Nordic Paper Holding AB (publ)

Thank you very much and warm welcome to this presentation of the Nordic Paper Q1 results. My name is Henrik Esén and I'm head of investor relations. As usual, the presentation will be held by Nordic Paper CEO Anita Sjölander and CFO Niklas Ericsson. The floor is yours, Anita.

Thank you, Henrik. Thank you for introducing me, CEO of Nordic Paper Anita Sjölander. And thank you all for attending today's presentation. Before we get into the numbers and the report, I would just like to summarize the key events for this quarter. In January, Strategic Value Partner announced the closing of their public cash offer for the shares in Nordic Paper. And as the previous main owner, Shanyin, decided to accept the offer, we then had a new main owner. We held an EDM the 13th of January, where seven new board members were elected with Tim Stubbs as the chairman. And we welcome Strategic Value Partners, Tim Stubbs, and the new board members. I'm very happy to have them on board supporting the company going forward. The management team has of course continued to have full focus on the operation and the development of Nordic Paper. I am very proud of the whole Nordic Paper team and the results that we have delivered over the years. And with this quarter being no exception to that. I also acknowledge the turbulence in the national trade, following the announcement of the tariffs from the US administration. We are a relatively large player in the US market with our natural Greece proof segment. This is a specialty paper, it's a niche market, which is to a very large part served by import to US as the internal production does not meet the demand. While we haven't seen any impact on the paper market from this turbulence yet, the currency market reacted with a depreciation of the US dollar. And Nordic Paper's exposure to the dollar however, is minor and we will share a bit more light on that later in the presentation today. So while the conditions in the global trade market potentially is changing, we believe we are well positioned with our specialty papers in our niche markets and the demand from consumers that are growing for sustainable material, replacing fossil based material. So now let's look into the financials and the report for the first quarter. Our headline is stable performance and overall the demand for our specialty papers in the first quarter remained healthy. Net sales increased by 6% and also the product prices increased by 6%. This quarter demonstrated all time high levels in our natural Greece proof segment. We have new records for net sales, EBTA and also EBTA margin for this segment. In the craft paper segments, the sales volume increased from significantly compared to the previous quarter, Q4 2024, but compared to Q1 2024, they are lower. But I'll get into the details on that later as well. We are comparing with an extraordinary strong quarter, Q1 2024, I'll come back to that in a bit. Despite the increased product prices of 6%, EBTA in the craft paper segment decreased compared to Q1 2024. The overall EBTA performance is unchanged from last year at 231 million and the EBTA margin is slightly down to 18.1%. Furthermore, the board of directors decided to remove the dividend policy and proposes no dividend for the ADN, but considers the opportunity for a potential extraordinary dividend later in 2025. So then let's look into the development of net sales and the EBTA margin. I mentioned net sales increased by 6%, increased to ,000,000. And the main driver and the primary driver is the increased product prices. And we also have to some part a more positive product mix. We have continued to grow in most of our markets and the exception is the Middle East Africa. And that is one of the smaller markets for Nordic paper, corresponding to 5% of the net sales in the group. The resulting EBTA level, 231 million Swedish crowns, same level as last year, but the margin decreased somewhat to 18.1%. The positive effects we have from the increasing product prices more than compensated the negative effects from the increasing prices on input goods. Currency had a negative impact on EBTA, minus 13 million Swedish crowns compared to the Q1 last year. And this is to a large part related to the revaluation of the receivables and payables. I mentioned in the beginning that we have some lower sales volume compared to Q1 2024 and that it is a comparison to a very strong quarter. On the next slide, we will share the sales volume development. If we take the starting point of Q1 2024, all time high sales volume, and also a very good increase from Q4 2023. End of 2023, we had a turbulent geopolitical situation in the Middle East. And end of December, we decided to keep volumes in stock rather than sending them out to the more uncertain, certain logistics supply chain. And we didn't know which harbor they would get stuck in. So we took a deliberate decision to keep it in stock. And that volume then came out in Q1 2024. So it's a very strong comparable quarter. And compared to that, sales volumes decreased by 4%. In crop paper segment, the volumes decreased by 5% compared to the same quarter last year. And it is to a large part explained by lower bail pulp volumes. In natural grease proof, the demand remained strong. And in Q1 this year, we were actually on the same level as Q1 2024. That was the result on the group level. And it's time to look into our two segments. So starting with the crop paper segment. Demand remained healthy in the first quarter. And let's say it reached 625 million Swedish crowns. That is an increase by 5%. Compared to Q1 2024, we have higher product prices and a positive product mix that is contributing positively to net sales increase. While the sales volumes 5% lower versus the record Q1 last year. For the reasons I just mentioned, it's on the opposite direction. Compared to the same period, 2024, net sales in absolute terms increased in Europe, which is our main market for crop paper segment. And net sales in other geographies decreased slightly. In the previous report, we shared that by the end of 2024, product prices were somewhat impacted by weaker demand for certain areas of our crop paper business. But compared to the first quarter last year, product prices increased by 6%. Every day amounted to 102 million Swedish crowns. It's a decrease from 114 last year. So we have increased product prices and product mix contributing positively. Lower sales volume and also higher price for our raw materials. It's contributing on a negative level. And we have a 16 million negative effect from currency compared to Q1 last year when it comes to revaluation of receivables and payables. That was the crop paper segment. And let's move to the Greece proof segment. Demands remained strong in the first quarter and the same volumes were on the same level as last year, Q1 last year. Product prices increased by 7% compared to Q1 24. And this is also the main driver for the increase in net sales by 7% to 669 million Swedish crowns, which is a new quarterly record. Net sales increased in all geographies except for the Middle East Africa market. In absolute terms, the increase is highest in America, while percentage wise is the highest increase in Asia. EBTA 146 million Swedish crowns and a margin of 21.9%, both new quarterly records as well. The increased product prices is the main driver. And on the negative side, we have some increase in the pump prices during the quarter. That is the raw material for this segment. But in total, the input costs are slightly negative on this segment. Currency has no material effect on EBTA for this segment. And then I would like to hand over to Niklas for a deeper analysis of the financials.

