Stora Enso Oyj

Hello, everyone. My name is Jutta Mikkola. And as head of investor relations at Stora Enso, I'm pleased to welcome in the middle of the summer to our second quarter results presentation. I'm happy to have Hans Solström, our president and CEO, and Niklas Rosenlev, our CFO, with me here today. This quarter, our main theme was optimizing our portfolio and driving results through our own actions. That captures well the progress we have made, both in executing our strategy and optimizing our portfolio. Today, we will follow our usual agenda, starting with strategy updates, followed by a financial review and concluding with the key takeaways. After the presentation, we will be happy to take your questions. Thank you for joining us. Hans, the floor is yours.

Thank you, Jutta. And hello, everyone. Great to have you with us. The second quarter marked another period of disciplined execution in a volatile market environment. We improved operational performance, strengthened customer relationships and advanced several important strategic initiatives. Our profitability improved compared to last year. Sales were stable and adjusted EBIT increased by 27% to €160 million. This reflects continued operational improvement, progress in Oulu and disciplined cost management. I'm particularly pleased with the progress in consumer packaging where operational performance strengthened further and customer feedback continued to be very encouraging. We continue to receive positive feedback on both product quality and service, reflecting the dedication of our teams, strength of our customer offering and our significant investments in leading technologies. Creating customer value remains at the heart of our strategy, and it is encouraging to see this translating into stronger customer relationships and faster than the market growth. During the quarter, we also continued to optimize our portfolio. We announced an investment to strengthen our position in Fluff Pulp at Skutsjär, while at the same time deciding to close a less competitive production line at the site. Preparations for the separation of Bergslaget Skogar also progressed as planned. The strategy is defined, the organization is in place and execution is firmly on track. In Oulu, the ramp up of the new consumer board line continued to progress. Production stability, technical runability and operational efficiency improved further during the quarter. While the ramp up continues to affect short-term profitability, the overall development is positive. Overall, this quarter again demonstrated that we are not relying on market conditions to improve our performance. We continue to drive profitability through our own actions, operational and commercial excellence and systematic value creation. Our strategic priorities remain unchanged. We lead in customer value creation through innovation, quality and sustainability. We grow faster than the market with a superior customer offering, leading technology and operational efficiency. We expand margins through business focus, a positive performance culture and systematic value creation. And we generate cash with a high conversion ratio and disciplined capital allocation. These priorities guide our actions across the business. They are also closely linked to how we are developing the portfolio, improving performance and building a stronger, more focused Stora Enso. Portfolio optimization is an important part of our value creation agenda. It is not a one off action. It is a discipline, a continuous lever to sharpen business focus, strengthen competitiveness and allocate capital where we see the best long term opportunities. Over the past years, we have taken several concrete steps. We have closed or exited non-core or low-return assets, divested part of our Swedish forest holdings, acquired Junnikala sawmills to support Oulu's cost competitiveness, and continued the ramp-up of Oulu. In 2026, we announced further actions. At Skudshär we decided to invest in fluff pulp capacity and close the softwood pulp line. This strengthens our position in specialized pulp and improves the long-term competitiveness of the site. We are also divesting the corrugated board production site in Germany as part of our corrugated asset base optimization. At the same time, the strategic review of our central European sawmills continue. And looking ahead, the planned separation of Bärslaget Skoga remains a key step in unlocking value and enhancing strategic focus for both companies. The common theme across these actions is clear. We are building a more focused portfolio, improving capital allocation and strengthening the foundation for long term value creation. One of our key strategic priorities is to expand margins through business focus, a positive performance culture and systematic value creation. This has been a core priority through the last two years and continues to be so going forward. We have identified 500 to 700 million euros of value creation initiatives. These initiatives have clear ownership and are already underway. In the first half of 2026, our own actions continued to contribute positively. At the same time, market impacts remained mixed. Lower pulpwood costs supported the development. However, solo costs have remained high or even increased. We also continued to face unfavorable foreign exchange rate impacts. pressure on price and demand, as well as war-related impacts on energy, logistics and chemicals. Enso Oyj The Oulu ramp-up continued to affect profitability. The impact was at the same level as in Q1, while operational progress continued. The key message is that the fundamentals of our margin expansion story remain intact. We are not standing still and we are not waiting for market conditions to improve. We continue to drive performance through our own actions. Let me now highlight three concrete examples of how innovation supports one of our strategic priorities, leading in customer value through innovation, quality and sustainability. The first example is circularity. In May, Stora Enso published its circularity plan aligned with the first version of the global circularity protocol for business. We also set a new target to reach 90% material circularity in our direct operations by 2030. For customers, this brings clarity and credibility. Circularity is becoming increasingly important, but common frameworks are still developing. By moving early, we are helping to create a more consistent and transparent basis for measuring progress. while also supporting our customers' own sustainability ambitions. This is also about competitiveness. Circularity brings together design, operational efficiency and value chain collaboration. It means using resources more efficiently, minimizing waste and helping customers move towards renewable packaging solutions designed for circular systems. The second example is Oulu. Our Oulu business unit now hosts Finland's first pulp mill to achieve FSSC 22000 food safety certification. Since May 2026 the certification covers the full production chain of Oulu from pulp production to board machines, sheeting and the portal terminal. For customers this means added assurance, process are audited, risk management is systematic and the materials are sustainable for direct food contact. This matters especially in food packaging where quality, safety and reliability are critical. The third example here is Performa Natura Aqua. In food service and bakery packaging, customers need grease resistance, stiffness, converting performance, and a high quality printing surface. Performa Natura Aqua combines these requirements in one dispersion coated folding box board. The customer value is practical and immediate. The integrated barrier supports grease resistance without additional processing steps, while the board structure supports stiffness, stable runability and reliable production protection. Together, these examples show that we are not innovating for innovation's sake. We are creating measurable customer value, helping customers meet sustainability expectations, enter growing packaging segments and rely on safe, high performing, renewable materials. With that, I will hand over to Niklas to take you through the financials.

