Good morning or good afternoon to everyone, depending on your local location, and welcome to the presentation of Metsä Board's half-year results. My name is Mika Joukio, and I'm the CEO of Metsä Board. With me are our CFO, Jussi Noponen, and Head of Investor Relations, Katri Sundström. As always, let's start with the main events during the second quarter. Demand for our paper boards was at a good level, and average selling prices remained fairly stable. Demand was further boosted by the coronavirus outbreak and the strikes in the British paper industry at the beginning of the year. Our total production volume of paper boards reached a record high level in the second quarter, being 489,000 tons. This, in turn, led to the improved efficiency of the mills, which reduced production costs. Our cash flow generation remained strong. In April-June, our operating cash flow was EUR 72 million.
This was already the third consecutive quarter with exceptionally strong cash flow. Regarding our ongoing investment in Husum, we are still waiting for the environmental permit issued by the Swedish authorities to allow the installation of the new recovery boiler to start. Naturally, we are disappointed with the longer-than-expected processing time, but the big picture in the investment remains the same, and our new Excellence Centre, Äänekoski, Finland, which combines packaging design competence and R&D activities, was completed on Friday in June. Now, an update of how the coronavirus has impacted us so far. Let's start with paperboard demand and sales. The impacts of the coronavirus outbreak and threats to the paperboard demand have been neutral or slightly positive on an aggregate level, but there have been differences between end-use segments. We have seen strong demand, especially in end-uses like food, beverages, and pharma.
At the same time, the demand for graphic end-uses and luxury products packaging has declined. During the pandemic, we have had substantial precautionary measures in place both in our mills and offices, ensuring the safety of all employees and business continuity. We have managed to avoid the spread of infection, and our production has been in full swing throughout the year. To avoid close contacts, some of the maintenance work planned for Q2 was postponed to the second half of the year. Although the impacts of the coronavirus on Metsä Board's operations have been minor or even positive so far, we must be prepared for tougher times. A global recession would also have negative impacts on Metsä Board's profitability. To accelerate the development of future paper boards and packaging solutions, we have established an Excellence Centre in Äänekoski, Finland.
The Excellence Centre enables collaboration throughout the value chain, and will help us explore the potential of lightweight fresh-fibre paperboards now and in the future. Operations at the new premises began, according to the original schedule, in June. Operational . Physical events and meetings with stakeholders will be initiated as soon as the situation allows. Now for the results. Starting with the total delivery volumes of all the paperboards. In March-April, the coronavirus outbreak increased the demand for pure and safe paperboards. The strikes in the Finnish paper industry in January-February further accelerated the demand. As a result, our paperboard delivery volumes increased by 3% quarter-on-quarter and by 3% also year-on-year. Strong demand normalized towards the end of the period, and the order books returned to the normal levels. And now, for a closer look at the sales peak and sales development by market area.
In the EMEA region, delivery volumes in both folding boxboard and white kraft liners grew compared to the corresponding period last year. The price levels for folding boxboard remained stable, but declined slightly for white kraftl iners. In the Americas, total paperboard delivery volumes increased, and average selling prices in Europe were higher. Especially in North America, booming e-commerce has increased the demand for white kraft liners. In the Asia-Pacific region, our paperboard delivery volumes decreased compared to the first half of last year. Now, a few words about production and safety. Our total paperboard production volume was at an all-time high in the second quarter, at 489,000 tons. The high production volume improved the energy and material efficiency of the mills, thus reducing paperboard production costs. We also managed to improve our occupational safety during the first half of the year.
Our main safety KPIs developed well and were at significantly lower levels compared to the full year 2019. The trend is in the right direction, although we still have to make an effort to achieve our long-term safety target of zero accidents. Our operating result in the second quarter was strong, at EUR 60 million. As already mentioned, a large part of this profitability improvement was derived from lower production costs, especially in paperboard production. Compared to the corresponding period last year, the result was also improved by favorable changes in FX, but weakened by the EUR 5 million carryover impact from the strikes at our Finnish mills. The total negative impact of the strikes was approximately EUR 20 million, of which EUR 50 million impacted the first quarter and EUR 5 million the second.
