Svenska Cellulosa Aktiebolaget SCA (publ)

Good morning and welcome to this presentation of SEA's full year 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 for that Anders and also from my side a good morning and welcome to the presentation of SEA's result for the full year and for the fourth quarter 2024. During 2024 SCA showed that we can deliver good profitability even in a challenging environment. And despite substantially higher costs related to wood raw material, SCA reached 7.1 billion SEK on EBITDA level and by that an EBITDA margin of 35% for the year. During 2024 we have continued to gradually increase production in the sites where strategic investments have been made. This has resulted in higher delivery volumes in comparison to last year due to the new paper machine in Obola and the new CTMP line at Ortviken. These investments will contribute to increased productivity and cash flow generating during upcoming years. Another factor contributing to the result, and partly offsetting the higher costs of wood-drawer material, was steady increasing harvesting from SAE-owned forest, where we reached record high harvesting volumes in 2024, a bit over 5.2 million cubic meters. We will continue to ramp up harvesting of our own forest according to plan during coming years. The book value of SEA forest assets was in line with last year and amounted to 107.3 billion SEK at the end of 2024. And as you already know, SEA bases the valuation of the forest on complete transactions in the region where SEA owns land. Turning over to some financial KPIs related to the full year 2024. As already said, our EBITDA reached SEK 7.1 billion for 2024, which corresponds to 35% EBITDA margin. Our industrial return on capital employed came out on 7% for the full year 2024 in line with last year. The leverage was at 1.5 and we have now finalized our big strategic investments in Obola, Utviken and Gothenburg, which will all contribute positively coming years. The proposed dividend for the AGM to decide on is 3 SEK per share. This is in line with our aspiration to provide a long-term stable and increasing dividend to our shareholders. Last year, we gave 2.75 SEK per share. And finally, earnings per share was 5.8 SEC. This slide will give you an overview of KPIs for the fourth quarter 24. Our EBITDA reached 1.65 billion SEC during the fourth quarter, which gave us an EBITDA margin of 32% for the period. despite high costs of planned maintenance stops in the quarter of SEK 338 million. Our equity continues to increase and despite the fulfillment of several large strategic projects, net debt to equity remains on a solid level of 11%. So before looking into each segment I want to mention a few words on our capital allocation strategy. We have continuously developed our value chain by investing in superior mills and in additional production capacity of products with long-term growing demand such as pulp, container board, solid wood products and renewable energy. But we have also closed our production of publication paper, a product with long-term decline in demand. The investments made are generating additional cash flow now and in the years ahead. The generated cash flow has allowed us to increase our forest holdings by investing in forest land in the Baltics. We have also continuously invested in forest management on our current and new holdings and this increases net growth in the forest which in the long run both increases raw material supply to SA industries and generates a higher cash flow. The investments in the forest and the value chain are creating profitable growth, which enable us to pay a long-term stable and increasing dividend to our shareholders. I will now make some comments for each segment, starting with forest. High harvesting levels of our own forest have contributed to a stable supply of wood, raw materials to our industries during the period. We have seen a continuous long-term trend of increasing prices for both pulpwood and saw logs, as can be seen also in the graph in the bottom left. When one compared Q4-24 with the same period last year, sales were up 16%, mainly due to higher prices for pulpwood and saw logs, as well as higher delivery volumes to SEA industries. When excluding the effect of lower evaluation of biological assets of 356 million SEK Q4-24 in comparison with Q4-23, EBITDA was up 18%. And that was mainly due to higher prices for pulpwood and saw logs and higher delivery volumes to SCA industries. Turning over to business area wood. In general, we still have a slow underlying market for solid wood products. Despite the generally low demand, we continue to see some signs of improvement in the repair and remodeling sector. Stock levels are at normal levels among producers and mainly on the low side at customers. I estimated that price for solid wood products in the fourth quarter in comparison with Q3 would be close to unchanged, which also happened. Our deliveries last quarter were on a normal level that consequently also gave a close to unchanged stock level of sown goods. As expected, the cost for saw logs has increased from the third to the fourth quarter and we also expect them to continue to increase going into the first quarter. Sales were up 12% and EBITDA was up 260% in the fourth quarter 24 in comparison with the same period last year. The reason behind this were mainly higher prices. The EBITDA margin consequently increased from 5 to 17 percent. 