Good day. Welcome to the Q4 2016 Stora Enso earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ulla Paajanen, Head of Investor Relations. Please go ahead, ma'am.
Thank you. Good afternoon, everyone. Welcome to this late Friday conference call about our Q4 2016 result. Just in order to save time, I will hand over to Kalle for his presentation. Please go ahead, Kalle.
Thank you. Very welcome to this call. Good morning or good afternoon, depending on where you are in the world. I would like to start to go through the Q4 earnings. I would like to make sure a couple of things. First of all, we came in on a sale, which is basically 2% below the same period last year. However, we were growing in the areas where we want to grow by 4.5%, and that is excluding structured declining Paper as well as divested entities. Operating EBIT came in at EUR 191. There are very clear expectations why, and that is hardwood pulp, Beihai, and Enocell. We managed to have a very strong cash flow in the fourth quarter, and we came in on a return on capital employed of almost 9% and slightly above 12% if you exclude the Beihai.
Net debt to operational EBITDA is down to two times versus 2.3 times a year ago. We have also launched today, based on the uncertainty in the European area, in the global economy, a cost reduction program focusing at reducing our mainly our fixed cost with EUR 50 million. This is also a way of making sure that we are nimble going into uncertain future. We have also today, published that we or the board propose a EUR 0.37 dividend per share, which is an increase of EUR 4 or 12% versus last year. This is actually a vote of confidence that we are leaving 2016 as a stronger company when it comes to product portfolio compared to when we entered 2016. I will come back to that later on. Going into explaining what have happened in the quarter.
If you looked upon this simple table, it actually explains what has happened in the quarter, but also demonstrates the underlying earning potential in the company. You can see that Consumer Board is down by EUR 15 million. In reality, the business excluding Beihai and the ramp-up of the Beihai mill is actually EUR 10 million above. Sales, excluding Beihai, is more or less flat. We have improved the efficiency, resulting in a EUR 10 million higher result than a year ago. Packaging Solutions coming in like EUR 3 million below. Then we have the big profit fall in Biomaterials. That is explained by basically two components. We are having in Europe a hardwood pulp price that is more than 20% lower than a year ago, and a double-digit also in China, even though the prices there has not fallen as fast as they have done in Europe.
That is EUR 35 million in hardwood pulp prices. On top of that, we have an unfortunate with the power generation and the turbine in Enocell costing EUR 5 million. All of that is basically capturing the development in Biomaterials. Paper came in with a EUR 23 million better results. We have others coming in EUR 11 million lower. That is basically because of lower energy costs as well as lower wood prices. With that slide, I think it's also important to remember that when we have additional costs, as we have in the quarter because of Beihai, it's because we take them earlier, and I will come to that later on. This is the slide that I'm very, very happy about. We have actually managed to delever the company from about 3 times net debt to EBITDA to coming down to 2 times in 48 months.
That is a strong performance on how we manage cash and how we manage profitability going forward. I also want to repeat to everybody that 2016 has been an extremely busy year for us. We started up one of the biggest investments that we've ever done in May. That is Beihai. We have started up the LVL production at Varkaus. We have inaugurated Murów. We managed to get to an EBITDA breakeven at Varkaus. We have done a lot of additional small investments. Today we also went out with an additional investment to increase quality, capabilities, and capacity for EUR 28 million in Heinola Fluting Mill to get us to the next level in the high-quality fluting area.
At the same time, we have divested, which is represented on the right-hand side of this slide, about 915,000 tons, either in closing down, selling off or stopped the fact on 950. This represents a EUR 306 million cash inflow. Coming to Beihai, I think it's important here that we are ramping it up and it's going very well and we are ahead of time. That's why we spent EUR 4 million more than we previously thought. If you look at this slide here on the right red little thing here, that represents for increased capacity, 38,500 tons. We managed to get basically 5,000 tons more in 2016. We're estimating that we can drive up even more this year, 30,000 tons and 3,500 tons in 2018. That is actually going faster than we thought. We still are talking about an EBITDA break even in Q1 2018.
We started up as previously announced, the CTMP mill in the fourth quarter. The other thing I would like to say about the fast learning curve of the people that we have trained over two years, who's running the mill. When it comes to efficiency, this was the second highest efficiency within all the Consumer Board machines in the month of December. It's going really well. Before handing over to Seppo, I would like to come back to the slide that we are looking on every quarter. We have moved from a company of having 30% in non-paper business to almost 70%. We had a very strong quarter in Paper, which means that's now one third of the profit. However, two-thirds of the profit is coming from business that was less than 40% in 2006. The transformation continues. With that, I hand over to Seppo.
