BillerudKorsnäs AB (publ)

Good day and thank you for standing by. Welcome to the Billerwood Third Quarter Report 2024 conference 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. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your first speaker today. Lina Schitter, please go ahead.

Good morning and welcome to this webcast and conference call. We have today published Billruth's results for the third quarter of 2024. Our president and CEO, Ivar Vatne, and our CFO, André Kress, will present the results and answer questions. So without further delay, I would like to hand over to the speakers. And first up is Ivar. Please go ahead.

Thank you, Lena. And good morning, everyone. And thanks for joining in this beautiful Thursday morning. To be excited to present another solid quarter for Billerud. It's been a quarter with few surprises. And in general, we are pleased with the result we see on several fronts. So let's get into it then. Next slide, please. And in essence, we've seen strong net sales growth and a profit recovery trend throughout 2024 is continuing. We record plus 6% net sales growth, plus 9% organic and currency neutral. And our top line growth is coming from both regions, and across most of our categories. We see also for this quarter significantly improved profitability, both versus a year ago and versus previous quarter. And what is satisfactory to see is that the recovery is coming from both regions. Europe records its best profitability in over three years. And I will continue my praise for our region, North America. Another excellent quarter with strong results across the board. And coming in with 18% EBITDA, making it a long trend of superb results. Key for a strong progress to improve bottom line has been our relentless focus on fighting cost inflation through proactive pricing and mix management. And we have succeeded again this quarter on exactly that priority. And last but not least, we continue to deliver on our profitability enhancement program and add another 220 million SEC this quarter, making us well positioned towards a full year target for 2024. So next slide, please. And let's get into some of the categories and channels with market conditions. And overall, and very much as we had expected, we experienced slightly better sentiment during the quarter, so during Q3. But we have not been operating at strong levels in any of our categories. Having said that, there is no doubt that we do see a worsening situation going into Q4. And the underlying consumption is below where we expect the long-term trend to be. And this is clearly a trend shift versus what we saw during first half of 24. But keep in mind, situation is different per channel and per region. This is a very important point to keep in mind. So add a little bit more detail. So for food and drink, our biggest channel by far, we experienced normal conditions during the quarter. And going forward, we do expect stable conditions for liquid packaging board, while somewhat softening conditions for container board. For our printing and publishing channel, it's been a solid quarter. Presidential campaign and closure of more capacity in US has improved our position as the natural choice and the clear market leader for domestically sourced graphic paper. We have started Q4 well for graphic paper. In consumer and luxury, That was a disappointment during Q3, and we ended worse than what we had expected. And we experienced a clear negative shift of the sentiment during the quarter. And in general, you can say that cart and board is in a tough spot with overcapacity and in general quite weak underlying demand. And we see this in several of our big European markets, with low GDP growth and consumers holding back on spending. We're not too optimistic about carton board in the short term and expected to go further down before we hopefully see a recovery later in 2025. And lastly, for our industrial channel, Q3 was pretty okay. We've seen decent demand and upward pricing for both brown and white sac. But also here, we see a worsening situation and then negative trend shift happening towards the end of Q3. So we expect tougher conditions towards the end of the year, in particular on the volume side. So with that, I hand it over to André.

