Stora Enso Oyj

Hello, everyone, and welcome to Stora Enso's third quarter results presentation. I'm Jutta Mikkola, head of investor relations, and I'm joined today by Hans Ulström, our president and CEO, and Niklas Rosenlev, our CFO. The theme for today is good progress in a challenging market environment, which indeed we have done. We'll start with Hans, who will walk us through the key highlights and strategic focus areas. After that, Niklas will take you through the financial performance and we'll wrap it up with the main takeaways and key focus for the rest of the year 25. Once we're done, we'll open the floor for your questions. Thank you for being here with us today. Hans, over to you.

Thank you, Jutta. In the third quarter of 2025, despite ongoing challenges in markets and subdued demand, we remain focused on the areas within our control, driving progress where it matters most. However, before looking more closely at the third quarter highlights, I would like to announce changes in Stora Enso's group leadership team. Mikaela Turström has been appointed Executive Vice President People and Legal General Council as of 1st of January, 2026. Mikaela has been part of our group leadership team since 2023, serving as Executive Vice President Legal and General Council. Furthermore, Niklas Rosenlev, our chief financial officer, will assume additional responsibilities and represent the communication and brand organizations on top of his current duties. I want to congratulate both Mikael and Niklas for their new and extended roles. Then we are ready to look more closely at the quarterly highlights. We have taken important steps to build a stronger and more competitive Stora Enso. A major milestone in the quarter was the completion of the divestment of approximately 175,000 hectares of forest land in Sweden, representing 12.4% of our total forest holdings in Sweden. The transaction with an enterprise value of 9.8 billion Swedish crowns equivalent to approximately 900 million euros and in line with forest book value strengthens our balance sheet and improves our financial flexibility. The deal includes a long-term wood supply agreement to Stora Enso. This strengthens our cash flow and reduces net debt, which is a key priority for us. We also made progress on the strategic review of our remaining 1.2 million hectares of Swedish forest, including the assessment of a potential demerger and public listing. This review is central to unlocking further value for our shareholders, as well as strengthening our growth and business focus in both forest and renewable packaging businesses. We'll share updates as that process moves forward, aiming at capital market day later this year on November 25th. On profitability, we continue to act proactively to improve margins. These measures are essential as we navigate challenging market conditions and subdued consumer sentiment. Adjusted EBIT for the quarter was 126 million euros. Excluding the 45 million euro impact from the Oulu Consumer Board ramp up, profitability would have been comparable to the same quarter last year, reflecting a stable underlying performance despite persistent market headwinds. And finally, on sustainability, we launched a science-based framework together with IUCN to advance nature-positive forestry practices. This is an important step towards our long-term environmental goals. As we all know, market conditions have been challenging. Therefore, we have intensified our actions to improve profitability. But it's important to emphasize that these efforts are not new. We have been acting on these priorities for a good while now. Since 2023, we have been very clear on our strategic focus, improving profitability, driving performance and shaping the portfolio for long-term strength. This has been our new way of working proactive, not reactive, so we can stay ahead of market turbulence and rapidly changing global trends. On fixed cost reduction, we launched significant cost saving programs in 2023 and 2024, totaling over 230 million euros of savings. These include structural efficiency measures, site closures and divestiture across business areas and the group. Operational efficiency has been another key