Billerud’s updated strategy, “Way Forward,” reflects the company’s ambition to continue leading in high-performance paper and packaging materials. It aims to evolve towards carton while remaining dedicated to graphic paper and specialty paper in the North American region, as well as strengthening performance in the European region.
Moving forward, the company will prioritize profitability over growth and focus on driving performance. Leveraging the growing demand for fiber-based packaging and Billerud’s attractive niche positions, solid manufacturing capabilities, and flexible production systems will be key. Successful execution of their plans will enable a strong and competitive Billerud, with a target of achieving an EBITDA result of over 6 billion kronor through strategic initiatives, according to Ivar Vatne, CEO of Billerud.
The new financial goals include:
– Return on Capital Employed (ROCE) exceeding 11%
– EBITDA margin exceeding 15%
– Cash flow generation exceeding 80%
Billerud’s previous financial goals were 3-4% annual net sales growth and an EBITDA margin of over 17%.
The targets for leverage and dividends remain unchanged:
– Interest-bearing net debt to EBITDA ratio of no more than 2.5 times
– Dividend payout of at least 50% of annual profit
“With the changing conditions for producing pulp, paper, and packaging in Europe since the beginning of 2022, including the strained European wood market and high fiber costs as a structural change, we are revising the EBITDA margin target from 17% to 15%. At the same time, we are reintroducing a target for ROCE and introducing a target for cash flow generation,” said Ivar Vatne.
Billerud is committed to maintaining its leading positions in the North American markets for graphic paper and specialty paper for labels, while gradually transitioning towards packaging materials to optimize capacity utilization.
The company’s board has approved a strategic investment program of 1.2 billion kronor in the Escanaba mill and 0.2 billion kronor in the Quinnesec mill. These investments will facilitate the transition to carton production.
Billerud’s total investments in 2024 will amount to 2.5 billion kronor. In 2025, total investments are estimated to reach 3.4 billion kronor, with 1.2 billion allocated to strategic investments.
Annual maintenance investments for the mills, known as “bascapex,” are projected to total 2.2 billion kronor from 2025 to 2027.
This strategic shift in Billerud’s approach positions the company for continued success and growth in the competitive paper and packaging industry. With a focus on profitability, innovation, and sustainable practices, Billerud is poised to maintain its leadership in the market and deliver value to its stakeholders.