Sappi Ltd S/Adr

Good day, and thank you for standing by. Welcome to the SAPI Q4 2025 results call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Steve Binney, CEO. Please go ahead.

Good day. Thank you, everybody, for joining. As always, I'll go through the investor presentation, calling out page numbers as I move through. I'm just starting briefly on page two, just drawing your attention to the forward-looking statements disclosure. Turning to page three, which is summarizing the year. as a whole, the financial year 2025, and it's fair to say it was a challenging year marked by ongoing global economic weakness. We did see difficult market conditions across all our segments, actually, and obviously partially driven by the weak economic conditions, but also the global trade tensions. As a result of all that, we saw downward pressure on selling prices, and from a materiality perspective, particularly on dissolving pulp, they dropped quite sharply during the year. And on the paper side, added to that, we have seen excess supply globally in our key market segments. Despite all those challenges, we did have some operational highlights. We saw our DWP and packaging volumes growing year on year, and in the graphic paper space, we were able to gain market share. I'm thrilled to say that we've obviously completed the Somerset PM2 conversion and expansion. And that's an important step in our strategy, and the machine is performing well. In Europe, we continue to make further rationalization to take costs out of the business and to improve capacity utilization. And on slide four is a summary of the quarter itself. Relative to the prior quarter, Q3 of this financial year, numbers up a little bit. However, the market conditions remained challenging. We did see sales volumes pick up for pulp and packaging, and we also benefited, obviously, because there was no maintenance shuts. Regionally, Europe continues to be in a challenging place. situation there is still difficult for us, and across many of the paper grades we see excess capacity. North America, obviously beginning the ramp-up of the Somerset 2 conversion, we saw improvements in volumes and modest improvement in profitability. You're not at optimized levels, but we start to see that improvement come through. And then South Africa, I think South Africa had a pretty good quarter, actually. Obviously, lower dissolving pulp prices are the big story there, but on the packaging side, a reasonable quarter, albeit that on the packaging side, even selling prices there globally have an impact on the South African business. Slide five has the bridge from last year to the current year, and the big story is obviously the lower selling prices and its impact on our business. It's across all the segments, and that kind of dwarfs all the other variables when you look year on year. To give us the 111. On slide six, we did see relative to the prior quarter, we did see variable costs coming down in each of the regions. Pulp at relatively low levels and obviously that benefits the paper business, but obviously indirectly has a negative impact on DWP prices. energy prices coming down a little bit as well, but really across the board. And then turning to slide seven, which is the evolution of our net debt and our leverage over the last few years. And obviously, we saw the peak through the COVID period. We saw it coming down substantially. We made a decision to invest at Somerset, obviously, and then in the current year we've got the higher capex, which is now behind us. We also were negatively impacted by the exchange rates. The fact that a significant proportion of our debt is denominated in euros, and when you compare that to dollars you get the negative impact. But having said that now, the investments are now behind us and we would expect our debt to start coming down. You saw that it's coming down a little bit in this quarter and we would expect that to continue over the next quarters ahead and into the next few years. And then the debt maturity profile is reflected on page eight and maybe just a couple of call-outs. Short-term debt, which is 2026. You can see we've got a chunk of short-term debt in the box there, the 224 million. And we did put out an announcement on this. We are in the process of terming out some of that debt and making good progress, and we'll give an update as soon as that's complete. Major refinancing that we've got coming up over the next few years is the 2028 bonds. Eurobonds is about 400 million euros. We obviously monitor the markets and we'll pick the right time to refinance that as we move into the new year. And then on cash flow and CapEx, Obviously, a tough year and lower profitability, which has meant that we utilized cash during the year, and you add in the capex as well. So 360 million that we utilized during the year. Capex going forward, 2026, we're estimating at 290 million, and then 2027, We're committed to keeping that below $300 million. We haven't finalized the number yet, but it will be below $300 million. Taking that forward into page 10, as you all know, we gave a recent update on some of the work we were doing on the balance sheet and on the funding side. Obviously, with the lower profitability, our leverage ratio increased. And because of that, we proactively renegotiated our covenant levels through next year, great support from the banks, unanimous support, and we've negotiated significant, enough headroom to manage through this peak time. We're terming out the short-term debt, as I said. And overall, with that debt reduction focus, back to basics, focusing on productivity, cost containment. At the same time, we've obviously stopped the dividend, and we have some initiatives to reduce costs, particularly in the European business, and I've got a slide on that just now. The Thrive strategy is reflected on page 11, and obviously our focus in the short to medium term is this back to basics, but we must never lose sight of our strategic focus and obviously operational excellence is key to back to basics, maximizing productivity and efficiency and reducing costs. We continue to focus on enhancing trust across all our stakeholders in terms of growing our business. We're