Arctic Paper: Continued investment for the future in a hesitant market

Press Release

Kostrzyn nad Odra / Gothenburg, February 18th 2025

Arctic Paper S.A. Q4, 2024 - preliminary results*:

• Q4 sales revenue amounted to PLN 810,8mn (EUR1 188,3mn).
• EBITDA Q4 was PLN 38,8mn (EUR1 9,0mn) and the EBITDA margin 4.8 percent
• FY 2024 sales revenue amounted to PLN 3 434,7mn (EUR1 797,6mn).
• EBITDA FY 2024 was PLN 298,6mn (EUR1 69,3mn) and the EBITDA margin 8,7 percent.
• Arctic Paper continues to gain market shares in a challenging paper market.
• Management Board will recommend a dividend of PLN 0.70 per share (1,00), which corresponds to 30 percent of estimated profit according to the dividend policy.
• Total investments in 2024 were PLN 424mn, of which 40 percent in power and packaging.

*The entire audited report FY2024 will be published on April 29th.

"Arctic Paper's strong finances and stable position give us the strength to encounter another challenging year with confidence."

Michal Jarczyński, CEO (see letter from the CEO on page 2)

Preliminary selected financial results: Arctic Paper Group & Arctic Paper (paper segment)

Arctic Paper Group consists of Arctic Paper S.A. (parent company), Arctic Paper mills (paper segment) and pulp producer Rottneros AB in which Arctic Paper S.A. holds a 51 percent stake.

1Arctic Paper S.A. reports in PLN. In the English press release, the amounts above were converted to EUR at the average rates for the quarter respectively.

2 Net profit per share: net profit for the paper segment plus 51% of the net profit for Rottneros divided by the number of shares.

The fourth quarter of 2024, like the previous periods during the year, was characterized by low economic activity in our European core markets in combination with high commodity prices. The weak demand has negatively affected the group's sales and earnings. Arctic Paper Group's sales reached PLN 810.8 million (825.9), while EBITDA decreased to PLN 38.8 million (96.3).

For the full year 2024, the Group's sales decreased by 3.2 percent to PLN 3,434.7 million (3,549.2) and EBITDA was PLN 298.6 million (475.3), which means an EBITDA margin for the full year of 8.7 percent (13.4). In line with Arctic Paper's dividend policy, the management proposes a dividend of PLN 0.70 per share (1.00), which corresponds to 30 percent of the estimated profit.

The paper segment has focused on maintain volumes in a challenging market, where the segment's largest market, Germany, was characterized by headwinds. Sales were stable at PLN 576.4 million (581.2). Compared to last year's strong final quarter, EBITDA decreased to PLN 46.2 million (119.8) with an EBITDA margin at 8.0 percent (20.6). Arctic Paper is seen as a stable supplier with strong brands and has continuously strengthened its position: for the last years, the market share of coated paper (CWF) has increased substantially, while the share of uncoated paper has remained stable.

For the pulp segment, Rottneros, sales amounted to SEK 626 million (637) for the fourth quarter, with an EBITDA result of SEK 10 million (-76). Pulp wood costs continued to rise, while the price of pulp fell by 5 percent compared to the previous quarter. The result was also affected by planned maintenance shutdowns in both mills. For the full year, sales amounted to SEK 2,710 million (2,755) and EBITDA was SEK 179 million (252). During 2024, Rottneros invested SEK 450 million in new production capacity, increased efficiency, energy and packaging.

The packaging segment developed stably. The investment in molded fiber tray production in Kostrzyn is in the final phase and we expect production to start, and successively ramp up, during the first quarter. Fiber-based packaging makes a big climate benefit when it replaces plastic-based packaging.

In the energy segment, a 10 MW expansion of the solar park in Kostrzyn is underway. During the period, a PV farm of 4 MW was acquired in Garwolin in Poland, which means that the Group will have over 30 MW of installed capacity by the summer of 2025. In December 2024, Arctic Paper terminated the cooperation agreement on energy storage and grid system services. A process to identify new potential partners for all Swedish mills and units has been initiated. The expansion of the biofuel boiler and the supplementary pellet production in Grycksbo is proceeding according to plan.

Arctic Paper's commitment and focus align with our 4P strategy to strengthen our positions in paper and pulp while also investing in the expansion of our packaging and green energy businesses. In 2024, the Group invested a total of PLN 424 million, with 40 percent allocated to the power and packaging segments. Looking ahead, uncertainty remains. The Group's strong finances and stable position give us the strength to encounter another challenging year with confidence.

Michal Jarczyński, CEO of Arctic Paper S.A.

Table 1: Preliminary selected consolidated profit and loss account items

Table 2: Preliminary selected consolidated balance sheet items

Table 3: Preliminary selected items of the consolidated cash flow statements

Financial calendar for 2025

Annual report 2024: Year-end April 29th, Q1 2025: May 15th, Q2 2025: August 12th, Q3 2025: November 6th