BillerudKorsnäs Half Way to Synergy Target
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BillerudKorsnäs, Solna, Sweden, this week reported that it is already half way toward realizing its synergy target, following the merger of Billerud and Korsnäs earlier this year. The company says it is increasing value in the form of brand-strengthening, productivity-boosting, and environment-enhancing packaging solutions. Among the top global producers of primary fiber-based packaging paper, the company has annual sales of around SEK 20 billion.
Updating performance during the second quarter of this year, CEO Per Lindberg said that "we continue to focus on integration and to create the new BillerudKorsnäs. I am therefore first and foremost very pleased to see that we have realized synergies corresponding to an annual pace of approximately SEK 260 million, which takes us almost half way to our target of SEK 530 million. This means that integration is making good progress. We have also received approval from the EU Commission to sell PM 2 in Gävle to SwedPaper and we expect closing on August 1, thus fulfilling the formal requirements from the authorities concerning our acquisition of Korsnäs.
As reported earlier, the company's adjusted operating profit for the second quarter of SEK 318 million fell short of expectations primarily due to startup problems after the rebuild of the board machine KM 5 in Frövi. The cost for the rebuild became almost SEK 50 million higher than expected, but the company noted that it is not uncommon that this happens in connection with such a large remodeling. "We now have created a platform for higher capacity and increased quality. I am also pleased to see that production now has stabilized and is in line with expectations," Lindberg said.
"We have noted varying market conditions during the second quarter. In short, the European demand in some segments is still treading water, which in combination with overcapacity is putting pressure on some European segments. We will therefore actively pursue sales outside of Europe in the medium-to-long-term.
"During the quarter, our new communication platform was launched. We view ourselves as challengers, where we challenge conventional packaging for a sustainable future. Our target remains to deliver smarter packaging, both through better materials as well as better solutions. Smarter packaging adds value at every step of the value chain; attracting consumers, increasing productivity, lowering cost of transportation, reducing waste, and not the least lowering environmental impact.
"We therefore continue to be very optimistic about the future prospects for BillerudKorsnäs. We will share more of our views at our Capital Markets Day planned for November 14 in Stockholm," Lindberg concluded.
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