Mondi plc

to discuss today's trading update. I'm Andrew King, your Group CEO, and with me is Mike Powell, our CFO. I'm sure you've all seen the announcements. I'm just going to pick up on a few points before we welcome any questions. The first quarter of the year was characterized by higher sales volumes, good cost control, and fewer planned maintenance shuts. These offset lower average selling prices when compared to the fourth quarter of 2024. and the line EBITDA for the quarter was reported at 290 million euros. Importantly, we continue to make good progress ramping up production at our capacity expansion projects. Our new craft paper machine at Stetti, which we started up in December last year, is showing excellent results in terms of both paper quality and production volumes. We are also delighted that our newly converted paper machine Arduino in Italy successfully started up on time and on budget in April. We're also pleased to welcome our 2,200 new colleagues from Schumacher to Monde and we look forward to working with them to drive sales and provide our customers with an enhanced range of solutions. Before handing over to take questions, just a quick point on the tariffs. As we said in our statement, the direct impact on our operations is limited. with under 3% of our revenue involving export sales to the US. However, we remain mindful of the potential second-order impacts that could affect trade flows, consumer confidence, and supply chains. With that short introduction, I'm happy to hand over to questions, so it's back to the operator.

Thank you very much. Right, we do have a variety of raised hands, so we're going to start with Cole from Jefferies. Cole, if you'd like to unmute and ask your question, please.

Morning, thanks for taking the question. If I could just start on any changes in cost inflation that you're seeing, be it wood costs, and then I just like your commentary on the waste paper costs have obviously moved higher into the second quarter, and I'm just wondering how Monty's positioned with waste paper costs and majority of your costs being from the wood side. Secondly, on the Schumacher acquisition, you know, you've had the business now for 30 days. Just like initial thoughts on how that acquisition is progressing. Thank you.

Well, it's Mike here. Let me take input costs and costs, and then Andrew can talk about PFR into Q2, how it relates to the market, and probably touch on Schumacher. Input costs, I would still guide, as I did at the full year results, I would say input costs are fairly flat overall. I'd still give that guidance for the full year. Clearly, within quarters, you see some movements, so actually Q1, Q4, for example, we actually saw, on average, lower PFR costs. Clearly, they accelerated into the Q2, but that was offset by higher energy. As we move into Q2, those are probably flipping around. But again, in the scale of a business the size of ours, input costs flat. So it's still very good guidance. And then on discretionary costs, clearly we're working those hard. And, you know, in the current environment, being very careful and reducing discretionary costs where we can. So no change to guidance, a bit of movement up and down within the quarters. But in the scale of a big business call, it's sort of a few ups and a few downs leave us flat. Andrew, do you want to touch PFO on Chinook?

Yeah, Mike's kindly given me the job of trying to predict the PFR prices. They've gone up. They've gone up, yeah. So you're right, Colin, that obviously our exposure on a relative basis to some of our, call it, corrugated peers isn't quite as much because of our bias towards virgin-based products. But I remind you, we still... Pre-Duino, we're buying about a million tons a year of PFR, and clearly with the ramp-up in Duino, we'll be consuming an extra 400,000 to 450,000 tons of PFR. So it's not an insubstantial spend for us. As everyone knows, the PFR prices have been going up quite rapidly over the course of Q1 and into Q2. They started the year somewhere around 100 euros a tonne and up to, what, about 160 odd now. Always a very difficult price to predict. It's always volatile, we know that. And, of course, it gets driven by not direct supply-demand impacts because it's almost a by-product of other processes. So in the short term, clearly what it's doing is driving up the whole recycled container board cost curve. As we discussed at the full year results, I mean, the recycled market is under huge pressure already. There was a modest price increase in Q1, but that's basically all been eaten up by this PFR increase. So from a margin perspective, the market is back to where it was at the beginning of the year, very strained situation. And so we offer the price increase initiatives out at the moment, supported clearly by a rising cost base driven by this PFR dynamic. So in short, the market remains under huge pressure, the top of the cost curve clearly under massive pressure, compounded more recently by the PFR increases. Clearly, on the back of that, we're also seeing some price increases in the virgin grades. That is more about margin expansion in our case, because clearly, as Mike just said, most other costs are fairly benign at the moment. Maybe the Jan Schumacher first impressions, I think it's really confirmed what we were hoping. We certainly see a strong synergy opportunity. as a buyer of paper right now, that buying power is very useful for us, for one thing. But more importantly, everything we had hoped around giving our customers a better geographic offering, also obviously adding that solid board exposure, which is a very interesting niche for us as well, we really think that that does open up bigger opportunities for us, and we're very excited by that. The initial engagement with the combined customer base, I think, has been very positive, very positively received, and equally important, our rapid engagement with our new colleagues from Schumacher has been, I think, gone extremely well, so we are currently working very hard on the hard work around integration and making sure we really bring the best of both together and drive the synergy. So we remain extremely confident in the synergy optimization opportunities, and we certainly believe the combination will be able to drive that commercial offering, which is all important in this deal for us, and remain very excited by the opportunity.

