Rottneros AB Reports Challenging 2025 Amid Weak Pulp Market; Strengthens Balance Sheet and Advances Strategic Growth Initiatives

Rottneros AB has released its Annual and Sustainability Report for 2025, highlighting a year marked by significant market challenges, cost pressures, and strategic financial strengthening, while maintaining operational stability and advancing long-term growth initiatives.

Financial Performance Overview

• Net Sales: SEK 2,539 million (↓ 6% YoY)

• EBITDA: SEK -253 million (vs +179 million in 2024)

• Net Income: SEK -452 million

• EPS: SEK -2.10

• Operating Cash Flow: SEK -71 million

The decline was primarily driven by:

• Weak global pulp market conditions

• High raw material (pulpwood) costs

• Weaker USD impacting pricing

Operational Highlights

• Production: 331 thousand tonnes (↓3%)

• Deliveries: 335 thousand tonnes (↑1%)

• Stable production and high operational availability maintained despite market conditions

• Vallvik Mill achieved record production of 233,000 tonnes

• Rottneros Mill production reduced due to weak CTMP market demand

Key Strategic Developments

1. Cost Optimization Program

• Cost-saving measures initiated in March 2025

• Expected annual savings: ~SEK 45 million (full effect from 2026)

2. Capital Raising & Financial Strength

• Rights issue raised ~SEK 290 million

• Strengthened liquidity and reduced debt

• Equity ratio improved to 60% (above 50% target)

• New loan agreement signed in March 2026, improving borrowing flexibility

3. Capital Expenditure & Investment Trends

• Investment levels significantly reduced vs prior years

• Focus shifted toward:

  • Lower capital intensity

  • Reducing working capital (down by ~SEK 200 million YoY)

• Key investments:

  • Vallvik Mill upgrades (~SEK 116 million)

  • Rottneros Mill (~SEK 48 million, including wastewater treatment reactor)

  • Solar power + energy storage systems

4. Packaging Expansion (Growth Project)

• Joint venture with Arctic Paper in Poland reached commercial-scale production

• Focus: molded fiber trays (sustainable packaging)

• Strong demand for eco-friendly packaging solutions

Market & Industry Outlook

• 2025 marked by:

  • Weak demand in Europe & North America

  • Overcapacity in mechanical pulp (CTMP)

  • Declining pulp prices

• Positive signals:

  • Pulp prices trending upward entering 2026

  • Wood prices declining due to improved supply-demand balance

• Strong long-term demand drivers:

  • Transition from plastic to fiber-based packaging

  • Growth in Asia (especially China)

  • Expansion in electrification (E-pulp demand)

Dividend & Shareholder Returns

• No dividend proposed for 2025 due to losses

• Dividend policy remains:

  • 30–50% of net income over time

Sustainability & ESG Progress

• Fossil CO₂ emissions reduced by ~60%

• Continued progress toward:

  • Fossil-free production by 2030

  • Increased energy self-sufficiency (solar + PPAs)

• Workplace safety improved:

  • Lost-time injuries reduced to 2 incidents

Risks & Challenges

• High dependency on:

  • Pulpwood prices (≈75% of variable costs)

  • Energy costs

  • Currency fluctuations (USD exposure)

Management Commentary

CEO Per Bjurbom commented:

The company maintained strong operational performance in areas under its control, particularly cost efficiency and production stability, despite external pressures.

Future Outlook & Strategy

Rottneros will focus on:

• Profitable growth in niche markets

  • Filters

  • Electrotechnical pulp (E-pulp)

  • Sustainable packaging

• Cost efficiency and capital discipline

• Lower investment intensity

• Strengthening balance sheet

• Expansion in fiber-based packaging

Conclusion

Despite a difficult year financially, Rottneros demonstrated resilience through operational stability, strategic cost reductions, and strengthened financial positioning. With improving market conditions and strong exposure to sustainable growth segments, the company is positioned for recovery and long-term value creation.