Arctic Paper S.A., Q3 2022: Strong sales and continued high profitability

“Our margin remained at a high level but was affected by higher costs for raw materials, energy, and transport.”
Michał Jarczyński, CEO 

The third quarter of 2022 was another strong quarter, with sales at all-time high and stable results. Arctic Paper's revenues increased by 58 percent compared with Q3 last year to PLN 1 402.1 million (889.7 million). The EBITDA result was tripled to PLN 298.2 million (102.1 million). As in the second quarter, both pulp and paper contributed to the strong results. Our financial position remains rock solid: Arctic Paper’s net debt/EBITDA ratio reached -0,22 (0,66) at the end of the period, corresponding to a net debt of PLN -199.6 million (186.6 million).

Paper segment sales increased by 62 percent to PLN 1 042.1 million (645.0 million) with an EBITDA of PLN 205.7 million (46.3 million). Our margin remained at a high level but was affected by higher costs for raw materials, energy, and transport. Therefore, we have implemented a price increase after the end of the period. All three paper mills have continued to run on a very high production-capacity usage, reaching 96 percent for the period after minor maintenance shutdowns. Sales for the period were 168.000 tons (169.000 tons) and we have continued to effectively manage the production mix to optimize the value of the output.

For Rottneros – the pulp segment – the revenue for the third quarter increased by 41 percent to SEK 806 million (570 million) with an EBITDA result of SEK 233 million (130 million). Production volume for the period was up to 96 000 tons (92 000 tons). Rottneros decided during the period to discontinue the production of groundwood pulp. The cost of the closure is expected to be 60 MSEK, while Rottneros plans to invest 160 - 200 MSEK to significantly increase capacity and production in the mill's CTMP line.

For packaging, volumes declined slightly during the period in line with our ambition to maximize the production in terms of profit per ton and were 16 000 tons for the last twelve months.

The Group’s stable position in the energy market is a prerequisite for the strong result. During the period Arctic Paper took an important step towards self-sufficiency, carbon neutrality and the circular economy when the new flexible multifuel boiler in Munkedal went into operation in September. The biomass boiler will provide the mill with another stable source of energy at a competitive price. The energy projects are running according to plan, and we have recruited a Group Business developer to coordinate the Group's activities in the area.

While our business is setting new records, the macroeconomic environment is more uncertain than ever. We have a high readiness for a period when both our customers and general demand can be severely affected by cost inflation and rising energy prices. I expect record results for the Group 2022. Even though we still look to the near future with confidence, we are at the same time well prepared with a strong balance sheet for more turbulent times that may follow, as well as for the upcoming planned investments.

Michał Jarczyński, CEO of Arctic Paper S.A.