Holmen AB

Good morning, everybody, and welcome to the interim report presentation for the Holman Group. It's me, Henrik, and Anders, the usual suspects. We will go through the presentation, and after that, we're happy to take on any questions you might have. So let's start. We are happy to be able to deliver a very strong result again in the first quarter of this year. I think we've been able to navigate in a quite challenging environment, not the least with the help of our forest assets and our energy assets. And on top of that, of course, also a very strong performance by our paper division. We'll come back to that a bit later. we've been able to deliver 28% operating margin. And when we make good money, of course, it has an effect on our cash flow, which, after having paid for the investments, actually was as high as 1.8 billion SEK in the first quarter, which means that at the end of the quarter, we were essentially debt-free. And right now, after dividends, we have roughly a bit more than 2.5 billion in net debt. You know that Holmen is a company where forest is the base for everything we do and in different ways we try to make our best to extract value for our shareholders. I think it's more than ever important in times when it's quite a big fierce competition for the for the wood in the forest, we'll come back to that, but first a few words about what we've actually been able to do. In Sweden and in Holmen, during a number of years, the way we have been actively managing our forest, we have been able to actually double the amount of wood standing in the forest, storing carbon every day, every year more and more, at the same time as we've been able to increase the harvest. And Extremely important, we have also, as one of two countries in the world, been able to increase the status of ecosystems and biodiversity in our forest, which means that when other people look at us, we are the best in the world. But we'll leave that for now. It's more like a reminder and a few words about the situation in the forest and the competition for the wood, which is higher than ever. Partly affected by Russians and the war in Ukraine, where the Russians supply into, let's say, our part of the market. From Russia mainly into Finland, Finland is no longer there. At the same time also, as we see, there are some investments soon coming on stream, not the least the chemipalp mill up in the north. This means that both the competition for saw logs and pulpboard is big, it's fierce. And we can see that on the prices, and the prices have gone up quite a lot. If we compare to where we are price-wise today to a long-term trend, which includes, I think, normal inflation, we are some 30% higher. Maybe you can elaborate a little bit on that and also what higher prices means for our profitability.

I will. The higher prices have, of course, translated into higher profits. If you just look at the profit level a year ago, we are 15% above that. But if you for a moment take away the change in value and also the sale of forest land that we have from time to time, and we look at the earnings level, the cash flow, the true cash flow we have from the forest operations, they are some 35% higher than the trend levels that we use when we value our forest assets so we have seen a significant boost from higher selling prices in the cash flow that we have from our own forest assets it's a bit hard to see sometimes but it's there yeah right moving over to paperboard you know we are in a niche market where not so many players not the biggest market in the world but very interesting market

But also here we can see that demand has slowed down, especially because we were extremely high during the pandemic when customers were ordering more or less in panic. Now we see that most customers, they have a bit too much in stock and they need to destock, which has an effect on the market. It has also an effect on us. Our order book is not bad. We are normally running full, but also we feel what is happening in the market. We also see that the interest for buying our board from the customers we really want to do business with, it's high, but also they are destocking at the moment. When it comes to the price development in the market, we can see that most other grades like test liner, white line chip, also craft liner. Well, the price pressure is there and prices are on their way down. We should remember, though, we've said it many times in the niche where we are for folding box board and especially for solid bleach board. It takes time to change the price. And even though many people talk about the pulp price and the pulp price and what effect it has on our pricing, it usually doesn't have such big effect. Now we're in a situation where we have increased our prices in order to compensate for higher costs, which you will comment on this. But we should remember that pulp price not necessarily have to have an effect on our pricing. And so far, our prices are stable. When it comes to our possibilities to increase our production over time, We can agree to right now this was not the best quarter, but we see that especially for the Iggesund mill, we have the chance to increase production over time. But it takes some years, and we take it step by step in investing a bit more money than we normally do in order to... Well, increased sales and production, of course, long-term, based on, which is very important, our position, having our own forest, strong position in the wood market, but also our energy situation. All right, Ines, to try to sum up, what kind of profitability?