Mayr-Melnhof Karton Ag

Welcome to this video conference call of the Meier-Melnhof Group on our first half-year results in 2026. I'm heading investor relations and communications here at MM and I will be the moderator in this call. Earlier this morning we already published a press release, a half-year report and the CEO video statement which is available from our corporate website mymm.group. Following our brief statement In this half year, we want to provide a more comprehensive update on our performance through this live presentation with our CEO Peter Oswald, who is sitting next to me, and our CFO Franz Hiesinger. Subsequent to the presentation, we will enter into a Q&A session. For this, I want to give you some technical information. Thank you for questions during the presentation by pressing the blue live Q&A button on your screen in the webcast and follow the instructions. Alternatively, if you cannot join through the browser, you have also a dial-in telephone number, you dial your country-specific number and enter the individual PIN followed by the hash key. You can then register for asking a question by pressing 0 followed by 1 on your telephone. I also want to inform you that this webcast will be recorded. I would now like to hand over to Peter to start the presentation.

Thank you Stephan. Welcome everyone and thanks for your interest in our half year results. We have basically four messages. Number one is that our results were mainly broadly in line with last year, slightly down, but broadly in line with last year, but significantly up compared to the second half year. And we will come to the individual items later, but the real positive surprise for us was the strong performance of pharma, significantly up. Food could again make Very strong result like we are always used to it and in board and paper the strong headwinds in terms of pricing led despite a very successful FFF project to a decline in our profitability. The second message is that fit for future is delivering far above our expectations and it will deliver above expectations. The third message is that our expansionary capex, we'll come to that in more detail, are on track within budget and will contribute to our earnings growth in 2027. And last but not least, we said Monday morning, we announced that we have signed an agreement to acquire the Ansberg Mill from Renault Deletici and we see substantial synergies here. Now, if we go to our Fit for Future project in greater detail, it strongly delivered in the first quarter with 105 million Euro above our expectations. We expect for the second half of this year a year-on-year contribution of more than 100 million and in the next year above 60 million. So all in all, we believe that by 27 compared to the baseline in 24, excluding TAN. There will be a burning enhancement of more than 330 million Euro, which is well above the 250 million Euro which were announced at the beginning of the year with the full year 25 results announcement. And as already explained, it's a comprehensive program. The core of the program is operations, But procurement, top line growth, SG&A and supply chain also play a very important role. And with this information, I hand over now to Franz Hiesinger, our CFO, who will explain you our numbers.

Thank you, Peter. I will briefly explain you our financial key figures for MM Group on a like-for-like basis, that means basically excluding TAN, which we have sold beginning June 2025. So our sales came in with 1.85 billion euros, which is slightly down to the comparable prior year figure, but basically stable to the second half year of last year, mainly due to lower pricing. Our adjusted EPI TPA came in with around 200 million euros which is quite up compared to the second half of 2025 and shows as Peter mentioned The market operating profit came in with close to 90 million euros, also quite up compared to the second half year 2025. And our EBIT margin came in with 10.8%, which is quite an increase compared to both prior year and second half year 2025. If we look at the operating cash flow, due to good working capital management we achieved 145 million euros and obviously significantly better than prior last year and our capital expenditure with close to 112 million basically fairly stable to the prior periods despite this includes already a lot of capital expenditure into our large Quitsyn ROE projects which are well on track as Peter will explain later. So if you look on our balance sheet, we're pretty happy to present a very stable position, very solid picture. Our equity ratio is 47%, basically unchanged to year end. The net debt amounts to 945 million euros, also way below 1 billion euros, which brings us to a net debt adjusted EBITDA ratio of 2.4, which Thank you Franz.

