Good day, and welcome to the Stora Enzo Q3 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ula Payanun, Head of Investor Relations. Please go ahead. Okay.
Thank you, Odell. Please welcome everybody to the Q3 earnings call of Stora Enso. And I have here with me our CEO, Carsten Sjundstrom and Sveppo Barvi. And Carle will start the presentation and then Sveppo will follow numbers. Please go ahead, Karl.
Thank you, everybody, and good morning or good afternoon wherever you are in the world. So I would like just to make sure that we are all on the same page. We had a preannouncement the October 12, and we are reiterating the same message as we did there. So it is a sale of around SEK2.5 billion basically flat versus a year ago. However, if you do take away the Corenso divested business and the structure declining paper, we are actually growing with almost 5%.
That is obviously mainly coming from Montes De Plata, our part of our joint venture in Uruguay, but also in Consumer Board. Operational EBIT increased by over 17% to $246,000,000 It's a margin increase to 9.8%, almost 10% in EBIT margin, and it's very much driven by the strong performance in our Biomaterials divisions. I also would like to point out that maintenance costs were about €13,000,000 higher than we indicated at the end of Q2, and we had an impact between EUR5 million and EUR7 million of the strike in Finland. We continued the second quarter in a row with a strong cash flow and we managed to reduce our net debt to EBITDA to 2.5 times from 2.8 a year ago and actually from 2.7 a quarter ago. So cash flow is continuing.
If you go to the next slide, you can actually see in a sequential perspective that the profit improvement in the quarter is basically all coming from biomaterials. Of that 41%, roughly 50% is coming from Veracel supported by depreciation of the Brazilian real. And then 25% of that 41% is coming from the performance of Montes Del Plata and 25% is coming from the performance of our Nordic mills, who has been doing extremely well. I also would like to comment that the sequential increase in Consumer Board is $2,000,000 And then you have to take into consideration of those 13,000,000 in higher maintenance costs, roughly around CHF 5,000,000 is coming from Consumer Board, but also about CHF 2,000,000 from the strike. So the underlying results of Consumer Board is slightly better.
The Packaging Solutions, we have to remember here that $8,000,000 in the sequential is coming from the Warkaus, which was headed was handed over to Packaging Solution in the month of August, that's about CHF8 million that we described in the report. And in there is also a capital loss of selling our unit in Hungary. As you can see, paper had a challenging quarter and basically went down CHF6 million. It's driven by two things, the strike in Finland, the price and slightly higher maintenance costs. If you then go to the next slide, you can see our journey of our operational return on capital employed since 2012.
We have continuously improved the return on capital employed, excluding and including our strategic investments. So you can see now, we are getting to 11.6% excluding the Guangxi project and just above 13% when we exclude the Guangxi project, which indicates we're on the right track of reaching our strategic targets. So what have we done in the last couple of quarters? We have got Mantes Del Plata up and running. That's the main driver behind our growth.
The Murrow sawmill is supporting the profitable growth in sawmilling. We've got the Sunilabayo refinery coming up in the 2015. We had a Virdi acquisition in 2014. The Imatra debottlenecking was ready as planned in the 1635, sorry. And I'm very, very happy today to announce that the production in Warkaus is up and running.
We have already produced a couple of thousand tonnes of sellable quality, which is an astonished achievement of the team in Warkaus. So what do we have in progress? Yes, we have the Gwansi mill being according to plan, will be ready mid-twenty sixteen. We have Wood Products, the second investment at the Warkaus mill to start to produce wooden building elements, which will be ready in the 2016. And then we have the biomaterials lost part of the payment for the Vildy acquisition, while we have the Solos demonstration plant up and running, which will be in early twenty seventeen.
The Guangxi mill is moving ahead very, very fast. It's less than a year ago when we started the piling, and we are now being at this stage. As you can see here on the slide, building where actually at the moment part of the board machine is being installed. And it's all proceeding according to plan despite having a heavy monsoon a few weeks ago. The transformation journey continues.
