Good afternoon from Helsinki, and welcome to Nokian Tyres Q2 2024 Results Conference Call. My name is Päivi Antola. I'm heading the investor relations in Nokian Tyres, and together in this call, I have Jukka Moisio, the President and CEO of the company, and Niko Haavisto, the CFO. As usual, in this call, we will go through the results and, talk about some other topics as well, and, these will be presented by Jukka and, and Niko, followed by a Q&A. So Jukka, the floor is yours.
Thank you, Päivi. Welcome on my behalf, and indeed, we'll talk about the results and some of the recent highlights that have happened in the company. But we will go through the presentation. I go through the presentation called Improved Tire Availability, Driving Sales Growth in a Challenging Environment, dated on July 19. And I move to page one, which is the Romanian factory in progress. And we reported on July 1, that the first tire was manufactured at the Oradea factory in Romania. We want to remind that the commercial production is expected to start in early 2025. However, the 60-member launch team has been trained in Finland, and they are now ready to start the preparations for the commercial production.
We are also saying that the investment is on budget, in budget and on schedule, and indeed, this is the first zero CO2 emission tire factory in the world. So in that sense, we are making history. You'll see the team, and you'll see also the first tire made in Romania on page two. Then I move to page three, which is just an aerial picture of the Romanian factory, the site in June 2024. On the left-hand side, you see the mixing building, which is being prepared right now. You see in the middle, the production building, and also on the right-hand side, the small office, which is part of the production building, and then on the right-hand side, finished goods warehouse.
As you see, at the end of June, the site has been prepared, the buildings are being prepared, and we are very much on schedule to have the ribbon cutting in September and then to have the full commercial production in early 2025. I move to page four, which is a similar aerial picture of our factory in the U.S. Dayton, and we have now completed the investments in Dayton, so all the hardware, all the investments have been done, and also the finished goods warehouse. This can house up to 600,000 tires, has been opened during the month of June, and indeed, now the site is complete in terms of the capability to produce. We will produce there all-season tires and all-weather car tires for North American markets.
And also, we started the light truck tire production this year. The plan was originally, when this factory was decided, in 2017, that some of the light truck tire production would have been in Russia, and then they would have supported the North American market ramp-up and so on. However, as you all know, who have been following the company for some time, that indeed, we needed to sell the Russia factory in 2022, and we made a change in the production schedule in Dayton factory, and this change has now been completed and is coming to the market during the course of 2024.
So this says that the investment phase has been completed in the U.S., and the aerial picture, compared to Romania, they look very similar in terms of the layout and in terms of the aerial footprint. I move to page five, and that is progress in the renewable material, which can potentially replace carbon black in tires. So we made the first-ever concept tire with the renewable lignin-based material made by United Paper Mills, a Finnish biomaterials company. It's called UPM BioMotion RFF trademark, and that is a product that United Paper Mills will be making in their factory in Germany. It has the potential to replace a significant part of a carbon black and reduces the need for fossil materials and lowers the carbon emissions in tire itself and in tire manufacturing.
As a reminder, our target is to increase the share of recycled or renewable materials in tires to 50% by 2030, and this again is one step on that way. You may remember that earlier this year, we also made an agreement to buy recycled carbon black that can be used in tires. So two ways to improve the sustainability of tires and tire making. And now I move to page six, which is the net sales and segments operating profit in quarter two. Net sales increased by 11.2% with comparable currencies, and that was driven by the improved tire availability and especially Central Europe, which was the biggest growth areas, strongest growth area, and that was achieved by better availability, especially with the off-take tires.
Our segment EBITDA at EUR 46.8 million versus EUR 41.3 million in 2023, there was an improvement there. Obviously, had the issue of political strikes in Finland in the first half of 2024. And we have already earlier said that the impact is roughly about EUR 20 million in EBITDA, out of which more than half was in quarter one, and then less than half in quarter two. We started quarter two in the month of April. The first eight days were impacted by political strikes, so that we couldn't produce anything in Nokia, and neither could we ship anything in the first eight days. Segments operating profit at EUR 20.1 million versus EUR 15.2 million in 2023, and higher sales and lower raw material costs helped our profitability improvement.
I move to page seven, which is reminding that we have a strong balance sheet despite the fact that we are investing heavily, so our capital expenditure is EUR 159 million in the first six months. Lion's share, a clear majority of those investments are related to Dayton warehouse, Dayton factory completion, as well as, of course, the Oradea factory build-up. That number, EUR 159 million, is clearly higher than EUR 87 million that we invested in capital expenditure in 2023. This is also the time when our interest-bearing net debt is at its highest because we are investing significantly, and our generation of EBITDA is still not at the level where we aim for, and the reason being that the factories that we are building are not yet delivering any EBITDA.
