Svenska Cellulosa Aktiebolaget SCA (publ)

Good morning and welcome to this presentation of SCA's third quarter results for 2024. With me here today, I have President and CEO Ulf Larsson and CFO Andreas Everts to go through the results and take your questions.

Over to you, Ulf. Thank you, Anders. And also from my side, good morning and a warm welcome to the presentation of our result for the third quarter 2024. We can state that markets for all fiber-based products in all areas are stronger in Q3-24 in comparison with the same quarter last year. We have had generally higher prices and stronger delivery volumes. In energy, we have seen a negative market development in Europe for liquid biofuels, also affecting tallow prices when compared Q3-24 with the same period last year. This is of course not least due to reduced mandate for liquid biofuels in Sweden since 1st of January this year. Also this quarter, we note a high demand for wood, raw materials and by that continued increasing prices. We have in addition also increased volumes from our own forest, which in comparison with Q3 23 has strengthened the result in business area forest. Sales increased by 22% and EVTA by 42%, Q3 versus the third quarter 23. Higher prices and increased volumes explain the improvements. So this slide will give you an overview of KPIs for the third quarter 24. As you can see, our EBITDA reached 2 billion SEC, which corresponds to an EBITDA margin of 38%. Our industrial return on capital employed came out at 12% for the third quarter, counted for the last 12 months. The leverage is at 1.6, and net debt to equity was 11%. We have now finalized our big strategic investments in Obola, Ortvik, and Gothenburg. just now they are under ramp up but coming years they will contribute in a positive way so i will now make some comments for each segment starting with forest high harvesting levels from our own forest have contributed to stable supply of woodrow materials to our industries during this period We have seen a continuous long-term trend of increasing prices for both pulpwood and saw logs as can be seen in the graph on the bottom left. When one compared Q3 24 with Q3 23, sales were up 12%. EBITDA was up 7%. And that is mainly due to higher prices and slightly higher harvesting levels in our own forest. Turning over to business area wood. 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. Stock levels are at normal levels among producers and mainly on the low side, I would say, at customers. I estimated that price for solid wood products in the third quarter would be close to unchanged, which also happened. Our deliveries last quarter were high due to intense sales activities and strong long-term relations with our customers. This consequently also gave a decreased stock level of sown goods for SCA. The cost for saw logs has increased from the second to the third quarter, and we expect them to continue to increase going into the fourth quarter. Sales were up 23% and EBITDA was up 79% in the third quarter, 24% in comparison with the same period last year. The reasons behind this were mainly higher prices and higher volumes. The EBITDA margin consequently increased from 13% to 19%. 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 in general is on a normal level. As can be seen in the diagram to the bottom left, the Swedish and Finnish sawmills production has also been on normal levels accumulated so far 2024. In the diagram to the top right, we can see the prices increased during the first half year, but has the last quarter leveled out. Going into the fourth quarter, I estimate that prices will continue to be close to unchanged in local currencies, and that is due to balanced stock levels and high and further increasing raw material costs. In the construction sector, we can conclude that the starts of new building is continued to be low. Looking forward, we believe that consumption in the repair and remodeling sector will be early to respond in a positive way to lower interest rates. Over to PALP. The ramp up of our new CTMP mill is running according to plan. Production optimization work continues. Our new CTMP products are well received in the market. Consequently, CTMP products represents an increase in share of our pulp sales. As you might remember, we have had an unplanned production stop at Östrand pulp mill in the second quarter due to a leakage in our recovery boiler. Total negative impact communicated was 60 million SEK in the second quarter and a similar amount in the third quarter. When we compare Q3-24 with Q3-23, sales were up 27%, and EBITDA was up more than 200%, and that is mainly due to higher prices. The yearly maintenance stop at Ørstan had a negative impact of 35 million SEK in the third quarter, and we expect an additional negative impact of 225 million SEK in the fourth quarter. After a rather weak 2023, demand for pulp improved in Europe and the U.S. during the first half of 2024. MBSK prices peaked in Europe in July at $16.20 per ton after increasing for 10 consecutive months. We then saw decreasing prices and weak demand in August and September. In the U.S., MBSK prices have had a similar development as in Europe but with a small delay. After a rather slow summer in China, with weak demand and decreasing prices, we reached the bottom in the end of August, and now we approximately see 5% higher prices today, and I would say an improving demand. Looking at CTMP, prices peaked in Europe during the third quarter, while being rather flat in Asia at the low level. In October, MBSK prices continued down in Europe to $15.40 per ton and $17.35 per ton in the U.S., while stabilizing in China at net price around $7.50 per ton. Prices now seem to increase further in China, but still we have a delta in prices between Europe and China of approximately $90 to $100 per ton. Inventories of both softwood and hardwood pulp as well as the CMP pulp are on a rather high level, as you also can see in the diagram. Moving over to container board. The ramp up of the new Kraftliner paper machine in Obara is progressing. During the quarter, we have taken extra stops to adjust the machine line. We also continue to see high operational costs, which are absolutely expected in this phase of the ramp up. As earlier communicated, we plan to reach full capacity in Ebola in 2026. Sales and EBITDA were up 15 and 26% respectively in Q3 in comparison with the same period last year. And we can note higher prices and volumes on the positive side while high raw material and other costs had a negative impact on this comparison. During the third quarter, we performed a planned maintenance stop in Munchsund. The stop went well, but had a planned negative impact on the result in Q3 of close to 90 million SEK. We see continuous growth in box demand in comparison to last year, and we are now almost back to historical growth trend levels. We also believe that decreasing interest rates and GDP growth should support the continued growth in box demand over time. On the other side, we also note the negative growth in the European manufacturing industry, which at the moment drives the demand in a negative direction. Nevertheless, the European demand of craft liner has improved in Q3 compared to the same period last year, and we expect full year demand growth for container board to stay positive. Supply and demand balance will be impacted negatively by additional supply coming on stream, with the vast majority coming in test liner. European prices for brown craft line have increased in Q3 by 40 euro per ton and white craft line has increased by 30 euro per ton. Craft line inventories have been maintained on an average level in Q3 with a seasonal increase in August as well as stock build up ahead of planned maintenance shots during Q3 and Q4. The availability of OCC is well balanced and consequently we have seen OCC prices sliding sideways and started also to decrease in the later part of Q3. So, finally, renewable energy. In business era renewable energy, we have had a weaker quarter with lower market prices for tall oil and liquid biofuels in comparison with the same period last year. Biopremiums and prices have decreased to substantially lower levels compared to 23. Main reasons are lower blending mandates in Sweden and increased imports from China, creating an imbalance in supply-demand in the renewable fuels market. Ramping up, Gothenburg Biorefinery together with SD-WAN 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 bio-premiums. Due to higher prices for solid biofuels, sales were up 6% in Q3 this year in comparison with the same period last year. The EBITDA level decreased by 36%, mainly due to low market price for tall oil and the bio-premise in liquid biofuels, and also due to higher raw material costs for solid biofuels. The market for solid biofuels remains stable. Higher volumes are expected in the coming quarter due to positive seasonal effects. SAA continues to grow in leasing out land for wind power and has reached 9.7 terawatt hours of wind power on SAA land by the end of Q3, and that is equal to 20% of installed capacity of wind power in Sweden. And finally, I can mention also that the execution of the windmill, our windmill project, Fasikan, is progressing according to plan. So, by that, I hand over to you, Andreas.