Thank you, Hans, and hello, everyone. Let's now take a look at the financial performance for the second quarter. During the second quarter, sales were stable at 2.4 billion euros. Higher sales from the old ramp-up and the unical acquisition were largely offset by lower prices and adverse currency movements. Adjusted EBIT increased by 27% to 160 million euros. Profitability improved as a result of disciplined owned actions and progress in the old ramp up. Volumes were higher, particularly in consumer packaging, which helped to partially offset weaker external sales prices for wood in Sweden and negative foreign exchange impacts. Overall, the quarter shows that our own actions continued to support performance in a challenging market environment. This can be seen more clearly when looking at the EBIT bridge. So looking at the EBIT bridge, the main message is that progress with our own actions and in all more than compensated for the negative market impacts. Price and mix was negative during the quarter. This was largely driven by lower external wood sales prices in Sweden and pricing across our industrial businesses was otherwise broadly stable. While wood prices had a negative impact on price and mix, it had a positive impact on variable costs. The reason is simple. In Sweden, we both sell wood externally and procure wood for our own operations. Wood prices in Sweden declined following the late December storm Johannes. The storm resulted in a significant volume of storm damaged timber entering the market. As this timber needs to be harvested and transported relatively quickly, supply increased and prices came under temporary pressure. We have seen similar dynamics following previous storms and historically prices have normalized once the excess volume have been absorbed by the market. Volumes were higher, particularly in consumer packaging, where, as Hans mentioned, operational performance continued to improve and customer feedback continued to be encouraging. We also continue to benefit from operational improvements and own actions across the business. These helped offset increased pressure from higher logistics, energy and chemical costs related to the conflict in the Middle East. Foreign exchange was again a headwind, with the weaker dollar reducing sales and currency movements increasing cost pressure in some areas. The positive development during the quarter was also supported by progress in Oulu, which is visible in the other category of the bridge, together with contribution from our own actions across the business. The bridge clearly shows that we continue to improve performance through actions we can control, even though the external environment remains challenging. Let's then look more closely at wood cost development. And let me spend a minute on this, as there are a few important points to keep in mind. First, pulpwood costs have come down from the exceptionally high levels we saw over the last few years. Clearly, that is positive for our wood intensive business and supports profitability. However, the impact on our total wood costs is not one on one. While pulpwood prices have declined, saw log costs have remained high and in some cases continue to increase, particularly for sawmills. On this slide, we show the development for both pulpwood and saw logs across Finland, Sweden and Central Europe. As you can see, pulpwood cost levels for us have come down, especially in Sweden, but the benefit is to a large extent offset by higher solo costs. As a result, the impact on our total wood cost base is more modest than the pulpwood price development alone would suggest. Second, there is always a timing effect. Changes in market wood prices are reflected in our mill wood costs with a delay, as the wood we consume today has often been purchased some time ago. This means the benefit from lower market prices flows through gradually rather than immediately. Third, it is important to understand the difference between public wood price or public wood price statistics and our actual delivered wood costs. Market statistics typically reflect stumpage or roadside prices, depending on the region. And our delivered mill gate costs also include harvesting, logistics and mix effects. Logistics costs in particular have been under pressure during the year following the conflict in the Middle East. So while lower pulpwood prices are clearly