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 inventory is on a normal level. As can be seen in the diagram to the bottom left, the Swedish and Finnish SOMIs production has also been on normal levels accumulated for 2024. In the diagram to the top right, we can see that prices increased during the first half of 2024 but has leveled out in the second half. Now coming into the first quarter 2025, I estimate that prices will increase with low single digits due to an improved balance between supply and demand. In the construction sector, we can conclude that starts of new buildings continue 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. When one compared Q4-24 with Q4-23, sales were up 27%, mainly due to higher prices as well as higher delivery volumes. EBITDA was up more than 300%, mainly due to higher prices and positive currency effects. The yearly maintenance stop at Östrand had a negative impact of 215 million SEK in the fourth quarter. MBSK prices peaked in Europe in July at 1620 USD per tonne after increasing for 10 consecutive months. We then saw decreasing prices and weaker demand during the remaining part of the year and prices reached the bottom in December at 1480-1490 USD per tonne. In the US, MBSK prices have had a similar development as in Europe, and after a slow summer in China with weak demand and decreasing prices, we reached the bottom at the end of August, and we now see approximately 10% higher prices and an improving demand. Looking at CTMP, prices decreased in Europe during the fourth quarter, while being rather flat in Asia at the low level. In January prices have been more or less unchanged. Inventories on softwood and hardwood pulp have been decreasing lately and are back on rather normal levels, as you can see in the diagram. CTMP inventories, on the contrary, have been increasing in the last months and are on a rather high level. In January, MBSK prices was unchanged in Europe at 1480 USD per ton while increasing further in China. And we have now similar price levels in Europe and China and a bit higher in the US. As earlier announced, SEA has increased the price on MBSK pulp in Europe by 50 USD per ton and the new price will be effective from February 1st. And maybe just as a reminder, I can mention that we had increased discount rates from 1st of January. In U.S. we have seen that the indexes went up by 35 USD per ton, which also will be used when we invoice our customers in February. And some words about short fiber. Susano announced 100 USD per ton for January. We think that will come through in February. And we have also seen another announcement of 60 USD per ton in March. So, moving over to container board. Sales were up 11% in Q4 in comparison with the same period last year. We can note higher prices on the positive side, while lower volumes due to planned maintenance stop in Obola had a negative impact in this comparison. EBITDA was down by 17% due to the maintenance stop. The stop went well but had a negative impact on the result in the quarter of 120-130 million SEK. The negative effect of the maintenance stop and the negative effect of higher costs related to wood raw material was met by higher prices. We have seen box demand moving sideways compared to Q3, but a solid growth in comparison to last year, and by that we are now almost back to historical growth trend levels. We can see an improved retail demand supported by increasing consumer confidence, which should support the continued growth in box demand over time. On the other side, we also note the continued negative growth in the European manufacturing industry, which for the moment drives the demand in a slightly negative direction. Nevertheless, the European demand of container board has improved in Q4 compared to the same period last year, and the full year demand growth for container board will end with the growth above historical trend levels. Moving into 2025, supply and demand balance will be impacted negatively by additional supply coming on stream, with the vast majority coming in test liner. Craft liner inventories have been slightly above average level in Q4, with a seasonal increase in December. The availability of OCC improved in Q4 and consequently we have seen OCC prices declining and we expect prices in the beginning of 2025 to be rather stable. European prices for brown craft line have decreased in Q4 by 40 euro per tonne and white craft line has during the same period decreased by 20 euro per tonne. We have seen a continued price pressure in the beginning of this year and prices for brown Kraftliner have decreased by another 20 euro per tonne in January. However, we now feel a more solid underlying demand in combination with strong cost pressure and due to that we have this morning announced a price increase for both brown and white Kraftliner from March with 90 euro per tonne. So over to renewable energy. In business area renewable energy we had a weaker quarter compared to the same period last year. The market for solid biofuels remained stable. Higher prices for sawdust in our pellets business were met by higher prices. In line with previous quarters, the green premiums for tall oil and liquid biofuels are substantially lower in comparison with the same period last year. Main reasons are lower blending mandates in Sweden and increased imports from China, creating an imbalance in supply-demand and in the renewable fuels market. Ramping up Gothenburg Biorefinery together with ST1 in this market environment has put a short-term pressure on the segment during 2024. We expect market volatility in renewable fuels to remain relatively high as Europe ramps up the blending matrix both in HVO and SAF. Long term our outlook is positive, but in the short term we expect continued low refining margins and buyer premiums. However, we have seen some recovery in prices and buyer premiums towards end of the quarter. Electricity prices were low during the quarter, which impacted our wind business negatively. SEA continues to grow in leasing out land for wind power and has now reached around 10 terawatt hours of wind power on SEA land by the end of Q4 and that is equal to 20% of installed capacity of wind power in Sweden. And finally I can mention that the execution of our windmill project Fasikan is progressing according to plan. And by that I hand over to you Andreas.

