Upm Kymmene Corp

Hello, everyone. Welcome to UPM's quarter four results webcast. I am Massimo Reinaudo. I'm the CEO of UPM. Here with me is Tapio Corpenen, the CFO of UPM. The year 2025 has been characterized by escalating geopolitical and trade tensions with multiple impacts and also on our business environment. During the year and in response to the situation, we intensified our actions to both sharpen our competitiveness and to execute our portfolio strategy. This resulted in the fourth quarter in a visible improvement of our performance in most of our businesses compared to the previous quarter. Our cash flow resulted very strong too. Our Q4 EBIT was €355 million compared to €418 million one year earlier. The Q4 EBIT margin was nearly unchanged at 15.3 versus 15.9 in the previous year. The operating cash flow in quarter four, I said, was strong at 720 million euros, and our net debt decreased while we also paid out the second installment of the dividends. During 2025, we launched significant strategic initiatives that continue to transform the company. In February, we acquired Metamark to accelerate the growth in adhesive materials. In May, we sharpened the focus in our biofuel business and discontinued the Rotterdam biorefinery development. When it comes to biofuels, during the year we made good progresses with our turnaround plan and the business got back to profitability in the second part of the year. In September, we started the strategic review of our plywood business. And in December, we announced the plan to establish a graphic paper joint venture that would encompass the UPN communication paper business and SAPI graphic and paper operations in Europe. While doing all of this, we took decisive actions to improve performance and competitiveness across all our businesses. Just as an example, in the fibre business, we mitigated the pulp and wood market challenges in Finland with production curtailments in the fall. and we enter into a long-term strategic partnership with VersaWood that strengthens our position in the wood market. I'll tell you some more about this later. In the adhesive materials business, we restructured our production footprint globally and we reduced capacity in Europe and in the communication paper business. Measures were taken also in all other businesses and functions. Finally, we intensified our actions to improve the working capital efficiency, which resulted in the cash flow I talked about earlier. I will go now into some more detail for each of the business segments. Let's start with the decarbonization solutions. Here, the values and markets developed positively during the 2025 In energy, the electricity demand in Finland grew by 3% during the year, during the 2025. The growth was driven particularly by the electrification of heating. But in the coming years, this growth is expected to be complemented by growth in data centers currently under construction and by the green transition. Over the five coming years, we see the annual market growth rate accelerate in a range between four and seven percent, in line with several other predictions on the same matter. We are in a strong position to capture the value this situation creates. In fact, there is a strong demand for free things. Sites with easy access to high voltage grid connections were to establish new operations. There is a demand for CO2 free electricity and there is demand for base load power and we have the three of them. In the meantime, we are well set to maximize the value creation in the current volatile and weather dependent market. For example, in 2025, we achieved 10 euros per megawatt hour higher sales prices compared to the average market prices. In quarter four, the energy business achieved a comparable EBIT of 54 million euros, marking the best quarter in 2025. But if we move to biofuels, there as well market prices for advanced renewable fuels increased during the second part of 2025. Our business improved its performance each quarter throughout the year and is back in profits. Going forward, the implementation of the RED3 regulation, Renewable Energy Directive regulation, will support a positive market outlook. In biochemicals, the business has now initiated the commercial phase with the first customer deliveries of industrial sugars taking place in quarter four. We will continue to introduce further products to the market during the first half of this year, the next step being the renewable functional fillers. We reconfirm that the demand and interest for our biochemical products is robust. You may also have seen from the release this morning that we plan to start reporting UPM next generation renewables, which consist of biofuels and biochemicals, as a separate reporting segment starting from January, 2027. With this, there will be the opportunity to have