BillerudKorsnäs AB (publ)

Thank you, Lena. Good morning, ladies and gentlemen. I'm here with Eva, and we start with a short presentation. Let me give you first of all an introduction. I think this was a very strange quarter. We had the best quarter in our history when it comes to the financial performance. We had probably one of the most difficult operating quarters when it comes to the environment in which we are operating, be it on the production or be it on the sales and logistics and customer service side. And then we have clearly a very tragic first quarter when you think about the overall environment, in particular the war in the Ukraine. So when it comes to the business side, you have seen our results. Net sales grew by 13%, which was very good, both in carton board and paper products, very good performance. We have an all-time high EBITDA at 22 percent margin. And price impact and mixed improvement offset most of our cost or all of our cost inflation in the first quarter. This was the first quarter where we basically really fully worked on our strategy. And some of the financial results that you have seen in the quarter are reflecting that. But in addition to that, we also had the opportunity to close our Verso acquisition. We closed that on the 31st of March. And we signed a memorandum of understanding with our partner, Vikenskog, to explore the opportunity of pulp production in Norway. And these two events, more focused on the strategy, are basically addressing the prioritization about carton board, the prioritization about North America and building a very good business there, and also our aim to find new sources in wood supply and widen our opportunities to buy both pulp and wood. So overall, very good quarter, very difficult environment in terms of operations. Everything that the war is now basically having an impact on Europe is in addition to what you have seen before with Corona. Logistics has further tightened. Prices of raw materials, in particular chemicals, mainly driven by energy prices, are very significantly on the rise. And also wood supply is starting to get expensive because of the closure of the border to Russia. Eva will tell you a little bit more in detail on our results, and then I will come back to talk to you a little bit about the different projects on the strategic side before we go into Q&A. So, Eva, please, over to you.

Thank you, Christoph, and good morning, everyone. Starting with some coordinates on our net sales performance. As Christoph alluded to, it's really been an excellent quarter. double-digit growth and continued a nice trend we've seen for the past quarters. We're up 13% versus a year ago and 11% than adjusting for any FX impact. Pricing is by far the biggest building block and we added more than 300 million or approximately 5% of incremental pricing versus previous quarter. So that's Q4 21. And we do see pricing activity on pretty much all the categories in our portfolio. We also have a sizable help from driving profitable mix. And we really found our stride in optimizing the board sites in particular. And that was one of the main objectives behind our 7 investment, as many of you remember. Small negative impact on ,, which is now still sitting in our base for some quarters, pulls our comparison down by 2 percentage point. If you look at our categories, And where that performance is all about, the growth is coming broad-based, particularly strong this quarter has been from Carton Board, Container Board, and SAC. So if we move over to the profitability bridge, I would definitely say it's been a sensational quarter in terms of profit delivery. We have all-time high EBITDA for the company, and actually with quite some distance. 22% margin reported, 24% then adjusted for annual stop timing is something that we are extremely pleased with. It continues focused on price management and driving profitable mix that are the two biggest building blocks. And we partly talked that already in our net sales bridge. There's probably also one more comment on we're really finding now the rhythm within product area board with portfolio optimization between Gruve, Gävle and Trövi. This has been enabled by KM7 and had a really good quarter across all of the sites. And this has been enabled by KM7 in particular. And we are super pleased with the performance this quarter across. We also had another good contribution from our cost and efficiency program. One of the main negative items on the chart is maybe not very surprisingly linked to cost inflation on different items. So 270 million versus a year ago. Some details on where that is coming from. Logistics, 135. Chemicals, 100. Fiber, 60. On the electricity, it's a slight positive as our hedging was extremely effective in Q1. And to the right, you will find that 80 million of the Grooven annual stop. was recorded in Q1, as the stop started last week of March, and the remaining part will be recorded when we come to Q2. So if we move on, and some further words about cost inflation and also going forward, this is, I know, a very big topic for pretty much all the industries at the moment. So quarter over quarter, and that means for us now Q1 versus Q4, The cost inflation was actually quite limited. It's roughly minus 40 million or 40 million cost increase in total. We've seen increases for logistics, 35 million. Chemicals is more up, it's 70. We also seen fiber or the wood purchase starting to move with 35 million. Most of this has then been offset very effectively to our energy and electricity hedging. that has given us a hope of approximately 100 million, and that is in Q1 versus Q4. And for Q2, the situation will start to accelerate, and we will hit harder of the cost inflation in Q2. We can pretty much say that with the insights we have on the contracts, we know pretty well on how the situation will end. We do expect the quarter over quarter, so that will be Q2 versus Q1, to land in the area of 250 million. There's two major items, so the biggest item, which is fiber or the wood purchase of 90 million, chemicals of also 90, in particular the caustic soda. Pricing are accelerating hard. We would see further increases of logistics between 30 and 40. And energy, we also expect a minor hurt, 10, 15 million. if the current spot prices we've seen now in April will continue. Now, as it also states in the heading, we are looking to offset all of that cost inflation coming our way in Q2 with incremental pricing and focused on continued profitable mix. And we are adding another 44% of incremental pricing in the quarter. So we should have another good quarter in terms of financial delivery when we close our Q2. Moving on to some words on cash flow and some coordinates around our balance sheet. It's another quarter with positive results. And our excellent EBITDA result is certainly a good starting point. We've had a bigger working capital hurt this quarter versus what we've seen over the past quarter. A couple of reasons for that. One is that we have returned our inventory level to a bit more normalized level, including safety stock being on the low side in certain categories. There have also been some phasing on the payables between the quarters, and particularly there were quite some invoices being paid in the beginning of the quarter. So at least part of this working capital increase that we've seen now for the quarter are not something we would expect fully going forward. Now, one item that has also increased in Q1, and we will expect to continue on the receivable side, that keeps going in line with pricing in particular and your positive momentum. And we probably would expect the receivable balance to keep going as our net sales is increasing at least for some more quarters. Next step to adjusted EBITDA ratio moves to 2.3 post the transaction of Verso. Do keep in mind that that ratio excludes any EBITDA contribution from Verso. So we will certainly expect this ratio to come down over the coming quarters. If we move to the left side, sorry, left bottom side of this slide, you would get a little bit update on the CapEx outlook for 22. And here we talk for the time being excluding Verso. Base capex relatively unchanged of 1.5. We have done a small adjustment on the survey, recovery boiler project and move that up to 1.1 billion. Please keep in mind that this is purely timing between 2022 and 2023. There is no change to the overall project frame that has been communicated earlier. So with that, I hand it back to Christoph.

