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1/27/2023
Good morning and welcome to this presentation of SEA's year end results for 2022. With me here today, I have President and CEO Ulf Larsson and CFO Andreas Evert to go through the results and take your questions. Over to you Ulf.
Thank you Anders and good morning also from my side. Warm welcome to the presentation of the results for the full year but also for the fourth year of 2022. When I summarized last year, I can state that we have delivered the best year ever. We reached 10.2 billion SEK on EBITDA level and by that the 49% profit margin. We have had a strong demand and high prices for all our products in combination with good cost control. We have also benefited from a high degree of self-sufficiency in wood, energy and logistics. And together this has created a strong cash flow from which we have been able to finance all investments including strategic. Our two major investment projects in Åbola Nordviken have both started up during last year. Approximately one quarter ahead of plan and we are now in an exciting startup phase. The new OCC line which is needed to reach full capacity in Åbola is scheduled according to the original plan and will be up and running during the first half of this year to meet the planned startup curve. In addition, I can also mention that our reinvestment in a new grading mill at Bolstas Sormill is finalized and the trimming phase has started according to plan. From 1st of January this year we will start to disclose our new segment renewable energy and the reason behind this is that we already today have a leading producer of renewable energy and we annually produce 12 terawatt hours of bioenergy. We have 20% of installed capacity of wind power on SEA land and we have a big ongoing investment in biofuels that will start up Q4 this year. And as we have said earlier we have the ambition to grow this segment further and we also recently announced that we have acquired our first wind farm in the northern part of Sweden. The capacity today in Skogberget which is the name of the wind farm is approximately 200 gigawatt hours but after repowering we expect the capacity to double or triple. The price level of forest land has continued to rise and when we follow our described model based on transaction prices in our region for setting the market price we can state that the total value has increased from 84.5 billion the 31st of December 2021 to almost 98 billion same date 2022. Finally EBITDA increased 12% in comparison with last year due to higher selling prices and a stable cost base and sales increased during the same period by 10% due to higher prices. Turning over to some financial KPIs related to the full year 2022. As just mentioned our EBITDA increased by 12% in comparison with last year and reached 10.2 billion SEK for 2022 and that corresponds to a 49% EBITDA margin. Our industrial return on capital employed came out on 40% for the full year 2022 which is 7 percentage points higher than 2021. The leverage is stable at 1 despite our almost finalized large ongoing investment projects in Obola, Ortvik and Bolsternsson and we continue to finance all our investments including strategic projects with our operating cash flow. The proposed dividend for the AGM to decide is on is 250 SEK per share and this is in line with our aspiration to give a stable and increasing dividend. Last year we gave 225 SEK as an ordinary dividend and then an extra dividend of 1 SEK. Last but not least the earnings per share went up by 14% in comparison with 21 to 9.61 SEK per share. This slide will give you an overview of KPIs for the fourth quarter 2022 and when we compare quarter on quarter we can note that our EBITDA reached close to 2 billion SEK during the last quarter. The leverage is 29% lower in comparison with a very strong Q4 2021. This gave us an EBITDA margin of 41% and an industrial return on capital employed of 24% calculated as the average for the last 12 months and the leverage is as already mentioned stable at 1. Then I will make some comments for each segment starting with the forest. During the fourth quarter we have had a stable supply of wood raw materials to our industries in general and also in our region we can note a high demand of wood raw materials and by that also increasing wood prices as you can see in the graph in the bottom left. When we compare the fourth quarter 2022 with the same quarter 2021 pulpwood prices have increased by almost 20% and corresponding figure for saw logs is around 15%. On the other hand we can see that pulpwood prices in the Baltics have now started to come down from an all time high level. When we compare quarter on quarter EBITDA has decreased 15% and that is mainly driven by lower revaluation effect of biological assets. We have also seen cost inflation in transportation and harvesting and that