The operating result for the first half of the year, EUR 94 million, was a little lower than in the corresponding period. The main negative items were lower market board prices and the impacts of the strikes. On the positive side, we had higher delivery volumes in both paper board and pulp, and again, lower production costs. The price of imported wood to Sweden came down, and lower market prices for all products reduced energy costs. Changes in FX after hedging had a positive impact on our profitability of some EUR 18 million. During the first half of the year, market prices for long fiber pulp weakened by 24% in Europe and 70% in China compared to last year. The coronavirus outbreak has accelerated the demand for tissue and hygiene products, but at the same time, there has been a rapid decline in printing and writing paper consumption.
Although this has led to reduced availability of recycled paper, which in turn increases the need for virgin fibers, it has not been enough to balance the demand and supply situation for long fiber pulp. In the second half of the year, the pulp supply will be reduced due to production curtailments announced by certain pulp producers and several planned annual maintenance shutdowns. Globally, inventory levels remain quite high. Now, an update on the Husum renewal. In March, we obtained the building permit for the foundation work of the new recovery boiler, and the work has progressed as planned. Unfortunately, the environmental permit process has taken longer than we expected, which prevents us from starting the installation of the new recovery boiler. We therefore now estimate that the new recovery boiler and turbine will be in operation during the first half of 2022 at the earliest.
Our previous estimate for a startup was the fourth quarter of 2021. I still want to emphasize that there has been no material disagreement on the permit conditions between the company and the Swedish authorities. Our operating cash flow continued its strong performance and was EUR 152 million during the first half of the year. There are two main reasons for this trend. First, the strong working capital growth typical for the first half of the year did not occur due to the production losses caused by the strikes at Finnish mills. Second, the lower pulp price has increased the share of Metsä Board's own board mills and correspondingly reduced the share of the associated company, Metsä Fibre, in generating cash flow. Total investments in January-June were EUR 73 million.
We estimate that the total investments for the full year 2020 will be around EUR 200 million, of which EUR 140 million is allocated to the Husum renewal. The timing of the environmental permit issuance affects the distribution of investment value between years. The positive result development during the second quarter was also reflected in the return on capital employed. In the first half of the year, comparable return on capital employed was at 10.7%, and during the second quarter, it was even higher, 13.9%. Our financial position is strong. At the end of June, our leverage was at 1.1, so there is a lot of headroom with our ceiling target of 2.5. Our dividend policy is to distribute at least 50% of our net result to shareholders. From 2019, the profit distribution was EUR 0.24 per share, or 59% of the net result.
The distribution was paid according to the board's original proposal. Moving on to the outlook. First, I will repeat our view in our previous earnings call. The negative impacts of the corona pandemic on Metsä Board business operations are still difficult to estimate in the long run. We don't know how long the situation will last and what the final impacts on the global economy and thus on Metsä Board's profitability will be. We see that the peak in paperboard demand has now passed, and the length of our order books has returned to normal. We therefore estimate that our paperboard delivery volumes in the third quarter will decline from the second quarter, and we expect paperboard prices to remain stable. We will have many planned maintenance shutdowns during the third quarter, for example, at the Kemi and Husum integrated mills.
As usual, part of Husum's maintenance will be allocated early October. In addition, some smaller maintenance work has been postponed from the second quarter to the third quarter. Uncertainty in the pulp market continues, and we expect that our market pulp deliveries will decline in the third quarter, and we don't expect production costs to decline further. Based on these assumptions and current visibility, we estimate that our operating result in the third quarter will be weaker than the second quarter. Now, to summarize. In the first half of the year, Metsä Board's business performed well. Demand of our fresh fibre paperboards increased, especially at the beginning of the pandemic, because consumers were stocking up on essentials: food, beverages, pharma, and so on. Strong demand increased our paperboard delivery volumes.
