1

INTERIM REPORT | JANUARY-SEPTEMBER 2011

THE NATURAL PART IN

SMARTER PACKAGING

Per Lindberg, CEO and President, and Susanne Lithander, CFO | 28 October, 2011

2

AGENDA

• Highlights

• Development by Business Area

• Financials

• Outlook

3

HIGHLIGHTS IN Q3 2011

• Strong earnings

‒ Operating profit of MSEK 296, margin 13%

• Very strong cash flow

‒ Cash flow from operating activities of MSK 531

• Significant increase in earnings for packaging paper

• Net cash position

• Growing uncertainty about packaging paper demand

‒ Weakened order situation

‒ Stable local prices for packaging paper

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THE NATURAL PART IN SMARTER PACKAGING

• Pentawards Best of the Show

‒ Billerud’s design agency NINE received the world’s finest

design award

• Design Challenge 2011

‒ Billerud FibreForm® was rewarded at the largest Nordic

packaging fair

5

Business areas

STRONG RESULTS FROM BUSINESS AREAS

292

0

50

100

150

200

250

300

Apr-Jun 11 Jul-Sep 11

EB

IT, M

SE

K

Currency hedging, other, etc

Business areas

275296

+35%

+8%

0

50

100

150

200

250

300

Apr-Jun 11 Jul-Sep 11

EB

IT,

MS

EK

Packaging & Speciality PaperPackaging BoardsMarket Pulp

+40%

+27%

+50%

+35%

216

Billerud group

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PACKAGING & SPECIALITY PAPERKraft & Sack Paper

PACKAGING BOARDS

S/C Fluting, Liner, Liquid Board

MARKET PULPNordic Bleached

Softwood Kraft Pulp

BUSINESS AREAS & SEGMENTS

Note: Graph shows sales breakdown per business area for July-September 2011.

7

PACKAGING & SPECIALITY PAPERMarket situation in Q3 2011

• Order situation for sack and kraft paper continued to

weaken gradually

‒ Seasonality and reduction of stock levels were main reasons

• Market-related production shutdowns implemented to

restore market balance

‒ Mainly related to sack paper

• Stable prices in local currency vs. Q2 2011

• Increased price pressure during the quarter

8

8

PACKAGING & SPECIALITY PAPERFinancials – Q3 2011 vs. Q2 2011

• Operating profit up MSEK 41

• Improved currency situation and

lower costs

• Lower sales volume had a negative

impact on operating profit

0

20

40

60

80

100

120

140

160

Q3 Q4 Q1 Q2 Q3

Opera

ting p

rofit,

MS

EK

20112010

Q3 2011 Q2 2011 Q3 2010 FY 2010

Net sales, MSEK 1,056 1,079 1,085 4,166

Operating profit, MSEK 143 102 106 417

Operating margin, % 14 9 10 10

9

PACKAGING BOARDSMarket situation in Q3 2011

• Order situation weakened to some extent

‒ Growing uncertainty about demand compared with Q2 2011

• Stable prices in local currency vs. Q2 2011

• Increased price pressure towards the end of Q3 2011

‒ Related to lower prices for recycled fibre-based grades

10

PACKAGING BOARDSFinancials – Q3 2011 vs. Q2 2011

• Operating profit up MSEK 25

• Improved currency situation and

lower fixed costs

0

20

40

60

80

100

120

140

Q3 Q4 Q1 Q2 Q3

Opera

ting p

rofit,

MS

EK

20112010

Q3 2011 Q2 2011 Q3 2010 FY 2010

Net sales, MSEK 696 704 649 2,428

Operating profit, MSEK 119 94 107 271

Operating margin, % 17 13 16 11

11

MARKET PULPMarket situation in Q3 2011

• Weakened pulp market vs. Q2 2011

• Producers’ pulp stocks increased

• Demand relatively good vs. Q2 2011

• Price in Europe fell to ~950 USD/tonne at end of Q3 2011

from ~1,025 USD/tonne at end of Q2 2011

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MARKET PULPFinancials – Q3 2011 vs. Q2 2011

• Operating profit up MSEK 10

• Higher sales volume and an

improved currency situation compensated for less favourable

prices in local currency

0

10

20

30

40

50

60

70

80

90

100

Q3 Q4 Q1 Q2 Q3

Opera

ting p

rofit,

MS

EK

20112010

Q3 2011 Q2 2011 Q3 2010 FY 2010

Net sales, MSEK 465 435 452 1,731

Operating profit, MSEK 30 20 92 276

Operating margin, % 6 5 20 16

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Q3 2011 IN SUM

• Strong earnings

‒ Operating profit of MSEK 296, margin 13%

‒ MSEK +76 in higher operating profit from business areas

• Very strong cash flow

• Growing uncertainty about packaging paper demand

• Billerud received two of the most recognised packaging

awards

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FINANCIAL INFORMATION

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QUARTERLY KEY FIGURES

332335335Sales volume (ktonnes)

Q3 2011 Q2 2011 Q3 2010

Net sales, MSEK 2,327 2,383 2,251

Operating profit, MSEK 296 275 276

Operating margin 13% 12% 12%

Profit/share, SEK 2.03 1.88 1.84

Net debt/equity ratio -0.03 0.06 0.12

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OPERATING PROFIT BRIDGE Q3 2011 vs. Q2 2011

296

275

-22

-35

+4

+26

+57

-9

0

50

100

150

200

250

300

350

Operating

profit

Q2 2011

Sales &

production

volumes*

Selling prices

(in respective

sales

currency)

Effects of

exchange rate

fluctuations,

incl. hedging

Change in

variable costs

Change in

fixed costs

Change in

depreciation

Operating

profit

Q3 2011

MS

EK

* Includes product mix.