focus. We have implemented FTE reductions, cut external spend and driven value creation initiative across the whole company to streamline processes. Building a strong performance culture has been critical. More than 4,000 improvement measures have been identified with around 800 initiative team leaders, meaning that thousands of our employees are actively driving continuous improvement and cost savings initiatives across the company every day. We have also strengthened cash flow and working capital discipline, reducing operating working capital by about 700 million euros and improving cash flow from operations. Going forward, we remain committed to disciplined capital allocation. Finally, on portfolio actions, on top of earlier closures and divestments, we completed the sale of 12.4% of our Swedish forest assets and continue the strategic review of the remaining assets in Sweden. At the same time, we are ramping up Oulu consumer board line and the Lear corrugated site to secure cost efficiency and competitiveness. This approach gives us resilience and flexibility. By acting early and decisively, we have not just reacted to market challenges, we are shaping our future and positioning Stora Enso to thrive in a rapidly changing world. And with that, let me give you an update on the Oulu consumer board line ramp up. Sture Enso's new consumer packaging board line at the Oulu site in Finland has entered the production ramp-up phase earlier this year. While the project remains on track in terms of its original timeline and the 1 billion euro budget, the ramp-up process has progressed slower than initially anticipated, resulting in production volumes somewhat behind the original schedule. Nevertheless, we remain focused on reaching EBITDA breakeven by the end of 2025, which continues to be an achievable target. However, due to the slower than expected ramp up, the EBIT impact for Q4 is now projected to be higher than previously anticipated, estimated at about 15 to 35 million euros. Consequently, the full-year EBIT impact is expected to be in the range of 120 to 140 million euros. It is important to emphasize that the Oulu investment is a long-term strategic move that will deliver substantial value for Stora Enso over time. This transformation of the Oulu site into a state-of-the-art consumer board production facility is a cornerstone of our strategy to lead in renewable packaging. This investment is not just about near-term volumes, it is about building a competitive platform for the next decade and beyond. As the ramp-up continues, we remain confident that Oulu will become a key driver of profitable, cost-competitive growth and a benchmark for sustainable packaging innovation. This year we have seen some remarkable recognition for our design and innovation. Winning the Red Dot Design Awards 2025 underscores our ability to combine aesthetics, functionality and sustainability in everything we create. Our craftsmanship was showcased on the global stage at the World Ski Championships, where we designed official medal boxes crafted from renewable materials, fully recyclable and even featuring Braille for accessibility. This is not the first time we have been recognized by Red Dot. Earlier this year, we also received an award for our collaboration with Marmekko on a scalable, recyclable gift packaging portfolio. One of the most exciting milestones is our contribution to Atlassian Central in Sydney. Once completed, it will be the world's tallest hybrid timber tower. And the heart of this achievement is massive timber solutions. It's a powerful demonstration of how engineered wood can transform urban skylines while reducing carbon emissions. Closer to home, October brought us the Finlandia Prize for Architecture for our new headquarters at Katajanokan Lightery in Helsinki. This award celebrates not only architectural excellence, but also our leadership in sustainable building practices. Together, these achievements highlights how innovation and responsibility go hand in hand in shaping the future of construction. That concludes our review of the key highlights for the quarter, and I'll hand over now to Niklas, who will take you through our financial performance.

