Billerud Interim Report – January-September 2022

Another quarter with excellent growth, profitability and cash flow delivery

Key highlights Q3
Strong organic* and currency neutral sales growth of 20%
Record underlying EBITDA performance
Price and mix management more than offset cost inflation
Excellent cash delivery and all-time low leverage

Quarterly data Q3
Net sales increased by 82% to SEK 11,814 million (6,494), whereof Billerud North America accounted for SEK 3,718 million
Adjusted EBITDA** increased to SEK 2,196 million (1,117), whereof Billerud North America accounted for SEK 515 million
The adjusted EBITDA margin was 19% (17%)
Operating profit was SEK 1,536 million (639)
Net profit was SEK 1,347 million (477)
Earnings per share amounted to SEK 5.42 (2.31)

Comments by the CEO
2022 has been an excellent year so far for Billerud, and our third quarter performance was no exception. We delivered strong results for all our key performance indicators. Organic and currency neutral sales grew by 20% compared to last year, with broad-based growth across categories. Reported net sales grew by 82% compared to last year with the inclusion of the acquired North American business and currency tailwind.

Considering that the third quarter was unusually heavy on maintenance, the underlying EBITDA was all time high. We were able to more than offset higher costs in all input categories through continued focus on price management, driving profitable mix and continued delivery of our cost and efficiency program. Despite maintenance and upgrade shutdowns at four mills in the quarter, we delivered an EBITDA margin of 19%. The cash flow generation was outstanding, and our leverage has been reduced to an all-time low net debt to EBITDA ratio of 0.7.

Our North American business is contributing significantly to both earnings and cash flow. A more balanced cost exposure following the acquisition of Verso makes us well positioned to meet more challenging market conditions. With continued North American contribution at current level, the acquisition payback period will be shorter than originally expected.

Our order book remains healthy and prices for deliveries in the end of the year are holding up. We start to see signs of a more gradual change towards normalized market conditions. There are signs of softening demand for some of our kraft and sack papers and some containerboard products, which is a natural effect of the lower consumer confidence in Europe. The demand for most of our products will however be robust even during recessionary conditions, with a proven resilience especially for liquid packaging board. For our graphic and speciality paper, prices are expected to be supported by capacity reductions in the industry.

Inflation phases and cost trends differ between Europe and North America. In Europe, pulpwood prices have increased significantly, mainly driven by lower availability of hardwood since the import stop from Russia. The volatile and high energy prices in Europe drive higher costs for chemicals, while logistics costs are expected to flatten out or decline. In North America, the cost inflation for pulpwood and other inputs is moderate and mainly driven by fuel and general price increases.
more at:–news/press-releases/2022/interim-report-januaryseptember-2022

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