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Rottneros interim report January-September 2020

2020-10-22, 08:00
 - Regulatory
Production continues to  grow, profit under pressure
THE LIST PRICE for NBSK pulp was 8 % lower in USD and 15 % lower in SEK compared with the third quarter of 2019. Compared with the second quarter  of 2020, the price in SEK decreased by 9 %.

NET SALES decreased by 18 % to 508 (617) MSEK in line with falling market prices and slightly lower sales volume.

EBIT (operating profit) for the third quarter of 2020 was 4 (54) MSEK. A weak market due to the pandemic affected the result strongly.

PROFIT AFTER FINANCIAL ITEMS for the third quarter of 2020 was -1 (49) MSEK. Earnings per  share for the quarter were -0,01 (0,25) SEK.

PRODUCED VOLUME amounted to 110,2 (100,3) thousand tonnes, which is a new record for a single quarter. The sales volume decreased slightly to  106,9 (110,8) thousand tonnes.

A STRONG BALANCE SHEET in uncertain times. The equity/assets ratio is 56 (61) % and available  liquidity amounts to 542 (576) MSEK.

THE CORONA PANDEMIC has not had any  negative effect on production, but the pulp market  is characterized by great uncertainty and reduced  demand. Measures have been taken to minimize  the risk of infection spreading in the Group’s facilities.

Comments from the CEO

Our focus on continuous improvements  are generating result. At the same time, the effects of the corona pandemic weigh on  both the market and our profitability. A new production record for a single quarter was reached during Q3 through strong volume growth. Our committed employees, solid balance sheet and efficient mills mean that we have good resilience against a continued tough market. Our strategic focus, to take Rottneros to the next level remains.

The consequences of the corona pandemic continued to affect our operations during the third quarter. Our extensive counter measures meant that the infection was kept away from our operations, but naturally it affects both the work environment and the opportunity to meet existing and new customers.

Despite the challenges, we follow our long-term plan to in- crease production through continuous improvements in our processes and routines. During Q3, production increased by 10 percent compared with Q3 last year. This meant a new re-cord level for a single quarter, just over 110 thousand tonnes. The comparison was affected by the fact that the maintenance stop at Rottneros Mill was made a quarter earlier this year compared with last year. During Q4, production levels will be affected by the planned maintenance shutdown in Vallvik in October, in line with the normal seasonal pattern.

Net turnover decreased by 18 percent during the quarter com-pared with the same period last year. At the same time, EBIT shrunk by 50 MSEK to 4 MSEK. The decline is explained by lower sales prices due to the weaker pulp market. As supply was greater than demand, we continued to sell a larger share than normal on short-term contracts, affecting margins negatively.


The pulp market continues to be squeezed by the pandemic’s effects on the world economy. However, the list price of NBSK has been relatively stable at around USD 840 for over a year, which is an unusually long period of limited price movements. The fact that high-cost producers are now unprofitable, even taking into account only variable costs, suggests that prices  should be close to the bottom and may eventually move upwards. Demand in China has picked up, which provides support for the global pulp market and the world economy in general. Demand within printing and writing paper is showing signs of leveling off after falling sharply during the first half of the year.

The long-term trend of declining pulp demand for graphic app-lications, in parallel with the growth of hygiene applications and packaging, means that the market is likely to trend structurally towards a more stable demand. In the US, the share of market pulp that is used for printing and writing paper currently makes up only 10 percent of the total market. Historically, the corre-sponding figure has been around a third of the market. Rott-neros benefits from the growth in the hygiene and packaging areas as we have strong market positions in these segments.

The supply of pulp wood remains at a healthy level. The supply balance between local wood and imports was at a favorable level during the quarter. A lower production rate in the pulp and paper industry, at the same time as the bark beetle problem boosts supply of timber, is positive for the market balance and means that prices decline.

Our large electricity purchases in Rottneros Mill continue to be affected by currently significant price differences between the area price we pay and the system price, a theoretical price for the Nordics. This is due to the lack of transmission capacity between the different parts of Sweden and has meant that the price for us has been extremely high for short periods.


In October, our moulded fiber trays for ready meals were launched in supermarkets in Sweden and other countries in Europe. We are proud to finally be able to display the product on store shelves after extensive development. Our trays reduce the amount of plastic by up to 85 percent compared to traditional fossil-based packaging. The fibers the trays are made of originate from FSC certified forests in the area around Rottneros Mill.


Due to our size, we can be quick-footed and agile in the market. By quickly moving volumes between customers and different end use segments, we have found outlets for our continuously higher production volumes, despite the tough market situation. At the same time, we have a strong focus on keeping costs under control  at all levels.

Our strong balance sheet with significant liquidity makes us well prepared for the uncertainty that prevails in the economy. The equity/assets ratio at the end of the third quarter was  56 per cent. At the same time, the Group’s cash and cash equivalents amounted to 360 MSEK and unutilized credits to 182 MSEK. The interest-bearing net debt was 50 MSEK.

I want to thank all colleagues for their commitment to take the Group to the next level and stand up to the great challenges we meet. Through our counter measures, we try to keep the pandemic as far away from the business as possible. We focus on completing our systematic work to take Rottneros to the next level by increased production, efficiency, sustainability and proximity to our customers.

Finally, I would like to thank our customers and suppliers for jointly handling the pandemic in the best possible way and minimizing the consequences.

(For full report, please see attached release)

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 22 October 2020 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.


The interim report for the third quarter will be presented on 22 October 2020 at 13.00 CET.

All participants can follow the presentation via the web link:

Anyone can ask questions via the link in advance or during the presentation.
You can also watch the presentation afterwards via Rottneros'  Youtube channel
and website:

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


For more information, please contact:Lennart Eberleh, President and CEO, Rottneros AB, +46 (0)270 622 65



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