Rottneros: Q2 below, Q3 likely better - ABG

- EBIT SEK 30m vs. ABG SEK 63m
- Q3 likely stronger — Rottneros Mill maintenance moved to Q4
- Conference call at 12 CET

EBIT SEK 30m vs. ABG SEK 63m
EBIT was SEK 30m, which compares to our estimate of SEK 63m. The miss was mainly driven by negative mix effects (higher deliveries of CTMP, which has had lower price increases compared to NBSK). Note that Rottneros booked an impairment loss of SEK -5m, which would arguably put clean EBIT at ~SEK 35m. The company had a production of 91kt and deliveries were 3% lower than production. EPS came in at SEK 0.15 vs. our estimate of SEK 0.32. We had the following EBIT bridge in our estimates: We expected Q2 clean EBIT of ~SEK 63m, up from SEK 5m in Q1'24 and SEK 57m in Q2’23. The main effects q-o-q were likely: SEK +16m from higher pulp prices, SEK +10m from higher volumes, SEK +13m from FX, SEK -5m from wood costs, SEK -5m from seasonal salary adjustments, and SEK +30m from a reversal of the Vallvik stop. We arrived at a Q2 clean EBIT of ~SEK 63m.

Higher volumes but lower price/currency effects
Q2’24 EBIT was SEK 30m. The effects y-o-y were SEK -49m from price and currency, SEK 53m from volume, SEK -2m from variable costs, SEK 8m from fixed costs, SEK -5m from depreciation (impairment), and SEK -16m from other. Demand for pulpwood continues to be high while supply is low. However, Rottneros has had good supply during Q2 and Baltic imports have been at a normal level. Note that wood costs are up from already high levels.

Q3 likely stronger
Q3 will likely be stronger than Q2 given that the annual maintenance stop at Rottneros Mill has been moved to Q4 (initially expected for Q3). Higher pulp prices should provide further tailwind. We expect Q3 clean EBIT of SEK 50-65m.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/rottneros/Equity-research/2024/7/rottneros---q2-below-q3-likely-better/