Rottneros AB (publ)

Hello and welcome to today's webcast presentation where we have Rottneros with CEO Lennart Eberle and CFO Monica Pastanen who will present the Q4 report for 2024. If you have any questions please feel free to use the form 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, Martin. And hello, everybody, to this report call. Happy to have you with us. And we'll start off with the highlights for the fourth quarter. And the underlying EBIT has improved, eliminating one of items to minus 28%. Please bear in mind that we had two maintenance stops in the fourth quarter. Usually, we only have the bigger mill, Valvik, in the fourth quarter and Rottenruths Mill in the third. Last year, both were the same quarter. We had a one-off impact of sales of emissions rights of 76 in the quarter and also refinanced our long-term loans prior to year-end. For the full year, we had an EBIT of 47 million, primarily impacted by the high raw material cost, where we've seen a continued increase for the cost of pulpwood and thermal chips. We have, as you know, been undergoing a big investment program, a new tall oil plant involving an increased TTMP capacity in Rotten-Roos Mill, a solar park and battery storage, as well as some one-off improvements on the maintenance side, totaling to 450 million. And that was also one of the reasons why we had refinanced our long-term loans in the fourth quarter. On the basis of this weak result and also the very unsecure macro environment we are currently in, the board has decided to put forward not to pay a dividend to the AGM, which will be held later on in the springtime. Looking a bit more into the market and what is happening in the pulp market for the last month, we can see that the prices for pulp peaked towards the late summer-autumn and then have come down. especially visible on the list prices on the gross levels. While if we look more on the net levels, they peaked a bit earlier and then have flattened out. All in all, the prices had been higher year over year, despite the fact that the market slowed down in the fourth quarter. We have also a favorable US dollar to the Swedish kronor currency exchange rate that is of course impacting our prices when recalculating into Swedish kronors. Looking a bit more granular we see that the monthly prices and especially here now the net price on the lower level has been flattened out and we can see that the prices have remained flat through December and January and looking forward we see that there is a number of price increases that has been announced both for the hardwood as well as the softwood based pulp. Stocks have peaked towards the autumn and since then have come down which also obviously is a good sign especially on the hardwood side there had been production curtailments While on the softwood, it's primarily a question of a good demand. We see good demand in our niches, UKP for E-grades as well as filters. A bit more challenging, especially on the CTMP. So looking more in detail in the delivery figures that you can find in the report, you see that there is a bit of a difference. But all in all, it seems that the prices are bottoming out. The stock levels have come down. and we're now in a phase where we've also seen the first signs of a recovery, especially in China, which has been a challenging market for the last year. Price increases have been put into place prior to the China Lunar New Year, which is currently undergoing. If we look into the European market for paper and board, we see that compared to the last year and for the first 11 months, Things have improved. All in all, there has been a recovery of extremely weak market for all grades except newsprint. And this is our main market with more than 67% of our sales, especially for the softwood chemical pulp. The CTMP is more globally spread with half of the volume into Asia and half into Europe. Looking then what this means for the pulp market, we see that Europe has performed better than 2023. And as I've just initially said, China had been weak during the majority of the year. And we first now see that while prices are buttoning out, the activity is slowly coming back. We're still waiting for a big demand surge, primarily on the carton board, listening here downstream on the supply chains. It seems that There is not really the kind of demand that we have been used to. And this is more impacting our mechanical pulp, which is primarily used for cotton bud. However, China still is and continues to be the major market for market pulp with some 40%. So it's extremely important to follow what's happening here. Nevertheless, our sales into China are very limited. Our sales all in all for the last year are successfully following the niche strategy that we have been working on for a long time now. It gives us a good exposure to a couple of segments which are stable also in more demanding and challenging times. We have the flexibility to grow in areas which are a little bit more bulk-oriented, such as tissue. You see here we have gone from 9% of sales into tissue in 2023 to 11% in 2024, as a countermeasure of the carton board that has gone down from 29% to 22%. Filter remains stable and electrotechnical is growing as are specialities. Very nice to see also that the new segment of fiber cement is slowly growing step by step. So it's a good spread of end-use segments where we can really deliver good value for our customers. And with that broad overview of our main items and the market, I leave the word over to Monika to guide us through the results.

Thank you, Lennart. Yes, we are happy to say that we see an underlying improvement in result, but a lot of things has happened during the quarter. In the fourth quarter, we normally have the maintenance shutdown in Vallvikmil, which we also had this year, which is always greatly affecting our result. But this year, we also had the maintenance stoppies in Rottnerosmil in the fourth quarter. which is normally in the third quarter. So this will affect the comparability between the years. But we see here that the higher sales prices really come through here in the fourth quarter. But we see that the variable costs continue to increase compared to last year. Another big thing happening in the quarter was that we sold emission rights in the total of 76 million Swedish crowns and that helped to boost the profitability and we ended up with an EBIT of minus 28 million for the fourth quarter. Then if we look at the full year, it is a bit a similar picture. We see that price and currency is especially the sales price is higher, but year on year it doesn't have the same impact as on the fourth quarter. We can see that volumes have a negative impact and this is mainly for the poor production we had in the first quarter of the year that we didn't manage to catch up with during the rest of the year. And for the full year, we really see the impact of the wood costs in the variable cost increasing. And also for the full year, we have a positive impact from the sales of emission rights, which is to the right of the slide. All in all, we ended up with an EBIT of 47 million for the full year. Looking a bit closer at our variable costs, this is a split of the variable costs for our production of pulp. The wood is 70% of the total cost last year. The share was 65. So here we see the impact on our costs and also how that will affect our margins when we are selling our goods. Then going to the balance sheet, we have had a heavy investment program, like Lennart talked about. This year, we invested 450 million. Last year, we started the investments and invested a total of 205 million. To support these investments, we renegotiated our long-term financing at the end of the year. So now we have a loan, so 400 million and available revolving credit facility of 150 million. All in all, we had an available liquidity at the end of the year of 385 million. And we continue having a strong balance sheet with an equity to assets ratio of 59% at the end of the year. With that, I hand back to Lennart.