is driven by high fuel prices. On the positive side we can note a high harvesting level in our own forest. Finally, we can note the continued high interest of purchased forest land in Sweden and in Baltics and Andreas will come back to some data around that. Turning over to business area of wood and in general we have seen a low global demand during the fourth quarter last year. Anyway, in most markets customers have finalized de-stocking and started to buy again. Building activities remained on a more or less normal level but housing starts decreased during the end of last year. For SEA we have maintained normal deliveries during the fourth quarter. Price levels for solid wood products as expected hit the bottom in several markets during the fourth quarter last year and I did communicate a price drop of 25% between Q3 and Q4. As you can see in the graph bottom left prices on solid wood products have come down substantially while on the other hand solo prices have gone the other way. My best guess for the coming quarter is that we will see more or less unchanged prices. Sales and EBTA was substantially down due to price and cost of wood raw materials when we compare quarter on quarter. Today's stock level of solid wood products in Sweden and Finland is in relation to the average for the last five years described at the top left on this slide. We note that the inventory volumes are on a somewhat high level. Anyway, SEA as mentioned has maintained normal deliveries during the fourth quarter and by that we have a balanced stock at the end of the year. As can be seen in the diagram to the bottom left, the Swedish and Finnish SOMI's production has been on the low side. Most producers in Scandinavia also announced production containments during the fourth quarter. When looking at the diagram to the top right we can see that the price peaked in the third quarter 2021 and that was on a historically high level. Prices have come down substantially since then and as I mentioned at the same time prices for saw logs has increased with a major negative effect on the profitability. Then some words about PALP and comparing quarter on quarter all fundamentals like price and were better in the fourth quarter 22 in comparison with the fourth quarter 21. The result for the fourth quarter 22 was up 36% but it was negatively impacted by a planned but also an unplanned production stop which reduced both the volume and the energy production during the period. The estimated impact on the A level is approximately 260 million SEC when we compare quarter on quarter. 138 million SEC although that is related to the unplanned stop and we will have a negative impact from this unplanned stop also in the first quarter this year, ascending to approximately another 140 million SEC. The reason for the unplanned stop is significant disturbances in the fiber line and the recovery boiler at Östrand and there have been difficulties with the process conditions in the boiling process which in turn has caused instabilization and leakage in the recovery boiler which led to this unplanned stop. Now we are up and running again. The CTMP alignment toot weakenings now on the ramp up, one quarter ahead of plan. Still we have of course a lot of fine tuning left but our goal is that the production should reach at least 150,000 ton during this year. Full capacity achieved in 2025 will be closer to 300,000 ton. We see weakening demand in the pulp market mainly in Europe and also in China. The European pigs price peaked in September-October last year and that was close to 1500 USD per ton. Since then we have seen declining prices on all markets and the price for deliveries to Europe in January is 1410 USD per ton. But then one need to keep in mind that discounts in Europe have increased by approximately -3% while on the other hand discounts in the US is on an unchanged level in comparison with last year. Today we have a better net price in the US in comparison with Europe and China and one reason might be that we note the weakening supply from competitors in Canada. We have seen announcements of curtailments and that is mainly due to lack of fibre but also the cash cost situation for Canadian mills. Inventors for both hardwood and softwood pulp is as you can see in the graphs on a rather normal level. Finally, container board and the new craft-line and paper machine in Obola has started ahead of the time schedule in the last quarter last year. The successful startup was affecting the production volume and costs negatively in the fourth quarter in comparison with the fourth quarter 2021. But of course long term this will create a good foundation for a highly successful project. And as mentioned before, overall this is a unique project also based on the fact that we have delivered a strong cash flow throughout the whole project since it started. The new recovered fibre line