• Net Sales Growth: 7% year-over-year.
• EBITDA Growth: 42% year-over-year.
• EBITDA Margin: Increased by 2 percentage points.
• Region North America Sales Growth: 15% year-over-year.
• Region North America EBITDA Margin: 21%.
• Region Europe EBITDA Margin: 15%, up by 4 percentage points.
• Region North America Volume Growth: 14% year-over-year.
• Cash Conversion: Improved to 41% for the quarter.
• Return on Capital Employed: 7%, up from 1% last year.
• Maintenance Cost Impact for Q2: Expected to be SEK380 million.
• Capital Investment Program: SEK1.4 billion in North America.
• Planned Investments for 2025: SEK3.5 billion, with one-third for strategic investments.

• Warning! GuruFocus has detected 4 Warning Signs with OSSUY.

Release Date: April 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Billerud AB (FRA:BNF) reported a 7% net sales growth year-over-year, with positive contributions from both regions and almost all categories.
• The company achieved a significant profitability improvement, with EBITDA up 42% and a margin uplift of 2 percentage points.
• Region North America showed strong performance with a 21% EBITDA margin and 15% sales growth.
• Region Europe also improved profitability, achieving a 15% EBITDA margin, up 4 percentage points from the previous year.
• Billerud AB (FRA:BNF) reached a milestone by selling its first batch of locally produced container board in the US, indicating progress in its strategic objectives.

Negative Points

• The carton board and consumer luxury channel in Europe is still performing weaker with slower demand and excess capacity.
• The company faces uncertainty regarding tariffs and their long-term financial impact, which could alter trade flows and competitive dynamics.
• Input costs increased, primarily driven by pulpwood costs in the Nordics, and the strengthening of the Swedish krona posed a headwind.
• Region Europe experienced a decline in liquid packaging board volumes due to high inventory levels in Asia and slower demand.
• The company anticipates a heavy maintenance shutdown in Q2, with a cost impact of approximately SEK380 million, compared to SEK40 million in Q1.

Q & A Highlights

Q: In North America, are customers bringing forward orders, or is demand expected to sustain into Q2 and the rest of 2025? Also, what is causing the relative weakness in carton board and coated liner in Europe? A: (Ivar Vatne, CEO) In North America, Q2 looks solid with good order books, and we have no signs of inventory buildup. However, consumer sentiment in the US has dropped, increasing uncertainty. In Europe, the weakness in carton board is due to our exposure to the premium side, which is sensitive to consumer uncertainty, and there is a lot of available capacity in the market.

Q: Can you detail the price increases in North America for paperboard grades and pulp? A: (Andrei Kres, CFO) In North America, we announced up to 5% price increases on coated freesheet reels, which will be implemented in Q2. For pulp, an $80 per ton price increase was announced, and we expect some pricing impact in Q2.

Q: What are the dynamics in the North American coded fine sheets and specialty business, and why aren't there similar price moves as in coded fine reels? A: (Ivar Vatne, CEO) The coded fine sheets and specialty business face heavy competition, making it challenging to implement price increases. The specialty segment, particularly the label business, is performing well, and we are fully sold out on the E3 machine at Escanaba.

Q: Are you seeing any restocking or inventory effects in the European packaging market? A: (Ivar Vatne, CEO) We are not seeing significant inventory buildup in Europe. Demand for container board is lukewarm, but we are moving up on pricing. Carton board remains weak due to high exposure to the premium side, while sack and craft paper are performing well.

Q: How are you managing the risk of overproduction if there is demand softness, and are there any categories where you might benefit from better margins due to higher waste paper costs? A: (Ivar Vatne, CEO) We focus on cash generation and maintaining discipline to avoid overproduction. We don't see specific categories benefiting from better margins due to waste paper costs, as the market is more balanced now.

Q: Have you seen any changes in order patterns due to increased uncertainty, and are there differences in customer behavior between North America and Europe? A: (Ivar Vatne, CEO) We haven't seen changes in order patterns yet. In North America, consumer sentiment has dropped, but key economic indicators remain solid. In Europe, consumer confidence is shaky, but we haven't observed significant changes in customer behavior.

Q: Can you comment on the decline in liquid packaging board volumes in Europe and its impact on EBITDA margin? A: (Andrei Kres, CFO) Liquid packaging board demand in Europe is solid, but high inventory levels and slower demand in Asia are impacting volumes. We expect this trend to continue into Q2, with tough competition and generally lower demand from end customers.

Q: What are your expectations for the ramp-up of packaging in the US, and will it impact divisional or group earnings? A: (Ivar Vatne, CEO) We have a stretch target of 15,000 tons for 2025, primarily in the second half. This is not significant for divisional or group earnings, but it marks the beginning of our ramp-up, with more impact expected in 2026.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.