Thank you, Ivar, and good morning, everyone. As you, Ivar, alluded to, we've had a solid organic and currency neutral growth of 9%, and it has been a story of two regions. Our North American region has stood for most of the volume growth, while region Europe was mainly contributing to growth with higher pricing and also improved mix. Now, both regions did have a positive pricing impact versus last year, totaling some 340 million. Sequentially, versus the second quarter, we've again had a positive pricing development across most of the categories, which more than offset the input cost increase we had in the quarter. Next slide, please. Our EBTA improved 33% versus last year. Now, higher volumes in North America and the positive pricing development in Europe were the main drivers for the uplift. Our raw materials and logistics costs were up versus a year ago, with pulpwood prices in the Nordics being the main factor here behind the cost increase. Our efficiency enhancement program continued to have a strong progress in the quarter, contributing 220 million to the uplift. The other bucket of negative 200 million comprises mainly of higher fixed costs this year, and that was due to normalized provision level for the short-term incentive program, but also somewhat higher maintenance costs outside of the annual maintenance shutdowns in the quarter. Now, moving on to the regions. Next slide, please. To start with region Europe, which delivered a solid profit improvement and reached 16% EBTA margin. The profit uplift was driven by continued focus on pricing. and also the very strong contribution from the efficiency enhancement program. We continued with our broad-based pricing efforts in the third quarter and had a positive pricing impact versus quarter two across all segments except liquid packaging board. Our second craft paper segments had by far the strongest pricing momentum in this quarter and our total pricing outweighed the cost increases. Sales volumes for the region were down 3% versus last year and 2% sequentially. And we did experience softer demand within some categories by the end of the quarter. And we expect that weakening to continue into quarter four. So to summarize region Europe, a clear profit uplift in the region. on the back of further pricing efforts. But our outlook into quarter four is certainly much more cautious. And a couple of points on cost development for the region. Next slide, please. As we expected, the pulpwood costs continued to increase in the third quarter, reaching new all-time high levels. The pulpwood cost increase had a negative impact of approximately 150 million compared to the second quarter. On the other hand, we did have some positive impact from seasonally lower electricity prices, but also lower logistics costs, which offset much of the pulpwood cost increase. All in all, we had a cost headwind of 70 million in the quarter, which was somewhat lower than we anticipated. Moving now into quarter four, we expect additional cost headwind in the region of 100 million, where 70 million is from higher pulpwood costs and 30 million from higher electricity costs as we now enter colder periods. And as we expect continued cost inflation into quarter four, We will maintain our focus on pricing and mix improvement in the region, and we will prioritize value above volume. Now over to region North America. Next slide, please. The North American region delivered, once again, very solid profitability with an EBTA margin of 18%. volumes increased with 14% versus previous year and 7% sequentially with volume uplift across all categories. EVTA margin was in line with quarter two performance and our operating rates in North America stayed below 70%. Heading into quarter four, We see relatively strong order books now in the beginning of the quarter. While we do expect some slower sales volumes at the year end, which is in line with the pattern we've seen for the last couple of years. At this point, we would expect total volumes for quarter four to be somewhat lower than we had in quarter three. Pricing for the paper segments within the region are expected to remain stable also into quarter four while we will see further decline in pulp prices. And finally, just a note on the maintenance cost in the region. In the third quarter, We carried out our planned maintenance shutdown at Escanaba mill, and that had a total negative impact over approximately 90 million, and the remaining 20 million will impact quarter four. Next slide, please. A couple of words on the cost development in North America, which has been very much in line with what we expected. We did have a cost tailwind of approximately 40 million compared to the second quarter, and that tailwind came from seasonally lower fiber costs and also lower logistics costs driven by our destination mix in the quarter. Heading into the fourth quarter, we expect only minor movements in our input costs. Our current estimate would be a cost tailwind in the region of 10 to 20 million. Next slide, please. Now, our cash flow performance in the third quarter was heavily impacted by working capital buildup. We increased our inventory level in the Europe region and also had a negative cash flow impact from timing of our operating liabilities. The cash conversion in the quarter ended below 30%. and our year-to-date figure is in line with the level last year. We have a clear target to improve our OCF conversion towards 80% for the full year, which we've also achieved for the past couple of years. As we've highlighted in our report, we finalized another successful transfer of our US pension obligation which will have a positive result impact of approximately 25 million US dollars that we will record in the fourth quarter as item affecting comparability. And after this transaction, our pension obligation is now at approximately 500 million US dollars, a clear decrease from the 1.2 billion we had at the time of acquisition of Verso. And we maintain our funding ratio of about 100%. Finally, our CAPEX guidance for this year is unchanged at 2.3 billion. And we will, of course, share more on our future CAPEX projections at our upcoming Capital Markets Day. With that, I would like to hand it back to you, Ivar.

Thank you, André. Our efficiency program continues with full force and we deliver another solid contribution this quarter. And this means we are very well on track to deliver ambition for 2024. In fact, as it looks right now, we should land comfortably above the 700 million target we set for ourselves in the beginning of the year. As usual, Some examples of tangible initiatives are found in the middle of the screen. We continue to make good progress on building up stronger positions amongst the private forest owners and secure the stronger value creation from downgraded material and waste. We've also had good help from the FTE reduction program we launched pretty much this period last year. Next slide, please. So we're starting to get towards the end of the presentation with some last words on the Q4 outlook. We are going into quarter. We do see a negative shift of the market sentiment. That is at least true for several of our categories in region Europe. North America is different and is expected to operate in pretty stable conditions. And as André just went through, did you see increased input cost? First and foremost, relative to fiber cost inflation in Nordics. And next slide, please. And lastly, I wanted to take the chance to remind everyone of our planned capital market day, Monday, the 2nd of December. And needless to say, I hope as many of you as possible will have the opportunity to attend in person. I'm personally very excited to finally talk about our new plans for both regions and how we plan to maneuver going forward. So with that, I hand it back to operator for Q&A.