Thank you, Hans, and hello everyone. During the third quarter, as Hans already mentioned, our own actions resulted in good progress in a market with subdued demand and low consumer confidence. Delivery volumes were relatively low, particularly in container board and biomaterials. Sales increased by 1% to 2.3 billion euros, mainly due to the contribution of the unical acquisition and the consumer board line ramp up at the Oulu site. While market conditions continues to be volatile with low demand, we focused on the areas within our control. On that note, adjusted EBIT for the quarter was 126 million euros. And as Hans mentioned, excluding the 45 million euro impact from the old ramp up, profitability would have been comparable to the same quarter last year, reflecting a stable underlying performance despite persistent market headwinds. This we can see clearly when looking more closely at the EBIT bridge for Q3. Overall adjusted EBIT decreased by 49 million euros compared to last year, primarily due to the ramp up of the new line in Oulu. As said, Oulu had a negative impact of 45 million. In the other bar where you can see the Oulu impact, you can also see the absence of a 10 million insurance compensation that was received last year in the wood product segment, along with some other smaller movements. Looking at the other components, the picture is relatively stable. Given how volatile the markets have been, we are quite pleased with this as it reflects the result of disciplined execution of our strategy and profit improvement actions. Price mix contributed positively with 12 million euro, partly offset by a smaller negative impact from lower volumes. Variable costs were flat, as higher fiber costs were offset by lower energy and chemical costs. Fixed costs decreased by 30 million euros, driven by strong cost control and lower maintenance compared to last year. And FX had a negative impact of 20 million euros. If we then turned the focus to cash flow, despite the challenging market environment, we managed to safeguard profitability and improve cash generation. Cash flow after investing activities turned positive, as expected, following the gradual completion of the investment phase in Oulu. I want to note that in this picture, which shows the operational cash flow after investing activities, the proceeds from the Swedish forest divestment, so the 12% divestment, are not included. These proceeds were received in Q3, but they are recorded further down in the cash flow statement under divestments. And on that note, let's take a look at the net debt. net debt decreased by almost €800 million to €3.2 billion during the third quarter, reflecting the positive impact of the forest asset divestment. The ratio of net debt to the last 12 months adjusted EBITDA is now at 2.7 times, after being above 3 for most of the past two years. As the intensive strategic capex phase of the last two years nears finalization and profitability gradually improves, net debt levels and the ratio are expected to improve further. Operating working capital to sales was around 8%, that is at similar levels to the last few quarters. We intend to keep operating working capital at these levels or at these lower levels and decrease it when possible. So let's move on to the segment performance. Starting with packaging materials, where we continue to implement value creation actions during the quarter to mitigate the impact of the challenging market conditions. Sales declined, mainly due to slightly lower consumer board prices and adverse currency effects from a weaker US dollar. Adjusted EBIT decreased year on year by 37 million euros, primarily due to the adverse impact coming from the Oulu ramp up. In addition, fiber costs remained high and logistics expenses and trade tariffs increased, adding further pressure on profitability. These headwinds were, as said, partly offset by value creation initiatives. As order inflow weakened further during the quarter, we continued to manage capacity and cost levels in line with demand. In packaging solutions, we had a similar development, with market headwinds being offset by own actions. Sales increased slightly, with improved product mix offsetting a small decline in volumes. Adjusted EBIT increased year on year, supported by higher sales and improved margins, driven by value creation initiatives. Despite persistent overcapacity, actions to enhance product and customer mix combined with continuous cost efficiency improvements helped protect margins. So moving from packaging to biomaterials. In biomaterials, market conditions stabilized at low levels during the third quarter. Demand for hardwood pulp strengthened in both Europe and China, while softwood pulp demand in Europe remained weak. Sales decreased, driven by lower prices and adverse currency movements, somewhat offset by higher volumes. Adjusted EBIT decreased year on year, primarily due to lower prices, but as said, stabilized at low levels. Cost reduction measures also helped mitigate part of the negative market impact. If we then move on to wood products, protecting margins has been a key priority mitigating the increase in raw material costs. Sales increased driven mainly by higher prices and stronger volumes for sawn wood. However, EBIT declined, primarily due to increased solo costs in Central Europe and the absence of last year's €10 million insurance compensation, which affects comparability. That said, price increases and value creation initiatives helped cushion the impact and protect margins. The construction market remained weak overall, but we did see improved demand for both traditional wood products and building solutions compared to the previous year. In forest, sales increased, driven mainly by higher volumes and wood prices. However, EBIT declined slightly due to slightly higher costs. So in sum, Forest continued its stable and strong performance. I'll now hand it back to you, Hans, for the key takeaways and our focus for 2025.