Thank you, Kalle. I start with the key figures and the reported sales that went down 2% versus Q4 a year ago. Like Kalle said, sales were actually up 3.5% if you exclude Paper and divestments. Full-year sales figure was EUR 9.8 billion. Operational EBITDA margin was 12.7% for the quarter, slightly down compared to a year ago, but the full-year EBITDA was flat at 14% level. Operational EBIT EUR 191 million. Operational return on capital employed, excluding Beihai project, was 12.1%, slightly below Q4 a year ago. Full year 2016, return on capital employed, excluding Beihai, was 13%, reaching our strategic target level. That is also up from 12.2% for 2015. Net debt to last 12 months operational EBITDA decreased during the year from 2.3 to 2.0. That is a demonstration of the strong cash flow that we have continued to generate.
Moving forward to different divisions, I start with Consumer Board. The ramping up of Beihai mill continues, and that is also reflected in the sales growth of 3.6%. Operational EBIT increased EUR 10 million excluding Beihai operations, thanks to improved efficiencies and lower wood prices. That demonstrates the good underlying performance of the operations. Beihai operational EBIT loss was EUR 38 million in Q4, and we expect that to be approximately EUR 34 million in Q1, so EUR 4 million less. Year on year, if you look at the expectations in Q1, we expect that the effect is about EUR 13 million negative in Q1 this year versus last year. Operational return on capital, 7.4%, but excluding Beihai mill, it was 13.8%, so at an excellent level.
An investment of EUR 9 million was announced during the quarter, where we are investing in microfibrillated cellulose production at Imatra and Inkeroinen Fors mills . Look at the Packaging Solutions. The ramp-up of Varkaus kraftliner mill is at the final stage and sales increased 18%, reflecting Varkaus data, but also impact in China and higher volumes from containerboard mills and corrugated Russia. Operational EBIT was EUR 3 million lower, mainly due to lower recycled containerboard sales prices and higher recycled paper prices. Varkaus kraftliner mill ramp-up is proceeding and EBIT break-even is expected in Q2 as said and communicated already earlier. Also, a feasibility study that we announced last year is at the final stage at the moment, and we will come back to that later.
We also announced this morning a new investment at the Heinola Fluting Mill in Finland that is EUR 28 million and addressing and preparing for the increasing demand of high quality fluting globally. That investment is expected to be completed in Q2 2018. Our return on capital is expected to be about 20%. That is our strategic target level for Packaging Solutions division as well. Biomaterials. The result and sales are impacted by historically low hardwood pulp prices. Effect was EUR 35 million, like Kalle said, during the Q4 versus the year before. Also, Enocell power generator problem affected the result by EUR 5 million during the quarter. We are working on this, fixing the problem, but unfortunately, we expect repairs to take some time, and the effect is about EUR 10 million negative during the first quarter.
We are moving ahead with the start-up at the Bagasse-to-Xylose demonstration plant in Raceland, U.S.A. Their first batches of Xylose are expected to be delivered this year. We also have signed now first commercial contract for Xylose. Wood Products. There we have also strategic investments ramping up, and that is Varkaus LVL mill and Murów Sawmill. They are also increasing sales. Operational EBIT decreased EUR 4 million, mainly due to the increased cost and depreciation due to those strategic investments. LVL at Varkaus is moving ahead well, and now we have 70% of product certificated, and remaining are expected to be done during the quarter that has just started, Q1 this year. Feasibility study that we announced last year for the CLT at the Gruvön mill will be finalized during the spring, and more on that later.
EUR 10 million investment was announced during the quarter to biocomposite granulates in Skutskär mill, Sweden. That is new type of production and opportunity that we are looking forward to, and we expect to finalize that investment in next year, in Q1 2018. Paper, where strong performance continued in Q4, both result-wise as well as strong cash flow generation that continued at record level. Also important to note is that sales remained flat excluding the divestments. That is a great achievement by the team and division, taking into account the declining market. Operational EBIT increased 56% year-on-year. That is thanks to active cost management and lower depreciation and very much to strong operational performance during the whole year, and also in Q4.