We first six months sales, EUR 561 million versus EUR 539.5 million in 2023. As just a reminder, EUR 20 million impact from the political strikes in the first half on our EBITDA. Then I will hand over to Niko to talk about the profitability in more detail. Niko, please go ahead.
Yeah. Thank you, Jukka. I will go to the segments a little bit in more detail. So in the passenger car tire segment, we have the higher sales and improved our profitability, and especially, the sales increase was driven by the Central Europe. And in total, the net sales being EUR 189 million, there is a growth of a little bit more than 24% in comparable currencies. Also, the ASP with comparable currencies increased slightly. So there is a better mix and for price and mix and lower cost as well. The segment's operating profit was in Q2, EUR 7.1 million. On page nine, there is the passenger car tires bridge.
There you see that the volume growth is + 22%, EUR 33 million. Price and mix, + EUR 4 million, and the currency is not playing that big of a role in Q2. In the segment's operating bridge, I would like to highlight the supply chain cost. So it was increased largely due to the off-take imports, as well as Jukka pointed out, the Red Sea crisis, as well as the political strikes here in Finland. On page 10, in the middle column there, the price and mix were slightly positive in terms of development there, so 2.4%. This will moderate towards or during the H2, when we have more products and sales volume in Central Europe.
Of course, the winter tires will flatten that little bit as well, but especially Central Europe now playing a bigger role, it will moderate going forward. Page 11, on the heavy tire segment, the market demand, especially in the OE, was weak, as we said already in Q1, that we saw that during the H1, it will be a weak demand in the OE. Yet we had the sales of EUR 60 million, so there was a decrease of some 10%. But at the same time, I'm proud that we were able to keep the segment's operating profit at around 13% level. So that is a good achievement in that business and in this market environment.
Then, finally, our Vianor business. So in terms of sales, we were at last year's level. The operating profit decreased by EUR 2 million. And there, you know, we continue to say that the inflation, to put that fully into the pricing, we have some difficulties there, but we are doing our best as we speak. And in terms of guidance, we kept that unchanged, i.e., that our net sales and segments operating profit is expected to grow significantly compared to last year. And there, the kind of the premises as well, that we see that the raw material costs are expected to start gradually increase during the second half of this year. With that, I hand back to you, Jukka, to wrap it up.
Thank you, Niko. So, we continue our journey towards EUR 2 billion net sales and strong profits. We are on the investment phase. We are halfway, so we started 2023, and we complete at the end of 2025. We've done the capacity increase in Finland. We've completed now the U.S. factory, and now it's operational focus in Dayton. So improved waste reduction, higher volume, all that, but no investment requirements anymore as we completed the warehouse. New factory in Romania, the first tire has been produced. However, we keep on installing and making sure that the equipment are fully available and fully capable, and we have a ribbon cutting in September. Then we make the products for testing, and then we are ready for the commercial production in early 2025.
Growing contract manufacturing, so compared to 2023, our contract manufacturing volumes that have helped us to achieve higher volume in Nordics as well as especially in Central Europe are there, and they help us to ensure that the market position, net sales develop favorably. And they will be then part of our long-term future as well. Then in 2025 we move to growth phase, 2026, 2027, and then we have a look for the increasing, increasing market penetration, build the new products, increase capacity, and improve and enhance operational capabilities. In Heavy Tires, we expect to continue to grow above the market level. And then in the North, we have the distribution excellence in the Nordics, and we target have EUR 2 billion on net sales, and this is our journey.
At this point of time, we are halfway in the investment phase. However, we can report positive things in terms of completing the U.S. factory investment. Also, that we are very much on schedule and under budget in Romania, or in budget in Romania, even slightly below budget. And then, we look forward to start the production in 2025. So this is where we are. So I hand over back to Päivi for questions and answers.
Thank you, Jukka. Thank you, Niko. So it's time for the Q&A. Before that, maybe in order to say one question from the audience, a couple of words about the European Commission's ongoing antitrust inspections in tire companies, initiated in January. Nokian Tyres doesn't have any new information on the outcome of the inspection, and we can't comment on an ongoing investigation. Nokian Tyres is fully cooperating with the authorities. Now, we are ready for the questions, please.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Michael Jacks from Bank of America. Please go ahead. Michael Jacks, Bank of America, your line is now unmuted. Please go ahead. The next question comes from Miika Ihamäki from DNB Markets. Please go ahead.