enhanced visibility into the performance as well as the potential of this high growth segment. We turn the page and look now into the advanced materials. Well, here, the label materials market development in 2025 was relatively stable with growth rates remaining modest. To put it in numbers, in Europe, the demand grew by 2% compared to 2024. In North America, the growth was on a similar, which means about 2% level, in the first three quarters of the year. But it slowed down and ended up with a minus 1% in quarter four. In this context, 2025 has been quite of a transformational year for our adhesive materials business. Here we took significant actions to sharpen competitiveness and to secure the future growth. The business streamlined its organization and closed the three production lines in Germany, France and the US, relocating production to lower cost sites in Europe and in the US. This will improve its fixed and variable costs and competitiveness in general going forward. In parallel, it started focused growth investments in the US, in Malaysia, in Vietnam, and in India to accelerate the growth in high potential or high margin areas. Finally, it acquired Metamark in the UK and then worked to integrate it with the previously acquired sites in the graphic space to build a platform for the development of this higher margin segment. As a result of all of this, the business was able to grow clearly faster than the market, and it is in a good position entering 2026. However, the slow growth environment. Due to that, we were not able to simultaneously improve margins. Significant part of the profitability improvement actions and the benefits from the acquisitions is still to materialize and will be more visible in 2026. The specialty material business delivered robust results in terms of profits and margin, despite all the market turbulences. Gradually, the demand for label, release, and packaging materials normalized in quarter four. These, combined with our efficiency measures and declining variable cost, resulted in a good quarter for EBIT improvement, up 20 million euros year on year. The specialty material business entered 2026 in a good position to supply a growing market demand and with low investment needs. Moving ahead to fibres. Fibers experienced a volatile 2025, impacted by trade uncertainties, currency fluctuations, and low prices. However, to put things in the right perspective, if we look at the whole year 2025, and despite the fluctuations, the pulp demand was robust. Global shipments continue to grow at a healthy rate at around 3%. Hardwood pulp shipments grew significantly more than that, whereas softwood pulp shipments decreased moderately. Fiber South, our platform in Uruguay, continued to strengthen its position as a world-class, low-cost business platform. Our cost during 2025 decreased by about 25 USD per tonne in line with our plans and what we communicated earlier. And the cost decrease is expected to continue still into this year and into the next year as optimizations continue. To give you some examples of these optimizations, our plantations are increasingly reaching harvesting maturity that improve wood sourcing costs. Beside that, or linked to that, we will improve our inbound logistic costs further. On top of this all, we're working to identify the bottlenecking opportunities both in Paso de los Toros and Fribantos. More in general, during the second part of 2025, the hardwood pulp market prices in China increased gradually, but significantly from the very low levels that they touched during quarter two. The Fiber South performance in quarter four reached an EBIT of 78 million euros. or 21% of sales, an improvement versus quarter three, despite the maintenance shut in Fribentos in quarter four. On the other hand, when we talk about Fibres North or our platform in Finland, it continued to experience low softwood pulp prices and high wood cost. Its EBIT remained at 11 million euros negative in quarter four, albeit EBITDA positive. On the positive side, the pulpwood market prices in Finland have decreased significantly and roughly 30% from the peak and at the end of the year. Due to the length of the supply chain, the benefits of this cost reduction come typically and progressively with a delay and therefore they will be visible in 2026. Another relevant fact is here that we have entered a strategic partnership with Värsövut, the largest private saw miller in Finland. and that will help to structurally improve our position in the Finnish wood market. Before we move ahead, I just want to recall your attention to the fact that the UPM forest business will be included in the Fibers North business from January 2026 onward. We will then start to provide additional financial information on the two parts of the UPM Fibres reporting segment, meaning