Nordic Paper Holding AB (publ)

Thank you very much. Good morning and warm welcome to this presentation of the Nordic Paper Year-End Report for 2024. My name is Henrik Esgen. I'm Head of Industrial Relations at Nordic Paper. As usual, we will hold a presentation where CO, Anita Schollander, and CFO, Niklas Eriksson will present the report. I now hand over the word to Anita. Please go ahead.

Thank you, Henrik. And thank you all for attending today's presentation. My name is, like Henrik said, Anita Schollander. I am the CEO of Nordic Paper since 2019. And I am truly passionate about our business and the value that we are creating in society where our products really make a difference when they are replacing fossil-based materials, but also the support these products have in our everyday life. Nordic Paper has a long track record of growing the business. The last six years, we have increased our net sales by 45%, while we have also kept the margins on the high-teen levels. And this clearly illustrates that we are able to generate attractive, profitable growth. And just to remember, we have also achieved this while we have experienced significant challenges during these years. We've had a pandemic, more challenging geopolitical situation, and a 30-year high inflation level. So a strong track record, but I'm equally excited to explore future opportunities to continue to generate growth and value. And as the headline of this report reveals, we are today reporting another quarter of growth. So let's get into the numbers. In the fourth quarter, we had a healthy demand, and we also generated double-digit growth for both net sales and EBITDA. However, we experienced a different environment for our two segments, where we saw a very strong sales growth in the natural grease proof segment, which also generated a new record for net sales, while we had some more challenging environment for our craft paper business. And I will elaborate a bit more on that later in the presentation. But on combined level, we increased the net sales by 17%. Sales prices were stable from the previous quarter, and compared to quarter four 2023, we increased sales prices by 6%. Our EBITDA increased by 12%, while the margin somewhat decreased to 16.7%. And as you might have seen from the press release yesterday, the dividend policy is removed. The board of directors has not yet made its decision for proposal of dividend for the ADM. So double-digit growth. On the next page, I will go through the quarterly development for net sales and EBITDA margin. So in the quarter, an increase of net sales of 17% to 1.1 billion Swedish crowns. The increase was broad, and contribution from volume, makes, prices, all these contributed to the growth. And also encouraging is to see that all markets where we are serving our customers generated growth. In percentage point, the highest increase was in America, and that market is approximately one quarter of the group's net sales. The positive effect from volume and product prices compensated for the negative effect from higher prices on the input goods. EBITDA increased by 12% to 189 million Swedish crowns, and the margin slightly down to 16.7%. So a positive contribution to net sales from the sales volume. So on the next page, we'll look at the sales volume and how it has developed. So when we look at the sales volume increase in tons, which is on the axis here, kilotons, it is 1%, but when we look at the effect on net sales, it is an increase by 7%. And the reason for that is the different performance that we have in our two segments. In the craft paper segment, the volumes were down 6%, and that is a result of the impact, the slower ramp up in our Beckhamer pulp mill head. We had the maintenance stop in quarter three, and from that we had a bit slower ramp up, which also affected quarter four. The other segments, natural grease proof, the price per ton have increased, and we saw a 20% increase when it comes to volume compared to the weaker Q4 2023. We've said it before, I think it's worth mentioning again, combining these two segments that performs differently in the business cycle generates a stable performance of the company. And as usual, we also share the results of the two segments individually, and now we'll start with the craft paper segment. The demand of craft paper was healthy in the fourth quarter, but somewhat weaker demand from the third quarter, we saw that, and primarily it was noted when it comes to the sack paper part of the business. As I previously mentioned, sales volume were impacted by the slower ramp up in Beckhamer pulp mill. So sales volumes in tons decreased 6% versus the previous same period previous year, while the price is increased by 4%. And despite the lower sales volume, and with the increase of net sales was 4% compared to the same quarter previous year, it is on a level of 490 million Swedish crown, positively impacted by the product mix effects as well. Currency had a slight positive effect on net sales, but only on the level of 1%. Compared to quarter four 2023, net sales in absolute terms increased slightly in Europe, which is our main market, and despite the decreasing sales volume. North net sales in Asia increased when it comes to both volume and value, while the net sales in America increased albeit from low levels. EBT increased from 82 to 99 million Swedish crowns, the margin increased 2.7 percentage points to 20.1%. We had a positive effect from the higher sales prices, we have lower energy prices, while the wood raw material has been more expensive. In combination, the cost of input goods is slightly higher compared to the fourth quarter 2023. That was the craft paper segment, and then we look into the natural grease proof segment. Demand for grease proof paper has remained strong in quarter four, during quarter four, and compared to quarter three. The sales volumes in tons increased by 20% compared to the weaker fourth quarter 2023. That quarter we also had production adjustments in this segment. We have increased our sales prices by 7%, and this is then resulting in a new net sales record, 658 million Swedish crowns. And this 30% increase comes then from, of course, the sales volumes, that's the biggest single main reason, followed by the sales prices, and we also have a positive contribution from production mix. The effect on currency is smaller, slightly positive compared to previous year. Also, when it comes to all our markets, net sales increased with double digits in all of them. In absolute terms, net sales increased most in Europe, while net sales in Asia increased most when it comes to in percentage terms. So with the new record level on net sales from volume price with lower part prices, but in total slightly higher prices on input goods, ABTA in this fourth quarter increased 25% to 119 million Swedish crowns, and the margin is slightly down .6% to 18.1%. Yes, end of 2024, the European Packaging and Packaging Waste Regulation was adopted, and in this regulation, it contains measures to reduce the packaging waste, improving the efficiency in Europe for packaging recycling. It also includes a ban on PFAS when it comes to packaging in contact with food, and that will come in effect during 2026. We in Nordic Paper, we do not add NAP PFAS to achieve the properties of this paper, the grease-proof net, so this ban further improves the attractiveness of our net grease-proof paper offering. As this report is the last one, 2024, I will take the opportunity just to share the highlights for the full year. And this year, 2024, started with an improved marketing quarter one, and it remained strong up until Q3, when we saw some weakening in certain segments of the craft paper business. As I mentioned, it's mainly the sack paper business. We had a new net sales record for the full year as well, 4.7 billion Swedish crowns, which is an increase by 4%, and the full year EBTA is 806 million Swedish crowns. Margin is the same as previous year, 17.3%. And we have continued to work on our investment in Beckhammar during 2024, and it's all proceeding according to plan, which we, of course, are very happy with. So, ending with the full year comments here, I will now hand over to my colleague, Niklas, to guide you through the development of the company.

