Arctic Paper

Press Release

Kostrzyn nad Odra / Gothenburg, November 7th, 2024

Arctic Paper S.A., Q3, 2024:

•     Q3 consolidated sales revenue amounted to PLN 819.3mn (EUR1 190.3mn).

•     EBITDA in Q3 was PLN 77.3mn (EUR1 18.0mn).

•     EBIT in Q3 was PLN 47.5mn (EUR1 11.0mn) and net profit PLN 36.6mn (EUR1 8.5mn).

•     Focus on the right balance between capacity usage and margins.

•     A 9.6 MW expansion of the PV farm in Kostrzyn began during the period.

•     Net debt PLN -27.5mn (PLN -306.7mn) with a net debt/EBITDA at -0.08 (-0.59).

“The recovery in our main segments and most important markets may take time, therefore we expect the current market situation to persist throughout the year.”

Michal Jarczyński, CEO (see letter from the CEO on page 2)

Selected financial results – Arctic Paper Group and Arctic Paper (paper segment)

Arctic Paper Group consists of Arctic Paper S.A. (parent company), Arctic Paper mills (paper segment) and pulp producer Rottneros AB, in which Arctic Paper S.A. holds a 51 percent stake.

1Arctic Paper S.A. reports in PLN. In the English press release, the amounts above were converted to EUR at the average rates for the quarter respectively. The complete quarterly report is available at www.arcticpapergroup.com

2 Net profit per share: net profit for the paper segment plus 51% of the net profit for Rottneros divided by the number of shares.

In the third quarter of 2024, Arctic Paper was still affected by an overall weaker economy in our core European markets, and subsequently lower customer demand. We are holding the ground in terms of revenue, a minor decline of 4 percent compared to the relatively strong third quarter last year, while the group's profit fell. On the other hand, compared to the previous quarter, our EBITDA margin has been strengthened. Group revenue was PLN 819.3 million (854.8 million), while EBITDA reached PLN 77.3 million (124.5 million) with a corresponding EBITDA margin of 9.4 percent. The group's financial position remains solid with a net debt/EBITDA ratio of -0.08 (-0.59).

Paper: During the period, demand for paper has continued to be dampened by the economic downturn in our largest market – Germany – with visible spillover effects in our second largest market, Poland. Paper segment revenue reached PLN 562.4 million (590.3 million), while EBITDA decreased to PLN 46.3 million (94.6 million) due to high pulp costs and a shutdown for maintenance and investment purposes in Kostrzyn. We continue to focus on margins while we also strive for a better balance in terms of capacity usage. The EBITDA margin was 8.2 percent, which is lower than the comparable quarter but higher than for the previous quarter. Capacity utilization for the period increased to 70 percent, while revenue per ton fell slightly to PLN 5.01k.

Pulp: For the pulp segment – ​​Rottneros – the development was stable in terms of revenues and results. Revenues amounted to SEK 686 million (693). EBITDA reached SEK 70 million (78) as rising raw material costs continued to negatively affect earnings. The ambitious investment program is in a final phase: the expansion of CTMP capacity at Rottneros Mill will soon be completed at the same time as the tall oil factory in Vallvik is up and running.

Packaging: Sales of packaging paper have increased slightly over the past twelve months. The joint venture investment in a new molded fiber tray production in Kostrzyn is progressing with the goal of being operational before year-end.

Power: Arctic Paper's strategy is to diversify into energy and packaging. While maintaining the group's stronghold in paper and pulp, we continue to invest in sustainable energy. During the quarter, we started a 9.6 MW expansion of the existing PV farm in Kostrzyn. When it is ready, a third of the mill's electricity needs will be covered by renewable energy. The investment in upgrading the biofuel boiler and steam turbine in Grycksbo is also going according to plan and will increase the mill's competitiveness by reducing energy costs and by generating a new revenue stream from wood pellets.

The recovery in our main segments and most important markets may take time, therefore we expect the current market situation to persist throughout the year. We continue to diversify our business in line with the 4P strategy by investing in higher margin, lower footprint and superior growth segments.

Michal Jarczyński, CEO of Arctic Paper S.A.