And then maybe just as a follow-up, could you give any commentary around your order books? I understand it might be too early to see any indirect impacts from U.S. trade tariffs, but we're in a situation where we're seeing differing commentary out of the U.S. versus Europe. In the U.S., you've got corrugated volumes down to, in Europe, I imagine there were probably plus 3% to 4% in Q1. So I'm just wondering, after a good order book in Q1, what are you seeing into the second quarter? Thank you.

Thanks, Colin. I think, as you say, Q1 is obviously not really a tariff story because it only really started to become a topic into Q2. In Q1, all the volumes in Europe, we haven't got the full industry stats as yet because they haven't been published, but it was a fairly good quarter, I think, from a volume perspective across the industry. And certainly our central European business enjoyed good volume growth in Q1. Turkey is another issue. Turkey had a very difficult quarter. I mean, as you well know, the geopolitical issues there are disturbing, and that has created a lot of uncertainty in that particular market, but that's a different story to the tariff issues. Clearly, you know, the tariffs discussions only really it's really early days in that. I think it is fair to say that there's a general unease around. I mean, it is the topic. Every time you talk to customers these days, it is a big topic for everyone, more in terms of simply the uncertainty that it creates. So everyone's speculating as to what and as a consequence as we all know uncertainty is the enemy of good commerce and it just creates a more unstable environment should I say so it's not particularly evident frankly to date in our European order books but at the same time I think we shouldn't be complacent around this at all because undoubtedly it is a big topic for our customers and their customers in turn and everyone's pondering what it might mean for them and clearly none of us know what the rules of the game will be anyway around this and I guess that in that certain environment everyone will somewhat of a risk-off approach. So I think we're by no means complacent about this, but it's not particularly evident so far in our order books. Where we do see pockets of genuine weakness, I suppose, is in exposure to China. So we do sell product into China, which is fairly limited in our case, but we do sell some pulp, as you know, into China, both from South Africa and from Canada. And there you can see a weakness in the order situation. And I think that, again, China is really in the crosshairs of the whole tariff discussion. And I think that is evident in the deep sense of uncertainty within China. Again, I'm not sure if it's driven by... actual underlying demand side declines, or just the uncertainty that prevails, and so people are looking to hunker down and not carry stocks and the like, which is a typical sort of risk-off behavior.

Thank you. Thank you so much for your question, Cole. Our next question comes from, let me just check, comes from Lars, Lars of Istiful. Lars, if you'd like to unmute and ask your question, please.

Good morning, and thank you for taking my questions. You, of course, have a lot of internal things that you're doing right now with Stata, Arduino, and Schumacher coming on board. I just wanted to clarify if you have been taking any sort of startup costs above the line or these sort of costs are capitalized as ramping up, and if you can comment on what sort of contribution you would expect from these assets in the current environment. appreciate the high uncertainty, but nevertheless, it would be interesting to hear your comment on that. And Schumacher specifically, of course, it is a sort of a challenging market, but it seems as if Germany is strengthening a bit. Are you seeing that? And what sort of contribution in this environment, again, would you expect to get from Schumacher? If I start there and kind of So you've got a central line.

