Billerud reports weak Q2 as European packaging demand softens

Investing.com -- Swedish paper and packaging company Billerud on Friday reported second-quarter EBITDA of SEK912 million, missing consensus estimates of SEK1.09 billion by 17% as European packaging demand weakened across categories.

The Q2 results marked a significant drop from the SEK1.39 billion EBITDA reported in the first quarter.

European operations were particularly affected, with EBITDA falling to SEK333 million and margins dropping to just 5%, below the SEK0.5 billion consensus estimate.

North American operations performed better, with EBITDA of SEK622 million, in line with expectations, and a solid 22% margin supported by 76% utilization, up from 74% in the previous quarter.

Billerud faced economic downtime in addition to planned maintenance stops, with consumers holding back on spending and visible impacts on trade flows from tariffs.

Looking ahead to the third quarter, the company expects weak conditions to continue in Europe due to soft packaging demand, while U.S. operations are forecast to maintain solid conditions in graphic and specialty paper.

Maintenance costs will remain high at approximately SEK380 million, and input costs are expected to stay stable.

Analysts anticipate further cuts of 4-6% to the 2025 EBITDA consensus estimate to around SEK5.3 billion. For 2026, wood cost relief of 5-10% and demand recovery would be needed to support EBITDA of SEK5.5-5.8 billion.

Billerud shares have corrected about 10% since May and approximately 20% from year-to-date highs.

The company’s current share price is SEK96.65, with Jefferies analysts maintaining a buy rating and a price target of SEK128.00, representing 32% upside potential.

The weak European demand reported by Billerud suggests potential negative implications for other European packaging peers.

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