BillerudKorsnäs — Earnings Release 2015

Feb 10, 2016

Quarterly financials hampered by production problems

YEAR-END REPORT January–December 2015

KEY HIGHLIGHTS

• Net sales for the quarter was SEK 5 213 million (5 124).
• Earnings per share for the quarter was SEK 0.96 (1.56).
• Operating profit was SEK 320 million (460).
• Extra costs for rebuilds and unplanned maintenance amounting to SEK 245 million negatively impacted profits for the quarter.
• Net sales Jan-Dec 2015 increased 5% and operating profit increased 36% compared to 2014.

PROPOSED DIVIDEND

The Board of Directors proposes a dividend of SEK 4.25 per share for 2015.

KEY FIGURES

• Demand and orders situation for the first quarter is expected to be stable with normal seasonal variances for all business areas.
• Average prices in local currency in the first quarter are anticipated to be stable.
• No changes to wood prices are anticipated for the first quarter.
• Investment level in 2016 will be lowered to a level of SEK 1 300 million in current production structure, excluding future restructuring projects in Gruvön and Skärblacka.

	Q4	Q4		Jan-Dec	Jan-Dec
SEKm	2015	2014	Change	2015	2014	Change
Net sales	5 213	5 124	2%	21 814	20 853	5%
EBITDA	671	809	-17%	4 003	3 279	22%
Adjusted EBITDA	672	809	-17%	3 661	3 378	8%
Adjusted EBITDA, %	13%	16%		17%	16%
Operating profit	320	460	-30%	2 586	1 901	36%
Adjusted operating profit	321	460	-30%	2 244	2 000	12%
Adjusted operating margin, %	6%	9%		10%	10%
Net profit/loss for the period	199	329	-40%	1 968	1 301	51%
Earnings per share, SEK	0.96	1.56	-38%	8.75	6.18	42%
Adjusted earnings per share, SEK	0.96	1.56	-38%	7.67	6.55	17%
Operating cash flow	360	427	-16%	1 957	1 739	13%
ROCE, %	N/A	N/A		15%	11%
Working Capital, % of net sales	10%	11%		10%	11%
Net debt/equity ratio	0.40	0.67		0.40	0.67

For further information, please contact

Per Lindberg, CEO or Susanne Lithander, CFO, +46 (0)8 553 335 00

The information in this report is such that BillerudKorsnäs AB (publ) is obliged to disclose under the Swedish Securities Market Act and was submitted for publication at 07.00 CET on 10 February 2016.

Per Lindberg, President and CEO

SEK 5 213 m NET SALES

SEK 320 m OPERATING PROFIT

6% OPERATING MARGIN

Comments by CEO Quarterly financials hampered by production problems

"In spite of a strong full-year performance, the isolated result for the fourth quarter is a disappointment. We have had a tough quarter with lost volumes and extra costs, but several of our production units have set new production records, and we have grown in accordance with our targets in business area Consumer board. The overall business situation is satisfactory with stable demand and pricing, and the drop in the Q4 results are due to internal factors only."

THE RESULT

The operating profit for the quarter was SEK 320 million, burdened with approximately SEK 245 million in unplanned extra costs. The extra costs have occurred during rebuilds and cost overruns in maintenance in our mills. We have run into technical problems that have taken longer than planned to fix and caused major cost overruns and loss of volumes, and on top of that a flooding in Beetham. Total extra cost for rebuilds and rebuild related production volume losses is approximately SEK 150 million, and cost increases for maintenance an additional SEK 95 million. We are not at all happy with our fourth quarter performance and we have to learn from this. Hence, we have decided to postpone the final phase of the build-out of the board machine in Frövi that was planned for 2016. Capacity is already built to run 525 ktonnes in 2018. This will make the investment level in 2016 approximately SEK 1 300 million excluding future restructuring projects in Gruvön and Skärblacka.

MARKET OUTLOOK

The overall market has been stable and we expect this to continue with normal demand patterns and small variations in local pricing.

For business area Packaging Paper the markets remained stable with seasonal variance during the fourth quarter. As anticipated we saw a lower than normal brown sack paper market. Prices in local currency were stable compared to previous quarter with slight deterioration in brown sack paper. We have not run our production at full capacity during the quarter and we have chosen to produce pulp instead of paper in some units.

In spite of the production problems during the quarter and the associated tight delivery situation in Consumer Board the business area has managed to deliver a 6% volume growth year over year.

Business area Containerboard shows a solid strong performance. Fluting demand continued to be strong with improved prices. The liner segment also showed a stable demand and pricing.

STRATEGY

A key part of our strategy is innovation. Since 2013, we have five-folded the number of development projects, we have increased our investments in R&D with 180% and doubled the R&D headcount. We will continue this expansion of innovation capability in 2016. We believe that these efforts and projects will be crucial elements to strengthen our product portfolio even further and thereby contribute substantially to our profitable growth.

Our innovation efforts are not only directed towards better and unique materials but also towards expanding new service and business models. One example is the complete incorporation of the "Managed Packaging" business model from Paccess into Containerboard during 2016. This means that we can fully utilize the business model of managed packaging and grow the solution based side of our business, and as a consequence we rename Containerboard to Corrugated Solutions. Other examples of new business models taking off are the two complete packaging systems from FibreForm Packaging and the three Axello Zap systems sold during last year.

Lower net sales than the previous quarter combined with higher personnel and maintenance cost led to a negative profit development.

Quarterly sales in line with last year but profit was negatively impacted by increased maintenance costs as well as production losses.