supportive, some of that benefit is offset by higher transportation and sourcing related costs. So in summary, the direction in pulpwood is positive, but the full benefit takes time to come through and is partially offset by higher solo costs and other wood cost components. So with that, let's move on to cash flow. Cash flow remained or cash flow remains and remained an important strategic priority for us. In the second quarter, lower capital expenditure supported cash flows after investing activities. This is in line with our plan to reduce capex after a period of significant investments. Cash flow from operations was lower than last year. This was due to an increase in working capital. We had a higher trade receivable or higher trade receivables as a result of stronger consumer packaging sales. And we also had lower payables. And these were partially offset by a reduction in inventories. Overall, the development remains aligned with our priorities. We are reducing capex, improving the quality of the portfolio and maintaining a capital discipline. This is also visible in our balance sheet development. Net debt decreased clearly during the second quarter following the 1 billion euro hybrid issues. The hybrid strengthens our capital structure and increases financial flexibility. It is treated as equity under IFRS and partly by the rating agencies. So it supports our credit metrics and helps protect our investment rate profile. This was an important step in supporting our long-term strategy and the preparations for the planned separation of Bergslag and Skogar. Net debt to adjusted EBITDA also improved to around 2.2 times. Going forward, our deleveraging path will be supported by structural execution, profitability improvement and disciplined capital allocation. Let's then have a look at how our segments performed. This is the second quarter when we report based on the new segment structure. As I said earlier, the structure reflects the P&L responsibilities and how value is created across the group. Let's start with consumer packaging. Sales increased during the quarter, mainly driven by the ramp up of the new consumer board line in Oulu and unical acquisition. Adjusted EBIT increased by 42 million euros, And this was a result of good operational performance, higher volumes and lower variable costs. As Hans mentioned earlier, we continue to see encouraging customer feedback and a positive response to both our product quality and customer offering. Another contributor to the increase was the continued progress in Oulu. While Oulu still had a significant impact on profitability in absolute terms, in line with the first quarter, the year-on-year improvement was clear and reflects the progress we have made. Order inflow remained healthy during the quarter. At the same time, demand for European consumer board grades continued to be somewhat mixed, reflecting the broader market environment. Then moving on to integrated packaging. Sales decreased mainly due to lower corrugated packaging volumes in Western Europe. The underlying business performance remained relatively stable. However, profitability was negatively affected by lower emission and energy related subsidies compared to last year. Excluding this effect, the performance of the business was broadly stable. Lower fiber costs and good cost discipline helped offset the negative impacts. Demand for virgin container board continued to improve, supported by announced price increases. Then moving on to biomaterials. Sales increased slightly as higher deliveries were only partly offset by negative foreign exchange effects. Adjusted EBIT increased by 23 million euros, mainly due to lower wood and fixed costs. Fixed costs were also supported by lower maintenance activity. Softwood market remains weak, while hardwood and fluff pulp markets are more stable with prices recovering sequentially, albeit still at low levels. In the other segment, sales and profitability decreased, mainly due to lower external wood sales prices in Sweden, reflecting the same market impact from Storm Johannes that I discussed earlier. The external wood sales are part of BU Wood and Energy, so in other category. In additional, profitability in the central European wood product was affected by continued increases in saw log costs, which put pressure on margins. So with that, I'll hand back to Juhans for the key takeaways.

