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1/31/2025
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 Evert 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 SEA showed that we can deliver good profitability even in a challenging environment. Despite substantially higher costs related to wood raw material, SEA reached 7.1 billion sec on the 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 Obola and the new CTP 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 raw material was steady increasing harvesting from SEA on 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 sec 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 7.1 billion sec for 2024 which corresponds to 35% EBITDA margin. Our industrial return on capital employ 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, Ortviken and Gothenburg which will all contribute positively coming years. The proposed dividend for the AGM to decide on is 3 sec 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 sec per share. And finally earnings per share was 5.8 sec. This slide will give you an overview of KPIs for the fourth quarter 2024. 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 338 million sec. 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 SE 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 pulp wood 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 pulp wood and saw logs as well as higher delivery volumes to SEA industries. When excluding the effective lower evaluation of biological assets of 356 million SEC Q4-24 in comparison with Q4-23, EBITDA was up 18% and that was mainly due to higher prices for pulp wood and saw logs and higher delivery volumes to SEA 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 the normal level that consequently also gave a close to unchanged stock level of sawing 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%. 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 sawmills 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 Q424 with Q423, 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 of Östrand had a negative impact of 215 million SEK in the fourth quarter. MBSK prices peaked in Europe in July at 1620 USD per ton 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 ton. 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 PALP 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 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. We have now similar price levels in Europe and China and a bit higher in the US. As earlier announced, SCA has increased the price on MBSK PALP in Europe by 50 USD per ton and the new price will be effective from February 1st. And maybe as a reminder I can mention that we had increased discount rates from 1st of January. In the US 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. Some words about short fiber. Susano announced 100 USD per ton for January. We think that will come through in February. We have also seen another announcement of 60 USD per ton in March. 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 Obala had a negative impact in this comparison. EBTA was down by 17% due to the maintenance stop. The stop went well but had a negative impact on the result in Q4 of 120-130 million SEC. 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 by the 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 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 lining 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 lining have decreased in Q4 by 40 euro per ton and white craft lining has during the same period decreased by 20 euro per ton. We have seen a continued price pressure in the beginning of this year and prices for brown craft lining have decreased by another 20 euro per ton 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 craft liners from March with 90 euro per ton. So, over to renewable energy. In business area of 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 tell 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 bio refinery 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 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. However, we have seen some recovery in prices and bio premiums towards end of the quarter. Electricity prices were low during the quarter which impacted our wind business negatively. SAF continues to grow in leasing out land for wind power and has now reached around 10 terawatt hours of wind power on SAF 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. In 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 SEA's forest assets totaled 107 billion in 2024 which was in line with the previous year. The decrease of the freeage 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 increase in long-term prices for woodrow materials and net growth in standing volume while the value of the land decreased. Prices for woodrow materials continued to increase. The slide shows the index price development for soil logs and pulpwood paid by SEA'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 first 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 higher prices which was partly offset by higher costs for woodrow 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 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 Åbala 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 4S 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 SES 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 due to higher volumes from OBALA and positive currency effect. EBITDA declined to 942 million due to higher costs for raw material. In the fourth quarter we had a planned maintenance stop in OBALA which impacted the results by 123 million. In renewable energy the cost for sawdust increased which affected the profitability in solid biofuels negatively but affected our wood division positively. The market for liquid biofuels and tile 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 EBITDA bridge and starting to the left. Price mix had a negative impact of 588 million and higher cost for mainly wood raw 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. We had a positive impact from currency and the quarter was negatively impacted by higher cost 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 and equity of 11%. Thank you and with that I'll hand back to you Ulf.
Thanks Andreas. Just to summarize, I think that we have delivered a strong result during last year. We have had rather tough market conditions and despite that we delivered 7.1 billion SEC and a 35% EBITDA margin. We have seen a rather strong price increase when it comes to wood raw materials and that we have to some extent mitigated by record high volumes from our own forest. We can also state that we see step by step higher production capacity related to strategic investments in container board and pulp, which is positive of course. We can also see that the market has bottomed out at the end of last year and now we see a rather positive development in each area, wood, pulp and also container board. So by that I think we open up for questions.
Thank you. Ladies and gentlemen, if you would like to ask a question, please press star 1 on your telephone keypad. Thank you. We will now take our first question from Johannes Brunzillas of DNB Markets. Your line is open, please go ahead.
