Holmen AB

Good morning, everybody, and welcome to the interim report presentation for the Holmen Group. My name is Henrik Sjölund, and this is not Anders Jernhall. This is Stefan Lorén. He's been with the company for actually quite many years before, and then you were away working for LKAB and back now as CFO. And Anders Jernhall, who you know really well, most of you at least, he has a more free role as vice president of the company. So we will do the presentation together in roughly the same way as Anders and I used to do it. And then after the presentation, we are happy to take any questions you might have. So Stefan, let's start. First quarter. A good result from us. Again, not the least thanks to a really good performance from board and paper, which I will come back to a bit later. The environment is not easy. The market conditions are, I would say, both uncertain and not extremely good. We'll come back to that as well. If we look at our industry, I mentioned board and paper, but if we also include our wood products division and look at how we have performed in terms of return on capital employed in the first quarter, we reached 20%. And as you know, the last 10 years, looking at the graph, we've been on that level roughly, actually 19% as an average. We are now a little bit after the first quarter. We have, as always, I would say, a very strong financial position and we paid a lot of dividend, 1.9 billion SEK. And after having paid the dividend, our financial position is strong and we have a net debt of roughly 10% of equity. All right, let's start with the forest division and maybe more the wood market as such. I think if we go back one year and when we discussed, we discussed actually quite a lot. What is the situation in the wood market? What do we believe about price development going forward? At that time, I couldn't really see anything that should change the situation that prices would continue to go up. Today, The situation is slightly different. We can see that in the first quarter, solog prices continued to increase, especially in south of Sweden. And the price difference now between south and the northern parts of Sweden are bigger than ever before. If we look at the pulp wood prices, we have a situation now where we see that prices are leveling off. And what do we mean by that? Well, we can see that the industry is not running fully in Sweden. We also see that there has been some demand from district heating, biomass boilers, and we've had a rather mild winter. And also electricity prices have been really low, especially up in the northern parts of Sweden, which has some effect. And not only that, but also we can see that the supply of paltbord, meaning the area that is reported for becoming harvested, is increasing as we speak. So things have changed a bit, and as we say, we see that pulpwood is kind of leveling off. But Stefan, prices went up in the first quarter.

They did, Henrik. We reported an operating profit from the forest division of some 487 million Swedish krona. It is affected by temporarily lower harvesting on our own forest this quarter. That is due to us having our harvesting resources in areas where we have more felling rights than we have owned forest and then the harvesting from our forest becomes lower than what's normal. The effect on the result is partly offset, the lower harvesting is partly offset by some price increases that we implemented during the quarter.

Let's move on to renewable energy. electricity prices well we have a quite a big difference between northern sweden sc3 where we have our consumption of electricity well up in the north we have most of our production and then germany and if we look at the chart we can see that prices have been extremely low up in the north for one year now The situation right now is that there is a lot of water in the system, more than usual, which has some kind of effect. And we also have in Sweden something called flow-based, which we haven't really got our arms around. We don't 100% understand exactly what the effect is on the energy price and the system in Sweden as such. If you look at the situation in Germany, this is obviously not so good if you produce a lot of energy or electricity up in the north. Simply, the electricity right now up in the northern parts of Sweden is locked in. We can't make use of the electrons where they are needed. That's why the price difference. If you look at Germany, we can see that prices are coming down a bit. They've been rather high, because fossil energy has been quite expensive. Right now, the sun is coming into play in the system, at least at daytime. The sun is not shining so much at nighttime. But in Germany, there is quite a lot of solar energy on the margin, which means that at daytime, actually, it has an effect on the price, together with slightly lower gas prices. Stefan, even though we have a portfolio of, not nuclear, but hydropower and wind power, most of it is up north. So even if we make like 30% better than the average price, it's not easy to make money when the price is very low.