Stora Enso Oyj

Hello, everyone, and welcome to Stora Enso's fourth quarter 2024 result presentation. Thank you for joining us today. I'm Hans Solström, the president and CEO of Stora Enso, and I'm here with our new CFO, Niklas Rosenthal. Today's presentation is titled Improved Results in Challenging Markets. We will today guide you through our performance for 2024, and we will address any questions you might have towards the end. Before we start the formal presentation, let's take a moment to look at this image of the lobby in our new headquarters in Helsinki, where we moved last autumn. This remarkable mass timber building, owned by the Finnish insurer Varma, is the largest of its kind in Finland, and it's a new low-carbon marvel capturing attention across the architectural world. The structure is composed of over 2,000 bespoke load-bearing wooden elements produced by Stora Enso. Choosing wood over concrete for the structure resulted in a significant 35% reduction in greenhouse gases. Besides having a lower carbon footprint than concrete, wood also has the unique ability to store carbon. No other commercially available building material offers this benefit. It's more than just a building. It embodies nature at its core. Now, let's shift our focus to the key highlights of the full year 2024. In the full year 2024, we achieved a robust 75% year-on-year growth in adjusted EBIT. This success is a result of our focused actions on improved sourcing, enhanced operational efficiency and commercial excellence, despite challenging market conditions and rising wood costs. we reduced our fixed costs by 110 million euros. And all profit improvement actions more than offset food cost escalation. I'm also very pleased that we reached an all-time low operating working capital, which in the last 18 months has decreased by more than 700 million euros, meaning a reduction in operating working capital to sales from over 14% to 7%. All in all, it's been a year of significant progress, and it's satisfying that our efforts and improvement actions are starting to bear fruit. In our fourth quarter last year, we announced our plans to sell approximately 12% of our forest assets in Sweden. We are actively engaging in discussions with several potential buyers. In addition to strengthening our balance sheet, it would also underscore the economic value and resilience of our forest holdings. A key focus in 2025 is the successful ramp-up of our new packaging board line in Oulu, Finland. In connection to that, we signed an agreement to acquire 100% of the Finnish sawmill company Junnikkala to secure cost-efficient wood supply to this new packaging board site in Oulu and to support Stora Enso's wood products division with new production assets. Furthermore, reflecting our commitment to shareholder value, the board will propose a dividend of 25 euro cents per share, up from 20 euro cents last year, with payments scheduled for Q2 and Q4 of this year. In 2025, we need to continue to enhance efficiency, performance and reduce costs, which will be crucial for our success despite the subdued demand forecast. Let's now take a closer look at the detailed financial results. Following a challenging year in 2023, the market began to gradually recover in 2024, although consumer confidence and spending have not yet fully rebound. Market uncertainties and fluctuations in demand and pricing persisted throughout 2024. Full-year sales declined by 4% to €9 billion, primarily due to capacity closures and divestments in 2023. However, sales for continuing businesses increased by 1%, mainly driven by higher deliveries. In 2024, as I mentioned earlier, we increased our adjusted EBIT by 75%, reaching €598 million. This improvement was supported by higher deliveries across all divisions. We reduced our fixed costs by 110 million euros and countered the continued escalation of wood costs through efficiency improvements and reductions in other variable cost categories. Including mill closures, our fixed costs decreased by 155 million euros. The fourth quarter sales increased to 2.3 billion euros, and the adjusted EBIT increased to 121 million euros, marking a 139% increase from the same quarter previous year, which had been seen notably low levels. Although good fiber costs increased significantly, the improvement was driven by higher sales prices and volumes, as well as cost-saving actions. Let's dwell deeper into the key factors that influenced adjusted EBIT for the full year. Increased in 2024 profitability improved by €256 million to reach €598 million, with the adjusted EBIT margin increasing to 7% from 4% the year before. Lower sales prices, primarily in packaging, were offset by clearly higher volumes, despite the political strikes in Finland in the first half of 2024. Stora Enso made significant strides in profit improvement, working capital reduction and value creation actions. This progress was achieved through improved sourcing, operational and commercial efficiencies across all divisions. Lower variable costs contributed to increased profitability, as a rise in pulpwood cost was more than offset by reductions in other variable costs, particularly in energy and chemical expenses. As mentioned earlier, fixed costs were reduced by 110 million euros on a comparable level, thanks to cost-saving measures. As a result of these efficiency improvements and cost-saving actions across the entire company, we were able to deliver a significantly higher adjusted EBIT. However, we are still far from our long-term financial targets, and our systematic, determined efforts to improve profitability will continue. Next, we will explore the progress of our capital expenditures as we approach the completion of the heavy investment phase. In 2024, additions to fixed and biological assets amounted to slightly over 1 billion euros, consistent with the level recorded in 2023. A key focus and a great part of the strategic capex has been the build of our new packaging board line in Oulu. The investment is scheduled and production ramp-up is expected to commence in the coming months. Production will start with small volumes and lower grades with full capacity anticipated during 2027. Now that the heavy investment phase is concluding, the average range of capital expenditure expected to return to the historical average between 600 and 800 million euros per year after, as from this year onwards. The remaining capex related to the Oulu investment is approximately 160 million euros, with total capex expected to be around 730 to 790 million euros in 2025. Having reviewed now our capex, let's now explore how these investments strategically position us for robust growth in fiber-based packaging sector. We are well