Thank you, Niklas. Let me now summarize the key takeaways and our focus for the second half of 2026. As said, the second quarter marked another period of disciplined execution in a volatile market environment. While market conditions remain challenging, we continue to drive performance through our own actions across operations, costs, commercial excellence and procurement. Our strategic priorities remain unchanged. Lead in customer value creation through innovation, quality and sustainability. Grow faster than the market with superior customer offering leading technology and operational efficiency. Expand margin through business focus, a positive performance culture and systematic value creation. Generate cash with high conversion ratio and disciplined capital allocation. We continue to strengthen our competitiveness and ability to deliver consistent performance regardless of external market volatility. I would like to thank our employees, customers, partners and shareholders for their continued trust. Together we are building a stronger, more focused and more sustainable Stora Enso. Thank you for listening and we are now ready to take your questions.

Use the raise hand function at the bottom of your Zoom screen. When it is your turn, you'll 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 a maximum of two questions at a time. If you wish to ask more than two questions, please rejoin the queue. We'll pause a moment to allow the queue to form. Our first question comes from Ioannis Masvelas with Morgan Stanley. Please unmute your line, turn on your video and ask your question. Ioannis Masvelas, please accept the prompt, turn on your video and unmute yourself.

Hi, good morning. Thank you very much for the presentation. Enso and Niklas, two questions from my side. I'll take them one at a time. First, looking at the oil mill, can you give us a sense of the operating rate in the second quarter and whether You anticipate to fully ramp up in early 27, or that's more of a late 27 timeframe. And related to that, what was the EBIT impact in Q2? And also, if you can quantify the EBITDA impact just to get a better sense on something closer to a cash flow metric. Thank you.

Yes, hello, good morning, Jannis. So, first of all, we don't disclose the exact operating rates for the various businesses, but we are in, you could say, an integrated packaging and container board. Enso Oyj is running at high operating rates. The market is solid with solid ordering flow. And in carton board, as you know, there is a weaker market. There is also overcapacity in Europe. So there we are ramping up sales as we speak and their operating rates are lower. And as we have said before, we expect to reach full capacity with the new consumer board line in Oulu during next year. And regarding the EBTA impact, so we don't We don't disclose specifically for various mills or units, but as you can see, if we look at Consumer Board as a totality, we improved our EBIT margin from about 2.3 last year to 6.5 in the second quarter of this year. So Consumer Board for us is a profitable business, but of course we are still not where we want to be. So we are continuing to work on profit improvement actions within Consumer Board.

Perfect, thanks very much for that. And the second question on the Central European sawmills, where you flagged some margin pressure despite the declining solo costs, as you showed in the presentation. Can you talk about EBIT development? Is that business EBIT positive in the second quarter? and can you talk about some of the self-help initiatives to improve performance given that you have the strategic review and clearly you want to get the business to the best possible position when you look at the alternatives? Thank you.

