Svenska Cellulosa Aktiebolaget SCA (publ)

Good morning and welcome to this presentation of SCA's 2026 half-year and second quarter report. With me here today I have President and CEO Ulf Larsson and CFO Andreas Evertz to go through the results and take your questions. Over to you Ulf. Thank you Anders. Good morning and also from my side a warm welcome to the presentation of our results for the second quarter. During the second quarter, SCA's market conditions were mixed between the segments. Pulp and solid wood products faced a continued challenging market with weak demand, while renewable energy delivered a record result. During the quarter, we saw improvements in both demand and pricing for the container boat segment. Price increases will impact our results for Q3 and Q4. High fuel prices driven by the conflict in the Middle East affected the result within the forest and industry segments negatively, while the liquid biofuels business within segment renewable energy benefited in terms of increased margins. SCA reached 1.3 billion SEK on EBITDA level and by that an EBITDA margin of 25% for the second quarter. Turning over to some financial KPIs for the second quarter. As already said, our EBITDA reached 1.3 billion SEK, which corresponds to 25% EBITDA margin. Our industrial return on capital employed came out close to zero, counted for the last 12 months, and the leverage was at 2.1, while our net debt to equity reached 10.7%. I will now make some comments for each segment, starting with forest. During the quarter, SCA continued to process wind-filled volumes for forest owners in the areas affected by the storm at the end of last year. Harvesting levels of our own forest were stable, but at a slightly lower level compared to the same period last year. Harvesting of our own forest has contributed to a balanced supply of wood-drawn materials to our industries during the first and second quarter. We've seen a continuous long-term trend of increasing prices for both pulpwood and saw log, as can be seen in the graph on the bottom left. However, during the second quarter, both pulpwood and saw log prices decreased. When one compares Q2 26 with Q2 25, sales were down 2%, while EBITDA was down 19%, mainly due to increased fuel costs and a lower harvesting volume in our own forest. In general we still have a slow underlying market for solid wood products. Demand has remained stable over the last period and we expect that situation to continue. The production in Sweden, Finland, Germany and also Canada has decreased giving support to price increases in local currencies. Stock levels remain on the high side among producers for pine but are normal for spruce. Stock levels at customers continue to be on the low side. Delivery volumes were lower in Q226 in comparison with Q225, but Q225 was on the other hand a record quarter in terms of deliveries for SCA. Our stock level of zone goods within SCA is at a balanced level. The price for solid wood products increased by 5% in the second quarter of 26 in comparison with the first quarter this year. The cost for saw logs in the second quarter continued to be at the high level. We expect now to see decreases in log costs when moving into second half of this year. Sales were 12% lower in comparison with the same quarter last year. EBITDA margin decreased from 18% to 6% due to high raw material costs, lower deliveries and also due to a negative currency effect. Today's stock level of solid wood products in Sweden and Finland is described at the top left on this slide and is shown in relation to the average for the last five years. As mentioned earlier, we note that the general inventory level is on the high side, especially for pine, while I judge the SCA level to be rather balanced. As can be seen in the diagram to the bottom left, the Swedish and Finnish sawmill production has been below the five years average during 26. In the diagram to the top right, we can note that the export price index increased in the second quarter And as already mentioned, SA prices also moved in the same direction. Going into the next quarter, I estimate that prices in the market will be close to unchanged. Looking forward towards the year end, we will probably see a stable development with a fairly good balance between supply and demand in solid wood products. Moving over to pulp. When comparing Q226 with Q225, sales were down 3%, mainly due to lower prices and a negative currency effect, while delivery volumes increased. EBITDA was down 59%, which was also driven by lower prices and negative currency effects. During the first quarter of 26, demand was rather weak and net prices decreased from previous quarter due to high yearly rebates in Europe and US. Net prices on MBSK then improved during the first quarter and in the beginning of the second quarter due to earnings being below cash cost for many softwood producers. In China, demand for MBSK pulp was normal during the second quarter, but prices decreased further due to pulp port inventories being higher than normal. The conflict in Iran continued to increase complexity and costs for the pulp industry. Looking at CTMP, demand and prices remained on a low level during the second quarter. However, prices increased partly driven by increased prices on eucalyptus hardwood pulp. Inventories of softwood pulp were on a high level during the first and second quarters. Hardwood conventories, on the contrary, were below average level. And finally, CTMP inventories have been on a rather normal level. Moving over to container board. Sales were in line with the same period last year, driven by higher delivery volumes, but mitigated by lower prices and the negative currency effect. EBITDA decreased by 70%, driven by the planned maintenance stop at Obolamil, lower prices, negative currency effects and higher energy costs. The planned maintenance stop in Obola had a negative result impact in the second quarter of 147 million SEC. We've seen box demand improving during the second quarter. The manufacturing industry developed positively during the period, supported not the least by a continuously growing retail business. European demand of Kraftliner has improved during Q2 following the box demand and we forecast positive demand development of container board also in coming quarters. There is no new container board capacity started up in the first half of 26. During the last quarters of 26 we can expect ramp up of the new capacity started in 2025 as well as some closures to balance some of the increased supply. Kraftliner inventories have moved down to historical average levels, driven by both improved deliveries and limited supply. During the second quarter, the availability of OCC has been in balance with supply and demand, which in its turn has led to minor upwards price adjustments. Prices for brown craft liner in Central Europe increased during the second quarter with €60 per tonne and for white craft liner with €40 per tonne. The improved underlying demand in combination with strong cost pressure and lower global supply have supported a second price increase for craft liner. With gradual implementation as mid-June, prices for Brown Craftline in Central Europe will increase with an additional €60 per tonne and for White Crafter with another €40 per tonne. And the price increases will gradually be reflected in the earnings during the second half of the year. So finally, I will say some words about renewable energy. In renewable energy, we've had a stronger quarter compared to the same period last year, mainly driven by high margins in our with SD1 jointly owned by refinery in Gothenburg. Electricity prices were volatile during the quarter, but higher in comparison with Q2 previous year. SCA's land lease business is stable at 10.6 TWh according to plan. This is equal to 20% of installed capacity of wind power in Sweden. The market for solid biofuels was stable with slightly higher prices together with normal seasonal effects on deliveries. For liquid biofuels we have seen continuous higher margins compared to previous quarters driven by high fossil fuel prices together with relatively stable renewable feedstock prices. However, in June, refinery margins returned to pre-Middle East conflict levels, mainly due to lower fossil prices and higher feedstock prices. We expect market volatility in renewable fuels to remain high as Europe ramps up the blending mandates both in HVO and SAF, implementing RED3. In addition, we see impacts from conflicts in energy markets adding to this volatility. and by that I hand over to Andreas.

