Rottneros: Margin pressure going into H2'23 - ABG

• Q2e: EBIT of SEK 62m
• European pulp prices down -20-40% from the peak
• Fair value range: SEK 10-15/sh

Pulp/pulpwood margin squeeze to intensify in H2'23
We expect Q2 clean EBIT of SEK 62m, which compares to SEK 219m in Q2'22 and SEK 149m in Q1'23. The q-o-q effects are likely: SEK +10m from lower chemical costs, SEK +5m from FX, SEK -90m from lower pulp prices net of hedges, SEK -10m from higher wood costs and SEK -5m from higher personnel expenses. Thus, we arrive at Q2 clean EBIT of SEK 60-65m. Rottneros' mix-weighted pulp price is down ~12% q-o-q, and cost pressures persist going into H2'23. Södra has announced pulpwood prices up another 15% in Sweden (~SEK -90m annualised EBIT effect). We reduce '23/'24 estimates by -36%/-20% on the current pulp/pulpwood margin squeeze.

Länk till analysen i sin helhet: https://cr.abgsc.com/contentassets/df89e40122d04a0aa4c32702c3c3ba12/pdf/margin-pressure-going-into-h223.pdf