Billerud's HY1 profits down on lower sales prices
Billerud reports a 50% year-on-year decline in profits in the first half of 2012. Price hikes for sack and kraft papers announced in Q2 are not yet reflected in the earnings.
Despite a successful business expansion and a positive quarter-on-quarter growth in the second quarter of the year, Billerud's business results for the first half of 2012 showed a significant drop in profits when compared with the same period of 2011. Operating profit fell by 50% year-on-year to SEK303m. Net profit for the period stood at SEK215m, showing a 50% drop against the first half of 2011. Net sales in the first half of 2012 was SEK4,731m, 4% less than in the corresponding period last year. The company blamed the year-on-year drop in net sales and profits on lower sales prices. On the other side, higher sales volumes and lower variable costs had a positive impact on operating profit in the first half of 2012.
Billerud attributed the 4% increase in total sales volumes mainly to the acquisition of UPM's packaging paper operations in Pietarsaari and Tervasaari. In addition, no maintenance shutdown was undertaken in the first six months of 2012, unlike in the first half of 2011, the company said. Packaging and specialty paper sales volumes saw a 7% increase in HY1 to 296,000 t. Sales volumes in the market pulp segment rose by 8.5% to 178,000 t.
"The first half-year of 2012 will go to history as the period in which we successfully concluded negotiations on two major strategic acquisitions," said Per Lindberg, CEO of Billerud, in a comment on HY1 business results. In January, Billerud acquired UPM's packaging paper operations and consolidated the business acquired as of 1 June. Furthermore, Billerud announced in June its intention to combine business with Korsnäs, acquiring Korsnäs shares from Kinnevik in exchange for cash and shares in Billerud.
As regards business development in the second half of 2012, Billerud expected price hikes for sack and kraft paper announced back in the second quarter to be reflected in HY2 earnings. At the beginning of the third quarter the order situation in the packaging paper segments was on average normal and was anticipated to remain stable over the quarter, Billerud said.
Effective 1 July, Billerud's Market Pulp business segment will not be reported independently anymore but will be included in the Packaging and Specialty Paper business area.
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