Papierfabrik August Koehler SE, based in Oberkirch, recently celebrated the official groundbreaking ceremony for a new paper machine. Watched by some 145 invited guests, including the shareholders of Koehler Holding GmbH & Co. KG, the ground was broken by the Koehler Executive Board and representatives of the contracted construction firms Bold GmbH & Co. KG and Rendler Bau , Dr. Michael Trefz (Voith Paper Holding), the architects Alfons Burkart (archigroup GBR) and Thomas Schweiker (Schweiker Architekten), and the Kehl Building Commissioner Harald Krapp. In his welcome address, CEO Kai Furler, who is the eighth generation of his family to lead Koehler, underlined the fact that the Kehl site, with its three paper machines, will be the largest and most modern production site for specialty papers in Europe. This investment is the most significant in the 211-year history of the company. During its global search for a perfect site for the new production facility, the company came to the conclusion that there is no need to search far and wide when the answer is so close to home. Click Read More below for additional information.

KEY HIGHLIGHTS *All-time high sales, EBITDA and operating cash flow *First quarter where Verso was included – net sales growth 75% *Strong organic growth, both in Europe 17% and North America 19% *Price and mix improvements more than offset the cost inflation *Excellent cash delivery and strong balance sheet position. QUARTERLY DATA *Net sales grew by 75% to SEK 11 408 million (6 504), whereof Billerud North America accounted for SEK 3 738 million *Operating profit was SEK 1 609 million (404) *Net profit was SEK 1 419 million (311)

The second quarter was challenging with all-time low sales volumes and with currency-neutral net sales declining by 18% compared to the same period last year. The largest sales decline was in North America due to the continued inventory destocking resulting in production curtailments. This, in combination with historically high fiber costs in Europe led to a weak result. By all indications, the blastomycosis outbreak at the Escanaba mill is behind us. Following a three-week idling and deep cleaning of the facilities, operations were successfully resumed on the 8th of May. We continue to work closely with local, state and federal health experts as they complete their analysis of the testing and sample collection at the mill. Results will be made publicly available in due course. The negative financial impact of the outage and the deep clean was SEK 85 million in the quarter. From the 1st of April, our financial results are reported according to a regional structure. Business conditions differ vastly between Europe and North America, even if the current situation of high inventories and destocking applies to both regions. Region Europe’s profitability deterioration in the second quarter was primarily due to all-time-high fiber cost and soft volumes. Region North America on the other hand delivered a comparatively healthy margin, despite an operating rate of 50-60%, thanks to our cost-leadership and tight cost control.