Release Date: July 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Net sales increased by 9% compared to Q2 last year, reaching SEK1,225 million.
- Sales volumes rose by 11%, indicating strong demand.
- EBITDA margin improved to 22.9%, surpassing the target of 20%.
- Natural greaseproof segment achieved a new record for EBITDA margin and the third consecutive quarter of record EBITDA.
- The company has a strong and robust balance sheet with a net debt to EBITDA ratio of 1.5, well below the target of 2.5.
Negative Points
- Product prices are still 5% lower than the corresponding quarter last year.
- Kraft paper segment prices are 10% lower than last year, despite recent price increases.
- The price for raw materials, particularly pulpwood, has continued to increase due to lower availability.
- Maintenance stops in Q3 are expected to incur costs and reduce production output.
- The market in Europe is only now returning to previous demand levels after a challenging 2023.
Q & A Highlights
Q: Can you please elaborate on the effects of the coming maintenance stops in Q3?
A: Niclas Eriksson, CFO: We will have two kinds of effects. One effect is the cost for the maintenance itself. We have a chart in the reports where we show the level of that. Except for the direct cost from the maintenance, we have the effect from the stops in the plants and the lower production output.
Q: Are there any geographical differences in market sentiment for the second quarter?
A: Anita Sjolander, CEO: Yes, North America has been upholding a better level, even during the 2023 situation. The European market has returned more evidently, and Middle East Africa is also improving with their volume. All markets are improving, but Europe is coming back more evidently than the others.
Q: How has the market demand been in Q2, and what are your expectations for Q3?
A: Anita Sjolander, CEO: Demand continues to be healthy in Q2, resulting in an 11% increase in sales volumes compared to Q2 last year. We estimate that the market demand will remain at a healthy level in Q3, and we will continue to work with product price increases.
Q: What are the main drivers behind the increase in net sales and EBITDA in Q2?
A: Niclas Eriksson, CFO: The increase in net sales by 9% to SEK1,225 million is driven by healthy demand and an 11% increase in sales volumes. The EBITDA of SEK280 million, with a margin of 22.9%, is supported by high production levels and lower specific costs per tonne.
Q: How have raw material costs impacted your financial results?
A: Niclas Eriksson, CFO: The price for our raw material, pulpwood, has continued to increase due to lower availability. However, lower energy and chemical costs have contributed positively to the development of the EBITDA margin.
Q: Can you provide more details on the performance of the kraft paper and natural greaseproof segments?
A: Anita Sjolander, CEO: The kraft paper segment saw a 2% increase in net sales and a 7% increase in sales volumes. The natural greaseproof segment achieved a new record for EBITDA margin at 20.3%, with a 21% increase in sales volumes and a 19% increase in net sales.
Q: What is the outlook for product price increases in the coming quarters?
A: Anita Sjolander, CEO: We will continue to implement product price increases, but the rate of increase is expected to be somewhat lower than the 4% achieved from Q1 to Q2.
Q: How has the company's financial position changed over the past year?
A: Niclas Eriksson, CFO: The balance sheet remains strong and robust. After paying out dividends and continuing investments, the net debt to EBITDA ratio has increased to 1.5, still well below our target of 2.5.
Q: What are the key factors contributing to the company's strong performance in Q2?
A: Anita Sjolander, CEO: Key factors include healthy market demand, high production levels, successful product price increases, and lower specific costs per tonne. These have all contributed to a very good EBITDA result and a strong financial performance.
Q: How are you addressing the challenges posed by the increasing raw material costs?
A: Niclas Eriksson, CFO: We are offsetting the increasing raw material costs by implementing product price increases and benefiting from lower energy and chemical costs. Additionally, higher stable production levels help reduce the specific cost per tonne.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
