BillerudKorsnas Interim report January–June 2020

Key highlights
Continued sales volume increase
Relatively limited impact from Covid-19
KM7 ramp-up progress as planned
Earnings continued to be affected by lower market prices
On track to deliver our cost- and efficiency program

Quarterly data
Net sales declined by 2% to SEK 6 156 million (6 293)
Sales volumes grew by 4% compared to second quarter last year
Adjusted EBITDA* was SEK 774 million (539)
Operating profit was SEK 245 million (194)
Net profit was SEK 202 million (182)
Earnings per share amounted to SEK 0.98 (0.88)

Q3 Outlook
Uncertainty related to Covid-19 remains
Somewhat more challenging market conditions for most segments. Exceptions being products designated to Food & Beverages and Medical & Hygiene, where we expect a more stable situation
Several planned maintenance stops
Raw material costs expected to decline marginally

COMMENTS BY CEO – The year 2020 is for sure a year we never will forget. It started off in a rather normal fashion but that soon changed as we started to learn the meaning of Covid-19. In BillerudKorsnäs measures were taken early to safeguard our employees and operations. Now, half a year later, I am proud that BillerudKorsnäs’ operations and business overall has continued to function without interruptions and still does. The decisive measures we took early on have enabled us to keep our business running as close to normal as possible, supporting our customers through a difficult period.

The financial effects on our company of Covid-19 have been, so far, relatively limited. Additional costs have incurred, but are partly offset by incremental cost cutting actions. The main effects are indirect and related to a weaker market for a number of our packaging paper grades. Overall, we have managed to keep the negative financial impact under control, but the pandemic is far from over so we must maintain full alert. Our focus areas for 2020 remain; ramping up our new board machine at Gruvön (KM7), ensuring a safe and stable production and delivering on our cost and efficiency program – all to be dealt with in a Covid-19 impacted environment doing our outmost to protect employees and customers.

In the second quarter the demand for our products was relatively stable. We managed to deliver a sales volume growth, but Covid-19 impacted negatively certain segments with lower demand, mainly within Division Paper. Division Board continued to deliver higher sales in all segments while Division Solutions struggled with significantly lower demand from North American based brand owners. Positive contributions came from a good progress on KM7 and efficiency measures taken throughout the company. All in all, I can conclude that we – despite a challenging environment – delivered a solid result with improved margins.

The ramp-up of KM7 is progressing as planned with a recent milestone being successful production of our most technical advanced product CrownBoard Prestige®. KM7 is gradually increasing its output of prime material. The process to certify materials for liquid packaging board continues, but at a slower pace than planned due to testing limitations at our customers as a consequence of Covid-19.

SALES AND RESULTS
Net sales for the second quarter declined by 2% to SEK 6 156 million (6 293). Higher sales volumes were primarily offset by significantly lower sales prices compared to last year in Division Paper. Net sales for the quarter were positively impacted by currency effects by 1%.

Adjusted EBITDA increased to SEK 774 million (539), mainly as a result of lower maintenance costs compared with last year, lower fibre costs, reduced KM7 start-up impact and cost savings.

Costs affecting comparability, reported under Other, amounted to SEK 39 million (-40) and included a provision related to a new supply agreement of SEK 160 million, a value change of biological assets of SEK -132 million and restructuring costs related to severance pay of SEK 11 million.
details at: https://www.billerudkorsnas.com/press–news/press-releases/2020/interim-report-januaryjune-2020

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