StepChange Consulting Publishes B3NCH FY-2024 Financial Report

StepChange Consulting has published the latest B3NCH FY-2024 financial report, offering insights into the financial performance of around 100 companies operating in the pulp, paper, packaging and tissue sectors.

The industry’s overall performance has stabilized but it remains below 2023 levels, with persistent overcapacity across multiple segments. While profitability has not rebounded significantly, most companies maintained a positive EBITDA, and only a few reported negative net profits.

Overall there was a decline in net profits for the packaging sector (-5.9 percent), a notable 12 percent EBIT improvement in graphic papers, and a mixed performance for the pulp sector, where Latin American players struggled due to unfavourable foreign exchange rates. Meanwhile, the tissue segment outperformed and demonstrated strongly improved results across key financial metrics.

Sector-by-Sector Insights

Tissue:

The tissue segment remained one of the most resilient performers, supported by stable demand and lower input costs leading to significantly improved results such as net profits increasing by 28.5 percent. The segment continues to outperform other industries in terms of overall profitability. However, working capital increased significantly, although from very low levels, and some companies experienced higher debt levels. The overall ROCE for tissue increased by 16.2 percent, as companies benefited from favorable pricing conditions and a relatively steady market. Kimberly-Clark led the way in this segment, outperforming peers on most metrics.

Packaging:

The packaging industry saw modest revenue growth of 0.8 percent in 2024. However, most profitability and operational indicators deteriorated. Company-wide EBIT declined by 4.9 percent, and segment-only EBIT decreased by 6.8 percent, highlighting ongoing challenges. Net profit fell by 5.9 percent, while operating cash flow (OCF) dropped by 31.9 percent, indicating operational difficulties and challenges in cash generation. Working capital also grew by 18.6 percent, adding to financial pressures. Smurfit Westrock published its first annual report after the merger, with many KPIs deteriorating compared to the standalone results of Smurfit Kappa in previous periods.

Pulp:

The pulp sector showed a remarkable recovery in operational earnings, with the average EBITDA reaching 27 percent and segment-only EBIT 17.7 percent (a 78.5 percent increase in comparison to 2023). Meanwhile, the net profit tumbled by 77.4 percent to a level of 2.2 percent on average, driven largely by FX developments for Latin American peers. Working capital remained the highest among all peer groups, placing additional financial pressure on the companies. The peer group has shown to be very volatile in profitability over the past three years.

Flexibles:

The flexible packaging peer group remains relatively stable but declined in most financial metrics. Despite the slight dip, the sector continues to demonstrate long-term resilience due to consistent demand and pricing strategies. Net profit for the group fell by 19.4 percent, and NiROCE declined by 21.8 percent, but overall financial stability remains better than in other segments. Working capital is down 18.5 percent, falling from an already low 4.2 percent to 3.5 percent.

Wood Products:

The wood products sector recovered in 2024, with company-wide EBITDA increasing by 10.4 percent and EBIT surging by 56.6 percent. Net profits rose from 1.4 percent in 2023 to 2.3 percent in 2024, although the industry is still below pre-2023 levels. A major lowlight was Enviva filing for bankruptcy.

Graphic Paper:

The graphic paper sector continued to decline, with revenue decreasing by 1.3 percent. However, segment EBIT improved by 12 percent while operating cash flow (OCF) dropped quite significantly by 36.4 percent, putting pressure on cash flows. Net-investment ratios decreased by 5.4 percent.

Overall

The B3NCH FY-2024 report highlights a mixed financial landscape, with tissue and wood products showing improvements, while packaging, pulp, graphic paper, and flexibles continue to slightly underperform relative to historical results. Profitability pressures and rising working capital requirements pose challenges across most sectors especially in times of high interest rates. Tissue remains the strongest performer, benefiting from stable demand and cost advantages. Pulp saw the steepest decline in net profit, highlighting the volatility in this segment. Packaging companies must navigate increasing costs and efficiency challenges to maintain profitability. Going forward, financial stability, disciplined investment, and operational efficiency will be crucial for companies looking to navigate the first half of 2025 successfully.

About B3NCH and StepChange Consulting

The B3NCH report, published biannually by StepChange Consulting, offers a comprehensive financial analysis of approximately 100 companies within the pulp, paper, and packaging industries, providing a detailed benchmarking tool for industry leaders. StepChange Consulting, founded in 2006 and headquartered in Vienna, Austria, is an independent management consultancy specializing in wood, pulp, paper, packaging, and tissue sectors. With a proven track record, StepChange supports clients from strategy development to the implementation of operational improvements, delivering innovative yet pragmatic solutions to achieve measurable business results.

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