Thank you, Niklas. Today we have focused on profit, performance and portfolio. Three pillars that guide our actions as we navigate a challenging market and position Stora Enso for long-term success and improved profitability. Profitability and cash flow remain top priorities supported by company-wide initiatives in sourcing, operational efficiency, commercial excellence and cost optimization to ensure resilience and agility. We are finalizing the strategic review of our Swedish forest assets, including evaluating a potential separation and public listing to unlock value and sharpen our focus on core businesses. At the same time, we are ramping up production and leveraging the 1 billion euro investment in new packaging board line at our integrated mill in Oulu, Finland. Strengthening our competitive position in renewable packaging and advancing our ambition to lead in sustainable solutions. These actions are critical steps towards delivering shareholder value and navigating in tough markets. We look forward to sharing more at Capital Market Day on the 25th of November in London. Thank you for listening and 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 panellist. Please accept, wait a moment and once you have been introduced, you may unmute yourself, turn your video on and ask your question. Our first question will come from Cole Harthorn with Jefferies. You may now unmute your audio, turn your video on, and ask your question.

Good morning. Thanks for taking my question. Could I start with the cost positioning that you, well, the improved costs in the biomaterials and packaging materials division? If the cost per tonne has come down, you talk about efficiencies. Are we right to assume that this is your internal actions that have supported the lower cost per tonne rather than lower pulpwood or wood cost feeding through into the business sooner? So that's just the first question if it's internal actions. The second one is around the packaging materials business and particularly consumer board. We've got a lot of oversupply in the market, and I'm just wondering how Store Enzo is thinking about that strategically. You are the market leader. How do you think about improving operating rates as you ramp up Olu versus the price dynamics of the market? Are you still considering or are you evaluating capacity out in the industry? Thank you.

Yeah, thank you very much, Cole. So first of all, about the cost improvement actions, they are internal actions throughout the whole company. And we have started this very proactive, systematic work on reducing our cost base, both variable as well as fixed cost since two years back. We're going to give some updates about this in the CMD on the 25th of November, some tangible examples of the way we are working. But it's significant cost reduction results throughout the whole company. And this is not a project. This is our new way of working. This is a continuous improvement work. It's our new culture where basically we have identified over 4 000 improvement profit improvement actions throughout the whole company in every unit every middle every every single part of the organization and we have 800 project initiative team leaders working on these so we have thousands of people actually actively working on on cost improvement actions and profit improvement initiatives as we speak It's not a project, it's our new culture and it's a continuous way of working. When it comes to your question about consumer board, we know that there is in Europe alone one million ton of higher cost consumer board capacity than our most expensive, most highest cost line. We also know that we have in consumer board the most cost efficient capacities in Europe today. So currently we don't have any plans to consolidate or close capacity. I'm sure that there is considerations in our industry for those who have negative cash flow, for instance.

Then maybe just as a follow-up, I'd like some color on what are you seeing from a demand and order book perspective? And could you give some color between container board

and then within consumer board you know what you're seeing the difference in kind of the traditional folding box board as well as your liquid packaging thank you yes so first of all year to date we have increased our top line by five percent so we are growing as a company and uh and also in the last quarter where demand was rather subdued we grew one percent and we are quite determined to continue growth. We have invested in growth in the Oulu consumer board line, as well as also we have the young corrugated site, which is in a ramp-up phase still. So thanks to earlier investments, we have post-competitive state-of-the-art capacity that we are ramping up in order to ensure also continued growth for the future. And when it comes to consumer board versus container board, I would say that our operating rates in container board are quite high. And as you also know, from a global supply and demand perspective, especially Kraftliner, which is our strength, our core area in Container Board, that is actually a market where the global supply and demand situation is the best, the market is the tightest. And when it comes to consumer board, we have very cost efficient, high quality capacity that we are currently utilizing and then also ramping up in Oulu.

Thank you.

Our next question will come from Andres Castanos with Barenberg. Please unmute your line, turn your video on and ask your question.

Hello, good morning. Can you please help me understand why did you book a gain of 140 million with the forest asset sale if this was a sale that was done in line with book value? And also, what is your current view about the deferred tax liabilities associated to the historical appreciation of the assets that you sold? What will be the treatment in your view? Thank you.

Sure. And it is a bit of a complex accounting issue, but the sale of the 12% was in line with book value. And there was a portion in the book value which is deferred tax liabilities. As you said, the sale was tax-free according to local tax rules. We sold the company, not the assets. And therefore, from an accounting perspective, we then kind of canceled the deferred tax liability, and that portion was then going into the P&L. So it's more of an accounting technical topic.

That's helpful. Thank you. Thanks.

Our next question will come from Charlie Muir-Sands with BNP Paribus Exsane. Charlie, please unmute your audio, turn your video on and ask your question.

Yes, good morning both of you. Thank you very much for taking my questions. There's been quite a lot of talk in the industry about falling pulpwood prices and some mixed messaging around log pricing. I just wondered what you're seeing specifically yourselves at the moment and how soon you would anticipate it manifesting in your opinion. I think there are movements. Secondly, I appreciate you're going to give us an update on the possible forest spin-off at the Capital Markets Day, but can you share any early thoughts on what you see as the relative pros and cons of making such a transaction? And then just on Delia, finally, the ramp up there, you haven't quantified what the profit drag is on my go-do. I wondered if you could put any numbers around that. And also, is the constraints for the Delia ramp up technical or is it that it is constrained by market demand conditions? Thank you.