The coronavirus has not affected our mills, and our paperboard production volumes were at an all-time high level in the second quarter. During the first half of the year, the total production volumes were even higher compared to the previous year, despite the negative effect of the strike at the beginning of the year. And during these exceptional circumstances, our profitability has remained good and cash flow strong. But looking ahead, we need to prepare for a slowdown in demand. It's difficult to estimate the extent of the pandemic's negative impacts both on the global economy and on Metsä Board's business. That concludes the presentation part of our half-year results, and we are now ready for your questions. Please go ahead.
Thank you. If you wish to ask an earlier question, you may do so by pressing zero one on your telephone keypad.
If you wish to withdraw your question, you may do so by pressing zero two to cancel. Again, it's zero one on your telephone keypad if you wish to ask a question. Our first question comes from Antti Koskivuo at Danske Bank. Floor is now open to you.
Yes, thank you very much. First, for congratulations on a good report. First, I would like to ask about the production volume, which was super high in Q2 and improved efficiency, as you explained. Could you quantify the positive impact in Q2 EBIT versus Q1? That would be the first part of my question, and the second part of the question would be that how should we think about the production and efficiency going forward? Has there happened a step change, or was this Q2 a quarter where all the stars were aligned perfectly, or how should we think about that?
Of course, taking into account that maintenance, of course, is impacting a bit in every quarter. Can you please talk about that topic first?
Okay. Yeah, first of all, of course, we need to remember that during Q2, we didn't have as much maintenance as normally during the quarter, as you pointed out also. But then the fact is that the production was running very smoothly and operating efficiently, that the mills were at a high level, good level. And of course, that is really it's coming from the mills themselves, and they have done excellent work. It's difficult to say whether it's a step change, because again, then in third quarter, we had these maintenance shutdowns and so on. As you said, all the stars were in the right position or good position during the second quarter. We didn't have any major hiccups during that period at the mills.
And then, coming back to your profit kind of impact, we don't quantify how many million EUR. It's difficult to actually estimate, but it's clearly a positive impact compared, for example, to the so-called previous quarters.
All right, thanks. Then on paperboard volumes, you described the demand during the early part of Q2 better than kind of usual, now getting a bit on a more normal level towards the end of the quarter. Then on Q3 kind of outlook, you guide the demand to come down, but it would be very helpful if you could give us kind of an indication of the magnitude of the drop that you expect to see in the future.
Yeah, during the Q2, there were two main reasons why the order books really increased as much as they did.
First of all, the Finnish strikes, and after that, of course, the order inflow was high. And then this coronavirus case or situation that again boosted the order inflows quite nicely. But then during the, let's say, May and especially June, then the order inflows normalized. They are not lower than normal, but also they are not higher than normal, so they are pretty much normal. And quite often, the third quarter, the volumes in the third quarter are lower than in second because the European holidays are typically taking place in August, and that has an impact on the volumes. And then, of course, the visibility concerning this coronavirus all in all is not very good, and the estimation is that the volumes, delivery volumes will go down or come down, but how much, it's difficult to estimate.
I don't want to give any kind of magnitude for that.
Yeah, fair enough, fair enough. Then last question maybe goes to Jussi on FX. We've seen quite a bit of movement in the FX rates during the recent weeks and months. You've been hedging next six months with a quite high rate previously. Is it fair to assume that the current kind of less favorable FX rates won't be visible in the earnings, say, before Q1 2021?
Yes, that's the correct assumption. So with the US dollar, we are currently hedged about six months forward, and with the Swedish krona even slightly longer than that.
All right, thank you very much.
Thank you. Our next question comes from Robin Santavirta. The floor is now open to you. Our next question comes from Harri Taittonen. The floor is now open to you.
All right, thank you.
Good afternoon. Well, maybe just sort of continuing a bit on this question and about order books, because I think this week earlier, some card and board sort of end users or the converter side, there's been comments that there's been quite heavy kind of inventory cycle and that this is kind of done through the whole supply chain, and that's why the second half will be clearly lower than the first half. But I mean, are you seeing just sort of double confirming that are you seeing sort of inventory cycle in the supply chain among your clients, or are we, as you said, that it's more like a normal situation?