OPERATING MARGIN TARGET LEVEL >10%

ADJUSTED OPERATING MARGIN TARGET LEVEL >10%

Sales and results

Q4 2015 COMPARED TO Q3 2015

Net sales for the fourth quarter were 5% lower than previous quarter. The group was impacted by reduced sales for Packaging Paper, mainly due to seasonality and price reductions for pulp combined with negative volume effects after the rebuild in Skärblacka. Due to heavy rain in northern England beginning of December, our production facility in Beetham was flooded which further added to the production shortfall. Consumer board was affected by production losses after the rebuild of the board machine in Frövi and Containerboard lost volumes due to issues related to PM6 in Gruvön.

Operating profit, excluding effects related to Latgran and Tervasaari, decreased by 53% following lower sales and production losses combined with increased maintenance costs. The third quarter was also positively impacted by seasonally lower personnel costs during the vacation period.

Q4 2015 COMPARED TO Q4 2014

Net sales as well as volumes for the fourth quarter were slightly above net sales for the corresponding period last year, despite the negative effect from the Latgran divesture. Volumes for Consumer Board grew well above the 4-5% growth target and Packaging Paper grew by 3% mainly due to increased pulp sales. Containerboard volumes remained on the same level as last year.

Despite net sales being somewhat above last year's level, profit was reduced as a consequence of both increased maintenance costs during the quarter as well as production losses following startup problems in Frövi and Skärblacka.

CHANGE IN OPERATING PROFIT Q4 2015 COMPARED TO Q4 2014, SEKm

* Effects of exchange rate fluctuations totalling SEK 156 million comprise the following components: change in spot rates SEK 134 million, currency hedging SEK 147 million and currency effects from revaluation of trade receivables and payments from customers SEK -125 million.

The underlying operating profit for the Group increased with 12% mainly due to a favorable currency situation.

FULL YEAR 2015 COMPARED TO FULL YEAR 2014

The favorable currency development continued to have an impact on net sales which increased by 5% despite the divestment of Latgran. The liquid packaging board segment continued to grow and business area Consumer Board showed a 6% volume increase. Business area Packaging Paper reported volumes in line with last year. Decrease in brown sack paper volumes was offset with higher pulp sales. Containerboard was negatively impacted by volume losses in connection to the rebuild of PM6 in Gruvön.

The adjusted operating profit for the Group increased with 12% mainly due to the positive currency impact. The positive currency effect on sales was to some extent offset by a negative impact on externally purchased material. Operating margin developed favorable and reached 12%. Excluding the effects related to non-recurring items, operating margin improved compared to previous year and the Group reached the 10% target.

CHANGE IN OPERATING PROFIT FULL YEAR 2015 COMPARED TO FULL YEAR 2014, SEKm

* Effects of exchange rate fluctuations totalling SEK 822 million comprise the following components: change in spot rates SEK 878 million, currency hedging SEK 128 million and currency effects from revaluation of trade receivables and payments from customers SEK -184 million.

NON-RECURRING ITEMS

During the year the company had non-recurring items impacting the operating profit positively with SEK 342 million.

Non-recurring items consist of capital gains from the divestiture of SIA Latgran, amounting to SEK 440 million and provision for closure of Tervasaari site, amounting to SEK -98 million. Non-recurring items are reported as part of "Other units".

Packaging Paper business area

KRAFT AND SACK PAPER FOR CUSTOMERS WITH TOUGH DEMANDS

The Packaging Paper business area offers kraft and sack paper of premium quality plus smart solutions for customers in the industrial, medical and consumer segments. The business area also sells surplus pulp that BillerudKorsnäs does not use in its own production¹ . The business areas largest markets are Europe and Asia.

SHARE OF GROUP'S NET SALES Q4 2015

KEY FIGURES

	Quarter		Full year
SEKm	Q4 -15	Q4 -14	2015	2014
Net sales	2 020	1 959	8 552	8 101
Net operating expenses, other	-1 768	-1 656	-7 096	-6 928
EBITDA	252	303	1 456	1 173
EBITDA, %	12%	15%	17%	14%
Operating profit/loss	131	183	971	701
Operating margin, %	6%	9%	11%	9%
Sales volumes, ktonnes	281	275	1 163	1 167
whereof packaging paper	167	173	733	776

Q4 2015 COMPARED TO Q4 2014

Due to rebuild of PM 9 in Skärblacka and the timing of the annual maintenance shutdown in Skärblacka the operating profit dropped by 28%. Net sales increased with 3% compared to Q4 2014. The lower sales volume of brown sack paper was offset by higher volumes of market pulp. The prices in local currency were on the same level as last year except for brown sack paper.

FULL YEAR 2015 COMPARED TO FULL YEAR 2014

Due to a favourable currency situation and product mix, net sales increased with 6% compared to 2014, despite unchanged sales volume.

The increased net sales combined with a cost level in line with last year led to an improvement of operating profit with 39%.The volumes of Packaging paper remained stable for the year as higher market pulp sales volumes compensated the temporary lower volumes of sack paper. The kraft paper market remained stable during the year. BillerudKorsnäs' non-integrated production units suffered from higher pulp costs.

MARKET DEVELOPMENT

The market situation remained stable with seasonal variance during the fourth quarter, and a lower than normal brown sack paper market. Prices in local currency were stable compared to previous quarter except for brown sack paper.

The market for NBSK pulp weakened somewhat during the quarter compared with the previous quarter. Prices decreased to approximately USD 800 per tonne at the end of the quarter, compared to approximately USD 830 at the end of the third quarter.

OUTLOOK

During next quarter the overall Packaging paper sales are expected to be stronger as the rebuild of PM 9 in Skärblacka will increase the sales volume. Kraft paper market remains stable and the sack paper market is expected to be on normal level. Prices in local currency are expected to be stable in the coming quarter except for the brown sack paper where the market situation is slightly below expectation.

¹ The Packaging Paper business area buys and sells pulp at market price. The Group's net exposure in market pulp is estimated to average approximately 150 ktonnes annually.

