Stora Enso Oyj

Hello, everyone, and welcome to Stora Enso's first quarter 2025 results presentation. Thank you for joining us today. I'm Hans Solström, the president and CEO of Stora Enso, and I'm here with our CFO, Niklas Rosenlev. Today's presentation, titled Consistent Programs in Improving Performance, will primarily address our performance, market environment and our plans to implement a new, leaner and flatter organizational structure, reflecting stronger focus on renewable packaging business. We have the broadest renewable packaging offering in the industry. Our packaging products include a diverse range of renewable wood-based materials and solutions, such as cartons, boxes, trays, cups and bags catering to industries like food and beverage, e-commerce, pharmaceutical and cosmetics. These products are daily essentials, as you can see here on the front page. We will now guide you through our performance for the first quarter of 2025 and address any questions you might have towards the end of this session. I am pleased to present our financial results for the first quarter. Sales grew by 9% and we have achieved a robust adjusted EBIT of 175 million euros representing an increase of 18% year over year with an EBIT margin of 7.4%. Operating working capital decreased by 3% points to 7%. This marks the fourth consecutive quarter of a year over year improvement in our financial performance. And for the first time since the third quarter of 2022, we have achieved positive adjusted EBIT across all divisions. This milestone has been reached as a result of our cost-saving actions and efficiency improvements, which are yielding increasingly impactful results and solidifying our resistance in disruptive markets. We are also excited to announce the successful production start of our new consumer board line at the Oulu mill, as well as the regulatory approval to proceed with the acquisition of the Finnish sawmills Junnikkala, which brings significant operational synergies and reduced wood costs at our Oulu pulp and board mill. These developments are part of our targeted actions to build a stronger, more cost competitive and profitable company. Looking ahead, we have plans to implement a new leaner and flatter customer and business oriented organization set to take effect as of the 1st of July. This reorganization will reflect the importance of our core business in renewable packaging and is designed to enhance efficiency and performance culture. I will now give you an overview of our strategy. We are a renewable materials company, focusing on replacing fossil materials with renewable solutions. Our values are to lead and do what is right, and especially now, leading and doing the right thing emphasizes improving profits and strengthening the balance sheet as well as increasing shareholder value. Our business areas operate in growing segments driven by strong sustainability trends. We aim to deliver high customer and added value through efficient and integrated production, maximizing shareholder value. Renewable, wood-based and recyclable packaging is central to our strategy, representing over 60% of our sales and a main part of our investments over the last decade. In wood products, we are one of the Europe's largest producers of sawn timber and a leading provider of sustainable wood-based construction solutions. Our sawmills also produce wood chips and sawdust, which is important cost-efficient raw material for our pulp and board mills. The foundation in biomaterials is pulp, and our goal is to increase the added value and profitability of our northern pulp mills by specializing, as well as to further strengthening the good cost competitiveness of our South American mills. To utilize the full potential of wood, we use all parts of the wood to create innovative biobased solutions that can replace fossil-based and non-renewable materials. Our pulp mills, especially the cost-competitive eucalyptus pulp mills in South America, are increasingly central raw material sources for our own boat production. Stora Enso has four pillars that it has built its leading positions on and is the essence of the renewable packaging strategy. We focus on cost competitive assets with flexible capacity and high vertical integration from fiber to final product. Owning the three largest consumer board integrated mills in Europe enhances our cost competitiveness. Our internal supply of eucalyptus pulp from Latin America joint ventures reduces dependency on volatile pulp markets and improves margins. This is a unique advantage among European and North American peers. Our strong market position and close customer relationships facilitate co-development and pilot innovations. Large global customers value us as a scale partner capable of delivering consistent high quality from multiple mills. As the fourth pillar, sustainability is crucial. Our low carbon footprint is a competitive advantage and part of our customer offering. By controlling the entire value chain, we have unparalleled