Press release
25 Oct 2023, 7:00 CET

Interim report January–September 2023

Improved profit and cash delivery in continued weak market conditions

Key highlights Q3

•    Higher sales volumes in both regions compared to last quarter, offset by price and mix deterioration

•    Sequentially lower input costs and lower fixed cost than normalized level

•    Efficiency enhancement program on track – delivered SEK 175 million in the quarter

•    Earnings per share positively impacted by recognition of tax credits in the US

•    Strong operating cash flow with tight control on working capital

•     Frövi recovery boiler project completed on time, spec and budget

Quarterly data Q3

•    Net sales decreased by 14% to SEK 10,210 million (11,814)

•    Adjusted EBITDA* SEK 1,167 million (2,196)

•    Adjusted EBITDA margin 11% (19)

•    Operating profit SEK 415 million (1,536)

•    Net profit SEK 656 million (1,347)

•    Earnings per share SEK 2.64 (5.42)


Outlook for Q4

•    Customer destocking largely completed, however continued weak demand driven by subdued macroeconomic environment

•    Negative mix for most categories and lower sales prices for sack and kraft paper, partly offset by lower input costs

•    Further steps are taken to drive efficiency and long-term competitiveness through reducing up to 350 positions


Comments by the CEO

We delivered a meaningfully improved result in the third quarter compared with the previous quarter. Profitability and cash generation were significantly up, and encouragingly, we see progress in both our European and North American regions. The adjusted EBITDA margin for the quarter was 11% with excellent cash conversion. The improved performance was mainly due to volume pick-up in both regions, lower than normalized fixed cost level, accelerated delivery of our efficiency enhancement program and strong focus to keep our working capital low. In particular, we are happy to see the mobilization we have gained throughout the organization related to our efficiency enhancement program, and we are on track to deliver our SEK 600 million target for 2023.   

However, the market conditions remain weak for most product categories. We continue to navigate through challenging demand and customer destocking by adjusting our production output. We do not foresee strong recovery near-term, and will continue to adjust to the new conditions, aiming to improve our long-term competitiveness. As part of our efficiency enhancement program, we have decided to reduce the number of positions by up to 350. It will mean redundancies and affect all parts of the company. Union negotiations begin today. These measures will provide annual structural savings of SEK 300 million, with majority of the run-rate savings in 2024. Restructuring costs related to this of MSEK 100 will be recorded in the fourth quarter.

Since mid-August we have a new operating model in place, with a clear regional organization for both Europe and North America. As well, our global management team is now a bit smaller. We see already positive signs of how our new structure is working, as it provides good conditions for agile, clearer and faster decision-making. I am confident that a holistic view of the value chain in each region will enable further synergies and value creation.

18 months post the acquisition of Verso, we are very pleased with the results and developments, which has exceeded our expectations, driven by solid margins and cash generation. The business fundamentals and strategic fit for paperboard production in North America continue to be strong and remains Billerud’s most important growth opportunity. However, given the changed economic conditions, we are taking our time to evaluate alternatives for the US transformation. We will therefore not decide on the transformation investment program by the end of this year as previously announced, and we will revert when ready. Meanwhile, we are building the paperboard sales in the US through export.

The new recovery boiler in the Frövi mill has been put into production and will be handed over from the supplier to the line organization during November. We are proud that this project has been delivered on time and budget despite plenty of external challenges since investment decision was made in early 2021. The successful project management creates confidence in our ability to carry out large and complex capital investments in the future. 

We are continuing to execute on Billerud’s strategy on packaging materials and focusing on the core and have divested the business unit Managed Packaging and most positions within venture holdings. The most recent decision was the divestiture of our ownership in the joint venture Paper Bottle Company AS (Paboco) to our JV partner Alpla.

For the fourth quarter, we expect continued weak market conditions for most product categories. Customers’ destocking is expected to be largely completed, but we foresee lower consumer spending to suppress demand for the majority of our products. We expect continued negative mix for most categories and sales prices within sack and kraft paper to decline. These effects should partly be offset with lower input costs, primarily within chemicals and pulpwood.

Looking into 2024 we are cautiously optimistic as volume recovery will kick in post a largely completed customer destocking phase. However, the geopolitical and macroeconomic uncertainty will continue to negatively impact consumption and thereby the demand for paper and packaging materials. We do not expect strong recovery, but rather step-by-step improvements throughout the year driven by volume growth.

