BillerudKorsnäs reports 2020 sales drop but celebrates COVID-19 “resilience” and carbon cuts

12 Apr 2021 --- BillerudKorsnäs has released its Annual and Sustainability Report for 2020, showing a 2 percent decrease in net sales growth due to “challenging market conditions in certain product segments.” 

However, lower market prices were partially offset by a rise in overall sales volumes, reduced raw material costs and efficiency measures. 

The pulp and paper manufacturer also saw a 7 percent drop in carbon emissions but recorded an “unacceptably” high accident rate for its employees. 

Christoph Michalski, president and CEO of BillerudKorsnäs, lauded the resilience of the company’s performance in the face of unprecedented COVID-19 challenges. 

“We have been relatively unscathed and are humbled by the resilience of our business and employees’ ability to handle challenges and adapt to new working conditions. In the past year, we have taken precautionary measures to prevent the spread of infection and to secure our operations and deliveries.” 

“The packaging industry has been relatively less affected by the pandemic. BillerudKorsnäs’ largest market segment, packaging materials for food and beverages, has been resilient.”

Key earnings 
Demand declined for some of the company’s product segments due to lower industrial activity and consumer behavior changes, as people spent more time at home.

Click to EnlargeAll wood raw material purchased by BillerudKorsnäs is evaluated and controlled under international FSC and PEFC Chain of Custody standards.The year’s net sales value declined by 2 percent, largely due to lower market prices for sack and kraft paper, while sales volumes increased by 4 percent to around 2.8 million tons. 

Lower raw material costs and savings had a positive impact on profitability. Still, they did not offset the effects of lower market prices and the ramp-up cost of a new board machine at the company’s Gruvön site in Sweden, the report notes. 

The EBITDA margin was 11 percent, equating to SEK 2.7 billion (US$3.1 billion), while net sales were recorded at SEK 23.9 billion (US$27.9 billion). 

The company’s financial position remains “healthy” and the company’s board of directors is proposing a dividend of SEK 4.30 (US$0.50) per share. 

Outlook for 2021 
Michalski says the commercial ramp-up of its new board machine at Gruvön will continue to be a top priority in 2021. 

“We will take important steps in certifying liquid board qualities together with our customers, and we aim to grow our carton board business.”

“The machine’s output will increase, and the product mix will be gradually improved to produce a higher percentage of premium qualities.” 

“Investing in a new recovery boiler at Frövi will be an important project, as the current boiler will not meet emissions requirements in a few years’ time.”

Click to EnlargeCEO Christoph Michalski is optimistic for the company’s 2021 performance.Competition for raw materials from forests is growing, which prompts the company to focus on ensuring a competitive wood supply. It aims to do this by sustaining its long-term relationships with forest owners and sawmills. 

“Our cost and efficiency program aims to achieve annual run-rate savings of an additional SEK 315 million (US$367.9 million) by the end of 2021,” says Michalski. “This would result in total structural savings of SEK 650 million (US$759.2 million) under the program.”

Environmental sustainability 
The 7 percent drop in carbon emissions is credited to the increased stability of the company’s production methods. 

BillerudKorsnäs’ operations and products contribute a “powerful and positive” climate effect, says the report, with an estimated 5.4 million tons of fossil carbon dioxide per year being saved through its renewable packaging materials. 

This is equivalent to the emissions of a third of all domestic transport in Sweden. This figure, based on 2019 data, also includes the negative climate impact of operations. 

Last year, BillerudKorsnäs released a home-compostable paper laminate for flexible packaging in partnership with German multinational chemical group BASF. 

The collaboration says its material is an answer to environmental sustainability requirements by being organically compostable without the need for collecting or disposal by public waste systems.

Edited by Louis Gore-Langton

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