positioned for growth in fiber-based sustainable renewable packaging. Looking at the growth numbers for fiber-based packaging, we see a trajectory of steady annual growth rate of 2% throughout 2033. With our strategic investments in Oulu in Finland and Delirium in Belgium, we will be better positioned in growing packaging segments for the future. On the previous slide, we discussed the ramp-up of our Oulu site in Finland during 2027. The site is projected to reach full production capacity of 750,000 tons annually, meaning 800 million euros in top-line growth. This investment targets key segments such as food, drink, and chilled goods primarily in Europe and North America. Thanks to produced products, transfers between our mills. The Olo investment increases our total consumer board offering and capacity in a total of about 50 million tons per year market, thus representing about 1.5% of global demand when fully ramped up in 2027. Our investment in a new state-of-the-art corrugated packaging site in Delire in Belgium enhances our long-term competitiveness in Western Europe. The site will increase our corrugated capacity by approximately 20% and will reach full operation during 2026. Products primarily include boxes and trays for fresh products, industrial applications and e-commerce. In October last year, we terminated the divestment process of our consumer board packaging site and forestry business in Beihai in China. Since initiating the divestment in late 2022, global increases in wood and logistic costs have improved the Bay High site's relative cost competitiveness. The potential for further development and enhancement of the site now surpasses the value of any possible transaction. The Bay High site will reinforce Durant's role as a leading global supplier of premium packaging board and food, drink, and two other segments, serving both existing and new customers in the vast Asia-Pacific region and primarily in China, which is the world's largest liquid packaging board market. We will now move on to take a look at the performance of the divisions. In 2024, the packaging division accounted for nearly 60% of our external sales, with biomaterials, wood products and forests each contributing about 15%. With the ramp-up of the new investment in oil, the share of packaging is expected to increase further. One of the challenges during 2024 has been the ongoing volatility in market weakness and rising wood costs. To address these challenges, our targeted actions mentioned earlier have made significant progress across all divisions. Packaging solutions faced challenges with overcapacity and market volatility in 2024. However, packaging materials and biomaterials showed significant adjusted improvement from the 2023 levels. Wood products adjusted EBIT improved as well, but remained negative, while forest continued and even improved its strong operational performance throughout the year, reaching record high result levels. Now we'll take a closer look at the details of the performance per division. Packaging materials faced a challenging quarter due to weak market cycle and planned annual maintenance shutdowns, primarily in consumer board units, which affected profitability. Sales rose by 5% to 1.1 billion euros, driven by higher container board prices and increased consumer board volumes. Consumer board price increases were successfully implemented on renewed contracts, but container board prices started to decline towards end of the quarter for both recycled and virgin fiber grades following declining recycled fiber prices. And order inflow remained weak across all segments during the fourth quarter. Adjusted EBIT increased by 37 million euros from last year, but was still negative at 6 million euros. Now, continuing with the packaging solutions division, where we continue to navigate through challenging market conditions. Packaging solutions continues to face margin pressure due to market overcapacity. Sales remain stable at 247 million euros with higher volumes, but lower prices. Adjusted EBIT fell to a negative 6 million euros. Profitability was adversely impacted by price pressure. and higher container board costs, while the ramp-up of the new corrugated packaging site in the Netherlands continued. Let's take a look at the biomaterials division. Despite a generally soft market, the biomaterials division was able to enhance both sales and profitability. Additionally, the division achieved strong deliveries, which supported its performance despite challenging market conditions. Volumes increased due to a changed sequence of planned annual maintenance shots compared to last year. Sales prices in Europe increased year on year. However, sequentially, pulp prices decreased across all pulp grades and markets. Adjusted EBIT rose by €32 million to €67 million, driven by higher sales prices, cost-saving actions and increased emission certificate sales. Shifting focus to the wood products division, it was impacted by continued low demand. The generally weak markets continued for the wood price division. Although demand was stronger year on year, it remained suppressed due to lower construction activity. Sales increased by 57 million euros to 400 million euros due to higher prices and volumes for sawn goods. The demand for cross-laminated timber and laminated veneer lumber remained suppressed. Adjusted EBIT improved by 50 million euros, but was still negative at 12 million euros. The increase was driven by higher volumes and prices, which offset the increase in raw material costs. Ongoing cost-saving measures helped to improve the results. Now let's have a look at the forest division that continues its strong performance also this quarter. Forest Division had a robust result driven by increased food prices, strong demand and good operational performance in all areas. Demand for all wood assortments remained high in the Nordics. Sales increased by 134 million euros to 784 million euros due to higher volumes and prices. Prices increased year on year and slightly quarter on quarter. Adjusted EBIT increased to 81 million euros, reflecting strong operational performance in the group's forest assets and wood supply. Let's move on to take a look at the development of the fair valuation of our forest assets. We are pleased to report a continued steady increased forest value of 8.9 billion euros, which translates to 11.28 euros per share. This improvement underscores the strength, enduring value and potential of our forest assets. The year-on-year increase of 163 million euro was mainly driven by increased in estimated wood prices and standing stock in the Swedish assets. Now I will hand over to Niklas to go through the details of some key financials.

