Tervetuloa, welcome to Metsä Board's Capital Markets Day 2022. My name is Katri Sundström. I'm responsible for Metsä Board's investor relations, and we'll be running this event today. It's been a while since we last had the opportunity to perform to a live audience, so this is really nice. Of course, a majority of our listeners are following this through webcast, so warmly welcome to you as well.
Our last CMD was held 2020, and a lot has happened after that. I just don't mean the global events all around us, but also within Metsä Board. All of which you will hear more about today, and of course, what the future holds for us. The big theme that surrounds us is our strategy, but I leave that to our speakers to tell you more. Let's have a look on agenda.
We will first hear four presentations by Metsä Board's management around topics like strategy, sustainability, product, investments, as well as financials. After that, we will have updates from wood and pulp markets presented by our colleagues from our sister companies, Metsä Forest and Metsä Fibre.
After each presentation, there will be an opportunity to ask questions, both here on site as well as online. Here on site, please use a microphone, and online you can write the question in your chat box, and I will then read it to our speakers.
The CEO's summary will conclude this event, and in here we can still take up a few questions you might have been missed. But I won't keep you waiting any longer, let's start it, and first we will hear how our strategy has performed in the current operating environment and what to expect for the coming years. So this is a presentation by our CEO, Mika Joukio. Please, Mika.
Okay, so welcome everybody here on my behalf to Metsä Board, Mika Joukio Capital Markets Day 2022. You, live audience here, as Katri mentioned, brilliant, nice to have you here after a long break, and then audience online, welcome to you also. Our theme today is growing sustainably in fiber-based packaging materials, and that theme very well describes our way forward.
Growth, we are targeting growth that is strongly driven by sustainability, and especially as an example then plastic replacement. Before we go into the future growth, let's look at what has happened in the recent past, so we all know that the global economy is struggling, and that we need to be prepared for a slowdown in economic growth next year, also in the markets where we operate, then the war in Ukraine, so geopolitical situation, really, really sad thing, and that also affected us.
Roughly 5% of our sales last year went to Russia, and this year we have been able to reallocate all the volumes outside Russia. Then three of our mills use natural gas, and now we have kind of investments in place in order to use other sources of energy if and when we are able to use natural gas.
And then wood supply, last year roughly 9% of our wood supply came from Russia, and now we have been able to then have more wood from Finland and Sweden, and we haven't had any production disturbances due to that. Then supply chain challenges, whether it's availability of containers or whether it's costs, logistic costs, we have also had the challenges, and Jussi will tell you more about those, how we have tackled these problems.
The rapid cost inflation, of course, has hit consumers' purchasing power, but pretty much the lion's share of our production goes to food packaging, so we have not suffered that much, at least not yet concerning that. We focus on developing our business, investing in sustainable and profitable growth in order to increase the shareholder value of this company.
Before moving to today's topics, let's have a look at what we promised, what we said two years ago. We said that we will focus on premium paperboards, and that's precisely what we have been doing, and that's precisely what we will do also in the future. As far as the sustainability is concerned, we had a very good track record, and since then we have had also a good track record in sustainability.
And then future growth. After Capital Markets Day 2020, we announced or have announced two capacity expansions, one in Husum, 200,000 tons more folding boxboard, and then the other one in Kemi, 40,000 tons more white kraft liners. But Ari and Jussi will tell you more about those later. Then our strategy, one of the key topics of today.
So our vision is to be the preferred supplier of innovative and sustainable fiber-based packaging solutions, creating value for customers globally. And as I have always said, all the words here have a meaning. We want to be number one supplier for our customers, we want and target this that our customers see as sustainable and innovative, and we want to help customers in their business, and we play this game globally. Our strategy statement is there on the left-hand side.
So we grow in fiber-based packaging materials and renew our industrial operations, and that's precisely what we have been doing, and that's precisely what we will do also in the future. We implement the strategy via these strategic programs: premium supplier, effective innovation, safe and efficient operations, and organic growth, leaders in sustainability, and motivated people.
Whatever we do in Metsä Board, there is always a link to these strategic programs. That's our way to implement a strategy. And here is the proof of our strategy's success. First of all, sales, we have been able to increase our sales quite remarkably during last years, past years, even though capacity has been quite stable as we know.
And then, as far as the cost inflation is concerned, we have been able to mitigate that, or even more than mitigate that, by increasing our paperboard prices, and also then strong pulp market that Metsä Fibre, our associated company, is in. That has also helped us a lot as far as profitability is concerned. And now the margin level is at the level of 20%. I think it's quite a good achievement.
And then investments this year and last year, we will invest roughly EUR 500 million altogether, so very strong investment phase ongoing at the moment. Then even though we are investing a lot, but we don't want to compromise dividend payment to our owners, and we have complied with our dividend policy. And actually, the average growth rate in dividend has been even faster than in earnings, and we are proud to deliver, of course.
And we have a strong financial situation to grow in the future. Then the packaging material market, the whole cake on the left-hand side is roughly one trillion EUR, so thousand billions, huge market. And the whole cake, the whole market is estimated to grow roughly 4% annually.
But in that cake, then the paperboard slice is actually growing more than estimated to grow more than this 4%, so estimation is like 5%. And then in the paperboard part, then the folding boxboard and food service board, so our grades, they are growing faster than the estimation is that they are growing faster than competing grades. And let me remind you that we are not competing against FBB producers.
Of course, we want to take share from plastic, metal, and glass, but also then our target is that we really compete against other paperboard grades, like white lined chipboard or solid bleached sulfate. And then plastic replacement, what kind of impact that will have on these figures. So the growth rate can be even more than this estimated 5%, which is shown here.
Then there are several other demand drivers for fresh fiber paperboards' impact, of which of course the magnitude is difficult to estimate. But there is huge need for more responsible packaging due to population growth, urbanization, and rising living standards, for example. Then circular economy is growing in significance, and requirements related to it are guiding more the development of the whole sector.
Then, availability and quality of recycled fiber—we know that paper consumption goes down in Europe and globally, and availability of recycled fiber is a challenge, and we are in the fresh fiber business, so that's of course an opportunity for us. Then, e-commerce continues to grow in long term, and that also supports us. And then, last but definitely not least, consumers prefer fossil-free or at least carbon-neutral or low-carbon packaging materials, and that our paperboard is a good solution then.
Then, concerning our sustainability targets, so of course the big target is that our production and products are fossil-free by 2030. It's a very ambitious target. And our reduction targets are approved by Science Based Targets, and they are consistent with the Paris Agreement, so to limit global warming to 1.5 degrees Celsius.
Then some other sustainability targets, of course: accidents at work. Target is zero. Now we are at the level of 7.7. Then energy and process water usage. Here the comparison year is 2018, so we compare 2030 to 2018, and target is that in energy consumption per produced ton, we will target this to improve by 10%. And now we are after Q3.
We are at the level of 5.1%, so still another 5% to go. And then the water consumption target is to decrease by 30% per produced ton, and now we are close to 14% after Q3. And then certified wood fiber target is that more than 90%, or the level is more than 90%, and now we are at the level of 82. But what is important here also is that in Metsä Board, everybody has a bonus target, one sustainability target.
As an example, myself, I have this work safety in my bonus targets. So we have our own ambition commitments and targets, no doubt, and we have clear path, clear investment plans how to get there for every target. Then several are shown here, so several external evaluators, they have also recognized our commitments, and that is of course good, but we don't want to have recognition just for recognition.
We want to have recognition because this topic, sustainability, is important for our customers. And the customers, they have their own commitments, own targets, and our intention is to help them to reach them. And then these sustainability targets, they are also important for our own employees, of course. So not only recognitions for recognitions, but for developing the business all in all.
Then we want to continue our successful strategy and grow, starting from 2016 when we converted Husum Paper Mill to board mill. Now it's up and running fully. We have 650,000 tons white kraft liners and folding boxboard. After that, we made a decision to invest in pulp mill in Husum. That project is ongoing, as we say, first phase, recovery boiler and turbine, and startup will be now in still November.
And then after that, I already mentioned the 200,000 tons capacity expansion in Husum for folding boxboard, and then white kraft liner capacity expansion in Kemi, and both of those will be implemented the next year, pretty much in autumn time. And now we are planning a new folding boxboard capacity in Kaskinen, Finland. We announced that some weeks ago to have 800,000 tons more folding boxboard capacity, and Ari will tell you more about that.
So, to summarize, our strategy has proven to be successful, and no reason to change our strategy. Then, demand for renewable packaging materials is growing fast, and very difficult to estimate, as I said, what is the kind of final growth rate, but it's clear that it's growing. And then, resource efficiency is a key for future sustainable growth.
Ou r products are already today world-class, and our intention is that in the future they are even more of that, so even better than they are today. So, thank you very much all participants for your attention, and I think now we have time for a few questions.
Okay, thank you Mika, and we can start the questions on site here. So, if you just raise the hand, and you will be given a microphone. Oh, Antti has here, so let's start there.
Yes, thanks. Antti Koskivirta from Danske Bank. I was wondering if you could a little bit elaborate on the topic of the current energy environment, the high-price environment where we are at the moment. What kind of impact that has on the kind of competitive landscape for you guys, both maybe in Europe as well as in the U.S.? That would be interesting to hear.
Yeah. Okay, so our self-sufficiency in energy is relatively high, but of course we need to buy something. And of course then the higher energy price, they also impact us. Of course now this Olkiluoto 3, if and when someday it will start, that will help us, and then also then Husum investment. But we are not, so energy prices touch us also.