Yes, pretty much it's a normal situation at the moment after very, very strong spring months, I mean, March and April especially.
Yeah, sure.
Pretty much normal summertime situation, so to speak, the European holidays.
Okay, okay.
And obviously, it's very early still to start talking about the price negotiations for next year, so we will need the situation to be at least as good as it is now to go. But I mean, it's probably a bit early to ask your ambitions for the pricing moves next year.
Ambitions is always of course higher, but what will be the kind of reality that we must be seeing?
Yeah, yeah, yeah. Then the wording in the guidance that you were saying that the production costs are not expected to decrease significantly from the second quarter, and obviously, we had a fantastic quarter already. Do you mean more like that the variable costs are just flat and that's the idea there, or at the same time, it doesn't look like I mean, the variable costs are not moving up either.
I mean, it seems that there are no particular lines that were the costs are moving a lot higher.
Yeah, estimation is the production goal I mean, variable costs should be higher. Sorry, at the same level, stable.
At the same level. Okay, yes, yes. Well, maybe just the last question on the comparison of the U.S. market that you are seeing and compared to the European market. You commented a bit on the liner board looking to pick up a bit, but I mean, if you give a bit more color on what you're seeing in the kind of the difference between the two main regions for you.
I mean, if we take the folding boxboard first, the situation is pretty much similar, so good in both markets, both in Europe as well as in America, and especially North America.
And then the liner board situation is slightly better in the U.S. compared to the European situation. So that is pretty much the situation.
Right, right, right. So basically, even if there's been quite a lot of capacity increases, but in the U.S. side also, but it's been a bit in different grades in liner board obviously, so you are not seeing that.
No, that's true.
As in negative. Yeah. Okay, very good. Many thanks.
Thank you. Our next question comes from Johannes Grunselius of Kepler Cheuvreux. The floor is now open to you.
Yes, hello everyone. It's Johannes Grunselius here. To start off, I want to ask you about shipments to the U.S., and I can see from your presentation material, at least for numbers for the first half, that you have enormous growth when it comes to folding boxboard deliveries to the U.S.
You are saying that I can see also there is a possible development for kraftliner into the U.S., but much more so for FBB. Could you comment upon why this is the case?
Yeah, so we have very systematically and so last year and earlier this year developed our sales, developed our customer base in that market, and we are moving towards our long-term target, 300,000 tons. Of course, we are not yet there, but we are moving to that direction. In sales, we have made excellent work in that region, and now we can see the results. It's as simple as that.
Okay, fair enough. On kraftliner, I mean, you're using very positive words for the demand there. Would you say that the demand is the development is as good for kraftliner as for folding boxboard in the U.S.?
Yeah, for both cases, the situation is good. Good, and no reason to say something else.
Okay, good, and obviously, you're selling more to sort of food and segments now, pharma also in Q2, and I suppose that's a positive trend that will continue. On kraft liner, can you just remind us about your sort of high grades there, advanced grades, and your more bulk grades? Am I right that one-third is the coated material? And can you just remind us, I mean, about your capacity utilization? Is there more free capacity that you can sell to the market on coated materials on the kraft liner side? And perhaps if it's possible, if you can give us any sort of idea about the profit difference between the two niches. Thank you.
Yeah, so concerning the U.S. market or the American market in general, North America in general, we are practically selling only coated grades to that market and so close to these 200,000 tons, which is the annual volume, so we are not selling practically nothing in uncoated versions, so it's only pulp, t hen your question concerning how able to then increase the volume, of course, we still produce uncoated grades also at our Kemi, and then by producing less uncoated and more coated, that kind of action can be taken, but of course, we are not able to dramatically increase the volume of coated grade,
but I hear you right that you have ample more capacity on the coated grades. I mean, you can almost do theoretically all the volumes in the coated materials side, uncoated materials, yeah?
Very, yeah, in Kemi.
Okay, okay. Then my final question is on the cost side. I mean, I think you're guiding here for largely flat input costs for the second half or at least the third quarter, if I'm right. But if you break out wood and if you break out electricity, perhaps chemical in this, how do you see the worst components for the second half?
