Billerud Q2 EBITDA Misses by 17% as European Packaging Demand Sputters, North America Holds Firm

Billerud (STO: BILL) posted softer-than-expected earnings for Q2, dragged down largely by shrinking demand for packaging products across Europe. The Swedish packaging firm's EBITDA came in at SEK912 million, falling short of analyst forecasts by 17% and down sharply from SEK1.39 billion in Q1.

The European segment bore the brunt, with EBITDA dropping to SEK333 million, underwhelming against a consensus of SEK0.5 billion. Margins slid to a wafer-thin 5%. Contrast that with North America, where operations held steady, posting SEK622 million in EBITDA and delivering a robust 22% margin. Utilization rates also edged up slightly to 76% from 74% the prior quarter.

Billerud's results reflect mounting worries about European consumer spending patterns and disrupted trade flows attributed partly to tariffs. On top of regular maintenance shutdowns, the company faced unexpected slowdowns, underscoring the fragility of the European packaging market right now.

Looking forward, Billerud anticipates continued weakness in Europe through Q3. Meanwhile, U.S. operations should remain stable in areas like graphic and specialty paper. Maintenance expenses are expected to stay elevated, hovering around SEK380 million, while input costs are forecast to hold steady.

The market hasn't taken these numbers kindly. Since May, Billerud's stock has pulled back about 10%, widening to a 20% drop from this year's highs. Still, Jefferies analysts are holding onto a buy rating with a price target near SEK128, implying some upside if conditions improve.

Analysts are already trimming their 2025 EBITDA estimates by 4-6%, settling near SEK5.3 billion. Wood cost reductions and a pickup in demand next year are seen as necessary if Billerud is to hit SEK5.5-5.8 billion in 2026 EBITDA.

In short, the Q2 report serves as a reminder that the European packaging segment isn't out of the woods just yet. The question is how long this softness lasts and whether North America's steadier performance can offset ongoing headwinds.