And then if you think about the competitors, of course a lot of production capacity is based on natural gas in continental Europe, and we have tackled that problem. We are not dependent on natural gas. But energy price topic is clear that we need to, I mean high prices are negative for us as Metsä Board.
Still on that, if you compare to U.S. and competitors over there, which I guess they don't have such a big issue of high energy costs, does that mean that your exports to U.S. are less competitive longer term, you think, or?
At least now we haven't noticed that. I mean demand has been good there, and also we have been able to increase prices there, so difficult to say the kind of impact of that particular topic.
Thank you. Thank you very much, Robin Santavirta from Carnegie. Now related to the paperboard trends, you showed quite strong sort of recent history and also sort of future trends. It's easy to believe in.
How do you see now your plan to Kaskinen and investment? It's a pretty big capacity addition, and now we see some other competitors also planning capacity. Is there room for all that capacity, and is there another plan for Kaskinen that would not be 800,000 tons, but rather a bit smaller, or is it 800 or nothing?
So first the latter part of your question, so yes, 800,000 is the kind of figure that we concentrate on. We don't calculate whether it's 400 or 600 or 300 or 500. 800 is our figure, and that is basis for the pre-planning or planning phase. And then as far as the kind of capacity, as I said, first we have this Husum investment back 2016, now it's up and running.
Now we have the second phase, or second investment next year, and then that will be fully utilized probably by end of 2025, as we have said. And if we are able to make decision concerning Kaskinen the next year, sorry, in 2024 earliest, then the implementation would be or could be 2026. And that means that then the mill is up and running, let's say sometime 2028 probably.
We are playing a long game here, and we really want to meet the demand of fresh fiber paperboard. We see that there is growth opportunities even though other people, other competitors are doing also investments.
I understand. And then the second question related to North America, you have been very successful there. I guess there was some belief back in the day that can Finnish companies sell from Sweden or Finland in the North America or in the U.S., and it has been a success for you. Do you plan any kind of organic or M&A-driven expansion in North America, or is the idea only to produce in Finland or Sweden and then to export there?
Yeah, at the moment that is the idea. So we concentrate now on Kaskinen, and that is our plan how to then expand capacity in the future. At the moment we don't have any plans concerning M&A.
I understand, thanks. And then a final one, very strong performance now recently, very high prices, very strong demand both in pulp and paperboards. Could you comment on what do you see now? We hear about sort of economy and consumer being a bit squeezed at the moment. What is the order intake sort of situation now versus earlier? Do you see any changes there?
You might remember that roughly a year ago and during the pandemic, I mean the demand was really good. I mean it was super hot, and that is not the case anymore, but demand is still there, and then order inflows are okay. But not as high order books as we used to have like a year ago, for example, when everybody thought that paperboard, there won't be paperboard enough in this world.
Can I try one last one related to that if you want to answer? We see spot prices of energy now coming down quite significantly in Europe. Do you see more capacity or sort of lower pricing for some guys that have been squeezed with high gas and energy pricing in Europe already now?
Maybe not that much in Europe, but then we need to remember that in China there is a huge overcapacity, and now when the container prices have been really high, now they are going down. So of course that probably opens possibilities for Chinese to then export also to Europe as they have been doing also in the past. But that is probably the kind of one kind of, if not risk, but anyway that might happen. But we have seen that also earlier, nothing new as such.
Thank you very much.
Okay, maybe we take a couple of questions from line here. First one is, what do you see the main risks in the short term or in the long term?
Okay, I mentioned this, of course: competitors' movements. I mean, we still play our own game and so, but I mean, of course there are several risks like global economy, as I said, if and when that will continue to struggle, that will impact also on us.
I mean, the purchasing power consumers, even though that has not been the case very much now during the last two years, but still that is one possibility, and then of course cost inflation that has been high this year. We have been able to mitigate that by having price increases, etc., but you never know what will happen in the future.
Yeah, thanks. And then about the plastic replacement, so are the customers or brand owners more active with these plastic replacement projects, or does the initiatives come more from paperboard producers like you?
It's both, and of course the customers are very proactive in that, and also we try to offer solutions for them, and during the pandemic time, customers really a lot concentrated on getting paperboard enough, and now not that much on these kind of development programs, but now we see very clearly that after pandemic, now the activity is peak at the moment and is increasing.
Okay, and then still back to these capacity additions, so China is adding 3.6 million tons of folding boxboard this year or next year. You have said in the past that you don't expect much competition in Europe due to the high costs, less customer relationship, etc. However, it doesn't sound like the capacity will be high cost, and the global market is very small. Why wouldn't that negatively impact prices in Europe?
As I said, of course that is one kind of possible scenario. We don't know what will happen, but it's a fact that there is overcapacity, and then of course they try to sell it elsewhere.
It continues that even with higher substitution, the market in Asia surely can't absorb that much, can it?
Of course, the main market for Chinese producers is Asia-Pacific region, and that's where they are very active there at the moment. We are not very active there at the moment, so that is Chinese playing field.
That's right. Okay, do we have any questions here in the audience? If not, I don't have any in the web, so thank you, Mika.
Thank you, thank you.
We move on with our agenda. So next we will have a very lively presentation. It will be presented by Head of Sales and Supply Chain, Mr. Jussi Noponen. He will go through more about Metsä Board's products, customers, and paperboard sales. Jussi's heading pretty much tells which of our market areas he is highlighting here. Please, Jussi.
Good afternoon, everybody. It's a pleasure to see you live after so long time. As Katri said, I will be mainly talking about growth in Americas today, but before that, I have some topics. First of all, a recap to our previous CMD, then a few more words about the current market situation, which was discussed in the previous Q&A session, and our markets and capacity, and then moving on to our growth in Americas.
The technical people, can you synchronize the notes page, please? So back in 2020, we said we want to be a preferred supplier to our customers, and that we have delivered. So during the supply chain crunch of the past years, we have been able to maintain a steady supply of goods to our customers. The slides are still out of sync. Secondly, we said that we focus further resources into innovation and sustainable solutions.
In a few moments, I will be talking about our success story with dispersion barrier coated paperboards. And third, we said that global trends support us and create new business opportunities. And as Mika explained, we have utilized that opportunity and decided new investments in Husum and Kemi, and pre-engineering for a project in Kaskinen for a new mill.
But now, without further ado, a few words about the current market situation, and let's discuss inflation first. There is no good global data available, so I will use a hypothetical country X as an example. And as Mika said, most of the end uses of our products are related to food. So if you look at food and beverages in this country X, let's say that inflation has been 15%. At the same time, consumer spending on food and beverages would be up by, say, 5%.
So it means that mathematically, volume of food and beverages would be down by 9% roughly. But there have been changes in consumer behavior. One is in branded foods, consumers have shifted from more expensive brands to cheaper brands. Secondly, private labels have gained market share. And thirdly, the decline in consumption has been the biggest in food items that are not typically packed in paperboard, such as fresh meat and fish, and that monetary spending has been redirected to packed foods.
So the takeaway from this is that the decline in volume for paperboard might not be as big as you could derive from the macro data. Even during the crisis of inflation, the customers have not stopped seeking for more sustainable solutions. And for that reason, the long-term growth estimates have been elevated to a new level that now exceeds the growth rates of plastic packaging.
A third factor is the energy situation. Customers want to secure availability for next year, and our ability to operate in an energy crisis situation is evaluated higher than some of the competing packaging materials. For those three reasons, as a sum, we can say that in FPB, the outlook for next year is such that the pricing momentum continues strong. We are closing annual deals for next year at pricing higher than this year's pricing.
In liner boards, the same goes so that we are able to defend the price increases that have been achieved during this year, but not expecting price increases as such. For the benefit of those that are newer to following Metsä Board, a few words about our products. Our focus is clear. We focus on ecological and premium fresh fiber paperboards in an industrial scale.
Folding boxboard is mainly used in consumer packaging and especially in food packaging, and that's thanks to its product safety properties resulting from use of fresh fibers only. Also, food service is a significant end use for our products, and our white kraft liners combine high strength and lightness with excellent printing properties for brand promotion,
and the demand for white kraft liners is strongly driven by retail activity, so when analyzing the volatility of demand for our products in economic cycles, it can be said that we are less exposed to volatility than many other industries. As an example, in the financial crisis of 2008 and 2009, fast food companies reported steady sales growth through the crisis, then about our geographic markets.
Even though my presentation today focuses largely on Americas, I want to remind you that EMEA is our biggest market, and we are seeing steady growth in EMEA, both in FPB and white kraft liners. About two-thirds of our volume was sold to EMEA last year. In North America, we have been able to capture the market growth largely to ourselves,
as there have been limited investments in local capacity, and the share of Americas region amounted to 27% last year. In Asia-Pacific, we focus on customers that are willing to pay a price premium for sustainability, and often those customers are multinationals. Okay, how are we then positioned in the competitive landscape? Our ongoing capacity expansion projects will further strengthen our number one position in Europe.
A total of 240,000 tons of capacity expansions will start up next year and will be gradually sold to markets in line with the startup curves of the machines. A majority of the additional 200,000 from Husum will be directed to Americas, and the same goes for the plus 40,000 from Kemi. Okay, let's see where we are in Americas today.
We have a strong foothold in Americas, both in folding boxboard and white kraft liners. We are already selling over 500,000 tons annually, and with the capacity expansions, the figure is expected to grow to approximately 0.7 million tons, and that is excluding the Kaskinen plant mill. So from 0.5 to 0.7 million tons with the ongoing investments. But there is also growth without new investments. Innovative products enable us to reach new price points in the markets and grow our top line without selling more tons.