So let's go now into the operations of our three divisions and let's start with our food and premium packaging division. I could almost say as always a strong performance. Profitability was slightly up compared to a year ago. We're very proud that we could also increase our adjusted EBITDA margin by 90 basis points. and they also enjoyed, because of the initiatives, a strong contribution from our FFF project by about 27 million euro. Looking into the future, it was very important that we could sign with a number of customers multi-year contracts, some of them developing new products together. This is exactly where we are focusing on. We don't want to compete. and partner of development and works many years together with customers to improve their packaging footprint. If you are a bit surprised why Copline did not develop, first of all it's not fully comparable because we have divested the plants in Bangor and Leuwarden. which are not adjusted, will be adjusted for the big-ton acquisition, or the big-ton divestment, sorry. And so it's not 100% comparable. Now, going to our pharma business, we saw a very strong development. The EBITDA margin improved by almost 200 basis points, so a very nice progress. If you think back, we came here from 6-7% EBITDA margin number, of years ago, now we are on our way to 18%, now we've reached 14%, we've surpassed 14%, so we are on a positive trajectory. Also here we succeeded in signing a number of multi-year contracts with our main customers, developing products together, developing packaging solutions together. And so we can already go to the next page. Innovation is a very important part of our product offering and here are just some examples where we have transformed formed in the first quarter from plastic packaging to, for example, to paper packaging in this way, so to say, avoiding more plastics. We also use, we are not just a producer of holding cartons, but still a small producer of molded pulp solutions and also here we could sign some interesting long-term contracts. The topic in pharma, the big topic is counter-fighting. That's really something which is a very, very important topic for all of us, also as consumers, that if we buy a medicine, we are sure that it's the original medicine and not just a We are very proud about our highly effective micro-optics technology, which gives us a good competitive advantage. Moving on to our board and paper division, we are faced with lower prices and the price The deviation was about 70 million euro and thanks to our FFF project where we could achieve 559 million profit improvement we could almost balance this but not completely. In terms of variable costs it was a rather favorable environment first half year compared to the first half year of last year. Our costs for paper and recycling were somewhat lower, pulp was a bit lower, wood costs were broadly flat, energy costs were a bit lower despite the already starting Iran war. The situation has now changed and I will come to this point then in the outlook. Our fixed costs are down even though we produced somewhat more. Now talking a bit about the top line. Outstanding thing was, which I already mentioned, was that prices were significantly lower compared to the first half of last year, because they've been sliding for most grades throughout the year, and they also dropped again at the beginning of this year. The good news, however, is that we see a positive price momentum in some grades, not in all grades, and we hope that this gathers momentum in the second half of the year. In terms of volumes, we were very pleased. because we could gain market share in Europe both for WAC so for our recycled carton board as well as for our fresh folding box board that is important we've seen that the overseas markets become less and less attractive also because of the tariffs in North America and so it is important to sell so to say around your chimney and One reason of that is obviously that we have very good products and we've improved these products. Another reason is our good service and by good service we don't mean that we're more frankly sales representative than other companies do but we are located especially in FPP on the continent in Europe so We are much closer to our customers, we can react much quicker and this is something which is highly appreciated. Now let's make also a deep dive beyond these half-year results into our overall competitiveness important paper because given the disappointing results this is obviously important. Results, by the way, are very much in line with other competitors in our industry. So first of all, it's important we have to sit on the cost curve. And the good news is that 80% of our capacity is in quartile one and two, so above average. I think that's a very, very important message. Then we have some more detailed charts which show what is the age of our machines compared to the competition. So is it on the right-hand side that it's newer than the average of the industry? If it's on the left-hand side, it's older. And on the y-axis, you can see the capacity. And here you see the first, the right upper chart is on FPP. And here you can see that with much, so with more modern machines, with a lower technical age, which is obviously very good news. In terms of size, we are hovering around the average. I'm not worried about that at all because a very big machine is only useful if you can produce very homogenous products. But if you have many different products, Lina, all other sorts of products, then actually the big size of the machine is not of any advantage at all. On the