION -----------------------------------------------------------------------------

Primary production

Sawn goods

Sulphate pulp

Crude tall oil and turpentine

Chlorine, caustic soda, chlorate

Particle board

TOTAL

Refined output

Joinery products

Distilled products

TOTAL

TOTAL AMOUNT OF UNITS Less: Own primary production

used for refining

GRAND TOTAT... FOR SALE

cu.m.

tons 11

11

1970

140 534

253 685

12 633

81 572

cu.m. 14 839

units 503 263

CU, m. 3 919

tons 23 364

units 27 546

530 546

units . /. 12 633 II 517 913

Per cent of 1969

100.0

99 . 8

95 . 7

104.3

100.0

103.5

1969

140 494

254 299

13 200

78 219

1969

161 600

244 ~47

11 C:47

75 258

486 212 493 252

119.3 3 284 3 191

100. 6 23 236 22 443 -----------102. 9 26 520 25 634

103.5

97 . 0

103.7

512 732 518 886

. /. 1 3 2 0 0 . / . 11 9 4 'i

499 532 506 939 ----------------------------------- ---==-=---=-=====--=================-=== -

OULU OSAKEYIITIO 6

-- - -- ------------------------- ------- ---------------- -- ----- ---------- - -- -1970 Per cent 1969 1968

of 1969

TURNOVER mmk 204.92 110. 9 184.77 15 (;. 90

DELIVERIES AND OWN USE

Saw mills

Exports:

Pateniemi cu.m. 74 564 70 . 2 106 171 114 852

lfyrynsalmi fl 25 380 57.6 44 038 49 051

TOTAL " 99 944 66.5 150 209 163 903

Home market 11 23 622 95.5 24 738 22 D53

Own use and joinery II 6 560 74.5 8 807 12 778

Inventories on Dec . 31st 11 81 294 129.2 62 932 97 626

Logs sawn 1000 cu. ft. G 894 97.3 7 083 8 193

Sul~hate pul2 mill

Sulphate pulp exports tons 178 055 84.3 211 147 222 497

Home market II 69 911 146.0 47 874 35 376

Inventories on Dec. 31st II 10 846 211.5 5 127 9 848

Sulphate pulpwood used cu.m (piled) 1604 472 99.2 1617 319 1498 927

Saw mill chips used II 143 690 102 . 8 139 792 160 256

Operation of mill days 344 99 . 4 346 334

Output tons/day 737 100. 1 736 732

Byproduct elant

Exports tons 9 074 91. 2 9 953 9 57G

Home market " 6 870 114. 6 5 992 5 767

Own use fl 8 174 109.7 7 449 2 636

Chlorine and chlorate plants

Exports II 2 681 76 . 9 3 485 2 592

Home market " 46 482 103 . 5 44 899 4] 781

Own use II 34 781 107.7 32 289 30 504

Particle board 2lant

Exports " 2 609 100.0

Home market It 6 468 100.0 -------- -- -------- - -------- --------==-= ---= -= ======= ==~ ==================

OULU OSAKEYJI'rIO

PH.OFIT AND LOSS ACCOUNT from Jan. 1st to Dec. 31st., 1970

Ordinary Expenses

Salaries and wages

Interests

Taxes . /. from tax fund

Dep rec ia tion Fixed capital assets Index premi urns

Other ordinary expenses

Contribution to pension funds

Profit for 1970

c=======

Ordinary Revenues

Gross Profjt on Sales

Interests

Dividends

Extraordinary revenues

========

EXPENSES

6 300 330:67 2 000 000 :-

34 433 124:53 461 714:-

REVENUES

87 992 037:99

998 473 :03

25 G69:40

mk

29 025 663 :48

5 941 935 :44

4 300 330 :67

34 894 838 :5 3

7 103 551 :25

2 800 000 :-

5 006 803 :55

89 073 122:92

---- ----- -- --------

89 016 130 :42

56 942 :50

mk 89 073 122:92 ----------- ---- -----

Gross Turnover (without Purchase Tax and Excise Tax) mk 204 921 790:39 --=====--=-========

7

OULU OSAKEYII1'10 8

BALANCE sug1~T as at December 3 l, 1970

Li.quid Assets

Cash on Hand and in Banks Accounts Receivable Other Receivables

Inventories

Products Materials ancl Supplies Fuel

Fixed Capital Assets

Land and Water Area Increase

Buildings Increase

' Depreciation

Machinery and Equipment Increase Decrease Depreciation

Factory and Transport Equipment

Increase Decrease Depreciation

Unfinished Investments

Securities

Adjustment of Values

Index Premiums Depreciation

ASSETS

2 531 825 :48 114 480:-

21 480 784 :64 6 465 851 :67 6 01 9 867:17

2 594 577 ·92 26 115 556:82

5 082:-17 821 927 :11

4 449 085 :57 32 147 109:37

12 800 :-10 591 330 :25

Accrued Credits and Deferred Charges

========

73 59G:22 55 570 173 :72 12 319 320:-

8 826 272:57 41 084 732:82

1 055 ·520:17

2 646 305 :48

21 926 769:14

10 883 125:63

25 992 064 :6 9

4 021 532:44

3 798 OG0:10

1 124 474 :63 461 714: -

mk

67 963 08 !J :B4

50 966 525:56

69 267 857:48

662 760 :63

2 191 428:01

191 051 661 :62 --=====---= -==-====---

OULU OSAKEYIITIO

LIABILITIES

Liabilities

Shnrt Term Bills of Exchange 4 17G 000:-Accounts Payable 45 875 653 :91 Bank Loans 183 485 :60 50 235 139:51

Long Term Mortgages 26 123 361 :62 Other Loans 37 955 347 :40 64 078 709:02 114 313 8-1-8 :S~I

Valuation Items

Business Development Fund 4 926 358 :-Reserve for Credit Risks 1 240 000:- 6 166 358 :-

Accrued Charges and Deferred Credits 4 936 368 :30

Net Worth

Capital Stock 21 600 000:-

Reserve Fund 5 400 000:-Liquid Fund I 3 500 000:-Liquid Fund II 21 792 014:98 Tax Fund 2 000 000 :-Investment Fund 5 000 000 :-Export Reserve Fund 700 489:98 38 392 504:96

Surplus carried over from the previous year 635 778 :28 Profit for 1970 5 006 803 :55 5 642 581:83 65 635 086:7~

mk 191 051 GGl :G2 --------- ----------------- ----Guarantees: End ors en1ents 70 824 953 :-

Mortgages 26 123 361 :-

mk 96 948 314 :-

External Loans mk 31 008 361 :62

OULU OSAKEYHTIC>

The Shareholders' meeting has at the disposal

profit for the year 1970

surplus carried over from ilw previous year

This amount is recommended to be used as follows :

as dividend 01'! capital stock

to be carried forward to the tax fund

to be carried forward to the liquid fund of the board of directors

to be left on the profit and loss account

Helsinki, February 22, 1971

mk 5 006 803 :55 II 635 778 :28

mk 5 642 581 ;83 --- ----------- ---

mk 2 700 000:-,,

2 500 000:-

11 30 000:-,,

412 581 :83

mk 5 642 581 :83

----------------

ADMINISTRATIVE COUNCIL BOARD OF DIRECTORS

'1.4.1971 FK/SO

10

THIS FII.E IS CLC~ED AS OF

DECEMBER 1968.

FOR FURTHER CORRESPONDENCE SEE:

1969 - 1971.

RECORDS MANAGEMENT SECTIOO February 1969

OULU OSAKEYHTIO Operational Report for the P eriod from July 1, 1968 to Dec. 31, 1968

The hopeful expectations for the activation of the economic develop

ment in the country during 1968 could not be fulfilled . The time after

the devaluation was too limited and the goal too big for that. The

growth rate of national production reached the rate of 2 per cent only.

The volume of industrial production increased by 3. 5 per cent and

that of pulp and paper industry by 5. 6 per cent.

The cost of living index rose by 6 per cent and so did also the build

ing cost index.

The exportation became, however , more favourable. The total value

of exports rose by 31. 4 per cent and that of imports by 15. 4 per cent .

The surplus of the balance of trade - the first one since 1958 - of

181 million Finnmarks was noted with great satisfaction.

The volyme of Finland's exports of both woodpulp and sawn products

increased. The output of the pulp mills - about the same as during

the previous year - and the surplus of inventories found their way to

the markets. The inventories at the end of the year were normal.

The curtailment of production of wood pulp a joint movement within

the Scandinavian countries - had to be carried out also during the year

1968, which induced a three week standstill for the whole pulp mill

and e41:ra eight weeks for the production of wet unbleached kraft, the

sales situation of which was worst.

In spite of this curtailment the total sales production volume of the

company exceeded, however, the result of the previous year by 1. 0

per cent. The turnover reached the value of 156. 9 million Finnmarks

against 134.0 million Finnmarks in 1967.

r.E-PN' 1 OPERATIOiiAL ·,LEtJ

2/

OULU OSAKEYHTIO 2

A detailed set-up on operational and financial data is given below

in the conventional way. The results of the operation of saw mills

do not depend on the sales possibilities but on the shortage of raw

material available .

PRODUCTION

--------=-----------=--==-=-===~==-==========================-==---= Production July 1st/Dec. 31st 1968 1967

Pateniemi saw mill stds 12 566.3 12 940 . 5 Hyrynsalmi saw mill

,, 3 913 . 3 4 121. 4

Joinery II 362 . 8 308.7 Sulphate pulp mill tons 122 370 . 4 116. 598 . 2 By-products plant " 11 843 . 1 9 5 91. 9 Chlorine plant II 33 745.9 35 819 . 5 Production units TOTAL 184 801. 8 179 380 . 2

P er cent of production capacity % 8 6. J 82. 3

The total output of all units of the company in 1968 was 38 9 367 units

(386 981 units in 1967). of which the amount for refining was 23 126

tons (22 783 tons in 1967).

FIN A...~CIAL SITUATION

----------------=========:==========--=-------------------------- ----Long Cheque Short term credits TOTAL ter1n accounts 13ills of Sawn goods

exchange debts 1968 1968 1968 1968 1968 1967 mmk mmk mmk mmk mmk mmk

June 30th 67 . 30 0.38 8 . 62 12.66 88 . 96 93 . 47 Dec . 31st 64.41 0.22 4 . 16 68 . 79 93 . 8]

Change ( + /- ) -2 . 89 -0 . 16 -4. 46 -12 . 66 -20 . 17 +o. 34 July 1st/Dec. 31st

/3/

Ill

• OULU OSAKEYHTIO

INCOME FROM PRODUCTS, RECEIVABLES, ANS VALUE OF CURRENT INVENTORIES

3

--------------------------------------------------------------- ------Received Receivables Inventories July 1st/Dec. 31st Dec . 31st Dec. 31st 1968 1967 1968 1967 1968 1967 mmk mmk mmk mmk mmk mmk

Sawn goods 33 . 07 27.89 2 . 5 9 2.26 13 . 16 17.03 Sulphate pulp 60.30 44.43 3 . 28 1. 43 4.32 10. 14 Chemical products 6 . 69 4.65 1. 57 2. 10 1. 06 1. 12 Oulu wall paper 0 . 12 0.14 0 .02 0.02 0 .01 0.04 Tall oil soap 0.19 o. 12 0.04 0.03 0.01 0.01 Chlorine and caustic soda 5 . 43 4.85 2.47 1. 86 0.37 o. 11

Joinery 1. 26 1. 02 0.16 0.33 0.80 0.48 TOTAL 107.06 83.10 10 . 13 8.03 19. 73 28. 93

PRODUCTION, DELIVERIES AND L~COME FROM PRODUCTS during the first half of 196 9 are estimated to be as follows:

Sulphate pulp

Sawn goods

Other products

RM/FK/SO

Production Jan . 1st/June 30th

1969 tons /stds

126 000 tons

14 500 stds

Deliveries Jan. 1st/June 30th

1969 tons/stds

109 500 tons

10 400 stds

Income Jan.1st/June 30th

1969 mmk

56 mmk

6 II

15 II

77 mmk ========

Oulu, February 22, 1969

GENERAL

OULU OSAKEYHTIO Operational Report for the Period from Jan. 1 to June 30, 1967

\I L\ 2_~.) f' l2__ ('I• f IL

Economic development in Finland will weaken towards the end of the

year according to a survey published by the Economic Department of

the Ministry of Finance .

Total exports from Finland increased by about 10 per cent during the

first half of 1967 compared with the corresponding period in 1966.

The increase in the imports was, respectively, about 4 per cent . As the

exports of wood pulp are not expected to increase during the latter

part of the year, the change of the final e.xport result will probably

remain lower than what was reached by the end of June .

The deficit in the balance of trade during the first half of the year

was 118 . 7 million Finnmarks lower than a year ago; the total deficit

was still 388. 4 million Finnmarks.

The volume of industrial production increased by less than 7 per cent

during the first half of the year compared with the corresponding last

year's figure, the increase of the consumer goods industries being

the most considerable. The growth is estimated to slow down during

the latter part of the year as a consequence of, among other things,

weaker prospects for exports.

The declining trend in the construction sector continued. The number

of building permits granted in January-May was about 25 per cent less

than a year ago, the decreas e for the part of dwellings being some

30 per cent.

The forecasts for the tdal fellings for the felling season 1966 /1967

(ended on June 30, 1967) remained at about the same level as a year

before .

The labour market position remained difficult. The proportion of unem

ployed in total labour force has been exceeding the last year's figures

/2/

,.

·. OULU OSAKEYHTIO 2

throughout the first half of this year. Also the geographic differencies

in the unemployment have grown larger. The situation in the northern

regions has become even more difficult compared with the rest of the

country,

The salaries of the employees and the wages of the workers in the

mechanical wood processing division were raised by 3 per cent on June

1st in accordance with the prevailing wage agreements. The wages of

the paper workers did not change in this connection, as their agreement

differs from the others for the part of the timing.

No agreement concerning the electricians in the pulp and paper industry

was reached by the end of June, The negotiations mediated by the State

Arbitrator were cut off. and the strike broke out on June 21. 1967 at

6 . 00 a. m. In spite of the strike the operations of the company's de

partments have been secured so far.

The cost of living index in June was 194 points meaning an increase of

5 points from December. The building cost index rose by 2 points to 114.

Production of paper and paperboard industries in the leading pulp con

suming countries in Western Europe did not reach the last year's

level in spite of the fact that there did not occur any considerable

changes in the consumption. The deficit between production and con

sumption was covered by increased imports of paper. Consequently,

demand for wood pulp was lower than earlier. As the economic situation

in USA has become more strained and demand decreased, e.g. in Japan,

and simultaneously, the production of wood pulp increased in both Canada

and USA, the sales pressure of oversea wood pulp has risen in Europe .

The products were subject to an ever keener competition as to the price

and quality. This was felt especially in the marketing of bleached sul

phate pulp. The development is expected to be difficult,

By June 30th the contracted quantities for delivery from Finland in

1967 amounted to 927 000 tons of sulphate pulp and 686 000 tons of

sulphite pulp. The total sales of 1 613 000 tons remained 179 000 tons

lower than a year before .

/3/

,. OULU OSAKEYHTIO 3

The total production of 1941 511 tons of pulp was 8 . 8 per cent larger

than a year ago, but the total exports of pulp showed an increase of

only o. 7 per cent . In the proportional shares of the qualities, how

ever, there occurred some changes . The exports of sulphate pulp

increased by about 38 000 tons, of which two thirds fall on bleached

birch sulphate, whereas the share of sulphite decreased by about

31 000 tons .

The inventories of market pulp were about 7 per cent higher than

a year before.

The sawn goods markets were relatively quiet. The buyers retained

an expecting attitude in spite of the statistically good position. The

war in the Near East had an effect on the freights, c~:_ising ~n in

crease in the CIF-prices in all countries. The total sales from Fin---- ----- --land amounted to 540 000 standards (in 1966 about 600 000). The

company's sales amounted to 27 435 standards by June 30th, corre

sponding 72 . 2 per cent of the year's estimate (in 1966 25 310 stan

dards and 70. 3 per cent respectively) .

In the marketing of rosin there occurred an alarming change. The

USA large inventories entered the markets and caused the prices

to drop by about 15 to 20 per cent, at which level they are likely

to remain for the rest of the year.

PRODUCTION

The volume of production was as fallows:

Pateniemi saw mill Hyrynsalmi saw mill Joinery Sulphate pulp mill By-products plant Chlorine plant

TOTAL PRODUCTION units

Per cent of productive capacity

Production 1. 1. -30 . 6. 67 tons /stds

14 459 . 2 5 655,0 1 506 , 0

123 963 . 0 9 131. 2

36 811, 2

191 525.6

92 . 7

Production 1. 1. - 30. 6. 66 tons/stds

13 429.3 5 329.0 1 514,0

116 572 . 5 7 782.8

37 386.3

182 013.9

89.6

/4/

\

OULU OSAKEYHTIO 4

FINANCIAL SITU AT ION (in million Finnmarks) ===--:================---===========================~===========~==

Long Cheque Term Accounts Loans 1967 1967

Jan. 1st 65.05 June 30th 61.35 0 , 63

Jan 1st --3.70 +0.63

June 30th

Short Term Credits Bills of Sawn Exchange Goods 1967 1967

21. 58 0.60 24.94 6 . 55

+3 . 36 +5.95

TOTAL

1967

87 . 23 93 . 47

+6. 24

1966

88. 11 101. 63

+13.52

The following statistics illustrate the income from products, the receivables , and the value of current inventories:

(in million Finnmarks) Received Receivables Inventories 1.1. -30 .6. 30. 6, 30. 6.

Sawn goods 4.54 3.15 22.65 Sulphate pulp 43.62 0.59 10.90 Chemical products 3.04 1. 19 1. 22 Oulu wall paper 0.07 0.06 0.02 Tall oil soap 0.09 0.05 0 . 01 Chlorine and caustic soda 5 . 08 1. 60 0.27 Joinery products 1. 04 0 . 17 0,57

TOTAL 57 . 48 6 . 81 35.64 Previous year 56.61 8.88 36 . 70

The production, the deliveries, and the income from products during the second half of 1967 are estimated to be as follows:

Sulphate pulp Sawn goods Others

RM/SO

Production Deliveries

125 000 tons 135 000 tons 20 000 stds 28 000 stds

TOTAL

Oulu, August 11, 1967

OULU OSAKEYHTIO

Estimated income 48 mill. mk 17 II

17 II

82 mill. mk

Semi-Annual Report Jan- June 1997

"

OULU OSAKEYHTI6 Operational Report for the Period from J uly 1, 1967 to Dec . 31, 1967

The economic development in the whole country in 196 7 affected also

the operation of the company. The growth rate of national production

reached the rate of 3 per cent only. The total inv estments in the country

were 2 per cent less than in 1966. The unsatisfactory general develop

ment was accompanied by increase of costs and tightness of the monetary

situation.

The cost of living index rose by 7 per cent in 1967 and the building

cost index by 9, 5 per cent .

The volume of Finland, s exports of both wood pulp and saw mill products

were less than during the previous year. Also their values were lower

than during 19 6 6 .

The curtailment of production of wood pulp - a joint movement within

the Scandinavian countries - had to be carried out during the latter part

of the year including a two weeks' standstill for the whole pulp mill and

six extra weeks in the production of wet unbleached kraft, the sales situa

tion of which became worst . As a supplier of chlorine for bleaching pur

pose to the northern pulp mills, also the company's chlorine plant suf

fered slightly from the curtailment.

The total sales production volume of the company exceeded, however, the

results of the previous year by 1. 7 per cent and the turnover reached

the value of 134. 02 million Finnmarks against 134. 41 million Finnmarks

in 1966.

The devaluation of the Finnmark in October and that of the pound sterling

in November followed by a similiar act in many other countries caused,

of course, a new situation the development of which can only be seen ,.•

... d ,.-.I ,,b L,...\l.al /2/ ...... rltJl. ~ /! cv.,._.k_ 0

.... FA?.-h2 C) / ~ <i

OULU OSAKEYHTIO

with time. As an immediate result the company .. s foreign credits in

creased by 12. 8 mill. Finnmarks and foreign bills for company .. s pur

chases by 1. 9 mill. Finnmarks.

2

A surcharge, Export Levy Act, passed on by the Government after the

devaluation unfortunately skimmed off the foam of the changed export va

lue, which so badly would have been needed as a cover for increased

costs in the near past .

A detailed set up on operational data is given in the conventional way

and as follows:

PRODUCTION

The amount of production was as follows:

-----------------------------------------------------------------

Pateniemi saw mill Hyrynsalmi saw mill J oinery Sulphate pulp mill By-products plant Chlorine plant Production units TOTAL P er cent of the

Production 1. 7. -31 . 12. 1967 tons/stds

12 940. 5 4 121.4

308 . 7 116 598 . 2

9 591.9 35 819.5

179 380.2

Production 1. 7. -31. 12, 1966 tons/stds

14 435 . 1 4 849.6

293 . 6 lHJ 954. 8

9 220 . 2 34 872 . 4

183 625 , 7

productive capacity 82. 3% 90 , 4%

The total output of all units of the company in 1967 was 386 981 units (380 465 in 1966), of which the amount for refining was 22 783 tons (19 931 tons).

FINANCIAL SITUATION ===== ===============-=============------======----;===----=-====----

Long term Short term Sawn goods TOTAL in loans credits debts mill. Finnmarks 1967 1967 1967 1967 1966

30.06 . 1967 61. 35 25 . 57 6. 55 93. 47 101. 63 31. 12. 1967 74, 52 15,56 3. 73 93 . 81 87,23

01. 07 . -31. 12. +13 . 17 .. 10. 01 -2. 8 2 +0 . 34 - 14.40

/3/

OULU OSAKEYHTIO 3

The following statistics illustrate the income from products, the receivables, and the value of the current inventories:

(in million Finnmarks) Received Receivables Inventories 1.7 ... 31. 12. 31.12.1967 31.12. 1967

Sawn goods 27 . 89 2. 26 17.03 Sulphate pulp 44. 43 1. 43 10. 14 Chemical products 4. 65 2. 10 1. 12 Oulu wall paper 0.14 0. 02 0.04 Tall oil soap 0 . 12 0.03 0.01 Chlorine and caustic soda 4. 85 1. 86 0.11 Joinery products 1. 02 0 . 33 0.48

TOTAL 83 . 10 8.03 28 . 93 Previous year 86.04 9. 90 22 . 86

The product ion and the income from products during the first half of 1968 are estimated to be as follows :

Sulphate pulp Sawn goods Other products

RM/ SO

Production

120 000 tons 18 500 stds

Incon1e

46 million Finnmarks 4 II II

12 II " 6 2 million Finnmarks

Oulu, February 26, 1968

OULU OSAKEYHTIO ( ~.~ . ~rt'ff,d~tv ltd,~,u,/~~

"

IDRD- Loan No. 222 - FI --

YEARLY FINANCIAL REPORT

of

OULU OSAKEYIITIO

for 1967

OULU OSAKEYHTIO OULU Finland

OULU OSAKEYHTIO Annual Report 1967

The 32nd year of the company's activity was in many ways tied up

with the problems that had an unfavourable effect on the development

of the Finnish economy in general during 1967. The growth of the

country" s production volume was weak, the costs continued to rise,

financial difficulties increased, investment activity was insignificant,

and unemployment grew heavily.

The growth of total production was only 3 per cent, the annual in

crease in industrial production remained at 2. 4 per cent . The growth

of consumer goods industries was 5 . 2 per cent, but that of wood and

metal industries only o. 8 per cent, and paper industry marked already

an decrease of 1 per cent.

The value of total exports amounted to 5 3 20 mill. mk and was 8 . 5 per

cent higher than in 1966. The imports exceeded the exports by still

564 mill . mk . The deficit of the balance of trade was, however, about

140 mill. mk less than in the preceding year. The eh-ports of both

wood pulp and sawn goods decreased in both volume and value terms ,

It was only the exports of paper that showed a slight increase, volume

by 2. 5 per cent and value by 5. 3 per cent .

The restriction of production agreed by the Scandinavian pulp producers

was necessary also in 1967 . All the mills stood for two weeks. The pro

duction of wet unbleached kraft was, in addition, stopped for six weeks .

Price pressure continued hard througout the year.

Finland's total exports of wood pulp decreased from the preceding year

by about 98 000 tons, of which the share of sulphate pulp was about

19 000 tons. The exports of dissolving and bleached sulphate differed

from the general line and showed an increase of 4 per cent, primarily

due to increased use of hardwood pulp . The invoiced value of wood pulp

exported through the Finnish Cellulose Union was 919. 8 mill, mk, i . e,

3 . 1 per cent higher than in 1966,

/2/

OULU OSAKEYHTIO 2

The exports of sawn goods remained about 70 000 stds lower than in the

preceding year. The trade was characterized by buying reluctance due to

general economic development, unsaleable quality accumulations, high

rises in freights and the English harbour strikes . Furthermore, want of

raw material had a restricting effect on logging possibilities . The sales

for 1968 started lively as early as October, till the devaluations of the

Finnmark and the pound sterling put an end to the trade .

The devaluation of the Finnmark was carried out on October 12, 1967 to

facilitate the situation into which economic life had driven. The stipulated

Export Levy Act took, however, bulk of the profit of the increased export

value which would have been necessary to compensate for the losses

caused by increased costs and to improve profitableness . The devaluation

of the pound sterling on November 18 , 1967 lowered further the compensa

tion intended to eA-port trade .

According to Export Levy Act, the county of Lapland and some rural

communities in the county of Oulu were stipulated to be an area, where

the export levy could be lowered to half of what it is outside the district .

The boundary was , however, drawn so that the main production units of

the company were left without the special advantage.

The difficulties of economic life lead to a recordlike unemployment . At

the end of the year 1967 the number of the unemployed in the country

was about 80 000.

The cost of living index rose by about 7 per cent during the year and

was in December 203 points. The building cost index rose by 9. 5 per

cent respectively.

The acquisition of raw wood was reorganized on May 5, 1967. According

to the agreement, which came into force on .July 1, 1967, the total re

sponsibility of acquisition of raw wood was transferred to the owner

companies . As a consequence thereof, bulk of the field organization of

the forest department was dissolved.

The reduced target for acquisition of saw logs was reached with help of

purchases amounting to 2. 5 mill. cu. ft . from the Soviet Union and Swe

den.

/3/

OULU OSAKEYHTIO 3

The acquisition of piled wood reached the target as well.

The company's market production rose by about 1. 7 per cent from the

preceding year in spite of the fact that it was necessary to reduce saw

ing by further 2. 2 per cent.

The volume of the company's total deliveries for e:Kports, home market,

and own use remained 1. 3 per cent lower than in the preceding year. The

growth of the inventories fell primarily on wood pulp, the inventories of

which rose to 23 119 tons at the end of the year, which is 51. 6 per cent

more than in 1966. The inventories of sawn goods remained about un

changed and were 27 035 stds .

The total turnover was 134. 02 mill. mk, i . e . O. 39 mill. mk less than in

1966. It was shared by the various units as follows: Nuottasaari mills

79. 4 per cent, Pateniemi saw mill 13 . 8 per cent, Hyrynsalmi saw mill

4 . 2 per cent, and the joinery 2. 6 per cent.

The company's share in Finland ' s production of sawn goods was about

3 . 8 per cent and that in total exports about 4. 6 per cent. The production

of sulphate pulp in Nuottasaari mills was 18. 1 per cent of Finland's total

market production of sulphate pulp . The company was the biggest exporter

of bleached sulphate: the percentage share was 28 . 2.

The sales of the company"s chemical products exceeded the level of the

preceding year in both volume and value in spite of the fact that the

export prices dropped considerably. The marketing of a new product was

started. The product is sodium sulphide, in crystalline form, and it is

produced as an alternative product with caustic soda.

New investment activity was practically stopped during the report period.

In 1967 a sum of 3. 55 mill. mk was used for investmenis and fundamental

repairs carried as an asset , In Pateniemi, the second length sorting and

packaging plant was finished. The renewal of the old boilers in Pateniemi

was started.

An amount of 166 000 mk was invested in forest purchases.

No production losses were suffered during the strike of the electrical

workers which lasted 77 days and ended on September 6, 1967.

/4/

OULU OSAKEYHTIO 4

A fire at the joinery on December 3, 1967 destroyed the saw mill,

which had been out of use since last May. The damage amounting to

380 000 mill. mk were completely covered by the reinstatement value

insurance. The fire did not disturb other production activity.

The losses caused by the devaluation in the company's foreign loans

were about 12. 8 mill, mk, those in the domestic loans about o. 3

mill. mk, and those in the foreign purchases agreed before the devalua

tion about 1. 9 mill. mk, i . e . altogether about 15 . 0 mill. mk,

The company's total expenditure on wages and salaries was 24 . 5 mill.

mk, of which the share of the for est department was 1. 4 mill. mk

and that of the employees 6. 3 mill . mk.

OULU OSAKEYHTIO 5

ADMINISTRATIVE COUNCIL

The members of the Administrative Council were : Mr , Tauno Angervo,

chairman; Mr, v. J. Sukselainen, vice chairman; Mr, Esko K . Leinonen,

Mr , Olli Paloheimo, Mr. Antero Piha, and Mr. Bjorn Weckman, regu

lar members; Mr. Kalervo Laine, Mr, K. N. Maatta, Mr, Aku Sumu,

and Mr, Antti Kivilahti until his death D ecember 24, 1967, deputy mem

bers.

The administrative council met four times ,

BOARD OF DIRECTORS

The members of the Board of Directors were: Mr, Aarne Pelkonen,

chairman; Mr. Mikko Ta.htinen, vice chairman; Mr, Kaarlo Lehtio

until January 31, 1968 and Mr, Reijo Merikanto since February 1, 1968,

regular members; Mr, P aavo Kivi and Mr, Heikki Sihtola, deputy mem

bers.

The board of directors met twelve times .

MANAGING DIRECTOR

The company's managing director was Mr. Kaarlo Lehtio until his re

tirement on January 31, 1968 and Mr. Reijo Merikanto since February 1,

1968 .

AUDITORS

The auditors were: Mr, Maune Luotonen, Mr , Jorma Kauppi, Mr, Osmo

Luutonen, Mr. J . W, Rangell, and Mr, Maune Vahla. The deputy auditors

were : Mr , Veikko Makkonen and Mr, U. A. Vatanen,

Mr, Jaakko Heikkonen was responsible for the general audit ,

/6/

OULU OSAKEYHTIO 6

The following statistics illustrate the company's activities:

Acquisition of raw wood:

------------------------------------------ --------------------------------1967 1966 1965

Saw logs and sleepers cu. ft. 10 151 872 10 364 865 10 042 156

Pine pulp wood piled cu.m. 1 317 504 1 589 096 l 587 420

Birch pulp wood II 213 261 185 279 215 297

Fuel wood II 1 102 10 060 10 981

Spruce pulp wood for owner companies ft 85 358 235 091 76 687

Pole wood poles 15 809 5 276 19 624

Production, turnover, deliveries, and own use:

-------=-=---=-=-=-==--=;=-=======================================~======

Primary production

Sawn goods

Sulphate pulp


Chlorine and caustic soda

TOTAL

Refined output

Joinery products

Distilled products

stds

tons

II

It

units

stds

tons

TOT AL AMOUNT OF UNITS

Amount of own primary pro-

1967

38 371

240 561

12 635

72 631

364 198

619

22 164

22 783

386 981

Per cent 1966 of 1966

1965

97.8

101. 7

101.0

100.5

101.0

101. O

114,7

114,3

101. 7

39 237 41 149

236 527 238 869

12 511 11 401

72 259 54 464

360 534 345 883

613

19 318

19 931

536

16 507

17 043

380 465 362 926

duction used for refining units . L-· _1_3_2_5 _4 __ 10_1_._o __ . ..,./_._1_3_1_2_4_.__,_/_._1_1_9_3_7 __

GRAND TOTAL FOR SALE ft 373 727 101. 7 367 341 350 989 ------=-:-==============================

/7/

OULU OSA.KEYHTIO 7

---------------------- -------= =-============================= ==-=------= 1967

TURNOVER mill, mk 134. 02

DELIVERIES and OWN USE

SAW MILLS

Exports

Pateniemi stds 25 565

Hyrynsalmi " 7 907

TOTAL II 33 472

Home market " 4 416

Own use and joinery " 2 176

Inventories on Dec. 31, II 27 035

Logs sawn lOOOcu. ft. 9 078

SULPHATE PULP MILL

Sulphate pulp exports tons 215 416

Home market " 17 257

Inventories on Dec.31, If 23 119

Sulphate wood used piled cu. m. 1421 948

Saw mill chips It " 207 516

Operation of mill days 335

Output tons/day 718

BYPRODUCT PLANT

Exports tons 8 873

Home market II 5 295

Own use II 2 002

CHLORINE PLANT

Exports 11 1 933

Home market If 44 129

Own use " 27 582

Per cent of 1965

99.71

115.41

97 . 20

110,5 2

99,17

106.61

98.61

99,39

96 , 17

96 . 31

151. 63

102. 11

88 . 32

104.69

97 . 29

106.17

100.27

149. 85

64. 28

103.74

98.13

1966

134. 41

22 151

8 135

30 286

4 453

2 041

27 417

9 134

223 984

17 918

15 247

1392 579

234 959

320

738

8 357

5 281

1 336

3 007

42 537

28 108

1965

133.58

26 338

7 70 6-

34 044

4 203

1 396

23 941

9 542

197 016

36 377

20 647

1392 660

247 417

324

738

8 230

4 143

498

1 459

25 684

28 165

-----------------------------------=-=================-=================

/8/

OULU OSAKEYHTIO

PROFIT AND LOSS ACCOUNT

as at December 31, 1967

EXPENSES

Ordinary Expenses

Wages and salaries

Interests

Taxes

Depreciation

Other Ordinary Expenses

Profit for 1967

==-======

REVENUES

Ordinary Revenues

Gross Profit on Sales

Interest Revenues

Dividends

Other Ordinary Credits

========

22 285 322:43

6 299 85 2:47

3 366 525:93

6 145 060:44

7 204 696 :76

1 816 469:10

mk 47 117 927:13

-------------------

46 082 729:25

958 104:78

12 154:90

64 938:20

mk 47 117 927:13

---------------- ----

Gross Turnover mk 134 015 154:79 (without Purchase Tax and Excise Tax)=================

8

/9/

OULU OSAKEYHT IO 9

BALANCE SHEET


Liquid Assets

Cash on Hand and in Banks Accounts Receivable Loans Receivable

Inventories

Products Materials and Supplies Fuel

Fixed Capital Assets

Land and Water Area Increase Decrease

Buildings Increase Decrease

Machinery and Equipment Increase Decrease


Increase Decrease

Securities

Adjustment 0£ Values

Index Premiums and Devaluation Increases

Decrease

Ac c r u e d C r e d it s and Deferred Charges

======

ASSETS

2 102 846:28 166 035 :60

575 :-

38 728 681 :49 310 608 :19

4 096 :-

108 665 430 :04 2 380 787 :72

23 330 :71

11 101 015 :10 355 676 :29 136 795 :17

20 780 :18 52 911 634 :85

6 639 320:-

2 035 319 :51 10 874 104:15

747 877 :91

2 268 306 :88

39 035 193 :68

111 022 887 :05

11 319 896 :22

59 571 735 :03

13 657 301 :57

3 627 551 :75 167 273 835:58

15 355 904:92 3 133 481 :21

Finnmarks

12 222 423 :71

47 749 :68

252 773 045:57

---------=====================

/10/

•

OULU OSAKEYHTIO 10

LIABILITIES

Liabilities

Short Term Bills Payable 15 563 320 :-Accounts Payable 16 532 677:04 Bank Loans 20 506 :97 32 116 504 :01

Long Term Mortages 24 006 483 :04 Other Long Term Loans 50 515 817 :42 74 522 300 ;46 106 638 804 :47

Valuation Items

Depreciation of Buildings 14 054 845 :02 Increase 810 060 :21 Decrease 1 203:- 14 863 702:23

Depreciation of Machinery and Equipment 103 527 769 :97

Increase 1 484 927 :94 Decrease 23 330 :71 104 989 367 :20

Depreciation of Factory and Transport Equipment 7 908 307 :47

Increase 716 591 :08 Decrease 105 865 :17 8 519 033 :38 128 372 102:81

Accrued Charges and Deferred Credits 3 426 854:32

Net Worth

Capital Stock 7 200 000:-Reserve Fund 3 000 000:-Liquid Fund 2 000 000:- 5 000 000:-Surplus carried over from the previous year 318 814 :87 Profit for the Period 1 816 469 :10 2 135 283 :97 14 335 283:97

Finnrnarks 252 773 045 :5 7 ====== -----------=---=------=-====~= Guarantees : Endorsements 52 171 995 :-

Mortages 23 825 843:-

Finnmarks 75 997 838:-----------=----===~=========

External Loans tr 37 447 509:82 ------------------=======~==

/11/

OULU OSAKEYHTIO 11

The company~s accounts for the year 1967 show a profit of 1 816 469 . 10

Finnmarks. As the surplus carried over from the previous year was

318 814, 87 Finnmarks, the amount at the disposal at the shareholders'

meeting is 2 135 283. 97 Finnmarks.

This amount is recommended to be used as .follows:

and

as dividend on capital stock

to be carried forward to the liquid fund of the board of directors

to be left on the profit and loss account

Helsinki, March 1, 1968

mk 1 800 000:-

" 15 000:-

II 320 283 :97

mk 2 135 283 :97


22. 4 . 68 RM/SO

•

OULU OSAKEYHTIO

STATEMENT OF INVENTORIES

RAW MATERIALS Lo gs: (1000 cu. ft.)

At the end of the year Purchases Consumption At the end of the year

Unit prices: Sulphate wood: ( 1000 piled cu.m.)

At the beginning of the year Purchases Consumption At the end of the year

Unit prices : Fu el e t c.

At the end of the year

PRODUCTS Sawn goods : {1000 stds)

At the beginning of the year Production Deliveries At the end of the year

Unit prices: Sulphate wood pulp:{1000tons)

At the beginning of the year Production Deliveries At the end of the year

Unit prices: Other products :

At the end of the year Chemicals:

At the end of the year Supplies etc .:


Units

3 3031)

9 185 9 078 3 410

2 346 2)

1 019 1 422 1 943

27 , 4 38. 4 38.8 27.0

15. 2 240 . 6 232.7 23.1

1967

Book Current value value mill , mk mill. mk

0.44 7. 21 -:13 2:11

7.71 53 . 95 3:97 27:79

0.75 1.46

0.90 17. 28 33:30 640:-

0 . 46 8.55 20:- 370:-

0.63 2.09

1. 15 2,41

1-62 2,42 13.66 95 , 37

- ---------------

1) Transferred to the owner companies, uncut forests 4 404 724 2) II II II II II

Oulu, April 19, 1968 FK/SO

OULU OSAKEYHTIO

ADJUSTED NET PROFIT 1967

Net Profit (Balance Sheet)

PLUS:

LESS:

Extraordinary Depreciation

Increase in Inventory Reserve

Other Pre-profit Reservations:

Pension Funds

Other

Depreciation

Extraordinary Income from Preceding Year

Decrease in Inventory Reserve

Adjusted Net Profit

Sales

Long Term Debts

Equity:

Capital Stock

Reserves

Surplus

Adjusted Net Profit

RATIOS :

Adjusted Net Profit as % of sales

" " 11 11 % of equity

Oulu, April 19, 1968 FK/SO

mill. mk

1. 82

2,04

1. 00

0.71

3,34

0.74

1. 49

134. 02

74.52

7 , 20

5 , 00

2.14

14. 34

1. 49

1.1

10.4

•

OULU OSAKEYHTIO

AUDITORS' REPORT

Having been elected at the General Meeting of Oulu Osakeyhtio on November 30,1966 to examine the company's administration and accounts for the year 1967, we have today completed this task and as a result thereof make the following report :

The supervisory auditor for the year 1967, Mr. Jaakko Heikkonen, KHT (auditor approved by the Chamber of Commerce), has minutely examined the company's accounting, and in his report thereafter affirms that it is correct and in agreement with acceptable vouchers . Each time the cash balance was inspected in the course of the year, it was found to be in accordance with the cashier's books. The interior control has been duly organized.

We have acquainted ourselves with the minutes of the General Meetings, the meetings of the Administrative Council and the Board of Directors.

We have found the fire, machinery and machinery breakdown insurances on the company's property to be in force and, in our opinion, sufficient.

The bonds and securities are in safety.

The closing of accounts, which we have examined in detail, is properly drawn up, and the property has been estimated with sufficient prudence. Proper depreciations have been made from the fixed capital assets as well as from the losses on exchange due to devaluation which have been carried as an asset . The tax reserve has been used to pay the year's taxes to the amount of 600 000 mk . An amount of 1 000 000 mk has been transferred to the company"s Labour Pension Fund. After these transfers, the balancing shows a profit of 1 816 469. 10 mk.

