Holmen AB

Good afternoon and welcome to the interim report presentation for Holmen. From our side, we are the usual suspects, Anders. It's me, myself, Henrik Sjölund and Mr. Anders Jernhall. We will do it in the same way as we usually do. We go through the presentation and after that we're happy to take any questions you might have. But starting off with some highlights from the third quarter, it's a very nice feeling to be able to present a very strong result and especially a strong performance across all our business areas. We can see that we have had a very high production efficiency. Not only in one business area, but as I said, actually in most of them. And we know that we have a seasonally low cost, but we also see very good discipline when it comes to cost in general in our business areas. We also see that when it comes to wood products, we have a favorable market situation or a good balance. We've been able to increase prices and we have some tailwind from that. On the other hand, we do not see a specific tailwind when it comes to lower cost for pulpwood or saw locks. It's more that we've been able to run our facilities in a very efficient way and a good mix to some extent as well. During the quarter, we also closed the acquisition of Martinsons, which we will come back to. And we've also been able to distribute the dividend of 350 per share. Looking at our financial situation, after acquisition of Martinsson and also after we have given dividend, we can see that it's very, very strong. And our net debt is on a low level. And if you look at the cake, Anders, wood products are now a little bit bigger, but not very much, to be honest, compared to the rest. But a very strong situation in general. If we then move to forests, We have a situation which is a bit delicate. We see that there is a very strong demand for saw logs. On the other hand, we also see that due to COVID-19, the activity in the world as such is lower, and it has also affected the pulp mills, especially in Sweden. especially in printing paper where we have seen coming closures, but also running at a lower utilization rate, which means that there is plenty of pulpwood and wood chips and firewood. Because on top of the situation we have, we also have the spruce bark beetles we need to take care of down in the south of Sweden, which means that more wood is coming out of the forest. In general, it means that we have to find a way to get through and also to be able to source the saw logs we need for our saw mills. On the other hand, find simply place to store the pulp wood we don't need at the moment and also take care of what is not the best quality. So it's a bit different situation than what we're used to. On the other hand, it's a very strong position to have the forest land we have ourselves, and we have a lot of the situation in our own hands. Ole Noel Anders, if we summarize the financial result for the forest during the third quarter.

Maybe we should talk about the new harvesting plan before.

Sorry, we should do that. Absolutely. Last year we checked the inventory of our forest and we came to roughly the same result as last time. We built over 120 million cubic meters standing in the forest. And based on that, we also made a new calculation how much we believe we should harvest in the coming 10 years and a bit beyond that. And the conclusion is that it's roughly as we saw the situation before, but we will be able to increase the harvest of mature forest because we grow trees to produce houses and homes, not pulpwood. And that part, the mature forest, we will be able to increase not much, but from 2.2 roughly to 2.3 million cubic meters per year. the period from 2016 to, sorry, going forward from 2021 to 2030. On the other hand, in our old prediction, we thought that thinning would be on a slightly higher level than what we have been at during the last few years. And when we look forward, we see that we will stay on roughly that level, which means roughly half a million cubic meters per year, which is, as I said, a little bit lower than we previously expected. If we then go beyond... The next coming 10 years, we see a potential to increase the harvest with some 10% after that. We have not included any climate effect on the calculation, at least not in that time span. In total, it will not have an effect on cash flow, no net effect. Slight difference between harvest and thinning, but no net effect.