Fibres South and Fibres North, starting from quarter one, 2026. Now, when it comes to communication paper and plywood, both had a solid end of the year in terms of EBIT performance. The graphic paper markets were challenging in 2025, impacted by tariffs and the related uncertainty. The European graphic paper demand decreased by 8%. I'll do the decrease moderated slightly in quarter four at 5%. The North American demand development was weaker and demand decline increased slightly in quarter four. In markets that are oversupplied, we closed production at the Kaukas and Ettringen paper mills in quarter four, reducing our capacity by 13% and our fixed cost by 70 million euros annually. In quarter four, we also sold the earlier closed Platlin paper mill in Germany. Communication paper quarter for performance has been relatively strong, with EBIT totaling 110 million euros and boosted by the annual energy refunds. Once again, the business generated a very strong free cash flow that was up to 362 million euros in 2025, despite the challenging market conditions I've just described. When it comes to plywood, the dynamics were different in the different markets it serves. In the LNG shipping segment, demand continued to be strong. In the industrial end segments, it continued to improve, and in the construction segment, it was stable, albeit on a relatively low level. In this environment, plywood reported a robust quarter four EBIT of 16 million euros, or 15% of sales, which make quarter four the best quarter of the year. When talking about plywood, as you may remember, we announced the strategic review of the UPM plywood business in September. We see plywood as a very good business with strong positions in the mid to high-end market segments in Europe and globally in the LNG segment. The business has strong customer partnerships, operational and commercial excellence, and a diversified portfolio of distinctive products. It has shown over time that it is able to provide good profitability and cash flow in different economic cycles. On the other hand, despite it has the scale of a mid-sized company in Finland, so relevant per se, absolutely relevant per se, it is the smallest of the UPM businesses. With this strategic review, we want to assess whether acting as a separate entity or as a part of a different entity, it could create even further value. The strategic review contemplates different possible future outcomes, including maintaining the status quo, a divestment, a partial demerger, or an initial public offering. At this point in time, all options are in play and the review is expected to be concluded by the end of 2026. We close 2025 with an announcement in December, an announcement about the fact we signed a letter of intent with SAPI that shall lead to the creation of a joint venture in the graphic paper market. As a reminder, we are planning an independent graphic paper company, owned 50% for each of the two parts, UPM and SAPI, 50-50, which would include what is within the perimeter of the UPM communication paper business in Europe and in the US, and SAPI's graphic paper business in Europe. The transaction would create a more efficient, adaptable and sustainable graphic paper business. It will also create a structurally competitive cost base and ensure supply security for the European and global customers. For UPM, the transaction would have a positive impact on profit margins, balance sheet and leverage. The key numbers are here represented in this slide. With the successful execution of this initiative, UPM would no longer have direct sales exposure to the declining European and North American graphic paper markets. The definitive agreement is expected to be signed during H1, during this first part of 2026, and the closing of the deal is expected to take place by the end of 2026. So by closing with this part, with this portfolio initiatives, the ones that I mentioned now about plywood and communication paper, but also the other activities and investment, the carbonization solution, advanced materials, and then the fiber business, we aim to change the profile of the company, increasing its focus on growth and improved margins and leverage. The future UPM would have an attractive portfolio made by decarbonisation solutions, advanced materials and renewable fibres. In fact, all these businesses operate in growing markets and UPM has shown a strong track record of realised growth already above GDP in the past years in this perimeter. Focused innovation and investments targeted to combine sustainable, renewable feedstock and CO2-free energy into high margin products for customers all around the world will be the catalyst for an accelerated profitable growth ahead. But I'll pause here and I'll hand it over to Tapio for some further analysis on our quarter four results.