control over sustainability performance, including traceability, efficiency and circularity. First comes strategy, then structure. Stora Enso plans to implement a new, leaner and flatter organization with seven P&L responsible business areas, reflecting the importance of its core business of renewable packaging in the business portfolio. This would remove one management layer and represents a further decentralization of P&L responsibility closer to customers and operations. The new, flatter and streamlined organization has carefully been structured to maximize customer and business focus, operational efficiency and synergies. This new structure will ensure the benefits of supply chain integration, reduce complexity and ultimately reflect our performance and result-oriented culture. The new organizational structure for the group will, as mentioned, transition from five divisions to seven lean business areas with P&L responsibility. The global leadership team will welcome two new members, Markku Luoto, who will be leading business area food service and liquid, and Andreas Birmoser, who will lead business area carton board. The current leader of the packaging materials division, Hannu Kassurennen, has been appointed to lead business area container board. After the changes, the global leadership team will comprise 12 members. Following the planned change, the group's renewable packaging business will consist of four business areas accounting for about 60% of Stora Enso's revenue. Food service and liquid board, carton board, container board and packaging solutions. The group's remaining businesses, accounting for approximately 40% of Stora Enso's full year revenue, continue to be divided into three business areas, biomaterials, wood products and forests. In addition to their respective businesses, they support Stora Enso's renewable packaging products through wood sourcing and their supply of raw material. To strengthen operational and supply synergies, sawmills and building solution sites in the Nordics will operationally and financially belong to their respective geographically closest board and pulp production sites. These integrated board, pulp and sawmills form new P&L responsible business units reporting into the respective business areas. Central European building solution sites and sawmills will remain in the wood products business area. Group functions are organized in a business-focused and efficient structure to support the seven business areas. In 2025, a key focus is the successful ramp-up of our new packaging board line in Oulu, Finland. This mill will become Stora Enso's largest production facility, an integrated mega-site specializing in folding box board and coated unreached craft. It will be one of the most modern and cost-competitive packaging board mills in Europe. The new line will primarily serve consumer packaging needs, including food, beverage, frozen and chilled products, and is expected to reach its full annual capacity of 750,000 tons by 2027. This expansion will also allow us to optimize production at other sites, unlocking further profitable growth. In addition, the mill produces premium pulp and fresh container board. We have signed an agreement approved by the Finnish Competition Authority to acquire the nearby Finnish sawmills company Junnikkala. This acquisition ensures a cost-efficient wood supply and enhances our competitive production resources. Adjusted EBIT for full year 2025 is expected to be adversely impacted by approximately 100 million euros due to the ramp up of the new packaging board line with the majority of this impact anticipated in Q2 of this year. The new line is expected to reach EBITDA breakeven by the end of this year. I would like to provide an update on the tariff situation that has been widely discussed in the markets. Firstly, I want to emphasize that the current tariff rates have a limited impact on our operations. Sales to the US account for less than 3% of our total sales in 2024. So the main risk lies in the overall impact on the economy. Several factors help mitigate this situation. We have production facilities in Europe, Latin America and Asia. and our raw materials are primarily sourced from Europe and Latin America, with some from China. Additionally, we have a global sales network, and we are agile in our sales efforts. The limited sales to the US can be repositioned, and sales prices are renegotiated. This situation also presents opportunities. We are Europe's leading producer of cotton board and fluff pulp, as well as one of the leading craft liner producers. As the U.S. is a major net exporter of cotton board, about 800,000 tons per year, Kraftliner, about 3.4 million tons per year, and Fluff Pulp, about 3.8 million tons per year, there are opportunities for us to grow our business in other markets which are implementing countermeasures to U.S. import tariffs or otherwise prefer to reduce imports from the U.S. I will now hand over to Niklas to cover the financial performance.

