Continued strong growth and all-time high profitability
- Strong sales growth and stable production
- All-time high EBITDA
- Pricing impact and mix improvements more than offset cost inflation
- Acquisition of Verso successfully completed
- Excellent Verso stand-alone performance
- Net sales grew by 13% to SEK 7 397 million (6 520). Excluding currency effects net sales increased by 11%
- Adjusted EBITDA* increased to SEK 1 664 million (1 003), corresponding to an adjusted EBITDA margin of 22% (15%)
- Operating profit was SEK 1 189 million (528),
- Net profit was SEK 884 million (377)
- Earnings per share amounted to SEK 4.27 (1.82)
OUTLOOK FOR Q2
- Strong market conditions in all product segments expected to prevail
- Accelerated cost inflation for fibre, chemicals, transports, and energy – which we expect to fully offset by pricing and mix improvements
Comments by the CEO
Quarter one was the first quarter fully focused on our new strategy. Despite all the macro-economic uncertainties further exasperated by the Russian war, we believe that our prioritisation on paperboard and growth opportunities in North America remain the right choices. We have made progress in the implementation of the strategy with the acquisition of Verso and its closure in the first quarter and the signing of a term sheet for a joint venture with Viken Skog to explore opportunities for pulp production. The organisation has been very focused on all key elements of the strategy, resulting in an excellent business performance in the first quarter.
Net sales excluding currency effects and adjusted for the divestment of Beetham grew by 13%. The all-time high EBITDA in the quarter was a result of implemented price increases and mix improvements, which more than offset higher costs for raw materials and transports.
We strongly condemn Russia’s brutal war in Ukraine and our thoughts are with all those suffering. While our sales exposure to Russia and Ukraine was only 1% in 2021, the impact on our business is mainly indirect. Wood supply and prices have been affected by the stop of imported Russian wood. Chemical prices are on the rise as a secondary consequence of energy price hikes. These effects have been in addition of the already tight market situation due to corona and logistics disruption.
For 2022, we expect the strong market conditions to prevail. Despite the more uncertain macro-economic outlook in our main markets, we are confident that most of our products target very resilient end-segments. Market conditions are also expected to remain strong in North America.
We will counteract the inflationary pressure by continued focus on price management, product mix adjustments, and efficiency improvements. For the second quarter, we expect to fully offset the cost inflation.
The acquisition of Verso was completed on 31 March. Our offering now includes a very profitable graphic and speciality paper business in the U.S. in addition to our current business. Our strategy to transform the North American operations towards paperboard remains very attractive and will add significant shareholder value. Verso has been consolidated in our balance sheet as of 31 March 2022. Our interest-bearing net debt to adjusted EBITDA ratio of 2.3. and adjusted ROCE of 11% will improve going forward.
Verso’s financial performance in the last six months has been impressive and we are very pleased that the closure of the transaction happened earlier than we expected. We are welcoming our new colleagues and are looking forward to working together. As part of the integration, we have decided to propose to the AGM to simplify the company name and brand to Billerud. We are also initiating preparations for the planned conversion to create a world-class paperboard production in North America. In this work, we will use competencies in both organisations and lessons learned from previous projects, such as our recent brownfield projects at Frövi and Gruvön.
Our priorities for 2022 remain to be delivering on our strategy, mix improvements, cost saving programme and as of now to integrate the North American operations. Uncertainties will remain high for the foreseeable future. Our organisation remains fully committed to mitigate any risk through proactive preparation and agile responses.
We sincerely hope that the war between Russia and the Ukraine will stop as soon as possible. In the meanwhile, BillerudKorsnäs has contributed to UNHCR to support the refugees from Ukraine.
President and CEO
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