The intention to divest Managed Packaging comes as Sweden-headquartered Billerud sharpens its focus on packaging materials, which the company said means a reduced strategic importance of service offerings.

“Managed Packaging has contributed to Billerud with expertise in optimisation of fibre-based packaging solutions for global brand owners, but there are no synergies with our core business, which is our focus in the years to come,” said Christoph Michalski, president and CEO of Billerud.

“Managed Packaging will now get an owner who wants to develop the business, to the benefit of employees and customers.”

The transaction is planned to be completed in August 2023 and is expected to result in a positive result effect for Billerud of around SEK 20m (£1.49m), which will be reported as an item affecting comparability in the third quarter.

The planned divestment’s impact on Billerud’s EBITDA and net debt will be immaterial, the business said.

Managed Packaging offers “customised packaging solutions” to global brands and retail chains with manufacturing in Asia and has a large network of production partners. It employs 143 staff in Asia, Europe, and the US and in 2022 it had net sales of SEK 770m.

Earlier in July, Billerud had sold its ownership in Kezzler, a company with a digital platform for packaging traceability, for SEK 48m.

In its results for Q2 2023, Billerud’s net sales fell by 13% to SEK 9.95bn, while its adjusted EBITDA was SEK 188m. Its net loss was SEK 481m.

The company said market conditions were weak in Q2 for all products except liquid packaging board, where conditions were stable. Customers’ inventory adjustments and low demand resulted in production curtailments in Billerud’s mills and across the industry.

The business implemented price increases for liquid packaging board and maintained prices for graphic and speciality paper. Prices decreased for the rest of Billerud’s products.

Continued weak market conditions are expected for Q3 and Billerud will continue curtailments on production. Negative mix impact and some price reductions are expected. Input costs are expected to decline except for wood raw material in Europe.

Earlier this year a person died following the fungal infection outbreak that shuttered Billerud’s Escanaba paper mill in Michigan.

In its Q2 results Billerud said the mill resumed full operations on 8 May following a three-week idling and deep cleaning of the facilities.

“Billerud’s top priority is the health and safety of employees and contractors, and the company is committed to working closely with and following the recommendations of health experts as they continue to investigate the situation,” the company stated.

The negative financial impact of the outage and the deep clean was SEK 85m (£6.33m) in the quarter.