As we have found, in such work as we have performed, the activities of the company to have been managed with definite aim and success, we propose to the General Meeting that the accounts should be proved and those concerned be released from their responsibility for the year 1967.

Oulu, March 14; 1968

J . W . Rang ell Mauno Vahla

Mauno Luotonen, KHT (auditor approved by the Chamber of

22 . 4 . 68 RM/SO

Jorma Kauppi Osmo Luutonen

Commerce)

r

I, {,,>~

IBRD-Loan No. 222-FI

YEARLY FINANCIAL H.EPOHT

of

OULU OSAKEYHTIO

for 1966

OULU OSAKEYHTIO .Annual Report for the year 196 6

The year 1966 was the company's 31st year of activity. The cyclical

downswing passed on from the preceding year continued in 1966. The

growth rate of Finland, s industrial production, which still in 1964 was

7 per cent, slowed down to 4. 7 per cent in 1965 and further to 4. 4 per

cent in 1966. The development of production in the different industrial

groups varied considerably. Consumer goods industries were able i.o

increase their production by 8 per cent on the previous year, whereas

that of capital goods industries decreased by 3 per cent . The growth of

paper industry remained at 4 . 4 per cent having been 4. 7 per cent in

1965 , but the development of wood industry turned down by as much

as 7 7per cent.

The value of total exports from Finland was 4 817 million Finnmarks

in 1966. The increase was about 5. 5 per cent on the preceding year.

This, however, was not enough to cut down the deficit of the trade

balance, which was 707 million Finnmarks and 1 per cent higher than

in the previous year .

The share of the exports of products based on wood was 66 . 6 per cent

of the total exports, the share of the forest industry being 65. 4 per

cent . This section was alarmingly tried by the export markets. The

volume of exports of sawn goods decreased by 8. 1 per cent, their value

by 9 . 7 per cent. The volume of wood pulp exports increased by 6. 7 per

cent, it is true, but remained almost the same in value terms. It was

only the exports of paper that increased in both volume and value, the

former by 8 . 4 per cent and the latter by 10. 4 per cent. Accordingly,

the farthest processed products based on wood were the most successful•

Towards the end of 1965 the Scandinavian wood pulp producers made a

decision of restricting their export production in 1966. The restriction

/2/

2

was carried out by having the mills stand for a period of four weeks

during 1966. 1'his measure calmed down i.he markets, but could noi.

force the prices up from the 5 to 9 per cent lower level to which they

had drupped at the end on 1965. P rice pressure continued to be hard

throughout th<:! year.

The volume of Finland ~s wood pulp exports increased by 130 000 tons

from 1965; the C>..1)0rts of sulphate pulp increased by 154 000 tons,

14. 8 per cent, whereas those of sulphite pulp decreased by 24 000 tons,

2. 6 per cent . The invoiced value of wood pulp exported by The Finnish

Cellulose Union rose to 891 , 9 million Finnmarks exceeding only by 3. 1

million marks from 1965 . The gross invoiced value was 970 . 6 million

Finnmarks, meaning an increase of 1. 6 per cent on the previous year.

The volume of sawn goods exports in 1966 remained 70 000 standards

lower lhan in 1965 . The scarcity of money on the markets and the buy

ers' large inventories on Dec. 31, 1965 , and also the Swedish sales

stocks from 1965 caused some buying reluctance and hard competition.

The saw mill crisis became the subject of common discussion. Only du

ring 1966, about 50 saw mills with an annual capacity of more than

100 000 standards altogether were reported to have ceased operation .

The sales fo1· 1967 did not, practically taken, get started by the end of

the year .

lt was only the metal industry among the manufacturing industries that

increased its investments in buildings, machinery, and equipment, 33

per cent from the previous year . The share of the wood processing in

dustry and other manufacturing industries showed a downwa1·d trend, by

J. 5 per cent and 12 per cent respectively .

The cost of livjng index was 189 points in December and rose by 5 per

cent during 1966, by 3. 4 per cent in 1965 . The changes in the building

cost index were 7 per cent and 2. 6 per cent respectively.

The financial markets were extremely tight throughout the year, and the

rate of interest was high . To improve the country's liquidity, the Bank

of Finland imposed the banking institutions a limit on rediscounting ac-

/3 /

3

cording to which their recliscounting debt to the Bank of Finland was not

allowed to exceed 800 million Finnmarks at the end of January.

Unemployment increased as a natural consequence of the weakening of

economic activity. The situation grew worse towards the end of the year .

At the end of 1966 the number of unemployed was 41 500 having been

36 000 a year ago.

According to the one-year wage agreement prevailing in the paper branch,

the wages were raised by 3 per cent on February 1, 1966 and by 2 per

cent on June 1, 1966. The cutting out of the washing pauses raised the

wages by further 2. 2 per cent. The negotiations for a new agreement,

threatened by a strike, reached solution just before the turn of the year

mediated by the state arbitrator. They resulted in a two-year agreement

principally with the same charges as in the general line. No agreement

concerning the workers in the electrical line of the pulp and paper indus

try was reached by the end of the year.

Shipping was met with difficulties because of the severe and long winter .

The harbours of Oulu were closed for 133 days, which means longer

than ever before in the 1960's.

The acquisition of saw logs by the company remained again, as in the

past few years, lower than the minimum target in spite of the fact that

the company succeeded in buying about 2. 3 million cubic feet of logs from

the Soviet Union and Sweden. This amount was O. 85 million cubic feet more

than in the previous year . The acquisition of piled wood did, on the other

hand reach the target .

In spite of the lack of saw logs suffered by the saw mill and the restric

tion of the production suffered by the pulp mill, the company's total

production increased by 4 per cent from the previous year . .Although the

production of sawn goods and wood pulp remained somewhat lower than

in the previous year, this deficit was compensated by the increase of 33

per cent of the production of the chlorine plant .

The volume of the company's total deliveries for exports, home market

and own use rose by 7. 6 per cent, i . e . by 26 093 units from 1965.

/4/

4

At the end of the year, the inventories of the main products , wood

pulp and sawn goods , were 4. 3 per cent, i.e. 1 924 units less than

a year ago .

T he gross turnover rose by O. 62 per cent, i . e . to 134. 41 million

Finnmarks - 0. 8 9 million Finnmarks from 1965 - and was shared

by the following units: Nuottasaari mills 80 . 7 per cent, Pateniemi saw

mill 12. 4 per cent, Hyrynsalmi saw mill 4. 4 per cent, and the joinery

2. 5 per cent.

The company's share in Finland's production of sawn goods was 3. 8

per cent and that of total exports 3 . 8 per cent . T he production of sul

phate pulp was 10. 3 per cent of Finland's total production of sulphate

pulp, and the exports were 18. 8 per cent respectively.

The sales of the company's chemical products exceeded the level of

1965 in both volume and value . The marketing of the products of the

rosin size plant reached the plant's capacity.

During 1966 a sum of 6 . 1 million Finnmarks was used for new invest

ments and fundamental repairs to be carried as an asset .

The main new building project started earlier at Nuottasaari mills, the

wood preparation plant with wood handling equipment, was taken into

final use in June - July. The above figure includes also the installments

paid according to the terms of payment of the agreement concerning the

soda recovery plant VI. The most important new investment was the in

stallation of new rectifiers to the chlorine plant.

At Pateniemi, a small machinery enlargement of impregnation plant was

completed and the installation of a second length sorting and packaging

plant was started. At Hyrynsalmi, the office building and the power plant

damaged by a fire were repaired.

An amount of 309 000 Finnmarks was invested in new forest purchases .

The company's total expenditure on wages and salaries was 28 . 9 million

Finnmarks, of which the share of the wages of the forest department

was 5. 7 million Finnmarks and the amount paid to the employees 6. 5

million Finnmarks .

/5/

5

ADM1NISTRATIVE COUNCIL

The members of the Administrative Council were: Mr. Tauno Anger-

vo, chairman, lVIr. V . J. Sukselainen, vice chairman; regular members

Mr, Esko K . Leinonen. Mr. Olli Paloheimo, Mr. Antero Piha and Mr. Bjorn

Weckman; deputy members Mr. Antti Kivilahti, Mr. Kalervo Laine,

Mr. K. N . Maatta and Mr. Aku Sumu.

The administrative council met four times.

BOARD OF DIRECTORS

The members of the Board of Directors were: Mr. Aarne Pelkonen,

chairman, Mr. ::vlikko Tahtinen, vice chairman; regular member

Mr. Kaarlo Lehtio; deputy members Mr. Heikki Sihtola and Mr . Paavo

Kivi.

The board of directors met thirteen times.

MANAGUiG DIRECTOR

The company's managing director was Mr. K.aarlo Lehtio.

AUDITORS

The auditors were : Mr. Mauno Luotonen, Mr. Jorma Kauppi, Mr. Osmo

Luutonen, Mr. J . W. Rangell and Mr. Mauno Vahla. The deputy auditors

were: Mr. Veikko Makkonen and Mr. U. A. Vatanen.

Mr. Jaakko Heikkonen was responsible for the general audiL .

/6/

6

The following statistics illustrate the company's activities:

Raw wood supplied by the forest department:

--- -===============-=-==-=========-==-========;===~===================--1966 1965 1964

Saw logs and sleepers cu. ft . 10 364 865 10 042 156 11 225 375

Pine pulp wood cu.m 1 589 420 1 587 420 1 236 166

Birch pulp wood It 185 279 215 297 158 241

Fuel wood H 10 060 10 981 31 711

Spruce pulp wood for parent companies fl 235 091 76 687 40 891

Pole wood poles 5 276 19 624 20 386

Production, turnover, deliveries and own use:

Primar y production

Sawn goods

Sulphate pulp

Crude tall oil and

Turpentine


TOTAL

Refined output

Joinery products

Distilled products

TOTAL

stds

tons

ti

11

units

stds

tons

units

TOT AL AMOUNT OF UNITS

Amount of own primary pro-duction used for refining units

GRAND TOTAL FOR SALE ti

1966

39 237

236 5 27

12 511

72 259

360 534

613

17 003

17 616

Per cent of 1965

95 . 35

99. 02

109. 74

132. 67

104. 24

114. 37

103.00

103.36

1965

41 149

238 869

11 401

54 464

345 883

536

16 507

17 043

1964

49 719

253 118

13 045

53 921

369 803

528

16 419

16 947

378 150 104.19 362 926 386 750

./. 13124 109. 94 .J.11937 ./.13573

365 026 104. 00 350 989 373 177 --------- --- - --- ------------=--------- --==== === ==~====== ~===============

/7 /

7

------- ------ - - ------ - - -------------------==-------==-------==-======-

TURNOVER million Finnmarks

DELIVERIES and OWN USE

SAW MILLS

Exports

Pateniemi

Hyrynsalmi

TOTAL

Horne market

Own use and joinery

Inventories on Dec. 31

stds

It

It

II

II

II

Logs sawn 1 OOOcu. ft .

SULPHATE PULP MILL

Sulphate pulp eA-ports

Home market

Inventories on Dec. 31

tons

II

ti

cu. m

It

Sulphate wood used

Saw mill chips

Operation of mill

Output

days

tons/day

BYPRODUCT PLANT

E>...l)Orts

Home market

Own use

CHLORINE PLANT

Exports

Home market

Own use

tons II

11

ti

II

fl

1966

134.41

22 151

8 135

30 286

4 453

2 041

27 417

9 134

Per cent of 1965

100.62

84. 10

105 . 57

88 . 96

105 . 95

146.20

114. 52

95 . 72

223 984 113. 69

17 918 49. 26

15 247 73 . 85

1392579 99 . 99

234 95 9 94. 96

320 98 . 77

738 100. 00

8 357 101 . 54

5 281 127. 47

1 336 268. 27

3 007 206. 10

42 537 165. 62

28 108 99. 80

1965

133.58

26 338

7 706

34 044

4 203

1 396

23 941

9 542

197 016

36 377

20 647

1392660

247 417

324

738

8 230

4 143

498

1 459

25 684

28 165

1964

140. 96

29 381

10 013

39 394

3 985

973

22 253

11 427

233 155

21 435

15 172

1454919

297 95 7

347

729

8 281

4 599

82

898

23 585

29 665

/8 /



EXPENSES

Ordinary Expenses

Wages and salaries 21 923 509:96

Interests 7 072 429:54

Taxes 3 412 562 :29

Depreciation 8 018 876:8 0

Other Ordinary Expenses 5 733 894 :77

Profit for 1966 2 046 114:21

li'innmarks 48 207 387 :57 -----=---===============~=

REVENLES

Ordinary Revenues

Gross Profit on Sales

Interest Revenues

Dividends

Other Ordinary Credits

Gross Turnover

Finnrnarks

Finnmarks

(without Purchase Tax and Excise Tax)

46 104 983 :26

1 866 895 :75

9 413:30

226 095 :26

48 207 387:57

134 409 380 :60

8

/9/

9

BALANCE SHEET AS AT DECEMBER 31, 1966

Liquid Assets

Cash on Hand and in Banks Accounts Receivable Securities Loans Receivable

Inventories

Products Materials and Supplies Fuel

Fixed Capital Ass et s

Land and water area Increase Decrease

Buildings Increase Decrease

Machinery and Equipment Increase


Increase Decrease

Securities

Adjustment of Values

Index Premiums of Loans Decrease

Accrued Credits and Deferred Charges

ASSETS

1 795 275:28 309 471 :-

1 900:-

37 872 829:99 878 547 :91

22 696 :41

104 677 779:15 3 987 650:89

10 609 260 :69 703 039:46 211 285:05

10 238 :14 49 796 391:78

117 756:-6 679 320 :-

1 850 957:70 19 359 803:17

240 522:60

2 102 846:28

38 728 681:49

108 665 430 :04

11 101 015 :10

3 317 150:75

1 616 253:87 287 500:17

Finnmarks

56 603 705:92

21 451 283:47

163 915 123:66

1 328 753:70

228 853:41

243 527 720:16 ----------------==========--

/10/

1 0

LIABILITIES

Liabilit ies

Short Term Bills Payable 19 627 000:-Accounts Payable 16 016 694:35 Bank Loans 8 251 :25 35 651 945:60

Long Term Mortages 22 442 032:77 Other Long Term Loans 42 610 558 :64 65 052 5 91 :41 100 704 537:01

Valuation Items

Depreciation of Buildings 13 107 342 :03 Increase 960 002 :99 Decrease 12 500:- 14 054 845 :0 2

Depreciation of Machinery and Equipment 97 144 884 :48

Increase 6 382 885 :49 103 527 769:97

Depreciation of Factory and Transport Equipment 7 409 212:87

Increase 675 988 :32 Decrease 176 8 93 :72 7 908 307 :47 125 490 922 :46

Accrued Charges and Deferred Credits 2 388 445 :82

Net WO('th

Capital Stock 7 200 000:-Reserve Fund 3 000 000 :-Liquid Fund 2 000 000:-Tax Reserve 600 000:- 5 600 000:-

Surplus carried over from the previous year 97 700:66 Profit for the Period 2 046 114:21 2 143 814:87 14 943 814:87

Finnmarks 243 527 720 :16 -------------- ------------- ---------- ----Guarantees:

Endorsements 34 738 149 :00 Mortages 22 296 651 :36 Finnmarks 57 034 800 :36

-------------------------------Foreign Exchange Loans

Finnmarks 25 642 782:34

--------------------------- ----I 11 /

11

2.046.114,21 The company's accounts for the year 1966 show a profit of 2 079 937, 21

Finnmarks. AB the surplus carried over from the previous year was

97 700 . 66 Finnmarks, the amount at the disposal at the shareholders

meeting is 2 143 814. 87 Finnmarks .

This amount is recommended to be used as follows:

as dividend on capital stock Finnmarks 1 800 000:-

to be carried forward to the liquid fund fl 25 000:-

and to be left on the profit and loss account II 318 814:87

Finnmarks 2 143 814:87

------------------------

Helsinki, March 7, l 96 7


8 . 5 . 67 RM/SO

OULU OSAKEYHTIO

3tatemcnt of Inventories

Raw materials:

Logs : ( 1000 cub. feet )

At the beginning of the year

Purchases

Consumption


Unit prices:

Suluhate wood: ( 1000 cub. r.net. )


Purchases

Consumption


Unit prices :

Fuel etc. :


Products:

Sawn wood goods : ( 1000 stds )


Production

Deliveries


Unit prices:

Sulnhate cellulose: ( 1000 tons )


Production

Deliveries


Unit prices:

Other products:


Chemicals: II

Supplies etc. : II

Oulu, 29. 4. 67

Units

8. 123

8.718

9. 134

7. 707

3.091

l. 372

1. 393

3.070

23,9

39,2

35,7

27,4

20,6

236,5

241, 9

15,2

1966 Book value

mmk

0,42

-:05

15,68

5:11

0,24

0,91

33:21

0,30

20:-

0,65

I, 31

1, 94

21,45

Current value mmk

7,02

- :91

63 , 72

20 :58

1, 01

17,00

620:-

5,62

370: -

1, 51

2,48

2,76

101,12 ----------=-========

OULU OSAEEYHTIO

Adjusted Net Profit 1966

( in mil.lion Finnmar ks )

Net Profit ( Balance Sheet )

Plus:

extraordinary depreciation

increase in inventory reserve

other pre-profit reservations:

Less:

Pension funds

other

extraordinary income from preceeding year

decrease in inventory reserve

Adjusted Net Profit

2,05

7,33

0,48

8,93

0,93 ------------------------=-=======-===================

Sales

Long term debts

Equity:

share capital

reserves

surplus

Adjusted net profit

Ratios:

Adjusted net profit fl II II

Oulu, 29. 4. 67

as % of II % of

sales

equity

134,41

65,05

7,20

5,60

2, 14

14,94

0 , 93

0,7

6,2

AUDITO RS" REPO R'T'

Having been elected at the General Meeting of Oulu Osakeyhtio on

November 30, 1965 to examine the company ' s administration and accounts

for the year 1966, we have to- day completed this task and as a result

thereof make the following report :

The suprevisory auditor for the year 1966, Mr. Jaakko Heikkonen, K.HT

(auditor approved by the Chamber of Commerce), has minutely examined

the books of account of the company, and in his report thereafter affirms

that they are correct and in agreement with acceptable vouchers . Each

time the cash on hand was inspected in the course of the year, it was

found to be in accordance with the cashier's books . T he interior control

has been duly organized.

We have acquainted ourselves with the minutes of the General Meetings,

the meetings of the Admlnisti·ative Council and the Board of Directors.

We have found the fire insurances on the company's property to be in

force and, in our opinion, sufficient.

T he bonds and securities are in safety.

The closing of accounts, which we have examined in detail, is properly

drawn up, and the property has been estimated with sufficient prudence.

Legal depreciations have been made from the fixed capital assets. The 2 . 04 6 . 1 1 4 , 21

balancing shows a profit of 2 079 937, 93 Finnmarks .

As we have found, in such work as we have performed, the activities

of the company to have been managed with definite aim and success, we

propose to the General Meeting that the accounts should be proved and

those concerned be released from their responsibility for the year 1966.

Oulu, March

J . W. Rangell Mauno Vahla

18,1967

,Torma Kauppi Osmo Luutonen

Mauno Luotonen, KIIT (auditor approved by the Chamber of Commerce)

9. 5 . 67 RM/SO

.,.

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rj\W1 I >'-'"L ( .. ~

OULU OSAKEYHTI0

Operational Report for the Period of July 1,1966 to Dec . 31,1966

GENERAL

Growth rate of industrial production in Finland, having been 7 per cent

in 1964 and 4. 7 per cent in 1965, slowed up further to 4 . 4 per cent

in 1966. Volume of paper industry increased by 7. 7 per cent.

The development of the Finnish exports during 1966 was relatively good,

they amounted to 4817 million Finnmarks and increased by 5 . 5 per cent

from 1965 . The total value of imports again was 5 524 million Finnmarks.

Although the growth rate of the exports slightly exceeded that of the im

ports, the deficit of the final balance of trade remained as high as 707. 7

million Finnmarks.

Products based on wood represent about 66 . 6 per cent of the total Finnish

exports, the share of forest industry being 65 . 5 per cent and that of raw

wood 1. 2 per cent. The figures in 1965 were 67 . 3, 66 . 0 and 1. 3 per cent

respectively . Forest industry held its dominating position in the Finnish

foreign trade, though continuing to show a downward trend.

The cost of living index rose by 5 per cent in 1966 (3 . 4 per cent in 1965)

and the building cost index by 7 and 2. 6 per cent respectively.

In 1966 the exports of sawn goods decreased by 8 . 1 per cent in volume

and by 9. 7 per cent in value, those of wood pulp increased by 6. 7 per cent

in volume, but remained about the same in value, and it was only the ex

por t s of paper t hat increased both in volume and value, by 8 . 4 and 10 . 4

per cent respectively. The export incomes of wood industry were shared

by about 18 per cent of sawn goods, about 26 per cent of wood pulp, and

about 47 per cent of paper . Accordingly the decrease in volume of exports

or the low price level had effect on the market production and export in

comes of near to half of the products based on wood and on those of al

most one third of the total Finnish exports.

/2/

..

\ OULU OSAKEYHTIO 2

Towards the end of 1965 the cellulose producers in the northern coun

tries had made the decision of restricting their production in 1966 .

This decision was carried out by having the mills stand for a period

of four weeks during 1966. This measure calmed down the markets,

but could not force the prices to come up from the low level to which

they had dropped at the end of 1965.

Despite the curtailment, the Finnish exports of sulphate pulp increased

by 16. 6 per cent in volume, because some unutilized capacity had been

taken into operation.

The exports of Oulu Osakeyhtiti amounted to 223 984 tons being 13. 7

per cent higher than in 1965 . The domestic deliveries decreased simul

taneously, so that the total deliveries in 1966 were 241 315 tons, i.e.

only 3. 7 per cent higher than in 1965. The inventories on December 31,

1966 were 15 247 tons, about 5 400 tons less than a year ago. The

amount of contracted cellulose for 1967 deliveries was 53 831 tons .

Demand for the by-products continued to be stable, and the whole pro

duction was marketed.

The expansion of the chlorine plant from 1965 was in full operation

throughout the year 1966 and was apposed only by the four-week stand

still of the pulp mill. The whole production of chlorine and sodium hy

droxide was sold, their invoiced value rising by 73 per cent .

The situation on the sawn goods market was bad in 1966 . Scarcity of

money, the buyers" large inventories on December 31, 1965, and also

the Swedish sales stocks from 1965 caused some buying reluctance and

keen price competition. The volume of total Finnish exports decreased

by 70 000 standards, which means 8. 1 per cent in volume . The total

value of exports was, however, 9. 7 per cent lower than a year ago.

The sales for 1967 deliveries did not practically get started during 1966

yet. The buyers had the low prices of 1966 still in their minds , and

their stocks were high due to the low-priced purchasing.

The first Soviet quotation for 1967 to England was published mid-Decem

ber . The prices of the secondary qualities had gone further down by

/3/

\ OULU OSAK.EYHTIO 3

£3 - 4 from the second quotation of 1966, which confirmed the decline

in prices experienced in the summer and autumn of 1966. At the end

of December, 1966, the total sales of the country for 1967 deliveries

amounted to 103 000 standards, of which Oulu Osakeyhtio shared 2 450

standards. The figures in 1965 were 220 000 and 5 152 standards respectively.

PRODUCTION

The amount of production was as follows:

Pateniemi saw mill Hyrynsalmi saw mill Joinery Sulphate pulp mill By-products plant Chlorine plant P reduction units TOTAL

Per cent of the productive capacity

Production 1.7. -31.12.66 tons/stds

14 435,1 4 849.6

293. 6 119 954.8

9 220.2 34 872.4

183 625 . 7

90. 4 %

Production 1.7 . -31.12.65 tons/stds

15 232.5 5 004,8

233.2 116 644.1

8 619.4 29 141. 3

174 875 . 3

92, 2 %

The total output of all units of the Company during 1966 was

378 150 units (362 926 in 1965), from which the amount of the

refining was 17 616 tons (17 043 tons).

FINANCIAL SITUATION

----- ----------------- ---------- ------------ -------------------Long term Short term Sawn goods TOTAL in loans credits debts million Finnmarks 1966 1966 1966 1966 1965

30 . 06 . 1966 69. 81 23.20 8.62 101. 63 89.17 31.12.1966 65.05 21. 58 0.60 87 . 23 88.11

1.7.-31.12. -4.76 -1. 62 -8,02 -14.40 -1. 06

/4/

' OULU OSAKEYHTIO 4

The following statistics illustrate the income from products as \.vell as

I.he receivables and the value of current stocks:

------------------------------------- ----- ------~--------- -- -----( in million Finnmarks ) Received Receivables Stocks

Sawn goods 28.73 1. 83 15.35 Cellulose 47. 16 4.28 6.09 Chemical products 4,67 o. 5 9 0.73 Oulu wall paper 0 . 16 0. 04 0.01 Tall oil soap 0.11 0. 03 0.02 Chlorine and caustic soda 4 . 02 2. 81 o. 15 Joinery products 1.19 o.32 0,51 TOTAL 1. 7. -31. 12. 1966 86.04 9.90 22.86 Previous year 82 . 33 10 . 34 23.04

The production and the income from products during the first half

of 1967 are estimated to be as follows:

Cellulose

Sawn goods

Other products

RM/SO

Production Income

120 000 tons 45 million Fim1marks

10 000 stds 6

19

11 It

" II

70 million Finnmarks

Oulu, February 20, l 967

OLLU OSAKEYIITIO r-/ / _;j__

~~.,, ~~~UuJ~fRJ

l Semi-Annual Report I Jan.-June •66.

OULU OSAKEYHTIO

Operational report for the period l. 1. -30. 6. 1966

GENERAL SURVEY

During the first half-year under review the declining trend of conjunctures

continued in Finland. The growth rate of industrial output remained low, the

long and severe winter kept down the house building until May-June, the volume

of trade slowed up and the logging, especially in southern Finland, remained

smaller than in the corresponding period of the previous year. The money mar

ket tightened, and the too quickly advanced cost level hampered the economic life _

On the other hand, the export went up by 2, 6 per cent from the amount of

the first half-year 1965, while the import decreased by l, 6 per cent. The deficit

in the balance of trade remained 11 per cent smaller than in 1965.

The growth in industrial output in the first four months of the year was a

good 3 per cent against 6 per cent in the first part of 1965 and approx. 4, 7 per

cent in the whole past year.

In order to balance the State ' s economy the new Government raised the

import tax on cars and the prices of petrol, cigarettes and spirits.

The cost of living index went up from December to June by 4 points, equiva

lent to 2, 2 per cent, to the figure 184 ( 1951 = 100), and the construction cost index

advanced by 8 points,equivalent to 5,5 per cent,to the figure 166 (1951 = 100).

The employment situation was somewhat better than a year ago.

After the two-year wage agreements had expired at the turn of the year, the

negotiations aiming to renew them turned out to be very trying. In the most lines 1

however, three -year agreements were reached in February. As to the wood and

paper industry such agreements were reached only with the mechanical wood

workers and salaried employees. The forest workers' wage agreement was made

to last two years and that of pulp mill workers only one year. The three-year con

tracts include a partial index clause, whereas the one-year contracts do not.

According to the agreements the wages and salaries will be raised twice a year, about

3 per cent at the time. At the negotiations it was also agreed upon a schedule of

shortening the working time. Accordingly, the week of 40 working hours will be

gradually reached by 1970, having started this summer with 13 longe week end.

The labour market unions agreed upon co-operation in taking steps to get

family and widowship allowances included in the now existing pension system

and to bring it into force from the beginning of next year.

SALES

The decision made at the end of last year by the cellulose producers in the

2.

northern countries in order to restrict the output and to prevent the prices from

a further fall, seemed to have steadied the markets. The European paper industry

was effective, and the stocks of the mills, having run out during last year, needed

a completion. The trading got to its normal speed, and in most countries the

market enlivened again. Both in the United States of America and in Canada the

production degree was good, and accordingly, the supply and demand kept their

balance. As a result thereof the prices in USA of various grades of paper went up.

By June 30th the contracted quantities for delivery from Finland in 1966

amounted to 971 000 tons of sulphate pulp and to 821 000 tons of sulphite pulp. The

total sales, 1 792 000 tons, surpaased the total output by 8 000 tons. The total ex

port, 984 000 tons, was about the same as during the first half-year of 1965 1 the

quantities of sulphate pulp showing an increase of 25 000 tons and those of sulphite

pulp as big a decrease.

At the end of the first half-year the Company contracted 162 900 tons of cellu

lose for export in this year against the 162 500 tons of 1965, and 13 400 tons for

domestic deliveries against 36 700 tons in last year. By the end of June 103 900

tons of the former and 6 600 tons of the latter qualities were delivered. The cor

responding figures of 1965 were 94 100 tons and 22 700 tons. The stocks of the

same date showed 26 400 tons (25 900 tons} .

The demand for tall oil and turpentine continued to be keen, and the capacity

did not meet the same. The cost level had a slight upwa1·d trend. Chlorine and

natrium hydroxide sold well, and their total invoiced value went up by 30 per cent

from 1965.

The sales of sawn goods from Finland made slow progress in the first part

of the year. By the end of June the sales from the whole country amounted to

590 000 stds corresponding to 740 000 stds in the previous year. The most striking

event of the season on the European markets was the second Soviet price schedule

at the end of May at reduced prices for England, France, Germany and Netherlands.

This offer, consisting of 70 000 stds, stopped almost the entire trade in other countries

' until mid - June when the offer expired, and forced the others to adjust their prices

downward. Thus, the Company too had to drop her prices of red fifth and white

wood as well as those of schaalboards and sixth quality. By the end of June the

Company had placed 25 310 stds (28 37 9 stds in 1965) of her export supply of

36 000 stds.

PRODUCTION

Due to the above decision of cutting down the output of cellulose, the plan,

which was to be realized by a four weeks ' standstill in this year, was carried out

half way during the first six months , and thus the output of pulp remained about

3.

5 700 tons smaller than in the corresponding period last year. The production of

sawn goods remained about l 000 stds smaller than in 1965. As the output of the

chlorine mill went up by almost 12 000 tons, the total production surpassed that of

the first half-year of 1965 by 5 365 tons, equivalent to 3 per cent. The exact figu

res are as follows:

===== === ================== ==========~=~==== ====== == ======== ========= === -

Pateniemi saw mill

Hyrynsalmi

Joinery

Cellulose mill

Byproducts

II

Chlorine plant

Production units (total)

% of the production capacity

FINANCIAL SITUATION

---- - -- -- .

1. 1.

30. 6.

1.1. - 30. 6.

-- ---- --Long term loans

1966

64,07

69,81

+5,74

- -- - - ---Cheque accounts

1966

0 , 74

0,24

+0,50

Production tons/ stds

1. 1. -30. 6. 1966 1. 1. -30. 6. 1965

13 429, 3 14 502 , 1

5 329, 0 5 232, 4

1 514, 0 1479,3

116 572,5 122 224, 9

7 782, 8 7 887, 3

37 386,3 25 322, 8

182 013, 9 176 648, 8

89,6 93, l

- -------- - -- --- ------------- - ----- -Short term credits Tot a 1

Bills of Sawn in million Finn-

exchange goods marks

1966 1966 1966 1965

22.89 0,41 88, 11 62,04

22 . 96 8,62 101 , 63 89, 17

+0,07 +8,21 +13. 52 +27 , 13

The increase in debts is n1ainly due to the growth in the current stocks, to

those of forest department and to the investments made in the period under re-

view.

The investments for construction during the first half year of the current

year were 6, 26 million Finnmarks.

The following statistics illustrate the income from products as well as the

receivables and the value of current stocks:

=============================1============1=============~============= 4

Received , Receivables Stocks I

Sawn goods 3,43 1, 50 22 , 50

Cellulose 45 , 33 4, 26 12,58

Chemical products 3 I 11 0, 77 0,86

Oulu wall paper 0,08 0,07 0,06

Tall oil soap 0,09 0,04 0 , 01

Chlorine and natrium 4ydroxide 3.90 1, 72 o.? 1

Joinery products

I 0.67 0,52 0,46

Total 56,61 8,88 36,70

Previous year 51,88 6,47 31,77

The production and the income from the products during the second half

of 1966 are calculated to be as follows:

Production Income

4.

Cellulose

Sawn goods

Other products

11 7 000 tons 44 000 000 Fmks

1 9 000 stds 12 000 000 "

9 700 000 11

65 700 000 Fmks

Oulu, July 29th 1966.

OU LU OSAKEYHTIO

GENERAL FIIES AND COMMUNICATIONS

I / /

1 . / /. ~ THIS FIIE IS CLOSED AS OF I./ l ____ .....__....,;--------

FOR FURTHER CORRESPONDENCE PIEASE SEE 1 '-'....., '- · ---.-------u

if I ·"'~



of'

OULU OSAKEYHTIO

f'or

OU LU OSAKEYHTIO

Annual report for the year 1965

During the year under review which was the Company's 30th term, a business

recession was setting in. The volume of the industrial production in the country, ta

ken as a whole, increased only by 4, 7 per cent against the previous year's 7, 2 per

cent. The growth rate of the volume index in the wood working industry was approx.

3, 1 per cent, and that of the paper industry 4 , 7 per cent corresponding the figures

6 and 10 in 1964.

The foreign trade however revived. The total turnover grew up to 9 832 million

Finnmarks , which is 9, 9 per cent more than in te.e previous year. The value of the

imports totalled 5 266 million Finnmarks thus surpassing last year's figures by

450 million Finnmarks or 9, 3 per cent. The export was 4 566 million Finrunarks,

increasing by 434 million Finnmarks or 10 , 5 per cent. The deficit of the trade ba

lance was thus 700 million Finnmarks, having been 684 million Finnrnarks the year

before .

It was for the first time that the export value of wood and allied industry re

mained below 7 0 per cent from the total export. The share of the products of the

wood working industry was 67, 3 per cent.

Due to the buoyant demand for cellulose the Nordic countries had raised their

prices towards the end of I 964. The buyers , however, had been filling up their

stores for some time , taking a watchful attitude towards further purchases, which

in turn resulted to overgrown stocks in sellers' hands. Therefore, during the first

quarter of the year, the output and production of unbleached moist sulphate pulp had

to be restricted. It was not succeeded , however, to retain the price level by these

measures, and therefore the Scandinavian sellers preferred to allow considerable

discounts on the so called official prices. The confidence upon the markets began

to fail, and at the end of May all the paper producers of the Nordic countries agreed

upon cutting down the production of pulp, which affected in Finland the b l eached

grades of sulphate pulp. Despite of this the sellers' stocks continued to grow, and

as the new pulp production of Northern America, partly still in scheming stage, and

partly operating, proved its great ability to compete, the Nordic countries were

forced to reduce their prices by 5-9 per cent depending on the grades, and to .__~~~~~~~·~~-----· . ~ -agree upon reduction in production for 1966 as well. Thus our producers had to --meet both with the restricted production and the losses caused by reduced prices.

2.

The total export of Finnish cellulose rose 1 per cent above the previous year,

amounting to 1 960 179 tons. Of these quantities the share of sulphate cellulose

was 1 040 191 tons, increasing by 5, 6 per cent from the previous year. The total

production grew by 3, 7 per cent up to 3 674 945 tons, of which the share of sul

phate cellulose was 2 179 112 tons and the raise from 1964 5 per cent. The invoice

value of the cellulose exported through Finnish Cellulose Union advanced to 888, 8

million Finnmarks which is 2, 4 per cent more than in the previous yearl while the '

gross invoice value surpassed 1964 by 2, 6 per cent totalling 955, 5 million Finn

marks.

The markets for ~wn tjrnb~r in 1965 were opened as normally in the autumn

1964, and a keen demand, especially for whitewood, steadied the prices . Thus, by

January, 50 per cent of the total supply was allocated, and a satisfactory level of

prices reached. The economic development, however, slowed down in some buyer

countries during the winter months and changed the optimistic views to more cau

tious. Further, the money market tightened, and the buyers 'stocks increased lead

ing to a declining trend of business. The quiet season lasted until September, when

the exporters, by approach of winter, were compelled to reduce their prices, espe

cially for whitewood.

The exported amount of round wood was only 803 000 cu-m and its monetary

value 1, 3 per cent of the aggre~gate export, wheras the import of raw wood totalled V'

2 232 000 cu-m thus surpassing the former by 1 429 000 cu-m.

The great deficit in the trade balance had its effect upon the reserve of foreign

currency, which was reduced by 30 per cent in the course of the year. The measu

res taken by the Bank of Finland and the Government to cut down the import and to

secure the foreign currency reserve by putting a limit upon the bank loans by rai

sing taxes of motor vehicles and by partially raising the rate of interest, did thus

not lead to expected results.

In spite of the increasing deposits the financial situation was strained and

the liquidity of the banks weakened. The rate of interest was raised by approx.

1/2 per cent.

The house building was revived but abated by the end of the year. The invest-

ments made by the wood working and paper industries in buildings, machinery and

equipment decreased by 10 per cent from the previous year while other branches

of industry increased their investments by 34 per cent.

During the period l. 7. - 30. 6. the volume of c2mmercial loggi~ totalled

3.

52, 9 million cu-m. The cutting was thus reduced by 2 per cent from the previous

year. The felling of fuel wood was reduced by 36 per cent, or by 3, 7 million cu-m,

and those of paper wood by one million cu-m. The cutting of soft and hard wood

logs increased from 1964 as well as the cutting of sulphate wood, of which the share

of spruce was 1, 9 million cu-m more than in the year before.

Despite of long lasting negotiations between the Central Association of Finnish

Woodworking Industries and the Central Union of Agricultural Products a mutual

agreement upon renewing an indication for pulp wood prices could not be reached.

Before the end of the year, the wood working industry, however, reduced the wood

prices by 5 /er cent because of weakening rentability.

The inflatory trend was minor to the previous year due to the slowed rise in

prices and wages. The cost of living index of December {180) was 3, 4 per cent, or

6 points higher than on the same period in the previous year. The wholesale index

rose by 1, 3 per cent and that of construction costs by 2, 6 per cent.

According to the 2 year wage agreement the wages and salaries were raised

by 3, 8 per cent at the beginning of the year. The negotiations aiming to renew this

agreement did not lead to any positive results by the end of the year. The labour

exchange files of December 31 st reported 42 700 persons applying for work. 36 000

of these were without any work of their own line. The corresponding figures in 1964

were 36 000 and 30 000.

The crop was very satisfactory in quantity but in quality it was not as good as

in the previous year.

The Company s purchasing of saw logs during 1965 did as usual not reach the

minimun target set, in spite of 1, 45 million cu-m purchased from the Soviet Union

and Sweden.

The target set for pulp wood to be purchased was reached except for spruce

pulp wood. The weather and snow conditions during the lumbering season were

fairly difficult delaying somewhat the work in the forests.

Due to the lack of saw logs and the reduced production of the pulp mill the

total production was 6 per cent smaller than in 1964.

The total deliveries for export, home market and own use were 6, 8 per cent

or 24 837 units below the previous year s level. The stocks of the main products,

cellulose and sawn goods went up by the end of the year by 7 163 tons/stds, eql,!i -

valent to 19, 1 per cent.

4.

The total turnover decreased by 5, 2 per cent or to 133, 52 million Finnmarks.

The amount is composed as follows: Nuottasaari mills 78, 69 per cent, Pateniemi

saw mill 14, 84 per cent, Hyrynsalmi saw mill 4, 07 per cent and the joinery 2, 40

per cent.

The Company's share in Finland's total production of sawn goods was 3, 5

per cent, and that of total export 3, 9 per cent. As to sulphate oellulose the corre

sponding figures were 11 per cent and 18, 9 per cent.

In spite of the keen competion the marketing of the Company's chemical pro

ducts reached the level of 1964 in quantities as well as in monetary value.

A sum of 17, 2 million Finrunarks was used for new investments and for the

fundamental repairs to be activated.

The main new building projects at Nuottasaari were the modernizing of wood

handling and barking plants, the dredging of the log storage pond, the new main

pipe line for water with screen, the extension of the chlorine plant and the comp

leting work of several other plants already in operation since 1964. Included to

the above figures are also the instalments of soda recovery plant VI, according

to the terms of payment. The extension of the chlorine plant, the log storage pond

of sulphate wood and the new water pipe line were completed, the barking and wood

handling plant could be taken into partial operation in December.

At Pateniemi the stacking plant as well as the garage were completed. At Hy

rynsalmi fundamental repairs on the bark and chip conveyor as well as the bark

silo were made. At the joinery some machinery were renovated. An amount of

382 000 Finnmarks was invested in new forests purchases.

