Rottneros Bought Two Good Quarters With Cheap Wood — and Q4 Sends the Bill

Q3's SEK 47 million EBITDA swing is almost entirely a fibre-cost story management now says is fading, with the Vallvik maintenance hit still to come

RROS.ST · Earnings Call · 2026-10-22

A Profit Made of Cheaper Wood

Rottneros went from minus SEK 21 million of EBITDA in last year's third quarter to plus SEK 26 million this time — a SEK 47 million swing that looks, on the headline, like a turnaround. Read the CFO's own decomposition and it is something narrower. Prices were flat, currency was flat, volumes were similar. “the year, we have seen a big improvement in our biggest cost item, which is wood, and wood is really the majority of the SEK 51 million that you see on the slide” — Monica Pasanen, CFO · 2026-10-22 — and in Q&A she put the wood share of that variable-cost reduction at "90% or similar". That is the whole story of the quarter. Strip out the SEK 8 million from selling emission rights and the SEK 8 million inventory write-down reversal the analyst flagged, and roughly SEK 10 million of operating EBITDA remains — a business that is still, in substance, close to breakeven, propped up by selling permits and reversing provisions. The keyword itself is an artefact of that: emission allowances jumped into the company's top three themes this quarter not because Rottneros is in the carbon business, but because the permits were worth more than the pulp margin.

The Tailwind Management Just Declared Fading

Here is the tension. A year ago, on the October 2025 call, the CEO promised the wood relief was coming: “As we've seen here, we are peaking now, and that will happen over the coming quarters.” — Lennart Eberleh, CEO · 2025-10-30 It did happen — the second quarter and this one delivered exactly what was promised. But the same lever is now being quietly retired as the forward driver:

I do not want to do any forecast regarding wood prices, but the wood prices have come down. And I don't think we should expect, say, the momentum in the reduction of wood prices would not be as big going forward compared to what they have.
Per Bjurbom, CEO · 2026-10-22

That is as close as this management comes to saying the earnings engine is sputtering. The analyst asked the only question that matters — where does the next improvement come from when the tailwind fades — and got cost discipline, working capital and hope for a pulp price recovery. Wood prices have now been the company's dominant theme for three straight quarters; for two of them it was a gift, and the third reads like a farewell. Worth noting this is not purely a Rottneros quirk. Look across today's Nordic forest reporters and the same input line shows up everywhere — pulpwood costs flagged by Billerud, wood prices by Holmen, alongside a general pulp market malaise and European graphic paper decline. When the entire Swedish forest complex starts talking about the same cost line in the same quarter, one small producer's "idiosyncratic" cost win is really a sector cycle turning over.

The Calendar Is Doing the Work

The maintenance shutdown is this quarter's number-one theme, and it explains the shape of the year better than any operating metric. Vallvik's annual stop began one day earlier than last year, putting roughly five days of the two-week outage into September — so Q3 ate a slice of cost, and Q3 also sold emission rights and reversed inventory. Meanwhile the bulk of the SEK 70–80 million hit — real maintenance spend plus the gross margin on tonnes not produced — lands in the fourth quarter. Monica was explicit that “the majority will really come in the fourth quarter. That's where we have the big impact of the maintenance shutdown.” — Monica Pasanen, CFO · 2026-10-22 Q3 was, in a real sense, borrowed from Q4. Anyone annualising the SEK 26 million is being set up.

The Balance Sheet Is the Actual Question

The most revealing exchange was not about pulp at all. Asked how much headroom exists before the original loan covenants snap back in Q2 2027, the CFO declined to forecast and pointed at pulp pricing, wood costs and the krona — currently favourable at close to SEK 10 to the dollar, a level the company has repeatedly called a swing factor worth tens of millions annually. Cash stood at just SEK 23 million against SEK 109 million of available liquidity, with “here, we have room for improvement to release capital and improve liquidity through such measures” — Monica Pasanen, CFO · 2026-10-22 offered on working capital. The history matters: the company raised a rights issue in 2025 specifically to pay down debt and shore up the balance sheet — amended loan agreements were a theme in the first quarter of this year — and it is now operating under temporary covenant waivers. A maintenance-heavy Q4 against a fading cost tailwind is exactly the scenario those covenants exist to test. Nor did the growth ambition get much oxygen. Asked whether 415,000 tonnes by 2030 — versus roughly 335,000 today — remains realistic with capital spending cut to SEK 60–65 million for the year, the CEO answered in five words: “From an operational point of view, yes.” — Per Bjurbom, CEO · 2026-10-22 No investment case was offered to bridge the gap.

The One Line That Is Genuinely Growing

There is a real story buried here. Electrotechnical pulps reached SEK 130 million in the quarter and are now the largest end-use segment — selected niches where the company's long-fibre, high-purity grades command a premium. Tissue was deliberately cut from SEK 75 million to SEK 45 million, and China volumes were halved, with the CFO blunt that “Tissue is not a prioritized end use.” — Monica Pasanen, CFO · 2026-10-22 That is disciplined mix management, not decay. The demand vector to watch is Chinese recycled-fibre inspection tightening, which is pulling substitution demand into unbleached pulp — and, per the CEO, pushing competitors out of bleached grades in the process. So the verdict is a narrow one. Rottneros executed a cost cycle well, protected its niche margins and told the truth about the fade. But two good quarters were bought with a wood-price decline, a favourable Swedish krona and a maintenance calendar that flattered Q3. None of those three is a 2027 earnings driver, and the covenant clock starts ticking in eighteen months.