Okay, very good, Lars. So in terms of startup costs, yes, there's always startup costs, but those are all taken as above-the-line costs. That's just a cost of doing business. So it's partly reflected in, you know, when we talk about maintenance shuts, clearly, for example, when you're commissioning a new machine, I mean, Arduino is a slightly different topic, but when you take down certain operations in order to commission the new machine it's part of that maintenance cost so for example at the moment we're doing some work up in Adinas in Sweden maybe you can go and visit it last but they are down at the moment on a big project so that will be incorporated in our guidance around that annual maintenance charge and that's it's a It's a downtime effectively while you're commissioning. And, of course, when you start a new machine in particular, there are some startup losses because you're running with a fixed cost base and, of course, you haven't got full saleable production, et cetera. And it takes, I mean, it takes two to three years for a machine to be fully optimized both from outside to the markets that you want to serve in the long term. But that's all in our numbers, if that makes sense. We don't separate that out, and we certainly don't take any of that stuff below the line. The only thing we're allowed to take below the line is the direct, well, not even that. We take some direct transaction costs linked to acquisitions. So, Schumacher, there will be some transaction costs, but those are the direct transaction costs. When it comes to then... For example, the integration cost, the cost to deliver synergies, et cetera, those are all incorporated in our trading profits. So, yes, there is some initial drag when you start up these machines. So, for example, Arduino will be initially loss-making as we ramp it up for obvious reasons because until you have But that's, you know, we just incorporate that all in our full guidance. It's not, it shouldn't be seen as a separate cost category. But, you know, in short though, we are, you know, we're very happy with where we are with those projects from a project execution perspective. You know, these are big projects and we're not unaware of all the execution risks that come with big projects. But I'm delighted as to our and a huge credit to our technical teams and the operating teams at each of these operations that have been able to bring these big projects on time, on budget, and are now ramping them up in line with our business plan. In terms of the overall contribution from the projects, as we keep stressing, obviously when you're bringing on new capacity, the one big line item that you don't know at any one time is your selling price. What we do know is we can manage the market risk very nicely. As I remind you, PM10 in Shetty, yes, it's 200,000 tons of sackcraft. But roughly speaking, by the time we optimize everything, net exposure will be an extra 100,000 tons of sackcraft. And I remind you, we lost 100,000 tons of sackcraft in Stambolinski last year, back in the last year. So it's essentially replacing that now. and then you've got 100,000 tons of the speciality craft papers, which you're all invited next week to our teaching on flexibles, and we'll tell you about all the exciting markets that we are selling into, and the big increases in demand that we are seeing, driven by the whole sustainable packaging dynamic. So we're very excited by that, and and that's also a reflection of the overall market dynamics. Similarly, yes, we bring on 400,000 tonnes of recycled container board and I appreciate everyone's very nervous about the overhanging capacity in the recycled markets. But again, I remind you, we are short of recycled container board in our operations and obviously that's been, I don't want to say exacerbated because it's a nice problem to have at the moment, but it's been increased by the shoe market acquisition. So, you know, it's a great combination, frankly, bringing on Duino and having shoe market at the same time because it allows us to drive that integration strategy. And so the market exposure in terms of finding markets for this volume is very limited in our case. Obviously, again, I stress that the exact margin earnings contribution in year one is always a function of the overall market price. I'll short-circuit things. I think Mike said at the full year, guidance on net contribution from all our expansionary projects in this year was $5,200 million. We stand by that guidance. Just one follow-up, if I may.

You call that, this is part of your maintenance cost anyway. So why are you looking at all your maintenance costs to help us out to understand that? I think last year you had about 100 million. Is that number now going to be materially higher?

No, the full year results I guided this year would be about the same. We're clearly feminine for the half year. Quarter one's had enough. Last year, I'd expect that 100 to be split 20-80. That, again, is in line with what I said probably eight, ten weeks ago. So, therefore, there'll probably be about 20 in Q2, about 80 in the second half. If there's any difference to that, I can update at the half-year loss.