Jussi Noponen here. I can take this question. So the positive development, I mean, cost inflation has fairly evenly been coming from, I mean, between wood costs, chemicals, and energy. And of course, especially in energy, it's mainly coming from the excellent production performance that we had in the second quarter because we are hedging commodities as well. So it was not as much price impact in energy, but more efficiency impact.
Okay, okay.
So, no major movement in annual than more of a steady development for important input variable.
Well, I would rather say that positive development in all those variable cost components.
Okay, right, right.
The gain was coming evenly from these different categories.
Okay, understood. So, what you're meaning is that because of the excellent production and so forth, your electricity per ton was very low and that will more normalize. But there is basically a cost deficit on all the input costs together.
Yeah, input prices have also come down, but especially in energy due to hedging, there is a certain delay before that comes through. So now in the second quarter, it was more efficiency related and price related, whereas especially in wood, we are not hedging at all, and also chemical costs are mainly coming through quickly.
Okay, okay. Thank you very much for taking my questions.
Thank you.
Thank you.
Thank you. Our next question comes from Linus Larsson, SEB. The floor is now open to you.
Yes, thank you very much. And I think I'll just continue with a follow-up on the previous question on production costs. And I understand that what we see in the second quarter is very much the fruit of internal efficiency. But do I understand it right that you are still seeing positive trends in the external cost factors, be it energy, chemicals, wood costs, etc., in Q3, Q4?
I would say so that we are not expecting any further price declines. There will be some rollover impact because of hedging from the earlier cost decreases. But then on the other hand, it would be very optimistic to assume that we can repeat such excellent production performance in every quarter that we had in the second quarter.
So taking all those aspects into account, we are guiding fairly flat costs now quarter on quarter.
No, that's fair enough. Thank you for clarifying that. And also on that note, maybe it looks as if you were building a bit of inventory in the second quarter. Is that part of should we expect that to reverse in the third quarter to some degree? I understand there is a pickup after the Finnish strike, but are your inventories at normal levels, or is there a bit of a reverse coming up?
Yeah, I mean, I don't think it is. So typically this time of the year, we are increasing our inventories because then we are preparing ourselves for these weekly maintenance shutdowns.
That happens practically every year during this time of the year. So we are preparing, especially at Husum and Kemi, where there are these long integrated maintenance.
Exactly.
You're going into that maintenance phase, your inventories are pretty much where they should be.
Yes. Yes.
Great. And then just final another follow-up on the FX side. On the sequential basis, in the third and the fourth quarters, what do you expect? If you could just please clarify what you said earlier.
Regarding the third quarter outlook, we are guiding flat FX impacts, I mean, third quarter versus the second quarter. And also for the fourth quarter, you can expect minor or no impacts from FX.
Wonderful. Perfectly clear. Thank you very much.
Thank you. Our next question comes from Mikael Doepel, UBS. The floor is now open to you.
Thank you.
A couple of questions. Firstly, on the U.S. operations and to the point of FBB volumes growing into that market, is it fair to say that this growth also means that your mix and average price for your FBB sales improves on a group level average?
Okay, I'll be here. So first of all, back in 2019, we were able to increase our average selling price of FBB roughly EUR 100, $100 per ton. And then comparing the prices in that market, first half of last year, first half of this year, they have been in euros, slightly higher, but in dollars, quite stable. So our intention is to grow our business so that at the same time, the average prices stay flat or increase, but not so that they will come down. So we are looking for new volumes, yes, but not at any price.
Yeah, I was mainly thinking about maybe you were selling some volumes in some lower-priced markets in Europe and being able to ship more to the US could actually increase the average price, not in the US market as such, but for your average realized price.
Yeah, actually, for Husum, we are not selling to Europe that much. It's practically these FBB and coated products that we are selling from Husum to the European market. So it's pretty much then for finished meals to serve the European market.
Okay. All right. Then another question on the paperboard business, and both for the folding boxboard as well as the kraft liners. In terms of your customer inventories, be it end users or converters, would you say that they are currently elevated or that they are on a normal level?