Thank you, Hans, and hello, everyone. So now let's walk through our financial results, starting with sales and adjusted EBIT. In the first quarter, our sales increased by 9%, bringing the total to 2.4 billion euros. This growth was mainly driven by higher prices across all divisions, as we implemented a number of price increases and improved deliveries in all divisions except biomaterials. Adjusted EBIT also saw an 18% increase in absolute terms, reaching 175 million euros and a 7.4% adjusted EBIT margin. This improvement was primarily due to higher prices, increased volumes, favourable foreign exchange rates and the positive impact of cost saving and value creation initiatives, which help mitigate the continued high fibre costs. Furthermore, as Hans mentioned earlier, all divisions achieved positive adjusted EBIT for the first time since the third quarter of 2022. Our adjusted return on capital employed for the last 12 months excluding forest has continued its gradual increase since its low in the first quarter of 24 and reached 3.8%. Let's take a look at the EBIT bridge. Our adjusted EBIT improved from 149 to 175 million euros. The main positive contributor was price and mix, in total 98 million. We increased prices for several products late last year and during the quarter. Price mix together with the higher volumes at 15 million euros almost offset the higher fibre costs. Fibre costs, mainly from wood, continued to increase and weigh heavily on the results, with the total negative impact in the quarter being 131 million euros. What comes to other variable costs, such as energy and pulp, they decreased slightly compared to a year ago. Other include a 29 million euro positive impact from FX, as well as the lower depreciation of 10 million euros. Also, unlike last year, we did not benefit from any larger energy compensation, but we also did not face political strikes that negatively impacted volumes last year. Moving on to the cash flow development in the quarter and in more detail. Cash flow from operations was 192 million euros. While the profit was higher than last year, the cash flow was negatively impacted by approximately 100 million euro increase in working capital. This was driven by our higher sales, which increased receivables, as well as the seasonally higher inventories, partly related to the ramp up of the new machine in Oulu. Capital expenditure remained high at approximately 240 million euros, but will start to decrease after Q2 as we come to an end of the Oulu project. Cash flow after investing activities was negative at 47 million euros, as said, driven by the last leg of the Oulu project. However, looking at the linear development of both cash flows operating and after investing activities, the trend is gradually improving, mainly due to improved profitability. And in the future, also lower capex will support further improving cash flows. Moving on to our debt position and liquidity. The ratio of net debt to the last 12 months adjusted EBITDA improved to 3.2 times from 4.0 in the same period last year, driven by enhanced profitability. Net debt increased to 3.9 billion euros as we are finalizing the Oulu project. As the intensive strategic capex phase of the last two years nears its finalization and profitability gradually improves, net debt levels and the ratio are expected to improve further. The average interest rates on borrowings decreased to 3.7% from 4.2% last year. Operating working capital continued to decrease compared to the same period last year, thanks to the good actions taken across to ransom. Sequentially, operating working capital increased slightly due to the higher inventories in the first quarter, which is typical seasonality, while the operating working capital ratio to sales remained stable at 7%. Let's move on to the divisional performance. Packaging materials had a positive result development driven by price increases and seasonally improved demand. Adjusted EBIT increased by 10 million euros to 62, driven by higher prices in both consumer board and container board. The higher fiber costs and negative impact from the startup of the new consumer packaging board line in Oulu was offset by lower energy, chemicals and fixed costs. The container board price cycle bottomed during the quarter and impact from the first price increase started to come through towards the end of the first quarter. In packaging solutions, our team is working on a turnaround, and Q1 was the first positive results since Q4 2023, driven by China demand, efficiency improvements, and lower depreciation following earlier announced impairments. While there's good progress improving performance, price pressure caused by market overcapacity and oversupply continued in the quarter. Moving from packaging to biomaterials. In biomaterials, pulp demand was relatively weaker in the first quarter compared to the seasonally strong end of 2024. Adjusted EBIT decreased to 36 million euros, mainly due to lower sales prices and higher costs, primarily wood costs. On the other hand, wood products improved the adjusted EBIT by 10 million euros and reached break-even, resulting from active margin management more than offsetting the higher wood costs. Forest had another record high quarterly adjusted EBIT, reflecting strong and stable performance. Adjusted EBIT increased to 82 million euros, And the forest assets fair value increased to 9.3 billion euros, equivalent to 11.7 euros per share, with the increase being driven primarily by a favorable currency rate impact. So with that, I will hand back to you, Hans, for concluding remarks.