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JANUARY-SEPTEMBER KEY FIGURES

+0.150.12-0.03Net debt/equity ratio

Jan-Sep 2011 Jan-Sep 2010 vs. 2010

Net sales, MSEK 7,257 6,549 +11%

Operating profit, MSEK 903 711 +27%

Operating margin 12% 11% +1p.p.

Profit/share, SEK 6.19 4.66 +33%

Sales volume (ktonnes) 1,039 984 +6%

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WELL ABOVE TARGET FOR OPERATING MARGIN

Financial target

-2%

0%

2%

4%

6%

8%

10%

12%

14%

FY 06 FY 07 FY 08 FY 09 FY 10Op

era

tin

g m

arg

in,

rolli

ng

12

mo

nth

s (

%)

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WORKING CAPITAL KEY RATIOS

0

10

20

30

40

50

60

70

0901

3109

0430

0907

3109

1031

1001

3110

0430

1007

3110

1031

1101

3111

0430

1107

30

DS

O d

ays

OverdueDays sales outstanding WC as % of quarterly sales

0.0

1.0

2.0

3.0

4.0

5.0

6.0

0901

3109

0531

0909

3010

0131

1005

3110

0930

1101

3111

0531

1109

30%

of to

tal re

ce

iva

ble

s

0%

10%

20%

30%

40%

50%

60%

70%

0903

0906

0909

0912

1003

1006

1009

1012

1103

1106

1109

Work

ing c

apital (e

xcl. IA

S)/

quart

ely

net tu

rnover

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STRONG CASH FLOW GENERATION FROM OPERATION

1) Minus equals increase in net debt

MSEKQ3 2011 Q2 2011 Q3 2010

Operating surplus, etc 464 421 417

Change in working capital, etc. 83 57 67

Net financial items, taxes, etc. -16 -10 -20

Cash flow from operating activities 531 468 464

Current net investments -121 -129 -113

Operating cash flow 410 339 351

Dividend - -361 -

Other items, not affecting cash flow -2 -1 1

Change in net debt 1) 408 -23 352

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80

100

120

140

160

2004 Q3

2005

Q2

2006

Q1

2007

Q4

2007

Q3

2008

Q2

2009

Q1

2010

Q4

2010

Q3

2011

80

120

160

200

240

280

2004 Q3

2005

Q2

2006

Q1

2007

Q4

2007

Q3

2008

Q2

2009

Q1

2010

Q4

2010

Q3

2011

Electricity index (Sweden*) Wood price index

Source: Nordpool. *Price area Sweden Source: Billerud

MARKET PRICES AFFECTING RESULT

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MARKET PRICES AFFECTING RESULT

550600650700750800850900950

1,0001,050

2004 Q3

2005

Q2

2006

Q1

2007

Q4

2007

Q3

2008

Q2

2009

Q1

2010

Q4

2010

Q3

2011

94

97

100

103

106

109

112

115

118

2004 Q3

2005

Q2

2006

Q1

2007

Q4

2007

Q3

2008

Q2

2009

Q1

2010

Q4

2010

Q3

2011

Market pulp (USD/t) TCW index*

Note: Average price for the quarter Source: Riksbanken *Total Competitiveness Weights Index

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CURRENCY SITUATION

Average hedged currency rates (share of net flow)

Oct-Dec 2011

Jan-Mar 2012

Apr-Jun 2012

Jul-Sep 2012

Total 12 months

9.27 9.38 9.21 9.24 9.30

(84%) (64%) (27%) (14%) (47%)

6.59 6.57 6.57 6.68 6.59

(80%) (60%) (29%) (16%) (47%)

10.61 10.60 10.49 10.63 10.59

(87%) (55%) (34%) (13%) (48%)

Note: Data in table and graph are as of 30 September 2011. *As of 30 September 2011.

• Profit effect of net flow hedging MSEK -5 (119) for Q3 2011 and MSEK 146 (265) for Jan-Sep 2011

• Market value of outstanding contracts not relating to account

receivables was MSEK -24*

Hedge level 12 months forward:

48%

47%

47%

GBP

USD

EUR

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OUTLOOK

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OUTLOOK FOR FY 2011

• Market development at the start of the fourth quarter was

marked by some uncertainty about demand. Customers

have continued to reduce their packaging paper stock levels,

which is having a negative impact on orders. Underlying

demand, however, is estimated to be relatively stable in most

segments

• The start of the fourth quarter has been characterised by

continued price pressure

• Billerud continues its efforts to increase the proportion of

sales of packaging paper solutions, i.e. material combined

with services in order to create conditions for a relatively more stable development

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Q&A