Rottneros (RROS) Q3 2024 earnings summary

Executive summary

• EBIT for Q3 2024 was 40 MSEK, reflecting stable demand in selected niches despite high raw material costs and a 1% year-over-year decline in net turnover to 686 MSEK.

• Operations have stabilized, with major investments nearing completion to enhance efficiency and competitiveness.

• Contracts for next year are signed at higher volumes and maintained good prices.

• Production increased 2% year-over-year, but deliveries fell 20% due to a high base in Q3 2023.

• The balance sheet remains strong, with an equity/assets ratio of 60% and available liquidity of 258 MSEK.

Financial highlights

• Margins were squeezed by significantly higher variable costs, especially wood, which doubled since early 2023 and accounted for 65% of variable costs.

• EBIT for Q3 2024 was 40 MSEK, down from 49 MSEK in Q3 2023 but up from 30 MSEK in Q2 2024.

• Nine-month EBIT dropped from 239 MSEK to 74 MSEK year-over-year, mainly due to lower volumes and higher costs.

• SEK 11 million from emission rights sold in Q3, with potential for further sales in Q4.

• Cash flow from operating activities for Jan–Sep 2024 was 88 MSEK, with cash flow after investments at -230 MSEK.

Outlook and guidance

• Major investment projects, including expanded CTMP capacity and renewable energy initiatives, are set to be commissioned in Q4 2024, with total 2024 CapEx estimated at 460 MSEK.

• Investment levels expected to normalize to around 120 MSEK annually from 2025.

• Marginal revenue from molded fiber trays expected to ramp up in 2025 as new machines come online.

• Maintenance shutdowns in Q4 will impact production volumes.

• Trends such as sustainability, renewable materials, tissue, and e-commerce are expected to favor pulp demand.