Yes, hello everyone. It's Johannes. I have two questions. First on Ebola and the ramp up. You touched upon it Ulf, that you talk about step by step higher volumes. Would it be possible for you to sort of give us some kind of guidance on how much more volumes we can expect 25 versus 24 due to Ebola? And if you can talk a little bit about improved cost position when Ebola is producing more and is presumably more stable. That's my first question.
I will not give you a figure, but again, it's fair to believe that we should reach maybe -20% more output from Ebola this year in comparison with 2025. We are still in the phase where we, if we need, I mean, we stop and we do what we need in order to long term have a high quality site. But I mean, it's fair to expect that we will increase by 15-20%. About improved cost, Andreas, maybe you should say. Yeah, we still
had some ramp up cost this quarter around maybe 60-70 million and of course that will continue to decrease over time. What we guided on at the investment was that when fully ramped up, we should contribute with around 800 to 1 billion second total EBITDA assuming trend prices.
Yes. And then my other question is, yeah, on your general comment on the cycle, if you said you're expecting the cycle to have bottom out here at the end of last year. Can you elaborate on that? I mean, do you see any risk for any backlashes here? I'm particularly thinking about how, where you go for price hikes, any risks at all in the market or is it sort of you're seeing evidence of improving markets now?
It's always a risk to be in the market. I mean, we cannot really forecast what's going to happen in the second half of this year. But we feel, if we talk about pulp, I mean, we feel a stable demand now. We have also seen that the stock level has come down. And I mean, we also today, I would say that we were more or less the same net price in China, Europe, a little bit higher in US. But that is a good starting point for further price increases, to be honest. I mean, we feel that we have a rather strong pulp market a little bit earlier than I thought maybe. But still, there we are. I mentioned also that we, and that was a little bit of a surprise that we will increase prices a little bit in the first quarter. And that is mainly for solid wood products and that is mainly related to high cost for wood raw materials, of course. And so I mean, but then I believe as we will have a seasonal effect in the second quarter with another price increase in the second quarter. Maybe not. I think it would be nothing dramatic, but still we will have a positive development there. In Containerboard, I was maybe a little bit surprised myself. We actually reduced the prices in, as I said, in January by 20 euro per ton. And all of a sudden we feel that we have a rather balanced market. We also, of course, we feel a strong cost pressure in all areas. And we also see that test line producers, they now go for price increases. And that's the reason also why we, among others, we have announced a price increase from effective from first March by 90 euro per ton. I mean, in all these three areas, we are fairly positive as it is just now. Okay, that's
helpful. Thank
you.
Thank you. And we will now take our next question from Efrem Reve of City Group. The line is open. Please go ahead.
Thank you. Just a couple of questions. Firstly, on the Containerboard, sorry, specifically Craftliner, price increases that you have announced today of 90 euros. Is it more a function of cost push inflation that you're seeing around the industry with higher PUL prices and PUL prices, or is it more a function of demand because inventory for Craftliner looks a little bit on the higher side and also the shipping rates are pretty much flatish versus the third quarter. So what gives you confidence that these price increases will go through? And secondly, again, on a similar vein on the wood division, can you give us a sense as to historically what has been the lag between saw log prices going up and wood prices, the wood product prices kind of going up? I appreciate kind of demand may be a little bit weak right now, but in your experience, what's the historic kind of pattern or lag been? Thank you.
Thank you. In general, I think it's better to take one question at a time because then I can remember what you asked for. But if we start now with the Craftliner anyway, I mean, no doubt, I mean, we had a stronger consumption in 2004 in comparison with 23. So that is one of course underlying factor. I said that also that in the retail sector, we start to see quite a quite good demand for boxes while we all know that. I mean, the manufacturing industry is that's not perfect, but we have listened to some reports now from Volvo and other players. And I mean, they also feel that they have an increase in demand in the underlying demand in the market. So let's see where we come. No doubt that for the moment it is a cost. It is the cost pressure that really push prices upwards now in both Craftliner and testliner. So I mean, that is the main that is of course the main reason. In wood, and we were talking about the lagging effect, I would say that I don't know if I can give a general answer to that. Of course, if you have a very high price for wood raw materials, then you need to increase the prices for the wood products. Otherwise, you when you cash negative, then then of course, producers, they start to stop production that has happened. And I mean, even if we did 17% they between margin in the fourth quarter, we can see that many players they are in in red figures for for the fourth quarter. So, so it differs for different reasons. It differs. The profitability differs between different companies and also different geographical areas. So I don't know if I can say give you a general answer on that one. Like to add something on the US.
No, I guess the add that I mean, as we mentioned before that we will see continued increase in both pulpwood and solar prices going into Q1.