And as if you look upon the sales, the top line, so from being 30% of non paper sales in 02/2006, We have now in the third quarter twenty fifteen reached 64%. On the EBIT line, we've gone from 38 to 97%. We did have a bit of a challenging result in paper in this quarter, partly as I explained, because of price, maintenance and partly of the Finnish strike being down to 3%, which means that 97% of our profits are coming from the growth areas. With that, I would like to hand over to Seppo to go through the financials in a little bit more detail.
Thank you very much. Thank you, Karl. So I started some key figures and financials on this page. And like Karl already said, sales at €2,500,000,000 flat year on year. But the best to note is that sales excluding structurally declining paper and divestments went up 4.9%.
EBITDA margin reached 14.1%. That's by the way highest I have seen during my lifetime in the company. Therefore, how likely? Yes, ZEPTO. And that's a nice and great improvement.
It's almost one percentage point up compared to year ago and almost two percentage points up compared to Q2 this year. Operational EBIT at €246,000,000 17% improvement compared to year ago. EPS zero one six euros and operational return on capital employed reached 13.1%, while when we exclude the burden of Guangxi, including that our return on capital employed was 11.6%, a significant improvement compared to a year ago when it was 9.7%. And net debt to last twelve months of pressure EBITDA at 2.5% compared to a year ago at 2.8. Then moving forward to next page, where we have a breakdown of the foreign exchange impact by division.
Like in the previous quarters also, we can see that the impact is by far largest in the Biomaterials division, where it was almost €40,000,000 for the quarter. Net impact in the quarter was 59 sorry, excuse me, 57,000,000 in Q3, plus €59,000,000 in Q2 year on year. And important to note is that it's very much if you look at year on year driven by U. S. Dollar and Brazilian real.
And during the past quarter very much by Brazilian real that devalued during the quarter by 30%. Moving forward to next page where we have a summary of the sensitivities in different items. As a new item there we have added sensitivity of Brazilian real. And if there's a 10% strengthen against euro in the value of the Brazilian real that has an impact of €10,000,000 negative. Otherwise, if you look at the table, are no major changes.
But I would like to highlight the 10% FX on market pulp on our result, which is €125,000,000 which I think is less than many people normally expect and speculate. So it's worth to notice that we are not so sensitive, even though that we have a long position in pulp. Then on the following page, we have debt maturity profile and we have been working on prolonging the maturity structure profile. You might remember we issued ten and twelve year bonds in total €150,000,000 earlier this year and that prolonged the maturity structure. And we have also reduced average interest rate from earlier 4.7% to 4.4%.
And like mentioned below the table, our average maturity has prolonged five point four years and is now four point three years. Then some comments of the performance of different divisions and I start with Consumer Board, where our sales increased by a bit over 4% due to increased volumes in foodservice and general packaging. Operational EBIT decreased by €15,000,000 mainly due to higher pulp and chemical costs that affected about €5,000,000 And like we already communicated in the previous quarter, Guangxi project is having an effect about €10,000,000 a quarter as additional cost and that is of course seen in the comparable figures compared to previous year. We have to note that, operational EBIT excluding Guangxi project was about €88,000,000 And operational return on capital at 16% and excluding Guangxi at 30%. And just to remind that in Q4, we have scheduled maintenance at Fors and Skookhal Mills.
Then moving to Packaging Solutions, where sales decreased 18% year on year, but here we have to remember that divestment of Corenso had an effect and actually excluding Corenso divestment effect sales remained unchanged year on year. Operational EBIT was down €17,000,000 but again it's affected by Corenso, which had an effect of €10,000,000 as well as Warkaus project conversion of the paper machine to kraftliner had a negative effect of €8,000,000 in the quarter and divestment of Comoran mill in Hungary €4,000,000 which of course temporary issues or topics. So taking those into account, we can also see positive underlying trend in the business there. And like Carlos said already, we are now already producing in Atwatercols, which is a great achievement and well done. Maintenance in Q4 at Einova mill plant.
