Rottneros Turns a Corner: Cost Cuts and Lower Wood Prices Restore EBITDA
The Swedish pulp maker posts its first positive EBITDA in several quarters, but cash flow and demand remain the watch items.
RROS.ST · Earnings Call · 2026-08-06
A Positive Surprise in a Tough Market
Rottneros AB (publ) reported a second-quarter 2026 EBITDA of SEK 31 million, a marked improvement from the negative figures that had defined its recent trajectory. As CEO Per Bjurbom explained, the company was "coming out of a streak of quarters where we have been on the negative side on EBITDA number" before delivering this result. The key driver was a long-anticipated decline in wood prices, which directly feeds the cost structure of the business. CFO Monica Pasanen highlighted that the cost of wood—the single largest input—has fallen from its 2025 peak and continues to exert a positive effect. This is not just a one-time swing; the company's own price sensitivity analysis in the annual report indicates that a SEK 0.50 move in the dollar can impact profitability by roughly SEK 68 million annually, illustrating how cost and currency movements can materially alter the P&L.
We are very pleased to see that we are showing up an EBITDA of SEK 31 million.
Cost Discipline Meets Niche Focus
The turnaround is not solely a function of external cost relief. Rottneros has been actively restructuring its operations, cutting fixed costs and headcount from 288 to 266 employees. The company has also sharpened its niche strategy, directing 79% of volumes into prioritized segments such as electrotechnical pulps and cartonboard. Per Bjurbom noted, "in the segments that I described in my presentation, I think we have a quite good positioning." This differentiation is crucial in a market where European paper production is declining by 2.5% and where pulp prices have moved sideways. The company has managed to increase its share in Europe by 2.8% in the first half, despite the overall contraction. Electricity prices remain a volatile factor, especially for the CTMP mill, where the company has adopted a flexible operating mode that adjusts production based on power costs. The Vallvik Mill will undergo its annual maintenance shutdown in late September, adding a temporary cost headwind, but management expects the downward trend in cost of wood to persist.
Cash Flow Still a Concern
While the EBITDA inflection is encouraging, the company's cash flow story is less rosy. Operating cash flow was negative SEK 81 million in the first half, driven by working capital build-up ahead of planned maintenance and the summer standstill at Rottneros Mill. Monica Pasanen signaled that "we will continue to have very strict focus on our working capital and on our cash flow," and the company is cutting capital expenditure to roughly SEK 60 million this year versus SEK 166 million in 2025. This is a deliberate trade-off: lower investment now to protect the balance sheet, but it could create bottlenecks later, as acknowledged in the Q&A. The company also sold emission rights last year, providing a one-time boost that will not repeat.
Connecting to the Sector
Rottneros's experience mirrors that of other pulp and paper producers. For instance, South Africa's Sappi (SAP.JO), which reported the same day, also emphasized raw material and operating rate challenges. This suggests that lower wood prices are a sector-wide tailwind, not a company-specific quirk. Globally, the keyword wood prices has gained momentum, and the company's focus on niche products is a clear differentiator in a commoditized market. As Per Bjurbom put it, "we are in a position within the niches we are delivering into that we have very strong underlying growth." The packaging joint venture in Poland is scaling up to produce up to 1 million trays per month, though profitability remains modest. In summary, Rottneros appears to have stabilized its earnings, but the commitment to cost discipline and cash preservation will be tested as the company navigates a still-soft demand environment.