Thank you, Niklas. We are confidently navigating through volatile markets, building a stronger, better, more resilient and more profitable Stora Enso by focusing on what we can control. This marks the fourth consecutive quarter of year-over-year improvements in our financial performance. Sales grew by 9% and we achieved a robust adjusted EBIT of 175 million euros, representing an 18% increase year-over-year. Additionally, operating working capital decreased by 3 percentage points to 7%. I want to emphasize that the current U.S. tariff rates have a limited impact on our operations as our sales to the U.S. can be repositioned and sales prices are renegotiated. Sales to the U.S. accounted for less than 3% of our total sales in 2024. So the main risk lies in the overall impact on the economy. During the first quarter, we had a successful production start of the new consumer board line at the Oulu Bill. Stora Enso also plans to implement a new, leaner organizational structure. These strategic initiatives are designed to position Stora Enso at the forefront of the renewable packaging industry, ensuring sustained, profitable growth. Lastly, we invite you to mark your calendars for our capital market base which will be held on the 25th and 26th of November, and we will communicate further details in due course. This event is a key opportunity for us to engage directly with you, our stakeholders, and outline our strategy, setting the stage for an exciting future together. With that said, we are now ready to take your questions.

If you would like to ask a question, please use the raise hand function at the bottom of your Zoom screen. When it is your turn, you will receive a prompt to be promoted as a panelist. Please accept, wait a moment, and once you have been introduced, you may unmute yourself, turn your video on, and ask your question. Please only ask max two questions at a time. If you wish to ask more than two questions, please rejoin the queue. We will pause for a moment to allow questioners to enter the queue. Our first question comes from Lars Kielberg at Stifle. You may now unmute your audio, turn your video on and ask your question.

Good morning and thank you for taking my question. I just want to start, Hans, with the change to the operational structure. I'm not sure that exactly they understand what's going on. and move some packaging materials to container board and the other two feathers are still in the same job. So it's essentially just the dimensional sort of mega structure that is gone. What does that really imply? Or a real change? The second question I have on that specific is, you talk about the pulp mills and wood products business that will now be sort of financially owned by these packaging assets, will that also then be reflected in the reporting structure of those? Because you're saying that the external divisional heading will still be the same. So if you can clarify, because I would argue, of course, that would add some to be a volatility maybe even to the numbers if you have wood products all of a sudden in consumer board, for example. So just clarify that. And then on the last point, really on tariffs, I think you told it exactly the way it is, risks and opportunities, but the biggest risk to the economy, of course. But you also stated, you know, with the Wallo machine ramp up, that you would target the U.S. So when we rethink that and the opportunity, where can you place those tons as opposed to now targeting the U.S. for that output?