Thank you, Hans. And hello, everyone. And very happy to have joined this great company. And actually look forward to meeting you, many of you in person here going forward. As Hans commented, there was a clear improvement in profitability in 2024. This was a result of the efforts across the company to improve sourcing, increase operational efficiency, for instance, in mills, and the ongoing work within commercial activities such as pricing and portfolio. Also, cost reductions, as Hans commented, was a focus area throughout 2024. And while we are still far away from our target performance levels, it's good to see that we are moving in the right direction. Our net debt continued to increase somewhat in Q4 to 3.7 billion. This was driven by the near final stages of the old investment. However, our net debt to adjusted EBITDA ratio continued to improve also in Q4 and ended at three times. Our net debt to adjusted EBITDA target remains at two times and we continue to work our way towards it. Besides performance improvements, we are preparing to sell approximately 12% of our forest assets in Sweden, as announced in the fourth quarter and as Hans commented on. And this move aims to further reduce our net debt and increase our financial flexibility. When it comes to our operating working capital, we saw clear improvement throughout the year. This was thanks to dedicated and focused actions, and the working capital ended at a record low, 544 million euros in the fourth quarter. This was actually a reduction of more than 700 million euros since the peak some one and a half years ago. The operating working capital to sales was 7% in Q4, actually a record low, down from 14% at the peak. If we then move on to cash flow, the full year cash flow from both operations and after investment activities improved compared to last year due to the actions taken to improve profit on the one hand and lower working capital or reduced working capital. As previously mentioned in the presentation, we have had quite high investments in both 2023 and 2024, driven by the strategic consumer board expansion at the Oulu site. The investments in Oulu are now getting close to completion, and this means total investments in 2025 will go down, from roughly a billion in 2024 to an estimated below 800 million in 2025, and thus also support an improved cash flow. In the fourth quarter, the cash flow from operations was at a reasonably solid and stable level at 325 million, and cash flow after investing activities improved to 88 million euros. due to less cash spent on capex. And with that, let's switch from financials to sustainability. And back to you, Hans.

