The second quarter was challenging with all-time low sales volumes and with currency-neutral net sales declining by 18% compared to the same period last year. The largest sales decline was in North America due to the continued inventory destocking resulting in production curtailments. This, in combination with historically high fiber costs in Europe led to a weak result.
By all indications, the blastomycosis outbreak at the Escanaba mill is behind us. Following a three-week idling and deep cleaning of the facilities, operations were successfully resumed on the 8th of May. We continue to work closely with local, state and federal health experts as they complete their analysis of the testing and sample collection at the mill. Results will be made publicly available in due course. The negative financial impact of the outage and the deep clean was SEK 85 million in the quarter.
From the 1st of April, our financial results are reported according to a regional structure. Business conditions differ vastly between Europe and North America, even if the current situation of high inventories and destocking applies to both regions. Region Europe’s profitability deterioration in the second quarter was primarily due to all-time-high fiber cost and soft volumes. Region North America on the other hand delivered a comparatively healthy margin, despite an operating rate of 50-60%, thanks to our cost-leadership and tight cost control.
For the third quarter, we expect continued low demand for all products except for liquid packaging board where demand is stable. We will continue to adapt our production to demand. Our prices are expected to be more stable, while mix will have a negative impact. Input costs are expected to decline, although fiber cost in Europe remains high.
Our efficiency improvement program remains a top priority. We have raised our 2023 ambition to SEK 600 million with accelerated delivery in the second half year. Examples of initiatives are increased share of field wood purchases and engagement with suppliers to jointly identify efforts to reduce variable costs and optimize consumption rates of high-cost chemicals.
details at: https://www.billerud.com/press–news/press-releases/2023/interim-report-januaryjune-2023