Okay, thank you very much, Lars. So first of all, about the organizational change. We are removing one management layer and we are in fact adding P&L responsible units throughout this change. I will explain. First of all, when we say that we are creating a flatter organization with seven P&L responsible business areas, It means that, you know, so basically within packaging materials, which has been one division until today, we are splitting that into three business areas. But we are also moving one management layer away so that the mill managers, the sales managers, today there are two management layers between me, the CEO, and the middle managers and sales managers. So we have the divisional leaders layer, and then below the divisional leaders layer, we have the business unit leader layer. So we take one of those layers out. So between me, the CEO, and the middle managers and the sales managers, there will be only one layer, which is the business area, P&L responsible business areas. Furthermore, we are creating those integrates. So basically we are integrating the Nordic sawmills with the closest pulp and board integrate. Giving some examples. We have, for instance, in Oulu, we have the Veitsilota sawmill, which is an important source of sawdust chips to the Oulu pulp and board mill. But we have also now, or we are acquiring and closing the deal of acquiring Unicola, which means three other sawmills in the Oulu region. They will be a part of the Oulu Integrate, because that is how you get really efficiencies, having sawmilling, pulp making and board milling together and they will form a new pnl structure so so they are forming a pnl responsible unit we will have in total in this new organizational setup 21 pnl responsible business units formed around these integrates to the larger largest extent so it is It is really an organizational change where we are de-layering, taking one management layer out, making a flatter organization, and then at the same time, decentralizing even further P&L responsibility closer to operations and closer to sales and customers. So that's important. So yes, those Nordic sawmills, they will financially be part of the integrate P&L and thus also part of the new business area P&L structure. But at the same time, it is important to remember that the non-synergistic Central and Southern European wood products units, they will form a separate business unit. So they are not part of this Nordic new P&L structures because they are not synergistic from a wood sourcing and wood supply perspective with the pulp and board mills. So that's important to remember also. Then when it comes to the tariffs, as explained, the tariffs offer opportunities and some risks. And exactly as you say, Lars, the main risks really relate to the impact on the economy in general. But I do want to underline that, you know, U.S. is a net exporter of cotton board, 800,000 tons and a net exporter of Kraft liner, 3.4 million tons and fluff pulp, 3.8 million tons. And we are the largest producer of cotton board and fluff pulp in Europe, as well as as well as one of the largest in Kraft liner. And we have seen already now that there are new sales opportunities opening up all around the world because of either new counter tariffs put in place or then preparation for counter tariffs being put in place. However, we are not leaving the U.S. market. We continue to serve the U.S. market. We are renegotiating our contracts and pricing in the U.S., We expect to be able to compensate for a major part, if not even all, of the tariffs. So we are also continuing to focus on the U.S. market, but there are new opportunities also arising. Thank you.

Maybe if I add, Hans, Lars. Yeah, Lars, on the external reporting, just to kind of give you an answer on that as well. I mean, as Hans explained, this is about... efficiency operational improvements, seven business areas, 21 BUs, getting that kind of P&L responsibility even further kind of advanced throughout the company. That's the kind of core from a reporting perspective and following up perspective and really tracking performance and instilling that performance culture in the in the company. What comes to external reporting, that will remain the same.

Plus that now we have had, of course, functions in the divisions and we are now organizing the functions on a group-wide perspective to gain also synergies and efficiencies, reduce duplication, reduce overlapping jobs, and in that respect also creating synergies and efficiencies.

I'm very clear then. So wood products will be what it is, packaging materials will be what it is, the way we see it from the outside. Okay, very good. Thank you.

Our next question comes from James Perry at Citi. You may now unmute your audio, turn your video on and ask a question.

Good morning. Thank you for the presentation. I'd like to ask about Olu and the ramp-up. You said you expect the EBITDA to break even by the end of 2025 and full capacity by 2027. Are you able to share roughly how many tonnes you'd expect to deliver in 2025 and also on the 800 million annual sales that you indicated? Does that assume pricing roughly at current levels or higher? Obviously, the same 800 million figure was disclosed when you announced the decision in October 22, but FBB prices are about 10% to 20% lower now. And then just briefly as well on the organisation structure, you've mentioned the operational efficiencies, but should we anticipate any kind of material P&L benefits or cost reductions as a result?

Yeah, thank you, James. So first of all, I mean, we don't disclose any volume targets for all this year. But as said, you know, the startup has been successful, both from a product quality perspective, actually very promising product quality, I have to say, and also from a production perspective. And we are now in the phase of starting, you know, deliveries of prime quality customer trials. So it's a good start. And the 800... million euro of top line. It is based on, let's say, average long-term prices for both Folded Box Board and CUK, Coated Unleashed Craft, which are the main two products of this production line. And what was the other part of the question? Yeah, the cost reduction part of this organization. So we are now, according to to Nordic practice and legacy, we are now negotiating with the unions about these changes. It can be seen as a formality, but it has to be done. And then possible, let's say, impact on FTEs and costs will come then in a later stage. But it is clear that, of course, we are looking for efficiencies. We are looking for streamlining. We are looking to avoid duplication, to reduce complexity, to make a flatter organization where the whole company, including me and Niklas, are much closer to operations, to sales, to customers, doing business in a way.