Thank you, Niklas. Our growth is driven by global megatrends and sustainability, which not only offer us strategic advantages, but also sharpen our competitive edge. In line with this, we remain committed to our sustainability targets. We are actively focusing on critical areas such as climate change, circularity and biodiversity, while also supporting our customers' sustainability goals. I'm particularly pleased to share the significant progress on our path towards climate neutrality and our long-term commitment to sustainability. By the end of 2024, we achieved a 53% reduction in scope 1 and 2 emissions, surpassing our target of a 50% reduction by 2030 from the 2019 base year. The decrease is mainly due to efforts in both reduction measures, such as fuel switches and the impact from site and production line closures. We have reduced scope 3 emissions by 39% from our 2019 levels, aiming for a 50% reduction by 2030. In terms of circularity, our products are now 94% recyclable with a target of 100% by 2030. Now moving on to the sequential market and business outlook for the first quarter. I will now cover the sequential market and business outlook for this quarter, Q1 compared to the previous quarter, Q4 2024. Overall, we expect demand to remain subdued and volatile, mainly due to macroeconomic confidence and ongoing geopolitical uncertainty. We also anticipate that wood prices will continue to be high. Let's begin with the Packaging Materials Division. Peer demand continues to be soft, yet we expect a rise in consumer board volumes following maintenance and the typical low seasonal demand in Q4. However, it's important to note that margin pressures are still present due to the high costs of wood fiber. Price increases have been achieved in some consumer board segments and price increases have been announced in container board markets this quarter. The division's average price level is expected to remain stable quarter on quarter. The packaging solution division still navigates through market volatility and OE capacity with continuous to impact demand. Despite these challenges, we see stability in Q1 European volumes with gradual normalization in China. But high costs from container board and new site ramp up limit margin expansion. Looking at biomaterials, the pulp market is nearing a cyclical low with supply curtailments helping balancing the market. Price increases have been announced with effects expected in Q2 of this year. However, demand continues to be uncertain, shaped by economic and geopolitical factors. For wood products, the outlook for classic sawn products remains stable despite low demand. Slight price increases are driven by escalating raw material costs while construction activities anticipated stay subdued. The forest division food demand is projected to remain robust. This is despite decreased consumption in pulpwood, which has been driven by cutbacks in the packaging and pulp sectors. Given these market dynamics throughout 2025, we need to keep pushing forward with our actions to cut costs and strengthen our operational and commercial excellence. Our goal here is to improve our operational performance and competitiveness. With this outlook, I will move to the key takes and how we are building a stronger future. To conclude this presentation, and before we open the floor for your questions, I'd like to emphasize that we are truly powering ahead. Our financial results and strategic initiatives demonstrate our strong position and commitment to growth, all made possible by the hard work and dedication of our team. Let's take a moment to reflect on these critical achievements. In 2024, we achieved 75% growth in adjusted EBIT, driven by improved sourcing, commercial and operational efficiencies, alongside a significant reduction in operating working capital by over 700 million euros and a 110 million euro cut in fixed costs. and all profit improvement actions more than offset good cost escalation. All in all, it's been a year of significant progress, and it's satisfying that our efforts on improvement actions are starting to bear fruit. We remain dedicated to further improving financial performance and cost efficiency in 2025 to ensure continued success. And now we are ready to take your questions.

If you would like to ask a question, please use the raised hand function at the bottom of your Zoom screen. Or if you've dialed in, please press star nine. Please only ask two questions at a time. If you would like to ask more than two questions, please rejoin the queue. We will now pause for a moment to allow questions to enter the queue. Our first question is from Efrem Ravi at City Group. please unmute your line and ask your question.

Thank you. I'll stick to two questions. Firstly, on the CapEx slide on page five, the 600 to 800 million of CapEx from 2026 onwards implies probably still 200 to 500 million of strategic CapEx, just looking at the different parts of that bar chart. Once Oulu has kind of ramped up can you indicate what are the main strategic CapEx items you are looking at going forward? And secondly, on the working capital reduction to 7% of sales is pretty impressive. And a large part of it looks like reduction in receivables. Just wondering, A, do you think this is a sustainable long-term level, the 7%? And B, are there any margin implications of this reduction? Typically changes in payment terms are, does come with some changes in prices and discounts in my experience. Thank you.

