Billerud: Year-end report January–December 2024
Comments by Ivar Vatne, President and CEO
“We delivered robust financial performance in the fourth quarter and ended 2024 on a good note. During the fourth quarter, we recorded outstanding net sales growth of +20% driven by better-than-expected volume growth, enabling a solid adjusted EBITDA margin of 13%, up 5% pts vs year ago. Once again, our North American region recorded impressive results with 17% net sales growth and 19% EBITDA margin. I am also satisfied with our result in Region Europe which, despite softer market conditions, managed to grow the topline by 16% and achieve an EBITDA margin of 12%.
2024 was characterized by challenging and rapidly changing market conditions. It was nevertheless a year with significantly improved financial performance versus 2023. Our proactive actions, discipline and flexible approach with strong focus on items we can control have served us well. Our net sales grew by 5% through volume growth, mix and price management. We successfully limited the fixed cost increase below inflation and delivered another sizable contribution to the efficiency enhancement program. This means that we reached the program target of SEK 1.5 billion well ahead of schedule. The cash conversion in the fourth quarter of 95% was strong. Our healthy operating cash flow and strong balance sheet will support necessary mill maintenance, selective value-creating strategic investments as well as dividends to our shareholders. The Board of Directors proposes a dividend of SEK 3.50, which is an increase of 75% versus last year and in line with our dividend policy.
At the Capital Markets Day in December, we shared the new strategic framework for Billerud. Going forward, we will be more predictable in terms of our strategic choices. Our new vision, “We make high performance packaging materials for a low carbon society”, sets the strategic direction. The safety of our people remains the number one priority. Our current safety performance is unsatisfactory, and we need to improve. To successfully deliver on our strategy, we will amplify the focus on value creation, prioritize profitability over growth and promote a stronger performance culture. Our new long-term financial targets emphasize the importance of capital efficiency, profitability and cash generation.
We continue to be impressed with our North American operations that consistently deliver outstanding results. We are well positioned with local production in the attractive Midwest region and remain committed to specialty and graphic paper. However, as the latter is in secular decline, we need to improve our capacity utilization. Hence, we will evolve towards packaging materials, benefitting on market opportunities, our attractive location and cost-competitive asset base. We will invest a total of SEK 1.4 billion, whereof most in Escanaba and during 2025, to enable this transition towards paperboard production. Our sales and marketing efforts have already started, with numerous promising customer trials ongoing for our US produced containerboard Tribute® and cartonboard Voyager®.
In the European operations, the focus will be to strengthen performance through the existing asset base. We have clarified the roles for each product category to match market opportunities, our commercial / manufacturing capabilities and flexible production footprint. Securing cost competitive wood supply and improving mill efficiency will be instrumental enablers to succeed. Going forward, the investments beyond normal maintenance will be limited.
Sustainability is embedded in everything we do, contributing towards a low-carbon future. We are committed to Science Based Targets and have a clear transition plan for CO2e emission reductions until 2030. In Europe, we are already an industry leader in terms of carbon footprint derived from production, so for the next five years the greatest positive climate impact will be in the North American region.
As we enter 2025, geopolitical and macroeconomic uncertainty remains high. In Region Europe, we seem to have passed the bottom of the curve and are starting to see early signs of improved market sentiment in many of our product categories. Market conditions in North America remain solid and in line with a well performing US economy. With the import tariffs that the new presidential administration in the US has introduced, Billerud is well positioned and will likely increase its local capacity utilization and sales volumes within North America.
Although the pulp and paper markets have been challenging over the past years, Billerud is in a strong position to evolve and strengthen. Long-term, we are a firm believer in fiber-based packaging to replace fossil-based materials. Billerud has attractive positions in core markets due to our superior product performance and manufacturing expertise. We are at our best when we work with customers and applications requiring lighter, stronger and more sustainable materials. With our updated strategy, modest investment level and strong balance sheet we have a solid foundation. We now look forward to continuing to execute and deliver our strategy.”
Key highlights
• Net sales growth of 20%, supported by both regions
• Continued excellent profit delivery in North America
• Improved profitability in Europe
• Cash conversion of 95% and further strengthened financial position
• The Board of Directors proposes a dividend of SEK 3.50 per share (2.00)
Quarterly data
• Net sales increased by 20% to SEK 11,468 million (9,566)
• Adjusted EBITDA* SEK 1,443 million (774)
• Adjusted EBITDA margin 13% (8)
• Operating profit SEK 1,091 million (-191) including items affecting comparability of SEK 373 million (-244)
• Net profit SEK 806 million (-330)
• Earnings per share SEK 3.24 (-1.33)
Outlook for Q1
• Solid market conditions for Region North America
• Normal conditions for Region Europe except for cartonboard and coated liner that will remain weak
• Pricing continues to offset input cost increase
• Temporarily lower sales volumes in Region Europe