not going to be taking on any projects or any material projects in the next couple of years. Our focus is on ramping up the projects that we've done, and primarily, obviously, that's the Somerset PM2. Ultimately, we're laser focused on getting the debt below a billion. We know it's going to take a couple of years. With all the actions that we're taking, we're confident that we'll get there in the medium term. And then, obviously, with a strong focus on our maturity profile, which I talked about already. Slide 12, I'm not going to repeat, because a lot of this is similar to the prior slide. Just to say that we are in this consolidation phase. focus on cost, focus on efficiency, maximize production. We've got a 60 million target to take out costs in Europe, and much of that's already been made public. But it's not just Europe. We are focusing on the other regions and at the corporate level. And on top of all that, working capital optimization. It's only once we complete all that that we would consider dividend payments and any growth opportunities. Slide 13 just talks about our capital allocation priorities, and I've touched on this. So I'm not going to repeat everything here, but obviously strongly focused on reducing debt, ramping up on PM2, ensuring we get a return on capital employed above our costs – above 2 percent of our WECC, 2% above WECC, and then making sure that we optimize our product portfolio and matching graphic paper capacity to market demand. Slide 14 is a specific slide on Europe, which we thought would be useful. It just breaks down the $60 million saving that we've got. You can see it's across the mills and at the corporate level or the central regional level. We're closing two machines at Alfelt, one at Kotmimi. At Engen, we are reducing the shift details. And at Gratcom, which is our number one mill in Europe, looking at a number of initiatives to optimize. product production and profitability. Then turning to the segments, and again, I'm not going to go into detail, but just to summarize, and I'm on slide 16. The demand, the underlying demand for DWP remains good, and we are fully sold out. And we continue to have our customers pushing for volume. The challenge is obviously that global prices have come off. And that's linked to various macroeconomic conditions. And I also think that the lower paper pulp prices have not helped as well with carouseling and substitution there. But overall, volumes are good. Also, on the production side, things are going better as well. Packaging, a really tough year. Sorry, slide 17. Packaging, a tough year across all the regions, actually. Europe, a modest recovery, but as I said earlier, the European economy continues to be challenging. And there's overcapacity in all the key product categories. North America, we've begun that ramp up. The machine's performing well. We're adding volumes. And we're confident that we'll continue to do that in the quarters ahead. South Africa had a very good citrus market season, which is our primary product. That's our primary market for our South African container board business. Good season. The only challenge – well, the one challenge we have is that global container board prices are weak, and that does have an impact on domestic selling prices. And then on graphics, we continue to be proactive in terms of managing our capacity. In North America, the domestic market tightened. Obviously, we took out PM2 out of graphics, so that supported the market balance, and I think it's helped ensure that we have stable selling prices and good margins. The challenge in Europe is the excess supply, and that obviously impacted on selling prices in that region, which had a negative impact on profitability. And then slide 19. Just a very brief summary of the regions. And all in all, you can see selling prices across the board down. And then some of it we did get cost savings in Europe to offset some of that, however, not enough. And then in North America, costs obviously because we had the initial ramp up at Somerset and that obviously impacts on efficiencies and usage and the likes. And then in South Africa, we did have some of the raw material costs up year on year, some of the chemical costs and wood costs there. Slide 20 has some of our key awards and highlights. I'm not going to go through all of them. We're particularly proud of our rankings in the Forbes best employer and top companies for women. We were 144 in the world for top companies for women, the second in South Africa. Really very proud of that. But even, you know, best employers as well, you know, globally to come in at 289. And when you look at the companies on that list, We're very proud of that. Other than that, we continue to focus on our science-based targets and our wood set specification, which gives us a strategic advantage. And then you can see the links to our reports there as well. Turning to the output, and I don't intend going through every bullet. I'm on slide 22. I think it's fair to say that the market conditions continue to be challenging. We do believe that as we progressively move through 2026, things will get better. DWP has stabilized. You saw a little bit of an increase in that quarter, and we continue to think that that will be the case as we move through 2026. We'll obviously have the benefit of the ramp up in PM2 as we progress quarter on quarter. And then on the graphics side, it's about proactively managing that capacity. The cost side, some of the raw material costs are relatively low, and we'll look for opportunities there. We do have a maintenance shut, scheduled maintenance shut at Somerset. That's an 18-month shut, which will have an impact of about 20 million, and we obviously took that into account. in our guidance. You've heard me say it many times, back to basics, focus on what we can control, focus on efficiency, focus on cost, debt reduction, very disciplined capital allocation. Taking all that into account, and the shut obviously, we estimate that the adjusted EBITDA The first quarter of 2026 will be below that of the quarter we've just reported on. So, operator, I've gone through the presentation. I'm now going to put it back to you for questions.