Thank you very much, Charlie. So first of all, wood costs have come down in the Nordics, both in Finland and Sweden since the peak in the summer. However, before they are visible in our P&L, there is a time lag. And actually in the beginning, there is a negative impact because the inventory values of our wood inventories comes down. But there will be with the time lag of a few months, there will be, of course, a positive impact of lower wood costs in the Nordics. Concerning the forest, the Swedish forest spin-off, 1.2 million hectares in total, I would say that the clear plus is, and that's also one of the main objectives, shareholder value creation. I mean, we clearly see that now after the sales of 12% of our Swedish forest land, The total value of all our forest holdings is €10.50 per share. And the whole idea here is to unlock value for our shareholders, as well as also being able to focus on the very different businesses of creating value and profits in a forest business, as well as creating value and profits in industrial activities, renewable packaging and biomaterials businesses. Regarding the Lear markup, the bottleneck is the market. So it's demand. We are gradually increasing volumes there. But of course, in an oversupplied market, it takes time.

So far, you've not identified any cons in terms of the possible forest spin-off.

Can you think about any, Niklas? I can't immediately at least, but we'll think about it.

OK, so we'll do it then. Thank you.

Our next question will come from Pallav Mittal with Barclays. Please unmute your audio, turn on your video and ask your question.

Are you muted?

Very quiet. Maybe we take the next question then.

Our next question will come from Andrew Jones with UBS. Andrew, please unmute your audio, turn on your video, and ask your question.

Hello, can you hear me OK? Yeah, yes. Excellent. Thanks. A few more questions have already been answered. But just just a bit of color on 4Q. First of all, you mentioned that the fixed costs were down 38 million in 3Q, mainly on seasonality. I'm curious, like how much of that should come back in 4Q? And, you know, taken together all the other moving parts on costs, I'm guessing that the wood costs don't make that much of a difference into 4Q given the lag? But you talk us through like wood, energy, some of the other moving parts as to how you see costs evolving into the fourth quarter. And then separately, I've just got a question on FBB sales to the US. I mean, is that profitable now? Like how should we think about margins on sales there? Have you changed your sales mix as a result of the tariffs and the currency moves? Like how are you looking at the different markets for your box board at the moment?

Right, Andrew, I'll take the first one. So, fixed costs very much as we said and we've said before, I mean, we are working We are working a lot on cost scrutiny, and this is nothing new. We've been on it for some time, but there's still a lot to do. So not commenting specifically now on Q4, but even kind of further out. And that absolutely will continue. Specifically in Q4, we have We continue with the normal maintenance. Maintenance stops should be roughly similar cost to Q3. And then on wood costs specifically, very much as Hans said, we have seen some downward trend. And now we talk about the Nordics, Finland, Sweden. It's different in Central Europe. But again, very much as Hans said, it comes with a delay and we talk about a quarter or two or so. When it first goes into the inventory valuation, inventory value actually goes down. It has a slight negative impact on the short-term result, but then of course over time it should start to help the result. so um so in that sense it's it it takes a while and uh uh don't expect any major impact in uh or positive impact um in q4 well i mean it's it's uh you know Logistics has gone up a bit, chemicals down a bit, energy down a bit. So it's a bit more of a mixed bag. So flattish sounds like the interpretation, yeah? Flattish, yeah. Well, again, not commenting specifically on Q4, but more what we've seen up until now and in Q3.

And when it comes, Andrew, to your question about Folded Box Board and the USA, I mean, we have been increasing prices in Folded Box Board sales to the US. We have been able to compensate a clear majority of the 15% import duty. But on the other hand, of course, also, as we know, during this year, the US dollar has weakened against the euro quite significantly. We are making positive margins on our business to the US, but very thin margins. That's where we are today. However, having said that, I do want to underline that if you if you consider our packaging materials our board grades our main board grades so consumer board various grades as well as craft liner and then i exclude a recycled fiber-based test liner because that's a very local business but if you look at consumer board and Kraftliner it's good to remember that the USA is a four million ton net exporter around the world of these products so you know if profitability of sales to the US is is challenged there are also other opportunities around the globe to develop businesses so I think you know one of my favorite sayings is that every challenge is an opportunity you need to also find the new businesses and the new opportunities. But we have not given up on the US. We continue to develop our business there. But of course, in order to improve margins, we need to increase prices further.