In fact, SOLOGS in Central Europe, if you compare the SOLOG prices in the second quarter of this year compared to the corresponding period last year. So they have increased by about 7% as Niklas presented to you. So whereas wood costs in Nordics have easened somewhat, in Central Europe they have moved upwards. And of course, we are increasing prices also for timber, but price increases have been lagging behind because of our capacity. And you are absolutely right that self-help is what it's all about now. I mean, we have made recently changes in the leadership in Wood Products Business Unit South. We are now taking very strong actions to work on the profitability of Wood Products, Central Europe business unit.

Thank you. And if I push you a bit, just to get a sense on profitability, if we look at EBITDA or EBIT level, is that business today positive?

It's a profitable business, but it's not there where our ambition level is. And we will take strong actions to improve the profitability of Good Products Business Unit Central Europe. Thanks very much. Thank you both.

Our next question comes from Pallav Mittal with Barclays. Please turn on your video and mute your line and ask your question.

Can you hear me? Good morning.

So a couple of questions. I'll take it one by one. You did mention order books, order flow healthy on the consumer board side of things. Just wanted to understand, are you seeing any changes in the trade flows? Because last year we were seeing increased imports from Asia into Europe. So is the Middle East war impacting that and helping the consumer packaging business in the short term? That's the first one.

Pala, regarding consumer board, we continue to grow faster than the market. We did that during last year and we have continued to do that during the first half of this year. We will continue to do that moving forward. We have very cost-competitive, state-of-the-art technology and mills. We have a really strong customer offering, product offering. And we also have received and we are receiving continuously extremely good customer feedback for our product quality and our service. So we are continuing to grow faster than the market in consumer board, backed up by our recent significant investments here. And yes, it is true that looking into public statistics, there has been increased imports from in China, into Europe in cotton boards. So the ivory boards have been imported here. But I want to restate what I have said earlier. We are not encountering direct head-on-head competition from Chinese board producers. And they are focusing on markets and segments where apparently You know, we are not strongly present today. And let's remember also that carton board, you know, folded box board, CKB, they are highly specialized, high added value products. We have lots of features that the Asian producers don't have and apparently will not have. I mean, for instance, the whole furnish, the recipes where we use microfibers, where we are using different fibers and constructing the board out of four, five different layers, giving extremely good printing properties, surface properties combined with stiffness, bulk. Enso Oyj So even if there has been some increased imports, we haven't lost any business to Asian producers in Europe.

Great, that's very helpful. Secondly, I would like to ask on the Central European wood operations. And I think to the previous question, you made this comment that it is still profitable, but clearly a much weaker quarter versus what we have seen in the past. if you could give any update on the progress there on the strategic review what are the various options and if you were to divest this business I mean how confident are you given the weak performance yes so of course I mean strategic review that we are looking into all options and we will conclude the strategic review you know by the end of this year as we said

in the fourth quarter of last year. We are progressing well, looking into all different available and possible options for wood products business unit Central Europe. and we will come back later during this year with our conclusions. Now we are focusing on the essential. I mean, we know that we can improve the performance and we are dealing with that with determination and speed. We have a new business unit leader in place since a couple of weeks and we are taking stringent and determined actions there.

If I can squeeze one more in. Just on the pulp operation, if you could broadly talk about how the demand has been both in Europe and in Asia, because I've heard mixed comments from different companies. So just wanted to understand what you are seeing from a demand perspective, both in Europe and Asia.

So first of all, it is true that if we look to the bulk and the volume grades, you know, so bleached, you know, softwood craft pulp, you know, the market has been and demand has been weaker than for eucalyptus or bleached hardwood craft pulp. But then I think it's really important to remember that We have very competitive and good pulp assets because we have some of the most cost-efficient eucalyptus pulp mills in the whole industry in Brazil and in Uruguay. and basically thanks to the cost competitiveness and the good long customer relationships and also the own use that we have when we are producing cartel board in Europe as well as in China, we can run these assets full and they generate a good healthy cash and profitability. And in the Nordics, we are to a very large extent specialized in specialized pulps. So being Europe's largest and leading producer of fluff, where the market dynamics is different. and then also producing unbleached special pure, unbleached pulp grades for special niche end uses like electrotechnical insulation and also certain food filter applications. So thanks to the high degree of specialization, we have a profitable pulp business, 16% EBIT margin, and the business we have also in the Nordic production is profitable thanks to differentiation and specialization directly impacted by the weaker bleached softwood craft pulp market conditions.