Strong cash flow after investing activities to sales continued and was clearly above the target level for the second quarter in a row now and reached 11.8% level. Our strategic target is 7. We also completed during the quarter divestment of Suzhou mill, site divestment, and the internal review that we announced earlier continues on how to create the best conditions for the Paper division to compete under increasing cost pressures and declining market. Look at the strategic targets, where we stand there, both Q4 and full year. First off, look at the growth. We continue to grow and beat the market. For the quarter, it was 4.5% and full year 3.1%. Balance sheet continues to strengthen. If you look at the net debt to operational EBITDA, as well as debt to equity ratios, where we are, below our strategic target levels.
Operational return on capital excluding Beihai was 13% for the full year, reaching the target. Fixed costs remain at 25% level. We continue to work to reduce that. As part of that, we also are announcing a new EUR 50 million program that Kalle mentioned earlier to address the costs also. Divisions, divisional targets, where the targets are return on capital in Packaging Solutions, Biomaterials, Wood Products, Paper, cash flow related. First of all, Consumer Board, excluding Beihai was 30.8% or 36.2% for full year, clearly above the 20% targeted level. Packaging Solutions was below 20%. There we can see the burden of the Varkaus start-up. We expect that to move the right direction now that we are at the final stage at the Varkaus kraftliner mill . Biomaterials, 6.1% for the quarter and 8.5% for the year.
That is a reflection of the historically low hardwood pulp prices. Wood Products, 13.1% for the quarter and 16.8% for the year, slightly below the targeted 18% level. I think we can still summarize and comment that they continue solid performance. I believe that they will also improve going forward. Paper, clearly above the targeted cash flow after investing activities of 7%, both for the quarter and full year. With that, I hand over back to you, Kalle.
Thank you, Seppo. Coming to the guidance for the first quarter of 2017. Sales are estimated to be similar to the amount that we had in Q4 2016. Operating EBIT is expected to be in line with the EUR 191 million recorded in Q4 2016. Operational EBIT estimates include negative impact of the ramp-up of Beihai and the power generator failure at Enocell of EUR 34 million and EUR 7 million respectively. No major scheduled annual maintenance shutdowns in Q1 2017. As I said in the initial slide, Stora Enso will start a profit improvement program targeted to decrease the annual cost by EUR 50 million with a full annualized impact in 2018. Today, the board has also gone out, including the report with a dividend proposal.
The policy is to strive to pay stable dividends linked to the long-term performance, and that is one half of the net profit over a cycle. The dividend proposal that will go to the AGM is EUR 0.37 per share, totaling EUR 292 million. It's a 12% increase versus the dividend of last year. As I said initially, we believe that we are well prepared for 2017 and beyond. 2016 has been a year of transformation. We have strengthened the balance sheet. We have proven once again that we have strong cash generation capabilities. We have a solid performance despite low hardwood pulp prices and the Beihai start-up costs that are coming earlier than expected because we are ahead of the schedule. The low hardwood pulp prices, we believe, have gone, and we are on the stable level.
The question is on how fast they will increase. We are moving away at demonstrating in the releases of this investment that has been popping up recently, like the biocomposite, the wood composite investment in Hylte, as well as the Heinola announced today. We are moving more towards the innovation and sales transformation. Thank you very much for that. With that, I would like to open up for Q&A.
Thank you. If you would like to ask a question, please press star one on your telephone keypad. Please ensure that your mute function on your telephone is switched off to allow your signal to reach our equipment. If you find your question has already been answered, you may remove yourself from the queue by pressing star two. Again, please press star one to ask a question. We will take our first question from Antti Koskivuori from Danske Bank. Please go ahead.
Yes, thank you. I have a few questions. The first one is on the Beihai ramp-up cost. Sorry, I missed that part. You are taking now extra cost on Q4, EUR 5 million or so. Is that also included in your guidance for Q1 of the EUR 34 million? Could you explain that a bit? That'd be the first question. Yeah.
When you ramp up the mill, when you increase the capacity
When you're training the staff, there is a budget to ramp this up, which is 100. The faster you do it, the earlier you get the costs. You understand?
Yes.
Which means that on the total budget, we have constantly taken a cost earlier. It's not that they are becoming more costs, it's just that they're coming earlier because we are ahead of the ramp-up, which is demonstrated in my slide.
All right. The other question, or the follow-up question would be that if you're taking costs earlier now, will that impact to your kind of expected level where you going to be in every quarter in 2017? Or is it just the few quarters that we are seeing here?
Right now, we have taken some extra costs, this quarter we came in by EUR 4 million. That is basically moving EUR 4 million from that.