Okay, that's clear. Thank you.

Our next question will come from Linus Larsson with SEB. Please unmute your audio, turn your video on, and ask your question.

Good morning, gents. Thanks for taking my questions. First, just to double check, so we're not missing anything on biomaterials. It was sequentially somewhat better in the third quarter, although prices were lower and I think your volumes were lower as well. So if you could just maybe elaborate just a little bit about what happened in the third quarter, I think we may have touched on part of it already. And just to make sure that we're not missing anything, any benefits which might not be there in the fourth quarter, please.

I'll start at least. Hi Linus. What we saw in Q3 was a stabilisation at low levels. and uh uh so stabilization so i would say no no major movements there volume uh uh price uh that i can think of at least in terms of what to to miss uh now going forward okay if i can if i can build on that you know so i think it's important when you consider our by materials business so our market pulp

uh business uh we have uh the majority is cost-efficient eucalyptus from veracella as you know very well and and they are among the world's cost most cost-efficient pulp mills uh in the first quartile uh when you take for instance afters cost competitive cost capacity competitiveness considerations so great cash machines in in every situation and then the The market pulp mills we have in the Nordics, so Skutsjar in Sweden and Enocel in Finland, they are producing specialized niche pulps. So Skutsjar, the majority is fluff pulp, where we are clearly the largest producer in Europe. Most of the fluff pulp in Europe is imported from the USA. So it's a speciality pulp grade. And also in Enocel, we are gradually increasing the amount of specialized pulp grades, among others, unbleached craft pulp for electrotechnical end uses and other special niches where you can get a better price compared to the volume grades. So that perhaps also explains somewhat our position in biomaterials.

No, thanks for the color. And if you compare the various units within biomaterials, is there a material profitability difference in, say, the third quarter or are they all doing pretty well?

Again, we haven't really split out the profitability of every mill. I mean, as we've commented before, I mean, we very much look at, I mean, each and every component mill needs to be profitable, goes without saying, deliver positive cash flow. But of course, as Hans said, I mean, the South American operations are kind of absolute cost leaders. So no answer, Linus, no direct answer, at least if you hope it's okay.

I would say that based on this product differentiation and specialization in the Nordics, I'm pretty sure that there are lots of you know, pulp mills in the Nordics producing standard volume, you know, grades that are not doing as well as we are doing.

That's helpful. Thank you. And then just one more follow up on Oulu. And maybe if you could just briefly touch on or give an update on your commercial plans for the The output from OLO, 750,000 tons, that's a big amount of paper board. Where will you allocate those volumes and how have plans possibly changed from your original plans?

Well, Linus, first of all, I think it's important to remember that the line will be, as we have said from the beginning, fully ramped up in full capacity in 2027. So also next year will be a year of gradually increasing production and sales volumes. Quality is good, really good. We have received very good customer feedback. It's also important to remember that that Oulu is not producing only folded boxboard. It's also producing CKB, for instance, where there are only two producers in Europe. We are producing CKB on three production lines, and then there is a competitor producing on only one small production line. So it's not only folded boxboard. We also have some other consumer grapes on the Oulu in the Oulu production unit. Then also I want to remind everyone that Oulu is not only for us an increase in carton board capacity, because we are also transferring carton board volumes from our liquid packaging board mills for instance Skooghull, into Oulu, which gives us an opportunity to grow in liquid packaging board. So basically Oulu is providing opportunities for us to grow in all the product areas we have within consumer board, both carton board, liquid packaging board, food service board and so on. And when it comes to our sales plans, so of course, I mean, our job is to maximize profitability. Our job is not to follow a certain plan, but to maximize profitability in every situation. And therefore, as we discussed before, it's clear that the margins in the US because of the 15% import duties are thinner than what we anticipated before the tariffs came in place or the plans for import tariffs came in place. And we are actively looking to maximize profitability by optimizing our market mix and our customer mix, as well as product mix. So we really look to place those volumes wherever we can maximize profitability and value. So it's not any board, it's the best board. Well, good. Well said.

