Oct 28, 2011. /Lesprom Network/. The turnover of the Vapo Group in the January-September 2011 period was Euro 530.7 million, compared to Euro 512.3 million in the same period in 2010. The Group posted an operating loss of Euro 11.6 million, -2% of turnover. The key reasons for the sharp deterioration in operating earnings were weaker operational profitability in the pellet business, a writedown of Euro 27.7 million in the pellet business in the 3Q and ongoing reduced profitability in the sawmill business, as the company said in a press release received by Lesprom Network. The equity ratio on 30 September 2011 was 35.3%. Cash flow from operating activities before investments in the January-June period was Euro 100.9 million. Overall investments in the year to date totalled Euro 67.4 million and cash flow after investments was Euro 42.1 million. The positive development in cash flow was due in particular to a reduction in working capital. The following business areas posted turnover higher than the comparison period: Biofuels (5.2% higher), Bioheat (15.9% higher) and Environment (7.2% higher). Turnover in wood products, i.e. the sawmill industry, was 3.9% lower than the comparison period. The Vapo Timber business area is responsible for production and sales of the Group’s sawn timber. The turnover of the business area was Euro 97.2 million with an operating loss of Euro 4.2 million. There was substantial oversupply in sawn timber markets, leading to lower sales prices and higher stock levels. Vapo Timber increased production by 4% in the first nine months, but sales prices were 5% lower than the comparison period. According to CEO Tomi Yli-Kyyny, the 3Q was weaker than forecast for Vapo. The measures taken in the 3Q to restore the pellet business to health, where earnings have slumped, will improve profitability in the future, but the poor peat production season and the difficulties in the sawmill industry will mean that full-year operating earnings for 2011 will be loss-making. Yli-Kyyny points out that pellets are an environmentally friendly and local fuel and thus an excellent energy source. Vapo will continue to be active in sales and production of pellets and will guarantee the pellet requirements of all current and new customers, now and in the future.