That will of course mitigate the effect of the price increase that we now will perform during the first quarter. Thank you.
Thank you. And we'll now take our next question from Lars of Stiffel. Please go ahead.
Thank you. Just want to come back a bit to the assets you're ramping up. You mentioned 67 million in the quarter for ramp up cost and oblong. Could you share what you've had through the year both at the CTMP mill and oblong and how we should think about a gradual reduction of the delta in 25?
If we look at the ramp up cost for oblong, I think I guided in Q3 for about 45 million and then in Q1, Q2, I think it was similar level to what we have in Q4 around 60, 70 million. And then we will see how it develops in the next year. But as you said, ramp up and then we fix something that you have to reduce the production of that of course increases the amount of chemicals and things you need. So that will gradually decrease. It's hard to say exactly. If we look at the CTMP there, I think the ramp up costs are less. We're still trimming the mill, but I think we are at a good level there now.
All right. Can the question just on the harvest levels? You said it's record harvest levels and you have a positive trajectory over time of course to increase your harvest. But these sort of levels that we have now, are they compatible and can they continue with the growth you have in the forest?
Yes, so we have, if you look at our harvesting plan, we have a target to over the next 5-10 years to go up to 5.4 million cubic meters on average. So the last couple of years we have gradually been increasing to that level. So this year we had around 5.2 million.
All right, thank you.
Thank you. We'll now move on to our next question from Patrick Mann of Bank of America. Please go ahead.
Thank you. Good morning. There are two big forest packages up for sale at the moment, one in the Baltics and one in Sweden. Are you interested in adding significantly to your forest holdings in the near term or can you just talk about how you're thinking about that? Thank you.
I mean in principle we are interested in buying forest land that we have done in the past and we will continue to do so also going forward. Then it's as always a question about timing and I would say the sale that we now see in Sweden, we are not in the process and you have lots of limitations I guess in that process. I don't know if it's open for industrial players really. We are not involved, we have not been invited so that's the clear answer on that one. The Baltics is of course of some interest but again it's a question of timing and what you can afford for the moment being. Just now we are very much focused on our balance sheet and to consolidate and ramping up what we have started in terms of big investments. So that is mainly our biggest focus for the moment being.
Thank you. And then
if I could
have another one. Wood prices, the raw material costs, you flagged a couple of times record highs, you continue to expect that to increase into the first quarter. What's the longer term outlook here? How high can they go? What factors could we watch as leading indicators that potentially could come down or consolidate? Thank you.
Yeah, I mean just now we see that it is easier to get access to pulp wood at the end of last year but also in the beginning of this year. While I think in some areas at least you still have a lack of saw logs. And I mean if you have a lack of saw logs that will push prices up to the level where producers start to lose money of course. How long will it last? In general I would say that we will have a slightly tough balance when it comes to supply and demand in different parts of the world. Canada, Central Europe and so on. And that's the reason why I think that the SEA is very well positioned as we can take around 50% of what we need from our own forest. As we've also discussed before, I mean we are still impacted by the Russian invasion of Ukraine and you know that we have lost into the European system about 10 million cubic meters per year. And at the same time Sveaskog, they have announced that they will or they have reduced the harvesting level on their own forest by 1 million cubic meters. I guess that's mainly in the very northern part of Sweden. So I mean I guess that it will be a tough balance also going forward. And by that we will have rather high prices for wood raw materials.
Thank
you. Thank you and we'll now take our next question from Robin, the centre-visitor of Cardighay. The line is open, please go ahead.
Thank you very much. The first question I have is regarding the container board segment. Andreas, did you comment on the expected ramp up cost in 2025 versus 2024? I guess you spoke about 2024 but what about the outlook for 2025? We
expect to continue to have ramp up cost in 2025 but the exact numbers is hard to say. We have to wait and see but we expect them to gradually decrease as we ramp up production.
Alright, thanks. I thought about the wood market. You call an increase in Q1 versus Q4 as a P&L impact if I understand correctly. Is that the laggy impact of prices going up throughout the end of last year or are these sort of in a way spot prices that you buy now? Are they still increasing versus the end of last year?
I would say it's a lagging effect for pulp wood. It's a lagging effect and in some areas I also guess that we have a rather big portion of lagging effect when it comes to saw log prices but in some areas the competition to get saw logs is quite tough. In some areas I guess we can also see somewhat higher prices for saw logs but again when you look at the result for many players just now they are on negative or red figures and that cannot really continue because then production of course will decrease. We feel a little bit of a surplus of pulp wood I would say in the market. Alright,
thanks. I just want to add that saw log that some players recently added price with around 100 sec per cubic meter so I think on saw log both underlying prices are increasing but a lag effect on pulp wood is more of a lag effect.