lower chart, you can see that in the right upper section, which is newer machines and bigger machines, all three machines are MM machines, so noise from light in Gernsbach. Kolitschewo is also a relatively modern machine, but and a bit smaller than the average. We could expand it, but don't do it in the current market environment. The only one which is in the left lower part is from Leighton PM2. But as this is part of a group with two machines, of a site with two machines, we also think it's very good. So in summary, we have a very strong cost position from the cost curve. But let's go now to the next slide. It's not just where you sit on the cost curve which is important, it's also what is your capacity utilization. Having a great machine which is 70% utilized is not what delivers the results and here the good news is that we could steadily improve our capacity utilization and we're now at an average of 87% specifically for FPP to preempt here an equation it's 80%. The third aspect which drives your profitability is do you produce products for markets which reward your products or do you have to dump them all over the world? And the very good news is that we could pass now for our folding carton board in Europe, so both recycled and virgins in together, we can sell more than 90% So we've deliberately cut back on overseas markets as the price competition against Chinese import tariffs in the US is just not very attractive. And last but not least, it's not just about machinery, it's not just about capacity utilization, it's at the end of the day about people running it and in terms of operational excellence. With the CAPEX, which we did in 2023, we were struggling a bit to adopt to this new machine setup, but now we have fully regained our leadership in operational excellence and also Griezin and Koltke have improved very much. So, in summary, we have a very strong Market position, yes, we have this extreme market share fight, especially in FPP and we have to live with it for some time. But finally, we see that we are in a very strong position and that gives us confidence for the future. And this leads me to the outlook. So there are negatives and positives for next year. First of all, not really a negative, but just to remind you about, second half we always do our annual maintenance stop in Kvitsin and in Kotka mills. We do it in other mills as well, but there they are not so relevant. And that has a negative effect of about 35 million Euro. The real bad news is that due to the Iran war, We are faced with higher transport costs of about 10%, energy costs, chemicals, and not directly related now to the Iran war, slightly higher wood and paper for recycling costs. And there is, we see at the moment, still a subdued consumer demand. On the positive side, we have our pockets of growth in our Farmer Business, our GLP-1 products. We see a nice development in beauty, beverages and pet food. As I already mentioned, we see a positive price trend in some board and paper crates. And last not least, Fit for Future will deliver again with a contribution of more than 100 million. So this is the specific outlook for the second half of this year. If we look more to 27, I think there are a number of, we're not commenting here on the market, that's too far away to predict, but what are the things which we can improve? First of all, as already mentioned, the acquisition of the Reino de' Medici's Ansberg mill has a lot of synergy potentials. Just to remind you, the deal is not closed yet, it's only signed. We're still waiting for the competition clearance. Secondly, very important, we have several capex in Gwitzen amounting to about 100 million and the benefits will flow through, they will start to flow through end of this year but maybe then next year and it's three important investments. One is the new continuous digester which will significantly reduce our energy and CO2 costs and also material usage. Secondly, we get the new binder, which will enable us to produce more packaging craft paper. We could sell here more, but we can't deliver it because of this bottleneck in the binding. And also more uncoated bind paper in reels. And thirdly, we've invested in a new sheeter, which will help us to service this express service much more, which will be installed for Poland. We will roll it out to Germany, where Our customers can ask very short term deliveries, but we need this sheeting capacity in order to react on very short notice. This is very well received. It's a unique position which we have only those who are really close to the customer can offer this. Then we have a number of packaging expansionary capex in packaging. One is in Romania, a new machine. We've invested in several machines in the US and that will positively contribute in 2027. And last not least, Fit for Future is not done. It will not just deliver for the next half year, it will also deliver then in the future for 2027. and I'm fairly optimistic that we can upgrade then the expectation again in the next half year results announcement so for the full year of 26 but let's wait and see so far our expectation is above 60 million and so all in all to wrap things up we believe that in comparison to these market circumstances we have delivered a good result We are very well placed for the future but we have to endure the price situation especially on the FPP side just now for some time as the market leaders are not willing to shut down their capacities and so we have just to be patient until this happens. So with this I would hand back to Stefan and we are looking forward to your questions.