This is what we have done with our Kyrö Mill in Finland. In 2019, we launched a new dispersion barrier called FBB grade, called Metsä Board Prime FBB EB. To remind you what barrier means, it's resistance for grease and moisture penetration into the paperboard. It's mainly used in direct food contact.
Since then, it has grown to an industrial scale, and next year we expect to sell roughly 95,000 tons of the mill's capacity in this grade. When we speak about industrial scale in our investments, for us it means reaching a revenue of more than EUR 100 million. Next, I'm going to introduce you to a customer success story in dispersion barrier coated paperboard.
Crumbl's mission statement has always been to bring friends and family together over a box of the best cookies in the world. Last week, we recently opened our 600th store. In the last five years, we've grown tremendously with plans to go to international markets starting in 2023, and we are just so excited. Crumbl has always had an iconic pink box as our packaging.
Since our partnership with Metsä, we've been able to provide a consistent upscale packaging experience for our customers that's hygienic and food-safe. One of the things to be mindful of as we've grown so quickly is our global footprint, and knowing that we have the sustainable recyclable product to have in our stores for our customers has meant so much to us.
Thank you, and apologies for starting the video without introductions. She was Katri Dunn from Crumbl Cookies. Crumbl Cookies is a U.S.-based cookie company, which, as she said, started five years ago from very small and now recently opened their 600th store in the U.S. It is a tremendous growth case for us with Prime FBB EB. And as Katri correctly pointed out, sustainability is the key strength of our dispersion barrier called deep board.
It can be recycled in normal paperboard recycling streams without any need to separate the plastic film from the board. Next, I will be talking about how we can provide industry-leading service to our North American customers despite the fact that our mills are located in Finland and Sweden. In our premium availability concept in North America, we keep inventory in two port locations in the East Coast of the U.S.
The concept is called Common Stock. Now we will see a video interview of Joe Nellis, our sales director for white kraft liners in the Americas region. He will explain how our Common Stock model works. And while Joe is from the liner board side of our business, the same goes for our folding boxboard.
The Common Stock program was piloted over 20 years ago when Metsä entered the U.S. With that entry, we needed a service model that could give us a competitive advantage in this rapidly growing market. The Common Stock program allows us to better manage stock levels, reduce costs, and quickly react to challenging marketing conditions. Any surge in demand, shipment delays, and inclement weather could affect service to our customers.
But having inventory on hand allows us to overcome the most routine issues that would expose the traditional mill model more commonly found in the U.S. The typical North American customer continues to push vendors on all aspects of service. This model allows us to deliver product from purchase order to doorstep, only restricted by the travel time between the warehouse and the customer's location.
Besides being faster to market, we allow our customers to focus on running the complexities of their business and not have to worry about managing inventory often eight to 10 weeks out. The Common Stock program allows our customers to win new business leveraging their design and printing expertise, with knowing we have product available to support any new venture with unknown volumes immediately.
Thank you, Joe, and as Joe said, we are not able to just match the service capability of North American producers, but we can offer quicker deliveries. Now it's time to summarize my presentation so the three key takeaways from me are: first, despite what's happening in the macro economy, the market situation for our products remains healthy.
Second, plastic reduction creates growth potential, especially in consumer packaging. And third, while we aim at further strengthening our pole position in Europe, our short-term growth will mainly come from Americas. Thank you, and now it's time for your questions.
Thank you, Jussi, and let's start again here on the audience, please.
Seb Borink from DNB Bank. Regarding the U.S., how much are you able to tell about the split between in your customer space, the split between end users and converters? Which of the two is the main group and where are you going? Which direction as of now? And then another one reg arding the U.S. as well. How big of a part of the U.S. are you able to cover from the East Coast locations of the current stock for the time being and any further plans in that regard?
Yeah, so first of all, if we start from the linerboard side, because the answer there is most straightforward, all of it is sold to converters, so producers of corrugated packaging solutions.
On the FPB and Food Service Board side, we largely sell to converters, partly also through merchants, but now in the recent years, we have been able to attract also direct brand owner deals, and sorry, what was your second question?
The geographic coverage from the East Coast.
Thank you. So it all comes down to cost competitiveness. So obviously, we are the most competitive in the East Coast all through to the Midwest of the U.S. We also have some business all the way to the West Coast, but then the customer needs to be one that is willing to pay a premium for our product.
Thank you. Related to your success in North America, what are the keys of the items? How have you been able to grow so fast in North America?
In folding boxboard, there hasn't been much local capacity in the U.S., none, and in Canada, a very limited amount, so first of all, there was space for us. And as I said earlier in the presentation, the local producers have not invested in new capacity in fresh fiber grades,
so as it is a growing market, although the market growth is modest, but we have been able to capture all of that growth to, well, not all of it, but most of it to us. So from a big market, even a modest growth, it has been enough for us,
but then perhaps most importantly, it is the superior mechanical properties of folding boxboard over the local competing grades, so light weighting of the packaging sustainability aspects. In liner boards, we have a longer tradition of serving the Americas market, and we are a very established brand name there, and there is not much local competition in that either.
Thank you. Then related to this dispersion-coated paperboard that you produce and which have grown in demand quite significantly, could you explain the pricing difference compared to sort of plastic coated paperboards? And are there any differences in the properties of this kind of board?
If you start from the properties, so dispersion barrier coated board, it offers medium resistance to grease and moisture, whereas a plastic coated board offers a stronger protection. So typically, the uses are such where the grease or moisture content is not that high or the shelf life of the product is shorter. Fast food, food service are typical end uses.
Thanks. Then finally, related to the pricing situation and related to that, could you explain the time span of the price agreements in your key markets and segments? How much is annual pricing, how much is quarterly pricing, and how much is monthly pricing?
Annual pricing is mainly a European thing, and it's most often seen with big converter chains and with big brand owners. The rest of the geographies and all the smaller customers and all of the liner board business, they have shorter pricing tenors than annual. So without going into too much detail, but that's roughly how it works.
Thank you very much.
Okay, let's take from the web then. So do you think the market demand growth in paperboard is connected with supply, i.e., if you increase the supply, the market with more paperboard volumes, will converters move quicker out of plastics?
We believe so, especially during the latter half of the pandemic. Or let's say year 2021, we heard a lot of comments from customers that the non-availability of the product is slowing down plastic reduction. So yes, we believe there is an opportunity.
Okay, thank you. And then what are the pros and cons of FBB versus SBS? We hear customers are cautious about making the switch. What sort of a market growth do you expect in North America for FBB and for boxboard in general?
The advantage of FBB over SBS, and for that matter, the other fresh fiber grades as well, is the so-called yield advantage. So the same amount of area or boxes can be produced by using up to 30% less material in weight.
Okay, and then anything about the growth rate in North America?
It is slightly slower growing than the global market that we saw earlier.
And then is there space for your capacity and Billerud and additional SBS like Sappi's planned conversion announced today? Okay, pretty much the same what Mika just.
I think it was already answered, but Mika, yeah.
Yeah. Then we could still take one here. So why are you not producing recycled paperboards?
We are located here nearby the raw material near the forests, and also an important factor is that our controlling shareholder is Metsäliitto Cooperative, which is a co-op owned by roughly 100,000 private forest owners in Finland who control over 50% of the privately owned forests in Finland.
Thank you. Thank you, Jussi.
Thank you.
And we will move on. Now, at this stage, I just want to remind you online that you can send us the questions throughout the presentation so you don't have to wait till the end. You can send them all the time. But yes, let's move on. And now we're going to do some deep diving around our ongoing and planned investments as well as R&D. And we will also hear more about our key driver in our future growth, resource efficiency. So this is a presentation by Head of Technology, Mr. Ari Kiviranta. Please, Ari.
Yes, good afternoon, everybody. Yeah, as you heard already the title of my presentation, and now in my presentation, I will tell you a few things. First of all, I will go back to year 2020 and tell a few things about our R&D, what we said that time, what we are doing in R&D, and also give you a view of what have we done.
Then I will jump into our investments into the resource efficiency. First of all, going through what we are doing for our existing mills, what kind of investments we are running at the moment, and then finally also give you a few ideas about the investment we are planning in Kaskinen, so the new folding boxboard machine, the new folding boxboard mill. Right. If we go back to 2020, that time I told you a few things about R&D.
I said first that we invest in innovation and partner collaboration. That is true. I will give you later some examples of what we have done in this area, but collaboration with partners has been and still is a very important part of our R&D work. Our R&D work is driven by sustainability. Yes, that you will also notice pretty soon, and then alr eady Jussi actually said a few words about this third point, which is we aim for significant scaling in innovations.
We, of course, look for new things and new possibilities, what to do with this and that. But when we start a real big program, we always aim for significant scale. That means 100 million EUR turnover per year for that product. Right, so those are the three things that we said two years ago, and that's it. More about R&D.
You might think that, hey guys, are you serious? This is boring. Same story as always. We are concentrating on lightweight paperboards, and we are making barrier coatings. The thing is that this works. Nice feature. So these are the things that we see that our customers need, and this is something we can sell.
And we don't make only lightweight paperboards, or we don't just develop lightweight paperboards. We also take into account that they give excellent printability, and they also run well in our customers' machines, so in converting machines. That's what we always keep in mind, and that's what we've been doing. And some examples might come later. And then barrier boards. Jussi already told you about the so-called EB product from Kyrö mill.
We are very proud of it, also because we have made very minor investments to the existing machine to be able to produce that product, and also we have developed ourselves, together with some partners, the coating color recipes that we use there, and that's been a very, very nice, interesting work, and as you heard, the business is really growing, and of course, that's not the end of our barrier development.
