Stable net sales in a tougher market
KEY HIGHLIGHTS
· Strong net profit for the year and proposed increased dividend as a result of the successful divestment of
· Fourth quarter sales volume growth offset by negative changes in pricing and mix due to weaker market conditions.
· KM7 start-up impact in the fourth quarter in line with expectations.
QUARTERLY DATA
· Net sales were flat and amounted to
· Adjusted EBITDA* was
· Operating profit was
· Net profit was
· Earnings per share amounted to
· The Board of Directors proposes an ordinary dividend of
Q1 OUTLOOK
· Stable demand for liquid packaging board and cartonboard.
· Somewhat uncertain market conditions for containerboard, but expected to stabilize.
· For sack and kraft paper market conditions are expected to remain weak throughout the first quarter.
· The total cost of fibre expected to be reduced due to lower pulpwood prices.
COMMENTS BY CEO
The year 2019 has in many ways been a challenging year. Since the summer the market has weakened considerably for several of our products, particularly for sack paper where both prices and volumes have dropped drastically. On the positive side liquid packaging board and cartonboard are holding up nicely and the downward trend for sack papers appears to have flattened out and stabilized.
In the fourth quarter sales volumes increased, but were offset by negative pricing and mix effects. Division Board delivered strong sales growth, while Division Paper continued to be under pressure and declined. Fourth quarter earnings were in addition to the weaker market also negatively impacted by start-up effects of the new board machine at Gruvön, KM7, of around
A key event during the year was the successful divestment of
For 2020 we expect continued challenges and act accordingly. The cost and efficiency programme is running according to plan and is expected to result in savings of
The ramp-up of KM7 is our number one priority for 2020. We recognize that we are somewhat behind our plan and have the ambition to catch up during the year. The share of prime grades and higher value products is expected to increase at an accelerating rate over the year. The first volumes of coated grades have been produced in the first quarter and our expectation is to initiate a process to certify material for liquid packaging board and cartonboard in the second quarter. Our present assessment is that the start-up of KM7 will impact EBITDA in 2020 negatively by
BillerudKorsnäs has a historic opportunity to capture the increasing demand for sustainable packaging and the development is very much in our own hands. Over the next years we will focus on optimizing the use of the company's assets leveraging recent investments with the objective to return to an EBITDA margin above 17%. Profitability is to be strengthened by maximizing customer value, reducing cost and improving efficiency and production output. We realize that 2020 will be a very challenging but also exciting year where focus is on execution to capture the potential in our business.
Acting President and CEO
The quarter in review
SALES AND RESULTS
Net sales for the fourth quarter were at the same level as for the previous year and amounted to
Adjusted EBITDA decreased to
The implementation of IFRS 16 affected adjusted EBITDA positively by
Costs affecting comparability, reported in Other, amounted to a net amount of
MARKET DEVELOPMENT AND OUTLOOK
The markets for liquid packaging board and cartonboard were stable in the fourth quarter, while uncertainty in the global containerboard market increased. The markets for sack and kraft paper weakened but price reductions for brown sack flattened out. The market pulp price index (PIX) declined from
For the next quarter, the demand in BillerudKorsnäs' segments in liquid packaging board and cartonboard is expected to be stable. For containerboard somewhat uncertain but stabilized market conditions are expected. For sack and kraft paper market conditions are expected to remain weak for the first quarter.
EVENTS IN THE QUARTER
On 4 November, The Board of Directors appointed
On 3 October, the new board machine at Gruvön, KM7, was officially opened with a well-visited inauguration ceremony.
Malin Ljung Eiborn was appointed EVP Sustainability and joined the Executive Leadership Team from
Paboco®, the joint venture between BillerudKorsnäs and ALPLA, presented in October the paper bottle community, a group of brands including Coca-Cola,
BillerudKorsnäs announced a partnership with
In December, BillerudKorsnäs launched Repel Pure, a machine glazed kraft paper for food packaging, where the grease-resistant barrier is plant-based. Repel Pure can replace grease resistant paper products treated by a high-fluorinated chemical and is good for the environment as its barrier is completely degradable.
EVENTS AFTER THE QUARTER
For the sixth consecutive year, BillerudKorsnäs received in January the highest rating level in EcoVadis assessment of how well a company has integrated the principles of CSR into their business and management system. The evaluation shows that BillerudKorsnäs scores high in environmental and supply chain work, where one example is the company's commitment to reduce carbon emissions in line with the Paris Agreement.
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