Thank you. Thank you, Peter. Thank you, Franz. We'll now start our Q&A session. For your questions, please press the blue Q&A button in the webcast and follow the instructions. You will receive a confirmation once you have entered the queue. If you wish to withdraw your question, please press cancel. All those participants joining by telephone may register for a question by pressing 0 followed by 1 on their telephone keypad. By pressing 0, 1 again, you can withdraw the question. You may ask your question once your name is announced and you are live. If you would like to ask a question, please press the blue Q&A button or dial 0 followed by one on your telephone keypad now. So first question, we've got already one by Markus Ramis from OdoBHF. Markus, please, you're live.

Hi, good morning, gentlemen. Thanks for the presentation and the details that you incrementally provided. I have a couple of questions and we'll take them one by one, if you don't mind. So firstly, regarding the savings targets. So congrats to the upgrade of your achievement. But can you help us understand a bit better how you calculate the number, specifically talking about the top line effect and then just thinking about procurement? Is that based on an as-if Thank you very much. We have valuation guidelines.

...of about 30 pages, so I can't go through all of them. We have, just to give you comfort, we were supported by a consultant in this exercise who was based, very result-based, he was incentivized in a result-based situation, so we have no Thank you very much for your attention. The biggest contribution comes from as I said from operations and in operations it's typically things like reducing broke, shortening change over time on machines, improving energy efficiency using the heat which goes into the air in a new way and so we There must be clearly identified initiatives, then there must be a result and typically in operations we observe it for three or six months if the reduction of energy, if the reduction of growth, if the shortening of change over time etc. has really happened for a number of months to say this is something sustainable. In procurement, we typically work against, it must be an improvement against an index. In some cases, it's easy to find these indices. So let's say if power prices go down by 50 Euro and the index goes down by 50 Euro, then it's not a saving. If the index, the PIX, goes down by 50 Euro and we have agreed a contract following the PIX index, but with a higher discount which was previously x and now it's x plus three percent then the three percent would be an additional saving. In sales it must be it's either price increases which go again above a typical market so it would be we didn't have a lot of price and more on supplement prices. So we ask if the order volume is small, if the run is very short, if it has to be delivered in a very short time, then we have typically agreed surcharges and sometimes our salespeople forget to implement them or haven't agreed on them. and here it was about to make sure that where we have higher costs we also get being better paid. Volume increases were also counted but again only if the overall customer, the overall site, the overall section, overall was growing, so there were some successful initiatives, getting new customers, but it's not counted because the division as such didn't show, or the part of the division didn't show the right growth. So then I left out SG&A, there it's pretty simple, it can be about personnel, can be about other costs, services from service providers, and that's in most cases pretty easy to determine so if you make a new contract you get a 10% discount. To your question is it fixed costs or variable costs? It is more variable costs actually as fixed costs because many savings like material savings in the production etc. in operations are in more cases variable costs than fixed costs.

Okay understood. Thank you very much. Can you maybe also give an indicative breakdown between the segments? I would assume that a large chunk is attributable to board and paper.

Yeah, so we have it. Sorry, I went over it, but in the presentation you see per division. We said exactly which division saved how much. So if I go back, we had the breakdown of So 27 million in food and premium, 16 million in pharma and healthcare, and 59 million in board and paper. So we have given this breakdown. And if you calculate it and you sum it up, you will see a gap of 2 million, which is crude costs.

Okay, thank you very much. Secondly, on your remarks regarding pricing and important paper, I mean, we have been talking about the overcapacities in the industry and I think in the full year call you also said that you expect your competitors to adjust capacities. You basically now repeated this statement. What makes you so sure that Your competitors will do the first step and staying with the capacity topic. Maybe you can also explain a bit the rationale behind the acquisition of the Arnsberg. So you're adding capacity in a business which is ailing at the moment. How much kind of investment into Ansberg is needed and how quickly can this turnaround be achieved? Thank you.