Thank you Ulf and good morning everybody. I'll start off with the forest valuation and the free average price which we use in the forest valuation to get enough transactions decreased by 2% to 388 sec per cubic meter. The market for forest transactions was slow in the beginning of the year but improved during the second half of the year in both volume and price. On the next slide, we have the forest price weight by reading and supplier, which you can also find in our report. The standing volume, as you can see, is concentrated in the southern part of Norrland. The freeage average price for 2024 is based on approximately 700 to 900 transactions from both Ludvig and Svefa. The valuation of SCA's forest assets totaled 107 billion in 2024, which was in line with the previous year. The decrease of the three-year average price in Sweden was offset by continued increase in standing volume to 274 million cubic meters. Biological assets increased by 1.8 billion, driven by increasing long-term prices for wood-row materials and net growth in standing volume, while the value of the land decreased. Prices for wood-row materials continued to increase. The slide shows the index price development for soil logs and pulpwood paid by SE's industry delivered to site. Prices are at record high level and is expected to continue to increase in the beginning of 2025. If we move on to the income statement and focus on the full year to the right, net sales increased 12% to 20 billion driven by both higher prices and higher volumes. EBITDA increased 5% to 7.1 billion, driven mainly by high prices, which was partly offset by higher costs for wood, raw materials. The EBITDA margin was 35%. EBITDA increased to 5 billion, and financial items totaled minus 506 million. With an effective tax rate of just below 20%, bringing net profit to 3.6 billion, or 5.18 sec per share. If we look at the fourth quarter to the left, EBITDA totaled 1.6 billion and was affected by planned maintenance stops in both Östrand and Obola with 338 million. Net profit for the quarter totaled 820 million or 1.17 sec per share. Looking at the dividend, we have proposed dividend of 3 sec per share, a 25-hour increase compared to the dividend last year, which is in line with our target to have a long-term stable and increasing dividend over time. On the next slide we have the financial development by segment for the full year. Started with the forest segment to the left. Net sales increased to 8.8 billion and EBITDA was in line with the previous year at 3.5 billion. High prices for pulpwood and soil log and increasing harvest from SCS-owned forest was offset by lower evaluation of biological assets. In wood, prices were 10% higher in 2024 compared to 2023. At the same time, prices for soil logs continued to increase, which was partly offset by higher income from byproducts. Net sales increased to 5.5 billion, and EBITDA decreased to 927 million, corresponding to a margin of 17%. In pulp, net sales increased to just below 8.1 billion due to higher prices and higher volumes. EBITDA increased to 1.7 billion, corresponding to a margin of 21%. In the fourth quarter, we had a planned maintenance stop, which impacted the results by 250 million. In Container Board, net sales increased to 6.4 billion, driven by higher volumes from Obola and positive currency effects. EBITDA declined to 942 million, driven by higher costs for raw material. The EBITDA margin totaled 15%. In the fourth quarter, we had a planned maintenance stop in Obola, which impacted results by 123 million. In renewable energy, the cost for sawdust increased, which affected the profitability in silo and solid biofuels negatively, but affected our wood division positively. The market for liquid biofuels and tall oil was weak, and in wind we had lower electricity prices. EBITDA decreased to 451 million, corresponding to an EBITDA margin of 22%. On the next slide, we have the sales bridge between Q4 last year and Q4 this year. Prices increased 14%, with higher prices in pulp, wood, and container board. Volumes increased 1%, and currency had a positive impact of 2%, bringing net sales to 5.1 billion. Moving on to Ribbita Bridge and starting to the left, price mix had a negative impact of $588 million and higher cost for mainly wood-drawn materials had a negative impact of $154 million. Energy had a negative impact of $67 million, mainly due to lower energy income and a turbine revision in pulp. with a positive impact from currency, and a quarter was negatively impacted by higher costs for planned maintenance stops and lower revaluation of biological assets. In total, EBITDA was in line with the previous year at 1.6 billion, corresponding to a margin of 32%. Looking at the cash flow, we had an operating cash flow of just below 3.2 billion for the year and 1.3 billion for the quarter. Moving on to the balance sheet, the value of the forest asset totaled $107 billion. Working capital increased to $4.8 billion. And capital employed totaled $115 billion. Net debt stood at $10.9 billion. Equity totaled $104 billion, corresponding to net debt to equity of 11%. Thank you. And with that, I'll hand back to you, Ulf.