Rottneros: EBIT miss driven by increased costs - ABG

- Clean EBIT SEK 5m vs. ABG SEK 37m
- Q2 likely stronger than Q1
- Conference call at 12 CET

Clean EBIT SEK 5m vs. ABG SEK 37m
Clean EBIT was SEK 5m, which compares to our estimate of SEK 37m. The miss was mainly driven by higher wood costs and higher costs related to production problems at Vallvik mill. The company had a production of 84kt and deliveries were 6.5% higher than production. EPS came in at SEK -0.02 vs. our estimate of SEK 0.18.

We had the following EBIT bridge in our estimates: We expected Q1 clean EBIT of ~SEK 37m, up from SEK -100m in Q4'23 but down from SEK 149m in Q1'23. The main effects q-o-q were likely: SEK +62m from higher pulp prices (NBSK +12% and BHKP +25%), SEK +20m from higher volumes, SEK -12m from FX, SEK -1m from pulp price hedges, SEK -1m from wood costs (prices relatively stable), SEK -1m from higher chemical and distribution costs (caustic soda price up ~10% q-o-q in Western Europe), and SEK +70m in maintenance reversals. We arrived at Q1 clean EBIT of ~SEK 37m.

Higher prices and better volume
Q1’24 EBIT was SEK 5m. The effects y-o-y were SEK -96m from price and currency, SEK -33m from volume, SEK -27m from variable costs, SEK -8m from fixed costs, and SEK +20m from other. The demand for pulp wood is high while supply is low, but Rottneros benefits from close supplier relationships, and thus saw good access to wood. However, wood costs are up from already high levels.

Q2 likely better than Q1
Pulp prices have moved up from trough. Q2 will likely be stronger than Q1, driven by higher pulp prices and better volumes. We expect Q2 clean EBIT of SEK 40-70m. Rottneros will host a conference call at 12:00 CET which can be accessed from the following link: https://www.finwire.tv/webcast/rottneros/q1-2024/.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/rottneros/Equity-research/2024/4/rottneros---ebit-miss-driven-by-increased-costs/