Navigating challenging market conditions
Key highlights Q2
- Low volumes due to continued customer inventory destocking and soft end market demand
-
Stable sales prices in
North America , price deterioration inEurope in some categories from record 2022 levels - Lower input costs did not offset price deterioration
-
Escanaba mill resumed operations on
May 8th after three weeks idling for deep cleaning due to blastomycosis outbreak - Revaluation of inventory impacted EBITDA
- Positive cash flow for the quarter with tight control on inventories
-
Raised ambition of efficiency enhancement program to
SEK 600 million
Quarterly data Q2
- Net sales decreased by 13% to
SEK 9,953 million (11,408) -
Adjusted EBITDA* was
SEK 188 million (2,267) - The adjusted EBITDA margin was 2% (20)
-
Operating loss was
SEK 496 million (profit: 1,609) -
Net loss was
SEK 481 million (profit: 1,419) -
Earnings per share amounted to
SEK -1.94 (6.83)
Outlook for Q3
- Weak demand expected to continue
- Continued production curtailments
- Negative mix impact and some price reductions, only partly offset by lower input costs
- Accelerated delivery of the efficiency enhancement program
Comments by the CEO
The second quarter was challenging with all-time low sales volumes and with currency-neutral net sales declining by 18% compared to the same period last year. The largest sales decline was in
By all indications, the blastomycosis outbreak at the Escanaba mill is behind us. Following a three-week idling and deep cleaning of the facilities, operations were successfully resumed on the 8th of May. We continue to work closely with local, state and federal health experts as they complete their analysis of the testing and sample collection at the mill. Results will be made publicly available in due course. The negative financial impact of the outage and the deep clean was
From the 1st of April, our financial results are reported according to a regional structure. Business conditions differ vastly between
For the third quarter, we expect continued low demand for all products except for liquid packaging board where demand is stable. We will continue to adapt our production to demand. Our prices are expected to be more stable, while mix will have a negative impact. Input costs are expected to decline, although fiber cost in
Our efficiency improvement program remains a top priority. We have raised our 2023 ambition to
Our focus on cash flow conversion is having an effect. We have reduced inventory levels and are keeping a tight control on our working capital and continue to limit investments.
In line with our focus on sustainable profitable growth in packaging materials, we have agreed to divest
The construction and installation of the new recovery boiler in Frövi is in its final stages. The new recovery boiler is to be put into production in September ahead of schedule and at a marginally lower than planned CAPEX. This investment ensures continued long-term and competitive production of high-quality carton board in Frövi. The new, fossil-free recovery boiler will enable increased energy efficiency and improved environmental performance. Its capacity will allow for higher pulp production in the future.
During the quarter Billerud made good progress on the large and very important program to convert one of our US mills to carton board production. This program covers the installation of one carton board machine, a new extended wood yard and a BCTMP plant. It also includes significant upgrades to the existing infrastructure to ensure cost effective operation, significant improved sustainability performance and opportunity to expand in the future. The significance of the project requires more time to reach the necessary project planning quality before ordering of equipment can take place. We expect to reach that level by the end of the year together with an optimized CAPEX phasing, including our BCTMP project in
We have made good progress with our strategy that focuses on premium primary fiber packaging materials. While this quarter has been particularly difficult, I remain confident that our long-term strategy will deliver significant future upside for Billerud. I also would like to recognize the hard work by our employees, customers and suppliers and thank them for their excellent collaboration.
President and CEO
Second quarter
Sales and results
Net sales for the second quarter decreased by 13% to
Adjusted EBITDA amounted to
No items classified as affecting comparability impacted the result in the second quarter (-).
Market development and outlook
In the second quarter of 2023, the market conditions were weak for all products except for liquid packaging board, where conditions were stable. Customers' inventory adjustments and low demand resulted in production curtailments in Billerud's mills and across the industry. Billerud implemented price increases for liquid packaging board and maintained prices for graphic and speciality paper. For the rest of Billerud's products prices decreased.
For the third quarter 2023, continued weak market conditions are expected. Billerud will continue curtailments on production. Negative mix impact and some price reductions are expected. Input costs are expected to decline except for wood raw material in
Events in the quarter
As of
On 13 April, Billerud proactively decided to temporarily idle the Escanaba mill as a precautionary measure due to a blastomycosis outbreak since the beginning of March. After performing additional cleaning of the facilities, Billerud resumed full operations of the Escanaba mill on 8 May. Billerud's top priority is the health and safety of employees and contractors, and the company is committed to working closely with and following the recommendations of health experts as they continue to investigate the situation.
Billerud's Annual General Meeting on 24 May elected Regi Aalstad as a new Board member and re-elected
On 15 June, Billerud announced that the EBITDA for the second quarter 2023 was expected to be lower than the current market expectations and approximately
Events after the end of the quarter
On 5 July, Billerud sold its ownership in Kezzler AS, a company with a digital platform for packaging traceability, for
On 13 July, Billerud announced that it had agreed with the investment company
* For key figures and a reconciliation of alternative performance measures including adjusted EBITDA, adjusted operating profit, adjusted EBITDA margin, adjusted operating profit margin, adjusted ROCE and interest-bearing net debt/adjusted EBITDA, see pages 14-16.
For further information:
ir@billerud.com
This information constituted inside information prior to publication. This is information that
https://news.cision.com/billerud-ab/r/interim-report-january-june-2023,c3807475
https://mb.cision.com/Main/66/3807475/2197098.pdf
https://mb.cision.com/Public/66/3807475/bad5308863e5e0f0.xls
(c) 2023 Cision. All rights reserved., source