Consumer Board business area

LIQUID PACKAGING BOARD AND CARTONBOARD WITH UNIQUE PROPERTIES

The Consumer Board business area delivers packaging solutions made from high-quality cartonboard for beverages, foods and other consumer goods. Smart solutions in function, design and material selection add further value for the customer. Europe is the largest market.

SHARE OF GROUP'S NET SALES Q4 2015

KEY FIGURES

	Quarter		Full year
SEKm	Q4 -15	Q4 -14	2015	2014
Net sales	1 933	1 768	8 006	7 436
Net operating expenses, other	-1 638	-1 414	-6 349	-5 852
EBITDA	295	354	1 657	1 584
EBITDA, %	15%	20%	21%	21%
Operating profit/loss	120	186	954	915
Operating margin, %	6%	11%	12%	12%
Sales volumes, ktonnes	257	235	1 065	1 004

Q4 2015 COMPARED TO Q4 2014

Due to higher sales volumes and more favourable currency exchange rates, net sales increased with approximately 9% compared to Q4 2014. Sales volume increased with 9% which is above the targeted growth rate, partly because of low deliveries in Q4 2014.

Higher fixed costs and production losses mainly in Frövi led to a lower operating profit compared to Q4 2014. During the quarter, the production unit in Frövi had an annual maintenance shutdown and an extensive rebuild of KM5 in Frövi. The rebuild aims at increasing production capacity to support business area Consumer Board's volume growth. During start-up of the machine after the rebuild there were extensive unpredictable technical disturbances which resulted in uneven production volume and major production losses. Also the production unit in Gävle has incurred some additional costs in the fourth quarter following the annual maintenance shutdown in the end of the third quarter.

FULL YEAR 2015 COMPARED TO FULL YEAR 2014

Due to higher sales volume and a favourable development of the currency exchange rate, net sales increased with 8% compared to 2014. Sales volume increased with 6% which is above the targeted growth rate.

The increased net sales, to some extent offset by higher costs, led to improved operating profit with 4%. The increase in variable costs was mainly due to the weaker SEK. Consumer board as a total has a low overall currency exposure.

MARKET DEVELOPMENT

The order situation for liquid packaging board and cartonboard in the fourth quarter was stable and satisfactory with normal seasonal variances. There is delivery pressure from our main markets. Prices in local currency were stable compared to the previous quarter.

OUTLOOK

Order situation for liquid packaging board and cartonboard are expected to continue to be stable and satisfactory with normal seasonal variances. Deliveries in the first quarter 2016 might be below the targeted growth rate due to the production losses in the fourth quarter.

Containerboard business area

STRONG FLUTING AND LINER ADD VALUE

Strong and light materials from the Containerboard business area are used in corrugated boxes for fragile goods and demanding distribution systems. Supply chain solutions for packaging optimisation are a key component of the offer. The business area includes Paccess, which strengthens BillerudKorsnäs' pos ition to bring smarter packaging solutions to brand owners, and is a further step in challenging conventional packaging. Europe is the largest market.

SHARE OF GROUP'S NET SALES Q4 2015

OPERATING PROFIT

KEY FIGURES

	Quarter		Full year
SEKm	Q4 -15	Q4 -14	2015	2014
Net sales	880	816	3 329	3 148
Net operating expenses, other	-676	-654	-2 605	-2 560
EBITDA	204	162	724	588
EBITDA, %	23%	20%	22%	19%
Operating profit/loss	160	120	551	416
Operating margin, %	18%	15%	17%	13%
Sales volumes, ktonnes	132	134	506	528

Q4 2015 COMPARED TO Q4 2014

Net sales increased with 8% mainly due to increased prices for fluting and more favourable currency rates partly offset by lower prices for liner. The volumes for liner developed positively compared to last year, while fluting remained stable.

The operating profit increased with 33% or SEK 40 million mainly due to increased sales, lower variable costs and improved contribution from Paccess partly offset by costs for the maintenance shutdown in Skärblacka. In 2014 the maintenance stop for Skärblacka took place in Q3.

FULL YEAR 2015 COMPARED TO FULL YEAR 2014

Net sales increased with 6%. Loss of volume during the rebuild of PM6 in Gruvön was partly compensated by increased volume of liner. Price in local currency moved in opposite directions for fluting and liner, positive development for fluting while liner was slightly down compared with 2014. Currency effects had a favourable impact on net sales compared to the previous year.

Operating profit increased with 32% or SEK 135 million mainly due to increased sales and increased positive contribution from Paccess, partly offset by higher variable costs.

MARKET DEVELOPMENT

Order book and delivered volume was stable for fluting and liner. Prices for fluting continued to increase even though the trend in local currency is slightly less positive than previously. Prices for liner were stable. Paccess continued to grow successfully and take on-board new business.

OUTLOOK

In general, the market for both fluting and liner is estimated to be stable during next quarter. Prices are expected to stabilize for fluting while an increased pressure on liner prices is foreseen as a consequence from strong competition.

The increased capacity from the rebuild of PM6 in Gruvön will continue to come through gradually and together with already achieved improved quality further enhanced BillerudKorsnäs' position as market leader for primary fibre based fluting.

Currency hedging

SEK 30 million earnings impact for the quarter.

During the fourth quarter 2015, net flows were hedged at EUR/SEK 9.51 (8.93), USD/SEK 8.51 (6.63) and GBP/SEK 13.04 (10.66). Currency hedging had an overall earnings impact of SEK 30 million (-117) for the fourth quarter and SEK -125 million (-253) for 2015 in total (compared to no hedging).

The outstanding forward exchange contracts at 31 December 2015 had a market value of SEK 117 million, whereof SEK 24 million is the part of the contracts matched by trade receivables that has affected earnings in the fourth quarter. Accordingly, other contracts had a market value of SEK 93 million.