We will continue that. We will go to more demanding end uses and so on. Here are some examples of the end uses and what we can do to reduce the carbon footprint of packaging. First of all, a simple example, tomatoes packed in plastic box or in carton board box. Nice looking carton board box. Minus 80% in CO2 emissions per package. Right.
Then if I go to the lower right-hand corner, going from plastic tray, cookie plastic tray, to barrier-coated paperboard tray, minus 80% emissions. And that's one example where we can use or where our customers can use our barrier-coated paperboards today. Medium grease resistance, medium water vapor, water resistance. They work very well for this kind of applications.
And there are a lot of these kind of things where we can utilize our developments. Of course, as I said, we are also looking for new growth opportunities, smaller things, or things that are a little bit farther in the future. And there we can utilize very well Metsä Spring, which is the innovation company of Metsä Group. And they have the financial possibilities to run research programs around new topics. There are some examples here, these wood-based 3D products, wood-based textile fibers, and so on.
I'm not going to discuss about all of them, but especially these 3D products. You have surely heard that Metsä Spring has opened kind of a pilot or the first production unit, I would say pilot production unit in Äänekoski. That's a collaboration between Metsä Spring and Valmet, so both companies have invested money in that.
So that's a very good example of the collaboration that Metsä Group, Metsä Spring, Metsä Board is doing with somebody, and they are testing, first of all, of course, the technology, if it works, and when it works, testing the markets, and then later it's to be seen who takes over the business. But just as an example. Very good, then I'm coming to this part of the presentation, which says we aim for world-class resource efficiency in production, and I'll start with the existing mills. I'm not going to read through this slide.
You have it in your handouts, and you can read which capacities we have where and so on. Just want to say that our production is close to our main raw material, and we are also overself-sufficient in pulp. Very important point. So there were some questions about cost, production cost, and so, as you know, we are self-sufficient in pulp, helps us a lot in these times. Right.
What are we then doing to our existing mills to improve their efficiency or resource efficiency and so on? First of all, we have stated that our goal is to be fossil-free in production at the end of 2030. This is the roadmap to that in the existing mills. We have already done quite many things. For instance, we have changed the fuel in our Kyrö power plant. We have made changes in the fuel mix in Simpele.
We are renewing the Husum pulp mill, building the new recovery boiler. I will have more about that on the next slide, and then we have made a clear plan what to do in some other mills where we are still using, for instance, natural gas as fuel, and the technology is there. It's more that what is the timing of the investment, when do we want to do it, and so on, but that work continues, and I said we have a clear plan.
Everything is, when it comes to technology, already possible today, then the other investments, the bigger ones that we are running right now, Mika already mentioned these. First of all, in Husum pulp mill, we are just about to start the new recovery boiler there.
Our suppliers, our own project team, they are working long days, making the final adjustments to the boiler before the startup. Our target is to start it up, as said, in November. It will improve our energy efficiency in Husum mill clearly, and of course, replacing the old two boilers, giving a lot more efficiency there.
The second point, our FBB capacity expansion in Husum. The project is ongoing. We have already started the civil works. We have made the contracts with the machine suppliers and so on. The startup of the rebuilt machine will be during the second half of 2023. Then finally, Kemi capacity expansion. Also, the work is ongoing. The final startup of that will be synchronized with the new bioproduct mill startup in Kemi in 2023. Right. Then, of course, I would say, I would guess an interesting part.
We are also planning to invest in a new folding boxboard mill in Kaskinen, as you have heard. Mika already mentioned this, that the possible investment decision could be made in 2024 at the earliest. We are planning for an annual capacity of 800,000 tons. There was a question about this, hey, why 800, or is it exactly 800? That's what we are planning right now. Just to say openly, it doesn't make sense to make small machines.
If and when we want to make really high resource efficiency, it has to be a big machine. Otherwise, this idea doesn't work. It will be 100% fossil-free mill and really world-class resource and operational efficiency. I will come back to that. The schedule of the project looks about like this. We are now in the pre-engineering phase.
Of course, before the announcement that we are planning this investment, of course, we had worked on this already for quite a while. And now we have started, I would say, officially the pre-engineering. We need about one year for that. It's the technical design, design of infrastructure and logistic solutions. So it's not only the board machine, it's also the mechanical pulp concept, it's the power plant, it's the sheeting, all what's associated with that new mill.
We will also make tendering for the main equipment during 2023. And then, of course, what is important, an environmental impact assessment and also the environmental permit process. So that's what will happen now, let's say, within the next one year. This pre-engineering, environmental permit, tendering, and so on. After that, we will need about two years for the construction. Let's assume investment decision 2024. You can add two years.
After that, we are in the startup phase. And then finally, the ramp of the production, of course, we want to be world-class also there so that it doesn't take years to reach the nominal capacity of 800,000 tons. But we also have to be realistic so that the full production capacity in the market is earliest in 2027. And well, I don't go into markets here, but saying Europe, North America are the targets here when it comes to the market.
So that's roughly the time plan for the new mill. And then how about then this resource efficiency? First of all, we really want to utilize the wood raw material that we use at the mill at 100%. So it's quite a lot about the pulp concept, what kind of pulp we use there. It's very, very important.
I can guarantee that we will surely work on that and find, I hope and believe, new solutions there. Then this reduced water use is very important for us. It's important for our customers too. They understand that this is an important topic. And then in water efficiency, there are a few things that we can do.
We can think about that, that okay, how much water do we circulate within the process? And also, what kind of purification technologies we use in the wastewater systems, so that the emissions are as low as possible. And there we are not looking for minus 5% water usage or something. It has to be tens of percent compared to the existing mills. So really ambitious targets here when it comes to water usage. Then when it comes to energy, the same thing applies there. Just a technical detail.
In board manufacturing, quite a large share of the energy goes to drying. And it's very difficult to change the laws of physics. So therefore we will still use quite a lot of energy in paperboard drying. But everything else around it, we will surely go through every detail, trying to minimize the energy usage there.
And we will use also modern, is it then artificial intelligence or whatever technologies, whatever you want to call them, to minimize the energy usage. And then finally, of course, the operational efficiency is important. The less waste we produce, the more efficient, the more profitable we will be. So we need to keep this also in mind so that there are not too many web breaks on the machine. We are not cutting too much waste from the or broke from the paperboard and so on.
Sell as much as possible from the production that we get to the real. So this will not be, I would say so that this is a very ambitious project trying to do all these things. Right. And then finally, I go to the summary saying that sustainability and resource efficiency are driving our R&D work. Well, I hope you heard and you believe that that is the way we do. We have a clear roadmap in order to be 100% fossil-free in production in 2030.
Yes, these are the investments in the existing mills. And really the third point here, our ambition is to take the resource efficiency to the next level. And finally, that is really a key success factor in our future investments. So that was my presentation. Thank you very much for your attention. And now the floor is open for questions.
Okay, thank you, Ari. Very interesting. I see Antti is already holding a microphone, so please go ahead.
Thank you very much. About the Kaskinen investment, and you talked a lot, there's a lot of things that can improve and do for the efficiency of that unit if you decided to do. Could you talk us a little bit about what do you expect, how the cash cost compares to your, for example, your existing mills or industry average, or what kind of impacts we should expect from all that great things that you talked about?
Okay, so I'm not going to tell you exact euros, okay? This will be this and that, but let's start with the raw materials. So of course, we will use pulp there. We will use some mechanical pulps that we produce ourselves or semi-chemical pulps, whatever. But as I said, we target for maximum yield out of those.
So I'm quite sure that we can squeeze out a little bit there. I'm quite sure also that in our existing mills, this is a technical detail, but you asked that. So we are using CTMP from, let's say, Joutseno and Kaskinen mills, and we are drying it at the pulp mills and then transporting it to Kaskinen. Now we can use the integration.
We don't have that extra drying there in between. That for sure will help us also in the costs. And then, as this is a big machine, as little broke as possible, that will give something there. It's also when you calculate all the fixed cost per ton, for sure they will be lower than on our existing mills.
If we say so that, okay, we have a mill with 200,000 capacity versus 800,000, and still your fixed cost level, of course, it's higher with the bigger mill, but it's not proportional to that. So there will be quite many points where we can find savings. And therefore, so if you compare this to the European FBB mills, of course, this is in its own class.
Are we talking about double-digit improvements or?
I don't speculate that yet.
All right. Thank you. Yeah.
Okay, let's take one from the web here. And there was about artificial intelligence. How Metsä Board is already using artificial intelligence?
We are using it actually in quite many of our mills. We have done a lot of work around that, trying, I would say, kind of a, what do you call this, proof of concept project. Trying that, okay, there's this idea, let's try it.
If it works, we take that into use. Just to give you some examples, we are using, for instance, in our Kyrö mill, so-called soft sensors to predict some paperboard properties that cannot be measured online, but there's a system that predicts them. We have some systems, for instance, in Äänekoski in use where we can predict or find out the root cause for some dirt spots in the paperboard. So what's causing that? So we can go there. So we are already doing it.
Okay. And then there are the grease-resistant coatings, oil-based latex.
At the moment, some of the coatings are. I don't go into chemistry here and explain that, but when you go to the market and look at these barrier coatings, so-called dispersion barrier coatings, of course, there are some latex used.
Yeah. Okay, then back to Kaskinen. Or, I suppose this means Kaskinen? Because any ballpark estimate for the CapEx?
We have said, and now I'm looking at Mika here, so we have said that its order of magnitude is 1 billion EUR.
That's correct. Yes. Right. Okay, we have Robin here in the audience. Please, Robin.
