Arctic Paper Navigates Challenging Market Conditions with Focus on Efficiency and Financial Discipline

Arctic Paper S.A., a leading European producer of high-quality graphic paper and pulp, has reported its financial results for the full year 2025, highlighting resilience amid a difficult macroeconomic environment marked by weak demand and cost volatility.

Financial Performance Overview

• Revenue: PLN 3.20 billion (↓ 6.9% YoY)

• EBIT: PLN -153.8 million (vs. +PLN 184.3 million in 2024)

• Net Result: Loss of PLN 175.4 million (vs. profit of PLN 161.1 million in 2024)

• EBITDA: PLN 40.5 million (↓ 86% YoY)

The decline in profitability was primarily driven by lower selling prices, weaker demand, and sustained pressure from raw material and energy costs.

Operational Highlights

• Maintained stable production volumes despite demand pressure

• Continued cost optimization and efficiency improvements

• Adjusted production levels to align with market conditions

• Strengthened operational resilience across paper and pulp segments

The Group produced approximately 827,000 tonnes of paper and pulp combined, with paper accounting for 59% of volume .

Capital Expenditure & Investment Strategy

• Shift in investment approach:

  • Limited large capital-intensive projects

  • Focus on low-risk, quick-return initiatives

• Total investing cash outflows: PLN 302 million

• Continued investments mainly in property, plant, and equipment

This disciplined strategy aims to preserve liquidity and maintain flexibility for future growth opportunities.

Market Environment

• Weak economic recovery in Europe

• Continued structural decline in graphic paper demand

• High volatility in energy and raw material costs

• Limited ability to pass cost increases to customers

Despite this, Arctic Paper maintained strong market positioning with diversified products and geographic reach (97% of sales in Europe) .

Dividend

• No dividend declared for 2025
  (compared to PLN 1.00 per share in 2024)

Balance Sheet & Liquidity

• Total assets: PLN 2.68 billion

• Equity: PLN 1.70 billion

• Increased short-term debt levels due to financing needs

• Cash position declined due to investment activities

Liquidity ratios weakened but remain manageable.

Projects, Shutdowns & Restructuring

• No major shutdown announcements disclosed

• No large-scale restructuring or layoffs explicitly reported

• Focus remained on operational adjustments and cost control rather than structural downsizing

M&A / Acquisitions

• No new acquisitions or mergers reported in 2025

• Existing integration of Rottneros continues to support pulp segment

Future Outlook

Arctic Paper remains cautious about near-term market conditions but is positioning for recovery:

• Continued emphasis on cost discipline and efficiency

• Readiness to resume growth investments when conditions improve

• Increasing focus on packaging and sustainable fibre-based products

• Benefiting from long-term trends favoring eco-friendly materials

Management expects improved performance once European demand stabilizes.

Management Commentary

CEO Michał Jarczyński stated that 2025 required a strong focus on resilience:

The Group prioritized operational stability, strict cost control, and selective investment to navigate a highly volatile environment while preparing for future opportunities.

Key Takeaways

• Significant profitability decline due to market conditions

• Strong cost discipline and operational stability maintained

• Conservative investment strategy adopted

• No dividend, no major M&A activity

• Positioned for recovery with focus on sustainability and packaging