Rottneros AB (publ)

Hello and welcome to this webcast presentation where we have Rottner Rose presenting the Q1 report for 2024. With us presenting we have the president and CEO Lennart Eberle and CFO Monica Pasane. If you have any questions please feel free to use the form that is located to the right and we'll take that up during the Q&A after the presentation. And with that said please go ahead with your presentation.

Thank you very much, Martin. And hello, everybody, to our Q1 report. It is the end of April 2024, and up here in Sweden, where we are today, we can still see some snowflakes outside our window. And it seems like the winter also had taken its toll on our first quarter. It was production-related challenges at our Valvik mill, the bigger one of the two, which resulted in a disappointing first quarter earnings. We have seen a lower production due to a very strong winter and also some isolated production related issues that have been taken care of and dealt with. And since then, production is going according to plan again. Nevertheless, these items are affecting our result with some estimated 30 million Swedish. And that in addition to the continued increase of wood costs, as well as lower sales prices versus the first quarter of 2023, result ended up at 5 million. But there already also are some signs for an upcoming spring If we compare to the fourth quarter of last year, prices have certainly risen. It is clear that the market has strengthened both for pulp and downstream qualities. And the increase in price is some 12% in US dollars or 9% in Swedish kronors. And also our systematic and structured approach on how we run our operations is giving result if we look at the Rotten-Roos mill, where we have had a new record high production of CETMP. And this is before we are starting up the investment program that is currently ongoing, which is going according to budget, both when it comes to time and cost. And of course, this new record built a lot of confidence that we will see a very good effect of those estimated additional tons, which will bring the rotten earth mill to some 170,000 tons on an annual basis from currently 120. On the basis of our strong balance sheet, we have proposed to the board has proposed and the annual shareholder meeting has decided to pay out a dividend of 50 Euro per share to create shareholder value going forward. So given the effects of the first quarter, we don't see any changes to our business model. We see that there is a continued demand for sustainable and climate friendly products. we do continue working on making rotten roots even more profitable in the long run we are broadening our revenue base we have achieved some 13 percent of sales which are not related to pulp during the first quarter and we will work for increased volumes and i think we demonstrate that not the least with the new record in the We continued and defend our balance sheet to give us the peace of mind and be able to come through unbalances in the market and are responsibly allocating the capital to where it makes most sense. As just mentioned, the dividend that has been paid out for the 2023 results is some 63%. which is slightly above the corridor of 30 to 50. But if we combine the last two years, 22 and 23, this is well within that range. uh but most importantly we do have very strong market positions for our customized and speciality pulp grades with our flexibility to do certain qualities which not everybody in this market can and this is giving us certainly a good possibility to have stable and good deliveries and So those have been demonstrated in the first quarter with some close to 90,000 tons of pulp being invoiced. So that is very good. If we have a deeper dive into the market where we do see positive trends, As mentioned, the prices have turned around from the throw in autumn last year. At the end of quarter one, the pixelized list price was at 1,400. And now in April, we see prices in the range of 1,450 to 1,480. And the momentum certainly will continue. It's a very strong demand, not the least due to some unplanned supply disruptions. and also stronger demand from downstream operations within carton board and papers. Also, the currency exchange rate has continued to be favorable. More importantly, however, is the balance between supply and demand, which can be seen in the stock levels. Those are the staples here in the graph. and they have come down from the very high levels which we've seen in the beginning of 2023 to stable levels now around about 36 to 37 days of supply in stocks. And that is the sort of normalized level as the share of Latin American volumes are increasing and they are longer in transit than other markets. We have seen that the value chains downstream have been destocked. And we can see also that there is an increasing demand for packaging and paper grades. And there are a lot of price increases out there in the market for all various grades, giving confidence to that there is an upward demand. I talked about some disruptions. Finland had a strike, which was taking out a considerable amount of softwood long fiber pulp. And there's also some unplanned outages at some pulp mills, which are disrupting this balance. Looking into the European paper and board market, which is Rotterdam's biggest market with some 67 to 70%. We have seen a very weak 2023, which are the lighter bars here. All grades had had a negative growth. But it has turned around and the beginning of this year has been positive for almost all grades with the exception of New Sprint, which is a grade we do not supply any more into. And all in all, you can summarize this upswing in the downstream market with some 7%. The continued growth of packaging as an important sector within the European paper and board market is continuing. total production decreased by 13%, but board continued to increase its share and all of our grades we make are being utilized in the carton board segment. It's all white and brown sulfate craft pulp, but it's also our CTMP and especially the CTMP production increase will be focused on this increase in the board market. And here we do have some unique properties, which our customers are asking for, not only in Europe, but also in Asia. So more in detail, what does this development mean for the global chemical pulp market versus the last year? Again, full year comparison of 23 with 22 and the first two months of 24 compared to the first two months of 23. A total increase of 6.5%, continued, driven by China, but also now accompanied by Europe and North America, where the demand has increased. And on the basis of that, prices in Europe and North America have gone up. In China, not as much, but stabilized on a relatively good level. For Rottnerus, the share of our various segments is not changing significantly. The most important changes took place during the year of 2023 when we closed down the groundwood line. Printing and writing now is an insignificant segment. and the carton board segment has grown. It has been not as strong here in the beginning of the first quarter versus the full year, but we already see that there is a picking up of the demand. Filter and electrotechnical applications, which are probably the most unique applications for our pulps, are very stable. We'll talk about that a little bit later. Tissue, not a highly focused area but an area which an underlying good growth is giving us the opportunity to balancing out when there are weaknesses in other segments and that we have done successfully in order to be able to supply full whatever we have available through production and in our warehouses. And with that brief overview of the market and the highlights of the first quarter, I hand over to Monika to give us a description of our results. Please, Monika.

Thank you, Leonard. Yes, as we pointed out earlier, the result for the quarter was a disappointment, mainly related to production problems. So if we look at the comparison between the first quarter last year to this year, we see that we had a drop in prices of 96 million. And we are really comparing a first quarter prices this year with very high prices still last year. They are increasing, but we didn't really see the prices coming through in our own sales to the extent that it would have been at the same level as last year. These were known facts, but what was the biggest disappointment was really in the volume and the production-related issues that we had, especially in Valvik Mill, and that impacted by approximately 30 million. Apart from the loss in margin that we have from lower volumes, it also impacts the variable costs. The production is not as efficient and as a consequence, we end up buying more electricity and fuels, for example. So part of the increase in variable cost is due to production inefficiencies and part is due to continued higher wood costs. The production related issues also had some impact on higher fixed costs. On the positive side is the item other, which is related to revenue from other sales than pulp. This increased to 13% of our total revenues and it is byproducts, wood packaging and things, areas not related to pulp. So in total, we had an EBIT of 5 million Swedish crowns for the quarter. Then if we look at the balance sheet, we still have a solid balance sheet with an equity to assets ratio of 65%. And we do have an available liquidity or we had an available liquidity at the end of March of 427 million Swedish crowns. We have our big investment programmes ongoing. It is the solar panels and battery park in the energy sector. It is the increased CtMP capacity at Rottneros mill and a tall oil plant in Valvik mill. And the majority of these 82 million invested during the quarter was in these three projects. Also, which is a bit unusual for the first quarter, is that we paid out the dividend of 76 million. And the unusual part is that it happened already in Q1 and not Q2, as we had our annual general meeting already in March. So we are confident with a strong balance sheet and good liquidity going forward. With that, I hand the word back to Lennart.