Encouraging start of the year with stronger profitability and cash generation
Key highlights
• Excellent earnings and higher volumes in Region North America
• Strengthened profitability in Region Europe
• Improved cash flow
• First sale of US-produced containerboard
Quarterly data
• Net sales increased by 7% to SEK 11,101 million (10,423)
• Adjusted EBITDA* SEK 1,388 million (1,166)
• Adjusted EBITDA margin* 13% (11)
• Operating profit SEK 638 million (448)
• Net profit SEK 415 million (313)
• Earnings per share SEK 1.67 (1.26)
Outlook for Q2
• Continued solid market sentiment in North America and well positioned for tariffs
• Normal market conditions for most products in Europe
• Higher sales prices and lower input costs
• Extensive maintenance schedule
Comments by the CEO
Quarter one was a solid quarter for Billerud and an encouraging start of the year. Despite significant FX headwind, primarily driven by the strengthening of SEK versus the USD, we delivered strong profitability growth in both regions and improved cash flow compared to last year. The financial performance in the quarter was in line with our own expectations.
Region North America continues to deliver outstanding results. Capacity utilization at the mills has increased, and sales volumes reached their highest quarterly level in more than two years, leading to an impressive EBITDA margin of 21%. A significant milestone on our Evolve journey towards packaging materials was reached at the beginning of the year, as we produced and sold our first white kraftliner from our Quinnesec mill under the brand Tribute®. This was an important step in our journey towards locally produced packaging materials in North America. We are now actively engaged in sales dialogues and product trials with numerous packaging manufacturers and new customers. We are also progressing as per plan on our evolution investment program that will further enable large-scale paperboard production in the future.
Region Europe also had a good start of the year, with a considerable uplift in profitability versus last year. Improved pricing and sales mix supported the earnings and more than offset input cost inflation. We have also seen broad-based progress on our mill efficiency program and continued our cost discipline, which is encouraging and fully in line with our ambition to strengthen the financial performance of the existing asset base in the region.
For the second quarter, we expect the market sentiment in North America to remain solid, while more normalized conditions in Europe. We have solid order books for most of our categories until the summer. Implemented sales price increases will have a positive impact, while we expect lower input costs in the wake of lower seasonal energy costs. As usual, the second quarter is a heavy maintenance period.
The market outlook has become more uncertain due to recent macroeconomic development and escalation of trade tariffs. With regards to US import tariffs and continued trade wars, it’s too early to assess any financial impact. However, Billerud is very well positioned within our industry. We have local production in the US with available production capacity, and we are well placed in the attractive Midwest region to serve new customers with a high service level and a reliable and predictable supply chain. For Region Europe, our export volumes to the US are about 2% of total, meaning the direct financial implication should be limited. It is more difficult to assess the indirect effects of changes to trade flows, competitive landscape and consumer demand. We will continue to monitor the situation and take swift actions to adjust if needed. As we mentioned in our Q4 report, we believe we have passed the bottom of the curve in Europe, but given the latest global uncertainty, we expect the market recovery to take somewhat longer.
Our sustainability performance stands as a testament to our environmental commitment. The European production is 98% fossil free due to deliberate and thorough efforts over many years to reduce our CO2 footprint. Unfortunately, this means that 2025 will be the last year we receive free emission rights as our European mills have lower fossil emissions than the new threshold of the EU’s Emissions Trading System (ETS). Hence, we will also be subject to carbon dioxide tax for our fossil emissions from 2026. The recent ETS reform therefore punishes Billerud and other companies in the forefront of the energy transition and sends the wrong signal towards companies not similarly dedicated to reducing their climate impact.
2025 is the first year in delivering our Way Forward strategy including revised financial targets. We remain committed to graphic and label business in North America, while we evolve towards packaging materials. We aim to fuel the momentum from Q1 where we have established our first positions of locally produced containerboard. In Region Europe, our clear intent is to strengthen our performance of the existing asset base. Focus is first and foremost on improving operational efficiency and cost competitiveness, and we are encouraged to see the results so far in 2025. We are well positioned as a leader in high performance packaging materials, and we continue to focus on items we can control and drive value over volume.
Ivar Vatne
President and CEO
Source: Billerud