Thank you. I'll go back into the queue.

Our next question comes from Linus Larson with SEB. Please turn on your video, unmute your line and ask your question.

Good morning, gents. Thanks for taking my questions. It looks as if your core packaging and pulp operations are moving along pretty nicely. They actually came in better than consensus and my expectations, but the disappointment here in the quarter appears to be in the division. It's actually your second biggest division now, and we have spent some time on it already, but maybe If you could help us bridge the year-on-year change. Now you're reporting 7 million euros. That's down 30 million euros year-on-year. Could you in any way try to explain that change and maybe add some color in addition to what you already said, please?

Hey Linus, I'll take this one. So you're absolutely right. I mean, OTHER was the weak spot in the quarter. Otherwise, we are very happy actually about the progress being made. And when it comes to OTHER, the main driver there was very kind of Sweden specific. So as I showed here earlier, The Sweden wood prices have come down, no surprise, come down since late last year. And then that was accelerated by the storm Johannes in the end of December. and this has then I mean we have a relatively sizable external wood sale in Sweden in particular not so much elsewhere but in Sweden in particular we sell quite a lot of wood to external parties so not for our own use but external parties and then prices coming down that is the main thing you see in this kind of other category then if we reflect a bit on and not wanting to forecast or commenting on forecasts of wood prices, but what we've seen in previous storms, and we've done a look back at previous storms in Sweden and the Nordics, what we see now is pretty similar to what we've seen in the past. There is price pressure. There's a lot of fallen trees that need to be picked up quite quickly. Enso Oyj then that creates a price pressure which at least in the past has been somewhat temporary or it has been temporary essentially so that's what we are in the midst of for the moment and that's what you see in the other category profit.

Can I still, Linus, build on that and add one comment? As Niklas said, we sell to third parties quite a lot of wood. And I want to underline that this, what we have seen in others, is not... Värslaget Skog is very stable really good performance Värslaget Skogar is harvesting and selling some three and a half million cubic meters of wood annually but our sales of wood to third parties is on the level of 13 to 14 million cubic meters. So it's really on that part where we have seen them through lower sales prices, this sales price negative impact that is visible in the bridge that Niklas showed. So it's the trading part, which is not part of Värslaget Skogar, but which is part of our wood and energy business unit.

Great. That's really helpful. And so two questions. Then if you split the year and year change, how much is relating to what you just said and how much is relating to the sawmills and or other things? And also going into Q3, Q4, any idea how this

how this may play out what might be bouncing back when and so forth I don't Linus have an exact split I don't want to give an exact split to be specific but I would say the big chunk of the year on year came from this and then as you said another part of it is central European wood products and also there as I said in Central European wood products it's a wood cost related you know margin effect so now otherwise things are running we know we can do better we can do more and we will do more but also there it's wood cost related very different reason I would cost moving up while in Sweden moving down but anyway I would say Main chunk is the wood cost, Sweden, wood prices, and then we have other things including Central European. kind of wood operations. And remember in other, and admittedly, this is a bit of a complex category, I understand for you, because we also have our costs there. So it's the operations, and then we have the so-called group costs there. On group costs, there's no major movement as such, at least not in the wrong direction.

And there is also the time lag factor. I mean, we get immediately the negative impact of lower wood costs when we sell, you know, to third parties. But then when it comes to internal impacts, you know, there is a inventory in between. So the positive cost impact comes with a certain delay to our businesses.