The Company's total expenditure on wages and salaries was 28, 5 million Finn

marks, of which an amount of 6, 0 million Finnmarks was used for the forest de

partment and 6, 0 million Finrunarks for the salaried employees.

5.


The members of the Administrative council were: Mr. Tauno Angervo,

chairman, Mr. V. J. Sukselainen, vice chairman; regular members Mr. Es

ka K. Leinonen, Mr. Olli Paloheimo, Mr. Va.inc Tanner and Mr. Bjorn Weck

man; deputy members Mr. Antti Kivilahti, Mr. Kalervo Laine, Mr. K. N. Maat

ta and Mr. Aku Sumu.

The administrative council met five times.

BOARD OF DIRECTORS

The members of the Board of directors were: Mr. Aarne Pelkonen, chair

man, Mr. Mikko Tahtinen, vice chairman, regular member Mr. Kaarlo Lehtio,

deputy members Mr. Heikki Sihtola and Mr. Paavo Kivi.

The board of directors met thirteen times.

MANAGING DIRECTOR

The Company's managing director was Mr. Kaarlo Lehtio.

AUDITORS

The auditors were: Mr. Mauno Luotonen, Mr. Arvi Peltola, Mr. Osmo

Luutonen, Mr. J. W. Rangell and Mr. Mauno Vahla. The deputy auditors were:

Mr. L.A. Puntila and Mr. U. A. Vatanen.

Mr. Jaakko Heikkonen was responsible for the general audit.

The following statistics and figures illustrate the Company's activities:

------------------------------------------------------------------------------------------------------------- -------------- -----------

Logs and railway sleeper wood cu. ft

Pine pulp wood

Birch pulp wood

Fuel wood

Spruce pulp wood for parent companies

Pole wood

cu. m.

ti

II

ti

1965

10 042 156

I 587 420

215 297

10 981

76 687

19 624

1964

11 225 375

1 236 166

158 241

31 711

40 891

20 386

1963

9 892 799

830 241

41 043

13 464

89 938

13 513

6.

r========= = ---------------------=====-==

Primary production:

Sawn goods stds

Sulphate cellulose tons

Crude tall oil and turpentine ti


Total

Refined output:

Joinery products stds

De stilled 11

Total

tons

I

I

Total amount of producing units

Amount of own primary produc tion used for refining tons/ stds

~

Grand total for sale 11

1965

41 149

238 869

11 401

54 464

345 883

536

16 507

17 043

362 926

11 937

350 989

Percentage 1964 1963 of 1964

82,76 49 719 34 604

94,37 253 118 237 892

87,40 13 045 12 040

101,01 53 921 47 045

93,53 369 803 331 581

101,52 528 533

100,54 16 419 15 662

100,57 16 947 16 195

93,84 386 750 34 7 776

I 87,95 -13 57 3 -12 573

94,05 373 177 335 203

============-=========~========-=========

7.

- ----------------------- ----------- --------------------------- --- ------ ------------- ------------------ -- -- ---------------- --~--------T-- ------ -

TURNOVER in million Finnmarks

DELIVERIES etc.

SAW MILLS

Exports

Pateniemi

Hyrynsalmi

Total

Home market

Own use and joinery

Stocks at the end of the yea r

stds

II

II

It

II

II

Logs sawn 1 000 cu. ft.

CELLULOSE MILL

Cellulose shipment

Home market

Stocks at the end of the year

Sulphate wood used

Sawn chips

The factory was operating days of 24 hours

Output in tons / 24 hours

BYPRODUCTS

Exports

Home market

Own use

CHLORINE PLANT

Exports

Home market

Own use

tons

II

II

cu . m.

II

tons

It

II

II

II

It

1965

133,58

26 338

7 706

34 044

4 203

1 396

23 941

9 542

197 016

36 377

20 6471

1392 660

2.47 417

Percentage of 1 %4

94,76

89,64

76,96

86,42

105,47

143,47

107,59

83,50

84,50

169,70

136,09

95,72

83,04

324 93,37

738 101, 23

8 230 99, 38

4 143 90, 08

498 607, 32

1 459 162, 47

25684 108,90

28 165 , 94,94

1964 1963

140,96 I 115,10

29 381

10 013

39 394

3 985

973

22 253

11 427

233 155

21 435

15 172

1454919

297 957

347

729

8 281

4 599

82

898

23 585

29 665

I

24 757

9 033

33 790

3 975

1 423

16 793

7 963

213 499

17 279

16 635

1405 507

265 005

348

684

7 645

5 661

76

I 521

19 237

25 990


as at 31 st December 1965

EXPENDITURE

Salaries and wages 22 651 617: 37

Interests 5 779 425 : 27

Taxes 2 241 450:93

Depreciations 14 863 062:56

Other operating expenses 5 623 638:60

Profit for 1965 2 079 927: 93

Net receipts

Interests

Dividends

Sundry receipts

INCOME

Fmks 53 239 122:66

51 667 301:45

1 510 618:01

14 492:70

46 710:50

Fmks 53 239 122:66

8.

Balance sheet as at December 31 st 1965

Currents assets

Cash and claims to cash Receivables Securities Claims to loans

Inventories

Products Raw materials etc. Fuel

Fixed assets

Plots, land and water area Addenda

Buildings Addenda Reduction

Machinery and equipment Addenda Reduction

Factory and transport equipment

Addenda

Reduction Securities

Estimated items

The additional pay on loans due to the index

Addenda Reduction

Transitory items

As sets

1 413 509:99 381 765:29

34 550 294:81 3 328 722:68

6 187:50 93 327 831:23 11 395 941:78

45 993:86

8 848 901:29 1 913 399:87

153 040:4 7

58 203:37 72 372 009:82

4 261 687:-6 702 320: -

1 904 782: 23 10 493 871:05

440 740:40

1 795 275:28

37 872 829:99

104 677 779:15

1 O 609 260: 69 3 134 903:55 ·

98 786: 91 1 894 721:64

380 135:34

Fmks

83 394 220: 19

12 839 393: 68

158 090 048:66

1 613 373:21

74 724:66

256 011 760:40

9.

Current liabilities

Short term Bills payable Suppliers Bank debts

Long term loans Mortgage loans Other loans

Estimated items

Depreciations due to the buildings

Addenda Reduction

Depreciations due to the machinery

Addenda Reduction

Depr eciations due to the factory and traffic equipment

Addenda Reduction

Transitory items

Own funds

Share capital Reserve fund Liquin fund Taxe fund

Profit

Liabilities

21 127 000:-35 417 432:31

792 042:20

25 276 794: 03 38 789 204:73

11 186 308:78 1 921 883: 25

850: -

85 158 988:20 12 031 890:14

45 993: 86

6 646 384: 17 909 289: 17 146 460:47

3 000 000: -1 500 000: -

600 000: -

Profit from previous years 342 772:73

57 336 474:51

64 065 998:76

13 107 342:03

97 144 884:48

7 409 212:87

7 200 000: -

5 100 000: -

l 0.

121 402 473:27

117 661 439:38

2 225 147:09

Profit from the current year 2 079 927:93 2 422 700:66 14 722 700:66 ---~'"'----'------_..;..-..;,_;_ __ _..;....;__~~-=-=...:....:....:;_

Guarantees: Endorsements Mortgages

Fmks

25 230 289:50 25 047 206:03 50 277 495:53

Foreign exchange loan..;.s_11 ___ 2_4_3_14_5_9'-0_:_8_6_

Fmks 256 011 760:40 --- ----- ---------- =---

11.

The Company 's accounts for the year 1965 show a profit of Finnmarks

2 079 927:93. As the balance brought forward from the previous years was

342 772:73 Finnmarks, the amount at the disposal at the shareholders ' meeting

is Fmks 2 422 700:66.


as dividend on share capital Fmks 1 800 000: -

to be carried forward to the liquid fund ti 500 000: -

As available funds for the board of management ti 25 000: -

to be left on the profit and loss account II 97 700:66

Fmks 2 422 700: 66

Helsinki, March 14th 1966.

BOARD OF ADMINISTRATORS BOARD OF DIRECTORS

OULU OSAKEYHTIO

Statement of Inventories

Raw materials :

Logs : ( 1000 cub . feet )


Purchases

Consumption


Unit prices :

Sulphate wood: ( 1000 cub. met. )


Purchases

Consumption


Unit prices:

Fuel etc. :


Products:

Sawn wood goods: ( 1000 stds )

At the beginning of the }ear

Production

Deliveries


Unit prices:

Sulphate cellulose: ( 1000 tons )

At the beginning of the yea:i·

Production

Deliveries


Unit prices:

Other products:


Chemicals: II

Supplies etc . : It

Oulu, 30. 4. 1966

Units

7.457

10.208

9. 542

8. 123

2.581

1.903

1. 393

3.091

22,3

41, 1

39 , 5

23,9

15, 2

238,9

233,5

20,6

1965 Book value

mmk

0, 33

-:04

7,37

2:38

0 , 44

0,79

33:-

0 , 41

20:-

0,70

l, 09

1,70

12 , 83

Current value mmk

5,66

- :70

48 , 40

15 :66

l, 30

15, 53

650:-

7, 87

382:-

1, 35

2,39

2,67

85, 17

OULU OSAKEYHTIO

Adjusted Net P r ofit 1965

{ in milli on F innmar ks )


Plus:

extraordinar y depreciation


other pre - p r ofit rese r vations :

Less:

Pension funds

other

extraor dinary income from pre ceeding year


Adjusted Net Profit

2 , 08

6,28

0 , 60

0,42

2,57 x)

5,97 ----------------------------=====-=-================ Sales

Long term debts

Equity:

share capital

reserves

surplus

Adjusted net profit

Ratios :

133,58

64,06

7,20

5, 10

2, 42

14,72

5, 97

Adjusted net profit as % of sales 4 , 5

40 , 5 II II II '' % of equity

x) Correction:

The company has informed us that the market

Oulu, 30.4.1966 value or current v a lue of inventories as per 3 1.12.1964 should have been 87,12 milj. mark kas instead of 82,08 milj. markkas as stated in the Yearly Financial Rep ort for 1964. The inventory reserve was thus 74, 9 1 milj. markkas and not 6 9,87 milj. markkas, and consequently the increase of the inventory reserve should have been 7,67 mil j . markkas

and not 2,63 milj. markkas as reported in the Adjusted Net Profit for 1964.

AUDITORS' REPORT

Having been elected at the Shareholders meeting on November 25 th

1964 to examine the administration and accounts of Oulu Osakeyhtio for the

year 1965, we have to-day completed our joint task, and as a result thereof,

make the following report:

As a supervisory controller for the year 1965, Mr. Jaakko Heikkonen,

KHT, has examined minutely the books of account of the company, and in his

reports therafter affirms that they are correct and in agreement with accept

able vouchers. Each time the cash on hand has been inspected in the course

of the year, it has been verified that the cash has corresponded to the balance

in the cash book. The interior control has been effective.

We have acquinted ourselves with the Minutes of the meetings of Share

holders, Board of Administration and Board of Directors.

We have found the fire insurances on the company's pro~rty to be 1n

force, and, in our opinion, sufficient.



drawn up, and the property has been estimated with sufficient prudence. Le

gal depreciations have been made from the operating funds. The balancing

shows a profit of 2. 079. 927:93 Finnmarks.

As we, in view of the above, have found the activities of the company to

have been managed with definiteness and success, as well as to the company's

advantage, we propose to the General Meeting, that the accounts to be proved

and those concerned to be granted their discharge of the year 1965.

J. W. Rangell

Mauno Vahla

Oulu, April 7th 1966.

Mauno Luotonen KHT

(Auditor approved by the Chamber of Commerce)

Arvi Peltola

Osmo Luutonen

,.

OU LU OSAKEYHTIO

Operational report for the period 1. 7. - 31. 12. 1965

GENERAL SURVEY

The economic development in all northern countries brought the con

junctures to a declining trend.

The growth in Finnish industrial output had been 6 per cent in the first

part of the year but fell back later, thus leaving the annual increase but 4, 7

per cent against that of about 7 per cent in the previous year. The figure

for paper industry in this growth was also 4, 7 per cent, and that of wood

industry 3, 1 per cent. Due to the keen competition between foreign and

home products the output in some industrial branches, such as textiles,

shoes and clothing, remained smaller than last year, some factories were

even subjected to a temporary stoppage.

The building activity continued to be lively also in the latter part of

the year. The investments of the industry were raised by 34 per cent, exept

those of paper-, cellulose, and wood industry which were about l O per cent

less than in the previous year. This was due to the big enlargements in the

wood working industry, realized and completed during the last few years .

The measures taken by the Bank of Finland and the government in the first

part of the year to restrict the purchasing power and thus to reduce the im

port and to improve the balance of payments did not bring expected results.

The deficit of the balance of trade was 700 million Finnm.arks. The export

went up by 10, 5 per cent reaching now 4 566 million Finnm.arks, but the im

port increased by 9, 3 per cent amounting to 5 266 million Finnmarks.

The export value of the wood working industry was 67, 3 per cent from

the total export and that of raw wood 1, 3 per cent. On the other hand the

import of raw wood was bigger than its export.

The financial situation was growing more strained.

The cost of living index went up only by 2 points, equivalent to I, I per

cent, during the latter part of the year, which did not result to any raise in

the wages and salaries. The whole year's rise in the cost of living was

3, 4 per cent and that of building trade index 2, 6 per cent.

SALES

As mentioned in the first report of this year, the cellulose producers

in the northern countries decided to restrict their output in order to keep

the price level steady. This attempt failed, though, and the sales prices

had to be reduced at the end of the year by 5-9 per cent, depending on the

respective grades. The export of sulphate cellulose from the whole country

increased by 5, 6 per cent from the amount of the previous year, which was

due to the raise in the capacity and sales quota of other mills. The amount

of cellulose exported by Oulu Osakeyhtio went down to I 97 016 tons which

is 15, 5 per cent less than in 1964, while the inland deliveries went up by 70

per cent reaching now an amount of 36 377 tons. Stocks at the end of the

2.

year were 20 647 tons, the increase from 1964 being 36 per cent. The amount

of cellulose contracted at the end of the year for delivery in 1966 was

56 815 tons.

As the main part of the sawn goods for export was sold by the end of

June, the sales during the latter part of the year remained small. On the

other hand the marketing remained quiet for the rest of the year, due to the

extremely big stocks in buyer countries, especially in Britain. At the end of

the year an amount of 3 000 stds was still unsold. During the quiet autumnal

season there was a fall in the sales prices, above all in those of white wood.

The exported quantities from the whole country were 100 000 stds small

er compared to the previous year while the value of all export almost reach

ed last year' s level.

The unfavourable development of the markets towards the end of the

year delayed the reopening of them in I 966. The Soviet Union came to the

market only in December quoting for redwood at prices which were 1-3

pounds lower than in the previous year, and for white wood at prices 4-5 pounds

lower. The amount of total sales from the country was at the end of the year

220 000 stds (460 000 stds in the previous year), and the corresponding figu

res for the Company' s sales 5 152 stds and 21 780 stds.

3.

PRODUCTION

The amount of the production was as follows:

-----================================================================~

Pateniemi saw mill

Hyrynsalmi _n_

Joinery

Cellulose mill

Byproducts

Chlorine plant

Production units total


Production tons / stds

1.7. -31.12.65 1.7. -31.12.64

15 232, 5 17 738, 7

5 004, 8 5 081, 0

233,2 148,8

116 644, 1 129 296, 5

8 619, 4 8 538, 5

29 141,3 27 410, 0

174875,3 188 213, 5

92,2 102,8

The total output of all units of the Company during the year 1965 was

362 926 units ( 386 750 un~t.s- i n the previous year), from which amount the

refining was 1 7 04 3 tons { 16 94 7 tons)

FINANCIAL SITUATION

- Long term !short term ---------

Total I Sawn goods

loans I credits debts in million FinrunarksJ

30. 6.

31.12.

1.7.-31.12. I

1965 1965 -

60~45 24,00

64,07 1 23,63 '

+3,62 i -0,37

1965 1965 1964

4,72 89,17 66,42

0,41 88, 11 62,04 '

-4,31 -1,06 C -4,38

The following statistics illustrate the income from products as well as

the receivables and the v..alue of currents stocks:

Sawn goods in million Finrunarks Cellulose Chemical products Oulu wall paper Tall oil soap Chlorine and caustic Joinery products Total 1. 7. - 31. 12. Previous year -"-

soda I I

--------- ,---------------------Received Receivables Stocks

32,06 1 0,72 13,40 41,61 7,21 8,02 4,24 0,43 0,90 0,22 0,02 0,04 0, 10 0,02 0, 01 3, 13 1, 49 0,22 0,97 0,45 0,45

82,33 I 10,34 23,04 84,25 5, 19 19,73

' I I

..

.. 4 .

The production and the income from products during the first half of

1966 are calculated to be as follows:

Cellulose

Sawn goods

Other products

Production

120 000 tons

20 000 stds

Oulu, February 22nd 1 966.

OU LU OSAKEYHTIO

Income

44 mill. Finnmarks

12 _tt_

10 _tt_

66 mill. Finnmarks

r

Operational 1Uea

BobenP ...... ~

l'DII.ARDt Pollp-ap of Bank Loan• • 9!19 Oz '!he C4alJ)IIV' rece1wcl $ 8.3 •UUon andlr IBRD loan 222 n to

apamd ita IIUl.pbat.e pulp 11111 t:rca lb4,000 ff.A, tq 214,000 TP.l_. and to 1.no ..... bl.eaaMna capec1t7. Tba total proJect, tor$ 21.2 mlllon, -. CGIIP1•te4 on tiJII 1D 1961, and at • coat lowr tan eatiilated.

I.1lca 1-1, the o~ pl"Odlloe• onl7 pulp (ZSJ,900 tou ot llllpbate in 1964) and 111.18'1 gooda ( ,000 •tan.clarde 1n 1'64), mich pro'Yidla the lowen aal"g1D per ton ~ NW aate!'i&l and ~t.1.:7 the 1eut protection apinlt coat incNUee. In add1 tian, the 04IIPll'lT bu no tore at. of it• om and. mat. 1"817 ent1rel7 UJ>Oll IW"lrat vood, ilb1oh baa .teaffl37 tncreaaed ill price. The ~ruuon in tJie tcall.ov1ng talae, proYidad b7 the company dtlr1na Hr. hcba' brief Tillit. to Olalu ml1"1llg tlJI reoent lliallion ~ rinland, cannot be integrated trith the ~ti.on in .the annual. ~rt••• it doe• no, COYer the 9&W 111ll operationa, mt doe• g.1.w an ind:lcatton of the mqnitua ot tbe coat probleu.

FGr ~- procl:&ction onl7s Wood coat aa a ,S of total

direct coat Total coat, u a " of •••

Ta1M

196S ll2 !m. 1:.2§2 ~ ~ 12§J. ~ (to ••. )

7J.4 74.0 7S.3 73.7 74.2 11.2 79.S 82.1

ao.1 es.o 81..2 92.0 ,e.2 93.a '6.1 95.0

The project, u o~gSuJlJ' concelftd, •• ~ apend IQJ.pbate Pll,p produ.ct.ion to 214,000 !PA and to 1ut&U 63,000 TPA bleaching oapacdt7. 17 1964 the anmaal report.a ~oat.a that bleachinc operat:lau had been expanded to operate at 94.SOO TPA and that tha -1,pbata ldll wae prodlicin1 2S.3,00J) TPA or 118j ot rated capacitJ'• 1bia ad41.t.1onal prodwJt.ion, when ocab.1.ned w1 th allcbt.17 inOl'Maed .., aUl. opei,aUon, broqbt 1964 ..:lea to Jilk. lbO w:tllian or .n• ll'N•r t.hllll ~ Md-. aal.e• pro.1ff1iecl for 1963 in the project app1"11181.l.. Exb1bit. I indloat.ea that tbl. OOIIJMlll1''• ad3usted pro.ft'8 aw been erratic. A• tbe nnm intoma\1.o1l doesnot inaludl aJJ7 inteq,ietat.ion of operat1q NINl.ta, it i• not ~ssl.ble to ~ naluate the ~ad accoanta. It ,aaald appear tha\ without the ~ tinanoe~ project, the aitut.1on ot tbta c,itr4.asq wua.1.d now be wor•, beoauee until 1964 and higher wi .. operat.1cma, the proft.tab1 li t7 of the COllpl.D1' bad fallen ott conalde~ troa ~ l.n91a of :1'60-1961. It~· t.hat tlte c~ mat be an. to conUnue operating at capactt7 to IIA1ntatn 196h1 • prot1tab111ty, and W.• ill vnlikal.7 s1,.ftD the proJeote4 pro41ct.ion nastrictiona.

!be nnezvd.al ,oad.tiarl or tlMI C'*Jl8QI (aae Wb1t. It·) baa ~ .. U expected. 1bl CC111p8117 baa llllde ill the last 1;,,o pare, ad baa p.roject.ed tor U6S, 1aft.taanta in t1Dd ~·'• at, • rate .U.&btlJ" h1pr than t.be nm~ mmal and accelerated dlpr9oiation. ~ a,ou t1ad u•ta ot tbl o+AIJliN11' ue blflber than pro~eoted, bu.t the• u•t• m• ·been t.l,mnotidj" traa operat.1.one.. u tba COII.PUV'' • lone tena debt- ta '"17 cloae to pt"Ojfctiena. !be CflllPIIJT'• irmmto17 (at matlDat ftlue) bu cleCll.1DN Nl:attw to ealea, mt bu rm toed l"8latlftl,1' 9'eac\T ·aa ~ .._iut. IIIOmlt. 'Iba tCAJ'81\f'• lDwnt.or., N~• wra dllcreued ali;b'3-7dJrlng 1'62, mt baw Nllll.1md at tbtlt laftl. \'be c,,•n-v•• net 1iorlf::I.Dg capital Pofttlorl bu NM.1 ned Nlati wJ.y- ateact, cmi.ng 1961.~964.. aa nu tbe debtrequiQ' relat.1.oaab1p. In 1962 the paienta coutr!.b!llted ru • .3..6 llillion to dollhle ~ ~ capital, vbich waa not pzo3ected at the t.iJID ot the· propoaal..

It eho111.d be noted tbat Oalu 1• eqa&il.T o-.d b7 Ve:ttsU.uoto, tba ._ ~t o,meci a111 that owna tlle l&r .. .t a'ncl• ~ . of Kai (28'), and 1a3aan1. Ooft:mor W&l'i~ aen'U.onad that the• jo1nt ftntures vould be V. .t.lr,t. to redu.co opera\iona 1t ~rat7 rationall.sation aauurea ,..,. MCellU'1 to redllce the, .,,,.,nd ~or raw wood, be~ the p&NQt.a eauld 'be apM1;a4 to carr, Umr lllbai.dla17•• ~t ilobamle wre W.a to occur.

CCI Me•ara• Fuch8, ~I

RPBraner/b,jo

gty OJ

*"Md!ri-°B, 2!!I

PUobaaa s.iad.ea otal con

Gzro• ... Isdentd, D9,pred.atto

199 1

., upemaea Total •

OperatiQs Pl'Ol1t ~inCCM

Ptotit before tax , ... ~ Pltot1t. an... tu

'back.t .... l'Japeci.at4 l'.ulatltor., re•rw bt~ di. dmt1&2lu ..... tl.oo 'laea (SO,) let. dtlttona

M.$tlated proA t

10).7 16.1

ti •. , 2.1

16..f ,tf ,.,.

,!8 ;lt

Z.I .

1~

1).,

, ... .to.

ll si the.ear .... F _ , tr r r • L Id A I . Ill

11 .J USJ. i .. , 7f!J . J~.k n., 9l.1

-it -ti IM 8j.&

*'·' ,s.x. n.1 21 •. ,

lhS k-6 ~ ,., l4.9 "·' ll•f 12.7

-d!f • -a -• ·IQ

2 2.7 i.. s., -it.4 ~ -ti -. 'I.J

::ti :ti ~ ;1;1. 6.7 SJ. s • (7.· ) (2.1> 2.6 -

-ti i -j:j -·t:f ~ ~ -1ff .

.

lai ilr·Z Ztll' ..La

3.1 3.2 s.2 i..1

1.'t ?;.:a 14.s •

..

mim II

OULU Ot

!lt:mf:n!J!!;•

n.o.n., ,IIUltatecl .31, Dlo • .31, .. .31 .. Dec.31. 1'63 .n.,

1961 1'62 l96J 1~ vitb.eut 1963 ,.r d1ted audi:!?!4 !*411!4 !l!lted lll!E'!I MP!!J.11\

Ca.ah .} .a • -a.o.lffblea 24.6 . )2.h, J6.S .9 Ilmrltorr .2 OQ.5 77.2 e2.o O\ber 6.B u~!k . dfi:i ~ !otal 0\1rl"lmt a •t• u9.§ 61:1 .so.o • Sllppli•r•' cr.dtta 1S.3 lJ.& 21.2 33.0 llu·dlbt - abort te .6 .) .J .1 Olber 0 '*· 7

s,:i: f.3 Total au.rrent

liabll1tioa 19.9 18. 26. .38.h 26.6 27.0 Un wdd.ng ~tal 100.0 1m..6 102 • .3 103.6 .3;.1 23.0

n.cl .... t. ll.3.8 ua.2 21.1 l4l.1 m., 4...:1.&ted dep:ru-

ti:, -ti -ti ti C1at1o11 let 4-4 u•t• 1 38.2 Hl...Uaneou ~ m:t -.rd -fo\alm uaeta • . 69.g

"Pl8 loans b.4 ;.9 3.4 2. ' Otbe• l.eana S?.2 S6.S ss.o ,2.9

..Uaaeoue ~ -d of.t -JN !oW-c tem dabt 60.l S6.2 n.ternct taxea (at. SO%) .ia,2 Jh,I ;u.~ llJ,2 - -Total long tera

Uabilitiea l<Xl.2 .6 &},I ii•§ . 6.9,, ff.,2 Bqm.tJ' ~ ~ ~ ~ ~ lN Capital ,:r Reta111ed.~ ,.o 2.4 2.1 2'.9 2.1 12.1 ......... :ti ~ j;! ~ ~ m

'• coat of aJ.••l1DflmtorY 1.h.2 12.0 10.0 .7 .. -Qrd.ck ratio 2.1 2.1 1., 1.6 - -foW 1-, tel'll debt/ ~equiv Slnhh S6d'4 $6t44 ,l,hT - -

d •

c~ -

OULU OSAKEYHT!d

Operational report for the period 1. 1. - 30.6.1965

GENERAL SURVEY

Finland •s industrial output during January- May was about 6 %

greater than last year. However, the growth of the country's total

production is expected to become slower.

The building activity became more lively, a rising tendency

being especially strong as to houses. During the first quarter of the

current year building of houses increased by 50 % from the previous

year.

The country's balance of trade was still considerably deficit.

The Bank of Finl and, however, took special steps to protect the

readiness for foreign payments.

While the economical activity became lively and imports

increased the money market remained still rather strained.

The development of the price level seemed to become firmer .

In June the cost of living index was 178 after having been in December

174. The increase was thus 2, 3 % during six months, whereas the

corresponding increase in the previous year was 7 %. The cost of

building trade index that showed last December 154 points, rose now

in the course of the halfyear by 3, 2 % or to 159 points.

In the beginning of the year the wages rose by 3, 8 % according

to the collective agreements.

SALES

In the cellulose market, in which the prices had been risen

at the end of previous year, a weakening tendency could be noticed

already during the first quarter so far that there seemed not to be

satisfactory demand for the increased capacity of the producing countries.

- -

As early as from the beginning of the year the output of the

unbleached wet sulpp.ate had to be reduced. This, however, proved

not to be a sufficient action to keep the price level steady. At the

end of May the producers in the Nothern Countries had to make an

agreement about new limits in production, which restricted the

supply of bleached sulphate qualities as to Finland by about 120 000

tons from the quantity planned for the current year. Therefore the

total quantity of our companyts cellulose for foreign sale decreased

to about 203 000 tons after having been about 233 000 tons a year

before. Because of the increased capacity the sulphate production

of. the country, however, was in the first halfyear about 145 000

tons or almost 15 % higher than during the corresponding period in the

previous year. The exported quantities instead rose only by about 6, 5 %. The slackening in the development of the sales could clearly be seen

also in the sulphate stocks, which were almost three times larger at

the end of June compared with the previous year.

By June 30, 1965 cellulose of our company had been sold for

export deliveries during this year 162 500 tons the corresponding

figures in the previous year having been 185 400 tons . The cellulose

stock was at the end of June 25 900 tons after having been 13 800 tons

at the corresponding date last year.

Sold quantities of tall oil- and turpentine products as well as

the products of the clorine plant remained on the level of the previous

year. The sales of joinery products increased by about 10 % from

the year before .

The sales of sawn timber, which became slower already in the

first quarter of the year, were in the second quarter quite inconsiderable.

The consumption in the most important buyer countries , however,

continued well, but the great stocks forced the buyers to be cautious.

By the end of June nearly 740 000 stds were sold from the whole

country corresponding 860 000 stds the year before. From the export

supply of our company, planned for 35 000 stds, 28 400 stds had been

sold by the end of June.

PRODUCTION

The total production of the company remained during the first

halfyear nearly 5 % smaller than the corresponding result in the

...

previous year caused mainly by the fact that the capacity of the saw

mills could not even approximately be used because of shortage of

raw-material. The production figures can be seen in the following table:

--------------------------------------------------------

Pateniemi saw mill

Hyrynsalmi

Joinery

Cellulose mill

Byproducts

II

Clorine plant



FINANCIAL SITUATION

--------------------

1. 1.

30 . 6.

1. 1. - 30. 6.

----------------Long term loans

1965

60,87

60,45

- 0,42

======== Cheque

accounts

1965

0, 45

0,50

+o, os

~-------------------------------=---~= Production tons / std

1. 1. -30. 6. 65 1.1. -30. 6. 64

14 502, 1 19 202, 2

5 232, 4 6 319,2

1 4 79, 3 1 7 5 6, 7

122 224, 9 123822,0

7 887, 3 7 880, 4

25 322,8 26 511, 1

17 6 648, 8 185 491, 6

93, 1 101,3

===================~================ = Short term credits Tot a 1

Bills of Sawn in million new

Finnmarks exchange goods

1965 1965 1965 1964

- 0, 72 62, 04 63,72

23,50 4, 72 89, 17 66,42

+ 23, 50 + 4,00 + 27, 13 + 2, 70

The increase in debts consists mainly of the following amounts:

the growth of the current stocks 5 million marks, the growth of the

stocks of the forest departements 6 million marks, the investments

9 million marks and the growth of receivables 7 million marks, which

together amount to 27 million marks.

The investments under construction during the forepart of the

current year and still continuing were as follows:

enlargement of clorine plant calculated costs

new water conduit to cellulose mill

dredging of stock area

-" -_11 _

4 600 ooo F mks

850 000 II

l 625 000 II

4 ••

• •

filter wa shing plant to cellulose mill - calculated costs 360 ooo F inks renewal of barking and handling of sulphate wood -" -bundling plant of sawn timber _ 11 -

11 500 000 II

210 000 II

19 145 ooo F mks

The following statistics illustrate the income from products as

well as the receivables and the value of current stocks:

---------- 1------------------------ ·------------------------------------------ ------------- r-----------Received Receivables Stocks

Sawn goods

Cellulose

Chemical products

Oulu wall paper

Tall oil soap

Clorine and caustic soda

Joinery products

Total

Previous year

4,55

41, 13

3,07

0, 14

0,08

2, 19

0,72

51,88

61,38

in million new Finnmarks

I , 2~

2,83

1,44

0, 72

0,07

0,03

0,84

0,54

6,47

4,81

19,81

10,08

1,04

0,05

0,01

0,24

0,54

31,77

26, 72

The production and the incomes from the products during the

second half of 19 65 are calculated to be as follows:

Cellulose

Sawn goods

Other products

Production

112 000 tons

20 000 stds

Oulu, July 30th 19 65

OULU OSAKEYHTid

Income

50 000 000 Fmks

23 000 000 II

6 500 000 II

79 500 000 Fmks

---------------

r

IBiill- Loan No . 222- FI

YEAHLY FINANCIAL REPORT

of

OULU OSAKEYHTIO

for

1964

OULU OSAKEYHTIO


Throughout the year 1964, the 29th year of activities of the Company, the

market conditions remained good in most of Finland ~s export areas . The in -

creasing demand and the advancing prices created a firm basis for an expansion

in the foreign trade and animated the economic activity. The business volume

increased by 18 % from the previous year, totalling 8 948 million Finnmarks. The

increase in the volume of imports and in cif-prices raised the total value of the

imports to 4 816 million Finnmarks or by 24 %, wheras the value of exports ad

vanced only by 12, 7 % totalling 4 1 32 million Finnrnarks. The deficit of the trade

balance, according to the Customs statistics, went up to 684 million Finnmarks ,

having fluctuated between 200-400 million Finnmarks during the last four years.

The average increase in the industrial output was a bout 7 %. The woodworking industry still held its share of about 70 % of the total va

lue and volume of the exports. The cellulose exports increased by abt . 11 % to

talling 1 940 278 tons, which quantity was almost e. venly divided between sulfate

and sulfite . The total cellulose production also increased by 11 %. or up to

3 543 14 7 tons, of which the share of the sulfate cellulose was 2 075 942 tons,

showing an increas e of 9, 7 % from the previous year. The invoiced gross value

of exports through the Finnish Cellulose Union amounted to 868, 3 mHlion Finn

marks, which means a rise of 22, 3 %.

The export of sawn timber amounted to 991 000 stds or 1, 4 % more than in

J 963. Its monetary value increased by 11 % up to 6 22, l million Finnmarks. Fin

land ~s total production of sawn goods, 1 225 000 stds, was 7, 5 % more than in

the year before.

The export of round timber went down to 1 319 000 solid cu. m . due to the

increasing demand on the home market .

The temporary 15 % import levy, imposed by the English government on the

27th October, affected heavily the paper- 1 cardboard-, plywood- and wallboard

industries, wheras cellulose and unplaned timber were not directly subject to it .

The total volume of fellings in Finland 's forests during the last 'ogging ':ea

son, closing at the end of May. were nearly 20 % higher than during the previous

season, amounting to 53, 9 m illion cu. m.

The continuino overcut in the forests and the fear of a declining industrial 0

output due to shortage of raw material were of state-wide concern and pressed

upon the acceptance of the financing plan made to improve the forest productivity.

2.

In order to encourage the timber sales and to secure the prices of in

dustrial raw wood on a satisfactory level for the forest owners, the Central

Union of Agricultural Producers and the Central Association of Finnish Wood

working Industries agreed upon a mutual indication for pulp wood prices .

The crops failed to reach the level of the previous good year, owing to a

long dry season in most parts of the country and to frost-damages in certain

regions.

The house building was cut down and even though the activity in other

branches of the building industry was considerably increased, the total results

could not be brought up from last year "s level . (Jut

The cost. level continued to rise to the inflatory trend, noticeable also in

other countries . The index o.f the cost of living went up by abt. 10 % and the in

dex of construction costs by 7, 7 %. At the beginning of the year the labour organisations made in most fields

a 2-year wage-agreement bound to the index. It caused an average increase of

12-13 % in the wages during the year. The rise in wages, incomes for forest

sales and other earnings increased the public saving power inspite of the rising

commodity prices and advanced taxes. As the issue of state bonds was smaller

than during 1963, the public savings went up by over 400 000 000 Finnmarks and

the total deposits in the banks by about 7 %. Despite of the favourable develop

ment in public saving, the banks were unable to meet the increasing demand for

money caused by the raised cost level and by the animated business activities .

By the end of the year. the labour exchange files reported 36 000 persons

applying for work, of which 30 000 were without work corresponding to their

training.

The social security was improved. The Publich Health Insurance law given

in the previous year came into force in the beginning of April regarding the

premiums to be paid by the insured and the employers, and on the l st of Sep

tember regarding the remuneration~.

The keen competition for sa N logs continued throughout the winter and re

garding pulpwood even over the summer. In spite of the rise of log prices by

abt. 15 %, the purchasing targets set by the Company were reached only up to

80 % in saw logs and to 86 % in sulfate wood .

In winter 1963/1964 the weather conditions we r e favourable for the forest

works. There was less a.now than normally and the works progressed well.All

the purchased logs were delivered to the mills .

3.

In spite of the difficulties in purchasing saw logs I the saw mills of the com

pany were kept running at their full capacity almost throughout the year, which

resulted in an increased output levelling the 1961 production. Also the cellulose

mill was kept running at its full capacity in spite of the threatening reduction

in the paper wood stocks and the production surpassed all previous results.

Also the productions of the refineries and the chlorine plant exceeded those of

the previous year.

The total deliveries for export, home market and own use went up by 35 956

units or l O, 9 %. The stocks of the main products, cellulose and sawn goods, went

up by 3 997 tons) stds or 12, 8 %.

The turnover increased by 22, 5 % totalling 140, 96 million Finnmarks. It

was divided between different plants as follows : Nuottasaari mills 79, 62 %1 Pa

teniemi saw mill 13, 72 %, Hyrynsalmi saw mill 4, 5 6 % and joinery 2, 1 0 %.

The Company "s share of Finland "s total production of sawn goods was 4, 7 %,

making 4 % of the total export. The corresponding figures for sulfate cellulose

were 12, 2 % and 23, 7 %.

The value of investments and fundamental repairs to be activated, totalled

13, 5 million Finnmarks. The main new building projects at Nuottasaari were a

new soda recovery plant , the extension of the chlorine plant, a new 40 MVA

electric transformer with switchboard plants, a rosin size plant, a new mah

pipe for water and the modernizing of wood handling and barking plaht3 . The

soda recovery plant, the transformer and the rosin size plant were completed

during the year and started running at the end of December .

At Pateniemi the length sorting machine was completed and the construc

tion of a stacking plant started. Further, a new telephone exchange and various

machines were installed. At the joinery the new investments applied to reno-'

vation of certain machines.

The Company "s total expenditure on wages and salaries was 26, 2 million

Finnmarks, of which amount 4, 4 million Finnmarks were used by the forest

department.


The members of lhe A d ministrative council were: Mr. V . J . Sukse

lainen, chairman, until 10th March 1964, from which date on Mr. T.i .mo

Angervo ; Mr. Tauno Angervo, vice chairman, up to 1 C•th March 1964,

after that Mr. V . J . Sukselainen; regular members Mr. Esko K . Leinonen,

Mr. L . J . Ollonqvist, Mr . Vaine Tanner and Mr. Bjorn Weckman; deputy

members Mr. Antti Kivilahti, Mr . Kalervo Laine, Mr . K. N. Mati.tta and

Mr. Aku Sumu.

The :i.dministr ative c ouncil met five times.

BOARD OF DIRECTORS

The members of the Board of dirt:ctors were : Mr. Olli Paloheimo,

chairman, up to 10th March 1 964, since then Mr. Aarne Pelkonen ;, Mr.

Aarne Pelkonen, vice chairman until 10th March 1964, from which date

on Mr. Olli Paloheimo; regular member Mr . Kaarlo Lehtio ; deputy mem

bers Mr . Heikki Sihtola and Mr. Mikko Tahtinan.

The board of directors met twelve times .

MANAGING DIRECTOR

The Company's managing directo1· was Mr . Kaarlo Lehtio.

AUDITORS

The auditors were : Mr. Mauno Luotonen, Mr. Acvi Peltola, Mr. Osmo

Lu _1tonen, Mr. J . W. Rangell and Mr . Mauno Vahla. The deputy auditors

were: Mr. L.A. Punt ila and Mr . U. A . Vatanen.

Mr. Jaakko Heik.konen was responsible for the general audit.

4.

The following statistics and figures illustrate the Company"s

activities:

5.

xxx=x•••~~~~~*••x•••••==••= xxx•~•x•=•••= ••••••••••••••••*••••••••~ 1964 1963 1962

Logs and railway sleeper wood cu.ft. 11 225 375 9 892 799 l O 506 840

Pine pulp wood cu. m. 394 381 870 848 l 059 209

Fuel wood II 31 711 13 464 14 776

Spruce pulp wood for parent companies II 40 891 89 938 l 70 93 7

Birch pulp wood II 438 4 718

Pole wood 20 386 13 513

~-·········r.~········,·····--············= 1964 Percentage 1963 l 962

Primary: production

Sawn goods

Sulfate cellulose


stds

tons

II


Total

Refined output

Joinery products stds

De stilled ti tons

Total

Total amount of producing units

'

I

I

I Amount of own primary production used for refining, tons/

std Grand total for sale

II

49 719

253 11 8

13 045

53 921

369 803

528

16 419

16 947

386 750

-13 573

373177

of 1 963

143,7 34 604 45 516

106,4 237 892 197 056

108,3 12 040 1 O 675

114, 6 47 045 38 260

111,5 331 581 291 507

99, 1 533 501

104,8 15 662 13 273

104.6 16 195 13 774

11 l , 2 347 776 305 281

I I. -11 176 I 107,9 -12 573

I 335 203 1 294 105

'=======;s::c J:X:!