Yes.
Will it change the EBITDA breakeven? No, but if we constantly do this in the coming quarters during 2017.
Yeah. Okay.
absolutely.
Okay. Very well. The second question on the sales price, on Consumer Board division, if I just do the math, it seems that your average sales price is down EUR 50 per ton since Q1 2016. I was just wondering whether this is purely Beihai impact or whether there is something more behind that decline.
I think you cannot calculate that because you need to understand that we are seasonally low always in Q4.
Yeah.
The other one is the mix. If you remember my slide from the Capital Markets Day.
60% of what we sell is liquid or CKB or food service board.
The very stable prices.
They have multi-year contracts.
Yeah.
30% are FBB.
There we have the majority with fairly stable prices because cigarette is very stable. You have luxury like Tambrite, Performa Brilliance, and those which are focused on very specific segments. Then you have a 10%, which is SBS clubs specialties.
It's more the mix that moves around.
Okay. Basically, yeah, excluding Beihai the pricing picture has been stable.
Absolutely.
All right. Thank you.
You cannot use statistics on FBB on us.
We sell very little commodity FBB.
Yeah. All right. Thank you very much.
Thank you.
The question is from Justin Jordan from Jefferies. Please go ahead. Your line is open.
Thank you, and good afternoon, everyone. I've just got a few quick questions on packaging paper. Appreciate, obviously, Varkaus had a maintenance shut in Q4, but just for 2016 overall, just give us some color. Can you tell us what the total tonnage produced was in calendar 2016?
What was the grade?
Sorry, I was talking about the ramp-up of the Varkaus kraftliner mill.
Okay. That is kraftliner. Okay.
Yeah. Obviously, you're successfully ramping it up. I'm just trying to get some sense of, in calendar 2016 overall, what was the total tonnage produced from the mill?
We've produced 270,000 tons in 2016 and with 73,000 tons, including maintenance in Q4.
Fantastic. Thank you. Just, obviously you're citing lower testliner prices and higher OCC prices within the Paper result in Q4. It's not unusual for anyone who's familiar with the sector, sadly. What's your view on the price increases that are currently being announced by peers for testliner and kraftliner for spring 2017?
You're absolutely right. Testliner declined during the second half of 2016. Absolutely right. Kraftliner, there has been a decline in the first, but have been stable for the rest of the year on a low level. However, if we look in for kraftliner, we believe that the prices will go up in the first quarter of 2017. However, we have not calculated any effect on kraftliner because of what happened in Pensacola. We don't know that. That's 500,000 tons gone out of the market, and we don't know when it's coming back.
Okay. Just with regard to the Ostrołęka study that you're doing, potentially expanding that mill, can you just give us a timeline to when you might be in a position to take a decision and communicate that with us?
It's going to be in Q1. It's a bit delayed.
Okay. All right. Just very quickly, just on fine materials, obviously prices have been falling in Q4, in recent weeks, big prices seem to be relatively stable and if anything, potentially going up in 2017. I don't know if you have a view on pulp prices in Q1 2017.
Yes, we do have a lot of views on that. I think, first of all, you have to understand, when you raise prices, it takes about a quarter to get them through the system, right?
Mm-hmm. Yeah. Sure.
If I take hardwood pulp, Europe, we believe it's stable year-over-year, we believe slightly higher. The question here is what is slightly and how fast can it go?
Sure.
The other one is that you have to remember that in hardwood in China, it is a slightly stronger demand, and it's higher. However, we only sell like 30%-ish in China. Most of it is going into Europe. The other thing is you have to keep in mind when you think about hardwood pulp, is that by selling off some of the entities like Kabel and other mills, Arapoti, we are getting longer in hardwood pulp and in pulp in total. In Q3, we said that we were basically 1.9 million tons long on an annual basis. We've now gone up to 2.1 because we have divested, and closed down, including Suzhou. You understand?
Yes. Okay. Just one final question. The new EUR 50 million cost-saving target you've announced, is that in addition to what you might do within the paper division review, or does that encompass potential closure?
This is a EUR 50 million across all division, all staff functions, because the macro right now, and you see it in the currency movement, you see it, you have elections in France, you have no government in Italy, you are having a Brexit thing happening, you have a potential trade conflict between U.S. and China. We are just being cautious. This is irrespective of that.
Sorry, just on there, it includes potential capacity closures?
No.
Okay. That would be potentially in addition to that EUR 50 million.
If these things would happen.
