Sales and results for the second quarter of 2021
Net sales for the second quarter grew by 6% to SEK 6 504 million (approximately Rs 5574 crore. Excluding currency effects sales increased by 9%, driven by higher sales prices, an improved sales mix, and increased volumes.
Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) increased to SEK 883 million (approximately Rs 756 crore), mainly due to the positive sales mix and volume development.
Market development and outlook
During the second quarter of 2021, market conditions for most segments improved with high demand and increasing price levels. The exception being liquid packaging board, where market conditions were stable.
The market outlook for 2021 is positive. Demand is expected to remain strong in all segments and the conditions for liquid packaging boards are expected to be stable. Higher input costs in some categories are expected to be compensated by price increases.
Christoph Michalski, president and chief executive officer, Billerudkorsnäs, shares, “Halfway into 2021, we experienced strong demand and a good sales momentum for all our product segments. The positive market outlook is expected to remain throughout the year. We are implementing additional price increases in several of our segments to counterbalance cost increases in chemicals, energy, market pulp, and logistics. Pulpwood supply in our regions remains good and at relatively stable price levels.”
Events in the quarter
Annual maintenance was carried out at Gruvön in April, under extensive precautionary measures due to the Coronavirus pandemic. The total maintenance shutdown costs amounted to approximately SEK 200 million (approximately Rs 171 crore).
An incident at the Gävle mill in April damaged equipment connected to the digester in the bleached pulp mill. Repair work was carried out and production ran at a slower pace during a couple of weeks, implying a volume loss of 22,000 tonnes. The financial impact of the incident will partly be covered by insurance compensation and the net effect amounted to approximately SEK 75 million (approximately Rs 64 crore) in the second quarter.
Billerudkorsnäs’ board machine at Gruvön, KM7, started to deliver its first grades of liquid packaging board to customers in May, ahead of time schedule. The qualification of board grades for one liter and portion-sized aseptic liquid packaging for one filling system was completed faster than planned.
“Our new board machine at Gruvön, KM7, produced its first commercial output of liquid packaging board in May, ahead of schedule. The ramp-up and certification work will continue, and we expect gradually increasing deliveries of both liquid packaging board and carton board from Gruvön. This will allow further mix improvements by reallocating production across mills as well as the acceleration of KM7 over the next few years,” adds Michalski.
On 15 April, Matthew Hirst was appointed new executive vice president, Commercial. He will take office on 16 August and has previously held various senior sales and commercial development roles in Essity’s professional hygiene business unit. Helene Biström, previous executive vice president Commercial, left at the end of April to pursue opportunities outside Billerudkorsnäs.
Billerudkorsnäs awarded Andritz the contract for a new recovery boiler at the Frövi mill, to be assembled during 2022. The groundwork has been initiated and the new recovery boiler is planned to be in operation by the end of 2023.
Billerudkorsnäs introduced Pure Decorx – a new generation of coated white top kraft liner with a 3-ply construction, light-weighting opportunities, high runnability in converting machines, and enhanced packaging performance. Pure Decorx yields excellent print results which makes it very competitive in applications such as shelf-ready packaging, displays, and packaging of food, beverage, and premium consumer goods.
Events after the quarter
In July, Billerudkorsnäs initiated a marketing campaign connected to the launch of two low grammages of the flagship cartonboard product Crownboard Prestige. With this addition, the Crownboard Prestige range comprises ten grammages. It is developed to meet the needs of discerning brands for packaging premium consumer goods.
Michalski concludes, “Our current business priorities remain the same: health and safety, stable production, the ramp-up of Gruvön, a competitive wood supply as well as delivering our cost and efficiency program. Good performance in these areas will bring profitable growth over the next few years.
“At the same time, we are reviewing the company’s longer-term strategic direction. The markets in which we operate, particularly primary fiber carton and containerboard, are indicating strong growth opportunities for the foreseeable future. We are starting to investigate additional supply capacity post-2024 assuming full capacity utilization by then.”