This century-old Nordic paper mill announced layoffs, with sales in China accounting for 5% of the group's total!

The decline in demand for pulp and the continued weakening of the US dollar have forced the Rotheneros Group to lay off 47 employees. Last week, the company issued a profit warning, explaining: "The continuous rise in raw material prices for timber, unfavorable market developments, particularly the poor performance of the chemical thermomechanical pulp market produced by the Rotheneros paper mill, and the weakness of the US dollar have all negatively impacted the financial performance of the Rotheneros Group in the first quarter of 2025."

Rotne Ros has stated that most of the affected employees work at the paper mill located in Sunning. The company pointed out in a written statement: "Last year, the price of pulping wood increased by 15%, while electricity prices remained high. Additionally, the exchange rate of the dollar also declined. This means that mechanically produced pulp from Sweden has lost its price competitiveness in the world market, leading to a decrease in sales. These three factors have collectively forced the group to make this painful decision quickly in response to the current economic downturn."

Lennart Eberley, CEO of Rottne罗斯, commented, "Given that our main production at the Rottne paper mill is mechanical pulp, unfortunately, this is where the deepest cuts need to be made. We have invested heavily in the factory over the past two years, which demonstrates our long-term confidence in the future. The global market for high-quality paperboard pulp remains strong, but currently, all external conditions are unfavorable for us to produce at a competitive price." It seems there's a typo or missing text at the beginning ("Rottne罗斯"). It should probably say "Rottne罗斯 paper mill". Please, if you can, provide the correct name to ensure accuracy.

Rotheneros Corporation boasts over a century of history, specializing in the development and production of chemical and mechanical commodity pulp. Our high-quality pulp is supplied to various niche markets across Europe, Asia, and North America. The majority of our products cater to the growing paperboard and packaging market, while our pulp products for filters and electrical applications hold a leading position. In recent years, Rotheneros has expanded into a new field, developing and producing fiber trays and packaging solutions.

Rotaneros has two pulp production bases in Sweden, namely the Rotaneros Paper Mill and the Valvik Paper Mill. Other components of the group include Rotaneros Packaging Company, which produces molded fiber, and Nickvest Forest Company and SIA Rotaneros Baltic Company, which provide raw materials for the group.

Rotheneros Packaging Company's sustainable packaging solutions project in collaboration with Poland's Arctic Paper is expected to commence production in 2025. This marks a significant milestone in Rotheneros' investment in high-quality, fossil-free packaging solutions. The establishment of this plant validates Rotheneros' exceptional product quality, as well as its scalable and competitive full-scale industrial production process. Compared to the currently dominant plastic products in the market, Rotheneros' fiber trays offer greater environmental advantages, highlighting their substantial long-term market potential.

According to the previously released 2024 performance report, the turnover of Rottneros Group in 2024 was SEK 2.7 billion, a decrease of 2% compared to SEK 2.755 billion in the same period last year. Excluding the adjusted groundwood pulp business (which has been excluded from the product portfolio since the second quarter of 2023), sales remained flat compared to the same period last year. During this period, the benchmark price of NBSK commodity pulp in US dollars increased by 18%.

Sales of products other than pulp totaled SEK 344 million, up from SEK 265 million in the same period last year, accounting for 13% of this period's turnover. The variable costs for this period were higher than the previous year, with costs increasing by approximately SEK 102 million per ton. The main reason for the increase in costs was the rise in pulpwood prices, while energy costs also increased. The supply of wood chips and logs was sufficient, and the volume of timber imported from the Baltic countries remained at normal levels.

Compared to 2023, fixed costs increased by SEK 45 million this period. The reasons for the cost increase, in addition to inflation, include rising maintenance and external costs. Due to production issues at the Valvik paper mill at the beginning of the year, the cumulative production from January to December decreased by 3% year-on-year, reaching 340,700 tons. The production of chemical thermomechanical pulp this period reached 121,900 tons, matching the record set in 2023.

In the fourth quarter, customer deliveries of sulfate pulp and chemical thermo-mechanical pulp decreased by 14% year-on-year to 72,800 tons. Cumulative deliveries fell by 5% year-on-year to 333,200 tons. Sulfate pulp sales were constrained by reduced production. For the full year, weak market conditions for chemical thermo-mechanical pulp also impacted its delivery volumes.

The EBIT for January-December 2024 was SEK 47 million, compared with SEK 139 million for the same period last year. The demand for CTMP was affected by a weak Chinese pulp market during the year. However, the demand for Rottne sulphate pulp has been good. Higher sales prices were offset by increased wood costs, which had a negative impact on profits.

In the Chinese market, the sales of the Rotneros Group in 2024 were 123 million Swedish krona, accounting for 5% of the group's total sales, compared to 255 million Swedish krona and 9% in the previous year. India is the largest market for the Rotneros Group in Asia, with sales reaching 207 million Swedish krona in 2024, accounting for 8% of the group's total sales, while sales in India were 275 million Swedish krona in 2023.