Thanks, Niklas. Of course. Excellent. Thanks, guys.

Our next question comes from Pallav Mittal with Barclays. Pallav, please unmute your audio, turn your video on and ask your question.

As a reminder,

When it is your turn, you will receive a prompt to be prepared.

Good morning. Can you hear me?

Yes, we hear you, Pallav. Hi there. Good to hear you.

Sorry about that. Some technical issues at my end. A couple of follow-ups on some comments that you have already made. So firstly on Olu, I appreciate all the commentary that you have made, and clearly volumes you have highlighted are currently running behind schedule. So what gives you confidence that you are still on track to reach full capacity by 2027, especially given the overcapacity issues in Asia? And then secondly, in the third quarter, EBIT, you have almost 30 million odd fixed cost savings. And these are your cost savings program over the last couple of years. Can you help us understand how much of those two programs is already in the numbers so far and how should we think about further improvement in Q4 and also in 2026?

Yes, thank you very much, Pallav. So if I take the first question and Niklas the second one. So first of all, Oulu, I mean, we are ramping up and and I would say that especially the last months have been very encouraging in terms of optimizing the production processes there and that gives us really confidence that we will be able to reach the full capacity from production perspective in 2027 as we have forecasted. Then of course you know, with a relatively weak oversupplied market that also in a way restricts, you know, the speed of ramp up and ramping up the volumes. Then you mentioned China, you know, we were just last week in China. We know that what is happening in China is that for instance, there is a lot of the local folded box board which is called Ivory Board. taking market share from higher cost recycled fiber-based grades, so what they call duplex there, which we call test liner in Europe. We can see similar trends in Europe, you know, folded box board, virgin fiber-based, top quality cotton board, taking market shares from recycled fiber-based white line chip board. You know, you can, for instance, with our folded box board, you can basically with uh with 30 percent a lower basis weight you get better characteristics product folding characteristics uh printing characteristics a cleaner sheet better looking uh board uh than you know with white line chipboard so we see also migration there from the european three million ton annual white line chipboard market into carton board And in China, there is a 6 million ton of white line chipboard or duplex market that is gradually being substituted with the local folded box board. So we cannot only look at the specific product segments as such. There is also important movements happening between these product categories. But now over to you, Niklas, for the second question.

On the costs. So what comes to the previous programs, more than 200 million, they are done. But as I said earlier, we are very active in terms of looking at our competitiveness, our cost base throughout. So we'll continue with scrutinizing fixed costs. We'll continue with scrutinizing variable costs. We have, as discussed earlier, We had the programs with more than 4,000 initiatives, 800 plus initiative owners, and they continue. And they are now, it's not a program, it's more of a culture, and that we intend to keep up and if anything, speed up. At the same time, As you know, we made a big organizational change in the summer, 1st of July. We have seven P&L responsible BAs, 22 P&L responsible BUs. And then we moved some of the functions to cut across the company. And now there we are taking the next step and looking at how do we make this new kind of construction, if you may call it so, more efficient. And there's been some some articles or some press picking up on some of our actions we are doing across, but that's just some of the actions we are doing a lot under the hood. And that's the whole idea. These are not programs per se, but we are day in, day out looking at how we make sure that we are competitive and create value for our customers.

Thank you.

Our next question comes from Lars Kjellberg with Stifle. Lars, you may now unmute your audio, turn your video on, and ask your question.