Then moving to biomaterials, the sales increased by 38% due to And operational EBIT went up €76,000,000 thanks to Montes De Plata, efficiencies improving, volumes going up there as well. FX driven by both U. S. Dollar and Brazilian real development.
And also we had good performance in our mills in Nordic countries. And also higher hardwood pulp prices helped the performance there. And also important to note is the operational return on capital improved to 15.5% and meeting our strategic target for the biomaterials division. And in Q4, we have maintenance going on at Skutsar Mill that actually started already in Q3, but continues now in Q4. And Sudiva Pulp Mill will have the annual maintenance stop during the quarter.
Then looking at the Wood Products, where our profitability improved even though that sales declined by 12%, mainly as a result of the lower volumes in North African and Middle Eastern export markets. It's very positive news and I think a proof point of the improved performance of the division that our operational EBIT remained stable at €22,000,000 And that is thanks to the fact that lower sales prices and volumes were compensated by reduced costs. And operational return on capital at 17.5%, very close to our strategic target of 18%. Then finally data, where good cash flow continued. Sales declined by 5% due to lower sales prices and operating EBITDA decreased as well due to the sales price development and higher pulp costs.
But the good news is and this is very important for us as a group that the cash flow after investing activities for sales improved actually from 4.5% to 9.2% due to improved working capital. And that's just is again proving the fact that the performance in paper is good cash flow wise and meeting again our strategic target of 7%. In Q4, there will be maintenance at Nyumola Mill and it's good to notice that the maintenance impact is expected to be €20,000,000 lower in Q4 compared to Q3 this year. Then capital expenditure for full year where we had changed the forecast up a bit from the previously forecasted EUR820 million to EUR880 million range to EUR940 million to EUR970 million and it's driven by Varkaus and Guangxi projects, their capitalization and the phasing of the capital expenditure payments has been faster than we have previously estimated. Important to note is that the total CapEx extended for these projects remains unchanged.
So it's more an issue of phasing and timeline when it comes to cash flow payment of the CapEx. And just a reminder that this forecast includes about €90,000,000 CapEx for biological assets. Then some news on forest valuation that we also came out this morning, which is an issue for Q4, but it's such an important and big change that it's something we wanted and need to flag already now. And there is an approximately I think there is a printing mistake actually here. It's a €435,000,000 it's correct, increase in the fair value for our part.
And it's due to the fact that in Paradigm Skog where we have 49% ownership, that has been decreased from 6.25% to 5.2%. And that will be recorded in IFRS operating profit in Q4, but it does not affect our operational EBIT that we report. And then comments on the strategic targets. Q3 follow-up, like we have promised earlier, continue to follow and track how we are doing compared to our strategic targets. And first of all, growth excluding paper at 4.9%, it was 4.8% in Q2.
That is sort of meeting our target. Also, like I already commented earlier, net debt to EBITDA at 2.5%, that is again meeting the target. Where we still need to work is fixed cost net sales where we are 25% compared to target of 20%. And this is of course something we are working on every day with the continuous improvement actions, but also top line growth that we are targeting is of course important to improve this ratio. Debt to equity reduced to 66%, which continues to be below our target of 80% and our personal return on capital at 11.6% and excluding Guangxi is actually meeting our target of 13% and was standing at 13.1%.
Then divisions, where for the divisions with exception of paper, we have operational return on operating capital as a target level. In Consumer Board, we stand at 16.4%, which is slightly below 20% target level. But like I said earlier, excluding Guangxi burden, we are already at 30% level. Packaging Solutions at 8.7%, which is below 20% target and actually also lower than in Q2. But there we have to remember the effect of Warkau's conversion in the figures of the division as well as the effect of the divestment in Hungary that we made.