So first of all, it's not that nothing has happened. We just don't see it in the numbers yet. So we've seen in FPP one market participate, The question is now if production will be shut down or if there is someone who buys it. There was an announcement. So this was our former company, which we sold a number of years ago for 150 million euro. So this is now bankrupt. One part, Airbeck in the Netherlands, is reported to have found a buyer. They have announced the startup on 15th of We will see how this works out. I can just say in terms of volumes, we are already benefiting from this. So we will see how this works out and we will see who the next company will be. And finally, I can't predict if one of the big players will will just continue as is or finally take a decision. So we don't know when this will happen. On the recycling side, we've seen a change. So also the fact that it was not a formal insolvency, but it was sort of the shareholder lost all shares and and the bondholders had to take a big cut and I think now that this competitor is owned by hedge funds they will I think be more rational in terms of going forward but exactly we don't know it. So why did we buy in an oversupplied industry another player? It's simply because We have in Germany the infrastructure Ansberg is fairly close to our mill in Neuss and therefore we see that in terms of SG&A costs you can do a lot but also in production areas like maintenance for instance you could install one maintenance center servicing both mills so we see a number of opportunities and therefore we think that at the end we can create value with this acquisition.

And regarding the investment needs and the kind of prospective turnaround already next year?

We don't see any significant investment needs. It's really about reducing costs but also being more rational in terms of pricing, filling the machines better, specializing the machines together with our other machine because a lot of productivity comes at the end of the day that you have a mill where you can specialize on products and not make changeovers all the time and obviously if you combine several assets you have more opportunities to do that.

Okay, thank you. Then one question regarding further restructuring costs in the second half. Is there anything on the horizon? And also regarding the maintenance costs, 35 million you mentioned for the third quarter. I recall that last year this was more spread over Q3, Q4 this year. Have you pulled forward into Q3 or is there an additional impact also in the final quarter?

No, there's no additional, so the 35 million refers to the full second half year, but as we've moved it forward, last year it was September, October, this year it is August, September, and so by end of September it's done. The third quarter result will be more impacted and the fourth quarter will, compared to last year, not be impacted, whereas last year we had these costs. Restructurings, we cannot really predict here anything concrete because it has to be discussed with unions, etc., but you can assume that we will Thank you very much. And a final question before I get back into the

Line two, two bookkeeping questions. Firstly, I would be interested in the factoring level at the end of the first half. And then you mentioned that in 2027, the capex figure, or at least my interpretation will go down the reference to 160 million normalized capex. Is that what you're seeing as maintenance level in the current state of the company? And is the decline to below 200 million something we should expect for 2027?

I first come to the capex. So maybe I was not precise enough. I made end of 2027. So we have long-term capex of 180 to 200 million including this is not just maintenance capex. Maintenance capex is more like 110, 120 million but realistically we want to stay competitive and there are growth opportunities in some areas of the business. So overall we should think about 180 to 200 million per annum. Next year, this year and next year are elevated mainly because of the capex in Kvitzen and that is not all paid this year some of this will come next year so this year and next year are elevated and without giving you a precise number for next year we should wait for that but it will be roughly where it is this year maybe a bit down okay and if we can we have another year of elevated capex because maybe of

Regarding factoring, the net factoring amount was below 340 million euros and that is basically the same figure as here said in 2025.

Okay, thank you. That's very helpful. Thank you, gentlemen.

Thank you. Thank you, Markus, for your question. The next question comes from Michael Marschallinger from Erste Group.

Yes, hello, good morning. Thanks for taking my questions. Firstly, I will touch on the pricing regards in comments in the body paper you made. So with this overcapacity still persisting, what supports the expectations of improving prices and could you please quantify which pricing improving we expect in H2, which specific grades and which regions?