Currency Q1 -16 Q2 -16 Q3-16 Q4-16 Q1-17 Total 15 months EUR Share of net flow 79% 78% 74% 22% - 51% Rate 9.51 9.49 9.51 9.57 - 9.51 USD Share of net flow 75% 68% 56% 12% - 43% Rate 8.48 8.49 8.54 8.63 - 8.51 GBP Share of net flow 30% - - - - 6% Rate 13.04 - - - - 13.04

HEDGED PORTION OF THE FORECASTED CURRENCY FLOWS FOR EUR, USD AND GBP AND EXCHANGE RATES AGAINST SEK (31 DECEMBER 2015)

*On 31 December 2015 contracts*

The currency hedging policy is to hedge 0-80% of forecasted net flows over the coming 15 months. Any deviation from the policy must be approved by the Board of Directors.

Market value of currency 36 34 35 12 - 117

Investments and capital employed

Gross investments amounted to SEK 550 million (480) for the fourth quarter and SEK 1 710 million (1 384) for the full year 2015. Investments for 2016 will amount to approximately SEK 1 300 million and does not include any rebuilds. This excludes future restructuring projects in Gruvön and Skärblacka.

Capital employed at 31 December 2015 amounted to SEK 17 397 million (17 828). Return on capital employed (ROCE), calculated over the past 12-month period, amounted to 15% (11%). The increase in ROCE is explained by the capital gain from the Latgran divestiture. ROCE excluding non-recurring items reached 13%. Return on equity was 16% (13%).

NET DEBT/EQUITY RATIO TARGET LEVEL <0.9

Cash flow and financial position

SUMMARY CASH FLOW STATEMENT

		Quarter		Jan-Dec
SEKm	Q4 -15	Q4 -14	2015	2014
Operating surplus, etc.	692	857	3 622	3 248
Change in working capital, etc.	222	-33	120	236
Net financial items, taxes, etc.	-10	75	-84	-369
Cash flow from operating activities	904	899	3 658	3 115
Current net investments	-544	-472	-1 701	-1 376
Operating cash flow	360	427	1 957	1 739

Operating cash flow in 2015 amounted to SEK 1 957 million (1 739). The increase was mainly due to improved operating profit and repayment of preliminary tax payments of approximately SEK 300 million. Working capital in relation to net sales was 10%, compared with 12 % previous quarter, and the company continues to implement activities to keep the ratio at the target level 10%.

Net interest-bearing debt on 31 December 2015 was SEK 4 979 million (7 124). The Group's net debt/equity ratio at the end of the period was 0.40 (0.67). BillerudKorsnäs' financial target for net debt/equity ratio is to be less than 0.90.

Financing

Interest-bearing debt amounted to SEK 4 395 million, a decrease of SEK 526 million since the previous quarter and a decrease of SEK 2 694 million compared to year end 2014. The decrease of interest bearing debt in the quarter was mainly due to the operating cash flow. A term loan of SEK 600 million, one bond loan of SEK 150 million and commercial papers of SEK 248 million was repaid in the quarter and SEK 300 million of long term debt was raised. Other changes in interest bearing debt in the quarter amounted to SEK 172 million.

The syndicated revolving credit facility of SEK 5 500 million matures in 2019.

		Maturity, years			Total
Loan	Limit, SEKm	0-1	1-2	2-	utilized
Syndicated credit facilities	5 500				0
Term loans		400		700	1 100
Bond loans within MTN program	5 000	400	300	1 500	2 200
Other bond loans					0
Commercial paper	3 000	349			349
Term loan, Bomhus Energi AB		38	39	487	564
Other interest-bearing liabilities		181	1		182
Group total		1 368	340	2 687	4 395

Taxes

The tax cost 2015 amounted to SEK 443 million, equal to approximately 18% of profit before tax. The low tax cost for 2015 is mainly explained by the non-taxable capital gain from the divestiture of SIA Latgran.

The tax cost for 2014 amounted to SEK 352 million, equal to approximately 21% of profit before tax.

Seasonal effects

BillerudKorsnäs' business is to a relatively limited extent subject to seasonal fluctuations. The greatest impact is from periodic maintenance shutdowns, during which the unit concerned is idle for approximately a week. The loss of production results in somewhat lower deliveries over an extended period before, during and after the shutdown.

PLANNED MAINTENANCE SHUTDOWNS

In addition to on-going maintenance during production, BillerudKorsnäs' production units normally also require more extensive maintenance at some time during the year. In order to carry out maintenance, production of pulp, paper and board is stopped. The cost of a maintenance shutdown mainly comprises the loss of volume related to the shutdown and fixed costs, mainly in the form of costs of maintenance and overtime work, as well as - to some extent - variable costs such as higher consumption of electricity and wood when production is restarted. The effects of shutdowns on earnings vary depending on the extent of measures carried out, their nature and the actual length of the shutdown. The estimated cost of shutdown is an assessment of the impact on earnings of a normal shutdown, compared to a quarter during which no periodic maintenance shutdown takes place.

ESTIMATED MAINTENANCE SHUTDOWN COST

Production units	Estimated shutdown cost ¹	Estimated breakdown of shutdown cost by business area			Planned dates of maintenance shutdown
	SEKm	Packaging Paper	Consumer Board	Container- board	2016 2015 2014
Gävle	~ 140	~ 5%	~ 80%	~ 15%	Q3 Q3 Q4
Gruvön	~ 130	~ 40%	~ 5%	~ 55%	Q2 Q2 Q2
Frövi	~ 90	0%	100%	0%	Q4 Q4 Q3
Skärblacka	~ 90	~ 85%	0%	~ 15%	Q2 Q4 Q3
Karlsborg	~ 55	100%	0%	0%	Q3 Q3 Q3
Pietarsaari	~ 15	100%	0%	0%	- Q4 Q2

1 Maintenance shutdowns at Beetham, Rockhammar and Tervasaari have an insignificant effect on BillerudKorsnäs' total earnings.