Yes, yes. Thank you for a very good presentation. I have a question related to the smaller mills you have in Finland. What is the plan with them in the future? You're still going to run them for foreseeable or long-term future or any plans to combine some capacity or shut down or invest?
We are planning to run them. That's a simple answer. There's, of course, room for them. This mill, the new one, if and when it will be built, it will be efficient. But to be efficient, we cannot run 10 different paperboard grades on this machine.
We have to concentrate on something, and that leaves room to the existing machines so that we can produce some other grades there. So my answer is that yes, we are planning to continue with them.
One final question related to wood raw materials and availability in the new mill. Now we see you guys and we see Kemi investment and we see Stora Enso doing the conversion in Oulu. So quite a lot of new capacity and increased demand of pulp wood. And then we have the border shutdown with Russia. Do you see sort of availability of wood raw materials a problem longer term in Finland and Scandinavia?
That's a very good question. And we all know that at the moment, the availability is relatively tight. And will it improve in the future? Probably not. But as Metsä Group, well, what is the right word? So the availability of wood is pretty good. And there will be not a major change in the use of wood within the Metsä Group, even with this one. So yeah.
So there are enough reserves in Finland. You don't need to go to the Baltics.
Otherwise, we wouldn't make this. So yeah.
Yeah. Thank you.
Okay. Pretty much same questions here on web, but maybe still one taking this, that what risks do you see to approving the project?
I don't know. So well, if that means, for instance, permits, it could mean. I don't know. But let's assume it means that there are any risks there. Of course, there are some risks. We are just making the, for instance, the environmental permit application. It will be handled in 2023. But we are quite confident that, yeah, we have good chances. Let's put it this way.
We have, of course, had already the first contacts with government officials and so on. And we fully believe that this is doable. Other risks, technology, although I say that there will be new this and that. And so although we are trying to find all kinds of ways to improve the efficiency, but we are not going to use unproven technology. So I don't believe that we have a major risk there. Some other risks, well.
Yeah, I think it's referring also to the capacity from competitors. Yeah.
Well, that was more or less answered already.
Yeah, it was already there. Okay, do we have any other questions from audience? If not, thank you, Ari. Very, very good presentation and good insightful answers as always. I think it says a break on our schedule at the moment, so let's do that.
I could actually take one question here because it's a general one. Is there a recording of the presentations available after? The answer is yes. But now we go on break and we'll be back at 3:30 P.M.
Welcome back to Metsä Board Capital Markets Day 2022. We are halfway through our event, and we still have three interesting presentations to go. As a reminder, you may ask questions after each presentation, and you can send those questions throughout the whole presentation. So our next presentation that includes a lot of figures and graphs, it describes our financial position and our EBITDA levels in pulp and energy. This is by CFO Henri Söderholm. Please, Henri.
Okay, thank you, Katri, and good afternoon. You have heard already a lot about Metsä Board today. Next, I will tell you why Metsä Board has a solid platform for future growth.
I will first warm up with the key takeaways from last year's, sorry, 2020 Capital Markets Day. And after that, I will have three topics to talk about. First, I will go through the financial targets, performance, and also the profitability drivers. Then I will go through two very important competitive advantages of Metsä Board, namely pulp and energy self-sufficiency. And then finally, we'll take a look at the cash flow, CapEx, as well as the financial position. But now, let me first quickly run through the key takeaways from Capital Markets Day 2020.
The coronavirus pandemic had started quite recently, and the business environment was very exceptional. We analyzed the challenges and opportunities, and now after two years, we can say that for Metsä Board, the opportunities outweighed and overshadowed the challenges and risks.
We saw growing e-commerce, concerns about health and safety topics, and also reduced availability of recycled fibers, all of which increased the demand for fresh fiber paperboards. Thus, also Metsä Board's performance has been strong, and the financial position has also remained strong, and finally, as you already heard today, we continue to invest in sustainable growth and have future plans for that as well, then let me go over to the financial targets. First of all, we are not changing our financial targets.
They remain unchanged at this stage because of the still very turbulent environment, as well as the big investment plans that we have ahead of us. We have been able to exceed the comparable Return on Capital Employed target for the last three years, which is at least 12%.
Our net debt to comparable EBITDA is close to zero when our target is maximum two and a half times. And lastly, as Mika already presented, we have paid dividends according to our dividend payout policy, which is to pay at least 50% of the net results. Then to the profit drivers. Perhaps the most important driver for us for the last year or so has been the increased paperboard prices.
This has been possible thanks to the increased demand, as I already mentioned. We have been more than able, more than offsetting the negative impacts from the rapid cost inflation. On the left-hand side, you can see the graph describing the price development in Europe, but a similar pattern and trend has been also there in our other main market, Americas. Then on the right-hand side, you can see our cost split.
The items that have been mostly impacted by the cost inflation have been logistics, chemicals, and energy, all representing about 15% of our total cost each. Our main cost element, wood, which represents about 25% of total cost when taking into account its share in pulp costs, has been increasing on a slower pace, and also our fixed costs have remained fairly stable, and then I have to remind you that even though pulp is shown as a cost here, overall,
Metsä Board is net long in pulp, and I will get back to that in a minute, then next, we have gotten also tailwind from strong U.S. dollar and weak Swedish krona. On the right-hand side, you can see our FX exposure, where U.S. dollar has about 60% share and Swedish krona about 35%.
We have hedges in place for about eight months net cash flow, and that means that our effective USD and SEK rates will be improving from this year's levels. We are estimating, taking into account the hedge ratios as well as the spot rate, that our effective rates will be around 1.02 and 10.8 next year.
It's also worth noticing here that our sensitivity to the USD has increased to about 100 million EUR per 10% change due to higher USD prices. Then Metsä Board also benefits from higher pulp prices through the ownership in Metsä Fibre. In this graph, we have combined the pulp price development on the other hand, and then our comparable operating result. The operating result has been further split into two parts.
The light green part on top is the share of Metsä Fibre's profit consolidated into Metsä Board, and then the dark green part is the Metsä Board standalone result. From here, we can conclude that Metsä Board has been able to improve the profitability both in low and high pulp price situations. Then I will leave the profitability drivers for a while and take a look at two important competitive advantages of Metsä Board.
First, talk about the pulp self-sufficiency. I'll walk you through the numbers on the right-hand side first. So Metsä Board has pulp capacity about 1.5 million tons, and the consumption is pretty close to that, a little bit higher. Then we also deliver market pulp, 500,000 tons per year. And then on top of that, we have 24.9% ownership in Metsä Fibre, which has a pulp capacity of 3.3 million tons.
That all adds up together that our pulp price sensitivity at the moment is around EUR 30 million per 10% change in pulp price. When we look at the items that are decreasing our pulp exposure and increasing it, we can see that in the coming years, our exposure will slightly increase, but remain maximum at EUR 40 million, and then very important self-sufficiency is energy self-sufficiency, as we've already discussed today.
When we think about which are the elements of energy self-sufficiency for Metsä Board, we need to take into account our own generation, the energy that we are sourcing from Metsä Fibre, and then thirdly, the nuclear power shares that we own through Pohjolan Voima.
When taking into account the Husum pulp renewal phase one, which will start up later this year, and the Olkiluoto 3 nuclear reactor startup, our electricity self-sufficiency is about 85%, and then in fuels and heat, about 75%, which then combined equals that our total self-sufficiency is at around 80%.
Okay, then let's move on to the cash flow. We have accumulated strong cash flow over the last years, which has been then also supporting the investment projects and the increasing investment levels, as Mika presented. This year, our cash flow has been burdened by an increase in working capital. That has a couple of logical explanations. First of all, we have been building up inventory ahead of next year's pretty long investment shutdown in Husum.
Secondly, we have seen the inventory valuation increase due to the cost inflation, and thirdly, the receivables have increased because of the increasing price level. On this one, you can see our ongoing investmen t project, which Ari already presented from the financial point of view. These altogether, these strategic projects that are ongoing total about 650-700 million EUR, and they will be finalized by the end of next year.
We have also indicated on this slide the planned investments, which have not been decided yet. And as Ari mentioned, the earliest time to make the investment decision on Kaskinen folding boxboard mill is in 2024. It's also indicated here that the estimated CapEx is at least 1 billion EUR. Then after that, we will also need to continue the renewal of Husum pulp mill, which is indicated to happen in the second half of this decade.
Also, the CapEx in that is material, which we at the moment assume to be more than EUR 300 million. Worth noticing is that our maintenance CapEx level on an annual basis is only about EUR 50-60 million. Then a few words about the kind of starting point for financing in the future. So we have a very healthy balance sheet, and I would say even excellent situation as our leverage is close to zero.
Our maturity profile is balanced and long, and the first meaningful maturity is in 2025. Further, we have two investment-grade credit ratings by S&P and Moody's, which all together add up in a situation where we have a good position with regards to the future financing needs. To conclude, I'd like to summarize.
Metsä Board has had a very strong performance in a turbulent environment. We have high self-sufficiency in fibers and energy. And finally, we have a strong financial position that supports the sustainable growth path. That's all that I had to present. Now I'm open for questions.
Okay, thank you, Henri. And now let's go into the questions. I see. We'll let Harry to begin because.
Thank you. Harri Taittonen Nordea. Yeah, thanks for the presentation. And just thinking about the wood cost, I mean, it seems that you have not been affected very much by the sort of increase in wood cost in Sweden and Finland.
I mean, just sort of give some reasoning for that. And is it so that you benefited from the Norra Skog, at least when that sort of transaction was implemented? And is that now fully in place, I mean, that benefit? So basically looking at things from here, we will be looking at sort of normalized situation from that point of view. Thank you.