All right. Thank you, Massimo. So here you can see our EBIT and cash flow by the quarter for last year and 24. And from this, you can see that our fourth quarter EBIT increased significantly from the previous quarter, third quarter in 25, but decreased 15% from the last quarter of the previous year. And as Massimo already mentioned, the EBIT margin as such for the fourth quarter was at the same level as it was one year ago. Most of our businesses improved their performance from the previous quarter. As we have guided earlier, we booked the annual energy refunds in communication papers in the fourth quarter. And then also in the fourth quarter, we booked the increase in the fair value of our forests in Finland, which was 72 million euros. We had the same items benefiting the fourth quarter, resulting in 24 as well. Only this year in the fourth quarter, they were slightly smaller. Operating cash flow was very strong in the fourth quarter, totalling €720 million. This includes a working capital release of €416 million for the quarter. Part of that release is seasonal by nature, which you can sort of see if you look at the previous years, but a large share is structural, thanks to our intensified efforts and measures that we have taken during the year to improve working capital efficiency permanently. Net debt then continued to decrease from the previous quarter. Net debt to EBITDA was 2.29 times at the end of the year. And we will continue our efforts to increase cash flow and strengthen the balance sheet during this year. And here on the left-hand side, you can see our fourth quarter EBIT, as it developed compared with the fourth quarter last year. Sales prices continue to be the biggest negative driver, impacting particularly fibers, but also communication papers and specialty materials. Variable costs decreased. significantly year on year as well, but their positive impact was still smaller at the UPM level than the negative impact from lower sales prices. Perhaps worth mentioning is that for the yearly comparison in Finland wood cost still was on the increase, so year on year still increasing. Delivery volumes were slightly lower and fixed cost broadly stable in the fourth quarter. Changes in the exchange rates had a 20 million negative impact on the fourth quarter EBIT as compared to last year's fourth quarter after hedging results. On the right hand side, you can see the sequential comparison to the third quarter of 25 Sales prices decreased also in this comparison, but variable cost decreased and more. In this slide, this bar showing the lower variable cost includes also the benefit of energy refunds in the communication papers that were booked in the fourth quarter. However, if you exclude them, variable costs in other areas, in other inputs decreased more than sales prices. Delivery volumes were broadly stable, while fixed costs were up seasonally. In this quarter, by the way, we had also the maintenance shutdown in Fribentos, which went according to plan and somewhat lower cost than what we had guided earlier, about 22 million impact on the quarter. Then the other bar on the right-hand side, that includes the fair value increase of forest assets, which was 75 million higher in the comparison to the third quarter. This page summarizes UPM's currency exposures. As many of you know, the most important currency in terms of our exposure is the US dollar. We look at the impact on the 2025 result as compared to the previous year, Changes in currencies reduced UPM's comparable EBIT by about 50 million euros after the impact of hedges. And here is the outlook for the first half of 2026. We expect our comparable EBIT in the first half of the year to be approximately in the range of 325 million to 525 million euros. In the first half of 2025, by comparison, our EBIT totaled 413 million euros, and the second half EBIT in 2025 was 508 million euros. In the first half of this year, 26, compared to the second half of 2025, UPM's performance is expected to benefit from moderately higher sales prices and delivery volumes and moderately lower fixed costs. Performance is expected to be held back by continued weak communication paper markets and also by increased costs during the early phase of the production ramp up at the UPM Loina refinery. Currencies started the year at similar levels compared to the second half of 2025. In the second half of 2025, comparable EBIT benefited from the timing of energy refunds and increased fair value of forest assets. So as mentioned earlier, those were booked during the second half. of last year, and these items are not expected to take place during the first half of 2026 in similar quantities. Then looking year on year in the first half 26 compared to first half 25, UPM's performance is expected to benefit from lower variable costs and moderately higher delivery volumes. Maintenance activity is expected to be lower than in the comparison period. Performance is expected to be held back by continued weak communication paper markets and also the increased costs during the production ramp up of UPM Loina biochemicals refinery. In the beginning of the year, currencies are negative in terms of their impact on comparable EBIT when comparing to the first half of 2025. Then the fourth quarter now was the second quarter that we were able to decrease net debt and that while we also paid out the second dividend installment during the fourth quarter, second dividend installment for the 2024 dividend. And as said, we aim to lower our leverage and bring the net debt to EBITDA back to below two times in a timely manner. Our capex estimate for this year is 300 million euros. The cycle of large investments in Paso de los Toros and Loina is behind us, and our maintenance investment needs are consistently below 200 million euros per annum looking forward. And finally, the Board of Directors has today proposed an unchanged dividend of €1.50 per share for the year 2025. The dividend represents 113% of UPM's comparable earnings per share for 2025, and is equaling a dividend yield of about 6%. And now I'll hand it back over to Massimo for the summary and some final remarks.