Thank you very much, Prem. First of all, yes, this projected capex levels includes also strategic investments, correct? We have a pipeline of a lot of attractive opportunities, which I will not disclose here. But of course, one strategic opportunity that we have disclosed before is the Langebrugge new sprint mill conversion to test liner, because that actually together with the acquired de Jong facility will form a very competitive entity. The Langebrugge paper mill is located close to our acquired Dijon facility. And with the ramp up of the new corrugated box plant there in the Lear in Dijon, this site actually will be the world's largest. corrugated box facility when fully ramped up, combined then with a converted new sprint line into test liners located close by. Also, that one will be the most cost-efficient unit when then converted. But there are no decisions about this conversion and no timeline more precisely there. But this is just one example, which just happens to be public information. And then when it comes to the working capital, 7% of sales, we are working on all levers of operating working capital, meaning receivables, inventories, and also payables. And we are continuing our systematic work. We still have efforts and we are taking actions to improve our working capital efficiency even further. So I see this absolutely as sustainable, you know, over the annual seasonality, of course.

Our next question comes from Lars Kielberg at Stifle. Please unmute your line and ask your question.

Thank you for taking my questions. Coming back a bit to a couple of comments that you made, you talked about a strong focus on growth, but also the need, of course, to improve profitability. And if I look at where you stand today, you're about 40% below 10-year average and 2024, as much as you improve costs, it's the second lowest profitability since 2013. So, of course, there's quite a lot to do. So when it comes to real structural profit improvements, because taking out costs tends to be diluted over time through cost inflation, you're now about to start up oil, which, of course, should be a lower cost mill in your system. But in an environment with high or sorry, slow demand and low operating rates. Wouldn't this be time to take some structural actions to make way for that machine to ease into the market? That's my first question. The second one is more related to your performance in packaging solution, which is way below most of your peers and going in the wrong directions. The question there is, What are you doing wrong? You shouldn't be losing money in a converting business. And all those sources really relate to them to the significant cost around the deal or startup and when should we expect this business to turn?

Thank you very much, Lars. So first of all, we are working in a very systematic and determined way on improving our cost efficiency across the whole company. We have, in fact, thanks to this systematic work where we have been going through every mill, every operation, every part of our company, we have identified 3,600 improvement actions. They relate, for instance, to improved energy efficiency, improved utilization of our raw materials, including wood chemicals, recipe development and changes, as well as also fixed cost reductions across the board, efficiencies in sourcing, and also commercial aspects of pricing and product mix optimization. so these 3600 initiatives are being worked on and we have in total 770 project owners in the whole company working on these actions and in fact last year despite 300 million euros increase in our fiber costs mainly wood costs we managed to improve our operational ebit by 75 so so our actions clearly surpassed the negative impact of wood cost increases. So we have seen the beginning. We have seen only the beginning of what we can do in improving the efficiency of our company. When it comes to our old 750 investment model, the new consumer board line. As you could see also in our presentation material, the whole consumer board market globally is in total 50 million ton demand per year. And In fact, this consumer board line, even if it is focusing into folded box board, it actually, through product transfers, is increasing our capacity also in liquid packaging board and food service board. thanks to the product transfers between the mills. So in total, we are bringing, when fully ramped up in 2027, we are bringing 750,000 tons additional capacity to a 50 million ton market, meaning 1.5% capacity addition. So less than one year of demand growth when you look at the trend growth figures. So Of course, the ramp up of Oulu 750 will be gradual and we hope to start soon. And then, as said, fully ramped up in 2027. And when fully ramped up, this will give us 800 million euros of additional growth. Naturally, we are very, you know, analyzing critically, you know, the cash flow and the forecasted net present values of all our assets. And if needed, we'll take actions based on that. But currently, we don't have any plans of any capacity closures, to make it very clear. When it comes to our packaging solution division, First of all, I want to highlight that when you compare with key competitors such as Smurfit Westrock, IPDS Smith, they actually don't disclose separately the profitability of their converting part. They actually report the profitability of the total value chain from container board, including box making. So container board and corrugated plants together. So therefore, of course, you know, the comparison is not quite comparable. However, having said that, we are absolutely unsatisfied with the performance of our packaging solution. And we are doing a lot of actions and taking measures to turn this business around to improve the profitability levels. We have a new divisional leader in place since November of last year, Caroline Wagner. who comes from this industry. She has 30 years of experience in operations, sales, general management, P&L leadership in corrugated business. And she has a very clear plan in place with her team to turn this business around and to improve the profitability.

Our next question comes from James Perry at Citi. Please unmute your line and ask your question.

