Operating margin
Historically, the development of the pulp and paper industry has followed a cycle with corresponding swings in the earning capabilities of the players in the industry. When setting a profit target for Billerud, the Board of Directors considered the company’s profit history, average exchange rates and price trends for pulp and paper in recent years. The target is that the operating margin shall be at least 10% over a business cycle. |
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Return on investments
Completed investments shall provide a return that is significantly above the weighted average cost of capital (WACC). This will ensure that Billerud has a return on investment that meets the demands of shareholders while more than covering the company’s costs for liabilities. In practice the company will apply different return requirements depending on the risk level of the investment, with a basic requirement that return on investment is significantly above WACC. |
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Organic growth
The target is to establish long-term organic growth in the order of 3% per year from 2008 onwards. Growth will be generated from increasing the proportion of paper in relation to market pulp, improving the product mix and customer structure and from new growth projects in the value chain. |
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Debt/equity ratio
Billerud’s business is influenced to a large extent by general economic conditions, which means that the operating risk is considerable. Strengthening the financial position in good years is essential in order to sustain the company in bad years. Billerud therefore has a target that its net debt/equity ratio over a business cycle shall be between 0.6 and 0.9. |
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Dividend policy
The target is that the dividend over a business cycle shall on average be equal to 50% of net profits. The dividend paid to shareholders will be dependent on, among other factors, Billerud’s profit level, financial position and future development opportunities. |
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