which is a necessity to reach full capacity in Obola is progressing according to plan and that one is planned to be ready in first half of 2023. As earlier communicated we expect to reach full capacity in Obola in 2026. Sales was up quarter on quarter due to higher prices while EBITDA was down by 13% mainly due to the effects of an early startup causing lower production and delivery volumes for Q4 2022. Also, of course higher energy costs had a negative impact on the result for container board. After a long period of increasing prices for craft-liner with a peak in Q3 last year, we have now started to see decreasing prices. One can note some reasons for that. And if we start with the demand, it has declined in the fourth quarter mainly related to lower retail sales which has led to lower demand of boxes. Europe is facing a double digit inflation and that will of course lead to reduced purchasing power. Delivery of craft-liner have decreased significantly, 8% in the fourth quarter 2022 compared with the fourth quarter 2021 and that is by other words similar to the box demand. Secondly, natural gas prices have come down sharply from the peak in August 2022 and that released the cost pressure for test-liner producers and at the same time availability of OCC is good and demand lower due to reduced production of test-liner. Anyway, availability of OCC will gradually decline when lower box consumption is translated into less availability of OCC. Today's price for OCC is around 65 euro per ton and that is more or less 120 euro per ton lower than the peak price in July 2022. The price for unbleached craft-liner has decreased by 90 euro per ton in the fourth quarter 2022. Test-liner prices have decreased somewhat more and the price gap between craft-liner and test-liner today is around 155 euro per ton which I think is a rather normal gap. During the same period the price for craft-liner white-top has decreased with 30 euro per ton. Despite the lower demand inventories have been kept on a stable level during the fourth quarter by producers reducing supply and we would estimate production to be around 10% lower in the fourth quarter 2022 in comparison with the fourth quarter 2021. So by other words, inventories of container-water are still on a high level, no doubt about that but they have not increased more than according to normal seasonal effect due to the mentioned production curtailments. So by that I hand over to Andreas.
Thank you Ulf and good morning everybody. I will start off with the forest valuation. Forest prices in northern Sweden continue to increase. In the graph we have the development of forest prices in SCS region according to Svefa and Ludvigen company and the prices have increased over 400 sek per cubic meter. In SCS forest valuation we used a three-year average price which has increased by 13% to 266 sek per cubic meter. The valuation of SCS forest increased by over 13 billion to 98 billion in 2022. The increase was driven both by the price increase of 30% and the increase of standing volume by 2% to 267 million cubic meters, approximately 1.8 billion through the PNL. If we move on to the income statement and focus on the full year to the right, net sales grew by 10% to 20.8 billion mainly driven by higher prices. EBITDA increased a record high of 10.2 billion corresponding to a margin of 49%. EBITDA margin increased to 42% and financial items totaled minus 39 million. We had an effective tax rate of around 20% bringing net profit to 6.8 billion or 9.6 sek per share which is the highest ever. If we look at the fourth quarter to the left EBITDA declined to just below 2 billion corresponding to a margin of just below 41%. The decrease was mainly driven by lower prices in wood and the production stopped at Östrand which impacted results with 138 million. Net profit for the quarter totalled 1.2 billion or 1.76 sek per share. Looking at the dividend, we had proposed dividends of 2.5 sek per share at 25 per increase compared to the ordinary dividend last year which is lying with our target to have a stable and increasing dividend over time. On the next slide we had a sales pitch for the full year. Prices increased 12% and record high prices in pulp and container board were partly offset by lower prices in wood. Volumes declined 3% mainly driven by a weaker wood market and a start-up of the new paper machine in Oberla. Currency had a positive impact of 4% and Exit publication paper had a negative impact of 3%. Moving on to EBITDA, price mix had the biggest impact of 2.3 billion driven by higher prices in pulp and container board. Volumes had a negative impact of 340 million driven by a weaker wood market and a start-up of the new paper machine in Oberla. Higher cost of wood raw material and chemicals had a negative impact of 980 million while higher energy cost had a neutral impact which really shows our high sales