Okay. So the next slide is more of a placeholder. You all know our strategy. And on the commercial side, you know that we are focusing on carton boards. We see that as a major growth engine. We have identified North America as one of the key growth markets. We will pursue all good select opportunities and look at packaging board. and our focus is really on added value when it comes to the second craft market. In operations, just to remind you, organically we have the opportunity to grow OEE over the next foreseeable future, about 2025, 2026, and we'll continue to optimize our footprint and to some extent continue to renovate our current assets. When it comes to wood supply, as you're aware, with the European Union policies, with a different competitive move in the market, we have a relatively tight wood supply in Scandinavia or, say, Northern Europe in general, a little bit exasperated now with the war in the Ukraine, but definitely we're also looking to widen our sourcing opportunities for wood. So, the next few slides are really about bringing the context of what we have achieved on the strategy going forward. As Ivo already alluded, we had a very good production quarter. Across all this, we had a record production in Gävle, very good production on KM7 in Grøven, and also Frövi has performed really, really well. And that basically this focus on the basics of our strategy is so important for us to deliver now over the next few years before new capacity with the transformations US comes on stream. We were very happy with the acquisition of Verso and now you have seen the quarterly results and you have seen the results of the fourth quarter. So we believe this acquisition fits our strategic perfectly. They're currently operating in two segments that are not part of our course. We added significant business to Billiwood-Kochness in graphic paper, speciality paper, and pulp. But generally speaking, as you can see the result of the first quarter of Verso, the business is performing really well after many years of restructuring before we bought it. I think, Eva, why don't you talk a little bit about the detail on Verso? This is just to give you a glimpse so that you understand what is to come. And I think there are always a little bit of skepticism sometimes about our ability to run this transformation. I'm absolutely convinced we will be very successful to conquer the carton board market. It is now our intention that we build up significant volumes. over time until the conversion is done, and then switch that production to our North American asset. We have already started the conversion work in the sense that we are at the concept stage. We will move into feasibility. And my expectation is that we have a very solid CapEx plan for this transformation in 2023. And by then, we can talk to you in much more detail how that will be executed. But generally speaking, I'm very pleased by how early we could close and also about the performance in the business as we speak today. And we will now continue our integration program. But in order to give you visibility, Eva, please take us a little bit through Verso, which is now called Billiard North America. And you will see that now quarter after quarter flowing into our numbers.