But also I just want to clarify that we have a two price system so what you see in the price list is not always what you pay in the market of course.
No, for sure. Regarding the pulp wood surplus you're seeing in Finland there's a lot of talk about the energy with the market that it has collapsed because of the very mild winter. Is this something that plays in or is it just pulp wood sort of balance becoming better because of the tough market environment and weaker demand?
I guess that the mild winter definitely is playing in and I mean as I described we don't see a tougher end market this year in comparison with last year. I mean we see coming price increases. I mean we will not maybe have an effect the first quarter but definitely the second quarter in all areas both in pulp and also in container wood. So I mean the demand will be I think good but availability of pulp wood is higher as it is now in comparison with the past. Might be connected related to the energy market.
Yeah, yeah. The final question I have is related to the wood segment. How do you see the impact of potential tariffs into the US from Canada? What would the impact be on the market and any impact on you directly?
I mean I think it would be a mess if we have these tariffs. I mean we haven't seen them and we don't know what kind of in what shape we will have them. But I don't think it's so easy to foresee what's going to happen because the pattern will of course change. If you have tariffs between Canada and US that will short term it will maybe it might be good for our products. Long term of course these products must find another play. It will have no impact on the consumption. So I mean for us I think for Sweden as a country and for us as very dependent on export I think we like to have a free trade and a level playing field. So we don't like tariffs. We can gain in some area and we can lose in some area but long term I think it's so important that we can have a free trade.
I understand. Thank you very much.
Thank you and we will now take our next question from Gaurav Jain of Parkways. Yalani Saheb then please go ahead.
Hi thank you so much. I have three questions. One is your comments on pulp prices. Can you just please repeat them because I think there were a few moving parts. So what I got is that Susanna has increased prices by $100 in Feb and another $60 in March. And you have also announced a price increase now and you will look at another price increase in Q2. Did I get that correct?
Yeah I mean first if we take short fiber first. I mean and then what Susanna has announced is $100 per ton up from January. We believe that that will come through in February maybe. But that's not up to us to say. And then they have announced another price increase from 1st of March by another $60 per ton. So all in all $100 plus $60, $160 per ton. On MBSK we have I would say that we have increased prices now from effective from 1st of February by $50 per ton. And I mean it's still to be seen what's going to happen in coming months. But we believe that the price will continue to move upwards. But again you have to take into consideration when you do a calculation that we had an increased discount rate from 1st of January in Europe. And that one was a little bit higher in comparison to the discount rate that we increased in US. So I mean that must be taken into consideration when you calculate on the net effect. And as always we have a lag effect before we can see it in the P&L.
Sure. Thank you so much. Now my second question is on what should we expect in terms of biological gain to be put in P&L for next year? And if I look at that forest valuation graph then clearly over the last two years prices are down. So that average of three years line should be flattening out, which it has. So does it mean that you will start taking lower biological gain in your P&L?
The biological gain is mostly driven by the net growth and the increase in the price for wood raw material. And we have in our model several year average price for wood raw material and then that is expected to continue to increase as we move that forward. But currently we expect something around 1.8 billion for biological assets, but it depends on how things will develop during the next year.
Okay. Thank you so much. And my last question is on CapEx plans for FY25 and beyond. So could you just reiterate them? What should we put in the model?
So CapEx, if we start with current CapEx we came in a bit lower this year, but we have some spillover effect to 2025. So we expect maybe up to 1.7 billion in the current CapEx and on strategic CapEx just below 1.5 billion, but also depends on the payment, the timing of some payments, but as a round figure.
Sure. And where should we step down after FY25? If you could comment on that.
After 2025, strategic CapEx will decrease as the largest payment we have now for strategic CapEx next year is our windmill Fasikan and that is around 1.1 billion for the next year. We also have some payments left in pulp and our container board division, but in 2026, strategic CapEx will go down a lot if we don't do any new big investments.
Thank you so much.
Thank you. And we'll now take our next question from Oscar Lindstrom of Danske Bank. Please go ahead.
Thank you, operator. A couple of questions from me and maybe I'll start with the first one then. Talking about net debt, which is now just under 11 billion, about one and a half times EBITDA and you say that presently you're focused on strengthening your balance sheet. What level of net debt are you aiming for and do you believe is sort of appropriate for you medium to long term, say? And sort of an additional question on this, would you be willing to significantly increase your net debt short term? And if so, what would be the sort of upper limit that you would be willing or able to go to, you believe?
