Ivar Vatne, CEO and President of Billerurd, describes the past 2023 financial year as an extremely challenging one. The company had to deal with unusually high stock levels throughout the value chain at the beginning, and patience was required until the stock reduction was complete. Sales volumes were somewhat weaker until the fourth quarter, but the good news is that there are now clear signs at the beginning of 2024 that customers' inventories have returned to more normal levels, he says in his comments on the 2023 financials year.
Billerud's annual results fell significantly compared to the previous year, with negative Ebitda and operating profit in the final quarter. The lower result was due to higher raw material costs and lower net sales, which were only partially offset by the positive impact of the efficiency improvement programme and the lower negative impact of planned maintenance work, the company explains.
The comparability of sales is affected by the acquisition of Verso at the end of March 2022 and the sale of the packaging company Managed Packaging in August last year. Verso generated sales of SEK3.31bn in the first quarter of 2023. Managed Packaging recorded sales of SEK233m from September to December 2022. Excluding currency effects, the acquisition of Verso and the sale of Managed Packaging, Billerud's annual sales fell by 7 per cent in 2023, mainly due to lower sales volumes, lower sales prices and a less favourable product mix.
In Europe, market conditions stagnated at a low level for all products in the fourth quarter of 2023, explains Billerud. One exception here is the market segment for liquid packaging board, where market conditions are said to be normal. Prices for sack kraft paper, kraft paper, corrugated case material and cartonboard fell in the fourth quarter, while they remained unchanged for liquid packaging board and rose for pulp. Input costs were lower than in the previous quarter.
In North America, Billerud saw stable markets at a low level in the fourth quarter of 2023. The destocking there has largely come to an end. Prices for graphic paper were largely maintained, but specialty paper prices fell. Pulp prices rose.
In 2024, Billerud expects sales volumes in its markets to grow again following the end of the long destocking period, but also recognises the potential negative impact of geopolitical and macroeconomic uncertainties. The company will therefore concentrate on what is in its own hands and focus on greater efficiency and strategic investment opportunities. There are now generally higher input costs in Europe and we need to be prepared for this, the company says. Billerud remains convinced of the opportunities of converting some of its paper assets in the US to the production of board, but emphasises the importance of strong shareholder value. The scope and timing of the project will continue to be discussed in close dialogue with suppliers, the company explains. Meanwhile, Billerud wants to strengthen its position in the cartonboard market in North America by exporting from Europe. The company's rationalisation programme is to be continued, the plan is to reduce the workforce by a total of 350 employees, and the programme is expected to increase Ebitda by an additional SEK700m by the end of 2024.