Holmen AB

Good morning everybody and welcome to the Interim Report presentation for Holmen. My name is Henrik and together with me I have Anders Jernhall, the usual suspects I think, most people we know by this time. And we do as we normally do, we go through the presentation and then we answer the questions you have. So let's start. Well, in the second quarter, we definitely realized that the demand in general for forest based products were a bit lower than normal based on high inflation and interest rates. And that has had an effect also on us. But still, despite that, we've been able to deliver a historic, very good result of a bit over 1.1 billion SEK. And also our cash flow has been really strong in the second quarter, meaning that we have been able to not only pay a normal dividend, but also an extra dividend in total, 2.6 billion SEK, and also buying back shares for roughly 1 billion and kept the net debt unchanged more or less through the second quarter at 2.6 billion SEK. Moving on to forest and the wood market. It's been a period now when it's been a lot of competition, not only for saw logs, but also for pulpwood. And you know the situation with Russia, which has an effect especially on the pulpwood market, that there is no raw material coming from there. And the situation in the second quarter has been that there's still a lot of fight for saw logs, for the saw mills. And I think the saw mills in Sweden, they've been, based on their cost position, running more or less full. Or as full as they've been able to if they have got hold of the saw logs, because it's been simply a bit of scarcity. And prices have continued to move up. In the pulpwood sector, also a lot of competition. But if we look at the situation in the Baltic states, as we import quite a bit from the Baltics in general in Sweden, we see that, well, at least it's coming down, slowing down, and it's not that extreme prices that we used to see. But Anders, if we look at price development, we are some 30% above the trend line right now, which also means more revenues for our forest division.

Yeah, we have seen a fantastic increase, step up increase in price levels, which have translated into a higher profit. We now earn roughly 100 million SEK more per quarter than we did going back only two years, and it shows that the very good business cycle for forest products have translated into a higher cash flow for the ones owning the forest. And we had quite a normal result in Q2. We can lump Q2 and Q1 together and get the running rate profits from the forest operations. We do not revalue our forest assets every quarter. We only revalue it in the fourth quarter every year. So we'll have to come back to that after Christmas. We will.

Okay, switching over to paperboard. It's been a... We're not used to this situation where we see that demand is actually going down quite a lot. On the other hand, to understand the market and where we are in terms of demand and also supply-demand balance, I think we have to look at 2021 and partly also 2022 where most customers were building inventories. And that we have felt for a while. And during the second quarter, we felt it again. Most players are struggling with low order intake and also, I think most players also are having market-related downtime. And also we feel that the market is weaker than usual. It's also price pressure in the market, but we should remember when it comes to our segment, folding box board and especially the solid bleach board segment, prices tend to move not that quick and also not in total correlation with the pulp price. When you look at our situation, as I said, also we have a bit lower order intake and Still, we believe that this market, even though it's a bit of overcapacity at the moment, if you look at the long-term trend, it's positive. And we have initiated now a long-term project in order to increase our cost competitiveness at the Iggesund mill, but also to increase our sales slowly in the coming, say, five, six years. Ja, Anders, second quarter.