So our estimation is that if you think about the European business, the folding boxboard customers, their inventories are pretty much at a normal level. But then on the kraftliner side, they are a little bit on the high side.
And this was for Europe?
Yeah, European business. And then the U.S., they are normal level.
Okay. Great. Then just a final question. In terms of the maintenance costs, I mean, you have alluded to this already that you have postponed some of the maintenance into Q3, and then you have the other schedules once there. How should we think about the delta in terms of, let's call it the earnings impact from the maintenance Q3 compared to Q2, and maybe also then going from Q3 to Q4?
So in Q3, the additional costs are at the level of EUR 10 million-EUR 15 million in quarter.
And then Q4, of course, then we don't have as much maintenance as in Q3, so then they will come down, but I don't have a figure for you at this point. But EUR 10 million-EUR 15 million is the negative impact on the maintenance during Q3 compared to Q2.
Sure. And does that include the Metsä Fibre maintenance impacts as well, or is this just the Metsä Board?
No, no, no. It's all together.
Yeah, all together. Okay. That's very clear. Thank you very much.
Thank you. The next question comes from Mikael Doepel from UBS. Please go ahead. Your line is open. Apologies. The next question comes from Markku Järvinen from Handelsbanken. Please go ahead.
Hi, good afternoon. I had a few more questions on costs. You said that imported wood costs in Sweden came down. I suppose that is the.
Pulp you import from the Baltics, which has moved down clearly. Is that sort of market price move now fully reflected in Q2, or do you expect that sort of to gradually still move down going to Q3 and Q4?
Yes. So estimation is that wood costs will be flat in Q3, or probably also Q4 comparing Q2. So we need to remember that in Husum, the wood volumes from both countries back in 2018 and 2019, they were higher than the so-called normal because there were certain challenges in Sweden. But now we are coming closer to the so-called normal situation. It's a bigger moderation between the Swedish wood and then the Baltic wood.
Sure, sure. Then still on energy costs, as you mentioned, due to hedging, that low market prices don't necessarily come through this year.
Could you sort of talk through the duration of your hedging and the sort of volume that or the net position that you're buying in power? How many terawatt hours is that?
Completely hedging in energy, it consists of so many different fuels and power sources that it's a fairly complex topic, so I don't think that it's realistic to give you a full and clear picture in this call.
Okay. But just on power, I mean, I suppose biannual contracts where power prices have moved down quite a bit compared to last year. Can you sort of characterize what the sort of net position is in electricity?
Currently, let's say, nearly self-sufficient in electricity in Finland, especially after the upcoming startup of the new nuclear power plant by TVO.
And in Sweden, we still continue to be a buyer of electricity until the startup of the new recovery boiler at Husum. But after that, we will be nearly self-sufficient also in Sweden.
Okay. Very good. That's clear. Then still on the cost levels in Q2, do you have any sort of temporary cost savings or cost savings that you would characterize as temporary due to less travel or that sort of thing in Q2, or is it meaningful?
Yeah. We can all be here. So less travel is evident. That's clear. Comparing, for example, corresponding time last year, but not comparing to Q2. But we don't have that kind of issues.
Yeah. But I suppose you didn't take any temporary layoffs or anything like that in that quarter? No.
No.
Okay. Very good. Thank you.
Thank you.
Just as a reminder, if you do wish to ask a question, you may do so by pressing zero one on your telephone keypad. Our next question comes from Johannes Grunselius, Kepler Cheuvreux. The floor is now open to you.
Yes, hello. It's Johannes Grunselius here again. Just wanted to come back on pricing on kraftliner. First of all, I mean, we have heard that from your competitors that there is a 20%-30% decline, or so, for kraftliner prices here in July. Is this impacting also the coated grades? That's my first question.
No. Very simple answer. No.
Okay. Yeah. Good to know. And also, I'm not sure I missed that when I asked my first question, but is it possible for you to indicate somehow what is the premium on the coated grades on kraftliner versus the standard grades?
