Interim report January–March 2021
Sales growth driving EBITDA performance
- Strong net sales
- Ramp-up at Gruvön (KM7) reached EBITDA break-even
- Excellent production quarter with increased operational efficiencies
- Net sales grew by 2% to SEK 6 520 million (6 364). Excluding currency effects net sales grew by 5%
- Adjusted EBITDA* increased by 27% to SEK 1 003 million (791), mainly due to the ramp-up at Gruvön
- Operating profit amounted to SEK 528 million (280)
- Net profit was SEK 377 million (164)
- Earnings per share amounted to SEK 1.82 (0.79)
- Stable and improved market conditions
- Positive price adjustments in several segments
- Selective cost increases for raw materials and transport
- Continued cost and efficiency measures
Comments by the CEO
The first quarter has been good. Not only did we have stable and high availability in our production, but our net sales also grew to an all-time high level and earnings improved substantially. The stronger performance is based on deliving within our three focus areas; ramping up the new board machine at Gruvön (KM7), ensuring a safe and stable production, and implementing cost and efficiency measures. The ramp-up at Gruvön reached EBITDA break-even in the first quarter, which is an important milestone for the entire company.
Also market conditions improved during the first three months of this year. Sales momentum was positive in both product areas and our total order pipeline at the end of March was almost 50% higher than the same time last year. Looking forward, we expect stable and improved market conditions and to implement higher prices in several of our segments. We see increasing demand for liquid packaging board for the full year. On the supply side we expect selective cost increases for raw material in the second half of the year and higher costs for overseas transportations as a consequence of the constrained container shipping situation.
Although vaccination programmes are being rolled out widely and at a higher speed, the coronavirus pandemic is not over yet. In all of our operations we need to stay prudent and continue to take preventive actions. The maintenance shutdown at Gruvön in April has been carried out with meticulous precautionary measures to avoid the spread of infection and disease. I am delighted that our colleagues at Gruvön have managed to accomplish this comprehensive shutdown successfully and without compromising the safety of employees and contractors.
The new board machine at Gruvön is gradually increasing its output of high-quality board material and the ramp-up has now entered a stage of product portfolio optimization within the Board product area. The certification of liquid packaging board from the new machine is proceeding in collaboration with our customers, although at a slower rate than we would wish for due to the coronavirus pandemic.
In January, the Board of Directors decided to invest in a new recovery boiler at the Frövi mill. After that, ground work has been initiated and Andritz has been awarded the contract for the recovery boiler. The new boiler will improve environmental performance and provide opportunities for enhanced efficiency and is planned to be in operation by the end of 2023.
Our priorities for the years ahead have not changed. Health and safety is the top priority. We must do everything we can to reduce the accident rate. Furthermore, we will strive to increase customer satisfaction through our constant quality management work, progress with the commercial ramp-up at Gruvön and by ensuring a competitive wood supply. Cost and efficiency measures will continue and the estimated positive effect of our cost and efficiency programme is SEK 250 million in 2021 and SEK 65 million in 2022. We have also initiated a digitalization project to realize opportunities through common ways of working and automated processes.
In parallel with disciplined work with these priorities, we are developing opportunities for profitable growth for the longer term. Sustainability will remain at the core of our strategy and we are committed to playing our part to reduce our carbon footprint in line with the Paris agreement.
President and CEO
The quarter in review
SALES AND RESULTS
Net sales for the first quarter grew by 2% amounted to SEK 6 520 million (6 364). Excluding currency effects sales rose by 5%, driven by higher sales volumes and an improved sales mix.
Adjusted EBITDA increased to SEK 1 003 million (791), mainly due to higher sales as a result of the positive trend of the ramp-up at Gruvön, as well as lower costs for raw materials.
No items affecting comparability impacted the results for the first quarter (25).
Market development AND OUTLOOK
During the first quarter of 2021, all segments except liquid packaging board and kraft paper improved. The markets for liquid packaging board and kraft paper were stable.
For 2021, all segments are expected to improve except liquid packaging board that is expected to remain stable. Positive price movements are expected in several segments.
events in the quarter
On 11 January it was announced that Jan Åström will not be available for re-election as Chairman of the Board, but as a Board member and that the Nomination Committee will propose that he is elected to this role. The Nomination Committee also announced its decision to propose that Jan Svensson be elected as Chairman of the Board at the 2021 Annual General Meeting. Jan Svensson is a member of the Board of BillerudKorsnäs since 2020 and was the CEO of Latour 2003-2019.
On 28 January the Board of Directors made a decision to invest in a new recovery boiler at Frövi, planned to be in operation at the end of 2023. A new recovery boiler will improve environmental performance, increase energy production and create possibilities for increased efficiency and integration of the mill. The investment is estimated to SEK 2.6 billion. The value of the current recovery boiler will be depreciated until it is closed, which will result in additional depreciations of around SEK 25 million per year for 2021-2023. See more information on page 7.
On 1 February the functions Technology, Strategy, Communication & Brand and Legal & Compliance were included in the Executive Management Team. At the same time, Erik Olsson assumed the position as Executive Vice President, Strategy and Ulf Eliasson assumed the position Executive Vice President, Technology.
On 26 February it was announced that Helene Biström, Executive Vice President Commercial, has decided to leave BillerudKorsnäs. On 15 April it was announced that Matthew Hirst has been appointed new Executive Vice President Commercial. He will take office on 16 August and be a member of the Executive Management Team.
At the end of March it was decided to postpone the annual maintenance shutdown at Skärblacka to the fourth quarter, due to the coronavirus pandemic.
events After the quarter
In the second and third week of April, the annual maintenance shutdown at Gruvön was carried out successfully under extensive precautionary measures due to the coronavirus pandemic, such as testing performed by healthcare staff and quarantine periods for foreign contractors. Additional costs for the maintenance shutdown at Gruvön will be around MSEK 20 in the second quarter.
An incident on 21 April at Gävle mill damaged equipment connected to the digester in the bleached pulp mill. After making an initial investigation, necessary repair work is underway but production will be affected for around two to three weeks. While volume loss is estimated to 18 000 tonnes, the net negative financial effect of the incident is not deemed material for the full year result and is currently estimated between SEK 40-75 million.
For further information, please contact:
Ivar Vatne, CFO, +46 8 553 335 07
Lena Schattauer, Head of Investor Relations, +46 8 553 335 10
This information constituted inside information prior to publication. This is information that BillerudKorsnäs AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 07.00 CET on 27 April 2021.