* Q1 Paper EBIT of ~PLN -2m * Still waiting for Rottneros pulp tailwinds * Fair value range of SEK 15-50
Q1 Paper EBIT of ~PLN -2m
Paper EBIT was PLN -2m vs. ABGSCe -15m, with the beat driven by stronger-than-expected volumes (137k tonnes vs 125k in Q1'25). Impressively, Arctic's market share has risen by ~2pp over the past three years. The quarter was again characterised by geopolitical uncertainty, trade barriers and subdued demand. Group EBIT improved sequentially to PLN -36m (-72m in Q4’25), while EBITDA came in at PLN 2.6m, reflecting a continued weak performance in Rottneros due to FX and weak demand. Looking ahead, announced price increases of 5–7% from April and 4–8% from June aim to support margins, alongside ~PLN 6m in cost savings and incremental earnings from the Grycksbo pellet ramp-up (~SEK 40-50m in 2026). However, with demand still soft and visibility limited, we expect only a gradual recovery and forecast Q2 Paper EBIT of PLN 24m (group PLN 16m). Our 2026e estimates are up due to the stronger Q1.
Still waiting for pulp tailwinds
Paper markets remain structurally oversupplied at ~75% utilisation, and while ~4-6% supply cuts are underway, the market still needs ~3mt of capacity cuts to reach historical utilisation. The pulp market faced headwinds in 2025, but key drivers are now moving in the right direction. Hardwood prices are up ~22% (38% in EU) following Suzano’s +30% hikes. However, Rottneros' exposure is mainly to softwood and CTMP, which have lagged hardwood, i.e. we are still waiting for the Rottneros pulp tailwinds. FX does not help either. Overall, management retained a cautious outlook, with 'no indication of a rapid market recovery', and emphasised continued focus on cost savings.
Fair value range of SEK 15-50
The company is trading at an EV/CE multiple of ~0.40x, which is ~48% below its historical average. We have applied three valuation methodologies and arrive at a fair value range of SEK 15-50.