Svenska Cellulosa Aktiebolaget SCA (publ)

Good morning and welcome to this presentation of the SCA half-yearly report for 2024. With me here today, I have President and CEO Ulf Larsson and CFO Andreas Evert. And with that, over to you, Ulf.

Thank you, Anders. Good morning also from my side. A warm welcome to the presentation of the result for the second quarter 2024. And when I summarize the second quarter, I can state that the markets for all fiber-based products in all areas are sequentially stronger with higher prices in Q2 in comparison with Q1. We can also note that we have a delay effect in pricing for container board and pulp with one to two months. In renewable energy, we have seen a negative market development in Europe for liquid biofuels, also affecting tall oil prices. So when we compare Q2-24 with the same period last year, this is of course not the least due to reduced mandate for biofuels in Sweden since 1st of January this year. And due to a seasonal effect, we also see 40% lower deliveries of wood pellets in the second quarter versus the first one this year. Also this quarter, we note a high demand on wood, raw materials, and by that continued increase in prices. We have in SEA also increased volumes from our own forest, which in comparison with the second quarter 23 has strengthened the result in business area forest. Sales increased with 15% and EBITDA with 11%, Q2 24 versus the second quarter 23. Higher prices, increased volume and a positive currency effect explains the improvement. This slide will give you an overview of KPIs for the second quarter 24. Our EBITDA reached, as you can see, 1.9 billion SEK during the second quarter, which corresponds to an EBITDA margin of 36%. Our industrial return on capital employed came out on 4% for the second quarter, counted for the last 12 months. The leverage is at 1.8 and net debt to equity was 11%. And we have now finalized our big strategic investments in Obola, Ortviken and Gothenburg. And just now they are under ramp up, but coming years they will of course contribute in a positive way. Then I will make some comments for each segment, starting with the forest. High harvesting level from our own forest has contributed to stable supply of wood-raw materials to our industries during this period. In general, we see a remaining high demand of wood-raw materials in the market during the second quarter, and by that also continued increasing prices for both pulpwood and saw logs, as can be seen in the graph in the bottom left. When one compared the second quarter 24 with Q2 23, sales was up 15% and EBITDA was up 8%, mainly due to higher prices and a higher harvesting level in our own forest. Regarding forest valuation, the market has since the beginning of the year been slow and we've had very few transactions in the area where SEA owns forest land. For that reason, forest valuation remains unchanged. Then I turn over to business area wood and in general we still have a continued slow underlying market for solid wood products. Despite the generally low demand we see some early signs of improvement in the repair and remodeling segment which is good for SEA as that segment is where we are mainly present in. Stock levels are on normal levels at producers and mainly at the low side at customers. I estimated that price in the second quarter should increase with 10%, which also happened. Deliveries and prices increased due to a seasonally higher demand in the second quarter, but the cost for solos also increased during the same period. Sales was up 11%, EBITDA was up 46% in the second quarter in comparison with the same period last year. The reasons behind this were mainly higher prices and higher volumes, and the EBITDA margin consequently increased to close to 20%. 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. As mentioned earlier, we note that the inventory is on a normal level. As can be seen in the diagram to the bottom left, the Swedish and Finnish sawmills production has been slightly below normal levels accumulated so far 2024. In the diagram to the top right we can see that prices started to increase during the first quarter 24 and has also continued to increase going into the second quarter. Coming into the third quarter I estimate close to unchanged prices due to balanced stock levels and also due to high and further increasing raw material costs. In the construction sector we can conclude that the starts of new building are low. On the other side, the repair and remodeling sector, as mentioned before, is performing better and that will also respond positively to coming lower interest rates. Over to PALP. The ramp up of our new CTMP mill is running according to plan. Production optimization work continues. Our CTMP products have been very well received in the market. Consequently, CTMP products represents now an increasing share of our pulp sales. Sales and EBITDA were up 22% and 34% respectively when comparing the second quarter this year with the second quarter 2023. We can note higher prices and volumes on the positive side, while higher raw material costs have had a negative impact in this comparison. During the second quarter we have had an unplanned production stop at Östrand pulp mill due to a leakage in the recovery boiler. The total negative impact was approximately 60 million sec in second quarter and a similar amount will be recorded also in the third quarter. The pulp mill is now back in stable production again. After a rather weak 2023, demand for pulp improved in Europe and US during the first half of this year. Export volumes to China normalized during the first half of 2024 after, as you remember, very high volumes in the fourth quarter of 2023. The Finnish strike in March substantially reduced supply of MBSK in the beginning of the second quarter. In Europe, prices on all grades of pulp continued up in the second quarter, with MBSK index pricing increasing from 1,400 USD per tonne in March to over 1,600 USD per tonne in June. In the US, MBSK prices have had similar development as in Europe, but with a small delay. Looking at the CTMP prices they have been increasing in Europe but at a slower pace and we have seen more of a flat price development for CTMP in Asia. In July we see prices stabilizing in general but with some regional differences. Inventories of both softwood pulp and hardwood pulp are on average level as you can see in the graphs. As mentioned before, pulpwood prices continue upwards, supported by limited supply. So, moving over to container board. The ramp up of the new Kraftliner machine in Obola is progressing. During the quarter we have taken extra stops to adjust the machine line. We also continue to see high operational costs, which is absolutely expected in this phase of the ramp-up. And as we have earlier communicated, we plan to reach full capacity in Ebola by 2026. Sales and EBITDA was up by 11% and 6% respectively in the second quarter in comparison with the same period last year. And we can note higher prices and volumes on the positive side, while higher raw material and other costs had a negative impact in this comparison. We see a healthy growth in box demand in comparison to last year, and we are now back to historical growth trend levels. As you can see, top right. As inflation and the interest rates goes down, we foresee retail spending to strengthen, leading to continued growth in box demand. European demand of KraftLine has improved in the second quarter compared to last year, following, of course, the box demand. We expect positive demand development of container board in coming quarters. Supply and demand balance will be impacted by additional supply coming on stream, with the vast majority coming in test liner. European prices for brown craft liner have increased in the second quarter with 100 euro per tonne and white craft liner has increased by 80 euro per tonne. Both price increases divided into two steps. We, SEA, we have recently announced another price increase from 1st of August by 60 euro per tonne for both brown and white top craft liner. Container board inventories have been kept on an average level in Q2, driven by improvement demand. Several Kraft Kleine producers are now planning for annual maintenance shutdowns in the autumn, which will put some pressure also on the supply side during the autumn. The supply of OCC will probably become limited in the autumn driven by the low historical supply of boxes and consequently we have also seen OCC prices increasing during the second quarter with 70 to 80 euro per tonne. So finally over to renewable energy and in business area renewable energy we have had a week a quarter with lower market prices for tall oil and liquid biofuels in comparison with the same period last year. Bio-premiums and prices have decreased to substantially lower levels compared to last year. And the main reason is, of course, blending mandates in Sweden and increased imports also from China, creating an imbalance in supply-demand in the renewable fuels markets. Ramping up Gothenburg biorefinery together with ST1 in this market environment put a short-term pressure on the segment. We expect market volatility in renewable fuels to remain relatively high as Europe ramps up the blending mandates both in HVO and SAF. Long-term, our outlook is positive, but in the short-term, we expect continued low refining margins and biopremiums. The EBITDA level decreased by 53%, mainly due to lower market prices for tall oil and biopremiums in liquid biofuels. The market for solid biofuel remains stable. SCA continues to grow in leasing out land for wind power and has now reached 9.7 terawatt hours of wind power on SCA land by the end of the second quarter, and that is equal to 20% of installed capacity of wind power in Sweden. Finally, I can also mention that the execution of our windmill project Fasikan is progressing according to plan, and by that I hand over to Andreas.