efficiency post exit publication paper. We had a positive impact from currency and a negative impact from higher fuel prices. In total EBITDA increased 12% to approximately 10.2 billion corresponding to a margin of 49%. On the next slide we have the financial development by segment. Starting with the forest segment to the left, net sales increased to 6.7 billion and EBITDA increased to 2.7 billion mainly driven by higher pulp wood and solar prices which was partly offset by increased fuel costs. In wood we had another strong year with an EBITDA of 2.1 billion corresponding to a margin of 41%. EBITDA was driven by a very strong first six months while the market deteriorated during the second half of the year with prices going down 20% in Q3 and another 25% in Q4 as Ulf mentioned. In pulp we had a record high year where net sales increased to 7.2 billion and EBITDA increased to almost 3 billion corresponding to a margin of 41%. In the fourth quarter we had the unplanned production stop at Örstrang which impact results with 138 million in lower volume and reduced energy production and the stop will impact Q1 with a similar amount as Ulf mentioned. In container board we had a record high EBITDA of almost 2.9 billion corresponding to a margin of 42%. This is despite having lower volumes and startup costs rating to the ongoing ramp up of the new paper machine. On the next slide we have the sales spree between Q4 last year and Q4 this year. Prices decreased 5% while lower prices in wood was offset by higher prices in pulp and container board. Volumes increased 1% while higher volumes in wood and pulp was offset by lower volumes in container board due to the startup of the new paper machine. And lastly, currency had a positive impact of 7%. Look at EBITDA average for the fourth quarter and starting to the left. Price mix had a negative impact of 330 million mainly driven by lower prices in wood. Higher volumes in wood and pulp was offset by lower volumes in container board again due to the startup of the new paper machine. Higher costs for wood raw material and chemicals had a negative impact of 400 million and higher energy costs had a negative impact of 70 million mainly relating to lower electricity production at Örstrand due to the production stop. We had a positive impact from currency and a negative impact from higher fuel prices and startup costs in CTP where we now had a full organization in place. In total EBITDA decreased to just below 2 billion corresponding to a margin of 41%. We had another year with strong operating cash flow, almost 5.7 billion in 2022 compared to 5.2 billion in 2021. This means we are continuing to fund our strategic investments with operating cash flow. In the quarter we had several large strategic cap experiments. Oble investment of around 800 million, acquisition of the wind farm in Markbygden of 800 million, forest land in the Baltics of 400 million and a CTP investment of 300 million. Look at the balance sheet. The value of the forest asset increased to 98 billion. Working capital increased to 4 billion due to higher prices. Total capital employed increased to 106 billion and net debt to the 10 billion, one times EBITDA. Equity increased to 96 billion and net debt to equity was 10%. Renewable energy will be reported as a new segment in 2023. On this slide we have the EBITDA impact on each segment for 2022. Starting with forest, segment to the left, unprocessed biofuels and wind power leases will be reported in renewable energy. The performing effect for 2002 was approximately 90 million. In wood, pellets will be reported in renewable energy, which had an impact of approximately 130 million. Pulp and container board sell tallow for a fossil-based price to renewable energy, which is responsible to maximize the value of the green premium. The impact was around 80 million in pulp and 60 million in container board. In total, renewable energy had a performance EBITDA of 355 million and from January our new wind farm will also be included and from late next year also our investment in liquid biofuels. Thank you, with that I'll hand back to you,
Ulf. Thank you and if I try to give a short version, I mean 2022 has been the best year ever. 10.2 billion SEK, 49% EBITDA margin. We have been able to finance our ongoing investment projects by operating cash flow. Our two major investment projects, they are now up and running. Of course, we still need to do some fine tuning and so on, but nevertheless producing prima products for the market. From this year, we will start to disclose renewable energy as a separate segment, which is interesting. We also announced end of last year that we have taken the first investment decision in our own wind power capacity in Markbygden. Last but not least, we see a substantial increase of the value for forest land. So by that, I think I open up for questions, please.