Costs for planned maintenance shutdown have been adjusted to reflect estimated cost impact for 2016 for Frövi, Gävle, Gruvön and Skärblacka production units.

During the fourth quarter 2015 planned maintenance shutdowns took place at Frövi, Skärblacka and Pietarsaari production units. The total impact on the fourth quarter earnings was approximately SEK 310 million, which was approximately 150 million above estimated shutdown costs. The increase in shutdown costs was due to start-up delays after rebuild at Frövi and Skärblacka production units and additional shutdown costs in Gävle in connection to performed maintenance shutdown at the end of third quarter.

Parent company

The parent company BillerudKorsnäs AB includes from 2015 the sales organisation for the Nordic market and markets outside Europe, and the head office functions.

Operating profit for 2015 amounted to SEK -185 million compared with SEK -400 million in 2014 excluding operating profit from the Gruvön production unit. The increase is mainly due to changed principles for allocation of the parent company's costs to subsidiaries and from positive impact from hedging contracts and revaluations of accounts receivable.

The parent company hedges both its' own and the Group's net currency flows. The parent company's earnings include the results of these hedging measures. This result amounted to SEK -125 million (-253).

The parent company has received dividend from subsidiaries amounting to SEK 1 524 million (42).

The average number of employees was 96 (91). Cash and bank balances and short-term investments amounted to SEK 10 million (499).

Largest shareholders

BILLERUDKORSNÄS' TEN LARGEST SHAREHOLDERS (31 DEC 2015)

	Number of	Number of
Shareholder	shares	votes, %
FRAPAG Beteiligungsholding AG	31 300 000	15.1
AMF Insurance & Funds	13 603 075	6.6
Swedbank Robur Funds	8 764 343	4.2
Fourth Swedish National Pension Fund	6 199 261	3.0
Handelsbanken Funds	4 567 269	2.2
Lannebo Funds	4 443 388	2.1
Norges Bank Investment Management	4 242 873	2.1
DFA Funds (USA)	4 043 430	2.0
Alecta	4 000 000	1.9
Catella Funds	3 705 248	1.8
Total 10 largest shareholders	84 868 887	41.0
Total number of shares in the market	206 951 152	100.0

Distribution of shares

DISTRIBUTION OF SHARES (31 DEC 2015)

206 951 152
-1 268 682
208 219 834

Significant risks and uncertainties

BillerudKorsnäs' products are generally dependent on the business cycle, in terms of both price development and potential sales volumes. The Group is exposed to currency fluctuations, since most revenues are invoiced in foreign currency, while a large part of operating expenses are in SEK. A more in-depth description of risks and a sensitivity analysis is provided on pages 21-26 of the 2014 Annual Report.

Related party transactions

No transactions have taken place between BillerudKorsnäs and related parties that significantly affect the company's position and earnings.

Events after the end of the quarter

No significant events have occurred after the end of the quarter.

Accounting principles

The interim report for the Group is prepared in accordance with IAS 34 Interim Financial Reporting and the Swedish Annual Accounts Act. The accounting principles applied in this interim report are the same as those used in the most recent annual report for 2014, see pages 28-35 and page 70 for definitions of key indicators. The interim report for the parent company is prepared in accordance with the Swedish Annual Accounts Act. Key figure definitions are provided on page 17 of this report.

Solna, 9 February 2016

Per Lindberg, CEO

FINANCIAL CALENDAR

• Q1 – 21 April 2016
• 2016 Annual General Meeting – 10 May 2016
• Q2 – 20 July 2016
• Q3 – 21 October 2016

Annual report for 2015 will be published in April 2016

The information in this interim report is such that BillerudKorsnäs AB (publ) is obliged to disclose under the Swedish Securities Market Act. This report has been prepared in both a Swedish and an English version. The report has not been reviewed by the company's auditors.

BillerudKorsnäs Group

Income statement

		Quarter		Full year
SEKm	Q4 -15	Q3 -15	Q4 -14	2015	2014
Net sales	5 213	5 478	5 124	21 814	20 853
Other income	34	474	41	594	118
Operating income	5 247	5 952	5 165	22 408	20 971
Change in inventories	-49	-119	192	-214	63
Raw materials and consumables	-2 448	-2 589	-2 693	-10 597	-10 490
Other external costs	-1 223	-1 142	-1 085	-4 421	-4 245
Employee benefits expense	-850	-718	-769	-3 167	-3 020
Depreciation and impairment of non-current assets	-351	-358	-349	-1 417	-1 378
Profit/Loss from participations in associated companies	-6	-	-1	-6	-
Operating expenses	-4 927	-4 926	-4 705	-19 822	-19 070
Operating profit/loss	320	1 026	460	2 586	1 901
Financial income and expenses	-57	-39	-49	-175	-248
Profit/Loss before tax	263	987	411	2 411	1 653
Taxes	-64	-125	-82	-443	-352
Net profit/loss for the period	199	862	329	1 968	1 301
Profit/Loss attributable to:
Owners of the parent company	200	722	322	1 811	1 277
Non-controlling interests	-1	140	7	157	24
Net profit/loss for the period	199	862	329	1 968	1 301
Earnings per share, SEK	0.96	3.49	1.56	8.75	6.18
Diluted earnings per share, SEK	0.96	3.48	1.55	8.73	6.16