1964

TURNOVER in million Finnmark ~ 140,96

DELIVERIES etc.

SAW MILLS

Exports

Pateniemi

Hyrynsalmi

Total

Home market

Own use and joinery

stds

II

II

ll

It


Logs sawn 1 000 cu. ft.

CELLULOSE MILL

Cellulose shipment

Home market

tons

11


Sulfate wood used cu. m.

Sawn chips •I


Output in tons/24 hours

BYPRODUCTS

Exports

Home" market

Own use

CHLORINE PLANT

Exports

Home market

Own use

tons

ti

It

II

II

I f

2.9 381

l O 013

39 394

3 985

973

22 253

11 427

233 155

21 435

15 1 72

1 454 919

297 957

347

72.9

8 281

4 599

82

898

l3 585

29 665

6.

·~:::ir::~~==;;:;==1==;;::===,

l 22, 5 115,10 110,50

118, 7 24 757 l 35 042

11 0, 8 I 9 033 I 11 740

116, 6 33 790 46 782

100,3 3 975 3 364

68,4 1 4:23 1 900

132,5 16 793 20 263

143,5 7 963 l O 586

I

109,2 213 499 194 439

124, l

I l 7 279 16 862

91 I ~ I 6 635 9 522

103,5 l 405 507 I 933 799

112, 4 265 005 I 418 9 74

99,7 348 I ; ,-,.,

106 ,6 684 637

108, 3 7 6-E, .1 ·n. 81. 2 5 661 4 887

107,9 76 7 6

I 59,0 1 521 994

122,6 19 237 19 618

114, 1 25 9'1U I 18 6 21



EXPENDITURE

Salaries and wages

Interests

Taxes

Depreciations

Other operating expenses

Profit for 1964

Net r1;:ceipts

Interests

Dividends

Sundry receipts

INCOME

mk

mk

21 920 910 :90

5 003 892 :93

l 505 J 96 :99

13 528 481 : 78

7 026 036 :40

2 6J O 698 : Bl

51 595 217 :82

49 236 974:01

2 327 359 :47

I 2 978 :50

17905 :84

51 595 217:82

Annual turnover Fmks 140 963 31 2 :09

7.

Bala::1.:e sheet as at 31 st December 1964

Assets

Current assets Cash and claims to cash Receivables Securities Claims to loans

Inventories Raw material etc . Products Fuel

Fixed assets Plots, land and water area

Addenda Buildings

Addenda Machinery and equipment

Addenda Factory and transport equipment

Adde 01d~ Reduction

Securities

Estimated items

Exchange rate difference and the additional pay

Depreciation

Transitory items

1108817 :44 304 692 :55

32 539 366 :44 2 010 928 :37

83 086 924: 87 10 240 906 :36

8 135 002:27 747 155 :37

33 25 6:55

57 104:70 38 950 472:85 14 373 031 :30

6 758 920:-

IO 293 833:17 l 530 27 1 :83

394 486 :41

l 413 509 :99

34 550 294 :81

93 327 831 :Z.3

8 848 901 :29 3 000 551 :59

437 108:98 338 322 :07

Fmks

60 139 528 : 85

12 21 8 591 :41

141 141 088 :91

98 786 :91

79 384 :95 ----'--213 677 381 :03

8.

•

•

•

Current liabilities

Short term Suppliers B.ank debts Loans (mortgage) Other loans

Lo .. g term loans Mortgage loans

Liabilities

32 994 703:75 95 674 :16

513 500:-l: 840 17.:i :-

2 883 60] :09

38 444 352 :91

Other loans 52 850 ;i} :05 55 733 844:14 ________ ..:...._~

Estimated items


Addenda

De pre-.: ia~ions due to the machinery

Addenda

Depreciations due to the factory and traffic equipment

Addenda Reduction

Transitory items

Own funds

Sha re capital Reserve fund Liquid fund Taxes fund

Profit

Profit from previous years Profit from the current year

-·- . . -4- - ..

9 759 742:02 l 434 211 :76

73 536 1 75:90 11 622 812:30

6 198 337 :80 471 457:72

31 056:35

Gua ra 1tees: Endors~ n n:s 36 595 762 :80 Mortgages 27 4o9 775 :50

Fmks (,4 065 538:30

Foreign exchange loan.:; 26 307 723:28

11193953:78

85 158 980:2.Q

6 638 739:l 7

7 200 000 :-2 700 000 :-

028 000 :-600 000 :-

329 073:91 2610698:82

Fmks

94 l 78 197:05

10~ 991 681 : 15

2. 039 730 :I 0

11 528 000:-

2 939 772:73

213 677 381 :03

9 .

10 .

The Company "s accounts for the year 1964 show a profit of Finnmarks

2 610 698:82. As the balance brought forward from the previous years -Nas

329 073 :91 Finnmarks, the amount at the disposal at the shareholders "meeti:1.g

is Fmks 2 939 772 :73.

This amount is recommended to he U3ed as follows:

as dividend on share capital

to be carried forward to the reserve fund

to be carried forward to the liquid fund

as available funds for the board of management

Fmks

II

II

II

1 800 000:-

300 000 :- (up to 3 "00 000 )

472000:-( " 1 500 000 )

25 000 :-

342 772: 73

2 939 77?..:73

to be left on the profit a.nd loss account ___ '_' __ _

Fmks

Helsin,ki1 February 26 th 1965,


•

OULU OSAKEYHTIO


.Raw materials:

Logs: ( 1000 cub. feet )


Purchases

Consumption


Unit prices:



Purchases

Consumption


Unit prices:

Fuel etc. :


Products:


Units

10 351

8 533

11 427

7 457

2 452

1 584

1 455

2 581

At the beginning of the year 16, 8

Production

Deliveries


Unit prices:



Production

Deliveries


Unit prices:

Other products:


Chemicals: II

Supplies etc. : It

Oulu, 7. 4. 1965

49,7

44,2

22,3

16,6

253,l

254,5

15,2

1964 Book value

.mmk

0,97

-:13

6,23

2:41

0,39

0,73

33:-

0,30

20:-

0,49

1, 05

2,05

12, 21

Current value mmk

7, 71

1 :03

46,58

18:05

0,99

14,46

650:-

6,22

410:-

1, 46

1, 85

2,81

82,08 ------------------------------------------------------

..

OULU OSAKEYHTIO


{ in million Finnmarks )

Net Profit { Balance Sheet )

Plus:




Less:

Pension funds

other



Adjusted Net Profit

2,61

4,48

2,63

2,00

0,24

0, 15

1 1, 81 --------------------------------------------------------------------------------------------------------Sales

Long term debts

Equity:

share capital

reserves

surplus

Adjusted net profit

Ratios:

Adjusted net profit as % of sales

II II II 11 % of equity

Oulu, 7. 4. 1965

140,96

6 1, 09

7,20

4,33

2,94

14, 47

11, 81

8,4

8 l, 6

. •

AUDITORS" REPORT

Having been elected at the Shareholders., meeting on November 27 th

1963 to examine the administration and accounts of Oulu Osakeyhtio for

the year 1964, we have to-day completed our joint task, and, as a result

Lherof, make the following report:

Af: a supervisory controller for the year 1964, Mr. Jaakko Heikkonen,

KHT, has examined minutely the books of account of the company, and in his


able vouchers . Each time the cash on hand has been inspected in the course

of the year, it has been verified that the cash has corresponded to the ba

lance in the cash book. The interior control has been effective.

We have acquinted ourselves with the Minutes of the meetings of Share

holders, Boa rd of Administration and Board of Directors.

We have found the fire insurances on the company"s property to be in




drawn up, and the property has been estimated with sufficient prudence. Le

gal depreciations have been made from the operating funds . According to the

resolution passed by Lhe Board of Administration certain amounts were trans

ferred to Company"s Pension funds,after which the balancing shows a profit

of 2 . 610. 698:82 Finnmarks .


have been managed with definiteness and success.as well as to the company.,s



J. W . Ra.ngell

Mauno Vahla

Oulu. March 18th 1965 .

Mau no Luotonen

KHT

(Audi.tor approved by the Chamber of Commerce)

Arvi Peltola

Osmo Luutonen

'sani~ Report Jtib" 164_ ~ ~ '- '§h

FORM No. 295 ( 5. 63)

INTERNAT IONAL BANK FOR RECONSTRUCTION ANO DEVELOPMENT

PROGRESS REPORT SLIP

DEPARTMENT OF TECHNICAL OPERATIONS Division

Industry Country Period To Carded

Finland Dec. 31, 1964 Feb . 26, 1965 Loan or Project Type of Report

222-FI Oulu Osakey ti.tio Semi-Annual Operational -HOt" .... "

For Action To Action Taken Initial Date

cdld

(.

Mr-.- :fS!!!I t!!ls~" f,{#- 't/1 t.;,

Operational Fil ~s ;J ~I

._ Pr

~ ss on Project

Finance

Re s

OULU OSAKEYHTIO

operational report for the period

1 . 7 .... 3] . 12. 1964

GENERAL SURVEY


The prevailing high conjunctures in our trade partner countries of

western Europe led to a revival in the merchandise trading and to rising

economic activity. The great demand for the products offered well found"

ed prospects to a growing industrial production in Finland. The export, of

which the share of woodworking industry reached 70 per cent, grew both

in volume and value. So did the import, and, as an outcome of the rise in

the cost level in many European countries, its cif"prices weni up, and the

aggregate value of the import increased more than its volume. The growth

rate of the balance of payments deficit was bigger than in the previous year.

The English government surprised the EFTA countries as well as the

others by imposing a temporary 15 % import charge to take effect on 27th

October on all imported goods except foodstuffs, basic raw materials and

unmanufactured tobacco, and by taking some other steps necessary for im ...

proving the balance of payments position and for supporting the sterling.

This surcharge had no greater direct effect on Company"' s activity, as

her main export goods were not subject to it. By contrast, the Finnish pa"'

per", wallboard .. and plywood industry were fatally affected by it, as England - -is quite an important buyer in this market of ours .

The cost level showed an upward trend, and the prices of raw wood in

creased considerably in the latter part of the year. The cost of living index

having reached the level of 1 70 during the first half year, showed now l 74

points and thus led to an increase of 3 per cent in the salaries and wages,

the growth of which over the year was 12 .. J 3 per cent.

PRODUCTION


x~~=••~~~~~-~~~~~~--~~-•~•*~~----~r~~~~~P.~•••---·~~•1 Pruduction tons / stds _ -----

Pateniemi saw mill

Hyrynsalmi .. u ...

Joinery

Cellulose mill

Byproducts

Chlorine plant



1. 7. " 31 . 12.64 l.7. e-31 . 12. 63

l 7 738, 7

5 081, 0

l 48, 8

129296,5

8 538, 5

27410,0

188 213, 5

102,8

11 109,l

4 465, 0

293,7

125 973, 2

8 642, 5

26 687, 6

1 77 l 71 , 1

971}

The total output and refining of all units of the Company during the

year surpassed that of previous year by 11 per cent and thus reached

386 750 units.

SALES

2.

Due to the prevailing great demand the outlined sales program was

carried through. The amount of cellulose sold and delivered during the

year totalled 254 590 tons, out of which quantity 233 155 tons were exported

and 21 435 tons sold inland, which meas they are up by 9, 2 per cent in the

exports, and 24, 1 per cent in home deliveries by comparison with last year.

The amount of the export of the byproducts was 8 281 tons which is 8, 3 %

more than in 1963, and the home deliveries 4 599 tons which means 19 per

cent less than last year. The amount of the products of the chlorine plant

delievered inland was 23 585 tons which means a 22 , 6 per cent,. s excess

by comparison with 1963. Further an amount of 29 665 tons, which means

14, l per cent more than last year, was used in Company,... s own bleaching

plant.

The export of sawn goods was 39 394 stds, which means 16, 6 per cent

more than in the previous year. The amount of home deliveries was 3 985

stds which is about the same as earlier. On December 31st an amount of

21 000 stds was contracted for delivery in 1965, which quantity ~s equiva ...

lent to 63 per cent out of the supply.

The annual invoicing of the Company in 1964 totalled 140, 96 million

Finnmarks showing thus an increase of 22, 5 per cent when compared to

previous year.

..

FINANCIAL SITUATION

·-······----r·~~---~----~·-··1--~~--··)IICC~---··.,.·····~·-·····-i Long term Cheque Sawn goods T o t a 1 loans accounts I debts in million Finnmarks j 1964 1964 1964 1964 1963 I

30. 6.

31. 1 2.

. I I 62,05 ... 0,74 5 1 11 66,42 I 71,82 I

60,87 0,45 0,72 62,04 63,72 i "l, 18 +I, 19 ... 4, 39 .. 4,38 "8,10

The following statistics illustrate the income from products as well

as the receivables and the value of current stocks:

·····~················-~······,-~---~-~~r··········~~---·~--~~ Received Receivables Stocks

Sawn goods in million Finnmarks 31,08 l, 80 12, 46

Cellulose 45,69 l, 21 6 t 01

Chemical products 3,86 0,69 0,56


Tall oil soap 0,08 0,01 0,01

Chlorine and caustic soda 2,61 o, 81 o, 19

Joinery products 0,70 0 1 62 0,44

Total 1.7 ... 31.12 . 84,25 5,19 19,73

Previous year • 11 ... 75,35 6,24 15,86

The production and the income from products during the .first half of


Production Income

3.

Cellulose 125 000 tons

25 000 stds

52 mill . Finnmarks

Sawn goods

Other products

Oulu, February 15th, 1965.

6

7

... 11 ...

.. u ..

65 mill . Finnmarks

-~~--~·-········· OULU ~EYHTIO- .L

... ~'- .. c~~-7/C~::: ~)~t.ll/vt ~

~

FoRM ~o. 295 ( s. 63 l

dsh

INTERNATIONAL BANK FOR RECONSTRUCT ION AND DEVELOPMENT



Industrv Country Period To Carded

FINLAND June JO. 1964 August l2, 1964 loan or Project Type of Report

22?.-FI (Oulu Oy) Semi-Annual Operational Report

For Action To Action Taken Initial

p ('~ - ~

n .... --~ Ji\i 1 ~= .

... ress on Project

Finance

rks .

Date

.J./;.;A

r

OULU OSAKEYHTib

Operational report for the period 1. l - 30, 6.1964.

GENERAL SURVEY

Finland's total production began to thrive during the forepart of

the year. The industrial output from January to the end of April was

about 8 % higher compared with the same period last year. The

growth in the woodworking and paper industries was above the average,

whereas e.g. the increase in the metal industry was only about 3 %. The value of exports was during the first five months about 23 %

and their volume about 17 % greater than a year before. In this

connection, however, it is to be taken into consideration that the

strikes in the previous year had stopped railway transports and

harbour works for a long time. Exports mainly increased in the

paper industry, while exports of the metal industry were decreasing.

Exports of cellulose were in the first halfyear 13 % higher than during

the corresponding period last year. Exports of round timber showed

a falling tendency all the time.

On the other hand, however, total imports increased relatively

more than the exports, and therefore the deficit in the balance of

trade was growing.

The deposits in the commercial banks were in the first halfyear

about 128 million marks greater than du.ring the corresponding time

last year. This positive development was caused by the general rise

of incomes, by the exemption of long-term index accounts from taxes

and by the decrease in the sales of state bonds. The economical activity

in general and also the rising in costs increased, however, the demand

for credit so taat the banks were unable to meet it satisfactorily.

The new law of the turnover tax, which came into force on

January l st, showed a tendency to raise the price level. The cost

of living index, which in December 1963 showed 158 points, rose in

-r

the course of the halfyear by 7 % or to 170, The corresponding rise

in the cost of building trade index was 3, 4 %. Collective bargaining, which had begun as early as the end

of last year, led in the middle of January in general to two-year

contracts, which meant a 6 % rise in wages from the beginning

of the current year and a 3, 8 % rise from the beginning of 1965 .

In addition, the wages were bound to the cost of living index.

Therefore the wages had to be raised as soon as Febryary 16th

by about 3 %.

PRODUCTION

Though there were some difficulties in obtaining sawn timber,

the result of the lumbering year was better, however, than estimated.

Because the demand for sawn timber was good, saw mills could run

at nearly full capacity.

A s from the following table of figures is to be seen, the output

of all the plants of the company was greater than during the

corresponding time last year.

-----------==--=-=--===-=----===================================== Production tons / stds

l, l - 30. 6. 64 l. l - 30 . 6 . 63

Pateniemi saw mill 19 202,2 12221 , 8

Hyrynsalmi -" - 6319,2 5 565, 0

Joinery l 7 56, 7 l 482 , 7

Cellulose mill 123 822, 0 111 919, 0

Byproducts 7 880, 4 7 019, 2

Chlorine plant 265ll,l 20 357, 0

Production units (total) 185 491, 6 158 564, 7

% of the production capacity 10 l, 3 86,2 I

SALES

The cellulose had a ready sale. All the orders Scandinavian

countries received during the fir st halfyear corresponded to

expectations except those from Italy, where authorities placed

restrictions on the allowance of credit in order to check inflation,

This resulted in cancellations and postponements of orders for

cellulose. The estimated supplies of Northern Countries seem,

-,.

however, to be marketed. The prices remain unchanged.

The positive development of the market situation allowed

also the increasing of production. The total output of cellulose in

Finland was in the first halfyear 150 000 tons greater than during

the corresponding time last year . Exports increased by 112 000

tons and the selling stocks decreased by 34 000 tons.

During the first halfyear ou r company sold 201 000 tons or

about 16 % more than during the corresponding period last year.

The sales of chemical products and joinery products showed

a rising tendency both in quantities and in prices .

Also the marketing of sawn timber was running well. Soviet

Union increased her sales-except to other European countries -

specially to England, where in the middle of June it exceeded

500 000 stds for the first time after the war. In spite of

that the demands also for northern sawn timber were good. This is

explained by the phenomenal growth of consumption of sawn timber

in England, which exceeded all estimates made beforehand.

By the end of June about 860 000 stds (about 820 000 stds

in 1963) were sold from the whole country. To England from this

quantity had been sold more than 390 000 stds. The corresponding

amount of last year was 340 000 stds.

The sales of sawn timber of our company were 93 % from

what had been estimated.

FINANCIAL SITUATION

========1====================== =============f================== Long Cheque I Short term credits I T o t a 1

1. 1

30. 6.

1.1 - 30 . 6.

term accounts Bills of ' Sawn in_ million new loans I d F1nnmarks exchange goo s

debts 1964 '

1964 I 1964 I 1964 1964 1963

63, 47 0,23 I -I

' 0,02 63, 72 65,34

62,05 0, 74 - 5, 11 66,42 71,82

-1, 42 I -0,97 - +5,09 +2, 70 +6,58

I

I

..

•

The following statistics illustrate the income from products

as well as the receivables and the value of current stocks:

-----------------------------------------------------------------------1 Received Receivables Stocks


Sawn goods 4, 32 2,55 19,87

Cellulose 50,20 0, 43 5, 39

Chemical products 2,82 0, 72 0,88


Tall oil soap 0,06 0,02 0,01

Chlorine and caustic soda 3, 13 0,57 0, 11

Joinery products 0,64 0,46 0,44

Total 61, 38 4,81 26, 72

Previous year 47, 28 6, 60 27,24

The production and the income from the products during the second

half of 1964 are calculated to be as follows:

Cellulose

Sawn goods

Other products

Production Income

120 000 tons 48 000 000 Fmks

20 000 stds 23 000 000 II

6 500 000 II

77 500 000 Fmks --------------------------------

Oulu, July 27th 196f'

~ E;,~~J,. ~

FnRM No .· 29 5 ( 5. 63)

INTERNATI ONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT


Division

mlh

DEPARTMENT OF TECHN I CAL OPERATIONS TOD - lnnustrv Country Period To Carded

FINLAND Dec. 31. 1963 Mav 6. 196l. loan or Project Type of Report

222- FI OULU OY Yearly Financial Report


H. ~ ~ tlt 7 \ 1<l1ci 1 _..V" ' At/3 ASB:tnttscnea!e!' Nd.A/),' t

p (

Onera tional FileE

-Progress on Project

Finance

Remarks


o:f

OULU OSAKEYHTIO

for 1963

IBRD-Loan 222-·FI

OULU OSA.KEYH TIO

Annual report for the year J 963

The start to the 28th year of the Company"s activities was indicated

by the monetary reform, which meant that one hundred old Finnmarks is

to correspond one new Finnmark, and one old Finnmark one new penny.

A business revival and firming conjunctures on our European markets

were already pronounced.

The industrial output in Finland showed an increase of not quite 4 per

cent. The development varied greatly according to various branches. The

grow th in paper and cellulose industry was approx. 10 per cent and in the

wood industry approx. 4 per cent, wheras the output of the metal industry

remained approx. 4 per cent smaller than in the previous year .

The total turnover of the foreign trade surpassed that of last year by l

per cent, due to the increasing export by 3, 7 per cent and decreasing import

by 1, 6 per cent. The excess of imports was cut down to 202 million Finn -

marks which is about a half of the corresponding amount in the previous year.

After the rise in the export prices the terms of trade improved.

The value of home trade increased - although to some extent due to the

raised prices - in the wholesale stage approx. 8 per cent and in the retail

sale approx. 7 per cent.

By the increasing consumption of paper products in the purchasing

countries the marketing of cellulose was made easier , and so, by the end of

the year, more offers could be passed. The amount of cellulose exported

from Finland increased by 1 2 per cent up to 1 74 7 000 tons, out of which the

raise of sulfate cellulose was 20 per cent and its total quantity 892 000 tons,

The prices could be brought almost to the level of 1961. The invoice value

of the cellulose exported was 709 million Finnmarks which is 13, 7 per cent

more than in the previous year .

Due to the increased exports and inland deliveries the total output of

cellulose got up by 8 , 9 per cent to 3 l 93 000 tons. Out of this amount the

2.

raise of sulfate cellulose was 14, 9 per cent and the output 1 893 000 tons .

The amount of sawn goods exported was 977 000 stds ~hich is 3, 3 per cent

less than in the previous year . Because of the slight rise in the prices the va

lue of exports however totalled 560 million Finnmarks, which is about the same

amount as in 1962.

The total production of the commercial saw mills was 1 140 000 stds

(1 135 000) .

At the end of the timber operating season the volume of lumbering for

sale was about 45 million cubic meters corresponding to 48 million cubic me

ters in the previous year. So the cutting quantity was reduced by 6, 3 per -qent .

Further, there was an eve r growing disproportion between the increased capa

city of woodworking industry and the availability of raw wood which lead to an

eager competition for purchasing and accordingly to unreasonably high prices.

The industrial investing activity as well as the house building was reduced .

When compared with the previous year every quarter of 1963 reported more

than ten per cent~ s decrease in the building activity, being obviously result of

the scarcity of money in circulation and declining industrial profitableness .

Despite the fact that the State passed out big debenture loans the deposit activi

ty of the commercial banks improved, their total receivings on the deposits

being advanced by more than 3 per cent. The banks , however, had to restrict

their lending business in order to reduce the rediscounts , and succeeded to cut

them down by 3 per cent from the amount of the previous year.

The empolyment situation grew worse. By the end of the year the labour

exchange files reported ten applicants for one open job, and a doubled number

of unemployed ones seeking for work.

The economic life was sorely afflicted under the first quarter of the year

under review. Both the public and private sectors were disturbed by strikes

which stopped the postal service as well as railroad and sea traffic . Even the

banking was pralyzed for some days, in addition to which the operating of some

exporting industries was interrupted.

The collective wage agreements, made after arduous negotiations in early

spring , were valid only until the end of the year . Their effect on industrial

wages reflected as a rise of approx. 8 per cent. By the end of the year the

most wage agreements were revoked by employees~ and functionary organi

zations. The discussions for a new concentrated solution, a basic agreement,

were eagerly started in good time by all central organizations concerned.

As the negotiations re wages and the validity of agreement, however , were be

set with difficulties, no conclusion was reached by the end of the year, not even

despite the fact that the State arbitrator exceptionally early offered his propo

sal for a 2 year general agreement.

Forest workers -'wages were raised by approx. 7 per cent in January and

by approx. 3, 5 per cent in October. At the latter date the validity of wage ag

reement was prolonged until the end of May.

Importance was attached 1by the State to facilitate industrial activity, among

other things by making easements in credit system for mechanical and ship I

building industry as well as for small scale industry.

State .,s own economy met with troubles and adverse cash balance which

situation the Council of State tried to ease up by raising certain costs, railroad

tariffs, taxes and prices.

3.

The cost level in Finland was advanced sooner than in many other European

countries, and the economic situation as for international competition looked no

good. The cost of living index, having showed in December 1962 150 points was

raised during the year by 8 points which means 5, 3 per cent. The rents of houses \

were increased considerably. The construction cost index got up during the year

by 7, 4 per cent showing now the figure 145.

After the EFTA ministerial council had decided at its Lissabon conference

in May to speed up the tariff reduction program, and after the FINEFTA minis

terial council in Helsinki had done the same as far as it concerned Finland, the

position of our country was secured within EFTA and her chances remained

equal with other countries as for competition on the EEC markets.

The target set for purchasing raw wood was not reached this year, as only

72 per cent saw logs and 80 per cent sulfate wood out of the volume aimed at

were o':>tained. The logging was carried out under good weather conditions, and

the required quantities of sulfite pulp for the mills of the parent companies

were purchased. The increased value of standing timber as well as the higher

expenses advanced the wood prices at the mill to such a degree that the chances for

profitable production further kept on reducing.

Due to the growing demand the capacity of Nuottasaari mills could be utilized

better than before, and the cellulose mill running at its full capacity since August.

Due to the lack of logs the sawing had to be cut down further by 24 per cent from

the volume of the previous year. In spite of all this the total output of all the units

of the Company during the year under review exceeded that of previous year by

4 per cents.

The total amounts of deliveries for export, home trade and own consumption

4.

surpassed that of last year by 1 7 5 77 units which makes 5, 6 per cent.

The stocks of sawn timber had reduced by the end of the year by 3 470

stds and those of cellulose increased by 7 113 tons from corresponding

amounts in the previous year.

The turnover of the year was 115, 1 million F innmarks being composed

in percentages as follows: Nuottasaari mills 80 , 24 per cent, Pateniemi 12, 85

per cent, Hyrynsalmi 4, 70 per cent and Joinery 2, 20 per cent.

The Company"s share on the production of sawn woods of the whole country

was 3 per cent, and that of export 3, 4 per cent. As to sulfate cellulose the cor

responding figures were 12, 6 and 24, 0.

The building activity of the Company was livelier than in the previous year.

The new head office of the Company was completed. Part of h could be I

taken into use in June and the house entirely in August .

At Nuottasaari the building of a new soda boiler house of 67 500 cubic me-

ters was started in March and got as far as to its rooftree by the end of Novem

ber . The enlarging of the semi-bleachery was carried out at two stages in April

May and at the beginning of September. The starting of the enlarged plant succeed

ed well.

The refinery for byproducts and the chlorine plant were furnished with new '

larger underground pipe systems for industrial use as well as for drinking and

fire extinguishing purposes. Three storage tanks were completed for turpentine

refinery in December.

At Pateniemi saw mills the modernization of the barking plant, started in I

the previous year, was finished . The impregnation plant and the storage area \

for poles were extended. The. water and draining system for the housing area

after several years" staged work was completed. The connecting road between

' the saw mill area and the high road was built through public road builders"

organization.

At Hyrynsalmi saw mill an all year round operating plant was built for pre-

vention of discoloration.

At the join.ery the shed for timber storage was finished .

The investments of the Company totalled 9, 6 million Finnmarks .

Industrial peace reigned at the Company, wheras the. strikes outside dis-

turqed somewhat the activity 'and caused extra expenses .

The Companys total expenditure on wages and salaries was 21 , S million

Finnmarks , out Oil which a sum of 3 , 7 million Finnmarks was spent for the I

forest department.


The members of the Administrative council were: Mr . V. J. Sukse

lainen (chairman) , Mr. Tauno Angervo (vice chairman), Mr . L. J. Ollon

qvist. Mr. Vaino Tanner, Mr. Klaus Waris and Mr . Bjorn Weckman.

The deputy members were: Mr . Antti Kivilahti, Mr . Kalervo Laine, Mr.

K. N . Maatta and Mr. Aku Sumu.

The Administrative council met four times.

BOARD OF DIRECTORS

The members of the Board of directors were: Mr. Olli Paloheimo

(chairman) , Mr. Aarne Pelkonen (vice chairman) and Mr. Kaarlo Lehtio.

The deputy members were: Mr. Heikki Sihtola and Mr. Mikko Tahtinen.

The board of directors met eight times.

MANAGING DIRECTOR

l'he Cornpany,.s managing director was Mr . Kaarlo Lehtio

AUDITORS

The auditors were : Mr. Mauno Luotonen, Mr. Arvi Peltola, Mr . Osmo

Luutonen, Mr . J. W. Rangel! and Mr. Mauno Vabla. The deputy auditors

were : Mr. L.A. Puntila and Mr. U . A . Vatanen.

Mr , Jaakko Heikkonen was responsible for the general audit .

5.

The following statistics and figures illustrate the Company"'s

activities:

xzx~xxx~xxxzxzxx~xxxxxxx=xxj'xxxxxxxxx~xxi=~xxxxx•xx•x 1963 1962

Logs and railway sleeper wood cuft

Pine pulp w cod

Fuel wood

Spruce pulp w cod for parent companies

Birch pulp wood

Pole wood

cum II

II

If

I I 9 892 799

870 848

13 464

89 938

436

13 513

l O 506 840

1 059 209

14 776

l 70 937

4 718

1961

1.3 582 645

162 946

5 437

l 75 087

12 265

==~xxxxxx~x~xxxxx~xxxx~xxx~x~xxx=x~x=r.x=~x=~•••j•x=xxxxx~x•xx=xxxx~ jPercentage

1963 of 1962 1962 I 1961 I

p rimary production: I s :1.wn goods stds 34 604 I 76,0 45 516 49 418

s ulfa te cellulose tons 237 892 120, 7 197 056 2U2 099

Tall oil and turpentine It } 2 040 I 11 2, 8 I 10 675 11 766

Chlorine and caustic soda'' 47 045 123 , U 38 260 34 667

Total 331 581 113, 7 291 507 297 950 I

Refined output:

Joinery products stds 533 106,4 501 475

De stilled II tons 15 662 I 118, 0 13 273 13 076

Total 16 195 117, 6 13 774 13 551

I I Total amount of producine: units 347 776 113,9 305 281 311 501

6.

7 .

=-=--~~-~*=--~--~:c:============:ip;=======•,==•==••==~•==•=~-=-:~~===~~~~~Percent-


DELIVERIES etc .

SAW MILLS

Exports

Pateniemi

Hyrynsalmi

Total

Home market

Own use and joinery

stds

II

II

,, II

Stocks at the end of the year 11

Logs sawn 1 OOu cuft

CELLULOSE MILL

Cellulose shipment

Home market

tons II


Sulfate wood used

S:1.wn chips



BYPRODUCTS

Exports

Home market

Own use

CHLORINE PLANT

Exports

Home market

Own use

cum

II

tons

ti

II

ti

II

II

1963 age of 1962 1961

l 15, l 0

24 757

1 033

33 790

3 975

1 423

16 793

7 963

213 499

l 7 279

16 635

l 405 507

265 005

348

684

7 645

5 661

76

l 521

19 237

25 990

1962

104,2

70,6

76,9

72,2

11 8, 2

74,9

82,9

75,2

109,8

102 , 5

174,7

150,5

63,3

112, 6

107,4

153,6

115,9

100,0

153,0

98,0

140 , 0

110,50

35 042

l 1 740

46 782

3 364

1 900

20 263

1 O 586

J 94 439

16 862

9 522

933 799

418 974

309

637

4 976

4 887

76

994

19 618

l 8 621

103,67

33 673

11 169

44 842

2 880

l 445

25 962

J l 237

l 70 021

15 482

23 920

945 222

469 368

337

600

2 795

5 360

185

1 152

17 491

14 822



EXPENDITURE

Salaries and wages

Interests

Taxes

Depreciations


Profit for 1963

Fmks

INCOME

Net receipts

Interests

Dividends

Sundry- receipts

Fmks

Annual turnover Fmks 115 104 070 : 23

1 8 256 338:06

4 596 668 :92

1 915 857:74

13 500 965 :52

4 587 090 :04

2 049 001 :09

44 905 921 :37

43 667 673 :51

l 201 265 :86

12 889:-

24 093 :-

44 905 921:37

8.

Balance sheet as at 31 st December 1963

Current assets


Inventories Raw material etc. Products Fuel

Fixed as sets Plots, land and water area

Addenda Buildings

Addenda Reduction



Addenda Reduction

Securities

Estimated items Exchange rate difference and the additional pay

Depreciation

Transitory items

Assets

906 020:44

89 941 :30 36 458 591 :59

8 416 153:69 6 785 820 :-

8 252 835:67 l 412 264:34

320 061 :92

202 797:- l 108 817:44 29 017 556:31

3 522 280:13 470:- 32 539 366:44 ___ ....;....;..c...;._

77 892 744:06 5 220 049:32

25 868:51 83 086 924:87

7 636 693:80 592 481 :84

94173:37 8 135 002:27 2 800 793:99

690 475:71 .342 276:66

Fmks

51 750 506:58

9985161:93

127 670 905:01

348 199:05

35 998:80

189 790 771 :37

9.

Current liabilities Short term

Suppliers Banks debts Loans (mortgage) Other loans

Long term loans Mortgage loan Other loans

Estimated items


Addenda Reduction


Addenda Reduction

Depreciations due to the factory and traffic equipt'nent

Addenda Reduction

Transitory items

Own funds Share capital Reserve fund Liquid fund Taxes fund

Profit Profit from previous years Profit from the current year


Fmks

Liabilities

21 189 223 :09 315 722:02 504 400 : -

4 609 195 : -

3 406 1 81 :89

26 618 540 :1 1

54 949 442:27 58 355 624:16

9 317 330:17 442 552:85

----'-I 4 __ 1:.....::.....-_ 9 7 5 9 7 4 2: 0 2

60 995 077 :38 12 566 967:03

25 868:51 73 536 1 75:90

5 798 618 :61 491 445 :64

91 726:45

34 820 110 :14 28 764 395 :64

63 5 84 505 :78

6 198 337:80

7 200 000 :-2 700 OOv : -

028 000 :-600 000 :-

90 072:82 2 049 001 :09

Fmks

Foreign exchange loans 11 28 240 962 :33 xx=~~x====~x===x~==~

84 974 164: 2 7

89 494 25 5 :72

1 655 277:47

11 528 000:-

2 139 073 :91

189 790 771 :37

10.

The Company"s accounts for the year 1963 show a profit of Finnmarks

2 049 001 : 09 . As the balance brought forward from the previous years was

90 072 : 82 Finnmarks, the amount at the disposal at the shareholders .,meeting

is Fmks 2 139 073 :91 .

This amount is recommended to be used as follows :



to be carried forward to the Profit and Loss account

Fmks

II

II

Fmks

Helsinki, March 10 th, 1964.

800 000 :-

l O 000 : -

329 073:91

2 139 073 :91

BOARD OF ADMINIBTRATORS BOARD OF DIRECTORS

11.

OULU OSP..KEYHTIO

.:>tatement of h1ventories

Raw materials:

Logs: (lLlOO cub. feet)


Purchases

Consumption


Unit prices:

bulphate wood: (1000 cub. met.)


:E-'urchases

Consumption

At the end of tlle year

Unit prices:

Fuel etc.:

1\t the end of the year

Products:

Sawn wood goocis: (lOuU stds)


Production

Deliveries


Unit prices:

Sulphate cellulose: (lOuO tons)


Production

Deliveries


Unit prices:

vther products:

.at the end of the year

Chemicals: 11

Supplies etc. : ti

Units

r{ 487

9 827

7 963

l J 351

l

l

.!.

533

32,1

4Ll5

45l

!O, 3

34,6

38, 1

16, 8

9,5

• 3 7, 9

..!3U, 8

16,6

.... .,. ., ....

0ulu , . -i. 19b4

1963 Book value

mmk

1,35

- :13

3,35

1:37

u, 32

1.J, 54

3.2:45

G, 33

~v :-

0,53

1, 2 ....

l ,35

9,99

Current value mmk

10,43

l :O l

43,9l

l 7 :91

1, !.4

9, ... 4

550:-

l), 15

370 :-

1, :U

l, 14

-, { 0

,7,l3

.,

C

OULU OSAKEYHTIO


( in million Finnmarks )


Plus:




Less:

Pension funds

other



Adjusted Net Profit

Sales

Long term debts

Equity:

share capital

reserves

surplus

Adjusted net profit

Ratios:

Adjusted net profit as % of sales II II II II % of equity

2,05

5,08

0,39

2, 12

5,40

115, 10

63,47

7,20

4,33

2, 14

13,67

5,40

4,7

39,5

Oulu, 7. 4. 1964

C

THE AUDITORS/REPORT

Having been elected at the Shareholders; meeting on November 21 st

1962 to examine the administration and accounts of Oulu Osakeyhtio for

the year 1963, we have to-day completed our joint task, and, as a result

therof, make the following report:

As a supervisory controller for the year 1963, Mr. Jaakko Heikkonen,

KHT, has exa.mined minutely the books of account of the company, and in his



of the year, it has been verified that it has corresponded to the balance of

the ca sh book.

We have acquainted ourselves with the Minutes of the meetings of Share


We have found the fire insurances on the company"s property to be in

force, and , in our opinion, sufficient.



drawn up and the property has been estimated with sufficient prudence. The

balanc.ing shows a profit of 2 049 001 :09 Finnmarks.

As we, in view of the above, have found the activities of the company

to have been managed with definiteness and success, as well as to the com

pany;s advantage, we prnoose to the General Meeting, that the account to

be proved and those concerned to be granted their discharge of the year

1963.

J. W. Rangel!

Maune Vahla

Oulu, March 25 th 1964

Mauno Luotonen

KHT

Arvi Peltola

Osmo Luutonen

~ Sani-A.nnual Report I

\ DecEl!lber 1963•

F~RM No . , 295 ( 5- 63)

mlh

INTERNATIONAL BANK FOR RECONSTRUCT ION AND DEVELOPMENT


DEPARlMENT OF TECHNICAL OPERATIONS Division

TOD - Industr.v Country Period To Carded

FINLAND Dec. .31. 196.3 March 17, 1964 Loan or Project Type of Report

222-FI OULU OY Semi-Annual Operational


F-. Gali=-

AEB-t-..:i '"\P.ffllnl er 1,0 1a .. ,, 1

One- - 'Fil AA

,__ Prvy, vSS on P roj ec t

Finance

,__ Re s

.. IBRD-Loan 222-FI

OULU OSA.KEYHTIO

Operational report for the period 1. 7. -31. 12.

1963

GENERAL SURVEY

During the last six months of the year a business revival and firming

conjunctures on Finland "s most important export markets were recorded.

In our country the rise in the total output in 1963 remained somewhat small

er than in the previous year, but was , however, nearly 4 per cent. The pro -

duction of the paper and wood industry increased, wheras e.g. that of metal

industry decreased.

The foreign trade was brisk during the period under review, with the

result that the total turnover of the year exceeded that of the previous year

by approx. I per cent. The growth in the exports was 3, 7 per cent, and the

reduction in the imports l, 6 per cent. Due to the stability and rise in export

prices the terms of trade improved.

After the Efta-countries had decided to speed up the tariff reduction

program Finland was taken into about the same scheme, which means that

our country still has equal chances with the others for competition on the

Efta markets.

The prices for pulp wood and for saw logs especially, went up consider

aoly, and the whole cost level showed an upward trend. The cost of living in

dex that in May showed 153 points,went up by December to 158 points.During

the whole financial year 1963 the index increased by 8 points which means

5, 3 per cent. The construction cost index went up during the year from the

figure 135 to 145.

The industrial investment operations as well as the building activity

showed a decline, leading to higher unemployment figures.

PRODUCTION

The output of sawn timber of the Company was approx. 28 per cent

below that of the corresponding period of the previous year, wheras the out

put of cellulose, byproducts and the products of the chlorine plant increased.

2.