Biomaterials meeting the target of 15% and Wood Products at 17.5%, which is actually more or less at the same level as the target 18%. And paid overachieving the cash flow after investing activities to sales target of 7% and standing at 9%. Then about the guidance for Q4 and that we are reconfirming what we thought already earlier last week to the market. So Q4 sales are estimated to be similar to amount of €2,500,000,000 reported in Q3. And operational EBIT is expected to be in line with the €246,000,000 recorded in the 2015.
And as a reminder that maintenance impact is expected to be €40,000,000 lower in the fourth quarter compared to the third quarter. Then over to you, Karl. Yes. As a summary,
I would like to highlight, sales excluding divested businesses and the declining paper grew nearly 5%, an improvement on operational EBIT of 17%, continued strengthening the balance sheet and ending up with a net debt to EBITDA of 2.5 times. The transformation continues. Kraftliner production has started in Warkaus. The Warkaus wood product investment will be ready in Q2 twenty sixteen and the Guangxi project ready by mid-twenty sixteen. And with that, I hand over for questions.
Thank you, sir. Our first question comes from Lars Kjellberg from Credit Suisse. Please go ahead caller. Your line is open.
Thank you. Good afternoon. I had a couple of questions. Starting where we ended with Wagaus, how do you see that progressing? It seems as if you've, as you put it very fortunately started this one a bit earlier than expected.
So what sort of volumes do you see in the balance of this current year and run rate in 2016? And when do you expect Warkaus to breakeven, if I start there?
So first of all, it just started a few days ago, and that produced a couple of thousand tons. The quality is of sellable quality. And I think that has to do with the experience of the crew. They've been making paper for a long period and they are very enthusiastic about the new life of the mill. We are trying to ramp as fast as we can.
And I think usually, it's eighteen to twenty four months to ramp up the mill to the highest yield. And that's what we said and that's what we stand for. And it will contribute to profit already in 2016. That's what we have said. And we haven't gone into the breakeven details.
Okay. If you're looking at the very considerable profits now generated in pulp, and I recall from the Investor Day you had in London that you said you did not really anticipate any maybe outside the China project, but other big investments in pulp. Where do you stand on pulp now? How do you think about pulp being now 40% plus of your EBIT? Is that a view that you share that it's a sustainable level of EBIT and margins as you're now at your target?
And would you consider to invest more in pulp? And also, of course, with that backdrop, how do you view the China prospective pulp mill? Yea, you're nay to that one.
To be very honest, Lars, I didn't think we could reach the targeted 15% this fast. Think if we take the three pieces, I'm very happy with the differentiation strategy we have had with the Nordic pulp mills to turn them into something that is slightly different than just commodity pulp. So that I'm happy with. And I think that has paid off. When it comes to Montes del Plata, I think they are ramping up better than expected.
They're getting a lot of the processes fine tuned, the wood consumptions and so forth. So that is but the big help out of the Vera sale, which is coming basically two ways. It's the dollar euro plus the dollar reais. I think over a longer time since Brazil is a main producer of hardwood pulp in the world, this might affect end price. And I know it's a lot of capacity coming on stream.
So I probably if I would consider any investments, it's probably more in specialized pulp and not a big pulp project. And if you're coming to the big Phase two in China, we have to repeat that we will not take this any proposal, because we don't have any authorization to the Board until I get that machine up and running and ramping. So that's where I am on that one.
That's fine. Just three more quicker questions, suppose. First one on the significant impact or increase in capacity in folding box boards that's coming in Europe starting with Metzaboard, Kotka Mills and various other things, including your own eMatra and what Bitterroot is doing in Fervi. How do you see that market playing out? Clearly, U.
S. Competitors based in The U. S. That is voicing some concerns already about product coming from Europe into The U. S.
How do you see this playing out in the European context?
I think what we are actually focusing on is to be a very strong player in basically three board rates. One is liquid packaging board. The other one is foodservice board. And the third one is what you call CUK and I would call CKB. That's the volume areas where we are focusing on.