Great. That's helpful. Thank you very much.

Thank you. As a reminder, please only ask a maximum of two questions at a time. If you wish to ask more than two questions, please rejoin the queue. Our next question comes from Gabriel Simos with Goldman Sachs. Please unmute your line and ask your question.

Hans, Niklas, thank you very much for taking my questions. So the first question would be on the container board side of things. So you mentioned that demand remains strong in this market. So I just wanted to understand Your view for the remainder of this year right so given that we have a significant addition expected for capacity and the test liner side in Europe, how do you expect that to impact the the S&D balance and demand for craft liner and then as the gap between craft and test liner is already significantly higher than than historically. If prices ended up moving lower for Testliner because of this new capacity, what would be your expectations for this gap and for the Testliner pricing, especially thinking about where demand, if you think that demand would behave in a more resilient way? So that's on the container board side. And then I just wanted to add a question on the liquid packaging board side. So just to understand your view on how demand has been progressing, As some peers have been mentioning, strong volumes there. And I believe competition has been increasing in that front. But we also see the main aseptic carton players still reporting below historical numbers for growth. So just wanted to understand how you see that market as a whole behaving and adding the demand from smaller and non-system suppliers there. so if you could provide some color on how relevant that is becoming for you guys and if you are already a relevant player in that space for the non-traditional players of Receptic Gardens that would be very helpful

Thank you very much, Gabriel. If I start with the latter part, so liquid packaging board. We are the world leader in liquid packaging board, both in terms of global market shares, volumes, but also in terms of quality service. And we are producing liquid packaging board in three mills, Finland, Sweden and China. and for us this is a very successful business where we are continuing to see growth and opportunities also to develop new business globally in different regions around the world So it's a good business. Also, operationally, these three mills are straight of the art, really highly efficient and very productive. And the customer feedback we constantly get here is extremely strong and positive. So it's a good business. And we see also positive volume development, thanks to our relative competitiveness in this area. Going then to container board. So also here we are in a good position because first of all as you know the Kraftliner market when you look at global supply and demand is actually is almost starting to be tight you know so there's a very good supply and demand balance thanks to the extensive capacity closures in North America during the recent years I mean millions of tons of capacity has been exited in Kraftliner and US has been exporting a lot of Craftliner into Europe, into various parts of the world, Asia, South America, and so forth. And this, of course, offers opportunities for us to grow and develop our business. So Craftliner market is in a good position from our perspective. When it comes to the test liner, In test liner, there is more over capacity, but it's important to remember that test liner, recycled fiber-based test liner is a very local business. You know, you need to be, you know, it's a lower priced product compared to craft liner. So you need to supply close to your mills. You also get the recycled fiber, the raw material close to your mills. And here we are in a good position that our test liner production in Australi is extremely well placed and it's very competitive. It's one of the lowest cost, if not even the lowest cost test liner production unit in Europe. And we are smack on in the middle of the fastest growing corrugated market in Poland, in Europe, which is Poland. So we are well placed there. We are cost efficient. And thanks to our strong position, you know, we can operate with run with high operating rates and a successful business, despite of some, let's say, local overcapacity in other regions of Europe. All right, thank you.

Thank you. Our next question comes from Cole Harthorn with Jefferies. Please turn on your video, unmute your line and ask your question.

Good morning. Thanks for taking my question. I'd just like to follow up, I mean, on the other division. I mean, the positive performance in your consumer packaging, you know, integrated packaging and pulp is overshadowed by the other division. And, you know, we've lost quite a bit of Visibility combining Central Eastern Europe, the forests in Sweden, et cetera, into that division. So can you provide any help of how you expect the EBIT performance to be into the third quarter and the fourth quarter? And the reason I ask this, because you've talked about Sweden profitability coming down, but I look at the old forest division and stripping out property sales there was no quarter on quarter move that was 20 million of EBIT so anything that you can help has there been a one off that's impacted this and you should see improved profitability on Sweden forest sales in 3Q and similarly with the sawmill business you talked about higher prices and the lag effect should we see higher margins into the third quarter just as you realize some of that pricing and hopefully saw log costs ease a little bit