Firstly, I mean, we want to keep an investment grade credit rating. That's our target. And as Ulf said, our focus now is to ramping up our investments and that will of course increase EBITDA and decrease the leverage. That's our current focus. We don't want short time to increase our net debt significantly. We are committed to staying at the investment grade.
And to stay at investment grade, you believe you need to be at roughly where you are now, sort of one and a half times EBITDA. Is that how I should interpret your reply? No,
we have. I mean, for us, I think FFO debt is what limits us. And to be investment grade, we need FFO to debt over 20%. Currently, we are at around 32%, something like that. But to keep our current rating, we need FFO to debt of around 30%. But to keep investment credit, it has to be above 20%. So we still have some headroom. But our aim is to be around 30% FFO to debt.
Right.
Thank you. And so there's no sort of leeway for you to short term significantly to go below 20%.
No, we don't want to go below 20%. And
then on the forest land, I mean, you stated now earlier in the call that you are interested in buying more forest land, including in the Baltics. And if I look at your webpage, you say, I think you have now about 70,000 hectares of land, which I believe about 50,000 is forest lands in the Baltics. You know, how hard is that target? I mean, is it an absolute ceiling? Would you be willing to sort of go significantly above this? Or, you know, what's your thinking here about owning forest land in the Baltics? And, you know, how much do you need? What would you like to have?
As you know, we have a forest company with industry and step by step we have increased the area of forest land within the CIA and that we will continue to do. And preferably we will buy in Sweden. But the problem is to get access to legal entities, which we need to do. You know the legislation. And the reason then for us going to the Baltics is that we can continue to increase the forest land. And that we will do when we have the money. I mean, that's not emergency. I mean, the plan and we did announce something just in order to give a figure. And we said that we should reach 100,000 hectares in five years. I mean, if we if it takes seven years, it doesn't really matter. It's also a question of what timing and what kind of price level you have in these different regions. And I mean, when you get the opportunity. So I mean, so that's our view. We will continue to buy forest land when we can. If we can, we will we will preferably we will buy in Sweden. If we can't do that, then we think that the Baltics is a good opportunity and a good option. If we take care of the forest land in the Baltics in the same way as we do in Sweden, then we think it's a great potential to have land there.
Right. Thank you. Just a final question, a quicker one on pulp. You mentioned that the discount rate had increased in January. How much roughly?
Sorry, that was
your 50. Yeah, the discount rate. I'm just trying to figure out, you know, if the discount has increased by roughly 50 US dollars per tonne, and then now you're you're announced a 50 dollar per tonne increase. I
can say that the price increase has not fully compensated for the increased discount in January. It will do when we have done another 50 US dollar per tonne. Then we have a little bit more than compensated. So then you have the range. Wonderful. Thank you. Those were my questions.
Thank you. And we'll now take our next question from Charlie Massanz of BNP Paribas. Please go ahead.
Thank you very much. Most of my questions have been answered. But just one more on pulp. The revenue per tonne drop was a bit sharper than at least I've anticipated in Q4. I just wondered whether there was any mixed effects, whether it was a mix to more CTMP as you took maintenance downtime in the main mill or whether it was a mix between contract and spot, which was adverse in the course of the Q3. Thank you.
I think the largest effect is, of course, we have a larger portion of CTMP now as you're ramping up our new CTMP mill, but also had the maintenance stop in Örstrand.
Thank you.
And we'll now take our next question from Jonas Messlars of Morgan Stanley. Please go ahead.
Thanks very much for the presentation. Most of my questions have been answered, but I had one on the container board and regarding again the price hike of 90 euros you've announced. Could you perhaps clarify where that gets your brown and white craft liner price levels? And if we were then to look at your Q4 profitability per tonne, if we get a full 90 euro to come through your P&L for that division going forward, it feels like profitability would move towards historical average levels. Is that the right way to think about it? And is that realistic given where inventory levels are and where utilization rates are across the industry?
Thank you. Just to start, if our price level, we don't comment on exact price level, but what you can do is if you look at the sales and divide that by our delivery volumes, then you would get a very good estimate of where our current price level is on container board. And I think in pulp, when you have price increases, then you have to, that's gross. So they have to remove the rebate in craft liner. The discounts are very, very low. So if prices, for example, go up X euro per tonne, that's also roughly what the prices increases on. So that's a bit different dynamics between pulp and container board.
