Press release
20 Jul 2023, 7:00 CET

Interim report January–June 2023

Navigating challenging market conditions 
Key highlights Q

  • Low volumes due to continued customer inventory destocking and soft end market demand
  • Stable sales prices in North America, price deterioration in Europe 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 North America due to the continued inventory destocking resulting in production curtailments. This, in combination with historically high fiber costs in Europe led to a weak result.

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 SEK 85 million in the quarter.

From the 1st of April, our financial results are reported according to a regional structure. Business conditions differ vastly between Europe and North America, even if the current situation of high inventories and destocking applies to both regions. Region Europe’s profitability deterioration in the second quarter was primarily due to all-time-high fiber cost and soft volumes. Region North America on the other hand delivered a comparatively healthy margin, despite an operating rate of 50-60%, thanks to our cost-leadership and tight cost control.

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 Europe remains high.

Our efficiency improvement program remains a top priority. We have raised our 2023 ambition to SEK 600 million with accelerated delivery in the second half year. Examples of initiatives are increased share of field wood purchases and engagement with suppliers to jointly identify efforts to reduce variable costs and optimize consumption rates of high-cost chemicals.

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 Managed Packaging and sold our ownership in the packaging traceability company Kezzler. For the same purpose, we investigate possibilities to sell other non-core assets.

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 Norway together with Viken Skog.

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.

Christoph Michalski
President and CEO

Second quarter
Sales and results

Net sales for the second quarter decreased by 13% to SEK 9,953 million (11,408). Net sales excluding currency effects declined by 18%, mainly due to lower sales volumes. The Group’s total sales volumes in the quarter was 831 ktons (995), negatively impacted by low demand and inventory adjustments by customers, which resulted in further production curtailments.

Adjusted EBITDA amounted to SEK 188 million (2,267), corresponding to an adjusted EBITDA margin of 2% (20). The deteriorated result was mainly due to the low volumes, higher input costs and revaluation of finished goods inventory, which was only partly offset by increased sales prices, currency effects and delivery of our efficiency enhancement program.

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 Europe.

Events in the quarter

As of 1 April 2023, Billerud has implemented a new financial reporting structure based on the regions where its materials are manufactured. The three operating segments are: Region Europe, Region North America and Solutions & Others. Comparable figures for the last eight quarters have in this report been restated according to the new financial reporting structure. For more information about the new financial reporting segments, see pages 8 and 20.

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 Jan Svensson, Victoria Van Camp, Jan Åström, Florian Heiserer and Magnus Nicolin as Board members. Jan Svensson was re-elected as Chairman of the Board. The AGM further resolved in accordance with the Board’s dividend proposal. Meeting minutes can be found on Billerud’s webpage.

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 SEK 100-200 million. The main reasons for the lower result were stated to be twofold; significantly lower sales volumes due to lower demand, mainly attributed to North America and resulting in a negative impact of SEK 280 million compared with the first quarter, and revaluation of finished goods inventory, resulting in SEK 310 million higher costs than in the first quarter. In the same press release, a raised ambition for the 2023 delivery of Billerud’s efficiency enhancement program was announced. The new target for this program is an EBITDA-uplift of SEK 600 million for 2023. See also on page 8.

Ulrika Wedberg has been appointed Executive Vice President Sustainability & Public Affairs as of 14 August 2023. Ulrika Wedberg was recently Vice President Sustainability at Trelleborg and has experience from various leadership roles in Sandvik. She will be a member of the Group Management Team.
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 SEK 48 million.

On 13 July, Billerud announced that it had agreed with the investment company Mimir Group about a divestment of Managed Packaging. The divestment will reduce complexity and have a positive impact on Billerud’s EBITDA margin. The transaction is planned to be completed in August and is expected to result in a positive result effect of around SEK 20 million, which will be reported as an item affecting comparability in the third quarter.

* 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:

Ivar Vatne, CFO, +46 8 553 335 07
Lena Schattauer, Director Investor Relations, +46 8 553 335 10


This information constituted inside information prior to publication. This is information that Billerud 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 CEST on 20 July 2023.