Arctic Paper (ARP) Q1 2025 earnings summary

Executive summary

• Q1 2025 net sales were PLN 822.8mn, down from PLN 965.4mn in Q1 2024, with EBITDA at PLN 22.9mn versus PLN 112.0mn year-over-year; profitability was pressured by high raw material costs, weak demand, and unfavorable currency rates.

• Net profit was negative at PLN -23.8mn, with EBIT at PLN -9.8mn; cost optimization and operational efficiency measures intensified.

• Management recommends allocating 2024 profit to reserve capital, foregoing a dividend due to weaker segment results and market uncertainties.

• Investments in renewable energy and packaging continued, with PV expansion and bio-energy projects progressing.

• Capacity utilization was 74%, slightly better than Q4 but well below Q1 2024.

Financial highlights

• Net sales decreased 15% year-over-year to PLN 822.8mn in Q1 2025.

• EBITDA for Q1 2025 was PLN 22.9mn (margin 2.8%), PLN 16mn higher than Q4 2024 but PLN 89mn lower year-over-year.

• Net profit per share was PLN -0.19, compared to PLN 1.19 in Q1 2024.

• Net debt/EBITDA ratio rose to 0.69x at Q1 2025 from -0.77x at Q1 2024, indicating increased leverage.

• Capex for 2025 expected at PLN 250–270mn, down from PLN 423mn in 2024.

Outlook and guidance

• No dividend for 2024; all profit to be retained due to ongoing market volatility, high wood prices, and currency fluctuations.

• Cost-saving measures and efficiency improvements are being implemented in both segments, with a focus on optimization and stabilization.

• Management expects the new packaging facility in Poland to reach full capacity in the second half of 2025 and contribute to EBITDA.

• Market challenges and uncertainty expected to persist through at least H1 2025.

• Long-term strategy prioritizes growth in renewable energy and packaging, while defending paper and pulp market positions.