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Introduction & Market Context
BillerudKorsnas AB (STO:BILL) reported an "encouraging start to the year" in its Q1 2025 interim presentation delivered on April 29, 2025, highlighting improved profitability and cash flow generation despite mixed market conditions.
The Swedish paper and packaging materials company operated in what it described as "mostly normalized conditions" during the first quarter, with stable market sentiment expected to continue throughout Q2. While most segments performed normally, the Consumer & Luxury segment remained weak, though the company anticipates stabilization in the coming quarter.
As shown in the following market conditions overview, Billerud’s diverse product portfolio provides exposure to multiple end markets, with Food & Drink representing approximately 40% of group net sales:
The company also emphasized its favorable positioning regarding potential tariffs, particularly in North America where it maintains local production capacity, high service levels, and a reliable supply chain. Imported volumes represent approximately 25% of North American paper segments, while the company has limited exposure to imported input goods.
Quarterly Performance Highlights
Billerud reported net sales of 11,101 million SEK for Q1 2025, representing a 7% increase compared to the same period last year, though declining 3% sequentially from Q4 2024. More impressively, adjusted EBITDA rose 19% year-over-year to 1,388 million SEK, translating to a margin of 13%, up 2 percentage points from Q1 2024.
The following summary highlights the company’s key financial metrics for the quarter:
Operating cash flow before capital expenditures showed remarkable improvement, nearly tripling (+194%) compared to the prior year to 573 million SEK. Earnings per share increased 33% year-over-year to 1.67 SEK, though this represented a 48% sequential decline from Q4 2024.
The sales growth was primarily driven by improved pricing and increased volumes, as illustrated in the following breakdown:
Profitability improvements stemmed largely from pricing power that more than offset increased input costs. The company’s waterfall chart shows that pricing (excluding pulp) contributed 405 million SEK to adjusted EBITDA growth, while raw materials and logistics costs created a 219 million SEK headwind:
Regional Performance Analysis
Billerud’s operations are divided into two main regions: Europe (representing 64% of net sales) and North America (28% of net sales), with both segments showing significant year-over-year improvements in profitability.
The European region posted net sales of 7,130 million SEK, up 3% year-over-year, with growth across all product categories except Liquid Packaging (NYSE:PKG) Board. EBITDA surged 34% to 1,054 million SEK, resulting in a 15% margin, 4 percentage points higher than the previous year.
The following table details the European segment’s performance:
North America delivered even stronger results, with net sales increasing 15% year-over-year to 3,190 million SEK. The region achieved its highest sales volumes since Q4 2022, operating at a 74% capacity rate. EBITDA jumped 52% to 680 million SEK, with margins expanding 5 percentage points to an impressive 21%.
The following breakdown illustrates North America’s performance by product category:
Strategic Initiatives
A significant milestone in Billerud’s strategic "Evolve journey" was the first sale of US-produced containerboard. The company successfully produced and delivered its coated liner product, branded as Tribute®, to customers, with several ongoing trials with both existing and new customers.
The company noted that its Evolution investment program is progressing according to plan, reinforcing its commitment to expanding its containerboard business in North America:
Management highlighted that overall cost development remained flat during the quarter, with expectations for lower costs in Q2 2025 primarily driven by declining energy prices. The company anticipates varying impacts across different cost categories, with fiber costs expected to decrease in Europe while increasing in North America.
Financial Position & Outlook
Billerud maintained its financial leverage at 1.0x EBITDA, while significantly improving its return on capital employed compared to the previous year. The company reported cash conversion of 41% and plans a dividend payout of 870 million SEK in Q2.
Capital expenditure guidance remains unchanged at 3.5 billion SEK for 2025, divided between strategic investments (1.3 billion SEK) and base maintenance (2.2 billion SEK):
Looking ahead to Q2 2025, Billerud expects:
- Continued solid market sentiment in North America with favorable positioning regarding tariffs
- Normal market conditions for most products in Europe
- Higher sales prices and lower input costs
- An extensive maintenance schedule that may impact production volumes
Billerud shares closed at 100.8 SEK on April 28, 2025, down 0.59% ahead of the earnings presentation. The stock has traded in a 52-week range of 90.0 to 122.2 SEK.
Full presentation:
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