Okay, yes, I think you were correct that definitely this cooperation with Norra has improved the situation and the share of imported wood for Husum has decreased. I think there is still some room to sort of decrease the share of imports. So I wouldn't say that we are fully there, but it's definitely benefiting the situation.
Part of the answer to the lower wood cost has also been that we have been reducing or fully stopping the procurement from the Baltic countries where the increases have been dramatic, and Juha Jumppanen will be talking more about that in a minute, so you'll hear more, but it's a combination of different things. Of course, we have a very good professional wood procurement organization who has been doing also very good work. So I'd like to give some credit for them as well.
Okay, thank you. Maybe about the financial targets. I mean, it's also, of course, related directly to the whole management group, but you've been doing so well and this sort of 12% ROCE is, from current profitability point of view and the sort of the near-term outlook point of view, it looks quite unchallenging. So I don't know how would you kind of reason the benefits or sort of the ambition level for the sort of coming years?
Yeah, that's a good question. Obviously this year we will clearly exceed the target. We see it also that the environment is very turbulent and also these big projects that we have ahead of us, that this is not the time to revisit that. We'll get back to that maybe sometime later, but not now.
Okay, thank you. If I can continue with one question related to the Metsä Fibre stake you have, I guess you have spoken before about the potential sort of changes in the future that that is not set in stone. Now you have quite significant investments in front of you. You have a strong balance sheet, but still big investments. So is this now the time that you take a look at that stake and perhaps divest it? And related to that, what is Metsä Fibre's sort of indebtedness at the moment?
Yeah, so the ownership percentage is not carved into stone, so we are willing to take a look at it, but it requires the whole pre-engineering, and we need to know about the CapExes of the future. So it's still not an acute topic for us, but it's something that we will take a look in the future.
As I presented, we have this long position in pulp in the coming years as well. So there is some sort of room from that perspective. And the Metsä Fibre indebtedness, I don't recall exact numbers, but despite the very large investment projects they have income, it is very low. So I don't have exact numbers. Maybe Ismo can get back to that in his presentation.
Thank you very much.
Okay, and here from the web, can you give us a little bit color on how are you financing your upcoming investments? Have you already thought about specific instruments for that?
We haven't made a detailed financing plan yet. I think the most important thing at this stage is that the starting point is good and we have good sort of credit ratings, low leverage. And it's likely if we make this investment decision on Kaskinen, that the financing need will be very large. So it's probably going to consist of several elements that we will plan more carefully during next year's pre-engineering phase.
Okay, and then there is, what is your goal regarding the credit ratings?
We don't have a credit rating target as such. I think it's just kind of a reflection of where we are, but we don't have any written or verbal credit rating target as such.
Okay. Anything from the audience? Any more? Okay, I see that our time is blinking red, so it means that we have to move on. Thank you very much, Henri. And we will move on. Now we are going to shift our focus a little bit. We're going to take an update of our associated company, Metsä Fibre, of which Metsä Board owns 25%.
In addition, we will hear always so interesting view on the global pulp market. This will be presented to us by Ismo Nousiainen, CEO of Metsä Fibre. Please, Ismo.
Good afternoon. Metsä Fibre is today the leading market softwood pulp supplier in the world, and we are a significant source of production. During the last two years, we have seen a very tight pulp market, and it's due to the supply-side restrictions. In these conditions, we have succeeded also well. We have ensured the reliable deliveries to our customers.
What we have also seen is that the sustainable requirements are strengthening. We have put a lot of efforts in Metsä Fibre to the sustainability already many years. Actually, we have also set ambitions, sustainable targets by 2030. Now we are investing into the Kemi bioproduct mill.
We have started new sawmill in Rauma, and with these investments, we are improving our sustainability. Also, this Kemi bioproduct mill new capacity is important when we are looking at the softwood market in the future and the demand growth there, so we are even more strengthening our position as a leading pulp supplier in the world and significant source of production.
We are going to grow sustainably in wood-based bioproducts, so if we go and start these factors, which have affected the pulp market during the last two years, logistic constraints. There has been huge shortage of the containers, but there has been also bottlenecks in inland logistics, for example, in North America, also here in Europe. We in Metsä Fibre, we have reserved also the breakbulk capacity in logistics, and we have safety from the containers to the breakbulk.
In this way, we have ensured the reliable supplies and deliveries to our customers also in this situation. There are also other factors which are affecting and which have affected the pulp market during the last years: extreme weather conditions. We have seen large wildfires, roads, floods in certain parts of the world, and these have affected also the pulp production in these areas.
We have seen unplanned production losses, shutdowns, and it is not only the unexpected equipment failures, but there have been also longer-than-normal maintenance shutdowns in the old mills. We have seen also the production losses because of the lack of wood raw material in North America. Like I said, there are increased sustainability requirements, for example, the need for high environmental performance, the need to mitigate climate change.
Actually, we have seen also in North America the mill closure because of poor environmental performance. I see that logistic constraints are easing now, but these other factors are also affecting the pulp market in the future. I see that the sustainability requirements are strengthening even more in the future. What is the Metsä Fibre today? We have the pulp capacity of 3.3 million tons.
We have four pulp mills here in Finland. All are modern. We have high energy efficiency in these mills. We have high environmental performance. When we will have this chemical investment running, our capacity will be 4.1 million tons. In sawn timber, our capacity is 2.1 million cubic meters. We have five sawmills here in Finland. Just now we are starting the most modern sawmill in Rauma. We have integrated that sawmill very tightly to our existing pulp mill there.
Actually, we are getting all the heat what we need in the sawn timber production from the pulp mill as existing heat. We don't need any separate heating plant. We are taking sawmill chips to the pulp mill as raw material directly from the sawmill. Actually now we are planning that we are utilizing the sawdust as a fuel in the pulp mill and replacing the fossil-based fuel in this process.
We are going to fossil-fuel-free integrate also in Rauma. With this integration in the sawn timbe and pulp, we can not only improve our cost efficiency, but also the sustainability. We have also other products, biochemicals, traditionally tall oil, turpentine, but we want to enlarge this product portfolio. We have made an agreement with the Veolia company.
They are building the methanol refining plant in Äänekoski so that they are taking as raw material our raw methanol in the pulp process, purifying it and delivering it as a fuel or the raw material for the chemical industry. Then we are piloting the lignin separation. We are looking at the application for today's lignin. And we have also other byproducts in the R&D process. We are also a remarkable energy producer. Actually, our electricity self-sufficiency rate is nowadays 150%.
It means that when we are producing 150 units of electricity, we are utilizing 100 units in our processes, and 50 units is delivered to the national network as renewable electricity. We are increasing this energy efficiency so that in the chemical, this electricity self-sufficiency rate will be 250%. So we produce actually 11% of total renewable energy now in Finland, and it will increase in the future.
So like I said, we succeeded well in our deliveries to customers during the last two years, and also our final results were strong. Last year, our operating profit close to EUR 650 million, about 25% from our sales. Year to date, this year, after three quarters, our operating result is close to EUR 680 million and 29% of our sales. Our net debt rate is increased close to EUR 500 million due to this bio-product mill investment.
We are increasing our production units' cost competitiveness with this bio-product mill investment. Like we can see here, our technical age of our mills is lowest when we are looking globally at the softwood pulp market producer. And also when we are looking at the average production capacity of our mills, it is much higher than average. So we will have very cost competitive production units.
We can see also that there are a lot of pulp producers, pulp mills whose technical age is quite high, over 30 years, over 35 years. And it is expected that these mills will have more and more unplanned production losses in the future. Is it also difficult for these mills to increase the sustainability, increase the energy efficiency, increase the environmental performance due to the fact that there is old technology?
Actually, many mills are utilizing electricity and fossil fuels outside when they are running the pulp mills and pulp production. They need outside of this energy. We decided to renew the chemical mill when the existing mill technical age was 32 years. And now we are replacing our existing mill with a new bio-product mill. The annual pulp capacity will be 1.5 million tons. Market softwood, around 1 million tons.
Then we will have also the hardwood, 100,000 tons as a market. The investment will be EUR 1.85 billion. This investment will be the highest in Finnish forest industry history. We will produce a lot of renewable energy also in this plant, 2 terawatt hours. It represents 2.5% of electricity production in Finland. And the startup will be in the third quarter next year. In this mill, we are combining efficient production with superior environmental efficiency.
Actually, we can operate within the emission limits which we have now in the current mill, even if we are increasing the capacity 2.5 times higher. In certain areas, we are decreasing the emissions and absolutely comparing to the current mill. We will have a very efficient wastewater treatment plant. There will be the tertiary stage, which is decreasing the emissions.
We will have the closed cooling system so that we are not increasing heat load to the water. We are decreasing the raw water need. Then we will use no fossil fuels in this production, even in startups and shutdowns. We are using the bio-based fuels. Like I said, the electricity self-sufficiency rate will be very high, 250%. And we are utilizing the raw material 100% so that we are utilizing the side streams to different kinds of valuable byproducts.
For example, we are gasifying our part to the product gas, what we use as a fuel in our process. We are even utilizing our odorous gases from the process so that we are producing sulfuric acid from these odorous gases and decrease the need of the sulfuric acid from the outside of the mill, so the mill will be the most modern softwood pulp mill in the world.
We are using the best available technology, actually more advanced technology in many areas, and I'm personally very proud of this mill. The mill is also, at this new capacity, very important when we are looking at the market pulp demand growth. Here we can see that in the softwood market pulp, we estimate that by 2030, the demand growth will be 2.7 million tons, and when we are going to the inside of these softwood grades,
we saw that the northern softwood pulp and fluff pulp is growing, but other grades inside the softwood are decreasing, and this is due to the fact that southern softwood are shifting more to the fluff production and radiata more to the dissolving and more to the eucalyptus, so the northern pulp has to take more role in the future in the softwood growth.