Thank you, Tapio, and this is just going to be a brief recap of the main aspects we have seen so far. So we ended the complex year 2025 with improving performance in most businesses, strong cash flow and decreasing net debt. 2025 has been a transformational year. Across all our businesses, we launched a number of important initiatives aimed to ensure competitiveness and continued performance in the short term, while preparing to change the company profile for continued success in the long run. The future UPM will have a portfolio of innovative and sustainable materials and solutions It will be focused on growth, improved margins, robust balance sheet and disciplined capital allocation. All of this as a base to support the solid returns. Our board is confident on the UPM's ability to create value and has proposed an unchanged dividend of 1.5 euros per share for the year 2025. And this ends the prepared part of our presentation. And I think with Tapio we are ready to take your questions.

If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Linus Larsson from SEB. Please go ahead.

Thank you very much and a very good day to everyone. I'd like to start off, if I may, with Farber South. You did give some comment, but if you could provide some additional comment on your EBITDA performance as it is right now. and where we are in terms of cost per ton. You said there is still some improvement ahead in 2026 and 2027 but how much please?

Yeah, when it comes to the, let's say, the cost improvement potential we have indicated earlier on, I believe it was in October, we estimate that potential across the next couple of years in the scale of 15 euros per tonne. And that's, yeah, that's about that metric. Then when it comes to the EBITDA performance in quarter four, I'll leave to Tapio to provide some more

Well, let's say we give the EBIT at this point, as said, we will give some further lines on the performance then when we start reporting during this year. But I would sort of... remind you of the fact that we had the maintenance shutdown in Fribentos during the quarter, so that had that sort of 22 million impact. And even with that, we had an EBIT of 78 million euros, so 21% of sales. So if you look at the EBITDA margin, which we will get some more transparency on, then later on, that obviously is at a healthy level as it is, and as I said, we will work on the cost side more.

Sure. And the cost improvement that you're seeing, is that a linear gradual improvement over a two-year period, or is it more of a step change on an earlier time horizon?

Well, as I've commented earlier on, this comes from improvement, for example, in maturity of the plantation, wood supply, wood cost, logistic improvement. So we're talking more of a gradual and progressive improvement, no big step change. Those have been realized, implemented, and materialized already in 2025 or before.

Great. And then if I may shoot a second question, please, regarding energy in these volatile markets. If you could please update us on your hedging. How much of your volume in your energy division is hedged in the first quarter and for the full year 2026, please?

Look, I will leverage the fact that Tapio leads also the energy business and is the most knowledgeable person in this room to talk about energy and transfer the question to him.

Yes, so well, like we have said before, we don't sort of disclose the hedging rate directly or percentage to our business but maybe what I'll sort of rather point out to you is that if you look at our result which is in Massimo's notes already that he told you we achieved 10 euros better average sales price during last year for the full year than what the average spot was. So that is coming from two sources. One, us being able to create value on the output that we can regulate primarily, then meaning hydro and then also from the hedging results. So we have been able to sort of create value on both ends. And let's say coming into this year, We are looking to sort of perform in a similar manner. The sort of volatility in the market continues, and the year has started with a real winter, which obviously you can see in the spot prices at the moment and in the fact that the hydro balance is dropping quite quickly now in the Nordic area. So in that sense, weather obviously difficult to forecast any longer term, but the year has started in that matter.

Right. But are you then suggesting that the premium that you just mentioned, is that what you expect to achieve in the first quarter as well?

That we will see.

Okay. That's helpful. Anyway, thank you. Thank you.

The next question comes from Charlie Muir-Sands from BNP Paribas. Please go ahead.

Hi, guys. Good afternoon. Thank you for taking my questions. Just in terms of the evolution into the first half of 2026, I know you qualitatively called out a number of the moving parts But just in terms of a few of the discrete components, am I correct to read that your energy rebate was around 100 million in the fourth quarter? Can you give us any indication on what losses you would expect from Loina? Should we expect those to be even greater than they were in the second half of 25? And any kind of indication on the path to profitability of that operation? And I think you talked about fixed cost savings of about 70 million from some of your communication paper closures. I just wanted to confirm, should we be thinking about that as a run rate immediately for Q1 versus Q4? Thank you.

Yes, if I'll take that. In round figures, the rebate impact was similar to last year, and this 100 million that you mentioned is in the right ballpark. Then in terms of the impact of the Loina refinery, if we now had 49 million negative EBIT in the second half of last year, we still, as the production is ramping up, in advance of significant sales will have additional costs, so headwind from the sort of operating cost side, plus then we will have also depreciation kicking in now during the first half of the year, so in that sense there will be a kind of larger negative impact still during the first half compared to the second half of last year. I would say for the whole year, this kind of additional headwind will be, let's say, in the scale of some tens of millions. And then maybe on the fixed cost comment, yes, we, as announced then towards the end of the year, production had stopped both at the are Ettringen Mill and Kaukas, so this 70 million fixed cost as a run rate will then benefit us during the first half of the year in the communication papers.

Many thanks. If I could just ask a follow-up on communication paper. Regarding the joint venture, can you give us an update on the status with the major antitrust authorities? Have you filed with them yet? Have you received any feedback from them yet at all? Thank you.

Yeah, all what we can say at this point in time is that we have engaged with them in a dialogue, in a constructive dialogue and work is ongoing on building the necessary, let's say, information and so on. But there is not more than this to share at this point in time. Many thanks. Good luck in the quarter. Thank you.