And I can understand you don't want to be fully explicit here, but if you can indicate it, perhaps if this price premium has widened and so forth over the last few quarters and how it was in the second quarter. Thank you.
No, you're right. We don't want to give any kind of clear numbers on that. Of course, the prices of coated grades are higher than uncoated, but that's it.
Yeah. Okay. Okay. Thank you.
Thank you. Our next question comes from Robin Santavirta , Carnegie . The floor is now open to you.
From Johannes Grunselius. Good afternoon. I was wondering about the Metsä Fibre Kemi pulp mill investment, which is being contemplated at the moment, as I understand, is a EUR 1.5 billion investment for Metsä Fibre, and you obviously own 25% of that company. What is the status of that investment project at the moment?
Yeah.
So it's quite, I mean, the situation is so that we are Metsä Fibre is waiting for the final environmental permit in order to get the final decision. Of course, it's difficult to estimate at this point when they are in that position. That is the status today.
No guidance or outlook on when they expect to receive that permission. Is it next year or on this year's side?
At this point, we don't comment that.
Okay. Being a quite sizable investment, EUR 1.5 billion, I think, is the guidance, 25% of that company. How would you finance this investment? Okay. You two will take it.
Yeah. That is, of course, part of the preparations that are now being carried out in parallel with the permit process.
But the base scenario that we are working on is that there will be no equity injection from the shareholders of Metsä Fibre. So the company would self-finance the project.
Okay. So similar kind of financing as the Äänekoski mill, I assume.
In Äänekoski case, there was a small equity injection of EUR 100 million total, of which our share was EUR 25 million. But now in this project, at least for the moment, we are not expecting even that.
Okay. So only that by Metsä Fibre or Metsä Board?
Yeah. They have strong liquidity, and over the cycles, the cash flow of business is strong, and then debt on top of that, yes.
I understand. Then just finally, a bit of a broader question. A lot of discussion over the past couple of years of plastic substitution and fiber packaging sort of being structurally in a good place.
What are you seeing when you talk to brand owners at the moment? It seems to be a fairly slow process if you look at delivery volumes over time now, how they develop, and how companies sort of guide looking ahead. Is this happening now, the sort of market share gain of fiber-based packaging, or is it stalling, or could you just sort of describe how you see the situation at the moment and the outlook?
Yeah. So many of our customers have stated, or even they have set the targets to kind of get rid of the plastic-based materials or then increase the share of the renewable packaging materials. So that kind of attitude is clear. But then how fast and how quickly that will happen, of course, there are issues like packaging lines.
If the packing line is, for example, for plastics, it's very difficult to move or utilize them paperboard and glass lines, so you need to invest in order to then change the plastics to paperboard in this case, but the attitude is clear, and they have set the targets concerning the renewable packaging materials.
Okay, and then I understand there's increased demand of non-plastic coated paperboard. What is it what you are seeing, and what is your solution? How competitive are you in that area at the moment?
What do you mean non-plastic coated, like non-film coated, or what do you mean?
Yeah. Yeah,
so last year, we launched our eco-barrier paperboard, and the sales of that grade have started quite nicely, and then R&D development, we have two main areas and topics.
First of all, the lightweighting that needs to be continued, and the second is to develop our barrier boards. So we launched back in 2018 the first version, last year with the second version. And then our target is to launch even better products in the future.
And the eco-barrier, is that LDPE?
That is LDPE.
Is that biodegradable then as well?
Yeah.
Is the demand good for that product, and can you receive better price?
Yeah. Yeah. Sure. Compared to the normal prices, like I said.
And can I ask how much are the sales at the moment? I assume not that big, but it would
depend on the market, but at least tens of millions of EUR, that's all.
All right. Thank you very much. Thank you.
Thank you.
Thank you. There appears to be no further questions.
So I'll hand back to the speakers for any of the remarks.
Okay. It's good to be here. So thank you very much, everybody, for your interest. And I wish each and every one of you nice continuation of the day. Thank you.
Thank you all for attending this conference call. You may now disconnect for a moment.