Organic growth
The company’s target is to establish long-term organic growth in the order of 3% per year from 2008 onwards. Growth will be generated from increasing the proportion of paper in relation to market pulp, improving the product mix and customer structure and from new growth projects in the value chain.
Performance 2010
Organic growth was 14% in 2010, compared with 0% the previous year. During a five-year period, the annual growth rate has been approximately 5%. |
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Operating margin
Over an economic cycle, the operating margin should be at least 10%. Historically, the development of the pulp and paper industry has followed a cycle with corresponding swings in the earning capabilities of the actors in the industry. When setting a profit target for Billerud, the Board of Directors considered the company’s profit history, average exchange rates and price trends for pulp and paper in recent years.
Performance 2010
The operating margin was 12% in 2010, compared with 4% the previous year. The increase was mainly attributable to improved prices and a better product mix. |
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Return on investments
Completed investments are to provide a return that is significantly above the weighted average cost of capital (WACC). Billerud is to ensure a return on investment that meets the demands of shareholders while more than covering the company’s costs for liabilities. In practice the company will apply different return requirements depending on the risk level of the investment, with a basic requirement that return on investment is significantly above WACC.
Performance 2010
Return on capital employed was 21% in 2010, exceeding the company’s WACC of 11%. |
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Net debt / equity ratio
Over an economic cycle, the net debt/equity ratio should be between 0.6 and 0.9. Billerud’s business is influenced to a large extent by general economic conditions, which means that the operating risk is considerable. Strengthening the financial position in good years is therefore essential in order to sustain the company in bad years.
Performance 2010
The net debt/equity ratio was 0.03 in 2010, compared with 0.29 in the previous year. |
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Dividend policy
Over an economic cycle, the dividend should average out at 50% of net profit. The dividend paid to shareholders will be dependent on, among other factors, Billerud’s profit level, financial position and future development opportunities.
Performance 2010
The Board’s proposal at the 2011 AGM is for a dividend per share of SEK 3.50, which equates to a dividend payout ratio of 51%. |
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