Thank you. As a reminder to ask a question, you will need to press star 1 1 on your telephone keypad and wait for your name to be announced. To withdraw your question, please press star 1 1 again. We will now proceed to our first question. Please stand by. And the first question comes in the line of Johannes Grunzelius from DNB. Please go ahead. Your line is now open.

Yes. Hi, everyone. It's Johannes Grunzelius here. I have two questions. My first one is what you talked about here, Ivar and the team, about the weakness in carton board. I was wondering if you cannot have the flexibility on moving out from that category and go into the other categories being relatively strong. Do you have that flexibility? It would be interesting to hear your thoughts on that.

Yeah, good morning, Johannes. And no, the answer is absolutely. As you might know, our carton board production is centered in Grooven on KM7. We also have a very good carton machine in 3G on KM5. And yes, there is absolutely flexibility to also maneuver towards liquid packaging and also large extent other grades of container board. I alluded to it earlier but container board as well is not necessarily super strong right now but you are pushing on something very important that absolutely we will be looking for all pockets of how we can find volume in other segments and container board will be a place where we will have a natural starting point. But we also need to be very clear We want that value creation to be strong for that volume. And as Andre mentioned, value over volume. But that is our plan going into Q4.

Okay, thanks. Also, on the U.S. market, you are indicating pretty much stable volumes, I suppose, Q4 over Q3. But if you look more into 2025, there is capacity being taken out that's in media. Do you expect the sort of levels in at least the first half of next year to be higher than Q3Q for in the U.S.?

Yeah, it's a good point. I can take that. It's a small reminder that We tend to have also a bit of seasonality in the US. So I think from Q4, although the sentiment is pretty stable, typically we would look at 10,000 to 20,000 ton lower volume Q4 versus Q3. There's nothing drama in that. It tends to be the rhythm we see every year. And again, it's also linked to some of the customer purchasing patterns, et cetera. But to your more maybe relevant question or important point about 25, I think we go into 25 with pretty good confidence on all fronts. I think on graphic paper and speciality. Speciality is in good shape, and that is a category that's supported by Tailwind overall. And we're doing well. I think it's fair to say that we do expect at least the same, maybe a little bit more on speciality from our side. And I think it's somehow similar but in a different context on graphic. You do know this is a category that is fighting secular decline. But we are a very strong position and we are the clear market leader in an attractive region. There has been closures already during Q3, and there's another big one coming up towards the end of Q4. So it's pretty fair to assume also that we will have a bit of a further uplift on a graphic volume going into 2025. Difficult to say how much, but we are certainly confident that we will have another uptick, everything else equal of what we know right now.

Okay. Thank you very much.

Thank you. We will now go to our next question. Please stand by. And the next question comes from the line of Linus Larsen from SEB. Please go ahead. Your line is now open.

Thank you very much and a very good morning to everyone. Maybe starting off with price, if you could help us as you often do and maybe

uh per region giving some more detail on the sequential price effects that you you expect in the fourth quarter please yes i can take this one good morning linus uh so in terms of pricing if you look at region europe we do expect overall flat pricing heading into quarter four If we look at region North America, as I mentioned, the paper grades are expected to have a stable pricing in quarter four. However, we will see some decreases in the pulp prices. Our estimate at this point would be a negative impact of somewhere around 50 million into quarter four compared to the third quarter.

Sorry, did you say five zero?

5-0.

Yes. Got it. Thank you very much. And then, that's very helpful. That's clear. Thank you. And then maybe on the delayed CTM project in Norway, what's the latest on that and how do you expect to proceed? And in relation to that, if you could give some early indication of your thinking on CAPEX for 2025, please.

Yeah, good morning, Linus. I can take that one. To be very honest, I don't have much more than what's already been written in my CEO comments in the report, but it was a surprise when our permit application was rejected. We will appeal and we're looking to complete that appeal I think towards the end of next week. Let's see, that's all I can say. I think we felt we had good arguments on Yeah, well documented. So again, we will go in with renewed optimism on that. How long it will take and what outcome is obviously very difficult to estimate at this point. I think it's important to keep in mind that that was a chip in a hole. Europe called it sourcing and fiber strengthening position. uh and you know we also have all the parts on top of this so let's see if it doesn't successful and what we do then but for the time being that that will be an appeal we first look forward to see how it's being processed Now, on your second point, I would probably dodge that question and ask for a bit more patience. All of this, pretty granular even, I would argue, we will go through in our capital market day. So sorry for not being able to answer, but in six weeks, I think you will get the ample level of details.