Thank you Ulf and good morning everybody. I'll start off with the income statement for the second quarter. Net sales decreased 4% to 5.15 billion driven by lower prices and negative currency effects which are partly offset by higher delivery volumes. EBITDA decreased 36% to 1.3 billion by lower prices, negative currency effects, high cost for planned maintenance stops, and high cost for raw materials. EBIT decreased to 724 million, and financial items totaled minus 90 million. An effective tax rate of below 20%, bringing net profit to 523 million, or 0.74 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 decreased somewhat to 2.5 billion. It decreased slightly compared to the previous quarter and totaled 866 million. Lower prices for wood, raw materials, higher fuel costs, and seasonally higher costs for forest management were offset by seasonally higher harvest from SCA's own forest. In wood, prices increased compared to the previous quarter. Net sales increased to 1.5 billion due to high delivery volumes and higher prices compared to the previous quarter. EBITDA increased to 89 million, corresponding to a margin of 6%. Higher prices and lower costs for wood raw materials were partly offset by higher distribution costs. In pulp, Net sales increased to 1.7 billion compared to the previous quarter, while the EBITDA increased to 107 million, corresponding to a margin of 6%. The increase was mainly driven by higher prices, higher delivery volumes, and lower costs for wood, raw materials, which was partly offset by higher distribution costs. In Container Board, Craftliner prices increased during the quarter. Net sales increased to 1.8 billion, while EBITDA increased to 145 million, corresponding to a margin of 7%. The result was positively impacted by higher prices and lower raw material costs, which offset by higher costs for planned maintenance top of 147 million and higher distribution costs. In renewable energy, we had another record quarter driven by higher fuel prices. EBITDA increased to 217 million, corresponding to a margin of 42%. High fuel prices and high delivery volumes of tall oil were offset by seasonally lower demand for solid biofuels. On the next slide we have the sales bridge between Q2 last year and Q2 this year. Prices decreased 4% with lower prices in pulp and container board. Volumes increased 4% driven by higher volumes in pulp and container board which was offset by lower volumes in wood. And lastly Currency had a negative impact of 4%, bringing net sales to 5.15 billion. Moving on to the EBITDA Average and starting to the left. Price mixed had a negative impact of 229 million and higher volumes had a positive impact of 32 million. High cost for raw materials had a negative impact of 154 million. with a positive impact from energy of 21 million and negative impact from currency of 204 million. And lastly, with a negative impact from planned maintenance stops and high distribution costs. In total, EBITDA decreased to 1.3 billion, responding to a margin of 25%. Looking at the cash flow operating, the cash flow decreased to 446 million for the quarter and 1 billion for the first half year. And as you know, Alder operating cash flow relates mostly to working capital currency hedges and should therefore be seen together with changes in working capital. Look at the balance sheet. The value of forest assets totaled 104 billion. Working capital decreased to 5.1 billion. Capital employed totaled 112 billion. And net debt stood at 11 billion. Equity totaled 101 billion. And net debt to equity was 11%. and we have now almost finalized our large ongoing investment projects. Thank you. With that, I'll hand back to you all.

Thank you for that, Andreas. I mean to summarize the second quarter I mean we can state that the market is still in general rather weak but we increased the result in the second quarter in comparison with the first quarter and by that as we said already in the first quarter I guess that we have reached the bottom now, and we have also during the quarter performed a rather big planned maintenance stop in Obola. The market is a little bit different in different segments. Pulp, solid wood products, I mean more sideways. We can expect lower raw material prices in the third and fourth quarter. Energy, record result, container board. Well, we know now that we have done substantial price increases and we will see the impact from those in the second half of this year. And the main focus for SCA for us just now is really cash flow. So by that, I think I open up for questions.