Alphaboard - research by investors.

Nordic Paper is a quality company in the paper industry with good pricing power (>50% gross margin) and excellent above 30% ROE.

The company produces Kraft paper (~50%) and grease paper (~50%) for a global customer base across industries. The spread in customers is good for the quality of earnings. Nordic Paper operates in markets supported by long-term trends like; sustainability, global middle-class growth and e-commerce. Although the demand from construction business is currently low.

Nordic Paper would be a quality long term holding, but is expected to be de-listed by Strategic Value Partners, funded by the 12kr dividend payment. Which basically means that the company pays the purchase of the final 10%. With regret I close a position in a quality company.

A company specializing in kraft paper for paper bags and packaging etc. and natural grease paper for the food industry. The company has been subject to a new major owner, SVP Strategic Value Partners, with about 48% of the shares. NordicPaper acquired a Canadian company which was included in the reporting from 2022Q. There are yearly seasonal effects from maintenance stops in Q3 at all Nordic Paper production plants. There are ongoing investments in Bäckhammar (about 500MSEK in 2024) which should be completed end of 2025, where after estimated to contribute 100MSEK/year in EBITDA. Energy costs should be lower for Q3, but ~70% hedged. The product volumes seem to be quite stable YoY. Raw material costs are significant part of the product price thus NordicPapers’s focus is mostly on margin. NordicPaper seem like a well managed company, with good profits in a stable market. It could be a good long term investment.