Very good. Thank you. Just to remind you, in terms of timing, we did take some big shots last year as well. Yeah. that was also impacted by, I call it, project-related shots over and above the normal shots. And then, sorry, Lars, you asked also about Germany and Schumacher. I mean, we hope for the round Germany. I mean, I'm a firm believer in Germany in the long run. I mean, that's why Schumacher was also a very interesting for us, and it's a very important corrugated market, and more importantly, we think we're extremely well positioned within that market. But I think it is fair to say that the last few years, it's been a very difficult market. When it was 2024, it remained difficult. In 2025, yes, if you look at the industry volumes, they look a little bit better in Germany than they have been. But it's still not strong, I would say. But I agree with you, Lars. Obviously, if one believes that the commitment to this additional spend from the federal government, if the political situation can be resolved and the like, must be a strong stimulus for growth from an economic perspective more broadly. and undoubtedly we will benefit from that. So I think it's early days in that. It's fair to say it's still a challenging market environment, but like you, I also have strong hopes that we'll see a stronger environment going forward from a trading perspective. But most importantly for us as well, we think there's a lot of self-help we can do driving our synergy opportunity and driving that combined commercial offering box business.

Very clear. Thank you. Thanks, Lars. Thank you for your question, Lars. We're now going to go to Charlie from BNP Paribas Rixane. Charlie, please unmute and ask your question.

Yes, morning. Thanks for taking my questions. Just related to the startup costs specifically again, but I guess obviously Duino wasn't contributing at all in Q1, but were there any particular costs for that or other projects that you were incurring with Q1 that didn't have any kind of offsetting revenues or profit contribution? And on the project contributions you're expecting for the year, the 50 to 100 million, I just wanted to clarify, I assume that excludes the contribution you're expecting from Schumacher. I just wondered where your expectation is for how much Schumacher might contribute in the year now. Thank you.

Yeah, Charlie, so I appreciate, I mean, the good and the bad thing is there are lots of moving parts around all of those projects, right? And, you know, we see it as kind of normal business to be bringing on projects as and when they come and all the costs associated with them are in the numbers. So I can only reiterate that. So, yes, there were some startup costs in Q1 linked to Duino because clearly we started having to, you know, we can't capitalize everything. So there are some operational costs that we were incurring and we didn't have any revenues, but it's pretty small. And it's not particularly material to the overall group number. And, you know, just as we were incurring costs there, obviously we started to see more revenues, for example, come out of the PM10 ramp up and the like. So I can just reiterate, these are all in the numbers. There's always a bit of noise you bring them on as you ramp them up etc but to us that's normal business and most importantly we expect to see a year-on-year incremental contribution in the 50 to 100 million range depending on exact pricing over the course of the year and that's an all-in number including all

expansion so that's on the 1.2 billion growth program that guidance hasn't changed and we still feel good about that guidance and as Andrew said those projects have been brought on time and on budgets as well from a CapEx guidance perspective therefore no change. You asked about Schumacher I think Carl said, you know, you've only had the business for four weeks. That's quite correct. So we're still in German gap, and we're very pleased with the acquisition. The fit is as good as we expected, and the opportunities, as Andrew has said, are exciting ahead of us. The best guidance I can probably give, and, you know, we have only had it for four weeks, is we've previously said a couple of things. One is in FY23. Our best guess of IFRS was that it made 66 million. We've said that publicly, and we've also said that it will be, in the first full year of ownership, EPS accretive. There's no change to that EPS accretive guidance. I think probably if you wanted to plug a number in for nine months, net of transaction costs, because we've got to spend some things to do other synergies, probably 30 for the nine months. I wouldn't take that necessarily as a run rate because I think we're quite excited about the opportunities. But I think if you wanted a number for this year for your model, which I guess is kind of a big question, best guess today, four weeks in, net of transaction costs, sorry, net of synergy costs, around 30 is probably not a bad guide. Thank you.

Thanks, Charlie. Thank you, Charlie. We're now going to go to Patrick from Bank of America. Patrick, please unmute and ask your question.

Good day. Thanks very much for taking my question. Maybe just a little bit of a longer-term question. You know, we've spoken about us being below mid-cycle and, you know, the projects contributing below mid-cycle, and all of your commentary seems to be suggesting, you know, the price increases are largely being pushed around by costs. I mean, thinking longer-term, what do you think we need to see for sort of a return to a pricing environment or market environment where you can price for margin and sort of recover to that mid-cycle level that we've seen in the past? You know, is it working through the excess capacity? Is it a return to demand? Is it the high end of the cost curve falling off? Yeah, maybe if you could just give us your thoughts around that and how that could play out. Thank you.