Statement of comprehensive income

		Quarter		Full year
SEKm	Q4 -15	Q3 -15	Q4 -14	2015	2014
Net profit/loss for the period	199	862	329	1 968	1 301
Other comprehensive income
Items that will not be reclassified to profit or loss
Actuarial gains or losses on defined benefit pension plans	35	-	2	-28	-67
Tax attributable to items not to be reclassified to profit or loss	-8	-	-	6	15
Total items never reclassified to profit or loss	27	-	2	-22	-52
Items that have been or may be reclassified subsequently to profit or
Differences arising from the translation of foreign operations' accounts	-45	14	75	-82	136
Change in fair value of shareholding in Bergvik Skog	454	5	15	456	22
Change in fair value of cash flow hedges	57	-66	-86	141	-204
Tax attributable to items that have been or may be reclassified subsequently
to profit or loss	-13	15	19	-31	45
Total items that have been or may be reclassified subsequently to profit	453	-32	23	484	-1
or loss
Total comprehensive income for the period	679	830	354	2 430	1 248
Attributable to:
Owners of the parent company	679	694	345	2 278	1 220
Non-controlling interests	-	136	9	152	28
Total comprehensive income for the period	679	830	354	2 430	1 248

Balance sheet

	31 Dec	30 Sep	31 Dec
SEKm	2015	2015	2014
Intangible assets	2 384	2 407	2 580
Property, plant and equipment	14 812	14 653	14 873
Other non-current assets	1 341	876	848
Total non-current assets	18 537	17 936	18 301
Inventories	2 842	2 888	3 145
Accounts receivable	2 512	2 695	2 601
Other current assets	1 004	736	925
Cash and cash equivalents	188	377	737
Total current assets	6 546	6 696	7 408
Total assets	25 083	24 632	25 709
Equity attributable to owners of the parent company	12 253	11 567	10 615
Non-controlling interests	165	166	89
Total equity	12 418	11 733	10 704
Interest-bearing liabilities	3 027	3 537	4 672
Provisions for pensions	783	821	772
Other provisions	45	166	67
Deferred tax liabilities	3 186	2 925	2 986
Total non-current liabilities	7 041	7 449	8 497
Interest-bearing liabilities	1 368	1 384	2 417
Accounts payables	2 679	2 610	2 514
Other liabilities and provisions	1 577	1 456	1 577
Total current liabilities	5 624	5 450	6 508
Total equity and liabilities	25 083	24 632	25 709

Statement of changes in equity

	Full year	Jan-Sep	Full year
SEKm	2015	2015	2014
Opening balance	10 704	10 704	9 917
Comprehensive income for the period	2 430	1 751	1 248
Share-based payment to be settled in equity instruments	11	5	4
Dividend to owners of the parent company	-651	-651	-465
Dividend to non-controlling interests	-76	-76	-
Closing balance	12 418	11 733	10 704
Equity attributable to:
Owners of the parent company	12 253	11 567	10 615
Non-controlling interests	165	166	89
Closing balance	12 418	11 733	10 704

Statement of cash flow

		Quarter		Full year
SEKm	Q4 -15	Q3 -15	Q4 -14	2015	2014
Operating surplus, etc. *	692	1 012	857	3 622	3 248
Change in working capital, etc.	222	84	-33	120	236
Net financial items, taxes, etc.	-10	-140	75	-84	-369
Cash flow from operating activities	904	956	899	3 658	3 115
Investments in property, plant and equipment	-514	-416	-480	-1 672	-1 382
Acquisition of financial assets	-36	-	-	-38	-2
Sales of subsidiary	-2	943	-	941	-
Disposal of property, plant and equipment	6	1	8	9	8
Cash flow from investing activities	-546	528	-472	-760	-1 376
Change in interest-bearing receivables	12	-6	-3	-	-3
Change in interest-bearing liabilities	-527	-1 266	-55	-2 687	-1 082
Dividend to owners of the parent company	-	-	-	-651	-465
Dividend to non-controlling interests	-	-76	-	-76	-
Cash flow from financing activities	-515	-1 348	-58	-3 414	-1 550
Total cash flow (=change in cash and cash equivalents)	-157	136	369	-516	189
Cash and cash equivalents at start of period	377	214	341	737	497
Translation differences in cash and cash equivalents	-32	27	27	-33	51
Cash and cash equivalents at the end of the period	188	377	737	188	737

* The amount for the period January-December 2015 takes into account operating profit of SEK 2 586 million, reversed depreciation SEK 1 417 million, capital result SEK 5 million, result from associated companies SEK 6 million, result from sale of Latgran SEK -440 million, decrease in pension liabilities SEK -28 million, other provisions SEK 91 million, net of produced and sold electricity certificates and sold emission rights SEK -26 million and incentive programmes SEK 11 million. The amount for the period January-December 2014 takes into account operating profit of SEK 1 901 million, reversed depreciation SEK 1 378 million, decrease in pension liabilities SEK -37 million, other provisions SEK -41 million, net of produced and sold electricity certificates and sold emission rights SEK 43 million and incentive programme SEK 4 million.

