INTERIM REPORT january–September 2018
- Net sales were SEK 6 054 million (5 544), an increase of 9% mainly as a result of increased sales prices and positive currency effects.
- EBITDA was SEK 881 million (1 051), a decrease of 16% mainly as a result of increased raw material costs.
- Adjusted EBITDA was SEK 893 million (1 080), a decrease of 17%.
- The adjusted operating margin was 9% (13%).
- Adjusted operating profit was SEK 540 million (717), a decrease of 25%.
- Earnings per share amounted to SEK 1.76 (2.48).
- Solid sales performance in all business areas.
- Positive effects from increased sales prices and currency.
- Continued headwinds from higher raw material costs.
- Strategic investments progressing according to plan.
- Strong demand within all business areas is expected to continue.
- Limited possibilities for further sales price increases.
- Sharp increase in wood costs expected to continue.
COMMENTS BY CEO
Solid sales performance across all business areas
“The strong demand for innovative and sustainable packaging continues, resulting in positive sales performance in all business areas. Revenues in the third quarter increased with 9% compared to the same period last year, fuelled by increased sales prices. However, headwinds from increasing raw material costs and start-up performance, continue to put pressure on our operating results.
We are proceeding on schedule towards the start-up of the new KM7 board machine in March-April 2019. Our current focus is to prepare for a stable and successful ramp-up. With the completion of our Next Generation investment programme, we will be in an excellent position to grasp the market opportunities and meet the strong demand for sustainable packaging.
A key enabler to unlock our potential is our new organisational structure, consisting of three business divisions with full profitability responsibility, effective as of October 1. Our new structure will increase speed, accountability and customer focus, and pave the way for the continued successful implementation of our strategy.”
EBITDA for the quarter amounted to SEK 881 million, a decrease of 16% compared to the same period last year owing mainly to higher costs for pulpwood and chemicals. Fibre costs account for more than one-third of our total operating costs, which is why we are focusing on improving the sourcing balance.
Another main priority is production availability; we expect to see increased stability during 2019 and onwards measured by overall equipment efficiency (OEE).
The result was also affected by comparatively high prices on the pulp supply to our non-integrated mill in Jakobstad, due to a fixed rebate in the long-term pulp supply agreement. At current pulp prices, this gives a quarterly negative effect of approx. SEK 75 million compared to general market levels.
Strong demand within all business areas is expected to continue over the next quarters. We will continue to increase sales prices where possible but at a slower pace than in previous quarters. Wood costs are expected to increase further while the wood supply situation has improved significantly.
We will continue to pursue our strategy for sustainable solutions and profitable growth. To unlock our full potential, we have implemented an agenda of prioritised activities aimed at securing the successful ramp-up of KM7, safeguarding the wood supply, stabilising production, enhancing effectiveness, and accelerating innovation and solutions.
Innovation is a key component of our strategy. We aim to improve our new product ratio and introduce new materials with increased efforts throughout the organisation. By establishing a division entirely focused on solutions, we intend to grow current packaging solutions and business models as well as innovating new ones.
For further information, please contact:
Susanne Lithander, CFO, +46 8 553 335 00
Christopher Casselblad, Investor Relations, +46 8 553 335 08
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 13.00 CET on 16 October 2018.