Yeah, thanks, Patrick. I think the first comment I'd make, that issue around pricing driven by cost is purely in one particular segment, which is the recycled container board sort of market, which, yes, it's important, but it's certainly not the only market we serve. I mean, for example, in our flexible packaging business, There is no real supply-side concern. Sackcraft, which is the major product within that market, the only new supply coming on is our own, and as I mentioned already, NetNet is actually fairly limited incremental because of the unfortunate situation we had with Stambolinski back at the end of last year. So there's no real supply side concern, should I say, on our flexibles business. There it's driven a lot by the cycle and normal supply-demand dynamics. In a cyclical downturn, of course, more the industrial exposures get more impacted. But the supply side is actually in very good shape, I would say. of the cycle and the cycle turns. And, you know, we have seen an improving order situation in, for example, what we call our overseas business, which is very cement exposed and the like. The cement industry in emerging markets has looked a bit better. You know, I caveat that by saying, of course, with the tariff stories, everyone's a little bit uneasy right now. But, you know, that... That will be resolved one way or the other going forward. So that's very much a, call it, I firmly believe, more of a cyclical demand side issue. And similarly in our consumer-facing businesses, inflexibles, very robust, frankly, on the demand side, even in a more difficult world. And the supply side, yes, there's a bit of new speciality craft coming on from different players. But I'm very excited by the structural growth we see in those markets going forward. And I think that will contribute to onward strengthening both from a margin perspective and a volumes perspective in, as you say, the longer term. The one market, you know, coming back to that corrugated business, which is, as you say, the one where we are faced with this overcapacity stockpile. trying to push on the costs. Firstly, I am a believer that this is a long-term structurally growing market. I think over time the world needs more boxes driven by everything from the e-commerce dynamic through to the fact that there is no obvious substitute. It is the most environmentally friendly solution when it comes to moving goods around in a protective packaging. So you know, that long-term growth dynamic, I firmly believe, remains in place. In the short term, we've had the issue of, you know, a coinciding demand-side softness driven by the cycle, combined with, of course, this capacity expansions coming into a downturn, and that's what's caused this short-term indigestion in the market. I think what can resolve that is In the long term, you need an incentive price for new capacity. It might sound odd at the moment, but due course, the world will be short of this stuff again if the price doesn't get to a level that incentivizes new capacity. What needs to happen to get to that point? Clearly, some genuine demand-side and sustained demand-side recovery can take a big chunk out of the excess capacity. And I think we all believe that there has to be further capacity closures. There have been some closures. I mean, there's a lot of downtime being taken in the market that is extremely expensive, and I'm not sure how people can carry on doing that without being pushed to permanent closures. But I would expect to see some permanent closures in this market. Clearly, we're in a different situation because we have very low-cost production in this product, and we can still make money even in these very difficult times. but undoubtedly there must be a lot of pain at the higher end of the cost curve. So one would assume that that would drive some closures. It always takes longer than one expects, and of course it's always somewhat frustrating, but I suspect it will be a combination of those. And maybe the last point, we're living in a world right now where exports from Europe have severely reduced, can also be something of a safety valve, but I wouldn't rely on that in the long term because I think as we've seen in the U.S., there's a realization that this is a product that doesn't travel particularly well. It's always better to try to sell it as close to home as possible.

Thank you. Yeah, thanks a lot. Thank you, Patrick. We're now going to go to Brian of RMBM Stanley. Brian, please unmute and ask your question.

Hi, good morning Andrew and Mike. Quick question on Arduino and PM10 at Steti. First question on Arduino, if I may. How are you marketing the product? Are you sending that material to Turkey as originally planned?

Yeah. Brian, we lost you there, but we certainly heard the first part of that question. Can you still hear us? Brian's dropped off.

It looks like Brian's dropped off. Can you hear me now? You can, Brian, thank you.

I don't know what happened there. The second question was on the ramp-up profile for both, for PM10 and for Arduino. Is it just a question of volume ramp-up, or is there a question of quality ramp-up too?

