Billerud Ab (Sweden)

Thank you very much for joining us today. I would like to start by saying thank you to all of you who participated in this webinar. I would like to start by saying thank you to all of you who participated in this webinar. It's so far within our categories, Q2 was another quarter with good demand. Our order books are strong and we are expecting to see operating rates above 90% going into Q3. If we change over to Europe, the market sentiment is a bit different. I mean, overall it has been muted, but we are starting to meet different conditions between our sales channels within food and beverages. Conditions have improved and are starting to normalize. Luxury is still weak, while the industrial channel also has improved during the quarter and in some sense is starting to normalize. And lastly, some words about Asia and the rest of the world. The situation has also improved slightly during the quarter. and food and beverages and that means for us mostly liquid packaging board that has performed surprisingly well during the first six months of 26 and has reached normal conditions. And also within the industrial channel where our exposure mostly found within the sack the sentiment has strengthened a bit during the quarter. So with that I will hand it over to Andrei.

Thank you, Ivar, and good morning, everyone. So starting with our net sales, which were down 2% versus a year ago, and this was driven by the pricing development in Europe. Sales volume for the group were in line with the last year, with North American up 7%, while the European volumes were down close to 3%. Currency continues to have an impact on both our top line and profitability as we have stronger Swedish krona compared to Q2 last year. Next slide, please. The profit decline versus last year was driven first and foremost by price pressure in Europe and loss of emission rights. Now, most of the impact was offset by our decisive actions to reduce costs, our volume growth in North America, and Pulpwood Cost Relief in the Nordics. Our EBTA margin of 7% was a clear improvement sequentially, given we also had heavier maintenance schedule now in Q2. Excluding the impact from maintenance shutdown, adjusted EBTA increased with 4 percentage points versus Q1. Next slide, please. Moving over to regions and first of all, I'm very pleased to see that our actions to improve profitability in region Europe are yielding results as we see improved profitability both sequentially and versus a year ago. We did see sequentially lower volumes across most categories, but clearly that impact was more than offset by our pricing and mix actions together with cost reductions. Pricing was up Thank you very much. which are partly supported by the seasonal impact from temporary capacity adjustments in the Nordics. And as Ivar mentioned, the underlying demand remains somewhat muted. Now, moving over to region North America. North America continues to enjoy favorable market conditions and had the highest sales volume since late 22. with more than 250,000 tons sold in the quarter. Sales grew both within graphical and label paper, while pulp sales were slightly down compared to last year due to Quinnisec maintenance shutdown. The positive volume development means that we now operate at considerably higher operating rates, which were above 90%, and we expect that level to also continue into Q3. The B-annual maintenance shutdown at Quinnisec was slightly more expensive and had approximately 50 million higher cost impact, which was related to some startup challenges. But the mill performance has progressed throughout the quarter, and we are now back to strong operational performance. And for the third quarter, we expect the favorable market conditions to continue. and similarly to Europe, we have strong order books. The price increases that were announced earlier in the year will now fully materialize in quarter three. And we expect a positive pricing impact of two to 3% for the region compared to the second quarter. Next slide, please. Turning over to some comments on the cost development And first of all, in the second quarter, as we expected for Europe, we saw continued pulpwood cost decline and also seasonally lower electricity costs, which contributed positively. That impact was partly offset by cost inflation on most and foremost logistics due to higher oil prices. All in all, we had a sequential cost relief of approximately 150 million for the region in line with the expectations. For North America, we saw likewise cost inflation related to higher oil prices, which impacted fiber, chemical, and logistics costs. Energy costs were somewhat lower due to seasonality, and overall the input costs were down approximately 20 million compared to the first quarter. Next slide, please. Now, looking forward for the third quarter, we expect overall flat input cost situation, but clearly, due to the events in the Middle East and volatile oil price, it is somewhat unpredictable environment. For Europe, we still expect further pulpwood cost relief, although the decline is now flattening out. At this point, We expect both lower pulpwood costs and seasonally lower electricity prices to offset the cost increase we will experience on chemicals. And we would look at the total sequential cost relief of around 40 million for the region. For North America, we expect input costs to increase somewhat into quarter three. But here we are talking about quite small increases with a total negative impact of around 20 million. And with that, I will hand it back to you, Ivar.

Thank you, Andrei. So some comments on cash flow and balance sheet. And as already mentioned, the cash conversion, Arving Q2, was another solid performance with close to 100% conversion. Our balance sheet remains healthy and leverage ended at 2.2 after the dividend payout was executed during the quarter. Our CAPEX guidance remains unchanged for 26 and we are planning to invest 2.6 billion SEK. Most of the strategic CAPEX is related to project evolution in North America. And we do expect that program should be close to completion by the end of the year. And we will get back with the CAPEX guidance for 27 in conjunction with our coming Q3 report. Now, so to round it up and next slide, please, and closing remarks on the near-term outlook. And for Q3, we would expect continued favorable conditions in North America. The situation for region Europe is a bit more uncertain and unpredictable, but we are seeing some positive momentum, at least within selective channels. And for both regions, we will see positive pricing impact now in Q3. So with that, I hand it back to operator for Q&A.