Hi, this is Miika from DNB. Thanks for taking my question. You're expecting raw materials to increase in the second half of the year. Can you quantify in absolute basis how much higher this would be year-over-year? And then secondly, do you expect to offset these costs with higher prices?
Yeah, we are not quantifying that, but we are saying expecting to moderate. But of course, there's a lot of fluctuation currently with the raw material prices, but I don't think we see the similar type of kind of the price decreases that what we've seen. So the expectation is that they will moderate going forward.
Thank you. Second question, if I may, with now U.S. facility fully ramped up, what is your capacity utilization at the moment out of the roughly EUR 4 million nominal? Is it right to assume that there will be no further ramp-up related costs from the U.S.?
Yeah, so we've said that the ramp-up is done there. We are meaning that all the equipment and the facilities are done, i.e., the warehouse being the final one. There will be still, during this year, some exclusions, and that those are related to those products that we are still running kind of as first-time products there. And we will have the full capacity available going to 2025.
Okay, thanks.
The next question comes from Boleslaw Lasocki from Thomson Reuters. Please go ahead.
Hello. My question would be about the recent concerns over tariffs on Chinese electric vehicles. What I'm wondering about is whether what kind of impact, if at all, that could have on Nokian Tyres. Do you expect the tariffs to affect somehow your production? Or on the other hand, do you expect any actions from China that could hurt the performance of Nokian Tyres?
We don't expect any immediate, impact on our performance as we are in the replacement tire market. But obviously, we need to pay attention on that, what is happening in the political and the legislation so that, there are future decisions or impacts that, will come our way. But at this moment, we don't see any that will influence us or impact us.
Thank you.
The next question comes from Thomas Besson from Kepler Cheuvreux. Please go ahead.
Thank you very much. I guess it's me. It's Thomas from Kepler Cheuvreux. I have a few questions, please. I'd just like to ask them one by one, if that's okay. Firstly, Jukka, can you give us a broad indication, not a precise number on the amount of contract manufacturing volumes you are projecting now for 2024, 2025, given the state of the markets you're operating in? And is there any risk that your contract manufacturing volumes may be eventually impacted by some changes in import duties? That's the first question.
So we said initially that when we went in contract manufacturing, that it was somewhere up to 3 million tires, and we are somewhere between 2- 3 million at this moment. So depending, of course, that how the market and how the demand will evolve, we have either we are at the higher end or we are at the mid-range of those contract manufacturing. So, and then when we go into 2025, obviously, we expect that our volumes go up, and so part of that will come from what are the commercial production, and then we will see which part and how much will come from the contract manufacturing. But it's clear that this virtual factory, contract manufacturing, will remain part of our future strategy.
Also just to remind that in the Heavy Tires, we also rely on contract manufacturing in bus and truck tires, as we don't manufacture them ourselves. So we have the two sources or two revenue plans where we have contract manufacturing helping us.
Thank you very much. Second question, can you share with us your latest projection for CapEx in 2024 and in 2025, if you're slightly above the half mark for EUR 300 million for the year? How much do you see that for the year and falling eventually next year, please?
Yeah. The CapEx for this year is roughly EUR 350 million, and we've spent roughly EUR 160 million in H1 so far, or during the H1. And then it will be a little bit north of EUR 200 million next year, the CapEx.
Thank you very much. Last question, please. Jukka, you've announced you're going to retire sometime this year. I wanted to know if there was any progress achieved on trying to find a replacement for you at some point in the second half?
Yeah. Yes, indeed. I've announced that I will retire during the course of this year, but the board will work on this successor solution and so on. And I've also indicated that I am, of course, taking care and in the position until a successor plan has been announced. So obviously, there will be no gap between my plans and what the board will announce.
Okay. So for the time being, no progress to talk about?
The board has not announced anything, so that...
Okay.
That's all I can say.
Yeah. Perfect. Very clear. Thank you very much, Jukka. Thank you, too, for your answers.
Thank you.
The next question comes from Rauli Juva from Inderes. Please go ahead.
Hi, Rauli from Inderes here. I would like to follow up on the U.S. factory. Could you say, are you ramping up the production kind of as fast as you can at the moment towards the 4 million next year, or is the limiting factor more the supply or the demand, if you put it that way?
It's basically such that we have a new equipment, and we have a little bit new production plan because as I mentioned in the early part of the presentation, that early on, we had a plan to do certain tires in Russia and then support the U.S. markets. But now we've changed that, and we've installed new capability in the U.S. and we are ramping up those equipment. So we will be actually focusing on operations only, so all the equipment are installed, and they are bolted on the floor. So it's all about capability to produce and efficiency and scrap reduction and all that. And we are basically able to sell everything we produce in Dayton.