Okay, helpful. Thank you.

Our next question comes from Halav Mittal at Barclays. You may now unmute your audio, turn your video on and ask your question.

Hello.

Hello, now we can hear you.

Good morning. Also, a couple of questions. Firstly, it seems that you have overproduced versus what you sold in the first quarter, especially in cart and board. So, how much of a cost relief was that in Q1 and should we expect it to reverse in the second quarter? And secondly, in terms of your ramp-up cost for Olu, Can you just let us know how much of that was in Q1 of the 100 million that you were expecting for the full year?

Yes, thank you for your question. So out of the 100 million for the full year of the ramp-up impact on full-year EBIT, there was a small part in the first quarter. I think it was in the magnitude of 8 or 10 million. That's roughly the magnitude. We expect the majority of these ramp-up costs to be visible in the second quarter of our first quarter. And and but it really depends, you know, how the now as it looks like, you know, the ramp up is moving very smoothly, smoothly indeed. So and yeah, and I think that all in all, this was our fourth quarter of of year on year success. EBIT improvement in a row. And it shows just that we are doing the right things. I mean, we are focusing on lots of actions, value creation programs and actions, 4,000 in total, in order to improve the efficiency and build a better, stronger, more profitable store. And the Q1 result was a good evidence of this.

And then just to add on the seasonality, I mean, this is very much like a year ago, for instance. So we produced in Q1 in anticipation then for the Q2 kind of seasonality, for instance, fruits and vegetables and so on in Europe is typically quite strong in Q2.

Sure. If I can just squeeze one more. On your FX benefit of 29 million, is that entirely translation benefit or is that related to something else?

No, I think it's normal and translation mainly.

Thank you.

Our next question comes from Charlie Muir-Sounds. at BNP Paribas. You may now unmute your audio, turn your video on and ask your question.

Thank you. Good morning. Thank you for taking my questions. Just staying with the reorganisation a bit longer, can you just clarify, are each of the mills now going to be dedicated to one of the three for sub-sectors of packaging materials? Or how would you resolve any conflicts between the decisions to produce one particular grade or another? And then just on wood costs, I wondered, they're at a high level clearly for the Nordic operations. Are you seeing stability or some of the public data suggesting that they might be starting to creep up again? What's your view on wood costs and indeed

Thank you, Charlie. First, about the wood costs. We expect now the costs to stabilize on these levels. They are on record high levels today. Regarding the organization, the mills will be dedicated to a business area. the, the business area, uh, liquid and, and food service board, uh, will include three meals. So basically Imatra, Schuylkill and Bay High. And, uh, There is one exception, though, and that is our Oulu mill, which will be part of the business area carton board, because that is the main part of the business. But as you know, we are also producing some container boards, some craft liner in Oulu. So that production line will then report into the container board business area but you know the whole business as the integrate as such will be led you know from the business area carton board great thank you our next question comes from patrick man at bank of america

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I apologize, I can't get my camera to turn on. I wondered if you could just give us an update on the forest sales process and whether you still expect that to happen in the first half of 2025 and whether any of the volatility that we've seen in financial markets and currencies has impacted this process at all.

Thank you. Thank you very much, Patrick. Yes, I mean, when we announced this deal towards the end of last year, we also said that we expect the deal to be made in the first half of this year. We are proceeding there according to plan. And then when it comes to the market volatility and potential impact, I would say that perhaps, yes, some positive, some negative impact. The The negative impact is mainly a certain uncertainty, of course, in the operating environment, but there are also positive impacts. Especially in this type of a volatile environment, the stable forest asset is quite attractive and even more attractive than before. Then I think it's important to remember also that, as you can see in our quarterly reports, the value of our forest assets have continued to move up So the forest assets are more valuable today than what they were when we originally announced the deal. But we are proceeding according to plan here. Thank you.