Thank you, ladies and gentlemen. If you wish to ask a question at this time, please signal by pressing star 1. Please make sure the mid-function on your phone is switched off to allow your signal to reach our equipment. Again, it is star 1 to ask a question. The first question comes from Robin Santavirte from Carnegie. Please go ahead.
Thank you very much and hello to everybody. My first question is related to the wood segment and to pricing outlook there. I guess you call for unchanged prices of sawn timber now in Q1, Q1-Q, after the declines we had last year in H2. Is this now, in your view, the bottom of this cycle? When should we expect the prices to increase? What is the best leading indicator for us to look at for the pricing? So those are some good segments.
It is hard to say really, but I mean, yes, I think we have reached the bottom. I thought that already in the third quarter and the estimation at that time was that we should, the price should decrease by 25% from the third quarter to the fourth quarter. And that came through. The best guess we have now is that we will see unchanged prices for the first quarter next year, this year. And I think that we might see an upward trend in the second quarter, but that is too early to say. What we see us now in the market, at least in Sweden, is that prices, I mean, they are in their view, they are on a reasonable okay level, but log prices have come up substantially. I thought about 15 to 20% in one year. And I mean, 70% of the cost for sawmill is related to raw materials. I mean, that puts the pressure on the profitability in the sawmill. And that you can also see now when, I mean, when more companies will release the results that they will be very close to zero cash flow. And I mean, that cannot continue for a longer while, of course. So I think we will find, we have found some kind of balance in the market now and we will remain on this level. But of course, again, you don't know what will happen with cost inflation, interest rates and all that kind of things. But personally, I think that we have reached the bottom.
I understand. Thank you very much. And we could see yesterday a smaller sawmill reported the numbers in the red already in Sweden, you guys more efficient, obviously, and blackfingers still. But related to that, then, the higher log cost, should we expect log costs to start to decline already now in Q1 or perhaps is it then Q2? What is the outlook for Balfour for this year?
I think that is tricky to say, really. I mean, we ourselves, we increased prices in the beginning of this week. And again, for us, it's not a very big issue because, I mean, 50 percent of what we need we take from our own forests. I mean, we are in a rather good position in this perspective. But again, if you don't have a good profitability industry, then, of course, prices on raw materials will start to come down sooner or later. But it's hard to say when it will happen. Normally, you have some kind of lagging effect of six months. But what it will be just now, hard to say. I mean, in Sweden, we have also seen that Sveaskog, they reduced the harvesting level by 1.5 million cubic meters. We have 10 million cubic meters, which they are not coming from Russia, Belarus and so on. So that have also an impact. So you have a slightly different balance this year in comparison with the past.
Right. And the increase you made, I guess, was that for logs?
That was, yeah, that was both for soil logs and pulpwood in the northern region. And I mean, we have seen other companies that have done more or less the same thing.
Yes, yes, true, true. Thanks. And the final question I have seems like Obolla has come off very well to production. Should we expect that 500,000 tons produced in Obolla this year still? Is that a good sort of outlook still? If
we can reach 500,000 the first year, that will be a big success, of course. And as I said, I mean, the bottleneck just now is the recovery line. But that one is now under construction. We have 200 entrepreneurs on site and also that part of the project is running well. So that was positive. And as mentioned, I mean, we took some extra, as you always have to do when you ramp up, you have to take some extra costs related to when you start up, I mean, you struggle somewhat. But it has been a fantastic journey so far. We have between 60,000 and 80,000 tons now out in the market of Prima products and with a very good reaction from our customers. So far it has been a fantastic project, really.
That is good to hear. Thank you very much.
The next question comes from Linus Larsson from SEB. Please go ahead.
Thank you very much and good morning to everyone. A couple of questions on wind and maybe starting off with Markbygden, if you could share with us what the EBIT and or EBITDA was from that recently acquired operation in full year 2022, please.
