Rottneros year-end report Januari-December 2023

Comments by the CEO - The result in Q4 was impacted by low pulp prices and planned maintenance shutdown

The result in the fourth quarter of -100 EBIT was a disappointment impacted by lower pulp prices in USD, higher variable costs and the annual maintenance shutdown at Vallvik. For full-year 2023, we delivered a satisfactory performance despite challenging external circumstances, primarily driven by strong volume growth and sound cost management. This achievement confirms that our methodical approach towards growth and development is yielding results. Our commitment to ongoing efficiency improvements, addressing customer needs and ­developing long-term growth niches, combined with our strong financial position, provide us with the confidence to ensure the continued growth of Rottneros in 2024, despite the uncertain global landscape.

The year 2023 was eventful, as Rottneros continued on its transformation journey at a rapid pace, with a focus on sustainable and profitable growth coupled with financial stability. Our performance also confirms that our methodological approach, working proactively every day to ensure increased availability in our factories, has yielded results. Our long-term efforts to build close relationships with both customers and suppliers are also crucial for our business and our profitability. Consistently enhancing efficiency is another cornerstone in our strategy.

In the fourth quarter, earnings continued to be impacted by lower pulp prices in USD and higher variable costs. In addition, the annual maintenance shutdown at Vallvik affected profitability in line with the normal seasonal pattern. Net turnover decreased by 1 percent for comparable units compared with the same quarter last year, to 637 MSEK. EBIT stood at -100 MSEK, leading to EBIT for full-year 2023 of 139 MSEK, which translates to a margin of 5.0 percent. The outcome confirms that our commitment to growth and development at Rottneros is yielding results, while offsetting the substantial cost inflation, especially for our primary input, wood.

Stable flow of raw materials

Our pulp wood flows remained stable throughout the quarter, largely owing to long and close relationships with our suppliers. The acquisition of Nykvist Skogs has enabled us to strengthen ties with several sawmills in recent years, which has had a positive impact on our woodchip supply. With good availability of pulp wood locally during the fourth quarter, import volumes from the Baltics were kept low, contributing to favourable margins.

Production developed well during the quarter, with a growth of 5 percent, excluding groundwood pulp. The shift towards CTMP specialisation at Rottneros Mill has clearly resulted in a robust consolidation of efforts. CTMP production grew an impressive 23 percent in the quarter. At the same time, the Group's total deliveries increased by a robust 12 percent for comparable units, reflecting our steadfast focus on allocating volumes to our selected niches while also attracting new customers, despite challenging conditions in our main market, Europe. Our strategic focus on custom products designed to meet the needs of our customers, along with the highest level of service, is crucial in a challenging market environment.

Relatively stable pulp market

The pulp market remained relatively stable during the quarter, although it continued to be marked by significant uncertainty. Demand saw a upswing in the third quarter, attributed to lower prices and a reduction in supply. This trend largely paused during the fourth quarter, apart from the list prices that continued to rise. Our customers returned with stronger demand and increased their orders for pulp in line with their contracts, compared with earlier in 2023. The list price for NBSK bottomed at 1,145 USD at the beginning of the third quarter and has strengthened to 1,300 USD in January 2024.

New CEO for Rottneros Packaging

Anna Jonhed was appointed CEO of Rottneros Packaging during the quarter. She will assume the position on 1 March 2024 and will be included in Rottneros Group Management. With her broad competence she will lead Rottneros Packaging into the next phase as the foremost supplier of high-quality fibre-based packaging. This involves an intensified focus on developing the market position and reaching the right customers with full force, while enhancing production capacity.

Work on Rottneros Packaging's investment in Poland together with Arctic Paper is underway. However, long delivery times for the equipment have impacted the timetable and we therefore expect production to begin in the third quarter of 2024.

In December, we became stakeholders in Blue Ocean Closures, a Swedish startup specialising in development of proprietary fibre-based packaging materials. They are pioneers in an exciting new field; dry formed, fibre-based closures like corks and caps. The aim is to replace current plastic solutions in the global market. The technology and material could potentially be used in many more applications that are currently based on fossil materials. We see this as a potential complement to our strong offering in wet-formed fibre trays.

Our robust finances are crucial to the Group's long-term development

Our strong balance sheet provides us with the foundation and peace of mind to focus on the long-term development of Rottneros and generate value on multiple levels. The equity/assets ratio at the close of the quarter was 66 percent. The available liquidity was a reassuring 528 MSEK.

I would like to extend my heartfelt thanks to all colleagues for their great dedication to Rottneros and our customers throughout the year, as well as to our customers, suppliers, owners, and the Board for a rewarding and close collaboration.

Lennart Eberleh

President and CEO

(For full report, see attached pdf)

This information is such information that Rottneros AB is required to disclose in accordance with the EU Market Abuse Regulation and the Securities Market Act. The information was submitted for publication on 1 February 2024 at 08.00 by the contact person below. This report has been prepared in both a Swedish and an English version. In the event of deviations between the two, the Swedish version shall prevail.

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Reminder: Invitation to Rottneros’ presentation of interim report Q4 2023

All participants can follow the presentation via the web link:

Rottneros' year-end report 2023 - Finwire

Questions can be asked via the link in advance or during the presentation.
You can also watch the presentation afterwards via Rottneros'  Youtube channel
and website: https://www.rottneros.com/investors/presentations/

The presentation will be held in English. Questions can be asked in English or Swedish.

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For further information please contact:
Lennart Eberleh, President and CEO, Rottneros AB,
+46 (0)270 622 65, lennart.eberleh@rottneros.com

Monica Pasanen, CFO, Rottneros AB,
+46 (0)270 622 70, monica.pasanen@rottneros.com