===.::::=::t=:ac====:=::;=:;:::.::;;;;;;:.:;;:::=:====;;:::·=:;::i.:;::::::::;:;::========;:::.i==:::.:.,:::=:===!!l~.::=:::=:ai.:===~=;:::;=i=::::=;:::;;::;::

Production tons / stds I

Pateniemi saw mill - ,,_ Hyrynsalmi

Joinery

Cellulose mill

Byproducts

Chlorine plant



SALES

1.7.-31.12.63

11109,l

4 465, O

293,7

125 973,2

8 642,5

26 687 1 6

177171,1

97, 1

1.7.-31.12.62

18 160, 2

4 837, 0

307,8

89 030, 6

6 242, 9

l 7 963, 8

136 541, 8

Bl, 5

The sales of the cellulose producers in the northern countries exceeded

the expectations of the first part of the year, resulting to an increased amount

of deliveries by the end of the year. The greater demand lead accordingly to

advanced prices which could be raised by 2-3 pounds per ton by the end of the

year. The amount of the cellulose export of the Company during the year 1963

went up to 213 500 tons and the home deliveries up to 1 7 300 tons, which meant

an increase of 9, 8 per cent in the exports and 2, 5 per cent in home deliveries

when compared to the corresponding figures in the previous year. The amount

of the export of oyproducts was 53, 6 per cent and the domestic sales 15, 9 per

cent above the corresponding figures in 1962. The products of the chlorine

plant were marketed almost entirely in homeland, and the amount of them re

mained aoout the same as in the previous year. Own use was raised by 40

per cent.

The amount of sawn goods exported during the year 1963 totalled 33 790

stds which makes 72, 2 per cent of that in the previous year. The amount of

homeland deliveries was 3 975 stds which is 18, 2 per cent above the corres

ponding figure in 1962. The amount of forward sales for deliveries in 1964 on

December 31 st 1963 was approx. 20 000 stds.

The annual invoicing of the Company in 1963 totalled 115, 1 million Finn

marks, having amounted to 11 O, 5 million Finnmarks in the previous year.

3 •

FINANCIAL SITUATION

==========,={~;~:;~~==~~=~::~~=~-;:::=~;::~ loans accounts debts

===;::=;==~=~~~~=~=~=~~'A=, Tot a 1

in million Finnmarks I 1963 1963 1963 1963 1962~

30. 6. 65,71 +o, 05 6, 16 l 71,82 l 75,82

31.12. 63,47 Li , 23 0 , 0 2 63,72 65, 14

1.7.-31.12. -2,24 +0 ,28 -6,14 I - 8 , l 0 I -1 0 ,68

The following s ta tis t ics illus t rat e the income from produc t s as well as the

receivables and the value of current s tocks:

-------~---------------------- -===~==~===~9r========~===~==========~-Received Rec eivables Stocks

Sawn g oods in million Finnmark s 30,26 0 ,78 9,24

Cellulose II 79,77 3,47 5 ,52

Chemical produc t s II 6,58 U,46 0 ,43

Oulu wall paper II 0,37 O, G3 0 ,07

Tall oil soap " 0 I 1 l 0 ,01 0 , 0 1

t Chlorine and c a ustic soda'' 4, 11 l , 1 7 0 , 21

Joinery produc t s 11 I l 44 I 0 ,32 0 ,38

Tota l II i 122,64 l 6,24 15, 86 l Previous yea r " 110,54 10 ,88 14,85

The production and the inc ome f rom product£ during the firs t half of 1964

are calculated to be as follows:

Cellulose

Sawn g oods

Other p roduc t s

Produc tion

120 000 t ons

20 UOO stds

Oulu, Ma rch 5 th, 1964. ,---.. ..

OULU rAKEYHTIO

~ / /~~~

Income

4 0 mill. Fmks

6

6

- 11_

- 11_

5 2 mill. Fmks

' mlh

FORM No. 295 ( 5. 63)

INTERNATIONAL BANK FOR RECONSTRUCTI ON ANO DEVELOPMENT

PRO GRESS REPORT SLIP


TOD - Ind us tMr Country Period To Carded

FINLAND June 30, 1963 August 8 , 1963 Loan or Project Type of Report

222-FI OULU Semi- Annual


G..._Ki::-.... 4--- t l C -'i -6 ,

A~indechedl~ - (1(cB lo-2 .e,3

~ t lA·>-4;:

Opera . Files

,___ Pr-,, . .:ss on Project ~ d. ~

S.J-~ '', - '-"'-·\ • """"'' 1s ,,~ f .~~ ,,_ ,.,.., (e«:.c..c-r< \"' ;id,.uJ~..._, e-{ )_~'iV t, cod-o) • (o;,\'" '-""(A"-~

{ w,.~, t~ l<d<>, , - ~;;tl...1,o,. c..;, t:, ) ~ = ~s.ual

("o t. \o]~~ A~

Finance

-Re s

... ~

OULU OS AX: EY:U:'r.IU

\, OOLIJ

OULU OSAKEYHTid

Operational report for the period 1. 1. - 30.6.1963.

GENERAL SURVEY

During the first quarter of the year the economic life of

our country was disturbed by many long strikes with the result

that railway transports and postal communication were checked,

harbour works were slackened and the building activity was

suspended in many places. Because of the strikes about 1, 3

million working days were lost . The cash income of the state

and the export income of the industry decreased essentially.

The production plants were, however, tried to keep going

to such an extent as the stocking possibilities allowed. The total

production of cellulose even went up 5 per cent higher than during

the first quarter of the year 1962. On the other hand the export

of cellulose decreased by 20 per cent and the stocks increased

by 70 per cent. Still during the second quarter of the year

industrial activity became normal and the output of cellulose in

the first halfyear exceeded that of the previous year by 6, 7 per

cent and the amount of exports by 14 per cent when the stocks

decreased by 23 per cent.

Renewing the 2 -year agreements on terms of working ceasing

at the turn of the year proved difficult. During the 2 -year time

stipulated in the agreements the wages had gone up more than the

agreements and productivity would have assumed. Of course, that

had its own influence on the prices of particular services and

products, too. In addition reaching the agreement was made difficult

by the mutual split of the workers I organizations, For these reasons

the central organizations did not get the matter settled as a whole,

but the agreements had to be reached trade by trade, which was

Oulu Oy N,o 427 3000 1 62 A 4

.. OULU OSA.:KEYHTIU

\.. OIJXiU

the sort of thing that prolonged negotiations as far as the end

of the fir st quarter and even in part of some more insignificant

agreements as far as May. The new agreements which are valid

only as far as the end of the current year, mean approximately

the rise of 6-7 per cent in wages, or consequently more than

increase in productivity and national income would suppose,

As a whole the foreign trade of our country decreased

when concerning both export and import. The balance of trade

s howed half as much deficit during the fir st halfyear than in the

previous year.

Public finance further suffered from the lack of money and

the state floated new obligations with good terms in order to

relieve cash crises. As a result of this the growth of the deposits

of the public in the financial institutions was checked and the

financial situation of private economic life was tightened.

In addition the Council of Ministers decided to rise certain

payments, railwaytariffs and excises.

The cost of living index pointed at the end of June at the

figure 153 having been 146 in the corresponding time of the previous

year. The sonstruction cost index of May was 140 points {130 in

May 1962.).

The wage arrangements of the spring, the already effected and

still coming rises in taxes and payments and the rise in price of

wood mean so great an increase in costs for the industry that its

profitableness is decreasing.

PRODUCTION

The amount of the output of the saw mills of the company

remained about 3 30 0 stds smaller in the first halfyear than in the

previous year, because Pateniemi saw mill was in limited operation

and the downtime because of the summer holidays took place as a

whole during the period reported on.

Whereas the amounts of the production of Nuottasaari mills

'\Vent up by 4 2.00 production units.

Oulu Oy N:o 427 2000 3 61 A 4

2..

..

\. O U LU 0SAK:E Y :HT.I0

0'1LV

The amount of the production was as follows :

==============================1==================================~ Production tons/stds

I P · · ·11 aten1em1 saw mi

\ Hyryn s almi - 11 -....

.,._ Joinery

~J\ceilulose mill 1

Byproducts 1 'YI~ JVl'j'i'i Chlorine plant



SALES

.,

1. 1. - 3o . 6. 63 I 1. 1. - 3o . 6. 61.

12221 , 8/

5 565,0 ../

1 482, 7

111919,u/

7 0 19, 2

20 35 7, 0 V

158 564, 7

86, 2

15 558, 3 v 5 628, U ,/

1 526, 3

108025, 0

6 806, 9

2.0 295, 9

157 840, 4

94, 2

v

3.

A s a result of the restriction of cellulose produ ction prevailing

in northern countries since December 1961 su pply and demand began

to . become balanced on many market areas . The continuous decline in

prices came to an end and the selling prices of cellulose could sligthly

be increased. By the end of June the amount of cellulose sold from

the whole country for the deliveries of the pre vailing year was 1 556 OUO

tons or about 88 per cent of the planne d total supply . In the previous

year the corresponding amount was 1 086 000 tons.

The amount of the Company ts cellulose sold by June 30th was

17 3 000 tons or about 8 u per cent of what was planned {about 145 OOCJ

tons in the previous year). Because of the increase of the bleached

grades the cutt ing down of the production of the Company may remain

about lU per cent in the current year .

The Company ' s chemical product s could be put on the market

satisfactorily.

Demand for sa,vn goods was fu rther fairly good. During the

fir st half year the amount sold from the whole country was about

820 UOU stds (738 000 stds in 1962).

Of the Company ' s reduced supply of sawn goods was sold about

31 000 stds by J une 30th or almost 90 per c ent of what was planned.

Oulu Oy N o 427 3000 1 1>'2 A 4

::ou L U OSA.:KEYHT.ID 4,

' • OO'LV

FINANCIAL SITUATION

================================================~================== 'Long Cheque Short term credits Tot a 1 term accounts Bills of Sawn

in million new loans exchange goods

Finnmarks

debts 1963 1963 1963 1963 1963 1962

1. 1. 65, 13 0, 19 0,02 65, 34 66, 76

3\J. 6. 65, 71 + U I O 5 6, 16 71,82 ,5,82

1.1.-30.6. + 0, 58 - u, 24 I + 6, 14 + 6, 48 + 9, 06

The following statistics illustrate the income from products as

well as the receivables and the value of current stocks:

Received Receivables Stocks


Sawn goods

Cellulose

Chemical products

0ulu wall paper

Tall oil soap


Joinery products

Total

Previous year

6,00

35, 69

2,46

0 , 14

0,04

2,40

0,55

47,28

46,59

the The production and the income from

half of 1963 are calculated to be as follows:

Cellulose

Sa'\-vn goods

Other products

Production

112 000 tons

18 000 stds

1,85 18, 31

2, 32 7, 21

o, 75 1, 04

0,05 0 , 04

\) I O 1 0,01

1,09 l, I ll

0,53 I., I 51

6, 60 27,24

5, 76 29,91

products during the second

Income

38 080 000 Fmks

13 400 000 II

4 blO oou 11

56 100 i.JOO Fmks

Oulu Oy No 427 3000 1 b2 A 4

FcrRM No ••.. (9 5 (4-55)

INTERNATIONAL BANK FOR

RECONSTRUCTION AND DEVELOPMENT


DEPARTMENT OF TECHNICAL OPERATIONS

COUNTRY FINIAND (Rec'd May 20, 1963)

LOAN OR PROJECT 222-FI OULU OY

PERIOD TO December 31 , 1962

TYPE OF REPORT Yearly Financial

CARDED May 21, 1963 mlh

FOR ACTION TO: INITIAL DATE

lr9~. Heftg81? _

2 ~~ ~ u I 't6.) w ~

J IJJJ.t () \.() I

3 ~ncfschea.ter b3 ~~~ ~ Opera. Files Qn- ~!3 I -5 '-'1 - / ~

6

7

8

OULU OSAKEYHTIO


OULU OSAKEYHTIO

Annual report for the year l 962

During the 27. year of the Companyi activities it became apparent that

the long-prevailed boom period on the Finnish market area in Western Eu

rope had reached its peak, and that the economic development had slackened.

The state of the world market was strained .

The economic decline that had set in earlier in our country became more

distinct the whole year long. The increase in the total industrial output, having

been approx. l O per cent during the two previous years, was but 4 per cent

now. The demand for cellulose was not equal to the rapid increase in the pro

duction capacity of the mills . In order to recover the balance and to stop the

continuous drop of the prices the production for export had to be reduced by

approx. 20 per cent. In spite of these measures the total output of cellulose

exceeded the amount of previous year by 3, 7 per cent. The saw mill industry

was hampered by lack of raw material, which caused a 12 per cent,.s decrease

in the production.

In the foreign trade a record activity was reached, and the total turnover

surpassed that of the previous year by 6 per cent. Because of the drop in the

selling prices the increase in the value of export was smaller than that in its

volume. Further, as a result of the rise in the import prices and the increase

in the quantity of goods imported, the excess of imports on the balance of the

foreign trade amounted to approx. 40 000 million Finnmarks.

The export volume of Finnish sulfate cellulose surpassed that of the pre

viPus year by 27, 8 per cent amounting now to 743 000 tons. A.s the export of

sulfite cellulose decreased instead by 6, 3 per cent, the increase in the total

export of cellulose was only 7, 4 per cent. Further, due to the drop in the pri

ces the invoice value of the exported cellulose did not increase . The amount

of sawn goods exported was l 010 000 stds which is 8, 7 per cent less than in

the previous year . The export value decreased, though, by 12 , 5 per cent. The

export volume of timber decreased.

The home trade retained its liveliness throughout the year .

At the end of May which closed the timber cutting season the volume of

lumbering for sale was only one per cent ahead of the previous year, being

now 48, 3 million cubic metres.

2.

The total cubic contents of house building was cut down by approx. 2 per

cent because of the sldckening in the industrial building activity.Nevertheless,

the housing production continued to be lively, the more towards the end of the

year, when news spread out of the terms of the tax legislation covering this

trade being made more stringent again after the turn of the year.

The wages were raised by approx. 6-7 per cent. The rise of the prices

of some certain expenditures, services and commodities caused an increase

of 5, 6 per cent in the cost of living index. The construction cost index went up

by 4, 7 per cent. The new pension statutes in force increased those expendi

tures equal with the costs of wages of companies by 5 per cent. The scale of

government taxation for companies was raised from 38 per cent to 50 per cent.

Industrial peace reigned. The collective wage agreements, most of them

having been in force for two years, were in most cases revoked by labor or

ganizations, and the negotiations carried on did not lead to any results by the

end of the year.

The receivings on the deposits decreased. The great need of money in

business life however forced the financial banks to resort to rediscounts, and

this lead to a more strained financial situation.

Because of the exceptionally rainy summer the crops failed, the loss of

which was calculated to exceed 20 000 million Finnmarks.

Due to the abundant rainfall the share of the water power stations amount

ed to 85 per cent out of the total electric power generated.

The employment situation remained rather good almost throughout the

year. Because of the strained economic situation towards the end of the year

there was an increase in the number of those seeking woc-k.

Due to the reduced output of the productive establishments and the rise

of the costs as well as the drop of the selling prices the profitablness of the

industry for export was enfeebled .

.According to the agreement between Efta countries and Finland the custom

duties were brought down once more in .August by l O per cent, the total cut down

of the duties within a year amounting to 40 per cent.

3.

The activity of the forest department of the Company during the purchase

and logging season 1961-62 was hampered by the scanty supply of saw logs.

Out of the volume aimed at only 77 per cent was purchased, the deficiency

amounting to 3 200 000 cubic feet. The pulp wood situation was better. The

target set to the quantities of sulfate wood to be obtained was reached as

well as that of the sulfite pulp for the mills of the parent companies.

After the new bleaching plant had given better chances to serve the

markets the reduction set on the capacity of cellulose was now only 13, 4

per cent, and the total output 2, 5 per cent less than in the previous year.

Because of the lack of logs the sawing had to be cut down once more by 8

per cent. In spite of an increase of l O, 5 per cent in the chlorine production

the total output of the Company failed by 2 per cent to come up to the last

year"s figures.

The total amount of deliveries for export, home trade and own consump

tion surpassed that of last year by 36 000 units which makes 13, 0 per cent.

Due to the reduced prices the invoice value, 11 050 million Finnmarks,

however, surpassed the turnover of the previous year by only 6, 6 per cent.

The stocks decreased by 21 400 tons/stds.

The Company "s share in the production of sawn goods was 4 per cent

out of that of the whole country, and 4, 6 per cent out of the export . .As to

sulfate cellulose the corresponding figures were 12,0 and 26,0.

The main object of Company ~s building operations was the new head

office s,tarted in spring 1962, which was reached up to the roofing stage in

november. The projecting of a new soda recovery plant and the enlarging of

the semibleaching plant were started in Nuottasaari, and orders were placed

of the machineries. The enlarging of the tall oil destillery department was

completed. The air conditioning and the altering of the electric installation

of the old iirying department were completed.

In Pateniemi a 5 family house was built, and the new water and drain

age system extended. The building of the barking plant was completed, ~nd

the main part of machinery installed. The handling system of the frame

saws was renewed, and the surroundings of the bracking tables covered

with asphalt . .A new locomotive was purchased.

The forest department was provided with a bundling machine for pulp

wood, and a tug boat of 240 horsepower for transporting timber was ordered.

The investments of the Company totalled 485, 3 million Finnmarks.

4.

The Company ... s total expenditure on wages and salaries was 2 100 million

Finnmarks, out of which sum 36 9 million Finnmarks was spent for the forest

department. From November 1 st on the salaries and wages of Company in

Oulu and Pateniemi were paid through the banks, and on the same date the

personnel service office started to co-operate with and in the Oulu Savings

Bank.

According to the resolution passed at the meeting of the shareholders

the share capital of the Company was raised from 360 million Finnmarks to

be 7 20 million Finnma rks .


The members of the Administrative council were : Mr. W. J . Sukselainen

(chairman), Mr. Tauno Angervo (vice chairman), Mr. L. J . Ollonqvist, Mr. Vai

no Tanner, Mr. Klaus Waris and Mr. Bjorn Weckman. The deputy members

were: Mr . Antti Kivilahti, Mr. Kalervo Laine, Mr. K. N. Maatta and Mr. Aku

Sumu. The Administrative council met five times.

BOARD OF DIRECTORS

The members of the Board of directors were: Mrl Olli Pal oheimo {chair

man), Mr. Aarne Pelkonen (vice chairman) and Mr . Kaarlo Lehtio. The depu

ty members were: Mr . Paavo Kivi and Mr. Heikki Sihtola. The board of

directors met thirteen times.

MANAGING DIRECTOR

The Company ... s managing director was Mr. Kaarlo Lehtio.

AUDITORS

The auditors were: Mr. Mauno Luotonen, Mr. Arvi Peltola, Mr . Eemil

Paakkonen, Mr . J. W. Rangel! and Mr. Mauno Vahla. The deputy members

were: Mr. L.A. Puntila and Mr. U. A. Vatanen.

Mr. Reino Vento was responsible for the general audit.

The following statistics and figures illustrate the Company ... s activities:

....

5.

~=~~===~~==~=~~==~====~====~==~=~=~===~==~~~~==~~~~~======~1z=~====~=== 1962 1961 I 1960

Logs

Pine pulp wood and pitprops

Firewood


Birch pulp wood for parent companies

cuft

cum

II

,,

"

10506840

l 059 209

14 776

l 70 937

4 718 I

13 582 645

l 162 946

5 437

l 75 087

12 265

I 1 13198937

I 818 826

706

37 856

913

~=~~============~==~~===~=====~==~=~~~~=~=~~~~==~~====~=~==~=~========= Percentage

Production 1962 of 1961 1961 1960

Primary :eroduction I Sawn goods stds rl3 45 516 92, 1 49 418 53 568

I Sulfate cellulose tons \ 197 056 97,5 202 099 168 485

Tall oil and turpentine II

l O 675 1 90,7 11 766 9 851

Chlorine and caustic soda II l~ 38 260 110,4 34 667 22 463

Total 291 507 97,8 297 950 254 367 !

Refined out;eut

Joinery products stds 501 105,5 475

Des tilla tion II tons 13 273 101,5 13 076 11 384

Total 13 774 I 101, 6 13 551 I 11 384 I

Total amount of producing units 305 281 98,0 311 501 265 751

,..


DELIVERIES etc .

SAW MIL LS

Exports

Pateniemi

Hyrynsalmi

Total

Home market

Own use and the joinery

stds

II

I I

II


Logs sawn 1 000 cuft

CELLULOSE MILL

Cellulose shipment

Home market


Sulfate wood used

Sawn chips



BYPROD UCTS

Exports

Home market

Own use

CHLORINE PLANT

Exports

Home market

Own use

tons II

" cum

II

tons

II

fl

II

II

,,

11 050 106,0 I 10 367

35 042

11 740

46 782

3 364

l 900

20 263

10 586

194 439

16 862

9 522

933 799

418 974

309

637

4 976

4 887

76

l 04 , l

105, l

104,3

116, 8

131,4

78,0

94,2

114, 4

108,9

39,8

98,8

89,3

91, 7

106,2

1 78, 0

91, 2

41, l

994 86,3

19 618 112,2

18621 125,6

33 673

11 l 69

44 842

2 880

1 445

25 962

11 237

1 70 021

15 482

23 920

945 222

469 368

337

600

2 795

5 360

185

1 152

l 7 491

14 822

6.

8 874

34 655

10 864

45 519

1 7 76

1 434

24 702

12 444

148 659

14 580

7 495

660 821

483 769

342

493

2 781

4 980

79

1 666

11 920

8 749



Salaries and wages

Interests

Taxes

Depree ia tions

EXPEND IT URE


Profit for 1962

Net receipts

Interests

Dividends

Sundry receipts

INCOME

mk

l 744 432 242:-

451 522 430:-

230 111 629:-

1 409 086 253:-

699 519 393:-

227 580 913:-

4 762 252 860 :-

4 708 264 229:-

52 878 908:-

791 900:-

31 7 823:-

rnk 4 762 252 860 :-

Annual turnover Fmks 11 049 728 403:-

7.

8.


Current assets Cash and claims to cash Receivables Securities Claims to loans

· Inventories Raw material etc. Products Fuel

Fixed assets P l ots, land and water area Addenda Buildings

Addenda Reduction



Addenda Reduction

Securities

Estimated items

Assets

71 923 404:-18 678 640:-

2 717 472 073:-192 459 829 :-

8 176 271:-7 609 840 823 :

l 79 680 383 :-246 800:-

715 080 l 76:-5 7 804 364:-

9 215 160:-


Depreciation 15 per cent

8 203 775:-3 237 323 167:-

95 288 550 :-681 272 000:-

936 564 929 :-135 3 70 844:-

45 017 634:-

90 602 044:-

2 901 755 631 :-

7 789 274 406 :-

763 669 3 80 :-273 601 909:-

100 377 906:-33 849 753 :-

I

4 022087 492:-

1 11 6 9 5 3 40 7 :-

11 818 903 370:-

66 528 153:-

Transitory items 5 085 393:-mk 17 029 557 815 :-

Current liabilities Short term

Suppliers Bank debts Loans (mortgage) Other loans


Estimated items Depreciations due to the buildings

Addenda Reduction


Addenda Reduction

Depreciations due to the factory and traffic

' equipment Addenda Reduction

Transitory items

Eguisity Share capital Reserve fund Liquid fund Taxes fund

Profit

Liabilities

l 383 799 552 : -27 459 238 : -49 219 200 : -

418 021 000:- l 878 498 990:-

391 542 884:-5 654 738 428:- 6 046 281 312 :-

860 450 679 : -75 708 899:-

4 426 561 : - 931 733 01 7:-

4 827 431 282:-1 272 321 249 : -

244 793- 6 099 507 738:-

528 038 456:-61 056 105 :-

9 232 700:-

, . . ~

579 861 861 :-

720 000 000 : -270 000 000:-

52 800 000:-60 000 000:-


11 426 369:-227 580 913:-

9.

7 924 780 302 : -

7611102616:-

151 867 615:-

l 102 800 000:-

239 007 282 :-

==== mk l 7 029 557 815 : -

Guarantees : Endorsements 3 451 960 135 : Mortgages 3 085 930 144:-

mk 6 537 890 279:-

Foreign exchange loans mk 3 003 085 944 :=~~==~~~===~~=~~~=

l O.

The Company'"s accounts for the year 1962 show a profit of Finnmarks

227 580 913 : -. As the balance brought forward from the previous years was

11 426 369 Finnmarks, the amount at the disposal at the shareholders,. meet

ing is Fmks 239 007 282 : - or in the new currency Fmks 2 390 072:82.



to be carried forward to the

liquid fund

to be carried to the Profit and

Loss account

Helsinki, February 28 th 1963 .

Fmks 1 800 000:-

II 500 000:-

II 90 072 : 82

Fmks 2 390 072:82

BOARD OF ADMINISTRATORS BOARD OF D IRECTORS


Raw materials:

Logs: ( 1000 cub. feet)


Purchases

Comsumption

At the of the year

Unit prices:



Purchases

Comsumption


Unit prices:

Fuel etc. :


Products:



Production

Deliveries


Unit prices:


At the be ginning of the year

Production

De liveries


Unit prices:

Other products:


Chemicals: II

Supplies etc. : II

Units

10 851

8 222

10 586

8 487

2 768

699:-

934

2 533

25,9

45,5

51, 1

20,3

23,9

197, 1

211, 5

9,5

1962 Book value

mmk

110

13:-

348

137:-

45

66

3 267 : -

19

2 000 :-

50

112

367

1 117

Current value mmk

535

63 :-

5 095

2 Oll:-

153

1 096

54 000:-

323

34 000:-

144

205

502

8 053

----------------=========== Oulu,( 6 . 4. 1963)

IJ . .f, l'J l, J


( in million Finn mar ks )


"' Plus:

Less:



other pre - profit reservations:

Pension funds

Other

extraordinary income from

preceding year

decrease in inventory reserves

Adjusted Net Profit

228

668

250

39

17

744

424 ----------------------------------------------------------------------------------------------------------------

Sales

Long term debts

Equity:

share capital

reserves

surplus

Adjusted Net Profit

Ratios:

Adjusted Net Profit as % of sales II II II 11 % 11 equity

11 050

6 513

720

383

239

l 342

424

3,8

31, 6

Oulu, 6. 4. 1963

THE AUDITORS" REPORT

Having been elected at the General Meeting on November 20 th 1961

to examine the administration and accounts of Oulu Osakeyhtio for the year

1962, we have today completed our joint task, and, as a result thereof, make

the following report:

As a supervisory controller for the year 1962, Mr. Reino Vento, KHT,

has examined minutely the books of account of the company, and in his re

ports thereafter affirms that they are correct and in agreement with accept


of the year, it has been verified that the cash has corresponded to the balance

in the cash book.

We have acquainted ourselves with the Minutes of the General Meeting,

Board of Administration and Board of Directors.

We have found the fire insurances on the company,.s property to be in



drawn up, and the property has been estimated with sufficient prudence . After

a sum of 250 000 000 old Finnmarks has been carried to company,.s pension

funds, the balancing shows a profit of 227 580 913 old Finnmarks .


have been managed with definiteness and success, as well as to the company"s



Maune Vahla

Oulu, March 8 th 1963.

J. W. Rangel!

Arvi Peltola

Mauno Luotonen

KHT (Auditor approved by the

Chamber of Commerce)

U. A. Vatanen

i' . • I

._ " . F'oRM ~O. l95

(4. 55) _.

INTERN ATIONAL BANK FOR

RECONSTRUCT I ON A ND DEVELOPMENT



COUNTRY FI.NIAND (Rec'd Mar. 4, 1963)

LOAN OR PROJECT 222-FI {Oulu Oy)

PERIOD TO Dec. 31, 1962

TYPE OF REPORT ·Semi-Annual. Op. Rpt.

CARDED Mar. 5, 196.3 ejw

FOR ACTION TO: IN I Tl AL DATE

ri.._ueg 16- ~.ltS" ·1~

2 *. E. B1 ncsS'chegJ er_ p'i) 0 11..J.7 .J 'l,J Ir.,

3 G. I:! enter --. /VJ ~ AkL\h,1L I ~

,J~ I ' __,,. ~ -

~ ~"'tl..... tt/ ~l>J H. -..- "TT---5 Op. Files

6

7

8

OULU OSAKEYHTIO

Operational report £or the period 1. 7. -31.12.1962

GENERAL SURVEY

During the last six months of the year it became apparent that the long

prevailed boom period had reached its peak, and that the lively economic

development had slackened. According to the advance information the West

European production of last year had exceeded that of the previous year by

4 per cent only. The progress in Finland was about the same: the production

volume index of the paper and sulphate industry had increased by 4 per cent

since last year, wheras that of the saw mill industry decreased by 12 per cent.

In neither of these groups could the whole capacity of the mills be utilized.

The total turnover of the foreign trade increased nevertheless by about

6 per cent. The excess of imports in the trade balance increased by appr.

l O 000 millions of Finnrnarks against previous year, and totalled now 40 000

millions of Finn.marks.

As a result of the drop in export prices and of the rise in import prices

the terms of trade grew worse.

The home trade retained its liveliness throughout the year.

As to the building activity there was an increase in the housebuilding trade,

wheras - because of the slackening in the building of industry - the total out

come of the building activity remained smaller than in the previous year. The

construction cost index went up by 4, 7 per cent during the year.

After the rise of certain expenditures and prices the cost of living index

went up by 5,6 per cent during the year. . . -

Towards the end of the year the situation on the money market remained

tight. After the conjunctures had reached their peak and were on the decline

again and the chances of obtaining credit grew more difficult, the employment

situation consequently got worse. After three years of full employment the

number of those in search of work was bigger than that of vacances available,

thus causing arrangements for relief work in some districts.

2.

PRODUCTION

The amount of the output of the saw mills of the Company remained 8 per cent

less than in the previous year, and that of cellulose 2 per cent smaller than

last year, wheras that of chlorine plant went up by 10, 4 per cent. The amount

of Company"s saw mill production was 4 per cent out of that of the whole country

which was l 135 000 stds, and that of Company "'s cellulose production 12 per

cent out the country"s total production which amounted to 1 648 000 tons.


Pateniemi saw mili

- fl Hyrynsalmi

Joinery

Cellulose mill

Byproducts

Chlorine piant



SALES

\.

\

18 I 6 u 2 ,/

4 837 ()lo/

307 3

8'i u3u, 6 v

6 242 , 1

17')63 , 8\r

136 541, 8

81,5

1 El 631, 0 v

6 u 61 4 ..

267 , 6

1 1 i' 44 7 I 4 \,

jl 243 5

20 183 3 \ ,,

169 842,2

I 108,0

As a result of continuously growing productivity the total outp,ut of cellu-

lose from the whole country surpassed the amount of the previous year by

l 04 000 tons , despite the fact that the planned reduction was carried out. The

amount of sulphate cellulose exported during the year totalled 743 000 tons.

The amount of deliveries for export by the Company totalled 19 4 4,39 tons which

is 26 per cent out of the total sulphate cellulose exports from the country. This

amount added by that of 16 862 tons as home deliveries totals the yearly deli

veries to be 211 3 0 1 tons. By the end of the year the amount sold for delive-

ries in 1963 was 34 000 tons. The stocks at the end of the year showed an amount

of about 9 4 0 0 tons against about 23 800 tons at the beginning of the year

The sales of sawn goods for delivery in I -;1 63 started in Novernber, and by

the end of the year the amount sold from the country totalled 34v 000 std, out

of which the share of the Company was 10 70 0 stds.

The total deliveries of the products of the Company surpassed in 1962

those in the previous year by about 36 000 tons/stds, thus showing an increase

of 13 per cent. Because of the declining tendency of prices the total turnover,

11 050 000 000 Finnmarks, surpassed that of previous year by 6, 6, per cent only.

3.

The total sales of Company-'s chemical products surpassed - expressed

in Finnmarks - by 15 per cent those of previous year, amounting now to 1 037 mill.

Finnmar.ks, and - expressed in tons - by 17 per cent, amounting now to 5 0 227

tons.

FINANCIJ.\L SITUATION

~~==~~==~~*~===~~~~~=~2~~~~=~~~~~~r~==·=~=z===~=~~~-~~=~==~======~=~=~9 ILong term Cheque 'Short term credits T

1 I

I • s Ota l oans accounts ~1ll E of ' awn . .1 . F. k

,Exchange goods

1

,1n m1 non 1nnmar s

I i debts 1 162 r 1 ) 62 19 62 1 9 62 19 62 1 1 61

30. 6. 6 529 , 5 144, 3 130,0 778,4 7 582, 2 7 378, 2

31. 12. 6 263,5 19 ,3 1, 6 6 284, 4 6675 ,'1

] 7 . -31 . ]2 - 266 , Of -]25 , O -1 3 0 , 0 -776,8 i -1 297, 8 • - 702,3

The following statistics illustrate the income from the products as well

as receivables and the value of the currents stocks:

Sawn goods

Cellulose

Chemical products

Oulu wall paper

Tall oil soap


Joinery products

Pitprops

Total

Previous year

The last half yea r 19 62

l

~~~R~~~i~:d==1~~:~:iv=:bie~~~~s~~~k~~~~=

. ill. F. ~ 1n m 10n 1nnma r s

3 222, 0 342,7 1 053,7

6 644, 3 471,5 314, 2 I

547, 0 53, U 67, 9

41, 1 0,3 6, 0

8, 9 I I 0 , 4 u ,3

426,l 181, 4 13,3 I 144,9 38,6 30,0 I

I 1 9 , 6 - j -

I

j ] 1 053,9 l 087,9 l 485,4 '

l O 42 7, 7 725,8 2 474, 3

6 3 4 9 ' 4

The production and the income from the products during the first half of

l 9 63 are calculated to be as follows:

Cellulose

Sawn goods

Other products

Production

109 0 00 tons

1 9 u OO std s

Oulu . February, 22th 1963.

OULU OSAKEYHTIO

Income

3 4 0 0 mill. Fmks

500

700

- Ji_

_ 11_

4 600 mill. Fmks

I

' . FORM Nt, . 1 5

( 4- 55) INTERNATIONAL BANK FOR




COUNTRY FINLAND (Rec'd Aug. 13/62)

LOAN OR PROJECT 222-FI Oulu

PERIOD TO. June 30 . 1962 ~

TYPE OF REPORT S.A. & Onera.

CARDED Auirnst 14. 1962 mlh


!i9-H, filttehs

2 ii, SeU

3 vu . 111.1.es

4

5

6

7

8

OULU OSAJKEYJElCTID

OULU OS.AKEYHTIO

Operation.al report for the period 1. 1. -30. 6.

1962

• OULU OSAKEYHTIO

Operational report for the period 1.1. -30 . 6 .

1962

GENERAL SURVEY

During the past six months the conjunctures showed a downward trend,

and the increase in the total industrial output was accordingly on the decline.

To improve the market situation Finnish paper and cellulose production

had to be cut down. Still, because of the increased capacity, the output of sulphate

cellulose surpassed that of the previous halfyear. The foreign trade retained its

excess of imports. The home market prices were on the rise. The cost of living

index went up by one point in April as well as in May and showed now the figure

146 (1951::: 100). The construction cost index remained unchanged at the figure

130. On the other hand there were some signs of the wages sliding up and ex

ceeding their prescribed scales.

The industrial expenditure went up. The amount of the workers" retiring

aDowance was raised from March 1st 1962, and the contributions to the pension

fund were ratified according to the new pension system to be 5 per cent of the

wages. Owing to the higher child subsidies the Government decided to raise the

contributions to be paid by the companies from July l st 1962 by 1/2 per cent.

Further, the government imposed a 12 per cent additional tax on the companies

for the current year.

The financial situation tightened and the rediscounts of the banks at the

Bank of Finland increased.

The employment situation was good.

Measures were taken to improve the harbour conditions of the Oulu district.

The Oulu town started to build in front of Nuottasaari mills a new oil port which

is expected to be ready by autumn 1963. The channel leading to the port is going

to be dredged to a depth that allows ships to draw 8 meters of water. The Virpi

niemi harbour, situated in the commune of Haukipudas and carrying on some

oil transportation since a couple of years, was last May legalized by the Minis

try as an official port. It is expected to get there a passage navigable to the

depth of l O meters.

2.

PRODUCTION

The amount of the µutput of the saw mills during the first six months of

the year was 2 300 stds less than in the previous year, whereas the amount of

the production of Nuottasaari mills surpassed that of the previous year by al

most 30 000 units, owing to the almost full increased capacity and because the

planned reduction of the output was postponed to the last six months o.f the year.


---=------=-------Z---:X::------------------=--------------------:l"""--::::..,..;::=:

Pateniemi saw mill

Hyrynsalmi - 11-

Join.ery

Cellulose mill

Byproducts

Chlorine plant



SALES

Production tons/ stds

1. 1. -30. 6. 62

15 558,3

5 628, 0

1 526, 3

108025,0

6 806, 9

20 295, 9 ---157 840, 4

94,2

I

1.1.- 30.6. 61

16718,9

6 769, 5

1 436, 5

84 651, 6

5 633, 3

14 484, 0

129 693,8

82,4

The conjunctures being continuously on the downward trend in most European

countries and due to various disturbing factors on the other market a:reas the

trading was not so busy as in the previous year.

Despite of the reduced production there was oversupply on the cellulose

market and the buyers accordingly tried to press down the prices. The~ amount

of cellulose sold during the second quarter from Finland was about 300 000 tons

and that of the first half year, sold by firm contracts was 1 086 000 tons, which

is 55 per cent of this year"s total supply. The corresponding figure la.sfyear was

1 230 000. The total amount of cellulose sold by the Company by June 30 th 1962

for delivery in this year was a bout 145 000 tons.

The amount of sawn goods sold from the whole country by June 30th was

about 710 000 stds {890 000 stds in the previous year). When the total export

supply is estimated at a million standards, the amount sold by the end of June

was 71 per cent and the rest to be placed amounts to 300 000 stds.

The increased Sovjet supply on British market as well as on the .European

Continent tightened the competition and pressed the prices down, which stayed

about 8 per cent lower than the opening prices of the previous year.

Out of Company's planned supply for the current year some 66 per cent

were sold by the end of June.

The sales of chemical and joinery products were on the rise.

FINA NCI.AL SITUATION

1 962 1961

3.

l. J. 6 557,6 57, 0 61, 3 6 675, 9 6 l 70, 7 '

30. 6.

l-6 529, 5 144 ,3 130,0 768,8 9,6 , 7 582,2 7378,2 1

+---··-1. 1. -30 . 6. 2 8 , 1 +87,3 +130, 0 +707,5 +9,6 + 906, 3 +1 20 7, 5 ·

The following statistics illustrate the income from products as well as the

receivables and the value of current stocks:

--===-====~~==r===-======~-======= r--;:~:~~:~-=r~:;;i~:~~~~J--=;;;;:;-==·

Sawn goods

Cellulose

Chemical products

Oulu wall paper

Tall oil soap


Joinery products

Total

Previous year

in

527, 4

3 520, l

251,2

14 ,6

4 ,4

296,0

4 5,8

4 659, 5

3 319,7

million Fi:nnmarks --265,6 1 991,9

137, l 830,8

87, 4 91, 5

6, 1 3, 2

2,6 0,9

41,7 31, 8

35,0 4 0,5

575,5 2 990, 6

375, 4 3 130, 8

The product ion and the income from the products during the second half of


Cellulose

Sawn goods

Other products

Production

92 000 tons

27 00 0 std

Oulu, July 28 th 1962.

OULU 0SAKEYHTIO

Income

3 40 u mill. Fmks

2 l 00

l 250

II

II

6 750 mill. Fmks ==~~=========-====

II Final Constructim J RATJOrt• ---3'~-----

' ~ FORM NO. 295

( 4. 55) INTERNATIONAL BANK FOR



DEPAR™ENT OF TECHNICAL OPERATIOtlS

COUNTRY

LOAN OR PROJECT 222-FI (Oulu Oy)

PERIOD TO May 5,/62

TYPE OF REPORT Final Construction Report

CARDED July 3/62 mlh


5

6

7

8

e I

•

Oulu Osakeyhtio

Oulu, Finland

Final Construction Report

Project Under IBRD-IA>an 222-Fl

May 5, 1962

The project, its realizing and results obtained

Major changes in the project

Construction time and delays

Performance of the major equipment

List of major items of equipment and services

financed from the IB-IA>an

The major sources of financing

Original Project Cost Estimate compared with the

Final Cost of the Project

e

'

'

"

The purpose of the project was to increase the output of sulphate pulp mill

by 50 % at the same time as the processing level was improved by building

a bleachplant for a part of production and modernizing the semi- bleachplant.

The increase of consumption of chlorine required a greater production capacity

of the chlorine plant . The above mentioned measures demanded naturally the

expansion of power plant .

The project included the following items and the main equipment belonging

to them:

Item A - O, Wood Yard and Debarking Department

A chipper and conveyors for round wood and chips .

Item A - 1 , Cooking , Washing and Screening

CookJ:!!g

5 digesters , 160 m3 each, with auxiliary equipment.

!!ashing

A complete filter washing system with recovery of the blow of f heat .

The transfer of the already existing machines to the new building and at the

same time completing the equipment to meet the increase in production.

Item A - 2 , Drying Department

A new drying machine with accessories such as cutting machine, automatic bale

press and conveyors . Also the conveyors of the old drying machines were

renewed.

Item A - 3, Boiler Repair , Causticizing , Lime Kiln and Miscellaneous

The repair work of the 4 B & W Recovery boilers .

Scrubbers for heat recovery from the flue gases .

Electrical precipitator after the fifth recovery boiler .

Completing the causticizing machinery .

Erection of a new lime kiln.

Renewing and completing the mill water system with water screens and pumps .

A new laboratory building.

2 -

Item A - 4 1 Bleachplant

Bleachplant for bleached and semibleached pulp .

Sulphur burning plant .

Chlorine dioxide plant .

Chemical water purification plant .

Item A - 5, Chlorine Plant

As supplement 36 more chlorine cells with auxliary equipment and the equipment

required to the manufacture of sodium sulphide were obtained.

Item A - 6, Power Generation and Distribution

Backpressure turbine .

~ Steam distribution central .

Switch board plant .

Buildings

The project required 256 . CXX) m3 of new factory space to be built .

The only essential change regarding the machinery in the project was that the

realizing of the bale conveyor between the drying department and the harbour

was given up . In addition some changes concerning the site of the buildings

were made during the project .

Construction time_and dela~s : - -

Production started exactly at the proposed time . There were small delays in

some details, but these had no iruluence on the total program . Of these delays

of no great importance can be mentioned as follows .

Wood Yard and Debarking Department was in the whole completed later than proposed,

but the parts of machinery contributing to the production were ready to work

in time .

In the Drying Department the last delivery of the bale conveyors was delayed

without giving, however, any inconveniences .

l.j_me Kiln was completed later than proposed on account of the strike in Denmark

'

- 3 -

and our prolonged technical studies .

Because the supply of lime for the manufacture of pulp had been made secure by

buying the additional requirement of lime ready burnt , this had no effect on

the whole .

Bleachplant was partly in use for several months before its completion, which

on account of the machines being late was delayed about a month from the time

proposed.

Power Plant was delayed about l! months because of the technical difficulties

occured in the final phase of the manufacture of turbine .

Item A - O, Wood Yard and Debarking Department

In regard to both effect and the quality of the product , the aim proposed has

been attained .

Item A - l . Cooking . Washing and Screenigg

The equipment is running well .

The promised effect has been obtained with the machinery, but performance is

not yet fully satisfactory and we are negotiating with the supplier about their

improvement .

The machinery has proved to be good .

Item A - 2 1 Drying Department

The drying machinery has in trial run exceeded the guarantee performance. Also

the additional equipment meets requirements .

Item A - 3, Boiler Repair etc .

The repair of the old recovery boilers and the expansion of the causticizing

department have succeeded well .

Electrical precipitator and scrubbers have fulfilled their guarantees, but

• '

- 4-

with scrubbers there have been some mechanical difficulties . Now, however ,

it looks as they had been overcome .

Lime kiln meets the guarantee values on the basis of experiments .

At the pumping- station the power consumption of the main pumps has exceeded the

guarantee and we are negotiating about this with the supplier . Also in filtration

of water there have been difficulties due to exceptionally bad water . The planned

improvements are already partly in use, but the work is continuing in co- operation

with the supplier .

We are very satisfied with the new laboratory •

Item A - 4 , Bleachplant

The bleachplant and the attaching sulphur burning- and chlorine dioxide plants

have fulfilled their guarantees as well as the chemical water purification plant .

The Total Achievement of The Pulp Mill .

The production of the pulp :

Unbleached sulphate pulp

Semi bleached

Bleached

Screenings

Total

" "

Calculated annual

production

" tt

Item A - 5, Chlorine Plant

Proposed

230

136

260

24

650

214 .000

tons/day

July 61 - March 62

253

149 224

27

653

215 .000

March

230

169

243 29

671

221 .000

The proposed capacity of 62,7 tons chlorine per day has been reached during

short testing periods . The plant is working according to demand and in March

the daily production was 57,2 tons chlorine. All equipment is working well .

Item A - 6 , Power Plant

The heat economy of the new steam turbine has fulfilled the guarantees.

Some small defects that the supplier will repair have appeared in the turbine.

Item

A-1

e

' A- 2

A-3

I A- 4

A-5

A- 6

- 5 -

List of major items of equipment and

services financed from the IB-Loan

Brief description of equipment

Digesters, 160 m3 per unit

Heat exchangers and liquor

circulation systems for pulp

digesters

Pulp washing plant

Drying machine wet end

Drying machine dry end

Conveyors for old DMc and bale

handling for Kamyr-machine

Electrical precipitator

Lime kiln

Stainless steel plates for

pipings

Bleacheries, the main machines

and equipment

Chlorine cells and accessories

El. equipment and instruments

Mercury

Back pressure turbine

Names of Main Suppliers

Salzgitter Eisenhandel GmbH

Export, Germany

Ab Nordiska Armaturfabrikerna,

Sweden

Wartsila-yhtyma Oy, Kone ja Silta,

Finland

Valmet Oy, Finland

Suomen Puhallintehdas Oy,

Finland

Querschneiderbau Strecker

Bruderhaus, Germany

Suomen Puhallintehdas Oy,

Finland

F. L. Smidth & Co. A/S , Denmark

Les Toles Inoxydables & Special

Ugine, France

A. Ahlstrom Osakeyhtio, Finland

Friedrich Uhde GmbH, Germany

Siemens-Schuckertwerke AG, Germany

Monte Amiata SmpA, Italy

Svenska Turbinfabriks Ab

Ljungstrom, Sweden

e

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The maj or sources of financing

(million Frnk)

IBRD-Loan for Equipment

The Old Age Pension System

The Post Saving Bank

The Export Funds

The Pension Funds

Own Financing

The Cost of the Project

24CY1

1000

800

900

513

471

6CY13 ======

IBRD- Loan for Interest 261

A-0

A- 1

A-2

A-3

A- 4

A- 5

A-6

B

Wood handling

Cooking, washing, screening

department

Drying department

Boiler repairs, causticizing, lime

kiln and miscellaneous

Semi- and fullbleaching plant and

chemical water purification

Chlorine plant

Power plant

Contingencies

Total

• --Original Project Cost Estimate compared

with the Final Cost of the Project

Original Project Cost Estinate " !! II

IBRD II Others Total 11

II

Final Cost

IBRD

of

Forei2n Local Total P. Foreiim Local u II 11

- - - 58 58 II - -II ll II II II II

166 - 166 994 1160 II 177 229 II II II

168 330 498 718 1216 II 121 399 II u II II II II

436 436 579 1015 II 365 71 - II II II II II II

410 - 410 1005 1415 II

78 363 11 II II

438 438 587 1025 " 379 63 - ll II II

164 164 22 186 II 141 23 - II

ll II

258 - 258 350 608 II !! II

2040 330 2370 4313 6683 II

1261 1148 II II

the Proiect

others Total

- 58

4<:iJ 870

520 494

436 817

441 897

442 419

164 129

2409 3684

Total

58

1276

1014

1253

1338

861

293

6093

II II u II II u u II ll II II II II II II II II II II u II II u II II II II u II u -.J u 11 I u II II

" II II u II II II 11 II II u II II II II II II II II II II II

::s---::-c-=::===== ===----:::=:: -=--==-= -===:::s-=s== = =====-========~::ll=~=:====~~=~==:~===~=c=====~========

" The difference 39 million Fmk between columns 11IBRD, Total is caused by transferring this II

amount from item C 11Interest and other charges for paying of deliveries , the rest amount,

261, of this 300 million Fmk being used for interest .

FoR"M No . 2'95 (4 -55)

I NTERNATI ONAL BANK FOR

RECONSTRUCTI ON AN D DEVELOPMENT



COUNTRY Finland

LOAN OR PROJECT 222-FI - Oulu Osakeyhtio

PERIOD TO December 31, 1961

TYPE OF REPORT Annual

CARDED May 18, 1962 (gwh)

FOR ACTION TO: INITIAL DATE

~ ssrs .~ C " ~ I~ . 6.2.

~ t.:..J Cl 2

3

lj.

5

6

7

8

I

•

OULU OSAKEYHTIO


The state of the market on the whole remained favourable almost through

out the year which was the Company" s 26 th term.

The industrial production of the whole country increased by 8 per cent.

The output of paper and cellulose were amogst those forwarding this rise,

due to the enlargement project of the woodworking industry partly carried out

during the year under review . The production of sulphate cellulose amounted

to l 434 000 tons, the increase being 21, 3 per cent. As to the marketing saw

mills, their 1 300 000 stds production failed by some 5 per cent in reaching

the after-war record of the previous year .

The foreign trade was very lively and retained its excess of imports. The

deliveries for export increased by 7 per cent, and the import by 8 per cent.

The amount of sulphate cellulose exported was 581 000 tons, the increase from

previous year being 17 per cent. The deliveries of sawn goods exported were

reduced by not quite 3 per cent, exceeding yet the amount of 1 100 000 stds

reached by our country only five times during the whole history of saw mill

industry.

As to the spruce pulp wood the export of raw wood went up to record

quantities, and the prices were high, whereas the export of pitprops and saw logs

decreased.

The rapid increase in production capacity and the full operation of the

sulphate cellulose mills as well as the considerably high production of saw

mill industry in Finland and other countries competing on the same markets,_

in spite of good consumption, lead to oversupply at the end of the year and

accordingly to dropping prices . As a result of all this the year was brought

to an end with plans of decreasing production.

According to the agreement between Finland and the Efta countries the

duties of some industrial products, in their mutual transactions , went down by

30 per cent from the beginning of July .

Home trade was rather brisk. The wholesale trade increased by about

• - 2 -

8 - 9 per cent, and the retail trade by about 11 - 12 per cent.

The exploitation of forests increased and the commercial lumbering increased

by 8 per cent from that of the previous year, amounting now to 4 7, 8 million cubic

meters .

The building activity being also exceptionally lively, the business boom met

the demand of employment arisen by the increasing number of those looking for

work. There was full employment, in some trades even lack of labour. The wages

agreements, which now, differing from the former practise, were made to be valid

for two years at a time, remained in force. Industrial peace reigned. The wages

were raised by about 6- 7 per cent. The prices were checked to remain about

unchanged. The cost of living index got up in October-November by about 1, 5 per

cent, and the construction cost index by 3, 2 per cent.

The receivings on deposits showed still an upward trend. The capital require

ments of the economic life exceeded however the normal chances of the creditors

which resulted to increasing rediscounts and stiffening financial situation.

The most important industrial laws enacted during the year were the water

law and that of workers ... pensions.

The crops were good.

The annual rainfall was abundant. The lakes got filled early in the fall thus

improving the water power situation.

By fusing Osakeyhtio Puuseppa Oulussa, a joinery and a small saw mill, on

January 1st 1961 to the Company, the number of our productive establishments

got increased by one.

The projects of enlarging and improving the Nuottasaari mills, accepted by

the shareholders"' meeting in 1958, were carried through by the end of the year.

The production of the latter part of the year amounted to 654 tons in 24 hours thus

reaching the set objective . The capacity and operation of the new bleachery and

chlorine plant met the expectations. The final costs proved to be 7 per cent less

than estimated.

At the refineries for byproducts the tall oil destillery was made more

efficient.

At Pateniemi a new water and dranage system was installed, and building of

a 5 family house started; the most important roads were paved, the loading plat

forms modernized, and the antidiscoloration handling was changed to a package

dipping system. In the timber yard an automatic trimming, sorting and barking

table was built.

- 3 -

At Hyrynsalmi a transformer station and various storehouses were built.

The small boiler was replaced by a bigger and more effective one.At the joinery

repairs were made in various office and factory buildings as well as in apart ....

ments pwned by the Company; further timber sheds were enlarged and machinery

supplemented.

The investments made during the year amounted to l 907 million Finnmarks,

out of which sum 1 689 million Finnmarks were spent for Nuottasaari mills.

Due to the linking up of new departments there were stoppages at the Nuotta

saari mills, which consequently reduced the number of the days of operation from

that of the previous year.After the enlargement was completed the output of cellu

lose and byproducts increased again, and after the new bleachery was put into ope

ration even the production of chlorine and caustic soda went up. The Pateniemi

saw mill was stopped for over a month in sum.mer, during which period various

repairs were made and the loading platforms renewed . Because of a damaged

motor the sawmill was running the latter part of the year only at a reduced capa -

city. Hyrynsalmi saw mill and the joinery were running with full force throughout

the year.

The unit quantities of the total production increased from last year by 1 7, 2

per cent. The total amount of the deliveries and own consumption surpassed that

of last year by J 4, 2 per cent. The Company,. s share in the export of sulphate

cellulose was 31, 9 per cent, and that of sawn woods exported abroad 4 , 1 per cent.

As to purchasing raw wood there were difficulties in getting sufficient quanti

ties of logs . Because of a keen competition the objective was not quite reached,

and thus the prices at the mill had to be raised about 18 per cent from those of

last year. There was enough supply of sulphate pulp wood, both pine and birch,

and the objective set us by the parent companies to get them spruce pulp wood

was reached.

The transportation of the purchased raw wood from the forests to the roads

and waterways succeeded. Because of the large timber quantities, unfavourable

weather conditions ,and even due to lack of labour the floating was completed not

earlier than at the end of September. The hauling was somewhat hindered by stormy

weathers, and even some sea damages ocnured.

The Company,. s total expenditure on wages and salaries was Z 160 million

Finnmarks , out of which sum 334 million Finnmarks were spent for the forest

department.

- 4 -


The members of the Administrative council were: N.A. Osara {chairman),

Tauno Angervo (vice chairman), L. J. Ollonqvist, Vaino Tanner, Klaus Waris and Bjorn

Weckman. The deputy members were: Antti Kivilahti, Kalervo Laine, K. N. Maatta

and Aku Sumu.

The Administrative council met five times.

BOARD OF DIRECTORS

Members of the Board of directors were: Olli Paloheimo (chadrman},Aarne

Pelkonen {vice chairman) and Kaarlo Lehtio. The deputy members were Paavo

Kivi and Heikk.i Sihtola.

The Board of directors met eleven times.

MANAGING DIRECTOR

The Company" s managing director was Kaarlo Lehtio.

AUDITORS

The auditors were: Maune Luotonen,Arvi Peltola , Eemil Paakkonen,,J. W.

Rangell and Maune Vahla. The deputy auditors were: L.A. Puntila and U.A. Va

tanen. Messrs. Reino Vento were responsible for the general audit.

The following statistics and figures illustrate the Company" s activities

====~~==============================~==========1===-==-== -====-=--==-1961 1960 1959

Logs

Pine pulp wood and pitprops


Firewood

Birch pulp wood

Production

_Primary production: Sawn goods Sulphate cellulose Tall oil and turpentine Chlorine and ca us tic soda

cuft

cum

" ,, II

stds tons

II

"

13 5 8 2 6 45 1 3 l 9 8 9 3 7 6 5 6 2 7 6 7

1 162 ·146

175 087

5 437

818 8 26

37 85 6

706

820 484

14 063

6 415

12 265 I 913 1961 Percent- 1960

, "M681 I 1959

49 418 202 099

11 766 34 667

I

297 950 I

92,6 120, 0 119,4 154,3

53 568 53 150 16 8 485 ' 154 916

9 851 22 463

8 535 11 797

11 7 > l I 254 3 6 7 228 398 i

Refined output;

Joinery products

Destillation products

Other products

Total

stds

tons

II

II

II

TURNOVER Million Finnmarks

DELIVERIES etc.

S.AW MILLS

Exports

Pateniemi

Hyrynsalmi

Total

Home market

Own use

Stock at the end of the year

stds II

II

II

fl

II

Logs sawn

CELLULOSE MILL

Cellulose shipment

Home market

l 000 cuft

Stock at the end of the year

Sulphate wood used

Sawn chips


Output in tons/24 hours

BYPRODUCTS

Exports

Home market

Own use

CHLORINE PLANT

Exports

Home market

Own use

tons

If

II

cum

II

tons

II

II

II

II

II

- 5 -

--------------------------=------==--~= ----1961 ____ p~;~~~:-,1960 -----1959--

475

6 305

6 771

13 551

311 501

l O 367

33 673

11 169

44 842

2 880

1 445

25 962

11 237

1 70 021

15 482

23 772

945 222

469 368

337

600

2 795

5 360

185

1 152

17 491

14 822

I'

II

age of 1960

102,3

129,6 J

119, O

11 7, 3

116, 8

97,2

102,8

98, 5

162,2

100,8

105, 1

90,3

114, 4

106,2

31 7, 2

143,0

97,0

98, 5

121, 7

100,5

107,6

234,2

69, 1

146, 7

169,4

6 161

5 223

11 384

265 751

8 874

34 655

l O 864

45 519

1 776

1 434

24 702

12 444

148 659

14 580

7 495

660 821

483 769

342

493

2 781

4 980

79

l 666

11 920

8 749

4 240

3 727

7 967

236 365

8419

39 496

10 904

50 400

2 046

l 855

19 787

12 467

161 458

12 653 I

3 512

702 155

359 760

323

480

I

1 426

4 062

2 333 I

2 273

- 6 -


as at 31 st December 1961.

EXPENDITURE

Salaries and wages

Interests

Taxes

Depreciations


Profit for 1 9 61

Net receipts

Interests

Dividends

Sundry receipts

INCOME

1 831 888 666:-

2 72 779 144:-

293 291 834:-

1 691 838 678:-

452 513 082:-

301 915 749:-

mk 4 844 227 153:-

-------~-----=----

4 761 809 458:-

78 548 739:-

767 500:-

3101 :456:-

mk 4 844 227 153 --------------------------------------

Annual turnover Fmks l O 367 257 434:-

- 7 -


Current assets


Inventories

Raw material etc. Products Fuel

Fixed assets

Assets

Plots, land and water area 52 670 004:-19 253 400:-

2 409 323 848:-Addenda

Buildings Addenda 308 148 225 :-

Machinery and equipment 6 154 237 434:-Addenda l 455 603 389 :-


Adden~a Reduction

Advance payment on machinery Securities

Estimated items Exchange rate difference and the additional pay

Depreciation 15 per cent

Transitory items

623 712 297:-96 142 066:-

4 774 187:-

3 21 O 708:-2 460 707 822:--

289 975 :-683 962 000 :-

948 836 897 :-188 572 166:- -J

3 148 170 505:-

40 0 45 0 3 6 :- t./ 1 l 7 7 45 4 0 9 9 : -

71 923 404:-

2 717 472 073 : -

7 609 840 823 :-

715 080 176:-

34 585 001 :-236 897 208:-

132 382 248:-33 609 047:-

11 385 798 685:-

98 773 201 :-

10 197 964:-

mk 15 820 394 454:-

--------------------

Current liabilities

Short term Suppliers Bank debts Loans {mortgage) Other loans


Estimated items


Addenda Depreciations due to the

- 8 -

Liabilities

l 532 253 389 :-59 920 880 :-48 828 125:-

350 279 040:-

441 153 160:-5 71 7 338 759:-

690 606 693:-169 843 986:-

machinery and furniture 3 355 192 060 :-Addenda l 472 239 222:-

Depreciations due to the factory and traffic equipment

Addenda Reduction

Transitory items

Equisity

Share capita. Reserve fund Liquid fund

Profit

482 952 939 :-49 755 470:-

4 669 953:-


1 991 281 434:-

6 158 491 919:-

860 450 6 79 :-

4 827 431 282:-

528 038 456 :-

360 000 000 :-270 000 000 :-380 000 000 :-

2 51 O 620:-301 915 749:-

B 149 773 353:-

6 215 920 417:-

1 40 2 7 4 31 5 :-

1 010 000 000:-

304 426 369 :-

mk 15 820 394 454:-


mk

2 966 016 l 87 :-3 094 855 687:-

6 060 871 874:-

----------~--~---

----~-----=~----~-~

•

- 9 -

The Company., s accounts for the year 1961 show a profit of Finn

marks 301 915 749:-.As the balance brought forward from the previous

years was Fmk 2 510 620:-, the amount at the disposal at the shareholders"

meeting is Fmk 304 426 369 :- •

This amount is recommended for use as follows:


as bonus to the shareholders

as available funds for the administrative council

as available funds for the Board of management

to be carried forward to the taxes fund


to be carried forward to the Profit and Loss account

Helsinki, March l st 1962.

BOARD OF ADMINISTRATORS

Fm.ks 90 000 000:-II 100 000 000 :-

II l 000 000 :-

II 2 000 000:-II 60 000 000 :-

II 40 000 000 :-

II 11 426 369:-

BOARD OF DIRECTORS

THE AUDITORS" REPORT

Having been elected at the Shareholders" meeting on November

22 nd 1960 to examine the administration and accounts of Oulu Osa

keyhtio for the year 1961,we have to- day completed our joint task,

and, as a result thereof, make the following report:

As a supervisory contrciler for the year 1961, Mr. Reino Vento

has examined minutely the books of account of the company, and in

his reports therafter affirms that they are correct and in agreement

with acceptable vouchers. Each time the cash on hand has been inspected

in the course of the year, it has been verified that the cash has correspond

ed to the balance in the cash book.

We have acquainted ourselves with the Minutes of the meetings of

shareholders, Board of Administration and Board of directors.

We have found the fire insurances <lil the company.., s property to be

in force, and, in our opinion, sufficient.

The closing of accounts, which we have examined in detail, is proper

ly drawn up, and the property has been estimated with sufficient prudence.

The balancing shows profit of 301 915 749 Finnmarks. Thus, the amount

of unused profit transferred from the previous year being 2 510 620 Finn

ma rks, the total amount at the disposal of the Shareholders.., meeting is

304 426 369 Finnrnarks.

As we, in view of the above, have found the activities of the company

to have been managed with definiteness and success, as well as to the

company,. s advantage, we propose to the General Meeting, that the accounts

to be proved and those concerned to be granted their discharge of the year

1961.

J. W. Rangell

Mauno Vahla

Oulu, March 6 th, 1962.

Ma uno Luotonen KHT

(Auditor approved by the Chamber of Commerce)

Arvi Peltola

Eemil Paakkonen

Sources:

Sources and Application of Funds

(in million marks)

Long term borrowings :

IBRD new loan

Other old loans II new loans

Depreciation 11 of deval. loss

Pre-Profit Reservation

Net profit before interest on debt

Increase in short term debt

Decline in current assets

Total sources

1961

647

l 692

34

674

707

3 754 ----------------------------------------------------------------------------------------------------------

Applications:

Expansion program 1 634

Interest during cons tr. (IBRD)

Normal renewals and replacements

Total fixed assets

Other investments

Increase in current assets

Employees I Pension Funds

Debt service:

IBRD loans N:o 61 and 70 II new loan

Other loans

Reduction of short term debt

Dividends and donations

Index of loans

"Additional assets"

Total applications

246

1 880

27

27

127

403

l 082

190

18

3 754

=================================----------------------Oulu 6.4.62.

4-.J

Adjusted Net Profit 19 tl

{in million Finnmarks)

Net Profit {Balance Sheet)

Plus:

302

extrao1·dinary depreciation 968

increase in inventory reserve 840

other pre -profit reservations:

Less:

Pension funds

Other

extraordinary income

from preceding year


Adjusted Net Profit

Sales

Long term debts

Equity:

share capital

reserves

surplus

Adjusted Net Profit

Ratios :


'' 11 " " 11 equity

Oulu 6. 4, 62..

977

l 133

10 367

6 558

360

650

304

1 314 ------------

l 133

10,9

86, 2


Raw materials:

Logs: (1000 cub. feet)


Purchases

Consumption


Unit prices:

Sulphate wood: (1000 cub. met.)


Purchases

Consumption


Unit prices:

Fuel etc.:


Products :

Sawn wood goods : (1000 stds)


Purchases

Deliveries


Unit prices:

Sulphate cellulose: (1000 tons)


Purchases

Deliveries


Unit prices

Other products:


Chemicals: _ 11 -

Supplies etc. _ 11 -

Units

13 157

9 208

11 514

10 851

2 810

903

945

2 768

24,7

49, 4

48,2

25,9

7,5

202, 1

185, 7

2.3, 9

1961

Book value mmk

Current value rnmk

141 .../

13: -

365 v 132 : -

40 v'

85 V

3 300 :-

48 v 2 000 :-

55 v'

146

259

730

67:-

5 262

1 901 : -

107

1 347

52 000 :-

765

32 000:-

65

225

318 -1 139 t ) 8 819

------u;------------..:.J..];. • I - •

Oulu 7 . 4. 62.

.. '&:.

IBRD loans 61 & 70

I. loan 222

Other long-term debts:

The loans to secure the employment

Statement of Indebtedness

in million marks

Time Nominal present . unorti- Inter. when loan value value zation % is received 31.12.61 31.12.61 time

1952-53 186 186 1960 - 70 4 3/4

1959-61 2. 670 2 605 1962-74 5 3/4

1951-58 170 170 1960-68 4 - 7

The Industrial Mortgage 1960-70 Bank 1954 148 148 7

The debenture loan 11 1954 29 29 1960-70 7

The Bank of Finland 1956-59 190 190 1966 , 0

The Old age Pension System 1956 124 124 1960 - 66 7 II 1959-60 923 923 1960-75 7

T Post Savings Bank 1958- 770 770 1961-71 7

The Export Funds 1958-60 900 900 1962-76 5

The Pension Funds 1957 -59 513 513 41/2

Total 6 623 6 558 --------------------------

Oulu 7 . 4. 62.

Security Cur-rency

The Bank $ of Finland Skr

Mortgage $

Kajaani Oy, Veitsiluoto Oy -

Mortgage 1 /2 L II

II DM

Pohjola

KOP

Pohjola KOP

Kajaani Oy 'Vcitsiluoto Oy -

Statement of insurance value in million Finnmarks.

31.12.1961.

Pateniemi Saw mill:

Mills, machines and other buildings etc.

Inventories

Hyrynsalmi Saw mill:


Inventories

Joinery:


Inventories

Nuottasaari mills:

Factories with machines

Other buildings etc.

Inventories

Forest department:

Buildings, fixtures etc.

Others:

Buildings

Conveying equipments

Fixtures, inventories etc.

Total insurance value at 31, 12. 61.

l 614

l 563

310

337

2.95

62

14 191

1 106

2 060

424

102

31

Insurance company: Vakuutusosakeyhtio Pohjola, Helsinki.

Oulu 7. 4. 62.

3 177

647

357

17 357

190

557

22 285

.. fOR~ No. 295

( 4. 55) INTERNATIONAL BANK FOR



DEPARTI~EN T OF TECHNICAL OPERAT I OHS

COUNTRY Finland

LOAN OR PROJECT 222-FI - Rawna.-Repola Oy

PERIOD TO Dec. 31, 1961

TYPE OF REPORT Quarterly Report

CARDED Feb. 19, 1962 (gwh)

FOR ACTI OH TO: IHI Tl AL DATE

I · ----• ,_ .... ~ - . ~.2o -

-;- j~ -

'"'-.,.-- ' 3

V

4,

5

6

7

8

( 1

~ - .. t

Company Name: RAU11IA- REPOLA Oy Project under IBRD Loan 222- Fl Reporting Period Ended: December 31 , 1961 .

TEXTUAL REMARKS ----------------------------

A) Technical Report

The last item A.7 Acid Plant is in full operation since the end of October . Consequently, this paper is the last quarterly report .

The trial runs and the trimming of the co- operation between all departments were accomplished up to the end of the year 1961.

Bl Financial Report

As mentioned in the "Technical Report" , the project was accomplished successfully up to the date of this report .

At the completion of the accounting calculations , some additional charges from our company's own Engineering Works have became necessary, mainly due to the increasing labor costs and developed automation constructions in the operating units treated as a whole . The prevailing boom period has led to labor shortage in the metal industries , especially in this part of the country, and the rising wage standards , in connection with the use of outside skilled workers , show the increase of about 23 % in total labor cost . Furthermore , some repair costs of the adjoining older parts of our mill have proved accountably significant and are included in this report . These consequences are itemized as follows :

Item Plan:ne lCompleted million million Fmks Fmks

A 2 623

(all figures in millions of Fmks)

Increased labor costs , 35 . Increases in costs of automation and instrumentation, e . g . remote controlling. 103 .

.. • IL

Item Planned Completed million million Fm.ks Fmks

A 3 395 528

A 4 525 588

A 5 1500 1771

A 6 1250 1316

A 7 325 420

Increased labor costs, 28 . Repairs and changes in building

construction, 21. Additional charge from Pori Works, mainly due to extention of piping and containers , 84.

Increased labor costs , 22 . Extensive use of stainless steel and its price rise , 17. Cost of an additional screening unit , 24 .

Increased labor costs , 55 . Additional charge from Mannesmann at the final deli very of Sulzer equipment , 1. Changes in building constructions owing to fire safety policies etc., 57 . Additional charges for developed automation equipment in the drying section, 97 , and in the finishing

room, 55 .

Additional nharge owing mainly to price rise of stainless steel, 38 . More extensive guarding equipment and piping in consequence of fire explosion repairs, 28 .

Increased labor costs due to troub1S:3ome working conditions during the installations in the acid plant , 20 .

Major repairs in three old acid towers ,

75 .

-Legend

Item • 0 d:

A. l . A. 2 .

A, 3,

A. 3 ,

A , 4.

A, 6 .

-Annex II ,_

' Ac-cual Progres:;; Proposed Schedule Revised Schedule

Prepared by Y!r . Alava C O N S .r R U G 'i' I O .. ~ S C 11 ~ D u L '.!:.

Place ,Rauma Finlana

Sheet N'~ l " Approvea ~r . Jalkanen

Wood rtandling

CooKing Department Addition Digesters :

Digester 1 Digest er 2 ana 3 Digester 4 ana 5 Digester 6 ana 7

Washing Departmen~

Was~ing machine system Blow tanK Pulp storage builaing

Screening Department Screens ana otner equipment

(1st stage) Screens and otner equipment

(2nd stage)

Eleaching Plant Chlorine dioxide stage Renewal i,rogram

(other phases)

Per cent com1,.i1.ete

100

10\J 100 100 100

100 100 100

lOu

100

100 ll)L,

Drying and daling Department Drying .Macnine 100

100 100

Other equipment .Building work

Evaporation Plant .E'irst stage Second and third s~age

Ga.:; removal Surface condenser

100 100

100 100

Rauma- Repola Oy , Dissolving Pulp ~ill

~odernization of Pulp ~ill at &auma Period l!.nding ]Jee . 31, ..1..':)ol

1~5~ 1960 1~61 l ~ ) 4 5 6 r( d -J 10 l.L lt::' l 2 j '+ 5 tJ'7 ~ 'j 10 J..l J.2

- --- ----------

--------- - -- -

------->- - -

- - -- -- ----- - - - -

------------- - _ _,

------

- ---t----

.. Legend

Item .~2

A . o .

A,7 , A,7 . A,7 .

Actual Progress Proposed Scheau~e Revised Scnedule

Prepared by Mr . Alava Approvea. Mr· . JalKanen

DIVISION O.F WORK

Soda Recovery Boiler flant ~oiler ~anufacture Boiler erection

Electric preciyita~or }

1 eed water ylant Steam turbogenerator and clteam lines

_I/ii sc ellaneous (fuel oil ana chemical storage)

.duilding worr;_

Acid Plant

water Purification

Repair Department

Per cent complete

100 100

100 100 100

100

100

100

100

100

C O N S 1 R U C l I O N S C H E D U ~ B Rauma- Repola Oy , Dissolving .Pulp MilJ.

~odernization of Pulp MiiL at Rauma

1958 lj59 l9n0

Place Rauma Finlana Perioa .r;nding:

Annex II L .. Sheet K~ 2

Dec . .31 , 1961

1961 1 2 3 4 5 o 7 8 9 To 11 :~ l ~ 3 4 5 6 7 d ~ 10 11 l~

~ - - - -- - - - - -- -

po,-- - ----- --

-+---------

----- - -- 1------------"-- ------------

~ - - - - ~-

I "tem.:; I"" .J.I.

Al A2

A3 A4 A')

Ab

A7 b

Compauy Jame : Rauma-Repola Uy Project under IBRL-loan 2~2- tI Reporting period ended : Decumoer j1st , 1y6l

At ec,a o!' !Ji.'eViOl..i"'

IJjRD r·oreign Local 11 ota.L

22 2~

196 1';16

51 10 61

'j~ 22 121

2u3 1.8 2~1

.L b4 J.14 ~'jO

70 5 7S

1·eportu1g peI'ldl"J

Otu t!r .In.mas ... 'ot a~ s

153 175 26':-} 4dJ

334 39? 4Ll4 5?-_'.)

127':;f 1500

::J52 1250

2::,u 325

65 65

ProJect uost Bstim~te

(mllliun .b'mK)

!Revisions auring reporting

lB.tU) Other .B·oreign J.iocal l'otal Fu.nos

+ 138 l,. 1 )

+ 63 + 271

+ 66

+ lj 5

Annex IV

period At present

IBRD Ott1er 11otals .r'oreign! Local 'l'ota.1. E'und s 1rotals

I

22 22 l'.53 175 + 13b 196 196 427 623

+ l.j) 51 10 61 467 528 .l. b3 90 22 121 467 5tlb

+ 271. 20j lb 221 155u ,. 771

+ 66 lt34 lJ.4 2\jb 1018 1316

+ 'j 5 70 '.) 75 345 420

65 65

Totals 80'.5 191 ':1j4 3726 4 720 I - - - + 766 + 766' 803 191 '::i':J4 4492 54t36 ===========================~================= ·=======c=====~====================~-~=======================~======

"

Company ~ame: Rauma- Repola Oy Project under IHRD- loan 222FI Reporting perloa ended: Decemoer 31st , 1961

Expenctitures to Late

Status ot' Pro:ect ~unas

(million li'mK)

Expenditures yet to oe waae

I terns IHRD Otner Total IBRD Other 'rotal Funds Funds IX Foreign Local'rotal

Al

A2

A3 A4 A5 A6

A7 B

.196

,1

'j :1

203

184

70

803

22 22

l'j6

10 61

22 121

18 221

.114 29d

5 75

191 9'::!4

Funds ~unds Foreign Local Total

1,3 175 427 6~3

467 528

467 588

1550 1771 1018 1316

345 420

65 65

4492 5486

Annex V

ut wnicn .ti'unds Committea

1.L,KD Otner '10-cal J?oreign l Local Tot.al' Funas ..t!'Unds

1

"

----------------------==-==-=========-==--=-=-=-==-=======================================================:======

Company Name: RAUMA-REPOLA OY

