Swedish pulp and paper manufacturer Billerud has announced a strategic shift in its North American operations, moving away from plans to convert its Escanaba mill into a cartonboard production facility.
The company’s board of directors has decided to gradually transition its product mix towards packaging materials in the region, with a more moderate level of investment.
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Billerud president and CEO Ivar Vatne said: “After in-depth feasibility studies, evaluations, and supplier discussions, we have concluded that the projected return on investment [ROI] is not sufficiently attractive to proceed with the conversion of Escanaba to cartonboard production.
“During the process, conditions have changed and the cost of equipment and services necessary to transform the operations have greatly increased. Instead, we will pursue a higher returning and more moderate investment strategy for our North American mills going forward.”
The company said that it will continue to supply high-quality cartonboard to the North American market from its European mills.
Billerud expects to incur costs of approximately Skr200m ($18.71m) for the US transformation programme, which will be reflected in the company’s second-quarter results in 2024 as an item affecting comparability.
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By GlobalDataVatne added: “Billerud North America operations are an integral part of Billerud and we remain committed to the North American market. Since the acquisition in 2022, the organisational fit, access to cost-competitive fibre and the financial performance of the region have exceeded our expectations.
“The long-term market outlook for paper and packaging material in North America is promising. With better-than-expected machine flexibility we see great potential to diversify our product portfolio towards packaging grades – fully in line with our strategy.”
In December last year, Billerud partnered with wood-based building and interior products manufacturer Moelven Wood to develop a new paper-based packaging solution for its interior panels.
