- Key financial highlights from the quarter: Sales increased by 4% y-o-y, boosted by FX and higher volumes (+9% y-o-y). Sales however slowed by 7% q-o-q on the back of lower pricing. Group EBITDA slumped 50% q-o-q (+40% y-o-y) with an EBITDA margin of 10%, impacted by increased maintenance. Gearing remains well controlled with net debt/EBITDA now 0.9x
- Kraft Paper segment remained soft (unbleached sack paper, MG paper and various kinds of high-quality specialty paper for industrial use): The kraft paper market remained soft in Q3 driven by ongoing inventory reduction among customers or further ahead in the value chain. MG paper was the segment within Kraft Paper where this was the most evident during the quarter.
- Kraft paper selling prices continued to fall (LC: -11% y-o-y and -6% q-o-q) in a soft market: Despite this, sales volumes increased by 8% y-o-y mainly explained by good production. Net sales increased in North and South America but decreased in Europe. The decrease in Europe is mainly explained by the lower selling prices as volumes were essentially flat. Incoming orders from customers usually increase at the beginning of autumn when the European customers return from their summer holidays. This year this effect was less apparent than normal.
- Kraft Paper Segment EBITDA slumped by 66% q-o-q: This was mainly driven by the lower selling prices. The price of energy, chemicals and freight have decreased, while pulpwood prices significantly increased y-o-y. The segment’s EBITDA for the quarter included electricity support of SEK12mn received from the Swedish government. Accordingly, the EBITDA margin decreased to 11.8% (19.5%), much lower than the 30.3% printed in Q2.
- Investment of SEK 850m (2023-25) in Bäckhammar: This will include a new wood room providing for strategic flexibility in raw material sourcing and efficiency gains in the production. Additionally, this will include a new electrostatic filter system for substantially improved sustainability performance. These improvements are expected to add SEK 100mn (5% of FY 22A) to EBITDA annually with full effect from 2026.
- More of the same is expected in Q4: The company expects market conditions to largely remain the same, with soft demand and general price pressure. Furthermore, with pulp prices rising, they expect pulp wood and chip prices to increase further.