Thank you, and good morning, everybody. I'll start with the income statement for the third quarter. Net sales increased 22% to 5.2 billion during the higher prices and higher volumes. EBITDA increased 42% to 2 billion during mainly the higher prices, which is partly offset by higher costs for wood raw materials. The EBITDA margin was 38%. EBIT increased just below 1.5 billion, and financial items totaled minus 131 million. With an effective tax rate around 20%, big net profit just below 1.1 billion, or 1.52 SEC per share. On the next slide, we have the financial development by segment. I'll start with the forest segment to the left. Net sales decreased to 2.1 billion compared to the previous quarter due to lower deliveries to SCA's industries. EBITDA decreased to 777 million due to seasonally lower harvest from SCA's own forest. Compared to last year, we have increased our harvesting of our own forest, which has helped to mitigate the impact of higher costs for wood-drawn materials. In wood, prices were marginally lower compared to the previous quarter. Net sales totaled 1.5 billion, or positively impacted by high delivery volumes. EBITDA was aligned with the previous quarter and amounted to 288 million, corresponding to a margin of 19%. In pulp, net sales decreased somewhat to 2.1 billion due to lower delivery volumes, which are offset by higher prices. EBITDA increased to $562 million, corresponding to a margin of 27%. At the end of the quarter, we start a planned maintenance stop, which had a negative impact of $35 million, and expected to impact the fourth quarter with $225 million. In container board, craftile prices increased during the quarter. Net sales totaled $1.6 billion, and EBITDA increased to $380 million, corresponding to a margin of 20%. In the quarter, with a planned maintenance stop in Mungsund with a negative impact of 87 million. In renewable energy, the market gift for liquid biofuels and tile load continues to be weak. EBITDA increased somewhat to 99 million, corresponding to a margin of 23%, driven partly by lower ramp-up costs in the new biorefinery. On the next slide, we have the sales between Q3 last year and Q3 this year. Prices increased 19%, with higher prices in pulp, container board, and wood. Volume increased 4%, driven by the new paper machine Nobola, and higher volumes in wood. And lastly, currency had a negative impact of 1%, bringing net sales to 5.2 billion. Moving on to Bittar Bridge. And starting to the left, price mix had a positive impact of 768 million, and higher volumes had a positive impact of 58 million. Higher costs for mainly wood-grown materials had a negative impact of 46 million, with a negative impact of energy of 128 million, and a negative impact of currency of 26 million. In total, EBITDA increased to 2 billion, corresponding to a margin of 38%. Look at the cash flow. We had an operating cash flow of $708 million in the quarter and $1.9 billion in the first nine months. This means we're continuing to fund our strategic investments with operating cash flow. Look at the balance sheet. The value of the forest assets totaled $108 billion. Working capital increased to $5.7 billion, driven by higher prices, higher volumes, and higher costs for wood, raw material. Capital employment increased to $116 billion, and net debt stood at $11.6 billion. And we're now almost finalized our large ongoing investment projects in Obola, Ortviken, Bolsta, and Gothenburg. Equity totaled $105 billion, and net debt to equity was 11%. Thank you. With that, I'll hand back to you, Ulf.