The strategic direction for Billerud remains intact, but our priorities are being updated to reflect the regional organisation and changed conditions on several fronts. Our near-term focus will continue to be on items that we control and where we already have built up good momentum during 2023. By accomplishing efficiencies, cost reductions and solid business cases, Billerud will be well positioned to capture future opportunities. 

Ivar Vatne
Acting President and CEO


Third quarter

Sales and results

Net sales for the third quarter declined by 14% to SEK 10,210 million (11,814). The organic and currency-neutral net sales declined by 16% due to negative price and mix changes and lower sales volumes. The Group’s total sales volumes were 890 ktons (945), negatively impacted by low demand and production curtailments in mainly North America.

Adjusted EBITDA amounted to SEK 1,167 million (2,196), corresponding to an adjusted EBITDA margin of 11% (19). The lower result was due to lower prices, negative mix and volume changes and higher input costs, which were partially offset by lower fixed costs, reduced maintenance impact and efficiency improvements. The result was positively impacted by a reduced provision for the short-term incentive program.

Items classified as affecting comparability of SEK -55 million (–) impacted the result in the third quarter and included the total capital gain from the divestment of Managed Packaging of SEK 23 million, a cost item related to an impairment of shares in Paboco of SEK 52 million and a restructuring cost for management severance pay of SEK 26 million.


Market development and outlook

In the third quarter, market conditions remained stable on a weak level for all products. Exception being liquid packaging board, where conditions were stable on a normalized level. Demand was negatively affected by customers’ continued inventory destocking and reduced consumption. Prices decreased for most categories, expect for liquid packaging board and graphic paper, where prices were stable.

For the fourth quarter, we expect market conditions to remain weak for most product categories. Demand is expected to be weak driven by the subdued macroeconomic environment, although the inventory destocking will be largely completed. Negative mix is expected for most categories and sales prices are expected to deteriorate for sack and kraft papers. Input costs are in total expected to decrease, mainly driven by reduced costs for chemicals and pulpwood in Europe.  


Events in the quarter

On 5 July, Billerud divested its holding in Kezzler AS, a company with a digital platform for packaging traceability.

On 13 July, Billerud agreed with the investment company Mimir Group about the divestment of the packaging solutions business Managed Packaging. The sale was completed on 31 August and a total capital gain of SEK 23 million was reported as an item affecting comparability. The cash flow from the transaction was SEK -80 million due to deferred payment of purchase price and cash position in the divested business. Managed Packaging was before the sale included in the segment Solutions & Other and had in 2022 around 140 employees, net sales of around SEK 770 million and EBITDA of around SEK 40 million. 

On 28 July, The Board of Directors appointed Ivar Vatne as acting CEO. Ivar Vatne joined Billerud as CFO in May 2019 and has also been deputy CEO since October 2022. Before Billerud, he held senior positions in Arla, Fiskars and Procter & Gamble. Christoph Michalski left Billerud with immediate effect and the recruitment of a new CEO was commenced.

On 17 August, Billerud implemented a new organization in line with its operation in the two regions Europe and North America. Matthew Hirst, previously Executive Vice President Commercial, was appointed President of the newly formed European organization and Kevin Kuznicki remain President of the already formed North American organization. At the same time, it was announced that Andrei Krés had been appointed acting CFO and member of the Group Management Team with immediate effect.

Following test runs of the new recovery boiler at the Frövi mill it was successfully put into operation during September. The new, fossil-free recovery boiler will enable increased energy efficiency and improved environmental performance. Its capacity will also allow for higher pulp production in the future. The project to build and install the new recovery boiler in Frövi is being completed in time and on budget. For more information about this investment, see page 7.

In September, Billerud decided to divest its ownership in the joint venture Paboco and related intellectual property to its joint venture partner Alpla. Impairment of shares in Paboco of SEK 52 million has been reported as an item affecting comparability in the third quarter. The sale was completed on October 9 and will have a positive cash flow effect of around SEK 80 million in the fourth quarter.

Billerud’s sustainability work was recognized as it for the fourth consecutive year received a Platinum grade in Ecovadis’ annual evaluation. This means a top 1% ranking in our industry on how well sustainability principles have been integrated into the business.


* 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 16-18.


For further information:

Andrei Krés, Acting CFO, +46 8 553 335 72
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 25 October 2023.