Quite. Yes, indeed. Thank you.
We will take our next question from Harri Taittonen from Nordea. Please go ahead. Your line is open.
Yes, good afternoon. Can you say something about the sort of overall cost inflation? Some of your peers have sort of indicated the end of the sort of deflationary era. What are you seeing in the main cost items on a sort of like for like basis?
Yeah, it's Seppo here. Hi, Harri.
Hi.
In general, I would say that the cost pressures are not high. It's rather flat going forward as far as we can see at the moment.
Okay.
We expect variable costs to be largely stable with different input costs in 2017, but in sort of all over, it comes out flat.
Yes. Okay, great. Another one, sort of quick. You talked about the pulp price and-
I understand what you mean and that is also a reason why we are doing the EUR 50 million.
Yes. On the pulp, as you sort of raised that impact on a sort of year-on-year basis, but did you see sort of a sequential change or impact in the same way? Because we all know that sort of short fiber prices came down already quite early last year, sort of during the spring. That's why asking whether you had a sort of sequential negative in your books in Q4 still from pulp.
No. They have been low. It is not gone down really, but they have not come up, especially not in Europe.
I think that expectation was that it is going to go faster, but it seems to be harder, hence I think they are going to go up, both in China as well as in Europe, I am not sure how fast it is going to be. I am a bit cautious about that.
Okay. Then the sort of final, Antti already asked about this, about Beihai, but if it is really in a kind of broad terms or sort of simple terms, ask if you have the target of still going towards the EBITDA breakeven in Q1 2018. How sort of stable or steady trend do you see towards the breakeven point? Is there some sort of step kind of change, or is there something you know that sort of one of the quarters is different?
Step change in the first quarter that we need. I will not go into them because I would rather tell them when we pass them. Right now I feel good. I feel very proud of the team in China.
Related to that, there's been some concern about price increases announced by the local players, hasn't there? Have you seen sort of any kind of tightening in the market, or sort of which would be improving your possibilities to get the product out to the customers?
The Beihai mill is focusing on three grades, which is the end game. CKB-
Yeah. Liquid and food service board. We are launching like a simple noodle cup already, and we are working on it. I feel that the market in China, for various reasons, is probably going to appreciate this and now it's a sign that high quality you can charge more for. I'm seeing those movements, and I'm happy with them. We are not really, so to say, in the area where we should be. We are still moving from basically trials to standard folding boxboard when we are training up the people and then qualifying the liquid customers and CKB and the more advanced food service boards.
All right. Got you. Many thanks.
Thank you.
Our next question is from Robin Santavirta from Carnegie. Please go ahead. Your line is open.
Thank you very much. A couple of questions from me. First of all, could you comment what's the production run rate at Beihai now when we start the year and what's the delivery run rate?
Run rate, I can give you because we made 140,000 tons last year, and we delivered about 110,000, 111,000. Obviously if you take that and draw a line from basically nothing in Q2, it's basically happening most of this run rate is coming in late Q3 and during Q4.
Right. It must then be so that because then your sort of run rates are quite high, if it's so that the grades you sell now sort of the pricing is much, much lower than what you sort of aim at later on because your EBIT run rate is EUR 160 million negative a year.
Yes. That's also the ramp up, the repulp and all that. I think when we get into the second half of 2017 this will be more interesting to talk about because it has been mostly checking grade FBB.
Also you have to remember that in the production with the ramp up, you have short production runs when you are doing production for qualifications. That means that the efficiencies, et cetera, are not necessarily always the best.
December was a special month.
Yeah.
I understand and probably some other extra cost related to the ramp up. Regarding the EUR 50 million cost-cutting program, can you share any other details, sort of what division, what measures and some timelines regarding that?
It's everybody. It's focused on fixed costs and staff functions.
Thanks. Related to CapEx, now what is included? Could you divide that figure you guide for 2017 into smaller pieces of the maintenance and growth investments potentially also Larsson, just so we understand what is included in that?
It's basically what you had in Capital Markets Day.
The maintenance CapEx typically is, like we have said, about EUR 200 million.
Yes.
Plus, minus.
Yes.
That, for instance, all the new CapEx projects that we have announced, including Heinola Fluting Mill investment this morning, it's all included in the guidance. As you remember from the Capital Markets Day, we still have some unallocated included.
Yes
in this EUR 600 million, EUR 650 million. It's totally aligned with our previous communication.
Good. Thank you very much.