Thank you. As a reminder, to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Please stand by as we compile a Q&A roster. Our first question comes from the line of Brian Morgan of R&B Morgan Stanley. Please go ahead. Your line is open.

Thanks very much, Steve. Steve, if I can ask two questions. First question is on Europe. Pretty torrid quarter, September quarter, like we saw with the rest of the packaging names, but none of them were EBITDA negative. So just a question on that is... Was there, in terms of those machines that you closed during the quarter, were there sort of non-normal effects coming through EBITDA which we can reverse out in coming quarters?

Brian, I think specifically the two machines that we took out were negative. Negative EBITDA. Obviously by taking those out and optimizing the product mix and, you know, the cost base associated with that, you know, we do think we can, you know, get improvement there. You know, one of the challenges we face is that in also specifically our energy costs have risen substantially since the COVID, you know, pre-COVID times. And it's meant that those, you know, those machines that we're closing became uncompetitive. And we, you know, we've moved around our portfolio. And, you know, and that combined with obviously all the other initiatives, you know, we're focused on getting the packaging back to positive EBITDA.

Okay, so without any tailwinds from the market, you'd expect that European business to turn EBITDA positive, even modestly?

Are you talking about in the year? Yeah, next year. Yes, definitely.

Yes. Okay, 2026. So without any tailwinds, any pricing benefits or anything like that, you would expect an improvement?

Yes.

Okay. Steve, could you just flesh out PM2 now? I'd be interested to know if you worked out How much of an EBITDA headwind that conversion had for you through the course of FY25? And then also, if you could just chat to us a little bit about how to think about maybe an EBITDA ramp-up. I know you don't give us numbers, but just help us to think about how that might evolve over the next couple of quarters.

Yeah. Interesting question. Look, I mean, obviously, we had the direct costs. the you know the downtime and we revealed that in the last two quarters and and I'm looking at my colleagues I think it was 22 and 21 so there was about about 40 odd million specifically but then you obviously had the you know the indirect impacts of the efficiencies at the mole I Brian I don't have that as a specific number but but clearly you know it's it's It's north of 10 million. I don't have that as an absolute number, but it had a material impact on the profitability. Now, obviously, on top of that, going forward, you're going to have the additional volumes because we've doubled the capacity of a machine. Now, Q1, we've got the shut, and you've got to take that into account when you're quantifying profitability of the North American business. But progressively beyond that, we're still very confident in the ramp-up. We've been signing up customers, we've been adding volumes. Yes, obviously the delay had an impact. Yes, we have that trade-off between price and volume, which we've got to delicately manage. You know that, and this is public, SDS prices in the US are you know, have come down a lot over the course of the last 18 months. And, you know, we've got to carefully manage that, but we are confident on the ramp up. And we know the machine is performing well. We know that the customers like the quality of the product coming off there. And, you know, we're still committed. You know, we said it all along, but, you know, by the time we, you know, we get to the end of Q4 of this new financial year, you know, we're confident that the machine can be substantially full.

Okay, cool. Thanks, Steve. Thank you. We will now take our next question. Please stand by. Our next question comes from the line of James Twyman of Prescient. Please go ahead. Your line is open.

Yes, thank you very much. Thank you for the presentation. Two to start with from me. The first one is the energy credit gain that you always get in Europe in Q1. Could you give us some idea of the scale of that and whether that's included in your guidance? And secondly, the five measures you're doing in Europe, could you give us some idea about, you know, broadly when you expect them to give a return and when and what the costs are? Thanks.