Then in SBS, we are focusing on some of the premium segments and we do the same in some of the what I would call the folding boxboard. We are not going into the general area of folding boxboard. We are trying to stay in the segments where we are relevant. Did that answer your question?
Sure. Just two technical ones related to SEPO. I guess the very good profitability is generating some tax benefits. Can you share with us what do you think for the tax rate in the fourth quarter and what we should view the tax rate as normalized? And also on the working capital side, of course, you are releasing quite a bit of working capital.
Where do you see this ending up relative to revenues?
First of all, on the tax rate, Leyte, Lars, for this year we expect that the standard and effective tax rate will be around 20%. And when it comes to working capital and the FX there, we continue to aim and target to come down towards 12% level. That's what we said also earlier. And we see that their potential to go there. So we think that there's still way to go.
There's of course seasonality between the quarters, particularly working capital goes down towards end of the year. But I cannot really be more specific than that.
Very good. Thank you.
Thank you. We'll now take our next question from Linus Larsson from SEB. Please go ahead. Caller, your line is open.
Thank you very much and good afternoon to everyone. First question on Guangxi. What's the situation in terms of permits at Guangxi? Are all permits in place at this stage?
All permits in place.
But there's nothing preventing you to start up at any point as you would wish?
Well, except for yes, of course, normal proceeds is that when you start the production, then you need to get the final approval. Final approval, but nothing abnormal or something that would be pending as such. It's just normal proceeds that you go through in every country.
But those final permits, what does that imply? Could those entail delays? What are the prices?
No, we don't see that.
Okay. Then on the Vaikos project, could you just maybe talk a bit more about that? So there was an €8,000,000 negative impact in the third quarter as we move into the fourth quarter. You sound pretty optimistic. But should we expect that to be fully reversed or partly reversed or more than fully reversed?
Or what's the expectation from your side issue? And especially, what's baked into your guidance when you talk about the group guidance in that respect? Yes.
Is baked into it that you will have some of that in there, and it will be partly compensated by selling the early part of the production, which already on the second time, we're being sellable. So far, it's looking good, but some of that will continue into the fourth quarter, yes.
Okay. That's very clear. And on the CapEx guidance, so for timing reasons, if I understand you're right, you are hiking your CapEx for 2015. Could you maybe say something against the backdrop about 2016 CapEx?
No, not really. As you know, no levers we give guidance in connection to full year results. But what they also stated earlier in the calls and also in the Capital Markets Day is that we expect capital expenditure to start to come down gradually towards the depreciation levels.
But are you saying so it will be higher than depreciation next year?
No. So what we have said, Lignos, is that we have a long term, and we said that very clearly in the capital market. To over time and already next year reducing the CapEx and getting towards the depreciation level. But it will obviously, we have not given guidance go in one go. So investment next year will be lower than this year and the aim is to bring them down towards more in line with the depreciation.
But you're not at this stage committing to capital?
No, have not. We are right in the budgeting process.
Okay. And then just finally, if you could repeat, I think you already said something about the strike costs, what how big were the strike costs in Q3? And if you could just repeat how it was spread? I missed that part of
the question. I gave it so it's in the release, the strike costs is 5,000,000 to $7,000,000 I gave it an impact of about $2,000,000 in Consumer Board. And then I indicated a value without saying one for paper.
Okay, that's fair enough.
And the problem is usually a bit because when it's an integrate, you lose three days for one day strike.
Yes, yes. No, that's great.
Thanks for clarifying that. Thanks.
No problem.
Thank you. We'll now take our next question from Tom Burton from Bank of America Merrill Lynch. Please go ahead. Your line is open.
Hi, good afternoon, everyone. Thanks for taking my questions. I just had two questions, please. The first is on the Consumer Board side. I wonder if you could talk a little bit more about the pricing environment in Europe in that segment.