Project Under IBRD Loan 222-FI

Reporting Period Ended: December 31st, 1961

Quarterly Report Commenting on the Company"s

Operations and Finances

Sales

The total Invoicing

Finance

Short-term Bills and Bank Credits

Long-term Loans

Bank Credits

Pension Fund

Period 1. 1-31. 12. 61

Mill. Fmk

25.000,0

2.200,0

8.041,3

625,0

8 . 666,3

Estimated Period 1.1-31.3.62

Mill. Fmk

2.200,0

8.100,0

625,0

8. 725,0

-v • ., ,.

1

~ FINLAND - LOA.N 222-FI

• ~ ..

' . • •

•

..

4' Final Constructj,.on Report, Woodworking Pro.;ects 1959

• ... ~

•

Date of loan agreement:

Amount of loan-:

Witharawn as at November 30, 1961:

Effective date:

Closing date:

Term of loan:

Interest rate:

Amortization:

First r~payment :

,Last repayment:

.... .. I y

l

••

I

l

' I Prepared by:

•

March 16, 1959

$37 milli on equivalent

$34,628,697 (about 94% of the loan amount)

May 16, 1959

June JO, 1962

15 years 5 months

5 3/4%

Semi-annua.~ly

August 15, 1962

August 15, 1974

H. Fuchs • •

•

--

- •

I I

I

• J_ I

I

• 11 .;e ,• .

-•

This reJ?Ort is based on Technical Pr.ogress Reports submitted by the ult.i,mate beneficiaries of the loan u;p ,to September 30, 1961, and end-use visits oi' the companies in the spring o.f 1960 and eari, in 1961. The latter visit covered o.nly three companies (Kymmene, United Paper "Hills and Kaukas) which were again beneficiari~ under the latest loan to the Finnish Woodworking Industry (Loan 291-FI of August 19.61). Apart from informat ion on project costs, the report does not cover the financial position of the borrowers; they will be deaLt with in a separate report wbich will be prepared_ upon receipt of the compan'.ies ' financial inf'o;t'mafion for 1961 expected to be submitted to the Bank in March or A:R,r::i.l ~962.

All the nine IBRD assisted projec"ts, apart froril s6me minor installations, are completed. Most of the projects have been completed in accordance with the original construction schedules . In three case~ (Netsaliiton Selluloosa, Kymmene and United Papsr Hills and to some extent Rauma Repola) projects have been subsequently enlarged with the approval of the Bank and their project costs, as a consequence, have increased. In the othex companies which carried out their projects as origi.nally .planned, costs on the average have risen by ab out 6% abo.ve ori¢nal estimates which came as a result of increases in civil works, esc~lation on equipment costs (the ~verage construction time was about 21 years) and, to a mi.no~ exte.nt,

• Ill • • •

•

• • •

• • I

- 2 -

addiiional equipment needs resulting from mo6e detailed designs after the appraisals had been made . .A,.part fro}Tl three cases (Kauka.s, Kymmene and izy-B.ykos}fen), experience vfith egui:g_ment has been satisfactory and, in those cases where it was not, the initial troubles shoJJld ~ot be difficult to overcome • From the two end- use visits and the deta1led reporting, the impression W9-S ga6..ned 'tha~ all tbe companies .have carried out., their projects efficientl:i. As at the end ofUTovember 1961 94% of the loan amount has been di-sbursed and the remainder is expected to be withdraim by J!lid- 196~ ..

Details on co~ts and construction progress of the individual projects are gj.veti in the Annex. The companies are listed, below with their r.especti ve loan amounts and the approximate propovt:Lon of our loan used for local expenditures (in million dollars equivalent):

:;, Loan Fmk ProJ?.ortion (~sat' Amount September 30, 1961}

Sulphate Pulp ~ %

• • ' Aerni 0y 3. 26 {j 33 --· Oulu Osakeyhtio 8.34 45

netsalii~on SelluJ.oosa Oy 4.69 67 ,1 lfewsprint =-• • I ~ ,- ' ~ene A'ktiebolag 4. 97 39 l,&llykosken Paperitetitas Oy 3.81 V 43 Unitea Paper Hills 4. 81 23

Di5solving Pule

•

Ab J. 't-J . Enqvist Oy 2.19 53 .. 1.50 Qy .Kaukas Ab .. '1 Rauma Repola Oy

' 3.10 21

• -Unallocated 0.33

'llotal $37 .oo 32%

• In tne Technieal Report, the disbursements of our 60,a..r.i for local expenditures were estimated at 13% although :i,t w.,_s --sa.'i'g that i t v1ould depend on how competi ti v~ F;innish equipment would prove after final b-ids had been

, rece.ived . The Bank has :ueceived on all major items of mac'hiner.v and equipment (above $100,000 equivalent) detailed cost analyses for approval and is convinced that equipment has been placed to the optima1 advantage 6f the companies. .Finnish equipment has not only shown ,itself to be fully compe:titi ve with foreign supplies (apart from some special'ized equipment not yet

• • • -- -- -

-

•

•

I

Ill

•

•

(

- 3

manufactured in Finland) as to pr:iice and delivery time, but. a l so as to pe~.formance, as is now becoming a,ppar~nt . T'loro )'innish newsprint ma.chines supplied by Valmet Oy are a good example; they are the first of their -size and speed built in Finland and so far .have been running very satis,factorily.

There is another reason wey the local portion of our loan dis bursements has mcre_a,sed . )i'l.though t)le companies M ve :repeatedly been asked to use IBRD funds firsrt. for .foreign exchange expenditures, the possi bility left to them to get also disbursements on locally procured goods (as long as approved by the Bank and included in the List of Goods) made it impossi£ le to enforce the use of IBRD funds for forei~n exchange expendi ture.s to the maximum extent . . " Surunary of Const:ruction PJ'.'ogress and Project Cost Development

a; C

The Kemi project, covering the ins'tallation of a new soda recovery boiler,added drying ana star.age capacities and an increase in

~ rt.he .pulp mill ' s capac ity by 10,000 toris per year, was completed acco r<ling \." to the orig~:o.al construction schedule and only a rri.nor over- run in project

costs occurred. Before completj.on of the IBRD project, the com~ embarked on a program to furt~er increase its sulphate pulp capacity, investments for

''which tbe IBRD financed project had alr\ ady laid the basis . These addit'ionc1J. investments have put a substanti.al burden on the company ' s finances and a visit to Ke¢. Oy on the occasion of: the next en<;l-use mission to Finland. is ~dicated in order to foresee more clearly tbe company ' s f~nancial development .

The Oulu project, to Ync~e~se t~e capacity of the company's sulphate pulp mj.ll by some 100, 000 tons per year, has been executed 1-1ithin th.e original schedule wi'th the e?CCeption of a lime kiln which, ·'however, did not hinder the full utilization of the added pulp capaci~y. The new capaci tJr became available in mid-1961. Project costs have remained below the originaa. estimates.

With the consent of the Bank, the J.1etsa<lii ton Selluloosa project's .. scope was . increased to cover the esi;ablishment of a new suJ.pha'te :pt;J;p mill o:f .,J.00,000 tons annual ca.pa.city instead of only 70, 000 tol)s as origin~lly foreseen. The project was completed i.n darch 1961 on schedule , with the exception of the late additions which were to be completed by mid-1961. /1.ddi tiona,l project costs were cons'iderably less ill proportion than the f a<laea s~1es value resulting from the project ' s increase .

The Kymmene project, which wa.s subseguent1.y enlarged with the Barik 1s consent~rtd included as a maJor item a new" newsprint machine 0£ an annual capacity of 70,000 tons of standard newsprint, was completed in :April l:961 close to the original scl;!edule with the exception of a boiler. Enough ste~m capacity was availq.ble, hdwever, so that the delayed boiler d,id not interfere with the full utilization of the r~st of the -Q'lant . Project costs increased maihly as a result of the project's increased scope~

• t • • • •

• •

a

'

II

II

•

The Hyllykosken project, 1.1hich inclua1;id the erection of a new newsprint machine of a capacity of some 70, 000 tons of Standard newsprint per year, was completed on schedule 'in June 1961. A minor over- run in project costs occurred.

The United Pa_per Hills pro j ect, for the installation of a n~w newsprint machine, wa,s completed about six months earlier than expected by the company at the time of loan signature . The machine's capacity was subseguently increased, with the'Ba.:nk•s consent, by about one- third to produce about 105,ooo tohs 0£ standard newsprint per year, resulting in an increase in project costs by about 8%.

The Enqvist project provided for the installat~on of an evaporation plant and a boiler and an increase in the pulping capacity of 10,000 tbns per year . Hinor over - runs in construction time and an increase of 16% of project costs have occurred . Enqvist is the weakest company financed un~r Loan 222-FI and a thorough study of~ ts f:i,nancial position should be made after receipt of the financial data for the year ending December 31, 1961. On the occasion of the next end-use mission to Finland, this compa"ny should be visited .

The Ka1t.lcas project, t>1hich included the installation of a new evaporation and boi ler plant, was considerably delayed due to difficulties experi~nced by th~ supplier of the evaporation plant to get raw Jllaterials in time . Project costs remaiued clbse to the original est".imate but not realized O.,Pef'ational cost savings due to the con,structibn delay are estimatea to ,\lave increased the project's ovetall costs by about 10%.

The Ra'L!l'l!A Repola project to increaae the company ' s pulp capacity to about 115,000 torts per year, has been completed in mid-1~61, about six months aheact of schedule . Project co$ts have increased as a result of the fact that capacities of some of the mill ' s departments :i,ncluded in this expans:ion are good for a still higher output and that part of the equipment former l y thought to be r ebuilt has l;>een replaced by new equipment .

Action

Apart from the visit of t:wo companies (Kemi and Enqvist) on the occasion of the next end-use m)..s$ion to li'inland, there is no aqtion required. A report on the financial development of the companies wil l_ i'oli ow as soon as the data for the past ,.financial year become ava:il able.

HFuchs :bs December 14, 1961

.. ...

'

• CE: : Messrs . Aldewereld, Squire, Reid, Ripman,

A11mstrong, Hathaway, Bateson and Povey Miss Zaifiriou

, Miss ~her legal Files Operation~,;]_ Files

Spottswood, Van Helden,

' ..,. "' ----

•

I

• "' .

A~R\1EY.. ---~ Page 1

· J{EMI OY

The project was aimed ma.inly at improving ope:i:-ating efficiency of the sulphate pulp mill . Apart from, a sr.ia.11 expansion of the sulphate pulp capacity by 10, 000 tons to 1uo , obo tons per year, the project had the following major aims : (1) t0 incre::-·se the steam yield from the available supply of black liquor; (2) to i.ncTease drying capacity in o~der to reduce cost and ihcrease t11e marketability of the pulp; and" (3) to expand storage .facili~ies for dried pulp. The r,iajor items installed a!'e a nev) soda recovery boi1e~, a nev~ drying ma.chine ano a pulp storage builaing . The 'boiler has been designed -to allow a further increase in ,PU1p production to 230, 000 tons ;:per year.

The original construction schedule foresaw completion of ifhe boiler ( the largest item of the :p-roje'c t'°' wi ~h th,e longest delivery time) by the end Q f Kugust 1961. The schedule, within tHo weeks " was adhered to . For a construction period o~ more t)1an 2! years an'a the fact that in No"vember 1960 work was interrj pted for about three weeks on account of a fire , this is an excellent result . The boiler, the largest of its land in the woirld, has been rurming continuou_sly since early October to the date of the latest report av<;i:i:.l able (November 9, 1961). The rest of the equipment was either completed on schequle Q{.. slightly in advance -the drying 't,iaohine in September 1959 and the additional pulp capacity in May 196o .

~he or:i,,ginal project costs we-,r~ estimated at Fmk 2 , 080 million; the latest estimates,. which sho•ild be firm although they are not yet final, show costs of Fl:µc 2,211 milli on, an increase of about 6% . The b oiler accountf d for the largest portion of this increas.e,.

In 'inid- 196Q, the cort}?any decided to increase the .sulphate ~ ulp making ca_pacity by another 90,000 tops to 230,00Q tons ~r year. Completion o:f tnis' progr:arn is scheduled ':for tl1E!' SR.ring of 1,.962 . Total costs -of this

' expansion are estimated at Fmk '2 , 22~ million (about the same as t:or the IBRD f:i.na,nceo. project) . Sot.le 22% of the investnent costs for t his expansion are being fihanoed by an increase, in the compn.ny 1s share capital, some 45% by locaLlcmg- term credits and the remaining 33% by internally generated f1,1ncfs . .Addi tic;,nal l}torldng capital is to be covered by sh:> rt- term 'loans .

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.. • • OULU OSAKEYH!J'.O OY .-,, • ...

The project prcwided for an inc_.rease in the company's capacity for sul~hate pulp from 1~4, 000 tons to 240,000 tons per year , the installation of a chlorine dioxide generating plant and a bleaching plant t 01'llllake possible full qleaching of about 40% of the expected pulp ou~put and an expansion o,.f the drying capaci:t:y t0 reduce the o~tput of t)le un~leached

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wet pulp from 37% to about. 16% of total output, . 'I'he capacity of the chlorine plant was to be increased from 13,000 '-t'o 43,500 tons per year, a lime kiln and a new back pressure tur..bine were to be installed arid some minor rni..sce1laneous investments to round out the progra]ll.

JI'he project was completed close to the original const:vuction schedule in 'iTune 1961 ydth tfie exception of a lime ki'ln which by now (~rly Decer.1be11 1961') should be in operation. The delivery of the lime kiln of Danish make was delayed due to a lengthy strike a~ the supplier's plant; however , t}J.is late, de':l..:j..very did not interfere \ tith the fuil.l utilization of the added pulp capacity. The new chlorine plant which is to slJ.p:~ly the needs oi' Oulu's two parent cotnµ:i.nies was c<§inpleted in Hay 1960 and the new bl'eaching capaciity °t'}as added in February 1961._ 1\.11 the eAuipmeq_t yistalled is working satisfactorily.

Projt ct costs have rema"ined \filchanged at Fmk 6,663 iiri.ll;i.on, an amount wh-icb still includes a. cont:i,.ng,ency res,rrve o.fi. Fmk 499 milQl;Lon •

.... • ME'l\SA tI'ITON SELLUlOOSA Ot •

The project originally covered1 the installation of a new sulphate pulp mill with an annual capacity of 10,000 tons 9f bleached p~lp . The soda recovery boiler was to be dimensi,oned so as to allow expansion of aJU1ual pulp capacity to about 100,000 tpns .

The first alteration of the project occurred when <lei.ailed studies showed that an annual production capacity,· of 80, 000 tons would be more appropriate due t_o the availability of standard sizes of various egui~ent. Secondly, due 1:J'o the dell:)and by a num'\;?er of domestic pape:c. -mills for Seipi- bleach~<i pulp, tire vompany dl cided to add another 20,000 tons of annual, pl,llping capacity in tl)e ,form of semi-bleached pulp . Consequently., the new mill wa$ 'to h~ve a ca12acity" of 100,000 tons per year consisting of 80, 000 tons o.f fully oleachedJ>ulp and 20,,000 tons of semi.a.bleached pulp. The other pr-iginal features of t.he pulp mill remained Ul}changed. The Bank agreed to ~hese chan9es of the project .

In accordance with the original e~tima}e, tpe new sulphate miJ..l star;ted operations in early il&rch 1961 and has been working cQntinuousl,y since the end of April.. During Hay and June "J..961 (the t_wo latest months "ror which reports are a vaila,ble) production has continously increased a:1d the mill then had a~"tained a production rate about 60% of capacity. -Fi~stclass pri.lfte quality pulp bas been obtaineq. 'Further work rE!r.1ained only in the woo<l handli'ng dep,artr.:ent and the semi-bleaqhing line which were to be completed in July 1961. - .. .

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Y.-age 3

Proiect costs on the ba~is of the original scope of the project were estimated at Fmk 4,280 rdllion . Final costs of thiis original scope have remained nearly unchanged, l;>ut, as ffe result of the additional capacity~

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project costs. w~nt up to Fmk 4,842 million. This riepresents an increase of • about J.3% in prd"ject costs as co.mpared to an increase in added sales valu,e of about 43%. The additional investments- were main).y met by a long- term loan of Fmk 400 millio)l from the Central Bank of Cooperative Credit Societie~ and by suppliers ' credits •

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~ .. • • KYil'.!F1ENE AB

The 13:r;oject originalfy covered the installation of a new paper , machine at t11e co'm..Pany ' s Voikka plant to produce about 70,000 tons per year

of standard nei-rs~rint; an expansion of ,J,ne groundwood ~ 11 by 40,000 tons per year; the i.."l.stallation of 1 new boiler with a capacity of 80 tons per steam per hour; and >the modification of an existing power line between Voikka and a1:..o ther nearby p"Iant of the company .

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1n April 1959 the company reguested the Ba,nk's approval (which was subsequently giveh) for a modif±cation of the scope af the project . Prov1sions were added for (a) bleacning 30, 000. t ons -per year of groun&.lood, and (b) 'l'llo_..re equipment for stotk :µ,reparation to "improve the quality of the stocke As a result of higher P.steam Feguireinents , the boiler capacity was to be increased to 100 tons'D~ steam per hour and an existing steam turbine was to be rebuilt . The ~basic consideration which led the company to these changes was increasing demand for higher quality products .

It ·was origmally estilruil.ted tha~ the paper machine would be completed b_:r t.he .end of l~ rc'h 1961 and the boiler and power installations in J~ of that ;year. All other items of .the project were to be completed by the end of 1960 or early ~96.1.

'I'he p:a.per machine supplied by- Valmet, Finland: was started"µp in mid-Arpril 1961 and, after some initial trouble 'ti1i th the pap-er macliine dri,ve, had obtained by the· end of' Oc'tober near capacity production wi-th satisfactory quality. '\he erection of the boiler, on. t he other hand, causea some troubl~ . A~ though the boi ler sup_plied by Wartsila, Finland, was .£inaI1y started up J:>y the end of October 1961, some three months behind schedule, a number o:f partis hav€ to be exchanged and tfinal acceptance i s not expected before Hay 1962 ~ The company had enougl;l ste..am re,serve capacity to avoid a reduction in the full utilization of' the plant .

Project costs were. oril inally estimated at Emk. 3 ,53l Jnil l:].iono As a res.ulf p1l,rtly of cost Qncreases of the original project scope but main~y due to the enlarged project -scope, cos t s went up to Fmk 4, 300 mi.J..lion or bf about 22%. The company is again a bene ficiary under the latest loan to the Finni sh Woodworking Industry of August 1961.

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•• r ~~' ...-~~- The project provided~ or the installation of a new l/"1'er machine ~ and a new super&lender to produce between 70,000 and 80, 000 t~ms of standard l newsprint ~,r year or a sr.ialler amount of glazed newsprint. Additional grind-

~~g capacity and a new b~ck pressure turbine were to }?e installed to meet th-., l. ' rt increased requireMents for puip and power . The project was completed to

schedu1e in June 1961. The neu paP.er machine started ·trial rtihs at the end of Na.Tch . In November 1961, the rieJir paper machine which -was manufactured in

r Finland by Valmet was already running at capacity production and has reached in short :runs a producticin -1:t,ate of some 94, 000 tons per year. The quality of

,.. tlie paper 'fs said to be satisfactory, . 'the supercalender, although in Operati9:1,

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Original pro.iect costs ~1ere est~ ted at Fmk 2,859:;;_llion; final } costs are Fmk 3,015 millionj representing an ~ncrease of about 6%. The cost r increases occurred principally in civil worKs and accessories of the paper

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. r:ia chine •

~ ~ . ... -The paper ~chine _sta:rted ope .. ·ations on Harch 30, 1961. This is a ~'ht~p ~:l..X- mo:1ths earlier than noted in the legal project description which expressed t he comp~'s planning at the time of the lo.m signature although actual complet:i,on ~sin line with the date anticipated in the Technical Report. As at tne ~end of June:,'°' the da·,e of the latest o-perati0nal report available, tlie ~chine supplie a ' li,i-."'"B::-loit, U .s .A .. , \las runm.ng at close ::.o 690 meter~ Eer minute which is equival~_nt' to an annual rate of production of about ) oo,ooo tons. Tl"\ere is no mention in the company ' s report that: the ~P.e~~quality i.s , not satisfactoilY~ ')

~;'S"-- ' .. rl : -•... ~ ~. _t.... # 1ft ..,,. ..... ~ As~a result 0£ the increase in machine capacity and auxilia!'Y

equipnent, project co~t's increased to Fmk 3,545 Million as compared to Fmk 3,285 million origina-lly, an \increase o! about 8% .

The company is . again~~beneficiary:. unaer, the latest loan to the Finnish i,loodworking "Industry of August 1961.' / ~;:.J ,. ~-

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.. AB J . w. ENQVIST OY

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T~e project provided for the install.at~on of a multiple effect evaporation plant and 1;1. boile'r to concentvate and 'burn 1the pulp mill's sulphate liquor . The project also included the installation of a back pressure turbine which v1as to make the company inaependent of purchased power and allow the sale of surplus po111er . 'l'he annual capacity of dis- ' solving- pulp was also to b,e increi,ised by 10,000 tons to 70, 00E> tons .

The original construction schedule called for completion of the project by the end of Narcn 1.960 ·with the exc~p-tion of the turbine i hich was scheduled to be oper i tional in September 1960. The original schedule fQr "the turbine was adhered to but the com_eletii.on of the boiler was delayed by about three mont~s as the result of a 40 day construction workers ' strike, the fact t hat the e;:,rly win~~ affec;,,ted outs"i..de work and cliffic~ties ..encountered 'by the supplier in getting raw materials in time . The ~ months constrµction period given to t lli:l supp1ier of the boiler v)as lmmm to be rather tight and a minor dela-y had to be expected . The legal project description had ma.de allowances for such an expected delay.

I.a~est re,PO~~s {as at June JO, 1961) indi,cated that all the eqy.ipment" is LrUnning to original specifications vthich, through a reduction.:. of aactit'ional fuel, increased prod~ctio~~ohol and decreased labor and maintenance costs as well a ~ through t )le J.. ta:,,e of power, was to bring abo'ut. sanngs of so,!Yle Fmk 2;;0 milliion pe:r year.

The thirq a.im of the _proj ect to 'increase capacity of the pulp mill b-y 101000 tons per year has a.lso been achieved; its progress ,-,as tied to that of the boile~. Pulp production during the f irst half of 1961 ran at 70, 000 ton_s per ye2r level . As at :Tune 30, the company had full order books to .keep -th e mill running at the capacity rate for t)1e rest' o.f the year . Prices decl'ined s-1.ightly during the fourth quarter of 1.961.

Original pro.iect cos ts (excluding additional working capita'l but ine..lll!iiing interest during cop stru cj;.ion) were ;Frnk 1 , 249 million comp~red to actual project cost s of Ftrtk 1,, 448 mil,lion p r 16% above the forecast . The cost increase is mainly due to some addi2tional equiJ?ment, found n~cessary for t he .14?ulp mi ll. The additional financial requirements were covered by addi~ional sup~liers' crediis and increase in current liabilities~

Upon completion of the project, the company decided to jncrease its pu1.p capaci<ty by another 10,000 tons to 80,000 tons peT year o:n wh:1.c}J. level it elans to st abiLize its production . "Enqvist estimates that these investi;n,ents will require aoout Fmk 235 million and can be financed out of' the company 1 $ o~m resources • The new product"idn level is expected to be reaghed by the ena of 1961.

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OY KAUKA'S AB

The project proVided fo.r ~he installation of a multi- effect evaporation plant and a boil$r to concentrate and buni the pulp mill 's waste 1.iquor. A. new bac~c pressure turbine was also included i.n the project .

The company did not start w:iith its final' planning before it had ... the ass urance of the :fBRD J.oan and tb e construction period was postponed by about f our mont;hs . Wl').il~ the boiler and the turbine were complete& in October 1960 in acco"!'dance wit h the revised construction schedule , the eva~JOration plant was delayect'by n~arly six months andl test runs did not start before the end of February 1961. As at September 1961 f:d.nil accept-ance tests had nqt ;ret been earried outG The deiay was caused by tbe ~ ii..na~lity of "'the supplier (Lurgi , Gerir.any) to get proper raw ma\ eri-als in Y t'ime after its original desil!ll of the evaporation plant based on German norms , and for which Lurgi had ordered materials, was not accej>ted. Finnish norms require slightly higher gauged mat$rials . TheI?e were alse some initial di.fficulties with the running of the evaporation plant which are being corrected . Tfre b0iler (supplied by SteinmulJ.er, Germany) operated satis factorily from the start but cont:i.nous tests to ~ on olack liguor of the evaporation plant had to be postponed uue to the initi~l ..troubles ~f the .e:,vapor~..t,iop p lant . Th~"'latest report 'r-1:'eceived from the company (September 29, 196l) does not' r1,enti0n any further difficult~e$ with the equipment •

The prQ ject' costs rgmained close to the original estimate . • Original project costs were estl1!lc\ted at Emk l,I66 million as compared with f p.naL costs of Fmk 1 , 197 million, an increase of less than 3%., but since 0nl y t he combination o'f evaporation plant + boiler + turbine brings about <the full extent of the cost savings expect ed from the project, the deJ:ay in the comp1.e'tion o-f the evaporE<tion plant can be expected to have cost· t};le company about Fmk 80- 90, millioh in .not ;-ealize~ operational cost savings . ll'J;ie company is aga::in a beneficiary under the latest loan to the Finnish Woodkworking Industry of August 1961 .

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RAUMA. REFOIA O"'f

The project o~igi.nally called for an increase in -yie capacity of the company 1s dissolving pulp mill from about 70, 000 to about 1is, ooo tons peT year by the end of 1961. This was tlre integt al part of an overall expansion and )llodemization program aimed at increasing capaci:!:,y t,0 a total of about 130,000 tons peF year by 1963. The divi~ion as established between the fu;st 'J)hase , which IBRD assisted, and t he following stage is not clearcut, as a number 01' investments included in the first stage a:re to become effective only upon cor1pletion qf the whole program.

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• ANNF.X ---· • Fa.ge 7 • • The project has not changed basi~ally . However, the final

capacity expected to be reached at the end of the s~cond stage has been increased from 130,000 to 150,000 tons :g,er year and equipment installation in the first phase reflects this change .

Construction of -the first stage has been speeded up and a capacity of betueen 110,000 and 120, 000 tons per year (depending on the rate of pulp produced) was attained in mid-1961 inste3d 9f the end of 1961 as in the original schedule . Only the ;new acid plant came into operation in October 1961. To our knowledge it has not yet been decided when the company will expand the capacity t0 150,000 tons per year nor whether this added capacity wilJ be in dissolving or paper grade pulp . Independent of whether the company decides for an increase in paper or dissolving pulp capacity, it is planned to move toward an ultimate plant 0utpu~o£ 200,000 tons of pulp per year.

Total project costs to bring the pulp capacity to 130,000 tons per year we:re original-ly estimated at Fmk 3,278 million . Actual project costs to bripg capacity to the 1101000-120, 000 tons .J.evel are now Fmk 4,720 million. It is expected that an addi>tion~l Fmk 1, 200- 1,300 million would be needed to bring output to about 150, 000 tons per year. The increase in project costs is not due to original under- estimation but is the result of the company ' s decision to replace old equipment with new rather than to nepain and adjust existing equipment to the increased capacities . There is alpo t~e factor that part 0£ the first stage equipment is already good for the 150,000 tons per year le'vel •

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FORM NO. 295 ('ll . 55) ' •

INTERNATIONAL BANK FOR




COUNTRY FINLAND (Rec'd April 24, 1961)

LOAN OR PROJ ECT 222-FI (Oulu Ov)

PERIOD TO Dec. 31. 1960

TYPE OF REPORT Annual

CARDED Aor. 25 . 1961 e.iw

FOR ACTION TO : I NITI AL DATE \'I

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OULU OSAKEYHTIC

Yearly Financial Report 1960

1 . Annual Re.r.,ort - (including Balance Sheet and Profit and Loss Statement)

2 . Report of the Auditors

3. Adjustea Net Profit

4. Sources and A~plication of Funds

E. Statement of Inventories

6. Statemetlt of Indebtedness

7 . Statement of Insurance

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OULU CS.AKEYHTIO

AIUUlal report for the year 1960.

Tho new dec:ado •tarted with poeUlve •conomlc proepocta for tho wholo

coutry. Tbe export and lmport trade ••• durma the year under re.tow moro

Unly iban eyer before. Th• value of th• eapori exceeded that of la•t year by

about 18 per cent, and. tho import by abou.& 26 per cent. Tb• bllaDd whole 1ale

trade mcrea•ed br about 15 per cent and the retail tnde by about 8 per cem.

The prodw:tlon volume of all the 1Dd111try increaaed br abO'Ut 1! per cent.

Du to tho hip domaDd ol thG product• the moat woodworldD.g mtlle were ill

full opentloG and thelr 1Ntput lAcreaaed by abov.t 10 por cent. Tbe total pro ...

dw:Uon of tile marketma ••• mill• w•• about l 350 000 ates,. The deHverlea

for el!lport amoWltod to about l l 25 000 atda. the lac r•••• bef.ng about J 8 per

cont. Tbe amoQDt of eulphate ceUulo•• prod11Ced In the whole country w•• 1 181 000 tone,whlch i1 ab01&l 8 por eeDt more than ta th• pre•loua J'ear,whore

a• tb• export, due to the refblemont of the product, docrea1ed by •bout JO per

cont beln.a llOlf 497 000 tone.

The waae lonl w•• nlaod by 5 per cont. There were AO atrlkea. The

employment eltmtlon waa arowf.na better; OD tb• 1ecoa.d part ot th• par the

number of tho1e without work••• tulalllflclant. Tbe central oraantaatlou on

the labour market mad• now 2-yeore' contract, bl almoet every trade for the

period of 1961 • l 962.

The coat of llYIDa llldea ••at up by almoat 3 per cent. la tho •hole ••1•

prtce• thore wa1 a almUar ral1e. The coutruction co1t1 wem up by about 5

per cellt-.

Tho depoaltf.na made aood proareee aDd tncrea,ed. like 1D th• prevtou

rear, by about 15 per cent. Ae • reault of a Uvely ecoaomlc actlvlty aleo the

need of crodU wa, grCNlo.g alld led to ao tm:reaa•d amOQQt of radlscowit,.

Tho monetary eltuatton arw more atrataed.

Tho aoctal clrcum9tam:e1 aot improved. Tb• old aao po119lou were ralsed

and the •••1 ftc:atl.OIUI ••re xtellded. The 1tatuie1 aecurln& tbe payment of

unomploy rr1Dnt aid came lDto force.

The crop• were 1ooct. The power ecoaomv w•• hampered br tbe lack of water.

The harboar• ol the nonberruno,t part of Qulf of BotJmla ••re kept open ~

by lcebruere 1tUl at tho end of tho yeor.

The loglq ta the whole coantl', eaceeded 'the quaatlty of th• prevlou

,ear by 18 per cent.

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'Thero••• 10•• rt•• ill tla• prtc•• ol 111lphate cellwo•• idllrina tho year, aQd dulq the laet quaner tbe 1amo price level••• r•clled •• two para aao. Alao tho prlc•• c,I n•a 1ood• were aS.ed toward• tho •ad of tbe eelltq ••••oa.

. Th;e la¢r .. 1e ill COD.IIIIDptlOll OD almoet all aa rketiq ar•1 ,iaarant••d

thts full operation of. all the productlrm w:alt• of tJMI Company, except of the

clalod1111 plant. whlcll wa1 10 far l1IIUdq oalr at U. 60 por cea& capacity. The

Uldt f111&DUty of tb• total prodactlOD exceeded by J Z, 4i JMlr cellt that of the pn•

YlMU ,ea•, •h•r•• the amount of ctellveri•• and owll ue ata,ect on the eame le

vel a• laat par whera the export wa1 bl11•r thall the prodactton. The Compaor'• 1bare ,of the 1\&lpbato cellulose e.wported from th• wbol• cou.ntry ••• 29, 9 per

cent and that of ••wn 1ood• ,. 5 per coat.

The plamaid 1upplle1 of ir•• material were obtalDed. Th• weather and

workl111 condltlou ID •lnt•r were tavouable, only the lack of water ID the :river,

caued trouble ln floatblg 1ea••· Mataly boc:aue ol. rahlq tbe prS.ce of 1taadf.na

dmber the rate of eaw loa• at the mUl ••• rateed by 15 per cent.

At N11ottaeaarl the projecta of enlaralD& alld s-ec:outrw:tlq the mlll• were

carried on. D\&nna th• year under review the follawla, blllldf.na• were complet

ea: the dr,taa de,artment, tbe chemical JtllrlftcaUon plant, the ..,ltcb plan&, the

flrat part of the bleachery. the whit• lf.q•or department, tho electric pMclpitatlon

plant, th• 1ulphur own, and the turbl.lle hOll8•• Otb•r• were proceeded by the •Dd

of the rear to varioua buildlaa o:r lnatallatloo •taa••· The bwe1tment1 made dulna the, .... amowated to 3 410 million Flnnman.a,

out of w!dcll 3 J!O million J'taamal'kl wa• , .. at tor Huotta1aarl mUle.

Th• Company'• tot.al eaq,eD4ltve on waa•• and ealartee ••• Z OZZ mUlloa

Ftnnmark1. 09I of which 1um JSl mUlloll .Fbuu1Jark1 were 1pent for the

foreet depanmem.

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ADMINISTRA TlVE COUNCIL

The member• of the AdmlalatntlYe cOllllcU were: N.A. O.ara (cbalrman),

Tau.no Aqervo (Ylc• chalrmaa), L. J. Olloaqvlat, Vatna Tanaer.&lau Wart11,

aad BJorn Weckman. The deputy member• •ores Amtl Klvilahtl,Kalervo Lal•

ae,K. N. Maaua. •ad Ak• &umu.

Tia. AdmlDl•tntlv• cOUDCll met ••••n Umet.

BOARD 01' DlllECTOU

Member• of tho Board of director• were: Olli Palohelmo (chalt'man),.Aar

u Pelkonen (vlce cb&trman) and Kaarlo Lebtle. Tbe dop.aty member• ••rer

Paavo Kiri aad Helldd Slhtola.

Tho Boa.rd ol. ctlrector• met Dln• tlme1.

MANAGING DIRECTOR

Tbe Company~• ma1111atna director ••• Kaarlo Lehtiet.

AUDITORS

Th• e11dltora were: Mano liaotODea,Arri Peltola. Eemil Pu.kkken, I. W.

Raqell,alld MaUDo Yahla. The depatr alldkor• wette: L.A. Puntlla and U.A.

Vatanen.

... ,ar,. Reino Vera&o were •••Poulblo for the a.SU.

The followlq •tatlettc• aDd flpr•• Wutrate the Companr'• acdvltle•: ...................................................................... , ; 1960 1959 1958

Loa• cuft 13 198 937 6 56Z 767 13 648 &73

Pine p,alp wood and phpropa cam 818 826 azo 484 l .976 309

Spnce palp wood for the parent compaDI.••

,, 37 856 14 063 Ill 388

Birch pulp wood " 913 ... •

Firewood 706 6 415 5 330 .....................................................................

Prod11etloo.

Prlma!f prodac tton:

••n aooct• CellulN•. ealphate Tall oll and tlU'JNDtlne Chlorlae and cautlc aoda

Total

ltdl ton,

" n

19t,o PerceDt• J 959 J 958 ••• of

19SJ •

53 568 100,8 53 150 :S7 .,., 168 485 108,8 154 916 146 916

9 851 111.4 8 5.,5 8 244 11463 12014 11 7!7 ., 221

zs, 367 111,4 Z28S98 200 430

... !fta!§nta!' 0 •ttllt.tloia praduct9

Cth•I' product• " II

1

.................................. .

1960 1 Percofft•

1 1919 l 95

•a• of I . I 1959

I

I

6 161 1 145, J 3 91!

Total . 11 l65 751 I J J 2, .. 1 23' 365 ' 106 05 ····-··············-·········· ...................... i •••••••••••• T

D

W MIL

Jll'tOJ' ..

Patealomt.

Hy~alml

Total

Horn• market

u

.... It

ti

" II

oc at the eod of tbe pal' "

Loa• •••n l ooo cult I

C Lt.UL MILL

Cell'*1•• 1hlpmeot ....... Dioc::a. at th •Dd tb re r

pha.t wood uaed

Wll chi.pf

T • factory ••• op rattfta d p ol 14 boun

.. in tOM / 24 b.~ a

Y ODUCT

°'1,Q. ...

CHl.Oa.a ..... r.a:..

apo~•

P.w\NT

e ran'k t

Ow --·

·-· .. "

11

tou If

,,

too., ti

..

I 74

34 655

10 64

45 919

l 776

I 434

1• 10a

124H

l48 6S9 14 5 0

? 495

660 21

4 3169

105,4

90,3 86,8

11.3

114,8 99,8

9J.l 115.J

113, 4

94, l

ll ... 5

342 105. 9

493 lOZ, 1

2 781 195. 0

4 980 122, 6

79 •

1 666 11 ...

11 920 sz,., 749 •

8 419 1 I

39 496

I! 20•

I 6 92

2T 567

? 7§ f

10 400 I 35 Jl7

2 046 I 010

I 5S 1 270

J9 7 7 ZI 19

12 467 8 819

161 458 1.29 13)

1a, s s s11

3 512 Z.1 721

702 l 5 165 43)

359 760 255 109

323

480

S26

451

1 426 1 ''' 062 3 297

• •

2 333

J i13

•

I 792

61 ...

••

PRonT AND LQIS ACCOUNT ae at :U•t D~oembel' 19,60

EXPENDITURE

Salarl•• and ••ao• 1 a,s asa sat : ... Net recelpte

'-tere•t• 133 10a z40: .. lmeren•

Tue• 304 948 7671- Dhttdend1

Depreclatlona l S8& 075 994t• Sund r, rec t.pte

Other opeMtiD& co•&• a<l6 ·,aa 11a1 ...

Profit for 1960 • 317 4J9 '!!•· --i Si2 608 1-'6:-

••• • .. ••••••••••• asa

Allllpl !!£!9!0,.. ,-... s a1, ,a, •21 :. BALANCE SHEET •! at JJ•t D•2•mbor 1160

A,1ot1

Current ••••t• Ca1h an.i clabna to ca1h

l\ecelvable•

Seevld•• Clatr:ae to loau

Je!!atorlop Raw material•

Prodw:h

h•l

l'l!•d ••••t• Pleta. laad aDc:I water area Sl 850 oo,,-Addenda 820 coo:-Bulldlaa• l 631 204 552:-

Addenda 778 112 126•-.MachlDer, and oq,dpment 5 177 950 620:-

A ddeDda 2 576 286 81 4:-

l"actoa-y aDd tramport equtpmom &96 834 l43a-

Addeada 35 •J4 8ZJ: • . Rodv.ctton 6 566 6621-

AdvaltiCe payment Oil

machl.D.ory

SecaJ>ltlo•

J50 743 666: ...

Z 331 482 619:

l SB9 954 .fOO:.

@2 795 %97:•

917 166 364:-

137 '°' 1531• 3! 252 29J:-

51 670 004i-

2 409 323 8481•

6 154 237 43fS•

613 712 i97:-

54 J78 741:-

J29 416 553:-

5.

INCOME

4 229 45S 8J 8:-

90 453 6J8t•

2 238 9601-

•61 750:-

• 312 608 116:-••••••••••••••

3 9SJ 975 982:-

1 100 827 890:-

9 12J 748 8771• 54 )

JEpdmated 1tem1

Exchaqo rate dUfe..-•nce and lhe •ddW.oaal par

Depreclattoo I$ per cellt

• Trautwr tt9m9

•••• LlebU!ff!• Cll.n"ent Uabllltte•

Z 590 685 584:

SJ 706 89Z:-

104 745 60J:.

• 25 6ff 4'19:-

Sb,;,11 terb:I

Stappli•I'• Boa d•bta

Loana 174 564 040:- Z 848 956 9161 ..

Lona toni>

Loau E•tlma!!fl U~

1m,

DeprectaUou due to tho bulldlaa•

Addollda

Dep,..ociadoia. due to the macbta.ar, end luQlture

360 690 6J6:-

329 916 057:-

Z 353 J80 66J: ..

5 9JJ 991 63t=:-

690 606 693c-

Addenda ,l 001 811 J97i• S 355 1,i 060:-

Depnciatione due to tho t.etoi-r and trauport oqlllpmoA& 436 112 Bl&: ..

Addenda

R duct.ton

Tnultor1 tte11>1

Egldeltr;

Sha.re ~pltal a ••• ...,.,, fund

Liquid fund

Pataftt

53 348 540:-

6 518 419:-

Profit from pi-evlous ,ear•

ProfU fl'om &he cul'ren& pal'

••• Ouanlllee•:

Eadowi•em•nt• Morta•ae•

rm1c.. I

360 000 000 s-270 ooo oooi .. 290· 900 000 :-

10 070 924:-31., 439 626: ..

I l 7S 970 359:• a 496 695 871 :-5 670 664 230:.

79 JiS 124:•

6 BM 606••

14 642 501 479: •

··-···-····-

8 760 9.)8 153:-

,4 528 751 6922--

1~5 29Z 014 :-

880 000 000:.

327 510 6&0•·

llDk 14 ,,2 soa 419,.

··············-···

,.

Th• Company"• accouma for the year 1960 1how • prc,fit of Fianmarke

317 439 696:-. Ae the blllaace brOIIQht fon,ard fl'om the prevtou rear•

7.

w•• Fmk• JO 070 914:-. tbe amouot at tho dl1poeal at th• •hal'eholdore'me•tlq

le Fmlt1 327 510 6101-. Tbb amount 19 recommelldOd for ue •• followa:

•• dlvt.deQd on. •bare capital

•• aftllablo "1Dd1 for the Board of dlroctora

to bo carried forwai-d to &he Liquid ft&Dd

to bo car•led fol'Ward to the ProlU and Loa, accov.Dt

Helelakl, J'ebl'Q&ry 23 I'd J 961.

BO.ARD OJ' ADMllGSTRATORS

l"mk•

It

n

90 000 000:-

5 000 0001-

130 000 000:.

102 110 6ao: ..

BO.ARD OJ" DIRECTORS

REPORT OF THE AUDITORS

Having been elected at the Shareholders ... meeting on November 27th

l 159 to examine the administration and accounts of Oulu Osakeyhtio for

the year 1960, we have to- day completed our joint task, and, as a result

therof, make the following report:

As a supervisory controller for the year J 960, Mr. Reino Vento has

examined minutely the books of account of the company, and in his reports

therafter affirms, that they are correct and in agreement with acceptable

vouchers. Each time the cash on hand has beeen inspected in the course of

the year, it has been verified, that the cash has corresponded to the balance

in the cash book.

We have acquainted ourselves with the Minutes of the meetings of Share


We have found the fire-insurances on the Company" s property to be in

force and, in our opinion, sufficient.

The closing of accounts, which we have examined in detail, is properl y

drawn up, and the property has been estimated with sufficient prudence. The

balancing shows a profit of 317 439 696 Finnmarks. Thus, the amount of pro

fit transferred from the previous year being 10 0 70 924: - Finnmarks, the total

amount at the disposal of the Shareholders ... meeting is 327 510 620 F innmarks.

As we, in view of the above, have found the activities of the Company to

have been managed with definiteness and success, as well as to the Cornpany ... s

advantage, we propose to the General Meeting, that the ace ounts to be proved

and those concerned to be granted their discharge of the year l 960.

J. W. Rangell

Mauno Vahla

Oulu, March 1 st l 961

Mauno Luotonen

KHT

(Auditor approved by the Chamber

of Commerce)

A rvi Peltola

Eemil Paa.kkonen


(in million Finnmarks)

Net Profit (Balance Sheet)