Yes, so thanks for that. So firstly, in terms of the specific question around Arduino, obviously we're not going to give and when we're selling our product but it is fair to say that as I said earlier clearly the dynamic has shifted a bit since the acquisition of our Schumacher business that gives us a natural outlet for paper from Duino either directly into those into our broader converting network as we have now in Central Europe or through what we call swap deals which is a fairly common thing in the industry where you swap with other producers to optimize logistics and the like into your respective plots. So there is a lot of volume going in, will be targeted because we're still ramping it up as we'll come on to, but a lot of the new volume is targeted into those through either directly or indirectly through swaps into our own converting operations. Clearly there is some volume targeted particularly into what we call the open market in Italy itself. To your question on Turkey, less attractive, frankly, right now than we had perceived at the time we made the original investment decision because, as you know, in Turkey they had put tariffs on container wood imports some time ago, so we readjusted some of our thinking there. But having said that, there are still price points at which it may You know, we ourselves, again, are short of paper in Turkey as well, so we do still have the option to sell some of it into Turkey if the pricing is more favourable relative to buying it directly in Turkey itself. So it's a combination of those, but as I say, you know, we are a small net short of recycled container borders in the group, and so we have a very strong and the market. And in terms of the ramp-up profile, as I said earlier, it takes two to three years to get full optimization of these machines. Why is that? Partly it's because there's a technical ramp-up, so you get quite a lot of volume up front. You can get to 60%, 70% output for a bit, you know, in rough terms, quite quickly. But then, you know, to get that last Obviously, really, you know, the hugely sort of profitable business, the incremental volumes that you can squeeze out at the end, that does take a period of time to optimize both in terms of the actual production output and also call it the quality parameters. Now, you know, with PM10, I think we alluded to it in the literature, you know, we delighted I mean, we were already producing a very high-quality product there. Now it's about ramping that up to full capacity over a period of time in terms of optimizing the full mill. I mean, frankly, in that operation, it's around optimizing the whole mill infrastructure, which was in the process of doing. And then you've got the commercial optimisation where, again, you don't necessarily sell the first volume straight into your long-term markets. You will sell it into a broader market and then develop over time the markets that you want to serve and optimise in the long run. And that does also take a period of time. But, again, all of these nuances that I've just been referring to are important built into our modeling, our planning, and the kind of guidance we give you in terms of contribution. But it does take up to three years before you've got full optimization, full contribution from these, particularly these big paper machine investments.

That's perfect. Thank you, Andrew. Thank you, Brian. We're next going to go to Sean from Cronux. Sean, please type star six to unmute and ask your question.

Good morning, Andrew. Mark, can you hear me? We can, yeah. Thanks, Sean. Excellent. Thanks. My first question is just around the credit word for you. It's obviously a bit less relevant in the profitability mix at this point. But it does seem like a fair amount of capacity has come out the market, which has been ahead of the sort of roughness in demand. Maybe if you can share any light on order books and perhaps if Monty's had to take any downtime on their non-integrated assets or machines, right?

Yeah, thanks, Sean. Yeah, I think it's fair to say it's been, you know, the unconfined paper market. If you compare year on year, it's a bit more difficult. But reminding you that this time last year, it was actually very strong. But clearly, we always knew there was an element of restocking. This year, I think, started off in pretty decent shape. But clearly, you know, the European market is challenging. We have seen, you know, pretty flat to even some declines in pricing. And, of course, we are current, you know, there's big debates, obviously, what we're next on the pulp price. But one senses, you know, with China slowing down and the like, one has to assume that pulp prices will start to come under pressure. And, of course, that in turn reduces the cost support for fine paper pricing in Europe because there still is some unintegrated capacity around that. Obviously, in the short term, in our noisy operations, we somewhat benefit from that because we buy in Paltaire. Obviously, in Rijon-Baroque, which is the main profit contributor there, we would suffer if pressure as a consequence of that so yeah it's been a bit up and down I would have to say in the fine paper markets in Q1 and certainly we're not seeing any real improvement on that at the moment going into Q2 so I think it is you know it is quite challenging for the for that business on that having said that you know our guys in Rojambark are doing a great job on cost control the wood cost situation has got much better over the last couple of years and and that means they're driving good profitability in spite of a challenging market environment. We have also seen imports from Asia. Those do come and go. It's a very spot market for the Asians, but you do see on occasion import pressures, and then they alleviate, and it's very volatile in that sense. But, yeah, all in all, pretty muted demand side environment, very good cost control from our teams, holding up profitability I think is the main message out of European fine paper. South Africa always a slightly different dynamic. Frankly the biggest profit driver there is the export pulp where again a weaker dollar pulp price is clearly a headwind for that business by the same token. Obviously the weakening rand is continue to soften.