So if we look at the wind acquisition, the capacity is just below 200 gigawatt hours. And then, I mean, it all depends on what electricity price you assume. So if you take the price that you assume for 2023, multiply the volume. And then the margins for wind power is very high, is 60, 70 percent range.
And the reason for us to acquiring Markbygden, just that project was that we have a good potential for repowering. I think that's most important. I mean, of course, again, depending on the prices and price development, but you have good conditions for repowering in this area. You have good capacity in the net and so on. So in five, ten, fifteen years, you can double or triple the capacity with, I mean, no big investment means that. So that's what I mean. That is the big potential in this project.
And also it would help to maintain our self-sufficiency. Now we're ramping up CTP and OBLA production, our electricity usage will increase. But because of the wind farm Markbygden, it will help to balance that again.
Right. But you're not sharing, is it hedged? Are you giving any kind of indication what to expect in the first quarter? What the contribution is from this?
It's not hedged. You can look at Nordpool and look at the wind prices in the SE1 area to get the feeling of the numbers.
Are you planning on more similar M&A in the coming year?
As I said earlier, I mean, we plan to build up a capacity of, let's say, three Tarawattas in ten years. And it might be acquisitions, but I mean, we are much more focused on organic growth. We think that we have a better margin in organic projects and we are working hard on that one.
And what's the timeline, do you think, on that when? And I understand it's to do with permitting processes, et cetera. When will you start investing in repowering in, for instance, Markbygden? I
mean, that depends on the price development and what kind of conditions you have. But I mean, as always, we take it step by step. So I think if you can take three Tarawattas and divide by ten, that is more or less the target we have.
OK. But no capex relating to this in the coming year, at least?
Then you can just multiply with, you know, approximately the capex cost per Tarawattas or Gigawattas. And so then you get the feeling of it.
Right. OK. What's your capex guided for the group as a whole for 2023? If
we start with current capex, we had this year we had just about 1.4 billion, but we have some capex that went down to the other to 2023. We were expecting 1.5. So I would guess around 1.6 in current capex for 2023. And if we look at our strategic capex, we have around one to 1.5 billion left in our ongoing decider project in SitMP, Obola, the biorefinery in Gothenburg and some forest acquisition. And then it depends on if we do any other investments, about one to 1.5 billion on already decided capex.
For 2023, that is. Yeah. OK. OK. Excellent. Thank you very much.
Thank you.
Our next question comes from Oscar Lindström from Danske Bank. Please go ahead.
Yes. Good morning, gentlemen. A couple of questions. First on the forest land market in Sweden. What was the development? What did you see in the market in the second half of the year? And what's your outlook or your expectation for 2023? And then the second question is on cost inflation outlook for 2023 and especially concerning chemicals, which I believe is often quite closely tied to energy. You know, how do you see that momentum developing? And then just a third question on the Mytbegden wind farm. So you have no immediate plans for any investments there. Is that correct?
If I start to comment on the forest prices, if you look at the compared prices from the first six months compared to the second six months, the prices increased slightly during the second half of the year. So so far we have the prices have have continued to increase on a high level. I know we want to comment on that. And then for the second question on cost inflation, as Ulf mentioned, the pulpwood and solar prices are continuing to increase during the beginning of this year. And that's, of course, our biggest cost. But we get half that back from our own forest. And then if we look at chemicals, the chemical prices are still very high and continue to increase, especially sodium hydroxide. But as you said, it will also depend on development of energy. If we look at transportation costs and oil, they're starting to come down. And also OCC prices have started to come down. They're now at the index around 65 euros per tonne. So it's a mix. Some costs are still going up and some have peaked and are starting to come down. And
about the third question, we have no immediate plan for investments in Markbygden. I mean, it is rather modern wind park. And now we will learn how to operate in the best way. And but no no investments during the coming short term, at least.