Plus:

Less:




Pension funds

Other

extraordinary income

from preceding year


Adjusted Net Profit

317

926

397

109

1 531 --------------------------------------------------------------------------------------------------

Sales

Long term debts

Equity:

share capital

reserves

surplus

Adjusted Net Profit

Ratios:


" II II 11 11 11 equity

Oulu 8. 3. 61

8 874

5 912

360

520

328

I 208 ===== 1 531

1 7, 3

127

Sources:

Sources and Application of Funds

{in million marks)

Long term borro.v ings:

IBRD new loan

Other old loans IJ new loans

Depreciation 11 of deval. loss

Pre-Profit Reservation

Net profit before interest on debt

Increase in short term debt

Decline in current as sets

Total sources

1960

l 282

l 5 00

l 385

26

580

4 773 ----------------------------------------------------------------------------------------------------------------

Applications:

Expansion program 3 286

Interest d uring constr. (IBRD)

Normal renewals and replacements

Total fixed assets

Other investments

Increase in current assets

Employees Pension Fund s

Debt service:

IBRD loans N :o 61 and 70

II new loan

Other loans

Reduction of short term debt

Dividends and d onations

Index of loans

"Additional assets"

Total applications

103

3 38 9

21

592

2?

64

331

7 3

1 ;, 2

84

4 773 =--------~-----~------=====-======================-===

Oulu W. 3. 61

.J

IBB.D loans 61 & 70

loan 222.

Other long- term debts:

The loans to secure the employment

The Industrial Mortgage Bank

The debenture loan 11

The Bank of Finland

The Old age Pens ion System

II

rri..~ Fost Sawings Bank

The Export Funds

The Fension Funds

Statement of Indebtedness

in million marks

Time Nominal present Amorti-when loan value value zation is received. 31. 12. 60 31.12.60 time

1952-53 t04 204 1960-70

Inter. %

4 3/4

1959-61 2 670 l 958 1962-74 5 3/4

195l-5b 2.07 207 1960-68 4-7

1954 167 167 1960-70 7

1954 31 31 1960-70 7

1956-59 180 180 1966 6

1956 152 152 1960-66 7

1959-60 0 78 978 1960-75 7

1958- 800 800 1961-71 7

1958-60 900 900 1962- 76 5

1957-59 510 510 4 1/2

Total 6 799 6 087

-------------------------

Oulu 14. 2. 61.

Security Cur-rency

The Bank di-'l~

of Finland Skr

Mo1·tgage $

F .. ajaani Oy, Veitsiluoto Oy -

Mortgage 1/2 f... II

11 DM

Pohjola

KOF

Fohjola KOF

Kajaani Oy Veitsiluoto Oy -

FORM NO • . '.95 ( 4. 55)

INTERNATIONAL BANK FOR, _ \ •



DEPARTI~ENT OF TECHNICAL OPERATIONS

COUNTRY FINLAND (Rec'd March 8, 1960)

LOAN OR PROJECT 222-FI (Oulu Osakeyhtio)

PERIOD TO December 31, 1959

TYPE OF REPORT Annual Financial Report

CARDED March 9, 1960 ejw


~ I G.A.Apcar

" 2 r.i.\ b .. ~t\ff\~c H. ,..,. ·-3· L.--- l' .

~

5

6

7

8 --

OULU OSAH:EYH'I'IO

r OULU OSAKEYHTIO

Annual r eport of the year 1959

OULU OSAKEY:U:TIU

OULU.

OULU OSAKEYHTIO

Annual report for the year 1959.

At the beginning of the 24th year of the Company's activitiea the in

adequate demand of the product• aa well as the uncertainty about the de

velopment of the markets had still a diaturbing effect on the woodworking

industry. The output of cellulose had to be limited. In the mtddle of March

prices went down. During the second quarter of the year there were some

sign• of reviving conjuncturea. In aummer the demand of paper product•

increaaed. Since autumn all the sulphate cellulose mills actually were run

ning at full capacity. The export waa increaaing, and the atocka decreasing.

The production of the Finni•h aulphate cellulose waa advanced by 11, 5 per

cent and the export by 15, •percent from that of the previoua year. The

aawn goods had a 1ood demand, but only at the end of the year the increase

in prices waa noticable. The total volume of export• of Finland amounted

to 950 000 std.a , thua exceeding the 1958 export amount nearly by one quarter.

Wage level was raised by 3 - 6 per cent.

The money market was improving and the credit volume of the financial

tnstitutiona increaaed. The woodworking induatry was granted a loan of about

12 000 million Finnmarka by the International Bank of Reconatruction and

Development for the purpoae of. enlargina and improving ita production unite.

The index of the coat and living went up by 3 point• showing at the end

of the year 136. The con•truction cost index •tayed during the -Nhole year

at 119 havina been 116 in December 1958.

At the end of the year economic life was reviving. The construction

activity was growina lively. As a consequenae of the improving market.

and becauae of favourable weather condition• the lumbering got going at a

good speed in late autumn. Employment aituation improved. At the end of

the year the amount of thoae without work was not fully 9 000. which waa

only half•• much aa in the previoua year.

Due to the mild winter and with help of the effective icebreakers even

the northernmoat port• of the Ciul f of Bothnia stayed open for nine c onee ..

cutive months.

Oulu Oy N:o 427 2000 1 60 A 4 ~

As a conseqaens e of increadna demand for all the Company 's products

the unit quantitie• of the total production inc reased almost by 15 per cent

• 2.

from that of previo\18 year, and the deliveries acce>Mingly by about 30 per cent.

So did increase the own use of sawn timber, chlorine and sodium hydroxide.

The share of the cellulose exported by the c ompany made 29, 4 per cent out of

the total amount of sulphate cellulose expor ted by the whole country, and that

of sawn goods 5, 3 per cent.

Purchase of raw material were smaller than in 1958. The lumbering and

tran1port conditions were quite good, but later on the lack of water in the

rivers caused trouble and rahed the costs of floating.

The projects of enlarging and improving the Nuottasaari mills were carried

on. The renewing of the evaporating station was completed. The buildings of

the chlorine plant and salt silos wer e completed up to the finishing work. In

stallation of the machinery succeeded to 1chedule, and at the end of the year

all the new cells could be taken into use. The ne• cellulose dryina department

progres,ed up to the installation stage. Out oft the whole enlargment scheme

covering 250 000 cubic meters about 190 000 cubic meters were either finished

ai under construction at the end of the year. The moat important machinery

and equipmenta were ordered.

A new storage building as well as barkina works for timber, tran,ported

by land, and necessary conveyors to it were built at Pateniemi.

At Hyrynsalmi saw mill the bracking bench wa• enlarged to serve three

times its earlier capacity, and in the lumber yard a water pipe system with

pump station was built for fire protection.

The investments made during the year amounted to 1 711 million Finnmarka,

out of which sum the share of Nuottasaari mills was 1 656 million Finn.marks.

The capital for these investment• was mainly furnished by the Iaternational

Bank for Reconetruction and Development, the Old Pension Syatem, The P c,•tal

Savings Bank and the Tr o•eury Department in the form of long term credits.

The company"• total expenditure on wage• and •alariea wa• 1 571 million

Finnmarka, out of •hich 185 million Finnmarks was spent for the fore•t de

partment.

Mr. Arvid Akeeli Kaurila, who had been working as head fore1tmaster of

the cempauy since its foundation and retired on November 1st 1958, died on

February 25th. Mr. Toivo J.Komai, who had worked for the company since

its foundation as secretary to its adminiatratice organs and •• legal advicer, died

on the 5th of August. The company honour• their memory.


The member• of the !Administrative council were: N.A. Oaara (chairman),

Tauno Angervo (vice chairman). L. J. Ollonqviat, V&ina Tanner, Klaus Warl•

and Bjorn Weckman. The deputary member• wer e: Antti Kivilahti, Kalervo

Laine, K. N. MI.IUtl. and Aku Sumu.

The Adminiatrative c ounctl met four time a.

BOARD OF DIRECTORS

Member• of the Board of directors were: Olli Paloheimo (chairman), Aar

ne Pelkonen (vice chairman), and Kaarlo LehtiO. The deputary member• were

Paavo Kivi. ~nd Heikki Sihtola.

The Board of director• met eleven time•.

MANAGING DIR.EC TOR

The Company"• managing director wa• Kaarlo Lehtia.

AUDITORS

The auditor• were: Mauno Luotonen, Arvi Peltola, Eemil Pa&kkonen, J. W.

Ranaell, and Mauno Wahla. The deputy auditors were: L.A. Puntila, and U. A.

Vatanen.

Meea rs. Reino Vento were r esponsible fol' the general audit.

The following atatietic• and fi,uree illu1trate the Company"e activitiee:

•=••••:1:••·····················---~~~;····1····7;;;-······;;;:;-··· Logs

Pine pulp wood and pit props

Spruce pulp wood for

cuft

cum

6 562 767 13 648 273 6 860 417

820 -'84 1 376 309 915 36-i

theparentcompaniee " l-'063 111388 l16090

Firewood ' 6 415 S 330 31 099 I .......................... =·····=-····=-··-r····=···r···=•=••=••••••••.

1959 Pe 1·cent- 1958 1957 age of

Production 1958

&ima!:I froductlon:

Sawn goods std• 53 150 142,3 37 349 +' 560

Cellulose, sulphate ton• 154 916 105,4 146 916 168 •'18

Tall oil and turpentine ,,

8 535 103,5 8 2+' 8 898

Chlorine and cauetic soda II 11 797 148, 9 7 921 299

228 398 114, 0 zoo -'30 222 175

3.

Refln!4 oucptt

De1tUlatlon prodw:ta

1

................................... . 1959 Pe~c•nt- l 958 1917

... of __ 1958 .

4 240 101., J 9ll 4 HO

Other product• " 3 7Z1 Jl7r I 1 711 2 252

ti 7 961 141. , ' 5 6U 6 79Z I Total II tJ6 365 11, 1 I &o6 os,1 221 967 --······----·--··--·---··-----·--·-·· TURNOVEa MUllm mark•

DELIVE1U£8 et:.

SAW MILLS

EJqtorte

Patenlemt

Hyryoealmt

Total

Home market

ORn uae

" .. .. .,

Stock at the •ad ol the ,.a. r ..

Loa• eawa 1 000 cuft

CELLULOSE MILL Cellulose ,ehipaHtllt

Home market

Stock at the end ol the year

Sulphate wood ued

Sev.,11 chlpe

The factory••• operatma •• ,. ot a, hoar•

Output ID too• !4 hcur•

BYP.RO.DUCTI

Eaporta

Home market

CHLORINE PLANT

Eqorta

Home market

tone ft

II

cwn It

ton, If

It

"

8 419

39 496

10 904 50 «)0

I 0,t6

1 851 19 787

12 467

161 458

12 6S3

3 617

'70i 155

359 760

!IZ3

480

1 4Z6

4 062

lZI • 5

143,3

140,1 1,a.1 JOI, 8

14', l

95,Z J4J. 4 t

1J5,0

15:3.8

15,Z

91.7 141,0

99,J

106,4

106. 1

JZS.2

I 333 130, J

I Z7J 1 361. 9

6 918 6 801

27 567 34 307

7 760 8 415

J 5 JZ7 42 7U

2 010 J 83J

1 270

10 rl98

8119

913

2.1 593

10 501

129 131 149 5U

I 1'17 9 491

23 721 19 .,,.

765 ,,1 937 675

255 109 161 209

3Z6 347

451 48 6

I 336

3 297

1 791

6.11 ·

J 919 I

3 ,.,,

I

: 1.

••

PROFIT AND LOSS ACCOUNT aa at 31st Dec4!~mber 1959

EXPENDITURE INCOME

Salaries and wages l 389 563 367:-

Interests 187 271 763:-

Nett receiJ•ts

Interests

Taxes

Depreciations

Other operationg expenses

329 754 475:- Dividends

l 228 935 974:- Sundry receipts

628 754 s1 •:-

Profit for 1959 190 213 174:-

Fmks 3 954 493 567:-=•= ••••aa•••••---•aa•• •••

Annual turnover i'mks 8 418 524 102:

BALANCE SHEET as at 31 st December 1959

Assets

Cur rent assets

Caah and claims to cash

Receivables

Securities

Claims to loans

Inventories

Raw materials etc.

P r oducts

Fuel

Fixed as seta

Plots, land and water area 46 09S 454:-

Addenda 5 800 000:-

Reduction .S 450:-

Buildings 1 153 501 686:-

Addenda 477 704 866:-

Reduction 2 000:-

Machinery and equipment 2 403 257 3)0:-

Addenda 1 175 193 310:-

Reduction 500 000 :-

Factory and transport equipment 561 380 727:-

Addenda 36 065 938:-

Reduction 612 52.2:-

42.5 134 850:

Z413843751 :-

405 695 825 :-

95 805 994:-

894 805 793:-

93998 l 20 :-

34 673 895:-

51 850 004:-

l 631 204 552:-

3 577 950 620:-

596 834 143:-

3 9Z4 417 726:-

25 747 996:

z 366 560:-

1 961 285:-

Fmks 3 954 493 S67:-••••••••••••••aa•••••

3 340 480 •zo:-

1 023 4 77 808:-

5.

6.

Advance payment on machinery 11 330 662:-

Securitie• 208 356 377:- 6 077 526 358:-

Estimated iteme

Exchange rate difference and the additional pay 1 Z9 206 581 :-

Depreciation 15 per cent 25 469 240:- 103 737 341: -

Fmk• 10 545 221 927:-...................... Liabilitie•

Current liabilitiee

Short term

Suppliers 2 624 860 668:-

Bank debt• 122 62l 966:-

Loans 211 983 000 :- 2 959 465 634:-

Long term

Loane 3 327 701 122:- 6 287 166 756:-

Estimated items

Depreciation, due to the building• 2-69 941 430 :-

Addend.a 110 750 506:-

Reduction l 300 :- 360 690 636:-

Depredations due to the machinery and furniture 1 363 091 820 :-

Addenda 990 438 843:-

Reduction 150 000:- 2 353 380 663:-

Depree ia tion• due to the factory and traffic equipment 308 563 -450:-

Addenda 127 746 625:-

Reduction 187 257:- 436 l zz 818:- 3 150 194 117:-

Transito!:I items

.Advance tax retensions and pure ha ee tax 25 290 130:-

Equieify

Sha re capital 360 000 000:-

Reserve fund · 90 000 000:-

Liquid fund 250 000 000 :- 700 000 000:-

•

J

' 7.

Profit

192 357 750:-Profit from previous yeare

~ofit from current year 190 Zl 3 17•:- 38Z 570 924:-

Fmke 1 o s•s z21 927:-••• . ................... . Guarantees:

Endoraementa 2 992 084 967:-

Mortgagea 1 zs• 333 261 :-

Fmka 4 246 418 228:-••••••••••••••--•••••

The Company"s account• for the year 1959 show a profit of Finnmarke

190 213 174:-. Aa the balance brought forward from the previou• year• was

Fmka 192 357 750:-,the amount at the diaposal at the shareholdera"meeting

ia Fmka 382 570 924:-.

Thia amount is recommended for uae aa follow•:

aa dividend on share capital Fmka 90 000 000:-

aa available fund• for the Boa rd of directors II 2 500 000:-

to be carried forward to the Liquid fund II 180 000 000:-

to be ca tried forward to the P r ofit and Lo•• ace ount II 110 070 9Z4:-

Helsinki, February 26th, 1960.


Progress Reports from June 1959 to September 1961--Destroyed October 17, 1962.

.... ~

FORM NO. 295 ( 4 - 55)

INTER NATI ONAL BANK FOR

RECONSTRUCTION A ND DEVELOPMENT



COUNTRY FINLAND (Rec1d 5/19/59)

LOAN OR PROJECT Loan 222-¥r Oulu Oy

PERIOD TO March 31, 1959

TYPE OF REPORT Quarterly Progr ess

CARDED May 19, 1959

FOR ACTION TO : INITIAL DATE

~- Mr~s ~ l\', ./ '\ (\" r 2

3

~

5

6

7

8 Mr , Jago

'

•

Oulu Osakeyhtio Oulu, Finland

Technical and Financial Progress Reports Project Under IBRD Loan 222-FI

Reporting Period Ended: March 31, 1959

Technical Progress Reports

Textual Remarks Construction Schedules Revised General Plan Schedule of Purchases and Deliveries

Financial Progress Reports

Project Cost Estimate Status of Project Funds ~4 ez lw -iite:port=of Esti ma:ted Wei t.bdrawa1s

Photographs i::n--separa te covers

•

•

•

Company Name: Oulu Osakeyhtio

Project Under IBRD Loan 222- FI Reporting Period Ended: March 31 , 1959

Technical Progress Reports

Construction Schedule

The present situation of construction is shown on the bar charts Nos . 1 and 2 . Supplement to these we are informing on the different

items the following:

Item O, Wood Yard and Debarking Departments

Offers for the principal machinery of this department have been received . The complete decision is depending of the decision of

the cooking department.

Item 1, Cooking, Washing and Screening

All these departments have been on planning stage .

The first quotations from different manufacturers have arrived and preliminary discussions have been held in order to be able to com

pare different quotations . No decisions have been made •

Item 2, Drying Department

The Fourdrinier wet end for drying machine was ordered from Valmet

on December 31, 1958.

The dryer was ordered on January 2, 1959 from Suomen Puhallinteh

das Oy .

Negotiations with Jagenberg-Werke , Germany, led to a preliminary placing of order for the cutting machine, on February 20 , 1959 to

them.

A scale model of the building with main equipment was completed and the engineering company, which makes the calculations for the

building, begun their work .

During the Easter shut down the necessary alterations to the

machinery were made in the old drying department building.

/2/

•

- 2 -

Negotiations about vacuum pumps with Roots-Connersville Blower, Connersville, Ind., were nearly completed.

Quotations of pulpers and DC drivers were received .

The most important of other equipment of drying department are bale

presses, tying machines and conveyors . The final offers will be obtained at the end of May .

Item 3, Repair Work of Old Recovery Boilers

The work has been under the planning. The offers have been received

and negotiations with the manufacturers have been held, especially

regarding electrical precipitators and heat recovery system .

Causticizing Department

Preliminary offers have been obtained and negotiations held •

Offers, suitable for the corrected situation have been asked .

Lime Kiln

Preliminary offers have been received . Negotiations have not yet

been held .

Item 4, Bleaching Plant

After first quotations and negotiations the exac t offers have been

obtained from the suppliers and their comparison is going on. Based

on these offers the negotiations will be held during April and partly at the beginning of May, on the ground of which the final

choice will be made . I Offered equipment and their function have been studied by us at the

bleaching plants of both Sweden and Finland.

Studies have been made in the laboratory in order to clear up questions concerning dimensions of different bleaching stages.

The final offers for chlorine dioxide and water purification plant will be received to the middle of May, and then the decision will

be made together with the bleaching plant .

Item 5, Chlorine Plant

The main machinery, consisting of 36 electrolysis cells, chlorine compressors and liquefaction equipment has been ordered from the firm Friedrich Uhde G. m. b . H. , Dortmund, on the 9th December 1959 .

/3/

•

•

•

- 3 -

Silicon rectifiers have been ordered on the 9th January 1959 from Siemens- Schuckert-Werke, Erlangen.

Building work has been started at the beginning of November, for

the part of electrolysis room . So far the concrete body has been

built, laying of the roof as well bricklaying of the walls are

going on.

Depending on the market difficulties of sodium hydroxyde we have

decided to give up the enlargement of the caustic evaporation.

After studies we have found possible to convert our excess caustic

in chlorine cells to sodium sulphide and use it in pulp mill liquor .

In this case sodium sulphide is compensating the adding of the salt

cake in recovery boilers . The yearly amount of the sodium sulphide

will be 7000 tons •

Item 6, Power Generation and Distribution

The turbine has been ordered from ASEA in Sweden and offers concerning 6 kv high voltage plant have been sent to the different manufact

urers.

General Arrangement Plan

Revised general plan is enclosed . The red coloured buildings of the

project are divided to four different signed stages: proposed, under

construction, completed under reporting period and completed

previously •

Referring to the text of "Construction Schedule, Item 511, the enlarge

ment of the caustic building is given up . Chlorine handling building is needing no areal enlargement, the towers are only going through

the roof. In the cell room building we have saved place with bigger capacity cells and choosing the silicon rectifiers. A little addit

ional room is deeded in sulphur handling for sodium sulphide, but

in the brine department no enlargement is necessary .

The drying department has got its final shape.

In wood yard the chipper with conveyors has got a revised place.

Photographs

we are sending you the covers for collecting photographs and will

complete it quarterly according to progress of the work .

This time we are enclosing you general photograph from our mill

before expansion and a series from the building work of the chlorine

plant .

Company Name: Oulu Osakeyhtio

Project Under: IBRD Loan 222 FI

Reporting Period Ended: 31.3.1959

Schedule of Purchases and Deliveries

Brief description of equipment

Cells etc.

Drying Mc wet end

Drying Mc dry end

Back pressure turbine

Rectifier

Categories List of Goods

5. Chlorine manufacture

Order No. and Date of Order

Cells LCA 582020 9.12.1958

2. Drying Drying Mc wet and LAE 591033 dry end plus 31.12.1958 accessories., local

II LAE 591010 2.1.1959

6. Power generation and distribution Back pressure turbine

5. Chlorine manufacture El. equipment and instruments

LHA 591360 5.1.1959

LCA 582266 9.1.1959

Value of Order and Name

of Supplier

$ 442.615:- Friedrich Uhde GmbH., Germany

$ 339.564:- Valmet Oy., Finland

$ 472.586:- Suomen Puhal-lintehdas Oy., Finland

Original (0) or Revised (R)

Est.imated Da.te of

Completion by Manufacturer

(0) 16 cells 9.5.1959

(0) 20 cells 9.9.1959

(0) 28.2.1960

(0) 28.2.1960

$ 289.575:- Svenska Turbin- (o) 15.9.1960 fabriks Aktiebolag Ljung-strom., Sweden

$ 275.139:- SiemensSchuckertwerke AG, Germany

(o) 15.2.1960

Expected (E) or Actual (A) arrival

At Site

(E) 30.5.1959 (E) 30.9.1959

(E) 7.3.1960

(E) 5.3.1960

(E) 30.9.1960

(E) 15.3.1960

Reasons for Changes in Delivery Date, Mod:ifl.cations

of Order, etc.

C•mpany Name : Oulu Osakeyhtio Project Under IBRD Loan 222-FI Reporting Period Ended: lvJarch 31. 1959

Project Cost Estimate

(million Fmk)

• Original Revised During Reporting Period

0

1

2

3

4

Items

Wood handllng

Cooling, washing screening department

Drying department

teller repairs, causticizing, lime kiln and miscellaneous

Semi- and full bleaching plant and chemical water purification

5 Chlorine plant

6 Power plant

I

IBRD IBRD I I

Foreie:n ,. Local !Total Others Total , Foreign Local ! Total IOt~ers J Total , I I l I I - I - - 58 58 - - - - -I I 166 I - 166 994 l.16o - - - - -I

I

168 33o 498 718 11.216 - - - - -I

I I I I

I

436 436 579 l.ol5 I I - - - I

- - -I

I

I I I

I

410 41.o l .oo5 l .4l5

438 438 587 1 . 025 - 27 + 27

164 164 22 186

At

IBRD

Foreie:ll Local

- -166 -

I

I

I 33o I 168

436 -I

Uo

411 27

Present I

I

Total Others_! Total 1

-

166

498

436

Uo

438

164

I

58

994

718

579

587

22

58

I l.16o

I

1.216

1 .015 I

I

I I

l.o25

186

7 Contingencies 258 258 35• 608 258 258 350 6o8

Tot a 1 2.o4o l 33o I 2. 37oL4. 313 6. 683 - 27 I + 27 - - I - I 1 . 849 357 2. 370 4 . 3131 6. 683 I ========== ========~======%====== ==============~======~===================i=======-=======*="=---~=--====b========-==----

\

0

1

2

3

4

5

6

7

Company Name: Oulu Osakeyhti5

Project Under IBRD Loan 222-FI

Repa,rting Peried Ended: March 31. 1959

.. Status of Project Funds

(million Fmk)

...,

Expenditures to Date Expenditures yet to be made

Items IBRD Funds Other Total IBRD Fund Other

Forei1m 1 Local ,Total Funds Funds Fereign ' Local Total Funds. I

Wood handling - - - - - - ... - 58

Coeking , washing, screening departmEl'l1 - - - - - 1 66 - 166 994

Drying Department - - - 7o 7• 168 33o 498 648

Boiler Repairs , causticizimg, Lime - ... - - - 436 - 436 579 Kiln, and mis-cellaneous

Semi- and full bleaching pl.ant - - .... - - 41.o - 41.o 1.005 and chemical water purification

Chlorine plant - - - 119 119 411 27 438 468

Power plant - - - 19 19 1.64 - 164 3

Contingencies - ... - - - 258 - 258 350

Total - - - 208 2e8 2.013 357 2. 370 4.lo5

-------·-~------------ ·• .__ ------ ---------------- ---

Of which Funds Committed

Tetal IBRD Funds Other Total

Funds Foreign Local Total Funds Funds

58 - - - .... -

1 .16. - - - - -

1 .14,6 4l 286 327 - 327

l . ol5 - - .... - -

1 .415 - - - - -

906 243 27 270 53 323

167 95 - 95 1 96

6o8 - - - - -

6.475 379 313 692 54 746 ------ ------- -------'------- -----f---------

(

Foundations

October 26, 1958

Breaking of ground

October 8, 1958

Page 1

Chlorine Plant Item 5

Framework of reinforced

concrete

February 2, 1959

.

Plledrlvlng for salt storage silos October a, 1958

Cellroom, brick laying of walls March 31, 1959

r Oulu OsakeyhtUS Sulphate Pulp Mill

General View 1958

OULU OSAK:JEY:U:TIU

GENERAL SURVEY

OULU OSAKEYHTIO

Quarterly report for the period

l. l. - 31. 3. 1959

The winter season was exceptionally mild, and, accordingly, the ice

covering the waterways thinner than usually. The shipping season, ended

at Pateniemi on December 31st, continued in Oulu until January 13th, on

which day the last ship left our South harbour. The port of Kaskinen was

open all winter through. During the second half of March the channels to

Vaasa, Pietarsaari and Yxpila were opened anew by the icebreaker.All the

other harbours of the northest part of the Gulf of Bothnia remained closed.

After the Bank of Finland had lowered the rate of discount by 1/2 per

cent, all the financial institutions of the country decided to lower the in

terest charged on loans granted from April I st 1959 to be 7 per cent. Owing

to this decision the interest charged on short term basic loans granted to

our company will be lowered to 7 per cent, and the interest charged on sea

sonal loans to 6 3/4 per cent.

The cost of living index did not show any special changes and remained

at the end of February unchanged, at I 33 points.

The collective wage agreements were renewed partly before the turn of

the year and partly during the quarter under review for the current year by

a 3 per cent"s rise in wages but without tying them to the index. The building

line made an exception its negotiations having not yet resulted to any contract.

According to the newly made contracts the working hours at the saw mills

operating at 2 shifts are 43 1/2 hours per week, and at the cellulose mills

operating at 3 shifts 42 hours per week.

O ulu Oy. N:o 42 7. 3000. 12. 5 7. A 4 -~•

PURCHASE OF RAW MATERIAL

::;::z;:,r:;:,,:;,o:,=:=::;:111:0::::~=::;===:111;;:::;.i'i;,:::=::ic:o::;,:;:,:;;::::;=;:a:•i:.•••;ii;•:,::;;c:::::::o:a::;,::,c::;,i;:o,,r,c:,::=:,;:,:::,,;:,;;:;::;,:,:::,:;:,:::,,::,::,,:;ll;:i;:

Pine pulp1 Spruce Spruce

Planned to be trans -ported out of the woods

Transported by 31. 3. 59 II % - -

- II - (prev. y.) % Estimated result

If %

PRODUCTION UNITS

Cellulose mill

I Logs wood & pulp wood pulp wood , Fire pitprops (Oulu Oy) (Parent wood

companies)

l 000 cuft I 000 cun 1000 cum 1000 cum I 1000 cum

6 800 600 25 15 5

6 375 525 13 12 5

94 % 88 % 52 % 80 % 100 %

90 % 71 % 36 % 42 % 85 % 6 700 600 20 13 5

99 % 100 % 80 % 87 % 100 %

Because of the tense market situation the cellulose producers decided to

cut down the production of cellulose to 80 per cent of its capacity. The compa

ny's cellulose mill was 83 days in operation during the quarter under review

(86 days in the previous year). The amount of cellulose produced was 38 952

tons (39 211), in other words 469 tons per 24 hours (456) , out of which amount

12 667 tons (1 2 658) :=: 153 tons per 24 hours (14 7) were semibleached.

BYPRODUCTS

The new tall oil destillery was running already 73 days, its capacity being

still partly a trial operation. The amount of tall oil destilled was l 228 tons

( l 256 ) and the amount of various destilled products was l 076 tons ( 1 164 ).

The turpentine destillery was running 84 days. The amount of raw turpen

tine destilled was 494 tons (650), and the amount of various destilled products

455 tons (587).

The amount of soap produced was 55 tons (37).

CHLORINE PLANT

The plant was running 82 days (86) during the quarter under review. The

amount of chlorine produced was 1 065 tons (926) and of caustic soda 1 208 tons

( 1 027 )

2.

SAW MILLS

The Pateniemi saw mill was in full operation through all the time under

review, except the period of January 31 st - February 21 st, during which

time one line was shut down because of one broken frame saw. The amount

of the production was 8 986 stds ( 9 235 ).

The Hyrynsalrni saw mill was in normal operation at 2 shifts. The pro

duction amounted to 2 741 stds ( 2 976 )

SALES

The amount of sulphate cellulose sold and sto~ked for delivery at the I oG. u,ro. -

end of the quarter for the current year was ~tons which is the same

amount as in the previous year. The price level reduced in the middle of

March by 3 pounds. The amount of deliveries increased to 41 000 tons, in

other words by 14 000 tons from the amount of the corresponding period of

the previous year. The stocks reduced since the turn of the year by 2 400

tons.

The a mount of marketed byproducts and products of chlorine plant was

1 675 tons.

The amount of sawn goods sold for deliver.y during the current year

reached by the end of the quarter under review 20 648 stds, which is about

40 per cent of the objective set for sales. The deliveries of the winter

season reached 2 644 stds.

FINANCIAL SITUATION

====~=======~~===~====~==~=~=~~====~,=-~=~~~-~~=~=====~~============ Long term Cheque · Bills of ex-

loans accounts change and Total other short

term credits 1959 1959 1959 1959 1958

1. 1. 2 150, 3 52, 2 350,0 2 552, 5 l 4 27,9

3 l. 3. 2 071, 1 3,0 500,0 '

2 5 74, 1 2 11 2,6

Increa se during -79, 2 -49, 2 +150,0 +21,6 +684,7 the a hove period

As a conseq uenee of exceptiona lly brisk shipment of our cellulose from

the southern h a rbours of the country a nd because of the smaller purchase of

raw material than normally, the increase in debts amounted to the small sum

of 21, 6 millions only during the first quarter of the year.

3.

The following statistics illustrate the income from products, as well as

the receivables and the value in stocked products.

===================~======~r=~===========~======•=~===~=~=~=========, Received Receivables Stocks

Sawn goods million Fmks 186,2 140, 7 1 356,6

Cellulose II 1 408,5 97,2 715,7

Chemical products t1 35,2 1 7, 7 36,9

Oulu wall paper tr 6,3 4,6 3,4

Tall-oil soap II 1, 8 I, 3 0,5

Caustic soda II 20,5 9,0 4, 1

Total II I I I 1 658,5 270,5 2117,2 I F==========~•=•==x==•====••~===x~•==~=•==1

=::~;~~i:=r::;=~=~=~======J====~=;!~~~===l=-===~;;~x==~===~;;;~;===~ ESTIMATED PRODUCTION FOR THE SECOND QUARTER 1959

The production for the second quarter 1959 is estimated to be equivalent

to the first quarter, as the shut down at the mills and factories owing to the

annual holidays has been planned to be carried out at the beginning of the

third quarter.

As a consequense of the early spring and because of the sufficient stocks

the income from the shipment is estimated to be bigger than last year"s. The

following figures show the calculation:

Income from

Cellulose about

Sawn goods

Other products

ENLARGEMENT

Purchase of machinery

l

1

200 million Finnmarks

250 ti - -

100 ti - -

550 million Finnrnarks

( previous year 1 I 65) ti 175 - -ti 95 - -ti l 435 - -

Until 31st March the major purchases of machinery were as follows:

The general designing and the main purchase of machinery for our chlorine

factory were placed to the German firm, Uhde G. m. b. H. Silicon rectifiers

were chosen and the supplier will be Siemens-Schuckert W erke.

4.

As to machinery of the cellulose drying department, wet end was ordered

from Valmet Oy, L-dryer as dry end from Suomen Puhallintehdas Oy, pulp

web cutting machine from the German firm Jagenberg and vacuum pumps from

Roots-Connersville in USA.

•

5.

The order for back pressure turbine was given to Asea (Stal-turbine).

So the main machinery has been ordered for the chlorine factory, drying

department as well as for the power station. Nex:tapproach will be the

bleaching plant.

CONSTRUCTION WORK

At the chlorine factory the frame casting of the cell room has been

carried out, and the casting of roof plate as well as masonry were star ted.

The alteration work at the chlorine handling department has been started •

Preliminary works for salt silos have been executed.

Old unwanted constructions have been pulled down at the drying depart

ment and other preliminary work has also been carried out.

LABOUR POWER

Out of the 119 men employed for the enlargement work there were on

March 31 st 1959 107 men at the construction work, and 12 men at machine-,

transport- an.ti electrical work.

Oulu, April 14th, 1959.

Kaarlo Lehtio

' •

t

OULU 0§.AK:EYH:TIO

OUX.,'IJ'.

/

OULU OSAKEYHTIO

Annual report of the year l 9 58

'

OULU OSAKEYHTIO

Annual reJ?ort for the year 19 58.

During the 23 rd year of the Companyts activities the downward trend

that set in during the previous year continued, In some markets the con -

sumption of paper products certainly increased, but nevertheless the over

capacity of cellulose production was considerable. The competition of the

world market for forest industry products was getting fiercer, and conse

quently lower prices ruled. The fall in export prices for our timber was

almost 20 per cent during the year. The gradual reduction of the export

levy finally withdrawn in September partly adjusted the retained prices .

Seafreights remained low owing to surplus tonnage available.

As demand was declining whole production capacity of the cellulose

industry could not be fully utilbed. Even the manufacture of sulphate cel

lulose had to be limited. In spite of the increased capacity output was cut

down by 2 per cent from that of the previous year, while the export volume

remained unchanged.

As a consequense of devaluation and the substantial purchase of raw

material the last year's production from export saw mills increased ap

plbXimately 20 per cent, in other words up to one million standards, while

the export increased by 6 per cent to approximately 760 000 stds.

There were no strikes, and the wage level which had risen from the

beginning of April by 4 per cent, remained almost unchanged since. The

collective wage agreements were renewed for the following year without

tying them to the index, but a 3 per cent' s rise in wages was agreed, and

the working hours were reduced,

Throughout the year confidence in the value of our currency prevailed,

and increasing availability of money developed till the end of the year. De

spite the slowing down productivity and the increasing unemployment si

tuation the deposits with the banks etc. increased continuously. The com

mercial banks were able to reduce their rediscounts. The banks lowered

the rate of interest from the beginning of October by 3/4 per cent, in ad

dition to which the reduced commitments of the banks to guarantee long

term deposit accounts enabled them to lower short term interest rates ,

J

'

. '

The bond loan market revived. The opportunity to cbtain foreign credits

were greater.

At the end ot the year convertibility was introduced in Finland as

well as for most of the western currencies.

Cost- of- living index went up from 128 points to 132 points during

the year.

The unemployment continued even in the summer and increased by the

end of the year when the returns showed about 80 000 workless of which

about 20 000 were unemployable even under Government's schemes.

The company ' s total expenditure on wages and salaries was 1, 462. 4

million Finnmarks, out of which 321. 2 million Finnmarks was spent for

the forest department.

The investments made during the year amounted to 502, 7 million

Finnmarks.

The purchase and the stocks of raw material increased. Supply was

abundant, and the limited production reduced consumption. The climatic

conditions were favourable for timber felling, cutting , hauling and trans

portation.

Because of the reduced demand, production of higher 1uality and re

paits made to improve the efficiency of the mills, the production and the

deliveries of the company were smaller than in the previous year.

The pine-oil destillery was enlarged and mo~ernized. The prelimi

nary work to carry out the enlargement plans of Nuottasaari mills started,


The members of the Administrative council were: N. A. Osara ( chair

man), Tauno Angervo ( vice chairman), L . J. Ollonqvist, Vaine Tanner, Klaus

Waris, and Bjorn Weckman, The deputary members were: Antti Kivilahti,

Kalervo Laine, K. N . Maatta, and Aku Sumu.

The Administrative council met four times.

BOARD OF DIR EC TORS

Members of the Board of directors were: Olli Paloheimo (chairman),

Aarne Pelkonen (vice chairman). and Kaarlo Lehtio. The deputary members

were Paavo Kivi, and Heikki Sihtola,

The Board of directors met 10 times.

2,

'

..

MANAGING DIR EC TOR

The Company' s managing director was Kaarlo Lehtio.

AUDITORS

The auditors were: Mauno Luotonen, Arvi Peltola, Eemil Paakkonen,

J. W. Rangell, and Mauno Vahla. The deputy auditors were: L . A. Puntila,

and U. A. Vatanen.

Messrs. Reino Vento were responsible for the general audit.

The following statistics and figures illustrate the Company ' s activities.

=======================-=================================f========= 1958 1957 1956 I 1938

Logs ·cuft 13648273 68604171

11042308 5778443 Pine pulp wood and pit props cum 1 376 309 915 364 699 420 890 859

1

Spruce pulp wood for the parent companies 11 111 388 116 090 I 122 759 110 474 Firewood " 5 330 31 099 . 1 622 5 183 1

== = === =~::::: ::= = == ====r ==I:: :==rE~i:~~;:= = :::: = = ~===l:=S~=I= ,= . = ~: ::= 1 Primary production

Sawn goods s tds Cellulose, sulphate tons Pine oil and turpentine 11

Chlorine and caustic soda fl

37 349 146 916

8 244

83,8 87 , 3 92, 7

44 560 168 418

8 898

7 921 299

23 618 155 303

8 554

20 811 84 768

2 540

I

-4--------------+----Refined output

Destillation products " Other products 11

200 430 90, 2 222 175

3 913 1 711

5 624

86, 7 76,0

82,8

4 540 2 252

6 792

187 475

4 369 2 292 6 661 I

108 119

Total 206 054 90, 0 228 967 194 136 108 119

=======================1============= .===1========~========d========-TURNOVER Million mark~ 6 928 101, 9 6 802 6 068 151

DELIVERIES etc. \

SAWMILLS l

Exp-orts Pateniemi Hyrynsalmi

Total

stds II

II

27 567 7 760

35 327

80,4 92,2

82, 7

34 307 8 415

42 722

17 876 4 326

22 202

22 977

22 977

3.

' '

..

4.

Percent-1958 age 1957 1957 1956 1938

Home market stds 2 010 71,0 2 831 3 976 1 025 Own use II 1 270 139, 1 913 838 1 399 Stock at the end of the year II 20 798 96,3 21 593 23 499 11 198 Logs sawn 1 000 cuft 8 819 83,9 10 508 5 707 4 878

CELLULOSE MILL Cellulose shipment tons 129 131 86,4 149 524 152 068 51 214 Home market II 8 877 93, 5 9 491 5 498 79 Stock at the end

I 23 121 I of the year II 122, 7 19 338 7 723 34 098 Sulphate wood used CUM 765 431 81,6 937 675 901 167 470 782 Sawn chips II 255 109 97, 7 261 209 187 904 84 874 The factory was operating - -days = 24 hours 326 93, 9 347 330 341 Output in tons 24 hours 451 92, 8 486 471 249

BYPRODUCTS

Exports tons 1 336 69, 6 1 919 1 505 Home market II 3 297 85, 1 3 874 4 044

CHLORINE PLANT Exports tons 1 792 .,: Home market II 628

PROFIT AND LOSS ACCOUNT at 31 st December 1958

EXPENDITURE INCOME

Salaries and wages 1 145 031 441;=-

Interests 208 443 440: -

Taxes 251 798 932:-

Depreciations 487 912 084: -

Other operating expen-ces

Profit for 1958

344 810 151:-

186 010 972:

Fmk 2 624 007 020: -

Nett receipts

Interests

Dividends

Sundry receipts

Fmk

Annual turnover Fmk 6 9 2.7 864 91--4: -BALANCE SHEET as at 31st D ~cember 1958

Assets

Current assets

Cash and claims to cash

~eceivables

Securities

Claims to loans

Inventories

Raw materials etc.

Products

Fuel

1504714:-

1 485 :784 143: -

737 250:-

104 810 848: -

817114494:-

128 377 580: -

33 294 168:-

2 568 502 630: -

46 724 340:-

2 382 160:-

6 397 890:-

2 624 007 020: -

1 592 836 955:-

978 786 242: -

'

'

...

Fixed assets

Plots, land and water area 41 205 454: -

Addenda 4 890 000: - 46 095 454:-

Buildings 1 071 341 889:-

A denda

Machinery and equipment

82 159 797:- 1 153 501 686:-

2 051 300 629:-

355 087 830: -Addenda

Reduction 3 1 3 1 149 : - 2 40 3 2 5 7 31 0 : -


Addenda

Reduction

Advance payment on machinery

Securities

Estimated items


Liabilities

Current liabilities

Short term

Bills of exchange

513 008 516:-

51 816 106:-

3 443 895:-

350 000 000: -

Suppliers 1 606 266 078: -

Bank debts 53 346 380:-

Loans 106 578 800:-

Long term

Loans

Estimated items

Depreciations due to the buildings 208 815 097:-

Addenda 41 126 333: -

Depreciations due to the machinery, furniture and fixture 9 73 09 8 372: -

Addenda 391 246 044: -

Reduction 1 252 596:-

Depreciations due to the factory and traffic equipment 255 253 318:-

A r:ldenda 55 539 707: -

Reduction 2 229 575: -

561 380 727:-

8 805 280: -

191 686 377:-

Fmk

2 116 191 258:-

2 043 744 830: -

249 941 430: -

1 363 091 820:-

308 563 450: -

5.

4 364 726 834: -

129 206 581:-

7 065 556 612:-

4 159 936 088:-

1 921 596 700:-

'

' •

6.

Transitory items

Advance tax retensions and purchase tax 14 566 074: -

Equisity

Share capital

Reserve fund

Liquid fund

Profit

Profit from previous years

Profit from current year

Guarantees :

Endorsements

360 000 000: -

90 000 000:-

120 373 913:-

Zl 3 072 865: -

186010972: -

Fmk

2 595 983 250:-

Mortgages 606 151 908:-

Fmk 3 202 135 158:-

570 373 913:-

399 083 837 : -

7 065 556 612 : -

The Company ' s accounts for the year 1958 show a profit of Finnmarks

186 010 972: - . As the balance brought forward from the previous years was

Fmks 213 072 865:-, the amount at the disposal at the shareholders ' meeting

is Fmks 399 083 837: - .

This amount is recommended for use as follows:

as dividend on share capital Fmks 75 600 000: -

as working capital for the Board of directors II 1 500 000:-

to be carried forward to the Liquid fund II 129 626 087:-

to be carried forward to the Profit and Loss acount II 192 357 750:-

Helsinki, February 13th 1959.

BOARD OF ADMINISTRATORS BOARD OF DIR EC TORS

World Bank Group Archives Folder 1582048

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Transcript of World Bank Group Archives Folder 1582048