Our next question comes from Detlef Brinkelman at JP Morgan. You may now mute your audio, turn your video on and ask your question.

Hi team. Thanks for the call. Um, just a very quick one regarding your maintenance costs. Um, I see obviously Q1 sees me quite low. Q2 was a little bit lower than what I expect. Um, going into kind of H2, should we be expecting that H2 is higher than what we see in normal H2s or, you know, should it be roughly similar or even lower just any guidance on that would be great. Thank you.

Yeah, I can take it. No, I mean, no, uh, We don't expect any major kind of changes from the normal quarter on quarter kind of operational activities, what comes to maintenance. And as you know, I mean, we are scrutinizing all our activities and all of our costs, including maintenance, of course, but wouldn't expect anything major being made in a major way different in second half for this year overall. Cool. Thanks very much.

Our next question comes from Cole Haythorn at Jefferies. You may now unmute your audio, turn your video on and ask a question.

Thanks for taking my questions. I just like a little bit more color on the Olu ramp up drag. I know you said the majority in the second quarter, but are you talking kind of 50, 60 million, or could it be as high as kind of 80 million, just even rough quantification just would be helpful as we think about the two Q numbers. Um, then on pulp, we've seen some declines recently from list prices towards the resale levels. And I'm just wondering how store ends those pulp portfolio might perform because you've got a lot of fluff pulp in, um, in Europe, you're the only producer there. Will your pulp dynamics potentially be more resilient considering your product portfolio? So any color on how you think about the price dynamics? Thank you.

All the one briefly. So again, it really depends on the operational rhythm and how things proceed. But as we currently see it again, the majority but being more towards the lower end of what you mentioned than the higher end of what you mentioned.

And regarding the pulp dynamics, we are clearly the major fluff pulp producer in Europe. And US is the world's largest exporter of fluff pulp into both China, which is the world's largest fluff market, and Europe, which is the second largest fluff market in the world. And yeah, that can play out and will play out also opportunities depending on the tariff's counter tariffs. We know about the counter tariffs already now in China, but let's see how it plays out. I think for us, it's good to be in the place where we are right now in this pulp business.

And then if you allow me just to follow up on price dynamics in container board, cost pressures for recycled container board have increased here. We've seen one or two players announce price increases for May, despite the new supply that's ramping up. Has Store Enzo announced any price increases into the second or third quarter from here?

Yeah, we don't publish our price increases, but we for sure, we take them to our customers. And we have implemented price increases in container board. And we have also informed our customers about further price increases. So we are also here, we are quite agile. Rest assured that we are taking every opportunity there is to increase prices. I can guarantee that.

Then finally, on the reorganizational structure, creating the new business areas, which is helpful, but you didn't announce a specific number for potential cost savings for removing a management layer or any related asset rationalization. Is there any cost savings number we can think about for the reorganization structure, or is this a precursor to allowing the business units to act more decisively if they do need to close capacity?

You know, at this moment, we don't disclose any, let's say, targets for cost savings because this is a legal procedure. You know, in the Nordics, we are now starting negotiations with our unions and employee representatives about the organizational change. It's more formality, so it will... It will eventually, you know, within some weeks be finalized. But then after that, you know, we can start talking about potential implications for fixed costs and FTEs. So we need to take these things, you know, one thing in order, one step at a time. Thank you.

Our next question comes from Brian Morgan at Morgan Stanley. You may now unmute your audio, turn your video on and ask your question.

Hi, good morning. I can't seem to turn my video on, but just two questions, if I may. First question is on the organisational restructure. You've been doing for a while now, right? You've been doing for about 18 months, if I'm not mistaken, and this is just the latest of it. And just a question on that is, have you changed the remuneration sort of structure for the management team? So second and third layer down management team, now that they're more P&L responsible, is there more variable pay? Is there profit linked earnings, which there wasn't before? Just to get a sense of how motivated these guys might be to focus on P&L.