yeah that's a very different question obviously uh uh yeah we we only know what has happened until until today and not about what will happen but we see a somewhat so let's say in we have to really separate out recycled uh carbon board and virgin carbon board in recycled carbon We have seen now with several closures which have taken place in Spain, in Holland, in Germany over the last years and markets growing that we are much closer to a balanced situation and therefore we've seen gradual, we've seen real price increases, we implement pricing increases So here we are, I wouldn't say we don't have a balanced market but we are close to a balanced market and there we have seen during this year an overall increase in prices even if it's still somewhat lower than where it was last year. And then we have the Virgin Grains FPP and here We see the two market leaders, the one market leader, so to say, trying to get market share in order to shift volume from the US to Europe. And the other one, who has built a new mill, obviously wants to fill their mill. And here it's difficult to predict when they will act. The only positive news is that, I mean, positive is now In an inappropriate way, but for us, the positive thing is now that with the insolvency of FOLP, we will for sure get some additional volume, but it will not solve the overall pricing issue. So for this part, I'm not predicting anything. We have to wait patiently until things will happen. For Virgin, a carton board called FBB. And then we have some other grades. So we have a good price level in saturated graph paper with very weak prices in uncoated fine paper, but they are on the move up now currently, but difficult to see how it will go from here. Yeah, and that's more or less it.

And just to follow up, when would you expect the supply-demand balance to be reached in FPP, as mentioned in Solency?

Now, on LPP, I'm not predicting it unless, if none of the two capacity leaders, I mean, we are all three have the same size in terms of what we sell into Europe, but the two others have much higher capacity, which is used to a certain extent for overseas sales, and to a certain extent, it's simply empty. And it's very easy if, as long as they don't shut can really predict it.

Understood, thank you. And just one last question on cost inflation. Could you quantify the cost inflation of solar in the last half of the year across your major cost positions for energy, wood, recycled fiber, and what do you expect for the full year?

Yeah, so let's start with the more easy things. So wood is marginally up. It's not so relevant. I mean, wood prices in Europe are generally on the move up. In Scandinavia, they're more on the way down. So we benefit a bit in Kotka and we suffer a bit in Kvitsin. Paper for recycling, the indices are gradually moving up. So I just wanted to highlight they are somewhat higher than they were a few months ago. The more serious chemicals is a bit of mixed bag, also difficult to quantify. Overall, I don't think it has a major impact. And then we come finally to the two main items is transport. So we have typically transport contracts with forwarders, which say it's a fixed price plus an adjustment for the diesel price. So it's a question of if you believe that oil prices will rather We will be a net beneficiary in board and paper because we don't have as high transport costs as our Nordic competitors, but it will affect us. In terms of energy, which is mainly for us gas price, but also electricity, it's again the guess on what happens in the Middle East and in Iran and what are the long-term consequences. So I think all predictions have proved constantly wrong. Initially, it was when the war started, many said they would skyrocket, and they didn't. They went up but didn't skyrocket. Then at least I thought that the situation will at least calm down and all of a sudden it became even worse. So I mean I'm reading weekly newsletters on energy from experts who have the best knowledge available but even here I've seen constantly wrong predictions. As we stand here as per today or as per yesterday, when we finished it, we see cost inflation from energy and transport. These are the main issues and transport is about 10% more higher than last year.

Okay, so you would expect further acceleration in H2 with

I think H2, I'm pretty sure H2 will be worse than, or we will have higher costs than in H1, just because, as a matter of fact, they are higher in July and August, and now it's anyone's guess if things accelerate, so to say, throughout this quarter, because gas prices go up even more yesterday, they reached a new high. Thanks a lot.

Thank you. Thank you. Thank you. There's still a possibility to ask questions. As a reminder, please press the blue Q&A button in the webcast or dial 0 followed by 1 on your telephone keypad. And we have another question coming up from Markus Ramis. Follow-up question from Otto Behaev. Please go ahead, Markus.