As a reminder, please press star one to ask a question. We will take our next question from Kevin Hellgardt from Goldman Sachs. Please go ahead.
Good afternoon. I was just wondering if you could maybe add something. Can you give us a feel for how big the step down in Capex or in maintenance shutdowns is Q1 2017 versus Q4 2016?
Yeah, it's Seppo. Maybe I can take that. If you look at the maintenance effect in Q1 2017 versus Q4 2016, it's EUR 38 million less.
Okay.
you have to remember that year-over-year, it's flat.
No, that's fine. It's just to get a feel for the
Yeah.
For the quarter-over-quarter effect.
In the maintenance cycle.
Okay. Yeah, no, thank you very much.
We will take our next question from Linus Larsson from SEB. Please go ahead.
Yes, thank you very much, and good afternoon to everyone. If I may continue on the previous question on your assumptions for your first quarter guidance. Given the big tailwind that you have on maintenance costs, which are the big negative factors that you're assuming Q1 on Q4, please?
First of all, you have a seasonally volume-wise weaker paper. You can see in the volumes year-over-year. We have basically the other negative, which is the Enocell, which is five. You have Beihai minus, I think it's 13. Year-on-year. Yeah. I mean sequentially. Sequentially down with Cartwright.
Four better.
Four better.
Then you're coming back, what is happening with pulp prices? I think it's going to take longer before the European, where we sell most of our things, is going to pick up.
If you look at normal seasonality and previous years, typically Q4 and Q1 are flat. It's just that we are at a lower level now, mainly due to the lower pulp prices compared to year-over-year.
The question is, when will it pick up?
Your planning assumption for pulp pricing is flat, it sounds like, if you look sequentially Q1 on Q4, then?
Yes.
Mm-hmm. Then presumably, Consumer Board has a stronger seasonality. I would expect better volumes in Consumer Board in the first quarter compared to the fourth quarter?
Yes.
Then you have the additional shutdown of Varkaus because of changing the equipment that we announced at the Capital Markets Day , that we couldn't fit in because of the lead times into the maintenance that we had in Q4 for Varkaus.
Okay, that is not part of the CapEx guidance that you gave in the EUR 38?
Yes.
Is it inside the EUR 38?
Yes.
Okay. Yeah, it looks like a pretty cautious guidance statement. What do you expect for currency, for instance? Do you have any delta on currency Q1 on Q4?
Well, just looking at in total picture in Q4, year-over-year, the positive from currencies was about EUR 20 million. If you look at the full year 2017, we expect some EUR 60 million better improvement coming from the currencies. The positive on the result. There is some in Q1, nothing significant in the big picture.
If you look what have happened in the recent days, it's quite volatile.
Yeah.
Mm-hmm. Are you planning for lower paper prices Q1 on Q4?
We are in negotiations. Which means that we expect them to be stable.
Okay. All right.
I think it's also we are basically non-existing in the coated mechanical grades after what have happened with our asset base.
Right. Okay. On Varkaus, just finally, if I may. How much potential is there still left in Varkaus? What was the contribution in the fourth quarter, and how much better can it get gradually during 2017, do you think?
We have said the following. We were EBITDA breakeven in Q3. We had a maintenance in Q4. We are changing some equipment, and we are expecting to be EBIT breakeven in Q2. You will get towards what we announced previously of the end result of Varkaus.
Okay. There's still quite a bit of potential there?
Yes.
That's great. Thank you very much.
We will take our next question from Alexander Kekk from J.P. Morgan. Please go ahead.
Hi, good afternoon, everyone. Thanks very much. Just looking at Varkaus kraftliner. Would you be able to give a rough estimate of the split between sales going to the European market versus exports out of the European market? Just given your expectations around where kraftliner prices in Europe are going, would you expect to see or to move some of that product that you're currently exporting back into Europe in 2017?
We don't disclose, but what we think is the demand will be stable, and we see slightly higher prices for kraftliner. The only thing, as I said to previous, was that we don't really know the impact of the Pensacola 500,000 ton mill.
Okay. All right. Thanks.
As a reminder, please press star one to ask a question. There are no questions at this time.
Okay, we will close the phone here. Thank you, everybody, for listening in. Kalle, do you want to say some final words?
No. I would like to thank you all. We feel that we are well prepared for 2017 and beyond. Even though it's a rough macro, I think we are a lot better prepared for 2017 than we were for 2016. Thank you very much.
Thank you.
Appreciate you spending your time with us.
This concludes today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.