The next question comes from Robin Santiverta from DNB Carnegie. Please go ahead.

Thank you very much. First question I have is related to the H1 EBIT guidance you provide. Now we start the year with higher hardwood pulp prices compared to last year. And I guess you expect somewhat higher volumes in H1 and also lower input costs. Plus we have quite significantly less mill maintenance cost in H1 this year versus last year. Still the midpoint of the guidance range is close to last year's outcome. What are the key negatives we should expect in H1?

Well, if I comment, of course, one thing you have to remember, that last year we started with the US exchange rate of 1.04, and obviously that sort of exchange rate impact is mostly felt in the fibers business. So that obviously is a headwind in that sort of year-on-year comparison. Then we have, as pointed out in the Outlook commentary, communication papers where, let's say, despite our measures to cut and save on fixed costs, then reality is that we have a sort of a declining paper market to work in. We had also, even if we have said earlier that the direct impact of tariffs has been still small in the sort of low tens of millions of euros for the full year last year, that in a sense impact we did not have in the beginning of the year last year. And then perhaps also as a significant sort of point that we just discussed a minute ago that we have the additional headwind, even if we do see improvement on the biofuel side, we have additional headwind in the biochemicals. So, those are the factors that are then included in the range that we have given.

Thanks, Tapio. That is very clear. Second and last question I have is related to the wood cost. In Finland, we have seen quite significant declines I can also see from data that the Finnish forest industry's procurement of wood raw material has been very low since last summer, many months, almost 50% lower procurement of wood compared to historical averages. How should we now look when we go into the high season of wood procurement in spring? Is the expectation now that pulp wood and even log prices could start to come up towards or to higher levels you know in the spring and early summer or how do you sort of what do you bake in your assumptions related to Finnish wood cost and also added to that there's a Finnish pulp mills your former chairman expects a big pulp mill to close in Finland You now generate EBIT losses, not EBITDA losses, but still EBIT losses. Are you looking at even terminal closures of any of your partners in Finland?

Let me pick the second question. I'll leave the first one to Tapio. When you assess the profitability of an asset, you don't do it on a base of a quarter. You do it on a long-term perspective, or a longer-term perspective. And our assets have been profit-positive. Our assets in Finland have been profit-positive. And they are well-maintained. They are of a scale to grant sufficient competitiveness. And we are continuing to work to enhance that competitiveness to deal with VersaWood, what we are operating to in terms of internal improvement and so on. Last but not least, your first question was about declining wood cost. So first, A decision about closing an asset is not something you speculate about or you forecast for. And second, this is not part of our current considerations.

Maybe if I comment on the, let's say, questions that you had on cost and harvest and so on. So, obviously, why... the harvest levels have been low in Finland is that, like we have said already a while ago, a good while ago, that the wood prices in Finland have been on unsustainable levels. So that's why wood has not been purchased. That's why also we have seen some moderation on the wood market prices in Finland. Having said that, Good to remember that the wood price is more or less doubled in Finland. So if they have come down by 30%, it doesn't mean that they are low. And I would expect that that will also, in a sense, be something that kind of will calibrate any sort of kind of market dynamics then going forward as well.

I understand. Thank you very much.

The next question comes from Ioannis Mazvoulas from Morgan Stanley. Please go ahead.

Thank you very much for the presentation. Just two questions from my side. The first, when we look at the EBIT bridge 24 to 25, What sort of fiber cost increase have you seen to your business? Because you talked about pulpwood prices doubling, but you didn't necessarily bother at the peak. So some clients, you know, that would be very useful. And then the second point, I think in October you were talking about a $25 to $30 per ton improvement in fiber south. Today I think you're talking about a $15 per ton improvement. Could you just reconcile the two figures and what shall we be baking in on a two-year view? Thank you.

Yeah, well, let's put the currency apart. If I mentioned euros, that was, let's say, a mistake. We always talk dollars over there. And then, yes, let me correct it. I think we talked at the time, I'm checking, in 25 to 30 in two years. So I restated that, not 15, but 25 to 30 in two years. Dollars.

