Rottneros: All-time high EBIT - ABG

Q2 EBIT SEK 219n vs. ABGSCe SEK 159m Deliveries 6% above, realized prices >10% above Webcast today at 13.00 CET Q2 EBIT of 219 SEK

Reported EBIT of SEK 219m was above our estimate of SEK 159m. The deviation from our estimate is driven by higher realised prices (>10%) and 6% higher deliveries. EPS was SEK 1.13 vs. ABGSCe at SEK 0.80 (H1 EPS SEK 1.87). Rottneros booked SEK 57m in realized hedge gain on the company’s extremely favorable electricity hedges to offset most of the 3x higher electricity prices. EBIT improved 51% q-o-q due to higher realized prices, more volumes delivered and FX tailwinds. Some of the positive effects were offset by higher chemical and pulp wood costs. The latter should have a negative impact on H2 numbers as pulp wood prices have surged significantly in the area where Rottneros operates. Margins improved from 22% in Q1 to 28% in Q2. Net debt decreased to SEK -143m (net cash) vs. SEK 2m ending Q1.

Q2 EBIT bridge y-o-y Q2’21 EBIT was SEK 97m. The positive effects y-o-y were SEK 159m from higher pulp prices/currency, SEK 50m from higher volumes. The negative effects were higher variable costs (SEK -76m), fixed costs (SEK -4m) and other (-5m).

Outlook The company will not operate one grinding line in July and guides for a 5kt negative production effect in Q3 (in addition to normal maintenance). The company will focus on strict cost control to mitigate the rising pulp wood prices and has conducted an in-depth strategic review to ensure compliance with financial targets going forward. We expect positive estimate changes from consensus on the back of the report. Rottneros will host a webcast today at 13:00 CET.

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Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/rottneros/Equity-research/2022/7/rottneros---all-time-high-ebit/