No, that's very understandable. But is it fair to assume that relating to any CTMP project or, you know, Anything that could replace that? We should not expect anything for 2025 at least.

I will just hold that question. It's probably not going to be a big one anyway. If it comes out as a positive message, it takes time to get organized, as you know. But we will cover, I think, the necessary details in six weeks.

that's great thank you and and maybe just the final question on seasonality and costs you did comment on rising energy costs in the fourth quarter but what about fixed costs what's the seasonality that we should expect q4 and q3 yes linus uh so in terms of seasonality we have uh as you know the vacation accrual release that we have in quarter three

that we will not have in the fourth quarter. So this is going to be a negative impact of roughly 130 million quarter over quarter. Now in quarter four, we also tend to have some more activity than we have in quarter three due to vacation period. So that would add probably additional 100 million Swedish krona. And then finally, as I mentioned on our working capital position, we will have a high priority to adjust our working capital in the fourth quarter, which means that we will make choices to our production schedule. And that will result in some fixed costs under absorption to restore the inventory levels. At this point, we would estimate that the impact to be in the region of 50 to 100 million negative in quarter four. versus the third quarter.

That's super clear. Thanks a lot.

Thank you. We will now take our next question. And the next question comes from the line of Cole Hatham from Jefferies. Please go ahead. Your line is now open.

Good morning. Thanks for taking the question. I'd just like a follow-up on North America and graphic paper. You talk about kind of better graphic paper volumes into 2025, is that just from share gains from, you know, Sappy that's converting into Boxport? I mean, how do you think about and explain that kind of volume improvement? And then focusing on Europe next, which end markets, you've given some good color on, you But I'm just wondering if there's anything that you can call out there, because we've seen recycled container board come down a little bit, but wood costs are up. And I'm just wondering if you see virgin container board sack and craft effectively being able to hold pricing just because of the differing cost dynamics in virgin versus recycled grades that I know you don't play in, but some of your competitors in the box market do. Thank you.

Hey, good morning, Cole. I think the first question I can be pretty quick on. Yes, it is related to shared gain. As you know, this is a category that comes down pretty much every year depending a bit on the different grades. But we feel very confident about our value proposition of being well-placed in the Midwest and excellent cost curves of our production units there. And as more local or US-produced capacity is taken down, we go into 2025 pretty confident in our ability to have a meaningful proposition to customers and also establish new customer relations. I think to your second point, it's a very interesting question. And I think if you just go a little bit back in history and say that pulping or pulp pricing is a good indicator of also what happens in some other packaging materials, you can certainly ask yourself if this will be slightly different this time. I think certainly in Nordic and Northern Europe, everyone is fighting the same challenge. It's not, I think, a company-specific item, but all virgin fiber producers are having cost situation, which is tough. And input cost is certainly not coming down, although pulp pricing on a global scale is coming down. So I think it will be a different game this time where you would expect a lot of players to maintain focus on value over volume potentially be able to not jump over or onto all volume opportunity arises. And it's a fine balance. You certainly also need to have a certain utilization to keep the mills in a pretty good shape. The situation now is slightly different, as I'm sure you can expect, on the categories. I mean, liquid packaging board in general is holding better. That demand is It's more stable on the global lead, you can say, or level, although China is maybe the concern also there that it's a bit lower consumption. And then container board and carton board, just a challenge right now. and I don't expect that to be long-term or permanent, is that there has come quite a lot of new capacity in, and installed capacity being ramped up now in 24 and going into 25. If you couple that with some of our key markets struggling with the underlying consumption and consumer spending is not really up to par, then I think everything points towards that it will be more price pressure and fight over some volume positions. We still remain confident long-term trend. Packaging grades is in a good place and they are supported by macro trends that should be a strong force going forward with positive category growth for most of these categories we are exposed to. But yeah, no doubt, before we might see some meaningful interest level declines in Europe and starting to see some optimism on the consumer spending, it looks to be some tough quarters ahead.