Note financial assets and liabilities

Group 31 December 2015	Derivatives in hedge accounting	Accounts and loan receivables	Available for-sale financial assets	Financial liabilities measured at amortised costs	Total carrying amount	Fair value
Other shares and participations	-	-	1 289	-	1 289	1 289
Long-term receivables	-	18	-	-	18	18
Accounts receivable	-	2 512	-	-	2 512	2 512
Other receivables	97	637	-	-	734	734
Cash and cash equivalents¹	-	188	-	-	188	188
Total	97	3 355	1 289	-	4 741	4 741
Non-current interest-bearing liabilities	-	-	-	3 027	3 027	3 081
Current interest-bearing liabilities	-	-	-	1 368	1 368	1 368
Accounts payables	-	-	-	2 679	2 679	2 679
Other liabilities	174	-	-	264	438	438
Total	174	-	-	7 338	7 512	7 566

Group 31 December 2014	Derivatives in hedge accounting	Accounts and loan receivables	Available for-sale financial assets	Financial liabilities measured at amortised costs	Total carrying amount	Fair value
Other shares and participations	-	-	806	-	806	806
Long-term receivables	-	9	-	-	9	9
Accounts receivable	-	2 601	-	-	2 601	2 601
Other receivables	-	407	-	-	407	407
Cash and cash equivalents¹	-	737	-	-	737	737
Total	-	3 754	806	-	4 560	4 560
Non-current interest-bearing liabilities	-	-	-	4 672	4 672	4 735
Current interest-bearing liabilities	-	-	-	2 417	2 417	2 417
Accounts payables	-	-	-	2 514	2 514	2 514
Other liabilities	218	-	-	242	460	460
Total	218	-	-	9 845	10 063	10 126

1 Short-term investments are classified as "Cash and cash equivalents" when they mature less than three months after the acquisition date and are exposed to only a minor risk of fluctuation in value.

Key figures

	Full year
	2015	2014
Margins
EBITDA, %	18	16
Operating margin, %	12	9
Return (rolling 12 months)
Return on capital employed, %	15	11
Return on equity, %	16	13
Capital structure at end of period
Capital employed, SEKm	17 397	17 828
Working capital, SEKm	2 243	2 286
Equity, SEKm	12 418	10 704
Interest-bearing net debt, SEKm	4 979	7 124
Net debt/equity ratio	0.40	0.67
Interest-bearing net debt / EBITDA, multiple	1.24	2.17
Key figures per share
Earnings per share, SEK	8.75	6.18
Dividend per share, SEK	3.15	2.25
Other key figures
Working capital as percentage of net sales, %	10	11
Gross investments, SEKm	1 710	1 384
Average number of employees	4 223	4 194

Definitions

Adjusted EBITDA

Operating profit before depreciation adjusted for non-recurring items.

Adjusted earnings per share Earnings per share adjusted for nonrecurring items after tax attributable to owners of the parent company.

Adjusted operating profit

Operating profit adjusted for non-recurring items.

Capital employed

Total assets less non-interest bearing liabilities, non-interest bearing provisions and interest-bearing assets.

Earnings per share

Profit for the period, attributable to owners of the parent, divided by the average number of shares in the market.

Equity

Shareholders' equity at the end of the period.

EBITDA, %

Operating profit before depreciation (EBITDA = Earnings before Interest, Taxes, Depreciation and Amortisation) as a percentage of net sales.

Interest-bearing net debt

Interest-bearing provisions and liabilities less interest-bearing assets.

Interest-bearing net debt/ EBITDA Interest bearing net debt at the end of the period divided by operating profit before

depreciation for the last twelve months. MF kraft paper

Machine Finished kraft paper.

MG kraft paper Machine Glazed kraft paper.

NBSK Northern Bleached Softwood Kraft.

Net debt/equity ratio

Interest-bearing net debt divided by shareholders' equity.

NRI

Non-recurring items. One-time costs not affecting the company's run rate cost level.

Operating cash flow Cash flow from operating activities including net investments in property, plant and equipment and acquisition of financial assets.

Operating margin

Operating profit as a percentage of net sales.

Return on capital employed

Operating profit calculated over 12 months as a percentage of average capital employed.

Return on equity

Profit for the period, attributable to owners of the parent, as a percentage of average shareholders' equity, attributable to owners of the parent.

Working capital

Inventories, accounts receivables and other operating receivables less accounts payables and other operating liabilities.

Working capital as percentage of net sales

Average working capital for the quarter, divided by annual net sales at year end or annualized net sales during interim-quarter (net sales for the quarter multiplied by four).

Parent Company

Summarised income statement

	Quarter		Full year
SEKm	Q4 -15	Q4 -14	2015	2014
Operating income	307	988	256	3 806
Operating expenses	-150	-2 489	-441	-5 152
Operating profit/loss	157	-1 501	-185	-1 346
Financial income and expenses	-55	-32	1 318	-163
Profit/Loss after financial income and expenses	102	-1 533	1 133	-1 509
Appropriations	707	950	707	950
Profit/Loss before tax	809	-583	1 840	-559
Taxes	-175	135	-69	133
Net profit/loss for the period	634	-448	1 771	-426

Summarised balance sheet

	31 Dec	31 Dec
SEKm	2015	2014
Non-current assets	10 764	10 767
Current assets	6 815	5 020
Total assets	17 579	15 787
Shareholders' equity	7 263	6 129
Untaxed reserves	660	355
Provisions	201	338
Interest-bearing liabilities	7 410	7 206
Other liabilities	2 045	1 759
Total equity and liabilities	17 579	15 787

Quarterly data

The Group's business is controlled and reported according to BillerudKorsnäs' three business areas. Other units include wood supply, sales organisations, Nine AB, the Latgran Group, Bomhus Energi AB, costs for closure of Tervasaari site and dormant companies. Currency hedging etc. includes results from hedging of the Group's net currency flows, revaluation of accounts receivable and payments from customers. The part of currency exposure relating to changes in invoicing rates is included in the business area's profit or loss. Group staff and eliminations comprise Group-wide functions, Group eliminations and shares in profits/losses from participations in associated companies.

Starting from 1st of January 2016 other units will include results from wood supply, Nine AB, rental operations and dormant companies. Sales companies and Bomhus Energi AB will be allocated to business areas.