Thank you, Anita. And I will guide you through the financial part of the presentation. And we start as normal with the net sales. In the net sales this quarter, we have had an increase of 6% compared to the same period last year. And this is mainly driven by the price increases in the both segments. And the net sales that we see for this quarter is one of the strongest we have reported for one single quarter. The sales volumes in natural grease proof, they are at the same level as last year, while we have a slightly lower volume in craft paper compared to the very strong volumes in quarter one, 2024. The currencies, they are slightly stronger towards the Krona as an average for this quarter, giving a slight positive effect to the net sales. We can move to the EBTA for the quarter. Where we report an EBTA of 231 million, which is the same level as last year. The price effect to the EBTA we recognize from the net sales bridge. The variable costs have increased compared to last year, driven by the fiber costs in both segments. The pulpwood that craft paper uses have continued to increase in price. And the pulp, the market price for pulp have increased again during this quarter after decreasing during the autumn, 2024. The fixed costs have been slightly higher compared to last year. In net sales, we saw a positive currency effect towards the net sales. In EBTA, the effect is negative, since we have negative effects from revaluation of accounts receivables and accounts payables, since the Swedish Krona got stronger to the end of the quarter. And because of the variations in the currency rates this quarter, we have a slide, next slide, where we do deep dive in the currency situation for Nordic paper. We have large part of our invoicing in other currencies than Swedish Krona. And Euro is the strongest currency that we invoice in. In quarter one, we have seen a stronger Swedish Krona, especially against the US dollar. But Nordic paper exposure to US dollar is anyhow small because of the purchase that we do in the same currency. And the main part of this is the pulp that we buy in US dollar and use as the fiber material in natural grease proof. Nordic paper is also hedging exposure, which is material. And this is based on the estimated future exposure in each currency. Next slide. We can go on to the working capital and cash flow. So in Q1, we have seen a strong increase of the net sales compared to Q4 2024. And as a consequence, there is an increase in the accounts receivables, followed by an increased working capital amount. For the quarter, we can still see an improved cash flow compared to quarter four. In quarter one, we have continued our large investment project in Beckhammar. And thus, the net depth have increased compared to Q4. We report a net depth of 1.3 billion and the net depth to EBITDA relation of 1.6 at the end of the quarter. The investment in New Woodrow, an electrostatic filter in Beckhammar is proceeding according to plan with the plan start up in the autumn this year. On this picture, you can see the stands for the coming conveyor belt that will take the chips from the New Woodrow to the chip silo. As we have previously have communicated, this investment will deliver approximately 100 million of EBITDA with full effect from 2026. The other investments that we do have been performed at normal level. And from this investment, I give the word back to Anita for new investment.

