Holmen AB

Good afternoon, ladies and gentlemen, and welcome to the year-end report presentation for the Holmen Group. We are again the usual suspects from the Holmen side. It's myself, Henrik Sjölund, CEO, and Mr. Anders Jernhals, CFO of the Group. We will guide you through the presentation, and after that, we are happy to take any questions you might have. This has been a quite strange year. Everybody has been affected by the pandemic we have had, but now when we are standing here, we can summarize what has happened. We can say that we have had a rather, I would say we came out through the year in a good way and then operating profit for the whole year, which is close to 2.5 billion SEK, which is a good result. Partly thanks to better efficiency within paperboard. On the other hand, we also had a lot of headwind when it comes to our paper business. And later during the year, we also had quite big help from increasing prices for our wood products. We also ended the year in a fairly good way. And again, with help from really good prices from wood products and despite that we had a quite big maintenance stop at the Iggesund mill, which we carried out, by the way, in a really good way, we ended up the year earning 595 million SEK. And also in the fourth quarter, we had a very tough situation when it comes to paper and especially the prices were under a bit of pressure, which we come back to. If we go back a little bit and summarize what has happened during the year, it's clear that also we in the beginning of the year and especially during the springtime, we didn't know what to expect. We only knew we had a new situation with a pandemic. We thought for a while that maybe we can't keep our business going. We didn't know whether we could keep our mills running, etc. And after a while, we saw that things will not be that bad. Still, we were a bit afraid because there was a lot of security. We decided not to give dividend first. And a bit later, after having taking measures like postponed investments to some extent, secured long-term financing, And also, we made sure that all people we have could go to work in a fairly safe way. We also carried out a couple of really big maintenance shots, which the hundreds of people. But of course, we were quite scared that this could go wrong, especially in the middle of the pandemic. But it worked out fine. And now, at the end of the year, or beginning of the next year, we are standing here and looking at a good result in 2020, much better than we expected for a while. We came to the conclusion last year that we could give dividend of half what we planned from the beginning. But now when we look forward and we see the result we had in 2020 and also the financial situation we have, which is strong, despite that we have also acquired the Martinsson Group. We had a discussion today in the board of directors and came to the decision to propose to the annual general meeting to decide about an ordinary dividend for 2020 of 7.25 Swedish krona per share, but also an extra dividend of 350. Moving on then to our forest. I said last time when we had a quarterly report that we saw some imbalance in the wood market. That situation came from quite high demand for saw logs, but not the same demand for pulpwood. saw mills have been running full I would say all throughout the year since late spring or the summer time and we still see a really high demand for saw logs in the market but the paper business has been a bit tougher we know from our own mills that we have not been running full but also some other ones which are not been running full we also see from some neighboring markets that it's difficult to run even the saw mills cause it's tough to get rid of or to sell the pulpwood that comes with the harvest when you go for the saw locks So the market has stabilized. We don't see the same imbalance as before or is about to stabilize. So the situation in the wood market is a bit better. But Anders, it's also nice to see that still there is a lot of people who think it's nice to own forest and they are prepared to pay more.

Yes, we've seen a great interest the recent years and especially the recent year in acquiring forest assets. And as you are all aware, we last year introduced the new accounting methodology where we book the forest assets based on assessment of the market value of it, based on the forest transactions in the areas of Sweden where we have our forests. And at the end, we made an update of this valuation, and it's based on the three last year's transaction prices in those areas where we have forests. And that meant that we increased the value by 5% up to 43 billion SEK. And this is an increase of close to 2 billion SEK. 600 million of that increase is by the accounting recommendations to be going through the P&L. Once the rest is actually not passing P&L, it's a profit that actually goes straightly to equity. So if we take the next slide, the full year result of 1,367,000,000 for the forest division and almost 600 million of that profit is due to the change in value of the trees, you can say, and the rest is cash flow from the forest activities. The increase compared to a year ago in profitability is due to this new accounting methodology. Looking at the quarter, we have a pretty normal result for the forest divisions just north of 330 million SEK. Back to you, Henrik.

Thank you very much. Then moving on to the paper board. Also here in the beginning of the pandemic, we didn't really know what to expect, but quite soon we found out that people do spend money and buy things that need packaging. When we look at the demand situation in Europe during last year and where we are today, we have a slight increase, not big, but a slight increase, which is nice. And also when it comes to our own performance in terms of deliveries, we said a couple of years ago we should reach a running rate of 550. It has taken some time. It has been some bumps, I would say, on the road, on the way. But looking at where we are today, that's roughly what we deliver at the current state. And we have now a 12-month running level of roughly 550. It's also nice to see that the investments we have made lately, we spent quite a lot of money, especially at the Iggesund mill. It actually pays off. And when we look at the mill today, we see that there is higher efficiency, well done by our people. And as I said, the targeted capex we have spent has especially lowered the cost and maybe not so much production capacity, but hopefully that is soon to be also materialized. This has also an impact on our profitability, Anders.