Thank you. Staying with board and paper for one more time, please. Now that you're about to break even on an adjusted level in the first half, um given what you said okay um some price increases are are coming through uh more savings on the other hand is uh inflation um is it fair to assume that uh the second half um should also kind of be slightly positive on a on an adjusted uh basis would you consider this as a as a realistic range um

We don't give precise forecasts because we are constantly surprised by how things develop. I would say this way I would think it's a rather stable development minus the annual maintenance shots and this means the answer to your question is I think on balance it will be down but there is a huge variance because it's very difficult to to judge whether, whatever it will be, 50-60 million, I'm now referring to the division, if the 50-60 million contribution from FFF and some other positive developments outweigh higher energy and transport costs and some other cost inflation in variable costs and this is still unclear because I simply don't know I mean nobody knows whether in October the gas price will be at 100 euro or let's say moderated back to 40 euros and in this way we don't know it but it will be a rather Similar level minus this 35 million.

Okay, then one question regarding pharma and healthcare packaging. So we're seeing a certain trend in terms of the margin development now 8% on an adjusted basis in the second quarter. What would you consider like a target profitability level for that business? Apparently there's a lot of restructuring has been done in the past. How advanced are we? How much more homework do you see? And this is a business which with a kind of Looking out, 27, maybe more, 28 can get to the profitability level of food and premium.

Yeah, so overall, I mean, first of all, if we talk about EBIT, we have to appreciate that there is also some customer amortization included, which isn't in the food We had to capitalize on the customer relationships and write it off over time. So this way I almost think that EBITDA or EBITR would be a better measure. So it has to be very clearly above 10% the EBIT margin finally and we know that this is possible. and with a number of operations which are more in the 15% range for operating profit but equally you also have some legacy business which you have to think how you deal with it. On your question is there our The driver to bring up the margin with restructuring done is of course cost discipline and

How much lever do you see from the top line coming? Because it's a business which, at least in the most recent past, has undershot market growth and I understand there have been some portfolio optimizations. How do you think about the growth component?

We believe that It was a bit frustrating to see that with nice growth in some sectors and that will gain momentum because it's a very slow-moving industry in terms of it's a long approval process etc. and you don't want to deliver the packaging for products which have been for 30 or 100 years around and it's just about price but you want to be with new medical We see this pipeline constantly strengthening which is very good and we see that the bottom slicing is not completely finished but is finally coming to an end. So top line will be an important part of it of course we have still a lot of room for productivity improvement But the main driver, we believe, will definitely shift to top-line growth and not just any top-line growth but the top-line growth with products which have a good margin because we've developed these products together The next question comes from Cole Ethel from Jefferies.

Hello, Cole? Your line is open. Hello? So, Cole, perhaps dial in again and then it will work. Again, a reminder, so it's the final call for questions, please press the blue Q&A button in the webcast or dial 0 followed by 1 on your telephone keypad. So I see no more calls here again. Good morning. Fantastic.

Morning. Apologies for that. I just tried to join in from the webcast. Peter, I wonder if you can help me out. I'd like to follow up on that slide you showed on kind of your relative cost advantage, particularly on the recycled side. When I look at gas prices here, could you remind us how much hedging Meier-Melnhof has? And the reason I ask this is because You know, you've got Fold which consumes gas that's gone under and I imagine they wouldn't be able to hedge. You've got Reno de Medici whose Apollo has given back the equity stake and they've just had the bond restructuring. I imagine a lot of your competitors might not have the same level of gas hedges and if gas stays higher, Do you expect some of your competitors to take a lot more economic downtime, you to take a little bit more share? I mean, hopefully that resolves itself in some capacity closures, but I'm just wondering how you're positioned actually, even though higher costs are not great, do you actually have a relative advantage here?

Yeah, on the recycling side, I think we do have a bit of an advantage. Obviously, I don't know, and we don't even know from Paul, because even if you go bankrupt, it's up to the administrator to terminate contracts. So if they had hatches, they still have them today because he hasn't terminated them, and someone else, the party, the counterpart, cannot terminate it. How much they are hedged and we are not extremely well hedged. So it's somewhat below 50%. Unfortunately, you should have written your report on the gas price a bit earlier so that we had hedged more. So it is a slight advantage on FPP. I think it's a slight disadvantage because in Quincy we are fully integrated producing our own energy to a very high degree. In Kotka we are only partly integrated with the pulp mill and therefore we have somewhat higher energy costs to buy in and therefore we are a bit more dependent and it's a difficult game. By investing into the e-boiler from spring next year We need electricity even for the heat instead of buying the gas. At the moment for heat we need the gas but we can play between gas and nuclear power. So that's our situation. So I would say on the margin maybe we have an advantage in recycling and maybe with a slight disadvantage in inversion.

