Billerud (BILL) Q2 2024 earnings summary

Executive summary

• Net sales grew 8% year-over-year to SEK 10,764 million in Q2 2024, with profitability and underlying EBITDA improving both sequentially and versus last year, driven by volume, mix, and efficiency gains.

• North America delivered an 18% EBITDA margin and excellent financial performance, while Europe saw improved margins despite high pulpwood costs.

• Strong cash conversion and robust cash flow were achieved through disciplined working capital management, with cash conversion at 77%.

• Efficiency enhancement program contributed SEK 390 million in EBITDA uplift in H1 2024, on track for SEK 700 million for the year.

• Maintenance shutdowns at four mills were completed on time and within budget, with a SEK 515 million cost impact.

Financial highlights

• Net sales reached SEK 10,764 million, up 8% year-over-year and 3% sequentially.

• Adjusted EBITDA was SEK 1,003 million, up 434% year-over-year, with a 9% margin.

• Operating profit (EBIT) was SEK 171 million, down 62% sequentially.

• Operating cash flow before capex was SEK 678 million, up 105% year-over-year.

• EPS was SEK 0.25, down 80% sequentially.

Outlook and guidance

• Q3 2024 guidance: Flat volumes in Europe, slight increase in North America; cost headwind of SEK 180 million in Europe and SEK 10 million tailwind in North America.

• Price increases of 2%-3% expected in European paper and board, with North America pricing largely flat except for some pulp increases.

• Additional SEK 200 million in pricing expected to more than offset input cost increases in Q3, mainly in Europe.

• Market sentiment is cautiously optimistic, with expectations for continued improvement in the second half of 2024.

• Company priorities for 2024 include driving profitability, strategic investments, and delivering EBITDA uplift from efficiency programs.