Thank you, and good morning, everybody. I'll start off with income statement for the second quarter. Net sales increased 15% just below 5.3 billion, driven by both higher prices and higher volumes. EBITDA increased 11% just below 1.9 billion, driven by higher prices, which was partly offset by higher costs for wood, raw materials. The EBITDA margin was 36%. Debit margin was 26%, and financial items totaled minus 144 million, with an effective tax rate around 20%, bringing net profit to 960 million, or 1.37 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 2.2 billion, driven by higher prices for wardrobe materials. Adjusting for the capital gain of 128 million in the previous quarter, EBITDA increased slightly to 883 million, and seasonal higher harvest from SCA's own forest was partly offset by seasonal higher costs for forest management and fertilization. In wood, prices increased by 10% compared to the previous quarter, while the cost for soil logs continued to increase. Net sales increased to 1.5 billion, driven by both higher volumes and higher prices. EBITDA increased to 294 million, corresponding to a margin of 20%. In pulp, prices continued to increase throughout the quarter. Net sales increased to 2.1 billion, and EBITDA increased to 509 million, corresponding to a margin of 24%. In the quarter, we had a negative impact from a planned maintenance stop of 29 million. We also had leakage in the recovery boiler, which had a negative impact of approximately 60 million in Q2, and will impact Q3 with a similar amount. In container board, craft liner prices increased during the quarter. Net sales decreased to 1.6 billion compared to the previous quarter driven by lower volumes. EBITDA increased to 231 million, corresponding to a margin of 15%. Higher prices were partly offset by higher costs for wood, raw materials and higher OCC prices. And ramp up costs were in line with the previous quarter at around 65 to 70 million. In renewable energy, EBITDA decreased to 85 million, driven by seasonal lower deliveries of solid biofuels, lower prices for liquid biofuels and talloils, ramp-up costs, as well as higher costs for sawdust. And the higher cost for sawdust, we get back as a positive in our wood segment due to our integrated value chain. On the next slide, we have the sales bridge between Q2 last year and Q2 this year. Prices increased 7%, with higher prices in primarily pulp and wood. Volumes increased 5%, driven by the new paper machine in Obola and the new sit and pee mill at Ortviken, as well as higher volumes in wood. And lastly, currency had a positive impact of 3%, bringing net sales to just below 5.3 billion. Moving on to Iberta Bridge, and starting to the left, price mix had a positive impact of $287 million, and higher volumes had a positive impact of $15 million. Higher costs for mainly wardrobe materials had a negative impact of $76 million, with a negative impact of energy of $99 million, and a positive impact from currency of $130 million. In total, EBITDA increased to just below 1.9 billion, corresponding to a margin of 36%. Look at the cash flow. We had an operating cash flow of 526 million a quarter and 1.2 billion for the first half year, which means that we're continuing to fund our strategic investments with operating cash flow. Look at the balance sheet. The value of the forest assets was 108 billion. The beginning of the year was a slow market with very few transactions, and we have therefore left the three-year average price used in the forest valuation unchanged. Working capital increased to $5 billion, driven by higher prices, higher volumes, and higher costs for wood, raw material. Capital employed totaled $160 billion, and net debt increased to $11.8 billion due to the dividend. And we have now almost finalized our large ongoing investment projects in Obola, Ortviken, Bolsta, and Gothenburg. Equity totaled $104 billion, and net debt to equity was 11%. Thank you. With that, I'll hand back to you, Ulf.