And then if I could just have a follow-up on your speciality craft business. I mean, you're one of the few players that operate in that segment. I'm just wondering if there's any differing demand trends or pricing trends there.

No, I think that category has done a good comeback in 24. After 23, it was tough, as I'm sure you know, with inventory levels not being more normalized. It is a category that is in pretty good growth, also in the U.S. E-commerce in particular is a good driver for this. We are well placed with good production location in the Midwest, and we continue to fuel momentum on that category. It's an important category for us. It's a prioritized category, and we expect everything else equal to 25 to be better than 24. Thank you.

Thank you. We will now take our next question. And the next question comes from the line of Lars Kilberg from Stifel. Please go ahead. Your line is now open.

Thank you. I have two questions left. One being, of course, the wood cost pressures you're seeing and the dominance of Nordic production into liquid paperboard. How do you see that working with your main customers in terms of trying to find a sort of compensation through pricing, considering that demand in in that category is quite good. Also thinking about it, again, crafts and specialties. I mean, you called that out as being very strong in the U.S. I think you, well, I can't recall the exact percentage number, but it's a significant increase in volume. What are you seeing in that business in Europe? Are there any opportunities to tap into that market in a greater way also on the European side?

Yeah, hey, good morning, Lars. No, listen, the first one, There is just the fact that the input cost level has come up a lot in Nordic over the last couple of years. The dynamic and the contract length in liquid packaging is a bit different. As you know, we tend to be longer contracts. I mean, we have discussions with all of our customers going into 2025. And, you know, there is a clear expectation that pricing is coming up in 2025, whereas what we've seen in 2024, as, you know, that cost situation has put a lot of pressure on the region. But having said that, you know, we also need to continuously do better ourselves and have that mentality of take cost out and, you know, look at our own internal efficiency. And that's also very much in line with our efficiency enhancement program that we have ongoing. I think to the second point you have, we talked about US. I think in Europe, it's a bit of a difference between the grades. We can maybe quickly go through them. I think on SAC, and I can take SAC and craft paper combined, and Brown SAC, as you know, the main destination that we have on our side is towards construction, that is a tough a channel or an industry globally these days. Asia is certainly not in the best shape, so we definitely see that Europe is weak. It's tough demand still in Asia, and we go into 2025, it's probably an expectation that this is coming down for some quarters. white sack is somewhat better and that's also related to the destination categories and channels being slightly different um but we also sense that there is quite a different shift now that we see going into q4 and putting pressure on on i guess all of the players but it's not necessarily in the same negative league as we've seen on brown sack on on our mg side Yes, there is price pressure and there is definitely also some volume issues that we see. But we have pretty good flexibility on our machines. We can have a bit of flexibility in the different application that helps us to drive different mix and find some sweet spots that we are very good at and have a good point of difference. But we certainly expect some pricing pressure when we come into 2025. On a brown MF, that's still a pretty good, it's a smaller segment for us, but that is in a better shape. Ecom, particular carrier bags, is a pretty good match these days, and we are more confident to you on that item. Fiber form, smaller, a little broader, but it's a pretty unique proposition for us. It is pretty okay, and that's also where we should have a bit more room to grow. So, I mean, all in all, you know, that segment has been good for us in 24. We start certainly to see that towards the end of the year, it's cooling down and we're holding pricing well towards the end of the year. Tougher to say into 25, but, you know, we certainly go into an expectation of 25 with volume coming down and some increased pricing pressure from Q1.

Thank you. Just one clarification. When he talks about the sequential changes, the fixed cost, if I do the math, it sounds like you're expecting a ballpark 300 million higher fixed cost in Q4 versus Q3. Did I get that right?

Yes, that's correct. That's on the fixed cost per se. Lars, you should also remember that we do have somewhat lighter maintenance shutdown schedule in quarter four. So we get approximately 240 million in positive impact quarter over quarter from lighter maintenance schedule.

Sure. Thank you.

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

Good morning. Thanks for the opportunity. Just in terms of your comments around European pricing being flat, fitting into Q4, is it fair to assume that there's definitely a power to stack and crop paper segment? And then I guess sort of heading into 2025, how are you guys thinking about sort of balancing high input costs while demand seems to be moderating somewhat? That's it. Thanks.

Do you want to take the first part, Andre, and maybe I'll take the second part of that question?