Thanks. If I may, just a final question on the sawn timber market in Europe. Are you seeing some sawmills starting to take downtime or reduce production significantly? I know there were some announcements during the second half of last year, but I'm not sure to what extent they actually came about.
I mean, it's hard to say, but I believe maybe around 10 percent during the fourth quarter. And as someone mentioned, I mean, we now we see red figures and negative cash flow. And I mean, that will that will not continue. So so so then I think we will see more closures. And and you have a rather I don't know if I have seen this before when when saw log prices continue to rise. And at the same time, we have more or less we are in the bottom in the in the price for solid wood products. So that the combination here is not sustainable, I would say. So so so that's the reason why I think that we have we have reached the bottom when it comes to prices for solid wood products. And then I think also we have some kind of lagging effect when it comes to prices for saw logs. But again, it is impacted now by not the least by the reduced harvesting level at Svea Skogen. And again, we have a different situation also when it comes to the Russian flow and so on.
Thank you. Our next question comes from Cole Hathorn from Jefferies. Please go ahead.
Morning. Thanks for the color. Can you give some some views on what segments or areas you're seeing on demand for for the container board markets? I know you mentioned deliveries down minus eight and production down minus 10 across industry to kind of balance inventory levels. But any color you can you can talk about on the end markets for demand on container board and then linked to that. What are you seeing from from imports from the US players? The import data hasn't really picked up as much. And I'm just wondering if there's any particular reason or your thoughts on on the imports from the US as well. Thank you.
I mean, it's hard to say. I mean, the figure that we have got is that e-commerce went on six percent during last year. And that is also at least estimation for the first half of this year. You saw the graph on box consumption and that one also came down on the other end to the trend line. But I think maybe we see more. Yeah, it's hard to say what will happen there. But it is a rather balanced situation when we compare what we see in box demand with the reduction in the stock level. And as I said, some companies, they have already started to reduce capacity here. The inventory level is on a high level, but it was positive that we had a rather stable situation over Christmas. Normally you have a negative seasonal effect when it comes to the stock level over Christmas, but this year was rather stable. When it comes to the import, I believe that we have more or less the same flow from US down to the southern part of Europe as we've had before and that is no major volumes. It's a rather tiny flow, I would say.
And then maybe just an open question, but the cost curve for container boards is effectively deepened and players that are lower down the cost curve are much better positioned at the moment. How do you see this industry reacting? Will it be kind of a two-tier market where the lower players can run to demand, keep good operating rates and the high cost players set the price and will have a lot more variable production with energy volatility and just remain under a lot of pressure even though low cost producer can still earn good margins? How do you see the dynamics playing out? Thank you.
I mean, I don't like to comment too much, but you can look into the figures that will be presented now coming weeks and I mean, you can see that we still are on a rather good level when it comes to a container board business and we disclosed it very transparent and you can see other players where and they have become close to single digit figures and then of course, when you're cash negative, then you start to take curtailments, no doubt about that. But we see us now and that is a different situation in comparison to what we had six months ago and that is the situation for test liner. I mean, I think we peaked in, the cost for energy peaked in August, September last year and now we know that natural gas prices, they are on a decent level at least and as Andreján mentioned, I mean, the price for OCC has come down from 180 down to 60 or something like that and I think it will not decrease much further. I think we are more or less at the bottom, but still, I think the test line producers today, they have a rather strong profitability in comparison with craft line producers and then of course, depending on what kind of sites you have and cash cost position and so on, but in general.
I have to quickly comment on the cost position. I mean, Obola was even before the investment, the largest craft line machine in Europe and after the ramp up, it will be even bigger than the competition. So we have a good cash cost position. We can also see that as Ulf mentioned, if you compare our EBITDA margin to some other players.
But then you have to keep in mind that during this ramp up period, normally you have a negative cash flow during a ramp up period. We have delivered a substantial cash flow throughout the whole project, but of course, we will have some kind of impact during this ramp up phase. I mean, it is so if we see something that is wrong or not perfect, then we stop and we take care of that and then we start up again. And that is what we have to do now during the ramp up phase. And so.