Thank you, Anita, and I will take you through the financial development for Q4 and full year 2024. And we start with the net sales for the quarter. In Q4, the net sales increased 70% compared to the same period last year, and was mainly driven by the very good sales development in natural grease proof. The sold volumes in natural grease proof are the second highest we have had in one quarter. In craft paper, we had a slower start up after the maintenance stop in Beckhammar, and hence the volume was negatively impacted and slightly lower than last year. Compared to Q4 last year, sales prices are higher, and they are higher in both segments. Invoicing currencies have had only a slight positive effect on the net sales. The LDA for the quarter improved by 12% compared to last year. The positive price effect we recognize from the net sales bridge. The positive effect from volume is mainly related to the good sales in natural grease proof. Variable costs have had negative development compared to last year, related to the fiber raw material. In craft paper, the pulp would have continued to increase in price, and the fiber source in natural grease proof pulp, there the market price has started to fall during the quarter, but is still higher than in Q4 2023. Fixed cost increased compared to last year. Mainly related to positive one-offs last year. And currencies has a slight negative effect compared to Q4 2024, related to negative results on realized derivatives. We start to look at full year figures and the net sales for 2024. In this quarter, we have had higher prices compared to last year, but for the full year, 2024, the sales prices are on average lower than 2023. The lower prices was compensated by the large positive effect from higher sales volume, and also a positive effect from the product mix. Currencies have in total, on average, been on the same level as last year. And in total, net sales increased by 4% compared to last year, which is the same increase that we see on EBITDA. So, EBITDA, there we report a number of 806 million, which is the second highest EBITDA we have had. The negative price effect, mainly related to Q1, has been mitigated by higher sales volumes and the positive product mix. Variable cost is slightly lower than in 2023. Positive effects are received from prices for energy, freight, and chemicals, while we have had negative effects from the fiber costs, where the market price for pulp is approximately 17% higher than last year, on average, and the pulp would have continued to increase in price. Fixed cost is higher, and currencies give a positive effect compared to last year, related to realized derivatives. Working capital increased in the quarter to 571 million. We have seen that inventories of finished goods are higher than normal because of slower deliveries during the holiday season, end of December. This also affected the cash flow negatively for the quarter. Working capital end of 2023 is the same as last year, was very low because of the low accounts receivable as the sales were lower in 2023, and the accounts payables were also on a very high level because of invoices related to the investment in Beckhamer. We take a look at the capex. Our investment in new woodroom and flugas filter in Beckhamer is proceeding according to plan, and now equipment is starting to get in place. One significant equipment was delivered in mid-December when we got the bark drum to be installed. The investment projects are planned to be finalized in the autumn 2025, and as we previously have communicated, we expect that the investments would deliver approximately 100 million of EBGA with full effect from 2026. And the other investments are on normal level. We have in Q4 continued with the Beckhamer project, and hence the net depth increased to close to 1.2 billion at the end of the quarter. And then the net depth to EBGA relation is 1.5. And now back to you, Anita, for some outlook.

Yeah, thank you. As we normally do, we share our review for the coming quarter, quarter one 2025. Our review, our assessment of this quarter is that the demand for our products is largely unchanged compared to the previous quarter, quarter four. We see a healthy demand for the natural grease proof paper and a somewhat softer demand for the craft paper segment. We also assess that there will be some downward pressure on sales prices in both segments, while we in combination, the raw material prices on average will be on a stable level. And as this concludes the reporting and the outlook, we will hand back to the operator if there are any questions.

Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, then you may press star and two. Questionnaires on the phone are requested to disable the loudspeaker mode while asking a question. Anyone who has a question may press star and one at this time. One moment for the first question, please. As a reminder, if you wish to register for a question, please press star and one on your telephone. Thank you. Ladies and gentlemen, there are no questions at this time. I would now like to turn the conference back over to management for any closing remarks. Thank you.

Thank you, operator. Then we would just like to summarize the report. Net sales up by 17% to 1.1 billion. And we had a really strong sales development in the natural grease proof segment supporting this good development. ABTA is at 189 million Swedish crowns. And this is corresponding to a margin in this quarter of 16.7%. And for quarter one, 2025, we assessed that the demand will largely be unchanged from the previous quarter, quarter four, with some downward pressure on the sales prices in both segments. And with that, I would like to hand over to Henrik for final.

Yeah, thank you for attending this presentation. And with that, we conclude this call and we look forward to seeing you again in connection with our Q1 report later on this spring. Thank you very much.

Thank you.

Thank you.

Ladies and gentlemen,