Holmen AB

Good afternoon, ladies and gentlemen, and welcome to the interim report presentation for the Holmen Group. Here in Stockholm at the office we are the usual suspects, Anders. It's me, Henrik Sjölund, CFO, and Anders Jernhall, CEO and CFO, of course. This quarter, the second quarter, has been a very special quarter in relation to the years we have had before and also the situation with COVID-19. If we go back a few months, there was a lot of uncertainty in the market. I think all of us have been affected in different ways, all societies, also our own business. Now, as we have proceeded during the quarter, we have a little bit better understanding how it has affected our own business. And we can see that all over, we are doing relatively well, which is also reflected in the second quarter operating profit of 542 million SEK. But we can also see that we are struggling in our paper business, which comes from a really huge drop in demand. We are happy to see that our paper board business is back on track or is doing a little bit better. It's a strong performance in the second quarter. And we are also happy that we were able during the second quarter to finalize the negotiations to buy Martinsson's, which we will come back to a bit later. And at board meeting today, the the directors of Holmen decided to propose to an extra general meeting to decide about a dividend later on during September of CEC 350. We are a company with a very strong financial position. We are also a company that should normally be able to give dividend also in uncertain times. But if we go back a few months, you know that we postponed or we did not have our annual general meeting when it was planned. And later on, we also withdraw the original proposal for dividend. Now, a few months later, just as I said, we have a better understanding of our own business and how COVID-19 is really affecting the opportunities to make money and, let's say, run the business as normal. We have looked at and considered all different aspects when it comes to our own situation. And despite the fact that we have a very strong position, we have also looked at other areas such as we are a very responsible company. And when we take everything into consideration, the board of directors have come to the conclusions that yes, we should give it out, but we should not give dividend in the same, not to the same extent as the initial proposal was, but half of what was initially proposed, which means 350. Let's move on. We'll come back to that later on, I guess, to our forest business. Forest is a fantastic asset. We know it because we've had it for a long time. In times when things are uncertain and when things change, the strength of our forest assets becomes very clear as well. We have a wood market right now where there is, I would say it's a bit excess of pulp wood because the industry is running with slightly lower activity than normal. We have a balanced situation when it comes to the soil log market. But of course, for us, the good thing with the forest is that if the industry is not consuming as much as we are used to, then we just leave the trees for some time to grow a little bit bigger and become even more valuable. This means for the moment that prices are down slightly. On the other hand, we've had a period with slowly increasing prices. So how has that transferred into our operating profit, Anders?

I saw a Q2 report of 370 in operating profit from the forest. That's 50 million SEK more than the previous quarter. And the difference is explained by sale of forest properties that was concluded during the quarter. Otherwise, it's roughly the same underlying result in Q2 as Q1 with unchanged prices between the quarters. Looking year over year, we have a 90 million SEK higher profit. To the largest extent, that is more of an accounting increase in earnings due to the new value of our forest assets. We benefited from the sale of forest property, but lost a bit of revenue due to, on average, 5% lower selling prices between the years.

Thank you. I said before that COVID-19 has affected our business in different ways. To be a paperboard producer for the premium segment of consumer packaging, life has been quite okay. We see stable prices in the market, even though we see also that the pulp price, softwood pulp, is a bit lower or is really low at the moment. But as you know, for... For us, we are more or less neutral. We are not exposed really to the pulp market as we produce a little bit more than we need at the Iggesund mill and we are buying roughly the same amount to our Workington mill. Not only prices have been stable, we have also seen a fairly good demand development not only in Europe, but also if you look at the deliveries from European producers to other parts of the world, the development has been obviously quite okay. We have grown in line with the market, and we have also been able to improve our product mix slightly. We had really high deliveries in the first quarter, but if you look at the first half of the year, still the deliveries are on the positive side, and we are roughly at the 550,000 tons we have promised a couple of times, Anders, and then failed if we go back one year. But now we are there, and it feels like we are on track.