Svenska Cellulosa Aktiebolaget SCA (publ)

Good morning and welcome to this presentation of SEA's first quarter results for 2024. 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. Good morning also from my side. A warm welcome to the presentation of SEA's result for the first quarter 2024. We can now state that the market for all fiber-based products has turned up and that we have a sequentially stronger position in comparison with Q4 2023. It has started to drive price increases in all areas, but as always with a delay effect. In general, we see a high demand on wood, raw materials, and by that continued increase in prices. In addition, we have increased volumes from our own forests, which in comparison with the first quarter last year, substantially has strengthened the result in business area forest. We continue our efforts to gradually increase production in the sites where strategic investments have been recently carried out. and this has resulted in slightly higher delivery volumes in comparison with the first quarter last year. These investments will successively contribute to increased productivity and cash generation during coming years. Sales decreased with 5% and EBITDA with 22% versus first quarter 2023. Increased volume and currency are on the positive side in this comparison, while price is negative. This slide will give you an overview of the KPIs for the first quarter 2024. Our EBITDA reached 1.6 billion SEK during the fourth quarter, which corresponds to an EBITDA margin of 35%. Our industrial return on capital employed came out on 4% for the first quarter 24, counted for the last 12 months. The leverage is at 1.8 and we have now finalized a big strategic investments in Obola, Ortvik and Bolsta in Gothenburg. And they will, as mentioned, all contribute positively to the coming years. I will now make some comments for each segment, starting with forest. In general, we can note the continued high demand of wood draw materials. In SEA, we have nevertheless had a stable supply to our industries during the first quarter. As can be seen in the graph in the bottom left, prices for both pulpwood and saw logs have continued to increase. and in the Baltics wood raw material prices have started to increase again after a period of stability. When we compare first quarter 24 with first quarter last year sales was up 12% and EBITDA was up 24% and that is mainly due to higher prices and also higher harvesting level in our own forests. Turning over to business area wood. In general, we have a continued slow underlying market for solid wood products. Despite generally low demand, we see some early signs of improvement in the repair and remodeling segment. Stock levels are still low in the market and in a decreasing trend, especially in spruce. Last quarter I estimated that the price should increase in the first quarter with the high single-digit which also happened. In SEA we saw an increase of about 8% between the two quarters. As we forecasted when we released the Q4 report, our deliveries during the first quarter have been slow due to the very low stock levels when entering into the quarter. Sales was down 60% and EBITDA was down 10% in the first quarter 24 in comparison with the same period last year. And the reasons behind this were mainly lower volumes and higher cost of wood raw material. The EBITDA margin anyway increased with close to 1%. 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 top left on this slide. As mentioned earlier, we note that the inventory is on a low level. As can be seen in the diagram to the bottom left, the Swedish and Finnish sawmills production has been below normal levels since mid-year 2023. And finally, in the diagram to the top right, we can see that prices started to increase during the first quarter 24. Due to low production and low stock levels, I estimate that the price to increase with another at least 10% as we enter the second quarter. We have seen some early signs of improved activity in the repair and remodeling sector and when interest rates start to decrease, we might see further improvements giving support to positive development going forward. So, over to PALP. First, I'm happy to say that our CTMP expansion has been well received in the market. The production ramp up, optimization work continues according to plan. Sales and EBITDA were down 6 and 46% respectively when comparing the first quarter this year with Q1 2023. We can note lower prices on the negative side, while currency and volume have had a positive impact in this comparison. I can also mention that we have an ongoing reorganization and efficiency improvement program in business area PALP and the program will impact approximately 70 employees with full effect end of 2025. After a rather weak 2023, demand for pulp improved in Europe and the US during the first quarter of 2024. Export volumes to China normalized during the first quarter from a very high volume in the fourth quarter last year, but are still on a good level. Global supply of MBSK was substantially reduced due to the four-week strike in Finland in March. In Europe, we saw increasing prices on all grades of pulp, with MBSK increasing from US$1,250 in December to US$1,400 in March. The price then continued up in April to a little bit more than US$1,450 per tonne, and the supply-demand balance looks promising from a producer point of view, and we expect further price increases in this area. CTMP is following the same pattern with increasing prices in Europe, while prices in China and India are almost flat. In the US, MBSK prices had a similar price trend as in Europe. So, moving over to Container Board. The ramp up of the new Kraftliner machine in Obola is progressing fine, although we have taken a few stops to adjust the machine line during the quarter. We see high operational costs during the quarter, which is expected in the phase of the ramp up. As earlier communicated, we expect to reach full capacity in Obola in 2026. Sales was up 4% in Q1 in comparison with the same period last year due to higher volumes and positive currency effects. On the negative side was again lower prices. EBITDA was down as much as 69%, mainly due to lower prices and ramp-up cost effects. Volumes and currency effects had a positive impact. So