Okay, thank you. And so just the second part of the question around where that gives your profitability per tonne, it feels like it does improve profitability quite significantly from current levels. Do you think there is enough impetus today given utilization levels, given inventory levels that you show in your slide deck or for the full 90 euro to stake, you need demand to continue improving?
I mean, it's hard to say really, but again, I mean, the reason for this price increase is of course, mainly related to the cost pressure and but we also underlying we see we see an increased demand during 20. In comparison to 23. And I think personally, I think we will see a continued recovery in the in the economy during 25 and not least 2026 if if nothing very unexpected will will happen in in coming years, I think we will step by step we will see the recovery and again, when we as one indicator when we look at the box demand, you can see that we are now back on the on on trend levels. And I guess that will continue. So I don't know if you have something or no.
Thank you. If you find that your question has been answered, you may remove yourself from the queue by pressing star to thank you. We will now move on to our next question from Andrew Jones of UBS. The line is open. Please go ahead.
Hi, just just on the 90 euro craft line of price hike. I'm curious to what extent potential supplier disruption from Finland is is filtering into your thinking around that obviously, last year you benefited from you know, a lot of capacity being shut in due to the pause strikes. Is that something that's part of your your thinking there and also just just a broader question for this year. There's obviously loads of new test on a question coming into the market, usually test on and move together. Given the vast difference in where the supply additions are coming from, do you think there is potential for that spread to significantly widen this year as that capacity hits? Thank you.
Yeah, I think if we start with the second one, we shall remember I mean the spread has step by step increased and I think in I mean to some extent you have a connection between craft line and test liner. But it is of course also question about function and what we see now in the market is that the capacity of test liner is step by step increasing while craft line the capacity is I mean so stable. It is small as our own expansion in Ebola that that have an impact. So I guess that you will see and yeah, we have seen an increasing spread between craft line test liner. I guess that will remain for a while. It might be also bigger because again, it's a question about supply and demand. The first question on the other side. Don't remember. So maybe you can take it.
Can you take that question again?
Yeah, I was just asking about you know, you obviously have potential for supply disruption again in Finland. Is that filtering into the way you're thinking about the price of it? Is this opportunistic given there may be some disruption over in Finland and you could benefit from that?
Maybe I didn't get it right but was it if we have any relation with the potential strike in Finland? Was that the question? Yeah, I mean what we have seen in the I mean, we've seen a lot of strikes in Finland for some reason. And I mean, if we have a strike in Finland, that will of course have an impact depending on how long will it be and I mean, how many will be impacted by the strike but that we have definitely seen in the past. We don't speculate in the Finnish strike and definitely not now when we talk about price increases from 1st of March. I mean, that has no connection at all with the Finnish situation.
Okay. Okay, thank you.
Thank you. And we'll now take our next question from Linus Larsson of SEB. The line is open. Please go ahead.
Thanks a lot for squeezing in. I wanted to follow up questions towards the end of the call. You talk about rising wood costs in your P&L Q1 compared to Q4. I'm just curious whether you could quantify that either on a per cubic meter basis or even better on an absolute level please. Yeah,
it's about 6-7%. Yeah, -7% increase on both pulpwood and solar around that. Sorry? 6
-7%. On a sequential basis in the first compared to the fourth quarter?
Yes.
Okay. And that was on the pulpwood side?
On both, on both. On
both. Okay, great. Thank you. And then also you touched upon it, but maybe just on the wood product side, your market outlook, any green shoots, any early cyclical signals that you're picking up in any geographies. Could you comment on that please?
I think it's fairly stable demand all over the area just now. So I mean, as I said, typically we don't, it's hard to manage to increase prices in the first quarter typically, but that we will do now. It's not much, it's single digits, but anyway. And then of course, I believe that we will have a seasonal effect also in the second quarter and by that we can continue to increase prices for solid wood products. Then on the other hand, and as Andreas just mentioned, I mean, we will see increasing log prices in the first quarter. So by that the margin for the solid wood business will, whether they will remain stable or not, it remains to see. But we feel, I mean, if you also look at the inventory level, it's on a rather normal level. I guess we have a normal level by producers, but I guess that among customers, it's on the low side that we don't know about it. But I guess so. We feel that when you, when we talk to customers and when you try to find out what kind of demand you have out there.
Right, great. That's helpful. Thank you.
Thanks. And that, ladies and gentlemen, concludes our full year report presentation. Welcome back in April for our first quarter report. Thank you for listening and asking questions.