Rottneros
Rottneros is an independent global supplier of premium market pulp to selected niches. A new focus is development and sales of moulded fibre trays. We are a profitable and sustainable company that can contribute to a better and cleaner world through our products and our responsibility.
We constantly improve our offering, working in close customer relationships, with care for the environment and through high technical exper- tise. By focusing on the best interests of people, we create a respectful workplace and a secure foundation for engagement and innovation.
OPERATIONS
4 Comments by the CEO
6 Rottneros in brief
8 The year in brief
10 Market
17 Certifications and awards
18 Strategies
19 Sustainability goals
20 Raw material supply
22 Production - Vallvik Mill
24 Production - Rottneros Mill
26 Production - Rottneros Packaging
28
Products and areas of application
SUSTAINABILITY REPORT
36 Sustainability Report
38 Letter from the Chairman
40 Impact in the value chain
42 Sustainability strategy
44 Focus area safety and health
46 Focus area long-term profititability
48 Focus area customer satisfaction
50 Focus area gender equality
52 Focus area environment
55 Energy strategy
56 Environmental data
DIRECORS´REPORT
58 Directors´ Report
60 Proposal for profit distribution
60 The Board of Directors' proposal for guidelines for remuneration
62 Compensation Report
63 Opportunities and risks
70 Corporate governance Report
FINANCIAL REPORTING
78 Consolidated statements of income
79 Consolidated balance sheet
80 Consolidated statement of changes in shareholders' equity
81 Consolidated statement of cash flows
82 Parent Company statements of income
83 Parent Company balance sheet
84 Parent Company statement of changes in shareholders' equity
85 Parent Company statement of cash flows
86 Supplementary disclosures and notes
100 Proposed statement
101 Auditor's Report
OTHER INFORMATION
104 Board, Auditors and Management
106 The Rottneros share
108 Multi-year overview
109 Performance measures and definitions of key ratios
110 Glossary
111 Annual General Meeting
COMMENTS BY THE CEO
Strong and eventful year, niche strategy produces results
2021 was both an eventful and strong year in terms of results.
The development of Rottneros' strategic position as a leading niche player in several areas continues unabated in combination with our focus on efficiency and sustainability.
2021 was an intense year with a strong performance for Rottneros, mainly because of our targeted efforts to develop the Group to the next level. Our dedicated employees, strong balance sheet and efficient facilities were critical for addressing both the challenges and the opportunities we encountered.
SUSTAINABLE AND ATTRACTIVE EMPLOYER Employee safety always comes first. We focused heavily on their well-being during the year, including the psychosocial impact of the pandemic. Employee surveys were changed to every two months to take the pulse of the organisation, instead of once a year. We continued to take a structured approach to work efficiently with distancing and to enable those who could to work from home. Read more about how we have dealt with the coronavirus pandemic on page 44. To further improve safety in the long term, we continue to work on soft values such as safety culture and behaviours, combined with gradual invest-ments to eliminate accident risks in our operations.
Our organisation is undergoing a generational and skills transition, and it is clear that our targeted efforts to strengthen the Rottneros brand as an attractive and exciting employer in the locations where we operate have produced results. Our recruitment efforts were successful during the year, with our new highly competent employees matching the required skills by a good margin.
STRONG AND STABLE PULP MARKET IN EUROPE The pandemic continued to impact the pulp market in 2021.
Global logistics faced major challenges, causing sharp increases in container freight rates. The disruptions resulted in relatively isolated sub-markets, which caused pricing to be more regional rather than global. Overall, this meant reduced competition in the European market, where the list price for NBSK rose to record levels, around 1 340 USD, during much of the second half of the year. At the same time, prices in China fell from the second quarter onwards due to a worsening market balance.
Our niches performed well, with growing demand over the course of the year. We increased in packaging and in the fast-growing market for unbleached pulp, UKP. As a result, tissue paper and printing and writing papers accounted for a smaller share of sales. Customers appreciate both our high level of service and the high quality of our pulp.
UNPLANNED STOPS AND HIGH ELECTRICITY PRICES IMPACTED PRODUCTION
Our focus on preventive maintenance and continuos improve- ments remained successful in 2021. However, the clear progress in gradually increasing production capacity was offset by some larger unplanned disruptions. We were also forced to curtial production at Rottneros Mill during the second half of the year due to high electricity prices. Consequently, production for the year did not fully meet our expectations.
The electricity market was a concern mainly in the second half of the year, as the high summer prices rose even higher in the autumn. Nevertheless, there was no significant impact on our profit because of our highly effective electricity price hed- ges. During the autumn, we initiated an analysis of the poten- tial of a more long-term, structural approach to reduce our exposure to volatile electricity prices, in addition to electricity price hedging. At the same time, we became even more determined to continuously improve our internal efficiency to address challen- ging external factors.
A NEW ROTTNEROS TAKES SHAPE
Nykvist Skogs, which has been part of the group for a couple of years, is now fully integrated into the group. In combination with our investment in fibre trays within Rottneros Packa- ging, this means that a new Rottneros, with more strong and growing operational pillars, is starting to take shape. Nykvist Skogs adds significant value through improved management of raw material flows to Rottneros Bruk and through its focus on the large and important group of private forest owners. At the same time, Packaging is ready to take the next step and sig- nificantly increase capacity within the joint venture with Arctic Paper. The initiative is in line with the times, given the rapidly growing demand for renewable food packaging. For example, to comply with a new EU directive, Sweden introduced a ban on certain single-use plastic articles from 1 December 2021.
STRONG PROFIT AND CASH FLOW PAVED THE WAY TO RESUME DIVIDEND
Solid profitability combined with a strong and balanced balance sheet are fundamental to our strategy of creating long-term sustainable value. We work actively and continuously to implement this strategy. In July, we redeemed our outstanding
bond and replaced it with bank financing. Strong earnings and cash flow enabled us to reduce our debt burden by 266 MSEK, while maintaining good liquidity. As a result, our financing costs were significantly reduced. Our successful emergence from the pandemic is further confirmed by the resumption of the dividend in the autumn. An Extraordinary General Meeting resolved to distribute 0,45 SEK per share, corresponding to about 50 percent of total net profit for 2019 and 2020. Our financial position was solid at year-end. Available liquidity amounted to 443 MSEK, net cash to 16 MSEK and the equity ratio was an impressive 64 percent.
SIGNIFICANT EVENT AFTER THE END OF THE YEAR After the end of 2021, Russia attacked Ukraine, something we sharply condemn. It is with anxiety and dismay that we follow the development. Rottneros has limited exposure to Ukraine and Russia, less than 1 percent of the total sales. Sales to Ukraine are negatively affected by the war, while all business with Russia now have been suspended. The greatest impact on the company is indirectly through higher prices for energy and freight and other possible imbalances in the market.
SUSTAINABLE DEVELOPMENT
We develop our business in line with the long-term targets adopted by the Board of Directors, where sustainable develop-ment can be found on various levels as a clear common thread in everything we do. Above all, we care about our employees, the environment and sound financial performance. One of the key objectives is to make the Group fossil free by 2030. We are now formulating a clear plan for this purpose. Our investments in our core business primarily focus on increased sustainability and higher availability.
In conclusion, I am extremely proud and pleased to work at Rottneros, with our fantastic employees. I would like to extend a warm thank you to them. I would also like to thank our custo- mers and suppliers, as well as the owners and the Board of Directors. We are quite confident about the future, especially since Rottneros and the forest industry are part of the solution to the climate problem.
Lennart Eberleh CEO and President
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Rottneros AB published this content on 21 March 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 March 2022 07:50:05 UTC.