Perfect Andrew, thanks. And just a further one on Schumacher, I appreciate the EBITDA guidance for the full year. I think when the deal was first announced, I think you guys were into that low operating rates between, I don't know, if it was low 40s or 50s, I can't recall. Are you able to shed any light on that evolution at all?

Yes, I mean, they remain low as we expected. And again, I mean, just to remind you, these are converting operations. It's very different to a paper mill. You have different cost structures. You have a little bit more flexibility on your cost structure. But, you know, we were excited at the time by the fact that there was, you know, very well invested asset base, heavily underutilized, and certainly we believe with the combined sales platform that we built, We now have every opportunity to fully optimize and utilize that capacity. So that capacity, it remains underutilized. It also comes back to that earlier discussion we had around the trading environment in Germany in particular, which we also said to Benelux and the UK. But, you know, we were very excited by the conversations we've been having with our customers. I think they see us as a real credible player across that northern European market now. We do have, you know, all the weapons at our disposal now to be highly competitive across that region, and it's now up to our teams to drive the integration and optimize, you know, the hard work cost synergies, and at the same time, ensure that we drive the commercial strategy to fill this heavily underutilized capacity with the right volumes, because that is also very important.

Okay, thanks, Andrew. Just last one. Just in terms of the reported underlying EBITDA for the quarter, with the benefit of hindsight, are there any sort of pockets that were maybe better than expected that you guys saw? Thanks. Sorry, I missed the first part of the question, Sean. Mike, in terms of the performance for underlying EBITDA for the quarter, with the benefit of hindsight, now that we've obviously closed the quarter, was that pretty much in line with your expectations, or were there any pockets that were much better than you guys initially anticipated?

Pretty much in line, and I think also the delivery of the projects for the full it's one thing to deliver numbers and look backwards it's really important you know that we've delivered these projects which allows a great platform going forward too so I think yeah it's been not that we run the business by quarters I always say Sean but yeah if I was to talk about the quarter only in mind both in terms of delivery of projects and numbers thanks for the time cheers thanks Sean

Thank you, Sean. We're next going to go to James from Prescient Securities. James, please unmute and ask your question.

Thank you very much for all the detail today. Two questions from me, if I may. Firstly, the sat paper market, as you mentioned, it clearly is in quite a different position to the corrugated business. There has been a little bit of a price rise, I think, that we've seen in the last few months or so. Is there a price rise, another price rise underway as you're doing for container board? And then secondly, on the Schumacher business, now you own it. Is there any way you could give us some historic numbers, maybe for last year, what the sales were even, or the EBITDA? And just quickly, if I may, just to do the third one, that 50 to 100 million of benefits from the projects, I assume that's an EBITDA number, and do you have a depreciation number for that? I was assuming around 40. Thank you for that.

James, let me start. So the Schumacher, no, I mean, you know, we don't give individual details on any of our businesses. And frankly, FY24 is still in German gap anyway. I mean, we've only earned it for four weeks. I'm certainly not going to spend a lot of time and resource re-translating FY24 right now. We EBITDA for this year. And I think you've heard that we're pleased with the combination. And frankly, we're super excited about the opportunity, very much in line with what we've said in the past. In terms of the 5,200 EBITDA, I've already guided to this year's depreciation, so there's no change to that. I think over time, our depreciation will nudge up. If you think of 20%, number as we move forward but no change to the appreciation of this trading update either for this year. Andrew do you want to take it on?

Yeah in terms of the the bags business and I can't for the life of me remember what you'd ask them.

Is there a second price increase?