Good morning. Thanks for the presentation. I'd like to ask about the forest. You obviously recognised a forest asset fair value gain due to the high transaction prices. Some peers, though, have recognised lower forest trend pricing in Sweden. Might you be able to comment on how you see the transaction volume dynamics from here and the pricing? Should we expect any slowing or do you think we're past the worst? And secondly, on wood costs, similar, we've heard peers talk about Nordic wood cost inflation as stabilizing. Would you say you're seeing a similar plateau emerge? Thanks.

Thank you, James. So starting with the latter part of your question, wood costs outlook, the short answer is yes. I mean, we we see wood cost stabilizing. And then when it comes to the fair value of our forest assets. First of all, I think it's important to recognize that the forest companies also calculate the fair value different ways. We are basing our fair value on the let's say, done deals during the last three years. So we take a longer perspective for our fair valuation of our forest assets, whereas some of our competitors are perhaps looking into other ways of valuing their forests. And we saw an increase in fair value in Q4 of last year, following basically the very long trend that we have seen for many, many years in the Nordic forests. And I don't want to take any perspective on the future development there, but that's where we are today.

Okay, thank you.

Our next question comes from Andrew Jones at UBS. Please unmute your line and ask your question.

Hi, Hans. Just a quick question on ULU. I mean, I guess obviously you're flagging minus 100 million this year. When do you expect it to reach EBIT break even? And just on the sales plan, I mean, you talk about a 50 million ton global market, but obviously in Asia we have massive overcapacity on the consumer board side. In the U.S., there's a lot of potential risk that tariffs might be imposed. I guess the U.S. was originally in the sales plan for this new mill. Were you planning to place those volumes? Is the U.S. still a major part of it? And just as a follow on to that, can you just remind us about your sales into the U.S. in various grades in recent times? Thank you.

Yes, thank you very much, Andrew. Yes, first of all, when it comes to our old consumer board line, we are not yet guiding any EBIT breakeven. We might come back to that later during the year. Let's first start up the machine and the mill first. And as we have mentioned in our report, we estimate that there will be roughly approximately 100 million euro negative EBIT impact primarily during the first half of the year. This comes both from the startup and startup ramp up, but also from increased depreciations, of course. Then, yes, you are absolutely right that the 50 million tons of consumer board also includes Asia as a major market. So that's the global market. We are primarily looking to the majority of the new consumer borderline sales will go to Europe, but then also a significant part is planned for the USA. We have been ramping up and preparing for that business development already since a long time. Today, actually, U.S. represents less than 5% of our group sales. So we have a position in certain board grades and consumer board grades in the U.S. today, but it's not a very strong position. or it's not a significant sales today. But as I said, we have now for more than a year been preparing to ramp up sales in the U.S. We have invested in our sales force, technical customer service, and in our customer relationships for this.

And if tariffs were imposed, I mean, how would that change your plan? I mean, what's plan B in that context?

Well, we don't want to speculate with the tariffs. As such, you know, 10% tariff would not have a significant impact. But, of course, you know, if there are more major and more important tariffs, there are both direct and indirect impacts. I want to underline that, you know, today the U.S. market represents less than 5% of our group turnover. And I have to also underline that, you know, there is so much uncertainty around the tariffs. And depending on what tariffs will be imposed, there can be positive impacts, but there can also be negative impacts. So I think we need to keep both in mind.

Okay, thank you. I'll jump back to you.

Our next question is from Charlie Moore-Sands at BPN. Please unmute yourself and ask your question.

Good morning. Thank you for taking my questions. It's Charlie Moore-Sands from BNP Paribas. Firstly, just on the packaging materials division, a couple of your competitors have announced attempted container board price hikes recently. I just wonder whether you had yourselves attempted to do that as well, or whether you'd seen that and what kind of likelihood of success you thought was realistic for that, given it's only just come back down again. And then secondly, on the cost savings, can you say how much of the fixed cost savings that were due to come through in 2025 are already reflected in the Q4 performance and how much is left to come through in the year ahead on the fixed cost side. And on the other work streams like procurement and operational excellence, are you now at a position where you perhaps could put some quantification around the potential scale of cost savings you might be able to deliver over the next couple of years? Thank you.