And then there was the other question about... So wood cost, so basically again, point being that when it comes to Finland and wood cost during last year, as we do have a delay of, let's say, at least six months from when we buy wood to when we actually consume it at our mills, then we did still see during the last year 25, as said even in the fourth quarter, a negative impact from wood cost compared to the previous year. Then any kind of benefit from the fact that from summer on we have seen a movement downwards in the wood market price in Finland, that benefit then will start, you know, coming into the bottom line only during this year. And I would say, let's say more meaningfully from the second quarter on.

Okay, that's very helpful. But if I were to push you a bit, could you perhaps provide a quantum of cost tailwind you've seen realized through your P&L in 2025?

No, we don't disclose that.

Okay, fair enough. Thanks very much.

Thank you.

The next question comes from Andres Castanos from Burenberg. Please go ahead.

Hi, two questions on the Versawood deal, please. Can you please describe the efficiencies that you will unlock by partnering with Versawood? Meaning, why and how partnering with them will make the cost of the pulpwood you need cheaper versus spot prices? And I guess also the complement to this question is how much of your wood needs in the Northern Platform are now covered either by the Warsaw Wood Agreement and by the forests that you own in Finland. Thank you.

Okay, let me cover the question about the deal and the logic behind the deal. Basically, Versewood being, as said, the biggest saw miller in Finland and was in, let's say, had an interest for locks. to feed its capacity and for a sawmill. That is what we could put in this deal and what we did put in this deal. On the other end, what we are getting through this deal is availability of pulpwood and chips, which is what is important for us for our pulp production. So this is the, call it, industrial logic behind the deal. I do not have at hand numbers to share when it comes to, let's say, percentages of wood needs covered either way. Let me see, Tapia, do you have anything?

Well, let's say one can say in terms of our own forest, obviously, that varies in a sense a little bit depending on the market situation. But round figures, one can say that from our forest which is about half a million hectares in Finland, we can get around 10% of what we need. So still, vast majority has to come from outside sources and don't have a number to disclose in a sense how much this Versawood deal will impact that, but obviously will be a meaningful meaningful increase in our sort of secured wood supply from the synergies that this partnership will give us.

Okay. Thank you. Thank you for this, this caller. Another question, please, if I may, would be on the biodiesel market, a good improvement this quarter. And I was wondering if this outcome was sustainable or we're seeing one-off effects because of maybe from buying ahead of the implementation of the new red three regulations. Do you think this performance is sustainable going forward? And yeah, what dynamics are you seeing there in the biodiesel market?

Yeah, I would say that to answer your question, we need to go behind what is... Sorry, to go and talk about what's behind this performance or this performance improvement. So some elements are linked to, I would say, improved market dynamics and improved prices on the market. But there is also a part which is meaningful that is down to our own actions. in terms of improved operational efficiency and output out of the La Perrante refinery, and improved sourcing of crude tall oil, and improved cost of crude tall oil, which is the feedstock that we are utilizing for this business. So, if we look So the market considerations, we leave it to everybody because we can guess about that the same that everybody else can guess, if not acknowledging the improvement that has been visible in the last couple of quarters. But then when it comes to our actions, they are there and they will be continuing to yield results. Now, also, if we in this area, I want to take the opportunity of this question to broaden the angle a bit beyond one or a couple of quarters. And because there have been some significant changes in this space with issuing of the so-called RED or renewable energy directive number three in Europe. And on the base of that directive, if and when implemented, and implementation is going to be driven by the different countries that is going to be increasing according to a number of sources, the demand for biofuels and the sustainable aviation fuels from six to 20 million tonnes in Europe by 2030. So it is a significant step up. And this is going to be coming from elements like increased minimum targets, minimum greenhouse gas reduction targets in transportation. A minimum target needs to be achieved of 14.5% for all transformation modes. Then when it comes to aviation, there is a target to increase the use of sustainable aviation fuel from 2% in 2025 to 6% in 2030. Beside that, by 2030 as well, let's say, first generation biofuels made, for example, out of palm oil or palm oil waste will have to be phased out. And Germany, for example, talking about implementation of the directive in the different countries. Germany has made the decision to phase it out latest by 2027. So basically, and without going into further detail, there are the implementation of this directive is going to be changing and changing in a very positive way, the general market situation in this space.

That's great. Thank you.

Okay. With this, I'm mindful of time and that we have used the time that was available. So thank you all for your participation and for the questions that we're being able to answer. Thank you very much. Have a nice day. Bye. Bye-bye.