And then maybe just following up on the acquisition from Bruno de Medici, you haven't given any valuation or price. Is there anything that you can comment on that? I mean, I imagine when you're a forced seller, you get a good price, but I'm just wondering a little bit more on the synergies there. You talked about SG&A. and a number of other people who have been involved in the development of the mills. So I think it's a really good question.

I think it's a really good question. I think it's a really good question. I think it's a really good question. Thank you, and then just But it is a consolidation of the market because, especially in Germany, we were historically fierce competitors and they were extremely aggressive.

Thank you. Let's hope there is more economic downtime and other players have less gas hedges for you going forward. But maybe following up on the cost point, you did mention wood costs, and I'd like to follow up on Poland, considering that there has been some restrictions on harvesting levels. Is there anything that you can call out or any kind of lobbying that Meier-Melnhof can do to kind of maintain reasonable wood supply to your mill, make sure that you don't have a situation where availability becomes an issue and wood costs continue to inflate?

Yeah, of course, we are lobbying on that. And I wouldn't see it as particularly worrying, I think, with all of those in the Nordics. You have various interest groups who say we should put more, and also EU legislation more and more, forest should be put aside to be preserved and be natural and not used for harvesting. So we are working on it. I mean, it's a sad story, but Poland has lost, I think, 30,000 jobs in the boot. We don't see the price increases that are Of course, in contrast to the Nordics, but they come from a much lower level and they are less than they are, for instance, in Austria or some other Central European countries.

And then just finally, maybe this is a question for Franz, but your contribution on FIT for Future, an extra kind of 60 million into 2027, I mean, it is a big number. What kind of visibility do you have on delivering that? Because that, I mean, it is a big improvement, a big increase from the original 250. So just what gives you the confidence in actually being able to deliver that number?

Yeah, there is a number called the run rate. So both projects are what we call L4. So they are executed for at least one month, in many cases several months until we see that it's a sustainable improvement, as I explained it earlier. and so we are currently at about 270 L4 and L5 stand has been there for more than a year and we have stand visibility so this is already banked and then we have an L3 number which is everything has been prepared everything has been identified we are already in the testing phase but we don't know if the full benefits will come through and in some cases there's a higher uncertainty like in procurement so the tender has been done but we haven't received the offers yet or haven't finalized haven't signed something in some cases there is less like we see yes we have we have good success but we still want to look one or two And this is a very significant number, which gives us confidence that the 330 is really a very conservative number.

Thank you.

Thank you, Kol. So since we have crossed the hour, I think we will come slowly to an end of this conference call. Thank you for your participation, the questions, the interest in the amendment. Peter, perhaps the final sentence before we quit.

Yeah, sorry, I've talked so much there is almost nothing to say. So we have this adverse market situation in parts of our board and paper business and where we can't logically judge how and when it can be changed, but being Being in a strong position in terms of cost curve, capacity utilization, sales focused on Europe sitting in the middle of the continent, we feel that we are in a very good position and then at the same time we will develop our two packaging business which have delivered a strong result further and they will Going forward I believe show also more organic growth and in this way this part of the business will will grow and develop and in this way I also want to use this opportunity to thank all our employees they've done a fantastic job it's not easy if if there are so many headwinds you have to face but finally I'm I'm confident and we shouldn't forget that comparing ourselves to many peers that a result like first half year was more or less the same as a year before. That doesn't sound very exciting in itself, but if you study a number of annual reports of other companies, then I think you see that this is quite an achievement. And in this way, we look positive to the future. Thank you.

Thank you again and we wish you a great day and say goodbye to all. Bye bye. Bye. Have a good day.