You obviously announced the EUR 65 a tonne price increase. I just noticed yesterday, I think it was one of your larger competitors. The CEO said that he didn't think price increases were likely to be successful in that segment due to the capacity growth coming online. Are you still confident in getting that price increase in November? And then just as a second part to that.
I what it
would like to say,
when you say competitor, is that a competitor competing with us in liquid, foodservice or CUK?
It's on the liquid board side, I believe.
Okay. So we believe that the pricing is going to be stable in the basket for the whole Consumer Board quarter on quarter for us.
And then the second question was on the group level EBIT performance. On a I wonder if it's possible to get a constant currency growth basis. If you because looking across the divisions, if you were to strip out the FX benefits in biomaterials, if that's possible, it looks like underlying constant currency EBIT would have been down across the group ex FX, is that correct?
We have a text, which I put in, because I don't think you can talk about constant currency in some of these things. We are a euro based company and Krona based company. We do sell in certain commodities in U. S. Dollars, for example.
But that is obviously linked to the cost structure that we're having. So I think it's important to keep that in mind, because you cannot separate price from currency. They are very, very linked. And also important to note is if you look at
Biomaterials division, both performance and sales figure that compared to Q3 last year Montes De Plata pulp is ramping up, volumes are increasing, hardwood pulp prices are higher than a year ago and efficiencies at the pulp mill are improving continuously.
Okay. Thank you very much.
I did give you some guidance about it, because of the 41,000,000 that is coming out of 50% I said was coming out of Veracel. And in that basket, there is a performance, yes, but also big currency. And the other 50% of the 41% on my Slide number two is actually divided by Montes Del Plata improvement and the improvement in the Nordic mills.
Okay, that's clear. Thank you.
Thank you. We'll now take our next question from Cole Hafon from Jefferies. Please go ahead, caller. Your line is open.
Good afternoon. Could you give a little bit of guidance on the kraftliner ramp ups with next year people a little bit concerned about kraftliner prices? I'm just wondering to think how you're going to be ramping up with price in mind in kraftliner?
So in kraftliner, if you're talking about the Waggaon, we are handling this in a very responsible manner. And you have to remember, the kraftliner we're in is high quality kraftliner. And a lot of those customers, almost somewhere between 70 to 80, we are already dealing with through the floating business we're having in. So we have been talking to them for a long period. And we are replacing a lot of imported with not the same quality.
So even in a thing like you might sounds like a very commodity, it is a huge difference between kraftliner and kraftliner.
Sure. But you would expect broadly stable kraftliner prices next year even with your ramp up of Yes. And then the next question I've got is on FX. Can I just confirm that €57,000,000 you talked about that's pre FX hedges, correct?
If you think of the report, it's because that is the net FX in the profit and loss.
Net FX.
After the hedges.
Yes. Thank you very much.
Thank you. We'll now take our next question from Michael Doppel from Handelsbanking. Please go ahead. Your line is open.
Thank you. Good afternoon, everybody. Most of my questions have already been answered, but one question still. In terms of the paper pricing, there are some talks out there in the market of some hikes in newsprint and other grades going into 2016. What's your take on that?
On the paper, we think in general that it's sequentially is going to be kind of stable, but it's not the prices we had last year. And I don't want to go into grades.
Do you dare to take a peek into 2016?
No. I work with paper and so does here. We basically have reviewed the next quarter. This was my old division and I wish I could have a longer term, but it is so many factors moving around.
Thank you.
Thank you. We'll now take our next question from Harry Tantonen from Nordea. Please go ahead. Your line is open.
Yes, thank you. Good afternoon. First question on is just to confirm on the FX impact that you see in the financial line, the €43,000,000 negative item. So that's basically no cash impact there. So also looking at from the cash flow side of things, the financials were a bit sort of higher cost than in previous quarters.
Yes, Hari, that is correct. It's mainly coming from revaluation of U. S. Dollar based loans in Brazil.
