Holmen AB

Good morning everybody and welcome to the interim report presentation for the Holmen Group. My name is Henrik Sjölund. This is Anders Jernhall. Most of you probably know us already. We'll do as we usually do. We go through the presentation and then we're happy to take any questions you might have. But today we do it in a slightly different order where we start with the business areas and we come to the report for the group at the end. But let's start with the forest and the wood market where we right now have a quite extreme situation where we also in the first quarter this year saw that wood prices continued to increase despite the fact that actually the industry was not running full. How can that be? Well, there are a few things. First of all, activity among private forest owners were not as high as normal. We also know that Sveaskog has a strategy to reduce harvesting. That's add to the situation. And then we do not have Russian volumes into the system coming from the east, which is also affecting the situation in the forest. If we then look at the industry, higher prices, if you take the sawmill industry first of all, so far, the sawmill industry has been able to more or less compensate for higher wood prices by actually the energy sector paying quite well. But going forward, when we now buy at rather high prices, we also see a difference between northern parts of Sweden and southern parts of Sweden. That will not be possible probably going forward, or it will not be possible. When it comes to the pulp industry, board and paper, it's slightly different because it's more of a challenge when it comes to volumes than the margins and to be able to distribute the extra cost over less volume simply. So the situation in the forest, prices still going up. We have both industry and forest, but if we concentrate on the forest and higher prices, that helps.

Yes, we see that wood earnings from the forest division takes another step up. Year over year, we have a 15% higher prices. But if we look over the last few years before the annual crisis, we see that Selling prices on average are some 50% higher. Of course, costs have increased somewhat, but not at all by the same magnitude. So cash flow earnings from the forest are now some 70% higher than they were before the energy prices. And the trees in the forest is also more valuable today than they were a few years ago. So all in all, that supports a higher earnings level from the forest, which where we had in the first quarter of 450 million SEC.

Going on to renewable energy. Here we had a situation in the first quarter where actually we had a real winter in Sweden for, I wouldn't say the first time, but in the Q1, it was a bit colder than what we have been used to. And a bit less water in the system also than normal, meaning a bit less hydropower production at the same time as nuclear in Sweden was not running full. On the continent, however, it was the opposite. Mild weather, nuclear working well, especially in France, at the same time as gas prices came down a bit. So for us, Anders, having most of the production up north in the cold winter, it also helps.