Billerud sells Managed Packaging, sharpens business focus; lower deliveries put results under pressure


Swedish packaging material producer Billerud announced to sell its subsidiary Managed Packaging and also divested its stake in Norwegian digitalisation company Kezzler.

The company said Managed Packaging, a provider of packaging solutions to global brand owners, had contributed to the company with its expertise in manufacturing paper and board packaging, but was not part of Billerud's core business of packaging materials. It is on these that the company intends to concentrate in the coming years, explained President and CEO Christoph Michalski at the publication of the half-year results. He announced that Billerud was currently investigating possibilities to sell other non-core assets.

Managed Packaging will be acquired by Swedish investment company Mimir Group, and the transaction is expected to be completed in August this year. Billerud expects financial benefits of SEK20m from the sale, but with no impact on EBITDA and net debt. Managed Packaging had revenues of SEK700m in 2022 and was included in Billerud's Solutions & Other segment. Billerud had acquired a 30 per cent stake in the company in 2011 and the remaining 70 per cent in 2013.

The results of Billerud for the second quarter and for the first half of the year were significantly lower than in the previous year, as already announced recently in a profit warning, and partly slid into the red. The second quarter of 2023 was challenging, with sales volumes at an all-time low and currency-adjusted net sales down 18 per cent year-on-year, Michalski said when presenting the figures. The biggest drop in sales was in North America, he said, due to continued destocking and related production cuts. This, combined with historically high fibre costs in Europe, had led to a weak result. The North America region, on the other hand, achieved a comparatively healthy margin thanks to cost leadership and control, despite a capacity utilisation of only 50-60 per cent.

Billerud reported Ebitda of SEK188m (2022: SEK2,267m), operating profit of SEK-496m (SEK1,609m) and profit after tax of SEK-481m (SEK1,419m) for the second quarter of 2023. Quarterly sales fell to SEK9.95m (SEK11.41bn).

Following the blastomycosis outbreak at the Escanaba plant in the US and a three-week shutdown, operations resumed on 8 May. Billerud estimates the negative financial impact of the shutdown and clean-up at SEK85m.

Construction and installation of the new recovery boiler in Frövi is in the final stages. The new recovery boiler is scheduled to start up in September, earlier than planned and with slightly lower investment costs. The fossil-free recovery boiler is expected to provide higher energy efficiency, better environmental performance and increased pulp production.

Billerud reports good progress on its extensive and important programme to convert one of its US mills to board production. The programme includes the installation of a board machine, a new expanded woodyard and a BCTMP facility, as well as extensive upgrades to existing infrastructure. The importance of the project requires more time to achieve the necessary project planning quality before ordering the equipment, the company explains. Billerud expects this to be achieved by the end of the year, together with an optimised CAPEX phase and including the BCTMP project in Norway together with Viken Skog.

For the third quarter of 2023, Billerud expects continued low demand for all products except liquid packaging board, where demand is stable. The company intends to further adjust its production to demand. Stable prices are expected, while the product mix will have a negative impact. The company expects input costs to decrease, although fibre costs in Europe remain high.          

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