Thank you very much, Charlie. Well, first of all, container board prices, we normally don't disclose through a press release or similar our price increases. We have informed our container board customers already several weeks ago. They have received price increase letters from us. As said already several weeks ago, and we see that equal to last year, you know, this is a relatively similar type of a situation where, you know, there is clearly cost driven, the cost push reasons for the container board industry to increase prices. So we are, of course, also very keen to increase our prices. That's for sure. And then when it comes to our cost-saving measures, we decreased our fixed costs by a total of 110 million euros last year. We announced in the beginning of last year that we are starting a new fixed cost reduction program aiming at 120 million euros in total in 2021. with full impact in this year. A part of that was visible during the second half of last year, but the majority is to come during this year. You saw also in our report that during last year, our number of FTEs decreased by more than 1,300. So we are continuing on focusing on streamlining the company and making us more cost efficient, both through variable cost and reductions and fixed cost reductions. When it comes to your question about our our work, our systematic and determined work in improving sourcing operational efficiency and improving and reducing our variable costs. Here I would refer to the bridge that we have in the material where you can basically see that despite 300 million euros for the full year. Despite 300 million euros of increased wood fiber costs, we managed to save actually much more in variable costs than wood costs went up. And that contributed to improved adjusted EBIT for the full year of 75% in total.

Many thanks.

Our next question comes from Patrick Mann at Bank of America. Please unmute your line and ask your question.

Thanks very much. Hello, everyone. Hi, Hans. Maybe just a follow-up from Charlie's question there on the fixed cost savings. So if I look at Bridge for 2024, you're showing 110 million cost savings for fixed costs, which to me kind of implies there's only 10 million to go into 2025. But then you're also saying there's the majority of the benefits come in 2025 only. So maybe if we think about the bridge in 2025, what would we see there? Is it only 10 million or is there more to come? And then my second question is, if you could just give us an idea on the progress for the forest sale and how we should think about the potential timing for that. Is there any steer you can give us on when you think you might be in a position to conclude a sale. Thank you.

Thank you Patrick. First of all, There is definitely more to come on the fixed cost reduction. You know, €110 million of fixed cost reduction in 2024 is on a comparable basis. In fact, when you look at the total fixed cost reduction, we reduced fixed cost by about €150 million, including capacity closures by the end of 2023. But the comparable excluding capacity closures, the reduction was €110 million euros part of this was from earlier agreed you know fixed cost reduction programs and that's why i'm saying that a major part is still to come then during during this year out of the 120 million euros which we announced in the beginning of 2024. When it comes to our forest sale, we are in negotiations with several potential buyers and therefore I don't want to comment on value or timing. It is clear that for us a good deal and a valuable deal is the most important, more important than timing. So we will do a diligent good work also here in this process.

Thanks very much. Is there any chance you can give us an indication of how much of the 120 is still to come?

No, we don't disclose. I mean, we will see the full 120 impact of the program that we have started in January. But as I said, within the 110, there is a part from this program and there is a part from earlier started programs.

Great. Thank you, Hans. Appreciate it. Bye-bye.

Our next question is from Pallav Mattel at Barclays. Please unmute your line and ask your question. I'm going to take the next question from Cole Hathorn at Jefferies. Cole, please unmute your line and ask your question.

Morning, thanks for taking my question. Hans, you've spoken a lot about the variable costs and efficiency program, but it's very difficult from the outside in to put a number on that. Is there any quantification or any numbers that you can provide to help us for the relief that you might see into 2025? I know it's a difficult question, but any help there would be useful. And then following up on CapEx, Given there is strategic CapEx in the future years, I'm just wondering what the focus is for StoryEnzo for that CapEx. Is this more cost takeout efficiency CapEx? Given that most of the markets that you're exposed to are in oversupply, particularly in packaging materials. So just wondering if that CapEx is more cost focused or there are growth projects. And if there are growth projects, how can they be justified in a in an oversupplied market. Thank you.

Yeah, thank you very much, Kool. First around the strategic capex. I mean, we have in the pipeline both cost competitiveness and efficiency improvement capex, as well as also growth investments. But I absolutely agree with you that the timing needs to be right from a market demand perspective, from a supply and demand perspective, and that's also why currently we don't have any additional strategic investments to announce or move forward with. We are now determined to make the new consumer board line which is a significant investment, state-of-the-art, cost-efficient and large modern consumer board line. We are now focusing on ramping that up and making it a success. And then when it comes to our value creation programs, focusing on sourcing and operational efficiency as well as commercial excellence, we prefer to look into the results. And as you could see in the bridge from last year, Clearly, you know, we have yielded results. So despite the 300 million good cost increase during last year, we managed to increase our adjusted EBIT significantly by 75%, so more than offsetting that significant good cost increase. And we will continue our determined work to improve the cost competitiveness and efficiency of Storain in order to improve our profitability.