Exactly. So basically, the fact that the cash financial item was a bit higher this quarter, it's just a question of basically timing.
The big pond that we purchased back from the market, the pattern cash flow.
Excellent. Okay. The sort
of the Chinese, the harvesting costs, now you are resuming you're back to the normal after the sort of the changes you made in the previous quarter. But could you sort of confirm that? And then also like what sort of benefit in the cost do you have now compared to the to before the automatization and the harvesting over there?
So the we are now getting close to 70% optimization in the harvesting. And we are driving it even further up during next year. And this is a very important part for us because it's such a big cost element. So this is 100% focus of the whole Forest group in the Guangxi. So we are working on it, yes.
Okay. Excellent. Sort of the last question, I know it's a bit sort of far away and you probably don't want to sort of go into specifics. But given that there's obviously a lot of sort of uncertainty on the Chinese market over the longer term and with the capacity addition you are sort of implementing there. I mean, just get a feel of what sort of offtake or sort of understanding or sort of volume sort of commitments there are currently existing that you can base on rather than sort of selling onto the markets?
Okay. So first of all, China has slowed down its growth, yes. But we are still talking just below 6% in the latest report, which is for that kind of economy enormous if we compare to what ever I see in Europe or even in The U. S. So it's still growth.
I think for me, it's actually the most important part in China is how is the middle class development in China, because the products we are aiming at and the one the customers that we have worked with, that's their selling group. And so far, I haven't seen anything changing that.
Perfect. Thank you very much.
Thank you, Harry.
Thank you. We'll now take our next question from Steven Benson from Goldman Sachs. Please go ahead, caller. Your line is open.
Hi, there. I just had a couple of questions around the Warkhouse expansion. So have you disclosed at all, how much of your volume is actually contracted to customers over the ramp up or once you're finally ramped up? Or are you pushing this into some kind of spot market?
I tried to answer that before. So somewhere between 70% to 80% of the customers we are targeting are actually customers that we're already doing business in the fluting business from Hainanlar.
And about 10% to 15% we plan to use internally. And
we have some contracts, but we haven't really because we need to show that we have the right quality. And as I said earlier, Tambu rule number two was of sellable quality.
Okay. And secondly, you push this volume into the market and you displace imports. Where will those imports go? Do you think and maybe it's a bit of a philosophical question here, but where do you think that that import volume will have to go? I mean, who or are they just going to have to close?
I don't know that. I also tried to make a point earlier. This is top quality kraftliner, which is very much sought after. So we feel good for this and this was not really available in the So I think we are sitting in a very good position.
But I don't know where it's going to happen to it.
Where does the majority of the import come from at the moment?
It's coming from U. S. As well as from Australasia.
Okay, thanks.
You.
One last question.
Thank you. Our next question comes from Michael Pfaff from Kepler Cheuvreux. Please go ahead. Your line is open.
Yes, I have a question regarding the paper market. I mean, if I remember correctly, you curtailed some 10% of your capacity in Q2. This quarter, it's 7% of the capacity. How do you see that market developing given that your sort of outlook and then your visibility is rather short as you point out?
Can you Michael, was were you referring to the paper production?
Yes. I was referring to shouldn't you really try to take out some capacity from the market instead of having a lot of idle capacity? And basically your view on that, I know that you cannot sort of give a direct comment, but for how long would it be suitable to just have machines idled?
Yeah. So paper production was curtailed as you said 7%. And that I agree with you. If the market continues as it does, we will have to take actions like we have done previously. So don't worry that we wouldn't be responsible in what to do.
That we will do. But I can't go any closer into that as you understand, but we will take what we need to do.
Okay. Fully understand. Many thanks.
Thank you.
I would like to turn the call back to the presenters for any further remarks.
No, I just want to thank everybody for joining this call. And I thank you for the good questions. And I wish you a very nice weekend. Bye bye. Thank you.
This will conclude today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.