I can take in terms of pricing. I mean, we do expect only minor movements within the segments on the total level for the region. We do expect, you know, overall pricing to be to be flat. Now, on the back of somewhat weaker demand that we expect to have in quarter four, we might see some negative impact from the mix. But in terms of pricing, again, we will prioritize value over volume and expect to hold pricing quite firm into the fourth quarter.

Yeah, and maybe I just jump on the last point, going into 2025. And I think you mentioned it, but to be very clear, that it's a very different, well, difference between, you know, US and Europe. And I think you went through how we are much more optimistic about the North American going into 2025. But I think, listen, for Europe, it's a good question. And it's something that we will, you know, maneuver and probably fight on a weekly and monthly basis. Input cost is not coming down, and that is just a fact. And to the contrary, we see still that we will be fighting a full quarter impact of announced fiber cost increases that are coming Q3, and energy is coming up in Q4 now versus Q3 just due to normal seasonality. And yes, on a global basis, the demand is soft, but I don't think we should panic either. This is not something that is a long-term trend. We are very confident for most of the categories that there is, based on the macro trends, that this is going to be a growth story going forward, and our substitution effect towards fossil packaging is in the center of that. But yes, it will maybe be some tougher quarters, tough to say, because I think the only thing that this 22 onwards have caused us that the cycles are much faster and frequent than it used to be. But yeah, we are not too optimistic, at least in Europe, before we start to come towards the summer. It means that we will be quite ruthless in terms of how we plan our production schedule. It will certainly go down in slow steaming for quite a few of our units. Tough to say yet exactly what that means more than just volume will be quite a bit lower. But we need to and we have to, and we will prioritize the value of a volume. And that is a very clear choice that we will hold firm on going into 2025.

Excellent. Thanks very much.

Thank you. We will now take our next question. And the next question comes from the line of Christian Kopfer from Handelsbanken. Please go ahead. Your line is now open.

Yeah, thanks, operator. Good morning. Sorry, Andre, for... I just wanted to just clarify a little bit on the guidance here. Firstly, you talked about around 100 million further... higher fixed costs in Q4. But I understood that was primarily seasonal, right? So we should expect that to be a little bit more of a one-off in Q4.

Yeah, that's correct.

And then when it comes to your prioritizing price over volume, that's perfectly fine. How much did you expect volumes to come down in Europe for Q4? 20-30,000 tons.

I think where we stand now and looking into the both regions, I mean, we see a volume decline of 10-20,000 tons both in Europe and also in North America in quarter four compared to quarter three.

Okay, so it was so far up to 24 for the full group. Okay. Right. Gotcha on that. Sorry for asking that. And I just thought that was a little bit puzzled when you talked about, I mean, I understand that you prioritize price over volume, but on the front page you say price pressure in Europe. But still, given that you expect to have a flat pricing on your European operations.

Yeah, I think as we look into quarter four, again, we do expect to hold our pricing. Now, with the weakening of demand that we see happening in quarter four, we do expect some intensified pricing pressure primarily into 2025. But for the fourth quarter this year, we will confirm on our pricing positions.

Gotcha. Okay. Sorry for that. No, no, that's okay.

Thank you. We will now take our last question. Please stand by. The next question comes from the line of Eprim Ravi from Citigroup. Please go ahead. Your line is now open.

Thank you. Most of my questions have been answered. Just one clarification on the working capital. Apologies if I missed it. Could you kind of give a sense as to... which areas the working capital increase was coming from. Is it from a geographic perspective? Is it Europe or the U.S.? And then if it is in Europe and if it is inventories, inventories have gone up a bit, which product types are kind of building that? Thank you.

Yeah. Hi, Efrem. So in terms of the working capital build up, this has been really happening in Europe. And inventory build has been one component. It has been the minor one of them. But we do build up some inventory ahead of our maintenance shutdowns and had some overhang of that inventory at the end of the quarter. As I mentioned, we will take production schedule choices in quarter four, so we do expect to bring down our inventory. Now, the second big part was really timing of our operating liabilities. Also in Europe, that we had a negative timing impact now in quarter three.

Thank you.

Thank you. As there are no further questions, I would now like to hand back to Lena Schetter for any closing remarks.

Yes, then we will soon conclude this conference. Just a reminder, our next earnings presentation will be on the 4th of February when we report our Q4 and year-end results. And already before that, the 2nd of December, as you have heard, we will host a Capital Markets Day in Stockholm. And information on how to register for that event can be found on our web page under investor relations. So with that, we say thank you for participating today and goodbye.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect. Speakers, please stand by.