Thank you for taking my question. I got thrown out earlier due to power cut where I am. So not helpful, but back on again. So essentially, a couple of questions for me still. Coming back to wood markets. Obviously, there's been an exceptionally tight market now in the Nordics. Now the industry, certainly from the pulp and paper industry, is not running full. Prices are starting to give a bit. But what is your thinking in an upturn in this market, again, in terms of the wood supply that is available? And in that context, coming back to what you said earlier, Hans, about maximizing profitability, Can you operate everything, including your new assets, from a supply, wood supply standpoint on a competitive level? The other thing that you mentioned earlier was, you know, disciplined capital allocation going forward. I just wanted to understand what does that mean? You put in a lot of money on growth. You continue to talk about growth. And if I'm looking at some of the markets you serve, in particular the consumer packaging, there's no growth in this market since 2016. The volumes are the same. So how should we think in that context, your focus on growth versus what's happening in the market and in the context of capital discipline? What does it really mean? And the final point then, Coleman earlier today talked about stable generally prices on consumer boards for the contract business. But if you try to go after new volumes, there's tremendous amount of pricing pressure. So the question is, what are you finding on that incremental volume that you're trying to place relative to the contract business in terms of pricing pressures?

Yes, thank you very much, Lars. uh i i let you take the second second question but a couple of a couple of comments uh first of all starting from your last question uh about pricing yes we see consumer board prices uh or board prices in general uh stable uh you know when we are now uh introducing uh our old new volumes to the market uh very much we gain a business we gain volumes with a yield advantage uh you know our folded box board for instance from Oulu has a 30 to 40 percent yield advantage compared to white line chip board or SBS, some of the other board grades. So also with a higher price point for folded box board, you can basically prove to customers that the total cost of ownership goes down when they move to our grades instead of what they are using currently. And also one point on growth. If you look at Stora Enso during the last 10 years, you will notice that our core packaging business has been growing an average 5% per year. That's the growth we can demonstrate since 10 years back in our packaging business. uh so yes our top line has been about unchanged around 10 billion euros but we don't have basically any printing papers anymore and we have a significantly bigger uh packaging uh business so uh Ten years ago, packaging and printing papers were roughly equal sized, representing almost 40% of our total turnover each. And today, packaging is representing 60%, whereas printing papers almost zero. When it comes to the wood, uh wood uh costs and the supply and demand situation for wood in in the nordics uh i think that we have seen here this year that the wood costs have reached the pain point you know the pain levels uh there has been significant curtailments in pulp capacity without mentioning any any names of our competitors but there have been very long curtailments showing that when you're producing you know, standard volume bulk pulp grades, it doesn't make sense to run at these higher wood cost levels. So I think the proof is in the potting and we have seen that these levels basically forces the volume producers of pulp to take curtailments and shutdowns, extended shutdowns. So, and as said, since the summer, we have seen wood costs now moving downwards. But then over to you, Niklas, for the other part of it.

Yes, Lars, on capital allocation, and this is something we'll come back to as well in the CMD, but as we all know, I mean, we've had over a billion capex now for a couple of years. This year, we'll go down to some mid 700s. and likely down from there somewhat. We've done a lot of work internally thanks to great efforts by the team to kind of create, really kind of categorize our assets, run for cash assets, key growth assets and so on. And we see that we can become more disciplined by just doing internally being very structured, having return criteria, of course, but also other criteria for where to allocate the capital when talking about CapEx. So there has been a lot of work going on recently on this, and we'll come back and explain a bit more what it means in detail. But CapEx is now on a downward slope. And we, as Hans said here earlier, and as you know, we have made quite significant investments. Oulu is one, of course. De Lierre de Jong is another. And now going forward, we of course need to show the results of these and reap the benefits of them. So essentially kind of no major CAPEX kind of initiatives here in the near horizon. We have what it takes to grow, essentially.

So in 2026, what does that mean for CapEx? Where do you think you're going to land, roughly?

Let's come back to that. As you know, we typically, in the beginning of the year, in connection with Q1, we give an idea of next year. But down from where we are this year. Thank you.

We have reached the end of the time for the Q&A session. I shall now hand back to Hans Solström and CFO Nicholas Rosenlew for closing remarks.

Well, thank you very much for your attention. Thank you for joining this call. And just, you know, we are powering ahead. We are focusing on profit, performance, as well as our portfolio to maximize shareholder value. That's our ultimate goal to create the best possible value to our shareholders. Thank you very much. I'm looking forward to meet with you then in the next quarter. Bye-bye.