BillerudKorsnäs widens Q3 operating profit to 303M Swedish kronor from 161M kronor in year-ago period, with about 80M kronor of integration synergies realized during quarter; net sales up 79% year-over-year, to 4.72B kronor

Debra Garcia

Debra Garcia

Oct 30, 2013 – BillerudKorsnas AB

SOLNA, Sweden , October 30, 2013 (press release) – Third quarter 2013

  • Net sales amounted to SEK 4 715 million, down 5% compared to the previous quarter. The decrease was due to lower sales volumes primarily caused by the planned maintenance shutdowns.
  • Adjusted operating profit reached SEK 331 million. The increase of SEK 13 million from the previous quarter was mainly attributable to lower fixed costs.
  • Operating profits are negatively impacted by the maintenance shutdowns in the production with approximately SEK 209 million.
  • Integration and realisation of synergies are progressing well and accumulated synergies of approximately SEK 200 million have been realised, whereof approximately SEK 80 million relate to the third quarter.
January-September 2013 compared with the same period in 2012
  • The increase in both net sales and adjusted operating profit was due to the acquisition of the two paper machines in Finland in June 2012 and the combination with Korsnäs in November 2012. Today, BillerudKorsnäs has a stronger platform for future growth on the attractive and expanding packaging market.

  • The target of approximately SEK 530 million in annual synergies and savings is expected to be reached already in 2014.
  • Demand in business areas Consumer Board and Containerboard is expected to remain stable during the fourth quarter. Business area Packaging Paper expects a normal market situation during the fourth quarter, except for sack paper where demand is expected to be lower than normal and production will not run at full capacity.
  • Prices in local currency are anticipated to stay on current level for the next quarter.
  • Wood prices are expected to stay on current level for the coming quarter and first half of 2014.
  • The maintenance shutdown in Skärblacka will impact the fourth quarter negatively as part of the shutdown occurred in October and the start-up was a few days delayed.

Comments by BillerudKorsnäs’ CEO Per Lindberg:
On track to reach synergy targets ahead of plan
“Third quarter’s results show a stable performance. Our adjusted operating profit reached SEK 331 million corresponding to an adjusted operating margin of 7% which, taking the negative impact from the planned maintenance shutdowns into consideration is satisfactory.

The quarter has been very eventful in our production units with two planned maintenance shutdowns in Karlsborg and Skärblacka. After some delay in Skärblacka in connection with the major rebuild, all machines are now up and running again and performing as planned.

During the quarter, we have agreed on new long-term contracts with all major customers for liquid packaging board, which will contribute to long-term stability of demand. In general, however, the European market currently continues sideways, without strong signs of improvement. We therefore strengthen our efforts to increase sales outside Europe in markets with more healthy demand and we re-allocate resources from Europe to these areas.

The Board of Directors have approved an investment in one of the board machines in Gävle amounting to approximately SEK 220 million. The purpose of the investment is to increase machine capacity with approximately 10% to support further growth within the attractive liquid packaging board market. The investment will also improve both cost efficiency and product quality and the rebuild will take place during the planned maintenance shutdown next year.

During the quarter the remaining 70% of the shares in PACCESS Packaging LLC in the US were acquired. This is strengthening BillerudKorsnäs’ position to bring smarter packaging solutions to brand owners and is a further step in challenging conventional packaging.

The integration efforts are progressing relentlessly and I am pleased to end on the note that we now have realised synergies corresponding to an annual pace of approximately SEK 300 million. The synergy targets are expected to be reached approximately a year ahead of plan during 2014.

Finally, I just want to remind you of our Capital Markets Day on 14 November 2013, in Stockholm. I hope to meet many of you there.”

BillerudKorsnäs’ President and CEO Per Lindberg and CFO Susanne Lithander will present the interim report at a press and analyst conference at 10.00 CET on Wednesday 30 October 2013.
Venue: Tändstickspalatset, Västra Trädgårdsgatan 15, Stockholm, Sweden.

Click here for full financial report.

Industry Intelligence editor's note: In an omitted table, BillerudKorsnäs reported third-quarter 2013 operating profit of 303 million Swedish kronor and net sales of 4.715 billion kronor, compared with third-quarter 2012 operating profit of 161 million kronor and net sales of 2.628 billion kronor.

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