Okay. I think on the first one, just to clarify your question, you know, obviously energy costs in Europe have been rising and, you know, there have been increased costs. And the way that these rebates work is that you incur the costs, the higher costs across the year. And then at the end of the year, you get rebates based on your usage. So it's an offset of the higher costs that you have during the course of the year. Yes, you're right. Typically, the rebates occur in Q1, but not always. And, you know, it's difficult to pinpoint exactly when we get them. Typically, they're somewhere between 20 and 30 million. And by the way, it's not unique to SAPI. It's all work. It's all the industry players in Europe. Typically, they are between 20 to 30 million. We don't know the exact numbers as we sit here today for what we've done this year. We have a rough idea, but we don't know the exact. In terms of our guidance, yes, that would be incorporated into our guidance.

Okay, thank you. So you would have included somewhere in that range of number in your Q1 guidance. Indeed.

But I did stress that it is an operational, it's an offset of an operational cost, I think is the important point.

Yeah, thank you. Thank you. And then your second question? Yeah, sorry, yeah, my second question was just in terms of these five measures, your big measures you're doing in Europe, when should we start expecting that return and when do you expect the costs to, that 40 million of costs to be incurred? Thanks.

Yeah, yeah. I'll let Marco go into more detail. Just, you know, from my side, obviously, you have to be sensitive about the discussions with labor and and following a process which we've been going through. And maybe the other point before I hand to Marco, 60 million benefits, 40 million costs, those are the headline numbers, but obviously that's phased. And Marco, maybe you want to go into more detail.

Yeah, James, this is very much a staged approach. highlighted the five units, basically, where most of the work will be done. We finalized the consultation process in in the last couple of weeks, which means that we now can implement the social plans for the FTE reductions there. I would say most of that benefit we will see as of quarter two, fiscal quarter two. And the costs, because some of the work, particularly on the central organization, have been done already in September, October. So the costs will be kind of divided over the quarters, over quarter one and quarter two. But the effects will mainly be as of quarter two next year.

Thank you. If I could sneak another one in. There have been substantial tariffs on importers into the US from Asia and from Europe, which I think is around 15% at least. What has been the impact on domestic prices for paperboard and for coated fine paper? Obviously, the paperboard impact has been offset by other factors, but what have you been able to achieve in terms of price as a result of that?

Are you talking about European prices?

No, U.S. prices in terms of the impact of increased prices, the importers into the U.S.

Yeah, that's a tricky question. Because you have your indirect impacts and it creates opportunities for us. I'm not sure you can say that selling prices have gone up just because of tariffs, but Mike, I don't know if you want to elaborate further, the impact of tariffs on the European competitors and in North American domestic crises.

I guess my view on that seems that it hasn't had a direct impact. on North American prices, there have been announcements from importers of increases in how much they're realizing. It would only be speculation on my part. And that has also allowed some of the markets to improve in orders to move from imported to domestic.

I think that's the important point, James, is that it's not so much for our domestic supply. It's not so much that it's been enabling us to increase selling prices, but what it is doing is creating opportunities for us to secure more volume.

Okay, well, maybe as an example, obviously, you're a big exporter to the U.S. from Europe. What have you found? Have you been able to raise prices or have you, you know?

Yeah, but we're not a big exporter on the website. James, we're not a big exporter on board. I think you were specifically talking board or was it graphic paper as well?

Graphics as well, to be honest, sorry, yes.

Yeah, so board, it's not material. Marco, would you want to talk on the graphic side?

Yeah, on the graphic side, James. Of course, we have tried to offset some of the increased cost due to the tariffs and to pass that on to our customer base, which with the domestic competition in the U.S. is It's not easy. I would say that this has cost us volume, but we've been successful to around 50 percent of our incurred costs due to the tariffs. But it's not so much the pricing that we could get up. It's more the volumes that we started to lose because of this attempt that we did to pass on the tariffs.

Okay, appreciate that. Thank you.

Thank you. We will now take our next question. Please stand by. Our next question comes from the line of Sean Unger of Cronux Research. Please go ahead. Your line is open.

Good afternoon, Steve. How's it going? Just first question around the European cost savings. Just to be clear, based on the call so far, So the sort of run rates, to sort of see these cost savings come through, is only going to be filtered through into the second half of the year. Is that the correct way to interpret that?