Yeah, I mean, I think it has to be, I mean, they're very different markets and they operate in different ways. I appreciate the one that's called craft paper and now there's craft liner. But they do operate in very different sort of dynamics. And as I mentioned, you know, the supply side is in good shape. I think in terms of the demand side, you know, we saw a good volume in our underlying bags, you know, the bags business, which is where most of the sackcraft goes. Certainly Europe showed a good volume of growth in Q1. Our export markets, as I mentioned, the cement industry seems to be picking up on the emerging markets that we serve. So it feels a bit stronger. I think the big caveat to that in the short term, though, is the call it the unease that is around simply being driven by the tariff uncertainty and the impact it may or may not have on growth in all of these different markets. And as a consequence, one senses the supply chain across the piece is kind of taking a somewhat of a wait-and-see attitude. So we have to be mindful of that in the short term. But yeah, we're positive about the supply side and we'll have to watch how the demand side develops over the coming months as to our pricing strategy going forward. So we come back to that comment we made in the trading statement. We have to be conscious of the macroeconomic overlay and the geopolitical uncertainties that abound. quite quickly as well, so maybe some positive outcomes around some of these bilateral discussions might well restore confidence through the supply chains, but I think right now we just have to be cautious around the expectations in the near term.

Appreciate that, thank you. Thanks. Thank you, James. And our last question comes from Lewis of Goodbody. Lewis, please unmute and go ahead.

morning thanks for taking my questions um first one is just on some color behind the sequential improvement in the corrugated and flexible packaging segment just sort of how much of that is mixing is there sort of a market difference intra segment between sort of those end markets or products and then the second one just acknowledging the direct tariff impact is limited just on that indirect piece can we maybe get an insight on how much of that demand is sort of resilient in terms of fmcg or essential industrial goods or otherwise

I'm not sure if I would follow the first question. In terms of demand resilience, I think it's dangerous to just sort of, you know, say industrial bad, FMCG good. It doesn't necessarily work like that. I mean, again, we'll be giving some insights into our exposures on the flexible packaging because it's corrugated more generally as 60%, 70% kind of, food, beverage and non-durable indirect exposure because obviously it's largely a transport packaging and then there's a sort of industrial component. In our flexible business, if you take it at a very high level, it's around half consumer driven, half industrial being mainly cement building materials, agricultural, etc. I think it's wrong to assume that in a sort of more difficult macroeconomic environment, the one is sort of prejudiced particularly relative to the other because obviously they're very different dynamics. If you're building bridges using cement bags in Egypt, it doesn't necessarily correlate with overall GDP growth, et cetera, for the globe. So we have to be a little bit careful. But then, I mean, what I've just outlined is the broad, FMCG, but I wouldn't translate that into, you know, one's going to get hammered in a downturn and the other's going to, you know, going to prosper.

That's clear. Can you just repeat the first part? Yeah, of course. Just on that sequential improvement, just wondering how much of that is mixed?

You mean on the pricing for quarter-on-quarters? Yes, quarter-on-quarter. I mean, pricing actually was down quarter-on-quarter. I think we made it on a sequential basis purely because we saw... We saw, you know, as I think we said at the full year results, we saw containable and graph paper and the like tail off into Q4 of last year. So we started the year at a kind of a low point, and then we've been getting some price increases through the first quarter. But if you take an average-on-average effect, you know, Q1 pricing was lower on average than Q4. I'm looking at my case. Correct.

I just can't see it. Yeah. So I hope that's clear.

Yeah. Thanks, everyone, for your interest. Mike and I need to go and talk to our shareholders at the AGM. So with that, we should probably wrap up. As always, Fiona and team are readily available if there's any follow-up questions. But thank you again for your interest. I'd just like to reiterate, I think, yes, Q1 very much in line with our expectations most importantly I think we made great strides on our big important projects and also working very hard on the Schumacher integration which will set us up very strongly for the future obviously with an eye to the overall macroeconomic environment and as a last advert for our flexible packaging teaching next week where hopefully we can give you a lot more insights into the value drivers behind that particular business. I'm looking forward to seeing as many of you as possible at that event, either physically or on the webcast. So thank you again for your attention, and no doubt we'll keep in touch.