Quarterly financials hampered by production problems

CEO Per Lindberg comments on the development during Q4 2015:

“In spite of a strong full-year performance, the isolated result for the fourth
quarter is a disappointment. We have had a tough quarter with lost volumes and
extra costs, but several of our production units have set new production
records, and we have grown in accordance with our targets in business area
Consumer board. The overall business situation is satisfactory with stable
demand and pricing, and the drop in the Q4 results are due to internal factors
only.”
THE RESULT

The operating profit for the quarter was SEK 320 million, burdened with
approximately SEK 245 million in unplanned extra costs. The extra costs have
occurred during rebuilds and cost overruns in maintenance in our mills. We have
run into technical problems that have taken longer than planned to fix and
caused major cost overruns and loss of volumes, and on top of that a flooding in
Beetham. Total extra cost for rebuilds and rebuild related production volume
losses is approximately SEK 150 million, and cost increases for maintenance an
additional SEK 95 million. We are not at all happy with our fourth quarter
performance and we have to learn from this. Hence, we have decided to postpone
the final phase of the build-out of the board machine in Frövi that was planned
for 2016. Capacity is already built to run 525 ktonnes in 2018. This will make
the investment level in 2016 approximately SEK 1 300 million excluding future
restructuring projects in Gruvön and Skärblacka.

MARKET OUTLOOK

The overall market has been stable and we expect this to continue with normal
demand patterns and small variations in local pricing.

For business area Packaging Paper the markets remained stable with seasonal
variance during the fourth quarter. As anticipated we saw a lower than normal
brown sack paper market. Prices in local currency were stable compared to
previous quarter with slight deterioration in brown sack paper. We have not run
our production at full capacity during the quarter and we have chosen to produce
pulp instead of paper in some units.

In spite of the production problems during the quarter and the associated tight
delivery situation in Consumer Board the business area has managed to deliver a
6% volume growth year over year.

Business area Containerboard shows a solid strong performance. Fluting demand
continued to be strong with improved prices. The liner segment also showed a
stable demand and pricing.

STRATEGY

A key part of our strategy is innovation. Since 2013, we have five-folded the
number of development projects, we have increased our investments in R&D with
180% and doubled the R&D headcount. We will continue this expansion of
innovation capability in 2016. We believe that these efforts and projects will
be crucial elements to strengthen our product portfolio even further and thereby
contribute substantially to our profitable growth.

Our innovation efforts are not only directed towards better and unique materials
but also towards expanding new service and business models. One example is the
complete incorporation of the “Managed Packaging” business model from Paccess
into Containerboard during 2016. This means that we can fully utilize the
business model of managed packaging and grow the solution based side of our
business, and as a consequence we rename Containerboard to Corrugated Solutions.
Other examples of new business models taking off are the two complete packaging
systems from FibreForm Packaging and the three Axello Zap systems sold during
last year.

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

The information is such that BillerudKorsnäs AB (publ) is obligated to publish
under the Swedish Securities Market Act. Submitted for publication at 07.02 CET,
10 February 2016.
BillerudKorsnäs provides packaging materials and solutions that challenge
conventional packaging for a sustainable future. We are a world-leading provider
of primary fibre based packaging materials and have customers in over 100
countries. The company has 8 production sites in Sweden, Finland and the UK and
about 4 300 employees in over 13 countries. BillerudKorsnäs has an annual
turnover of about SEK 21 billion and is listed on Nasdaq Stockholm.
www.billerudkorsnas.com