The driver in the demand growth will be tissue hygiene sector, but also the board packaging sector and specialty paper end uses are growing. Printing and writing, we expect that they are declining and continuing to decline, but these other end uses are more than offsetting this decline.
Then when we are looking at the capacity and calculating the demand capacity ratio, and nowadays we are saying that market are balanced when this capacity ratio is 90%. So we can see that even we are going with the new capacity in chemical to the market, the market will be in balance. Actually, the market is going very high in the last year in this time frame if there is not coming any other investment and capacity expansion.
Actually, I see that this balanced market ratio will be lower than 90% in the future, and it is because there are factors which are restricting the production also in the future. The extreme weather conditions, they will continue, and globally, high technical age of capacity what we have in the softwood market pulp, there will be more production losses. Also, there is happening the capacity shift from the paper grade to the other grades, for example, to the unbleached kraft.
Cost inflation is affecting certain mills, and also the shortage of wood raw material will continue in certain areas, and then also these increasing sustainability requirements. Chemical pulp will be very crucial when we are looking at the market point of view, also this investment, so I want to summarize my presentation so that Metsä Fibre is the number one globally in the market softwood pulp.
New chemical bio-product mill further improves our efficiency and sustainability and strengthens our position as a softwood pulp, and the demand for market softwood pulp continues to grow with limited new capacity. Thank you.
Okay, thank you, Ismo. Very good presentation, as always. And let's open up the dialogue and start from here on site. Do we have questions here? Robin, please.
Thank you very much for a good presentation. Related to chemical, remember the Äänekoski mill started off very smoothly in a good market environment, though, but very quickly, and the results were great quite soon after the start. What should we expect now when it comes to the startup curve? How long does it take for you guys to reach full capacity? And if you compare chemical to Äänekoski, which one is more efficient when it comes to cash cost of pulp production?
We have this continuous improvement in our company, so we are improving the startup curve. Yes, this is the target, and after the one year, the target is to be in full speed with this mill. And in chemical, of course, we are improving the areas where we have experience in the Äänekoski that we can improve. And also the capacity will be higher than Äänekoski, 1.5 million tons. So it will be also when we are looking at the cost competitiveness, better than Äänekoski.
Thank you. Sounds good. Then related to short-term outlook on the pulp market, what do you see now when it comes to demand in the key markets, Europe and China, and what do you see when it comes to supply? Any changes now in the autumn versus the summer or the spring, or is the tightness, or is it the same tightness that we have seen during this year?
When we are looking at the situation, actually, in China, the paper pulp market has been quite weak, local market there, but our deliveries have been good there, and the pulp market has been tight because of these supply chain restrictions.
Now the logistics is easing, like I say, and I expect that that will affect the market somewhat so that the prices are more to normalize into the next year. But I see also that China demand will increase in the future because when they are getting the logistic cost down, they are exporting more than paper grade part also from China.
Thanks, and a final one. We've seen a lot of projects in China also involving production of chemical pulp. Where will they get the raw material to produce there? Have you any idea or are you as clueless as others on this one?
Actually, they have built in the hardwood side their own pulp capacity and integrated that in their paper production there, and raw material comes from the other areas from Asia especially. They have increased now quite much these hardwood imports during the last years. But in the softwood, the problem is that there is not raw material for the softwood.
Yes, Harri, please go forward. Yes, I continue. Logistically efficient this way. If we think of the chemical, if I recall right, the electricity sales will be something like 1.4 terawatt hours. Is that in any way like hedged or is it just sort of sold to the open market at the current spot prices then? And how does it work, the sort of power sales from the unit?
This excess electricity, we are putting that in our balance, and we are selling that as a spot market, and the prices are coming from the spot market.
Yeah, yeah, yeah. And the Rauma, the sawmill sort of startup comes at the time when there seems to be the market is very slow at the moment, but then you said that it's going to be very competitive. What sort of strategy will it be? Will you be just, I mean, will you aim at running it full and?
Yes. We are going to the same strategy like in the pulp mills so that we are building the sawmills, which can operate three to seven days per week, so all the time. And like I said, that we are integrating that in the pulp mill, and also we are taking new technology so that it's the same kind of controlling the process like in the pulp mills that we will have the one control room. And in this way, we can reduce the need of persons, and it is also more cost competitive in that way because we can also in the weekends run the production all the time. And also the location is very good when we are looking at the exports from Rauma.
Right. So you're looking at quite global markets?
Yes, yes.
Any sort of regional, I mean, do you want to open like where or what's the?
The main markets will be the Europe and also the Asia. Yeah,
yeah. Okay, thank you.
Maybe a small follow-up that you already answered pretty much it, but then how do you see the outlook on the European sawn timber market?
When we are looking in the longer term globally, the sawn timber demand will grow about seven million cubic meters per year. So we will have new capacity, 0.7 million in the Rauma. So the question is not is the demand increase and growth in the, but the question is where we are utilizing this high-quality sawn timber, where are the customers for that? And that is what we are looking at, which market and which customers are benefiting more from our sawn timber.
Good. Then back to pulp. How much scope is there for customers to switch from use of softwood to hardwood given availability will be much greater for hardwood in the next few years?
Of course, the customers can look at the furnish so that they can maximize the hardwood side. And we see that it has happened because the price spread with the softwood and hardwood has been quite big now during the last years. And of course, it's a question of also the chemical cost because they are utilizing chemicals when they are replacing the softwood with the hardwood. And what are the chemical cost versus the price difference between the hardwood and softwood? I don't believe that there can be happen a lot more in the future because there has been so high price difference between the hardwood and softwood.
Then still short term, if you want to comment, this is about the Asian demand. Do you think the strong momentum will continue into Q4 and early 2023?
Like I said, that we are seeing that the demand is normalizing more, and these logistics constraints are also normalizing. So I expect that also the prices are normalizing in the next quarter.
Okay, thank you. Any other questions from the audience? If not, then let's move on. Thank you very much, Ismo. Good presentation, very good answers. And yes, we are moving to our last speaker. The content of this presentation will be around Metsä Board's most important raw material, wood, and also about wood procurement, which in our case is handled by Metsä Group.
We will also hear more about a very important topic, sustainable forest management. I'm very delighted that we have our colleague from Metsä Forest, our sister company, Juha Jumppanen, here to open up these very important topics. Please, Juha.
Dear all, good afternoon. So my presentation is about wood supply. So as you have heard today, Metsä Group is in a phase of very strong strategic growth. And our task at Metsä Forest is to make it possible through sustainable and long-term wood supply. And our unique ownership structure is a very valuable asset in doing this.
So Finnish forests are our home base. So we have strong roots in Finnish forests, and Finnish forests have acted as carbon sink since the 1970s. And the carbon storage of Finnish forests has almost doubled during the last 50 years. And we have around 20 million hectares of productive forest land in Finland, which covers nearly 75% of our land area.
Maintaining healthy forest is very essential for us in order to mitigate climate change and also for our business as well. We have a very good position in Finland due to that issue that annual growth exceeds clearly the felling. During the last six years, we have only cut 90% of sustainable cutting potential in Finland. That means that we have flexibility to increase cuttings without risk of losing sustainability and biodiversity.
As I said, the total area of productive forest land is around 20 million hectares, and 60% of productive forest land is owned by private forest owners. Our owner members own roughly half of Finnish private forests. We have a very unique value chain from forest to the high-quality end products like folding boxboard, liner board, pulp, sawn timber, paperboard, sack paper, and tissue and greaseproof papers.
Our parent company is Metsäliitto Cooperative, which is owned by nearly 100,000 Finnish forest owners. We at Metsä Forest take care of the whole wood supply of the Metsä Group. Our owner members are interested to increase the value of their forest asset, and we provide all the services to do that. In addition to that, we have the best-in-class rewarding system for our owner members.
Biodiversity is extremely important for us as a company and for our owner members as well. We want to safeguard biodiversity, and we do that through our ecological sustainability program. Here you can see some recent steps what we have taken. We are leaving rarely found broadleaf trees in forest.
We recommend nature management for herb-rich forests, and we are making biodiversity stumps to increase decayed wood, amount of decayed wood, which is very important for a lot of Finnish species, and we are also leaving protective thickets for animals, and we encourage the forest owners to grow mixed forests in order to mitigate climate change.
We are the largest wood purchaser in Finland, so the total amount of our wood supply was 35 million cubics in 2021, and mainly it comes from Finland and our owner members, and in Sweden, as already has been spoken, we have a long-term wood supply agreement with Norra Skog. And as you know, they are part owner of Husum Pulp, 30% stake, so they are very committed to take care of wood supply of H usum Mill, and that is, of course, a valuable asset for us.
We stopped sourcing from Russia at the beginning of March, and now we are replacing Russian volumes by Finnish and Swedish volumes. We have been very successful in doing that. We have been able to carry out wood supply according to plans this year. Of course, we have very big turbulence in the wood market in the Baltic Sea area, but we have been able to manage with this thing. 88% of wood comes from certified forest.
As our group is in a phase of very strong strategic growth, our wood supply volume will increase by six million cubic meters from 2022 to 2025. Of course, Metsä Fibre is having the biggest investments in sense of wood supply. Rauma sawmill will increase wood consumption by one million cubic meters because we closed at the same time Kyrö sawmill.