	Net sales quarterly per business area and for the group

SEKm	Q4 -15	Q3 -15	Q2 -15	Q1 -15	Q4 -14	Q3 -14	Q2 -14	Q1 -14	Jan-Dec 2015	Jan-Dec 2014
Packaging Paper	2 020	2 174	2 176	2 182	1 959	2 058	2 016	2 068	8 552	8 101
Consumer Board	1 933	2 006	2 044	2 023	1 768	1 897	1 822	1 949	8 006	7 436
Containerboard	880	926	722	801	816	773	767	792	3 329	3 148
Other units	387	368	596	661	609	487	512	589	2 012	2 197
Currency hedging, etc.	-7	4	-49	-33	-28	-24	11	12	-85	-29
Group staff and eliminations	-	-	-	-	-	-	-	-	-	-
Total Group	5 213	5 478	5 489	5 634	5 124	5 191	5 128	5 410	21 814	20 853

Operating profit quarterly per business area and for the group

SEKm	Q4 -15	Q3 -15	Q2 -15	Q1 -15	Q4 -14	Q3 -14	Q2 -14	Q1 -14	Jan-Dec 2015	Jan-Dec 2014
Packaging Paper	131	278	245	317	183	158	169	191	971	701
Consumer Board	120	234	310	290	186	243	253	233	954	915
Containerboard	160	203	51	137	120	120	59	117	551	416
Other units	4	353	71	56	28	45	35	58	484	166
Currency hedging, etc.	-7	4	-49	-33	-28	-24	11	12	-85	-29
Group staff and eliminations	-88	-46	-86	-69	-29	-92	-77	-70	-289	-268
Total Group	320	1 026	542	698	460	450	450	541	2 586	1 901

Operating profit¹ quarterly per business area and for the group

SEKm	Q4 -15	Q3 -15	Q2 -15	Q1 -15	Q4 -14	Q3 -14	Q2 -14	Q1 -14	Jan-Dec 2015	Jan-Dec 2014
Packaging Paper	249	330	304	317	188	305	244	191	1 200	928
Consumer Board	297	350	324	290	303	354	265	233	1 261	1 155
Containerboard	175	214	148	137	133	140	115	117	674	505
Other units	5	10	71	56	28	45	35	58	142	166
Currency hedging, etc.	-7	4	-49	-33	-28	-24	11	12	-85	-29
Group staff and eliminations	-88	-46	-86	-69	-29	-75	-60	-56	-289	-220
Total Group	631	862	712	698	595	745	610	555	2 903	2 505
Costs for maintenance shutdowns	-310	-179	-170	-	-135	-227	-143	-	-659	-505
Non-recurring items	-1	343	-	-	-	-68	-17	-14	342	-99
Operating profit	320	1 026	542	698	460	450	450	541	2 586	1 901

Operating margin¹ quarterly per business area and for the group

									Jan-Dec	Jan-Dec
%	Q4 -15	Q3 -15	Q2 -15	Q1 -15	Q4 -14	Q3 -14	Q2 -14	Q1 -14	2015	2014
Packaging Paper	12	15	14	15	10	15	12	9	14	11
Consumer Board	15	17	16	14	17	19	15	12	16	16
Containerboard	20	23	20	17	16	18	15	15	20	16
Group	12	16	13	12	12	14	12	10	13	12

Sales volumes quarterly per business area and for the group

									Jan-Dec	Jan-Dec
ktonne	Q4 -15	Q3 -15	Q2 -15	Q1 -15	Q4 -14	Q3 -14	Q2 -14	Q1 -14	2015	2014
Packaging Paper	281	294	288	300	275	288	294	310	1 163	1 167
Consumer Board	257	262	274	272	235	252	249	268	1 065	1 004
Containerboard	132	139	106	129	134	127	128	139	506	528
Total	670	695	668	701	644	667	671	717	2 734	2 699

1 Operating profit and margin are adjusted for the effects of periodical maintenance shutdowns and for non-recurring items.

This is BillerudKorsnäs

BillerudKorsnäs is one of the world's leading suppliers of highquality, packaging materials based on renewable raw material. Our wood raw material comes from sustainable managed forests and manufacturing takes place at resource-efficient, integrated production units.

Our customers are packaging manufacturers, brand owners and large retail and supermarket chains. Through close collaboration with customers and partners all over the world, we are able to offer a customised and broad product portfolio that features a high degree of innovation.

Demand is driven by global megatrends, particularly rising urbanisation, a greater focus on sustainability and changing consumption patterns. Consumer segments, primarily food and beverages, account for 75% of sales. While Europe is the core market. BillerudKorsnäs is gradually strengthening its presence in the leading growth markets of Asia.

Smart packaging solutions using paper or board from BillerudKorsnäs reduce the impact on the climate, cut the use of resources along the whole value chain and contribute to a sustainable future.

BUSINESS MODEL

Our business model is based on high-performance materials from forests in the north, advice, service and the collective knowledge held by a global network of machine suppliers, packaging manufacturers, researchers and design agencies. Innovative packaging solutions are developed in close collaboration with customers all over the world that demand the highest standards of quality, performance and sustainability.

STRATEGIC FOCUS

BillerudKorsnäs' overall objective is sustainable and profitable growth. The target is to grow organically by 15–20% up until 2018, which equates to a figure of around SEK 24 billion in sales. Our strategy is based on five areas that all interact: Position, Innovation, Sustainability, Efficiency and Employees. Read more at billerudkorsnas.com

We challenge conventional packaging for a sustainable future

VALUE DRIVERS

High-performance material based on renewable raw material from responsibly managed forests. Smarter solutions that optimise our customers' business. Leading positions in the growing global packaging market. A holistic approach to the entire packaging value chain from raw material all the way to the end-customer and recycling.

BillerudKorsnäs Aktiebolag (publ) • Postal address: Box 703, SE-169 27 Solna, Sweden • Visitors' address: Frösundaleden 2b Reg. no. 556025-5001 • Tel +46 8 553 335 00 • ir@billerudkorsnas.com www.billerudkorsnas.com