Thank you. Our next question comes from Christian Paffer from Handelsbank. And please go ahead.
Yeah, thanks. Thanks, Operator. I just had one follow up question on the, I think you talked about the repowering potential and you have talked about it before as well. But have you received any initial response from municipalities and so on? I mean, still, you will increase the turbine size is quite material, I guess. And the windmills will become quite much, you know, much bigger. So have you received any response to those projects that you are planning to repower?
Do you mean in general or do you just mean Mark Bichler? Yeah,
in general. Yeah,
in general. I mean, I think that, again, you know that it is not so easy to get the permission to fill up a new wind farm. But from my point of view, I think all, including politicians, they realize that it is much easier to get the permission to replace old, inefficient turbines with new and bigger in already existing places. I think that might not be a big problem, I would say. Of course, you need some kind of permission process and what we are fighting for just now is to reduce the number of years in order to get the new permission. I think that should be done in six months or so. And just now, we don't know what kind of time it will take. But I think in that perspective, we have a good response from politicians and we also have ongoing discussions here in this field.
So... Just finally, when you built or when the operators built the wind farms initially, they had to build the transmission according to the turbine types, I guess. So does this also mean that you have to invest quite significantly into new transmission from the parks?
That depends. That's a good question. That depends. That was the reason why we went for Mark Bygden. You have a higher value in a wind farm where you have a stronger net and a stronger capacity in the net because then you don't need to take these kind of extra investments. But if you have a limitation in the net, then of course, then you need to do extra investments. And then you can also be dependent on other actors. So that's the reason why we chose Mark Bygden and that's also how we tried to choose other projects. So we tried to find projects with good net capacity in order to have the flexibility.
Yeah. Thank you very much.
Thank you. Thank you. As a reminder, to ask a question, please signal by pressing star 1. Our next question comes from Martin Melbay from ABG. Please go ahead.
Good morning. My questions have been answered now. But say the startup of Ubola, E-TMP and the Biofuel, should you indicate which quarter that will have an impact on EBIT, please?
So if we start with Ubola, we are currently running at around the same volume as the old machine, slightly lower in Q4. So I think as Ulf mentioned, that our target is around 500,000 tonnes on Ubola for this year compared to 450,000, 460,000 tonnes last year. So we're gradually ramping up Ubola and when the volume increases, we'll also get EBIT contribution. If we look at the bio refinery in Gothenburg, that will be finalized during the end of the year. That will be starting Q4, we'll get some volumes from the bio refinery. And then Sittinpi, I mean, we are just starting to ramp up now. So we will not expect any significant contribution from Sittinpi during Q1. It will be fairly similar to what we had in Q4.
And then again, you have to keep in mind when you ramp up, you might see some surprises and things like that, then we have to fix that. So I think don't be too positive to what kind of impact we will have this first year. Give us this year and then I think next year we'll see a substantial impact on the result.
Exactly. But there was no positive effect in Q4 from the start-up of the two ones?
No, there's rather a negative effect since we have start-up costs. And as Ulf mentioned, we run and then we find something. And then we have to be fine-tuned and then we stop, fix that and then start the machine again. So you lose some volumes but you're also not running on optimal costs when you have to start and stop. And that's a normal part of the ramp up. So the investments have affected a bit negatively during Q4.
And again, that is very positive long-term because that has created a good foundation for a very successful project and that goes for both the OBOLA and also for the CTMP project and Bolstern and so on. So I mean basically this is very positive good news. We have some extra costs earlier than we thought but that is due to the fact that we are ahead of plan.
Excellent. Thank you.
Thank you, Dr. Jan-Noor for the questions in the queue.
And that concludes the presentation for the full year results for 2022. Thank you very much for listening in and welcome back in April when we present our first quarter results for 2023. Thank you.