Continued outstanding performance in the US while navigating weakening market in Europe

Key highlights

·    Flat currency-neutral net sales development

·    EBITDA margin of 22% in North America, highest since Q4 2022

·    Challenging earnings in Europe due to weakening demand

·    Excellent cash conversion

·    Evolution program in North America exceeding expectations

Quarterly data

·    Net sales decreased by 5% to SEK 10,244 million (10,764)

·    Adjusted EBITDA* SEK 912 million (1,003)

·    Adjusted EBITDA margin* 9% (9)

·    Operating profit SEK 188 million (171)

·    Net profit SEK 55 million (63)

·    Earnings per share SEK 0.22 (0.25)

Outlook for Q3

·    Continued solid conditions in Region North America

·    Weak conditions in Region Europe

·    Stable input costs

Comments by the CEO

The financial performance in the second quarter was mixed across our two regions. Yet again, our Region North America delivered outstanding results across all financial KPIs. However, outcome in Region Europe was challenging, fighting soft market conditions in most categories.

Currency-neutral net sales in Region North America grew by 5% versus the same period last year, and the production capacity utilization rate in our US mills continued to improve. We have reached a solid operating rate of 76%. Our mills in upper Michigan are well placed with proximity to a large customer base and continue to excel by being the local partner which can offer quality, speed, reliability and predictability. Our North American region delivered another outstanding quarter with an EBITDA margin of 22%, our best result since Q4 2022. Profitability was mainly strengthened by continued volume growth and price increase on coated freesheet paper reels, which represent 60% of our graphic paper sales. 

Uncertainty continued to impact market conditions for our Region Europe in the second quarter. The currency-neutral net sales declined by 3% versus last year. The geopolitical and macroeconomic situation have caused consumers to hold back on spending. Also, the new reality around import tariffs have started to impact trade flows, causing an escalation of the already oversupplied fiber-based packaging materials market in Europe. For our largest product category, liquid packaging board, we continued to meet fierce competition and weak demand in Asia. The second quarter is the heaviest maintenance period for Region Europe and impacted earnings by around SEK 380 million. The region's quarterly EBITDA margin was 5% (excluding maintenance impact: 11%).

In this challenging operating environment, our philosophy is simple: We continue to relentlessly focus on items we can control. As we had expected, the efforts to reduce working capital are paying off. Swiftly adjusting our production schedule to market reality and manage inventories carefully. Our cash conversion in the second quarter was excellent, coming in at 131%. Cash generation is one of our top company priorities, and I am encouraged to see a more than doubled operating cash delivery in the first half of 2025 versus a year ago. In the second quarter we also maintained fixed cost discipline, and so far in 2025 we have managed to offset a significant part of inflation through efficiencies.   

The progress of program Evolution in North America, shifting our product portfolio towards packaging materials, is exceeding our expectations. Although it is still early days, we are experiencing strong customer support and we have numerous trials for both our bleached liner Tribute® and low-grammage cartonboard Voyager®. Being a local, reliable partner that can offer US-made products with speed has accelerated customer interest. We are well on track to exceed our initial target of commercializing 15 ktons US paperboard for 2025. Our upgrade of the Escanaba mill, to enable even further acceleration towards paperboard production, is progressing as per plan.

For the third quarter we expect stable market conditions for North America. For Region Europe, uncertainty remains high in the wake of the geopolitical turmoil. We do not foresee a fast recovery in Europe in the coming quarter, based on the current weak trading environment. After a long period of increasing wood prices in the Nordics, we have seen the first price reductions in the market. The impact for the third quarter is limited, but it is a clear trend shift in terms of inflation for our biggest input cost component.

Billerud is a leader in high performance packaging materials, with a strong financial position and low investment needs. We are well positioned in terms of product categories and geographies to evolve our business and to further strengthen our financial performance. Our focus remains on a few and selective priorities that all are in our control. By delivering on our Way Forward strategy, we will make Billerud stronger and more resilient to navigate future challenges and successfully capture opportunities to win versus competition.

