Best quarterly performance ever


CEO Per Lindberg comments on the development during Q1 2015:

“We are proud to report our best quarter so far in our short history as
BillerudKorsnäs. Our operating profit in the quarter reached a level of SEK 698
million and the operating margin was over 12%.”

THE RESULT

The financial performance for the first quarter this year was very strong. On
top of a very strong operating result, our operating cash flow was excellent,
SEK 733 million, and we have further improved our net debt/equity ratio which is
now down to 0.57. Return on capital employed is improving and closing in on our
13% target, but still rounded to 11% and hence we are above all our financial
targets except ROCE. Of course, no planned maintenance shutdowns and a weakened
SEK had a significant positive impact on the quarter, but I am still very
pleased. The one area where we in Q1 fall a little short is volume growth as
compared to last year. But keeping in mind that the beginning of last year was
exceptional and that production and delivery volume ramp-up rarely is linear, I
am still confident in our ability to reach our longer-term growth targets.

MARKET OUTLOOK

The overall market has been stable during the quarter. We expect the stability
to continue with quite good demand and little changes in local prices. The pulp
price in USD seems to have peaked, but the relative strength of the USD versus
other currencies have compensated for the USD nominated price fall.

The relatively high pulp price contributes both to stability and to our own
profitability. However, the high pulp cost pressures unintegrated production
capacity in the Euro-zone and Sweden. We also see some competitors being forced
to take action due to profit squeeze. Meanwhile, and on the balance, we now have
a slightly more positive market outlook for our business areas Packaging Paper
and Containerboard than we previously expected, whereas the Consumer Board
market continues to be stable.

Looking in further detail we can see that within the MF segment in Packaging
Paper increased competition pressures local prices and we have not been able to
utilise our full capacity during the quarter. This was expected and will most
likely continue. On the other hand, the brown sack paper segment shows strength
and is trending more positively than expected. Within Containerboard, the
fluting segment is currently very strong, with strong order books and we may be
looking at price hikes during Q2. In the liner segment competition continues to
increase with increased capacity on the market. Even if prices have been kept
quite stable during the quarter, white liner continues to be somewhat of a
concern.

STRATEGY

I feel that we have prepared the company well both financially and operationally
to be ready to take an additional step towards becoming the leading player in
the primary fibre packaging market. Our mid-term strategic target is to grow the
company organically with 3-4% per year until 2018. This requires debottleneck
investments, and several decisions have already been made and I expect more to
come. Looking beyond mere organic growth, we have by now strengthened our
balance sheet enough to also consider additional growth by acquisitions or
significant investments. However, shareholder value will not be compromised and
any such step will be subject to utmost scrutiny.

Our mission is to challenge conventional packaging for a sustainable future. In
order to emphasize the importance of sustainability we are partnering with the
Tara expedition. We share the vision of a future where plastics floating in the
oceans are a memory only, and what brings us together is that we constantly seek
new answers to sustainability challenges. We want to be active in driving the
development towards a more sustainable future, and several lessons from this
cooperation will be fed into our own product development.
For further information, please contact:
Per Lindberg, President and CEO 46 (0)8 553 335 00
Susanne Lithander, CFO, 46 (0)8 553 335 00
BillerudKorsnäs – Packaging manufacturers and brand owners are offered added
value in the form of brand-strengthening, productivity-boosting and environment
-enhancing packaging solutions. BillerudKorsnäs has a world-leading market
position within primary fibre-based packaging paper. The company has annual
sales of around SEK 21billion and is listed on Nasdaq Stockholm.
www.billerudkorsnas.com

Attachments

04218006.pdf