Thank you, yes. Yesterday, we announced the decision and the approval of an environmental investment in Beckhammar on a level of up to 450 million Swedish crowns. And this is an investment that is relating to the water handling at Beckhammar production site. The investment includes, among other things, a pipeline for purified effluent water from the Beckhammar plant to Lake Vänen. And it's conditioned in the new production permit for Beckhammar plant. And once the investment is carried out in 2027, we will then totally disconnect from the current recipient, the nearby stream, Vismann. And that will unlock the potential of exceeding the production output above the current permitted levels. This will allow us a potential of 20% in the pulp production. The unbleached pulp that we are using both for a cross paper production and also unbleached natural grease proof production. And it allows us and gives the potential for a 10% production increase for the paper in Beckhammar as well. So that is concluding our reporting of the quarter. And before we get into the questions, I would like to also shed outlook for quarter two. So we assess that the demand for our specialty papers will remain healthy also in quarter two. During quarter one, we have done some price increases. We have negotiated and agreed for certain parts of the cross paper segments. Those increases are valid from second quarter. And average prices for the cross paper segment will increase slightly from the average in the first quarter. The product prices for natural grease proof is expected to remain stable compared to the first quarter 2025. And we are seeing some market signals that are pointing towards the stabilization of the pulpwood prices in short term. And with that, we are happy to answer any questions if there are some.

Operator, do we have any questions?

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the telephone. If you hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode while asking a question. In the interest of time, please limit yourself to a few questions. Anyone who has a question may press star and one at this time. As a reminder, if you wish to register for a question, please press star and one on your telephone. We have a question from the line of Einar Christensen with Icarus Respect. Please go ahead. Mr. Christensen? Mr. Christensen, there is no sound coming from your line.

Yes, how many? I hope you... I'm not so technical. I hope the sounds... Thank you for a solid...

Mr. Christensen, there is no sound coming from your

line. I'm sorry.

I hope you...

I'm not so technical. I hope the sounds... Yeah, try again. So, it works now or...? We can hear you. Thank you, thank you. First of all, thank you for, as usual, solid performance by the management. And... It works now or...? We can hear you. Thank you, thank you. First of all, thank you for, as usual,

solid performance... Apologies for the interruption, Mr. Christensen. There is no sound coming from your line. Can you please mute any other device in the room?

I will, I'm sorry, I'm sorry. Just a second. Apologies for the interruption. Is it better now? I hope it works OK now? Yeah, it works better. OK, thank you. So, again... Thank you for that. I have some questions. The questions are maybe not for management because my impression of management is... I have nothing further to add. You just keep on going and in a very good way. But, unfortunately... The board... You are having the... Annual board, annual shareholders meeting in Stockholm at 8.30 in a new lawyer office, not being at this time, but shut. And it's tough with partners as owners. I understand that, but why don't you... Practice a little bit more fair play. Keep it in card stock. You still have 30% outstanding owners. I don't know if you even listen to this, but... SVP or the board, if you do, please give an input. That's... That's... That's my question or statement, maybe. But please answer SVP or the board.

Yeah, and for us in the company, it's difficult to comment on that. We did send out the notice to annual general meeting and we hope to see many of you shareholders at the annual general meeting that will be held on 28th of May in Stockholm, as you say. So, warm welcome.

Well, thank you very much on behalf of myself. And I hope some more will join. But do we have anything? Do we have anybody on the board who can comment? Or from SVP, Andre, whatever. We have made a lot of comments before.

But... No, not on this call. OK, OK.

OK, that's it for me.

Yeah, thank you very much. Operator, do we have any other questions?

There are no more questions at this time. I will now turn the conference back to management for any closing remarks.

Thank you very much. And we have received the written question as well. I read it out here. Can you please elaborate on the impact of the potential US tariffs for Nordic paper? Yes, that goes to Anita.

Yeah, thank you. Yes, so Nordic paper's exposure to North America is 20% of our net sales. So that goes both for Canada, which we have large volumes to, and also to US. And this is a really... As you know, we are specialty paper producer provider. And this is really niche paper qualities as well. And when a US market, they have some production in US, but they are not self-sufficient. They cannot satisfy the demand and the need within US. So they are relying on quite a large part of imports into US. So we feel we haven't seen any effects so far on tariffs. Of course, you can be 100% sure of everything, but so far so good. And we believe that to continue to satisfy the customer need in US, we will continue to deliver natural grace proof paper into US as well.

Thank you very much. And with that, we conclude the Q&A session. And we'll hand over the word back to Anita for concluding remarks.

Thank you. I would just like to summarize the report of today before ending this, the key points of this report. Demand remained healthy. We increased the net sales by 6% to ,000,000. We continue to implement product price increases. This quarter we increased the product prices by 6% compared to the same quarter last year. EBITDA on 231 million is unchanged from the same quarter of 2024 with a corresponding margin of 18.1%. And going forward, we assess that quarter two will also remain healthy and that the product prices in craft paper will increase slightly while the product prices in natural grace proof will remain unchanged. That was our key message in this report. And now Henrik, over to you to conclude. Yeah,

and I can only say thank you for listening into this presentation. We look forward to talking to you later on when we present the Q2 results during summer. Thank you very much and goodbye.

Thank you.

Thank you.