The new bioproduct mill in Kemi will increase the wood supply by 4.5 million cubics. So all in all, total nearly 6 million cubics. How we can be successful in our task. We are providing comprehensive member benefits to our owner members. According to different studies, we have the most wanted brand among forest owners.
According to different studies, we are offering first-class customer experience to our owner members and other forest owners as well. We have been market leader in online services for forest owners for, let's say, a decade. Our online wood trade was started already in 2016. Our owner members can invest wood trade income to shares of Metsäliitto Cooperative. The interest rate paid to investments has been very, very competitive during the past decade, so between 5% and 7%.
In 2021, the total distribution to owner members was some EUR 74 million as profit distribution and some EUR 17 million as other member benefits like price guarantees and so on. I think that we have a very unique relationship with our owner members, and through that, we can have a very stable wood flow to our mills of Metsä Group. We have a very tight situation in the wood market around the Baltic Sea area due to the Ukrainian war.
Some 10 million cubic meters of different wood assortments were imported from Russia to Finland and Sweden. Some 3 million cubic meters of different wood assortments were imported from Belarus to Poland and Baltics mainly. That is the big disturbance in the wood market. At the same time, or nearly at the same time, we are increasing wood consumption at Metsä Group as well.
So now we have turbulent times, but we have been able to mitigate those, and I'm totally convinced that we can mitigate this situation in the future as well. Of course, this tight wood market situation is reflected in pulpwood prices, and in Finland, the price of coniferous pulpwood has increased by 16% from the beginning of this year until the end of September,
and the price of birch pulpwood nearly by 20% in the same period, and you can see the same kind of development in Swedish raw wood market as well, and of course, I must highlight that you cannot compare Finnish prices to Swedish prices due to that issue that Finnish roadside price is so-called end price, but in Sweden, wood purchasers are making different kinds of deductions and increases to those prices.
And if we compare the Finnish and Swedish mill prices, those are roughly at the same level. Of course, it depends on the part of the country, but roughly on the same level. To summarize my presentation, our unique ownership base secures sustainable and long-term wood supply. And we can increase cuttings and enhance nature biodiversity at the same time. So we want to protect biodiversity and maintain forests as carbon sink.
That is really essential for us and to our owner members as well. And competition for wood raw material will intensify and already is intensified due to that Ukrainian war. And I'm totally convinced that we can take care of increasing wood supply of Metsä Group. So we have very valuable assets. I think that we are having the best wood supply organization in the Baltic Sea area. We have a unique ownership base.
We have very committed owner members to deal with us. And we are offering the best-in-class customer service, customer experience as well. And we are the most wanted brand among Finnish forest owners. And we are having the best forest owner rewarding system according to different studies. So I'm sleeping my nights very well still and totally convinced that we can take care of wood supply of Metsä Group in the future as well. Thank you.
Thank you, Juha. Very good presentation, very valuable information to us all and especially to Metsä Board shareholders. Okay, do we have questions for Juha here in the audience? Please, Harri.
Yes, thanks for the presentation. And just wondering, I mean, there's so much talk about energy use as the new driver for wood and how that is sort of affecting the market. I mean, how do you see that?
The other thing was also this sort of new imbalance in a way that the sawlog market probably is a bit kind of cooling down with the sawmilling being so slower and then the pulpwood tightness is there. What sort of operational challenges or how do you deal with that?
Excellent question. If I start from the energy wood, we have seen very rapid price development in Baltics. The Baltic raw wood market is driven by energy wood. They are replacing gas and other sources by wood raw material.
Of course, in Finland, if the situation goes so that we will have lower sawing volumes in Finland in total, then it means that we can use, for instance, stem pricing and steer raw wood to that usage, which is the most beneficial and most profitable for us. So that is a very good adjusting element to steer the wood to that address, which gives best profit for the whole Metsä Group.
Okay, thank you.
Okay, then we have here, we already touched a little bit on this subject, but if you could answer on your side that how would you describe the main benefits of cooperation with Norra Skog?
Yeah, good question. So I think that the main point is that they are very committed to Husum's wood supply. So as they are part owners, they are really committed to that task.
Okay, and then how big of a risk do you see forest fires or insect damage in Finnish or Swedish forests?
Yeah, forest fires are not a very big risk in Finland or in Sweden due to that issue that we have a very broad forest road network and we have excellent forest fire surveillance, which is offered by authorities, and we have good firefighting equipment in place. So no big risks for broad forest fires. But what comes to the insect damages, I think that is a big risk in both countries due to that reason that climate is changing all the time and we will have warmer and warmer summers in the future and winters, of course, as well.
And that is the reason that we will see more broad insect damages in the future in Sweden and in Finland. Of course, nowadays in Finland that is not a problem, but it will be a problem in the future. That is for sure.
Okay, and now totally up to you how much you want to comment this, but the first one is how much is the profit distribution for owner members in 2022?
Okay, yeah. Interest rates which were paid at the beginning of May was some EUR 80 million. And we don't know yet what will be the other member benefits, but I think that those will be roughly at the same level than last year. So all in all, total EUR 100 million in this year.
Okay, and then the next one is about wood prices. How do you see wood prices to develop in coming years?
Okay, good question, but let's put it in that way that we are purchasing wood every day at market price. So market will make the decision what is the right price for wood.
That's a good answer. I think, Robin, do you still have one?
Yeah, it was actually the sort of question you asked, but if I try it this way, you said the market is quite tight, that you have quite good figures here about increasing pulpwood prices in Finland and Sweden. You said Baltics is super high prices now. Should we expect, I mean, will prices continue to increase now into the winter or is this the top? What are you seeing in the market related to balance?
Good question, so I cannot answer to that because the market will decide what is the right price for pulpwood. I want to highlight that when the Baltic raw wood market went crazy, we decreased our purchases from Baltics a lot, really a lot, and we have replaced those volumes from Russia and from Baltics by Finnish and Swedish wood. That is the one key issue why the wood cost of Metsä Board has not raised a lot. So that has been a competitive advantage for us.
And is the winter weather a risk for availability? If you have a wet and warm winter, would that sort of be a negative impact on prices? Or is that something that is not so relevant in Finland?
I think that, yeah, it's of course relevant when we are thinking about wood harvesting. But if we think about the wood market, maybe then it's not so relevant how the price will be decided or formulated. But when it comes to the wood harvesting, of course, bad winter weather is always a risk. But it is not a bigger risk this year than earlier on. Yeah.
Thank you very much. Thank you.
Okay, I think that was it. Thank you very much, Juha. I really appreciated that you were able to come here. Now we have gone through all our presentations. Next on our agenda, we don't have an agenda there anymore, but we'll have the CEO's closing remarks. Mika,
if you come here up on stage, as I promised in the beginning of the event, if there are still some questions to Mika or anybody else in the team, you still have the opportunity to do them now. I can actually hear a couple in the web, so I'll take them first. Considering your strong financial performance, are you planning to distribute some extra dividends to owners or share buybacks maybe?
Our intention is to pay dividend based on our policy, and I can't say more at the moment.
Okay, then another one that is very, very often asked from us. So have you considered to decrease your ownership in Metsä Fibre?
As mentioned earlier, was it Henri that nothing is carved in stone? So of course we are able to discuss about that topic if and when needed as far as the kind of financing needs are concerned.
Good. And then still coming back to Kaskinen, could you a little bit elaborate how the place was selected? Why Kaskinen?
Yeah, there is a very good site. Some of you might remember that there used to be Botnia pulp mill. Now it's not there anymore. That has been closed down. So we have plenty of room there. It's stable, I mean, good site. We have an industrial plan in place, so we don't have to kind of go for that process. Then we have already kind of current operations there, our CTMP mill. And it's by the sea. It's very close to the port, and also from a wood procurement perspective, it's a good location. So several reasons.
Yes, thank you. Okay, if not any other questions, I want to thank on my behalf. Very active participation, very good questions, both here on site as well as online, and I hope you have found the day useful and learned new things about Metsä Board, but now I will leave Mika to make the closing remarks.
Okay, thank you, so as we heard today several times, we are in a growing market. We operate in a growing market. The overall packaging materials market growth estimation is 4%, and paperboard packaging materials are estimated to grow by 5%, so bigger or more than the whole packaging material cake, so relatively speaking, we are growing more, and then what will be the impact on the plastic replacement rem ains to be seen.
But obviously, it will be positive as far as growth is concerned. We are investing, so we are answering, we have answers to this growth to our demand to our customers. We heard today that we have invested back in Husum 2016. Then at the moment, we are investing in Husum in order to increase folding boxboard capacity and then Kemi white kraftliner capacity. Our financial position is strong. Our Q3 was best ever, so our profitability is excellent at the moment.
So we have excellent from a financial perspective, we have a very good position to grow further in the future. And that is precisely what we are planned to do concerning this pre-engineering phase of Kaskinen mill. But of course, for higher production, you need machinery, you need technology, but you need also raw materials.
We have our self-sufficiency in pulp very, I mean, higher than we are utilizing ourselves. We have more pulp than we are able to use today, and that is a very, very good starting point as far as the future investments are concerned. Energy self-sufficiency is high after Olkiluoto 3 and after Husum investment, as high as 85%. That is also very, very good as far as the future investments are concerned.
Our strategy, we grow in fiber-based packaging materials and renew our industrial operations. That's precisely what we have been doing, and that's precisely what we will do also in the future. No need to change our strategy. These are my kind of conclusion and closing remarks.
I also would like to thank you here, live audience, and thank you there, online participants, for active participation, good questions, good comments. I would like to thank also colleagues for excellent presentations. And then also Katri for your kind of guidance through the whole event. Thank you very much. So thank you, have a nice day. See you next time.