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- Revenue Growth: Increased turnover by 4% in Q2 2024.
- EBIT: SEK30 million for Q2 2024, down from SEK41 million in Q2 2023.
- Sales Volume: 7% higher sales volume, driven by CTMP production.
- Net Debt Position: First net debt position since 2021 due to investment program.
- Available Liquidity: SEK298 million at the end of the period.
- Equity to Assets Ratio: 64% at the end of the period.
- Investment Spending: SEK135 million in Q2 2024; SEK216 million year-to-date.
- Long-term Financing: Up to SEK200 million secured for solar panels and batteries.
- Production Records: New production records for mechanical pulp.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Rottneros AB (OSTO:RROS) achieved a new production record for mechanical pulp in Q2 2024.
- The company reported a 4% increase in turnover, ending the quarter with an EBIT of SEK30 million.
- Strong market conditions in Europe and the US contributed to rising prices for softwood kraft pulp.
- Rottneros AB (OSTO:RROS) has secured long-term financing for its solar panels and battery investments, supported by a green credit guarantee.
- The company is focusing on niche markets, such as fiber cement and molded fiber trays, which are seeing increased demand.
- Rottneros AB (OSTO:RROS) experienced a decrease in EBIT from SEK41 million in Q2 2023 to SEK30 million in Q2 2024.
- The company faced production issues in the first quarter, impacting sales of NBSK and UKP pulp.
- Pulpwood prices are at record highs, affecting profitability.
- The company has moved some maintenance CapEx forward due to a rocky start to the year, increasing total CapEx to SEK430 million.
- Rottneros AB (OSTO:RROS) has transitioned from a net cash position to a net debt position due to ongoing investments.
A: The mix is dependent on production capabilities. CTMP was higher due to good production, while NBSK and UKP were low due to first-quarter issues. We expect normalization with good production in both mills and future capacity increases in Rottneros Mill for CTMP, improving profitability.
Q: The pulp prices are at an all-time high, but your earnings are far from it. What's holding you back, and how will you capitalize fully on the increased prices?
A: We focus on niches with good profitability and stable customers to capitalize on prices. There's a time lag with our sales prices, but we expect increases. Earnings are also affected by costs, with record-high wood pulp prices impacting profitability.
Q: The pulpwood prices keep rising. How do you see the effects quarter on quarter in SEK?
A: We've seen some increases quarter on quarter, but at a lower pace than last year. We manage costs by choosing a good mix of suppliers, minimizing cost increases.
Q: If I recall correctly, CapEx for '24 was initially expected at SEK350 million to SEK400 million. Now you're saying SEK430 million. What is the result of the increase? Is it a CapEx overrun?
A: It's not an overrun. Current projects are on time and budget. We've moved forward some maintenance CapEx to ensure good utilization and production quality, contributing to the increase.
Q: How do you plan to leverage the continued growth in the pulp market to further enhance profitability and market share?
A: We focus on areas where our products deliver unique properties, maintaining long-term relationships with key customers. This strategy allows us to offer lower rebates than those for commodity grades, ensuring a good margin between selling price and input cost.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.