And then, Hans, maybe just as a follow-up so that we understand the progress of the Olu ramp-up this year, what is the initial focus of the ramp-up as it starts? Do you initially start with some, you know, cross-liner grades and then, you know, improve the mix through the year so ultimately we'll be seeing mix improvements as you ramp the volumes back off of 25 and into 26 to hopefully improve profitability on that?

Yes, correct, Cole. So we are starting with lower grades and then gradually moving into, let's say, the prime focus grades, mainly folded box board. But it will be a gradual development throughout this year. And as I said, the mill will be fully ramped up as from the beginning of 2027. Thank you.

Our next question, we're going to go back to Pallav Mittal. Please unmute your line by pressing star six and ask your question. Thank you.

Good morning.

Can you hear me fine now?

Yes, Pallav, we hear you fine. Good morning.

Apologies for the line earlier. So firstly, on 2025, I know you're not providing any guidance range. but you have done EBIT of approximately 600 million in 2024 and you are highlighting 120 million worth of fixed cost savings largely in 2025. So with some recovery in the market and prices broadly improving on container board you are highlighting, on consumer board also it seems that there are price increases if we look at what the peers are saying. So is it fair to assume that your EBIT in 2025 is at least 100 million above what you have done in 24, just accounting for these fixed cost savings. So that's the first one. And secondly, if you could, for the packaging materials division, you are highlighting stable pricing in Q125 versus the last quarter. Can you just talk about the increases or the price movements in consumer boards specifically?

Hey, it's Niklas here. Just briefly on the 2025 EBIT. As we commented here earlier, of course, goes without saying, we are still at the, you know, improvement phase. We see significant upside potential here going forward. But we'll leave it with that. We will continue to work with our costs. And as commented here earlier, look forward to improved performance overall, but we don't provide an exact figure for 2025.

And when it comes to the packaging material price outlook, we have achieved price increases in several consumer board segments recently. you know, at the turn of the year. And we have made those container board, you know, we have sent our container board price increase letters to customers. So our intention is to also there get the container board price increases through. But then, of course, you know, there is the impact of mix and so forth in this outlook statement from

from q4 of last year into q1 of this year sure if i can just ask a very quick one as well if you could just quantify your uh co2 sales the emission certificates in q4 and for the full year 24

So, our annual report will be out here in a couple of days' time with the details about our CO2 emission rights sale. But what we can say at this point is that in 2023, our emission rights sale was about the magnitude of about 60 million euros and during last year was roughly the same magnitude.

Thank you.

Our next question is from Joni Sandvold at Nordea. Please unmute your line and ask your question.

Yeah, thanks. A couple of questions. Firstly, on Bay High transformation towards more liquid packaging port, can you give any timeline on this and how this is processing?

Yeah, regarding BayEye, we can significantly improve the profitability of the mill with product mix changes, more towards the higher margin liquid packaging board, where BayEye is clearly representing a state-of-the-art, the highest quality asset in the world's largest liquid packaging board market, which is China. And we are actively working on promoting liquid packaging board there. And that's a work we will continue with in order to improve the performance and profitability of the mill.

Okay, okay. And secondly, maybe on the depreciation levels now, going forward, following the write-downs now in Q4 and the upcoming Oulu ramp-up, so could you give any indications for this year and when Oulu depreciations are coming visible?

Well, you know, what we, in connection with our write-downs breakdowns that we announced end of last year. We said that the impact will be roughly the level of 40 million decreased depreciations per year. So that's what we can say at this point.

Yeah. And the depreciation obviously comes with the commercial start.

Okay. Okay. Thanks.

There are no further questions. I shall now hand back to Hans Solström and Nicholas Rosenlew for closing remarks. Thank you.

Thank you very much and thank you for joining our Q4 results review. All in all, the key takeaway is that during last year, we have made significant steps forward to improve our profitability. However, we are still far away where we want to be. We are still below our long-term financial targets and we are determined to And we can see a significant improvement potential in the company. And we will continue our determined systematic work to improve the competitiveness and the result and profitability of Stora in order to deliver shareholder value. Thank you very much and have a good day.