Ivar Vatne
President and CEO

Second quarter

Sales and results

Net sales for the second quarter declined by 5% to SEK 10,244 million (10,764), negatively impacted by currency changes. The currency-neutral net sales development compared with the same period last year was almost unchanged, positively affected by higher sales prices and negatively affected by lower sales volumes. Sales volumes totaled 863 ktons (895). Production was curtailed as an adjustment to the demand in both regions.

Adjusted EBITDA amounted to SEK 912 million (1,003), corresponding to a margin of 9% (9). Price increases and lower costs for maintenance shutdowns did not compensate for higher input costs, primarily related to pulpwood in the Nordics, lower volumes and a negative change in inventory revaluation. Compared to the second quarter last year, the results in Region North America and in the business segment Other improved, while the result in Region Europe deteriorated.

Annual maintenance shutdowns were carried out in Gruvön, Skärblacka and Rockhammar in the second quarter of 2025 with a total cost impact of around SEK 380 million. During the second quarter of 2024, the cost impact of maintenance shutdowns at the mills Gruvön, Skärblacka, Pietarsaari and Quinnesec was SEK 515 million. 

The net result from emission rights had a positive impact of SEK 120 million in the second quarter of 2025 (114). Billerud is not expected to receive any emission rights from 2026 and onwards.

No items classified as affecting comparability impacted the result in the second quarter (-119). The items affecting comparability in the second quarter of 2024 were related to costs for the US transformation program of SEK 189 million, and a positive result of SEK 70 million from the sale of Wisconsin Water Quality Center (WQC) assets.    
 

Market development and outlook

In the second quarter of 2025, the market conditions for Billerud's sack and kraft papers and liquid packaging board in Europe were at normalized levels. The demand for liquid packaging board in Asia, however, remained weak. The market conditions for cartonboard and containerboard in Europe weakened during the second quarter, with subdued demand due to tariff uncertainties in combination with oversupply. The market sentiment for graphic and specialty paper in North America was solid. Billerud partially implemented price increases within graphic paper, sack and kraft paper, and containerboard during the second quarter.

For the third quarter, Billerud expects weak market conditions for most materials produced in Region Europe, given a continued soft packaging demand due to geopolitical and macroeconomic uncertainties. Market conditions for Billerud's graphic and specialty paper in North America are expected to continue to be solid, but prices for market pulp will decrease. Billerud expects to have seasonally lower fixed costs in the third quarter, but with continued high maintenance cost impact. Input costs are expected to remain stable.
 

Events in the quarter

On 1 May 2025, Jaakko Nikkilä assumed the role of President of Billerud Europe. Jaakko Nikkilä has extensive experience in international sales and production of fiber-based packaging materials and recently served as Executive Vice President in UPM. 

Billerud's 2025 Annual General Meeting (AGM) elected Gunilla Saltin as a new board member and re-elected Jan Svensson, Victoria Van Camp, Florian Heiserer, Magnus Nicolin, Andreas Blaschke and Regi Aalstad as board members. Jan Svensson was elected board chairman. The AGM further resolved in accordance with the board's dividend proposal. Meeting minutes can be found on Billerud's webpage. 

On 13 June, the Norwegian Environmental Agency announced that they are maintaining their rejection of the environmental permit for Billerud Viken AS to produce BCTMP in Follum, Norway
 

Events after the quarter

Ulrika Wedberg, Executive Vice President Sustainability & Public Affairs, will leave Billerud on 30 September. She will be succeeded by Sofia Hedevåg, who will assume this role on 1 December 2025 and who presently holds the position as Senior Vice President Sustainability and member of the Group Management in Gränges.

* For key figures and a reconciliation of alternative performance measures including adjusted EBITDA, adjusted operating profit, adjusted EBITDA margin, adjusted operating profit margin, adjusted ROCE and interest-bearing net debt/adjusted EBITDA, see pages 14-16.

For further information:

Andrei Krés, CFO, +46 8 553 335 72
Lena Schattauer, Director Investor Relations, +46 8 553 335 10
ir@billerud.com

This information constituted inside information prior to publication. This is information that Billerud AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 07.00 CEST on 18 July 2025.