container board market development. Well, we can see an emerging growth in box demand in Q1 compared to last year. As inflation and interest rate ease, we expect retail spending to improve. European demand of Kraftliner has improved in the first quarter compared to last year following the box demand. We believe that the market will gradually improve during 2024, driven by improved consumer spending. On the other hand, there is additional supply in test liner ramping up in the coming quarters, which will of course put some further pressure on the supply-demand balance for container board. European prices for brown and white craft liner have declined in the first quarter by 25 euro per tonne for brown and 15 euro per tonne for white top. From April prices have increased by 60 euro per tonne for unbleached and 40 euro per tonne for white top. And we have this morning announced another increase of prices from 1st of June by 60 euro per tonne for both brown and white top craft liner. Prices for test liner have already increased with 60 euro per tonne in the first quarter and another price increase of 60 euro per tonne is announced from 1st of May. Container body inventories have been on an average level fourth quarter and we have seen stocks declining in the first quarter due to improved demand. OCC is still in good supply but lead time is expected to be longer as demand continues to increase during 2024 and we can assume that demand will exceed supply for OCC in the second half of the year and with that probably increasing prices. So finally renewable energy and the biorefinery in Gothenburg is under commissioning and is currently ramping up. Full design production capacity with products on specification was reached already at the end of first quarter. It is of course still at an early stage but so far everything looks promising I must say. We continue with another quarter of strong profitable growth with higher prices and deliveries in comparison with the same period last year. Due to increasing prices and high demand, sales was up 24%, the EBITDA level decreased by 2% and that was mainly due to the higher prices for raw materials in our solid biofuel business, mainly sawdust. The market for solid biofuels remains stable. Lower volumes are expected in the coming quarter due to a normal negative seasonal effect. SEA continues to grow in leasing out land for wind power and reached 9.4 TWh of wind power on SEA land by the end of Q1, which is again equal to 20% of the installed capacity of wind power in Sweden. The execution of our FASECAM project is progressing according to plan and we will see the first startup in 2025 in this project. So by that I hand over to you Andreas.

Thank you, Ulf, and good morning, everybody. I'll start off with the income statement for the first quarter. Net sales declined 5% just below 4.6 billion, driven by lower prices, which is partly offset by higher volumes from the new paper machine in Obola and the new sitting PML at Orteviken. EBITDA reached 1.6 billion despite a weak market driven by high results in our forest division and continued strong results in renewable energy. The EBITDA margin was 35%. The EBITDA margin declined to 24% and financial items totaled minus 123 million. with an effective tax rate of below 20%, bringing net profit to 789 million, or 1.12 SEC per share. On the next slide, we have the financial development by segment. And starting with the forest segment to the left, net sales increased to almost 2.2 billion, driven by higher volumes and higher prices for wood, raw material. The EBITDA decreased to 970 million, driven by low reevaluation of biological assets and seasonal overharvest of SE zone forest compared to the previous quarter. Continued increase in wood-grown materials and a capital gain of 128 million had a positive impact on earnings. In wood, prices increased by 8% compared to the previous quarter, while the cost for soil logs continued to increase. Net sales declined to 1.1 million, driven by lower volumes. The delivery volumes were negatively impacted by low inventory at the year end. EBITDA increased to 111 million, corresponding to a margin of 10%. In pulp, prices continued to increase throughout the quarter. Net sales increased to 1.8 billion, and EBITDA increased to 323 million, corresponding to a margin of 18%. In the quarter, we took a provision of 26 million for the ongoing reorganization to reduce headcount. In container board, craft line prices declined compared to the previous quarter. Net sales increased to 1.6 billion, driven by high volumes, and EBITDA decreased to 141 million, corresponding to a margin of 9%. Lower prices, high cost for raw materials and energy, partly relating to ramp-up had a negative impact on earnings. Renewable energy with another strong quarter with an EBITDA of 177 million corresponding to a margin of 28%. On the next slide, we have the sales pitch between Q1 last year and Q1 this year. Prices declined 11% with lower prices in pulp and container board. Volumes increased 3%, driven by the new paper machine Nobola and the new C&P mill at Ortviken. And lastly, currency had a positive impact of 3%, bringing net sales to just below 4.6 billion. Moving on to the EBITDA bridge, and starting to the left, price mixed with a negative impact of 570 million, and higher volumes had a positive impact of 67 million. Higher cost for mainly wood, raw material had a negative impact of 24 million, which shows a high degree of self-sufficiency. We had a negative impact from energy and a positive impact from currency. And in total, EBITDA decreased to approximately 1.6 billion, corresponding to a margin of 35%. Look at the cash flow. We have an operating cash flow of $677 million in the quarter, which means that we're continuing to fund our strategic investments with operating cash flow. Looking at the balance sheet, the value of the forest assets totaled just below $108 billion. Working capital stood at $4.4 billion, and capital employed totaled $115 billion. Net debt increased to 11.7 billion due to the dividend, and we have now almost finalized our large ongoing investment projects in Obola, Ortviken, Bolsta, and Gothenburg. Equity totaled 103 billion, and net debt to equity was 11%. Thank you. With that, I'll hand back to you, Ulf.