Yes, there are changes which have taken place. We have introduced and are introducing, for instance, for our sales force, profitability gross margin related incentives, so profit-based margins for our incentives for our sales. That's something we're implementing throughout the whole company. Also, the whole idea with this organizational change, I mean, we have described it now on the top level, you know, the seven business areas. But as said, you know, there will be 21 P&L responsible business units on the next level. So we are decentralizing P&L responsibility further into the organization. And of course, that means that the key KPI for those 21 P&L responsible units is, of course, EBIT, but also then other, let's say, more operational and safety related measurements. But EBIT and maximizing and driving EBIT is the key KPI and also the key base for incentives. So decentralizing further P&L responsibility and its support. It's a part of the accountability.

Cool. Can I ask a question on packaging solutions, if I may? It's been quite a drag on returns in the last little while. Could you just maybe give us a dive into what's happened? What's gone wrong with that business? Is it a function of low operating rates or just where we are in the cycle?

Well, it's a business where there is quite a lot of OE capacity in the market. And we have also been there since 2023, ramping up a big business. new facility in in delir uh it's a 200 million euros investment which actually has made delir in holland to the world's largest corrugated site so it's a big investment that we have been now ramping up and and successfully filling and that has been also burdening our our pnl there but it's very much also a question of turnaround you know so we have a We have a new divisional leader there in place since beginning of November, Caroline Wagner, who has worked her whole life in the corrugated business, leading corrugated mills, plants, sales, being general manager, managing director, divisional leader. So she really knows the business inside out. And she's now basically, with her help, we are turning that business around. So it's a question of both market related, so overcapacity related, ramp up related, and then, you know, our internal efficiency. So turning around and improving our cost efficiency in this business.

Our next question comes from Andrew Jones at UBS. You may now unmute your audio, turn your video on, and ask your question.

Hi, gents. Just a follow-up to a question that was asked earlier. You talked about potential sales from Oulu into the US and the potential for redirecting some of that material and the fact that the US is a net export of cardboard. Can you talk... specifically about which markets you think you could redirect that into. Because clearly, China has massive overcapacity. They've been permeating into markets around MENA, which has been well documented by METSA and others. I'm wondering where you see those opportunities, because frankly, I'm struggling to see where that material goes. And maybe, I mean, when you say that the US is a net exporter of carton board, I mean, specifically in the grades that you're producing, Where is that material going? I know the US doesn't produce much FBB, but maybe in terms of SBS or other grades, where are those opportunities likely to come if there are reciprocal tariffs?

Well, I mean, there is market information available about the trade flows and where that is. net exports of 800,000 tons from the US goes, but it's basically, it's all around the world. I mean, it is into Europe, it's into Canada, it's into Central and Latin America, it's into Asia. It really depends on the various grades. So there are opportunities, I would say, all around the world, also in Europe. And I'll give you one example. U.S. is a major net exporter of coated unbleached craft, which is one of our two main products on the Oulu mill. And there are only two producers of coated unbleached craft in Europe. We are producing in three mills. And then there is another peer competitor producing on only one mill. So, I mean, that's just one example to mention.

Okay, thank you.

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

Great. Hey, thank you very much for your active participation and for all your good questions. Just want to briefly repeat here that, you know, this was, you know, another quarter really demonstrating that we are on the right track for it. consecutive quarter of year-on-year improvement. So we are moving ahead, powering ahead to build a stronger and more profitable Stora Enso. So all in all, as we also mentioned earlier on, you're all welcome to join our Capital Market Days. on the 25th to 26th of november and there we want to share with you more about our strategy our future direction so hope to see uh all of you uh there thank you very much and looking forward to to meet you again uh latest you know in one quarter thanks bye bye