No, I think from, you'll start to see it in Q2. So if I was to, you know, Marco touched on it, but you'll probably, there'll be a little bit, there'll be some in Q2, more in Q3, Q4, and the final little chunk will be in Q1 of 2027 because a lot of these things that we these initiatives are happening now as we speak right so you so you still have some of the costs in this quarter but for the next four quarters beyond that you will the savings will will progressively get larger okay got it thanks steven then just on the uh net debt target of below a billion

um what is the sort of definition of medium term because if you look at the slide of the presentation um i think it sort of flags resuming dividends and growth and considering share buybacks from 2028 when the target is reached am i interpreting that correct correctly or how should we think about that yeah i look it's it's hard to be definitive because clearly it's it's going to be dependent on market conditions we we've obviously

got a strong commitment to reducing capex over the next three years. I think that, you know, I do think market conditions are going to improve and profitability will pick up. You know, everybody can do their math. You know, it's all going to depend on the level of profitability. If we can get back to normalized levels, we'll get there quickly. But I think it's going to be gradual. I mean, clearly, 2026 market conditions are still relatively challenging. I do think we will get the ramp up of Somerset. We will have better DP prices. Our CapEx is going to be 290. So I think there will be some strong cash generation this year. And then when you get to 27 and 28, I think there'll be further cash generation. Listen, if it takes longer, obviously we'll stay committed. We are laser focused on getting this debt level down and however long it takes. What's our best estimate? Three or four years.

Okay, perfect. Thanks, Steve. And then just to follow on the question around the packaging especially is pricing in North America. So if we sort of exclude the ramp up of PM2, what is the core sort of board business pricing mix done sort of year and year at least? I mean, sort of listening to a couple of other competitors in the US, it seems like pricing was down about at least three to 4% year on year.

Yeah, that's right. You know, obviously it depends on the mix and the different grades and all that kind of stuff. But if you look, you know, on average and some of the key product categories, you're talking, you know, $100 to $150 type decrease. Mike, I don't know if there's anything you want to add.

No, Steve, no, thank you.

Yeah. Okay, got it. That's great. And then, Steve, appreciate the... Yeah, sorry, go ahead. Mike, anything you want more? No, no, no, we got it. Okay, great.

And then Steve, I'm looking at the guidance on the planned maintenance in Q1, and there's obviously a nice schedule for maintenance for the full year by quarter. Just trying to compare like for like compared to 2025, we sort of strip out the one sort of cost of ramp up. I mean, what is your best estimate is... and maintenance is going to be sort of roughly flat year on year or low or high? We've obviously got a number from Q1.

If you, yeah, look, if you back out the whole Somerset thing, I mean, last year you had, you know, in the US you had Cloquet and this year you've got Somerset. In South Africa, you've got Ngadwana, which you did have last year. Oh, there it is, yeah. Yeah, it's on page 28. Yeah, page 28. So, you know, you've got different quarters, but you've got Ngadwana in both years. Perhaps a little bit higher would be, and I'm looking at Graham here, Thaiko's a little bit higher because we've got that, a little bit of a longer shut to to fix the one piece of equipment that we need to spend time on. But it's not that material. Graham?

No, I think more broadly we're doing a full mill set in that one just to do a full clean of systems that don't regularly get cleaned. So it is slightly longer, but not that material.

Yeah. So I think the conclusion out of all that, Sean, is that broadly, I mean, obviously Somerset taking out Somerset

uh project last year broadly it's about the same as last year maybe yeah okay so i call it like 70 million odd yeah okay cool um and then steve just uh going to north america in terms of credit free sheets i mean

a couple of competitors after price increases for q4 um i'm assuming that will sort of uh benefit uh your business as well is there any sort of update there or traction or not no traction um i'll let mike go into more detail um obviously i was taking out the machine as i've brought the market domestic market back into to balance and you know it does It does create opportunities on Somerset PM1, and I think we talked about that in our results announcement. So we'll obviously, if there are opportunities to add value and make some graphics on PM1, we'll take advantage of that. But Mike, specifically to recent pricing moves and that.

I guess the way I'd phrase that up, Steve, is the market has still got overcapacity with the current coded pre-sheet assets in North America. And on the web side, not as much traction as on the sheet side. The sheets are dominated by imports which have had the tariff impact and I kind of frame it up in that way. We are carouseling some graphic rates to PM1 as we're ramping up. the volumes and at the Somerset now.

Yeah. So overall, there are certain grades where we've been able to get it, but others more challenging. But having said that, you know, it's obviously a much tighter market conditions than Europe.

Thanks. And this is the last one from myself. What do you think is going to be the biggest catalyst in the short term to sort of see a rise in DP prices?

The biggest risk?

Catalyst.