Enko, fair point, first of all, in terms of what you said, lost a bit of visibility, gained hopefully visibility elsewhere in the other segments, consumer integrated and bio, but then as you say, probably lost a bit in the other category. Let us think about, as a kind of a learning and input also from you, thank you, think about how we kind of make it easier going forward to understand this. Because as I said, we both have the operative businesses like Food Product South, and then we have the corporate costs in there. And of course, getting it right from a forecasting perspective with the visibility you have today is not the best. I don't wanna give a forecast for a category here, but what should I say? Don't expect any dramatic movements going forward. But again, it is some of these different parts. And going back to what we are doing, as Hans mentioned, on the Central European Wood products, we'll come back with the strategic review announced. There's a lot of potential in Central European Wood products. product. And we are looking at those, looking into those for the moment and actually starting to take actions, leadership changes, as Hans mentioned. But more on that later. So sorry, Cole, I can't give you an exact number, but anyway.

Maybe I can ask this another way. When you think about going into the third quarter, I understand you're going to be doing a lot to try and keep profitability stable quarter on quarter. Could you just talk about some of the pluses and minuses and positives? You've obviously got higher maintenance costs, but in integrated packaging, you've probably got the benefit from higher craft line and corrugated pricing. Consumer board, hopefully for a little bit of price mix and lower wood costs. You talk about other being No major changes, but what are the moving parts that try and help you offset the maintenance to try and keep a stable profitability level?

Again, don't want to provide a forecast, an exact figure, but I mean, on the consumer side, we see a pretty good run of course we have the ramp up in Oulu kind of pushing in the other direction or still being a drag but but otherwise by and large pretty good on the integrated side as you say also you know demand supply balance tightening and and becoming becoming better and and biomaterials you know continue as is but but I want to avoid giving an an exact Thank you.

Our next question comes from Reinhardt van der Volt with Bank of America. Please turn on your video and mute your line and ask your question.

Good morning, Hans and Niklas. Thank you for your time. I'd just like to revisit the variable cost decline that you showed in the bridge. Enso Oyj

We are pretty pleased with the own actions, how they continue. And I'm personally, this gets me going quite excited about the 2000 actions that we are running concurrently. Of course, it's not all variable. It's also in the other fixed and so on. But that's going well. And going back to kind of the CMD messages, the five to 700 million is very much in sight and on track. And we continue to push that forward. And if anything, there's upside. We go specifically to Q2 now. I mean, we had pluses and minuses. So we had a clear plus from the own actions. We had a negative from the Middle East related logistics, chemicals, to some degree energy, but logistics being the biggest category there. And then we had a positive from fiber costs in general. So what you see there is a mix of all these three. And fiber being a significant part, but not at all the only part. So pluses and minuses.

Understood, thank you. And maybe for my second question, just a simple one. If we look at consumer board, what do you think needs to happen in the sector in order for it to return back to mid-cycle profitability? What do you think the industry needs to do?

Well, first of all, I mean, you all know and you read the same news as us. I mean, there is one of our competitors have declared bankruptcy. We have another very significant cotton board producer from Southern Europe where there has been forced ownership changes because of financial distress. And many of our competitors also are actually negative where we are producing losses, where we are making almost 7% EBIT margin under these circumstances. So that just shows that we have Well said. Thank you very much.

Well, first of all, thank you very much, all of you, for participating and for your good questions.

And I think it has become absolutely clear that, you know, we are doing whatever it takes to improve the profitability profits of Stora Enso and also shareholder value through our own actions to improve our competitiveness as well as also through structural development of our portfolio so we are really determined to maximize shareholder value creation thank you very much have a good day bye