Oh, catalyst. Look, I do, and again, I'll let Mohammed expand further. I think that it's clear that there's still a high correlation between paper pulp prices and DP prices. Paper pulp prices have gone up a little bit in recent months, and I know there's another price increase out there. I think that will help. And then, obviously, secondly, as the kind of macroeconomic situation improves and the consumer environment gets better and You know, the trade tensions that have been out there as they get resolved, I think all of that will help as well. So, you know, we think it's going to get progressively better. Mohamed, I don't know if there's anything you want to add there.

Yeah, Steve, the only other thing I would just add is that the fiber prices also has a big impact on the DEP price. And Cisco Staple fiber prices have stayed and operate in a fairly narrow band for a long time. But the operating rates have moved higher. The inventory levels have moved lower. And at some point, that's going to start showing up in the fiber prices are moving up. And as soon as that happens, that could be a very important trigger to lift the DB price.

Excellent. Thanks for the time.

Thanks, Sean. Thank you. As a reminder, to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. Please stand by when we take the next question. Our next question comes from the line of Lars Kilberg from Stifel. Please go ahead. Your line is open.

Thank you for taking my question. I just want to come back to Somerset a bit. Steve, you talk about your great confidence in ramping up this machine over the next 12, 15 months or so. At the same time, you know, most would say it's about a half a million tons of excess supply in the U.S. market and volumes are flat to down a couple of percent. So how will this be done? What is behind that confidence? What are you prying away to ramp your machines?

Yeah, look, I think it's a progressive process. We've been in discussions with customers for the last couple of years. And we know that we've got the best machines in the industry in the US. And we know that we are targeting the independent converters. So it's going to be a progressive process. Interestingly, and I'll let Mike expand further here, we've seen some reasonably good growth numbers in the last couple of months in terms of volumes coming out of the SPS market. So it's a combination in terms of the longer-term discussions that we've had, our ability to service those independents, and building on the relationships that we have. Clearly, and I said that on an earlier point, there's going to be a price volume trade-off, and we've got to carefully manage that and optimize profitability as we go through that process. Mike, do you want to?

I think if you just think about the market and the scale of the two assets that we now have as independent suppliers, it is absolutely the best, largest scale machines in the SPS market. So we've got new equipment. Highly technical, we've got a product match with our PM1 that was extremely well accepted in the field. And we're obviously at domestic supply. So we've seen opportunities as a result of some desirous switch to domestic from imports. And as the independent suppliers are looking to grow their business, They're clearly looking to grow with companies that are convicted around this business, which is clearly sappy with the investments that we've made. And not just the mill, but with our sales force and our technology group with R&D. So we've had many visits to customers, and I think it's a relationship piece that we're going to continue to build. And we feel as though things are progressing well. Is it a seller's market? It's clearly not. But we're making great progress. And the product off the machine and the asset is running very, very well.

Thank you, Mike. And one other point, Rick, is that remember we have PM1. at Somerset and with margins healthy on the graphic side, we can leverage off that flexibility on PM1 as well, on top of all the good stuff that's happening on PM2.

Yeah, could you remind us of the yield benefit you would have relative to standard U.S. SPS sheet and how you would compare it with imported SPVs?

Probably that we have about a 5% yield advantage from SPFs, which is a little bit less than SPVs, but we also have a couple of fighter grades that we've developed that are similar to SPVs.

A final question from me is, again, we're coming back to Europe, right, where there's, as you pointed out, significant excess supply, and it feels as if some volumes are turning back that used to be exported from Europe. So are you seeing any incremental pressure from Europe?

um repatriation of overseas towns into the european market that makes that particular market when it comes to coded paper more challenging than it already is um look that's one of the dynamics isn't it large yes yes that's part of it it is already there and and it's it's a continuing special point um you know obviously you have the indirect impact on tariffs from the U.S. Other players can't get into the U.S. Where do they look to sell their product in Europe? So it just compounds the challenges of Europe and adds to that excess capacity, and that's why it's very important that we're proactive in matching our capacity to our demand and taking costs out of the business. So it just compounds. you know, the challenges we face.

That's it. That's all from me. Thank you.

Thank you. There are no further questions. I will now hand back to Steve Binney. Please continue.

No, thank you. I just want to take the opportunity of thanking everybody for joining us today and look forward to discussing our results at the end of Q1. Thank you very much.

This concludes today's conference call. Thank you for participating. You may now disconnect.