So it's really up to us to make sure that the throughput and the productivity improves. We expect that we are on full speed at the end of the year.
Yep, that's clear. And then another question, given your sales, especially in the winter season, fell short of the kind of initial expectations, do you have a meaningful amount of winter tires in the inventory that you could actually sell more volumes this year than you are producing?
We have, we have a good availability of tires, and obviously, we've been able to secure off-take tires. Unfortunately, we lost certain days of production in Nokia for tires, so this is something that we need to catch up. But we are quite optimistic about the winter tire volumes in the second half, and this is, of course, something that is seasonal for us, and at this point of time, we still are strongly seasonal. So, but we are in a good position. Unfortunately, this political strike, but other than that, we are, we are really fine.
Yep, that's clear. Thank you for talking to me.
The next question comes from Akshat Kacker, from JP Morgan. Please go ahead.
Yes, good afternoon. Thank you for taking my questions. The first one, sorry to come back to contract manufacturing. You mentioned you expect 2-3 million tires from contract manufacturing this year. Could you just clarify how much of that was already done in the first half, please?
No, we don't disclose that, how they are split between the winter, all season, or summer. But you can assume, of course, that the major part of the Central European growth is based on contract tires. And then, to a lesser degree in Nordics, where we have a strong manufacturing of premium tires in Nokia, and then the contract tires are complementing the premium tires of the category and so on. And of course, then we have the whole bus and truck, which is in the heavy tires that comes from contract manufacturing.
Okay, that's awesome. Thank you. The second one on passenger car tires. You have highlighted very strong growth in Central Europe in the first half of the year. Could you just talk about your expectations around the second half? You mentioned you are optimistic around winter tire sales. If you could just give us some comments around the overall inventory that you see in the market and the sell-out demand that you're seeing in Europe, too?
Yeah, we expect that when we look at the market evolution, of course, 2023 was a very soft market, and there was, of course, inventory pipeline and all that. And so therefore, the selling was quite soft one. The inventories by the end of the year and early part of 2024 came to a normalized level. And when we look at the demand overall in this year, we see positive numbers in various months. There were maybe one or two months where they're a little bit on the red side, the replacement tire demand, but overall, we see positive developments, and we expect that to continue. Obviously, from our point of view, what is important is that a year ago we pretty much had only the winter tires for the off-take.
This year we have, of course, summer tires, all season and winter tires, in addition to increased capability in both Nokia and Dayton. So obviously, these are the facts that are where we have our optimism based on. But the overall market, we see positive numbers in the demand. Of course, again, when we go in the latter part of the year, let's see how it evolves. But so far, and the outlook is positive. Not a significant growth, but clearly positive.
Understood. The very last question on, again, the competitive environment in Europe. If you take a step back, could you just remind us on where we are in terms of competition from imported tires or cheap imports in Europe? Do you see a trend of those imports now picking up? And if you could just talk about your assumptions on what you're seeing in the market in terms of pricing, kind of linked to both those questions.
Yeah, I think in the pricing, kind of, I think we've said there that we applied the marketplace-based pricing. In terms of the competition, especially from Asia, we see that growing, but we are in the premium, premium segment. So we need to keep a good look on that, but we are not too worried at this point as well, that we have the tires available in our inventories.
Thank you.
The next question comes from Artem Beletski, from SEB. Please go ahead.
Yes, good afternoon, and thank you for taking my questions. Actually, we'll ask one by one, and first, the first one is really starting with passenger car tires. And could you maybe provide some type of indication in terms of volume development in second half of this year, putting it into a context of 60% growth in first half. In H1, given the fact that there has been these disruptions related to strikes and Red Sea situation, and we are ramping up production. So, could you provide us with some more details on this front?
We can basically say that obviously a year ago, when we went into the second half, we did not have off-take. We only had the winter tires, and so didn't have the all-season tires. Neither did we have a number of product categories that are supportive of our premium tires. So clearly, the availability is better, and also there are obvious markets or market segments which we did not address at all or didn't have a chance to do that. So in that sense, we have opportunities which are based on availability and based on targeting historical volumes that where we can grow. And we see that as we said that the outlook and we reiterated the outlook that we expect that the growth continues. But it's also based, simply based on the fact that the product availability is much better.
Okay, that's clear. And then maybe one aspect, what you mentioned in Q1 is this risky situation, and it was impacting deliveries of off-take tires. Has those tires basically been delivered to customers, or has the situation, so to speak, normalized on that front?
Yeah, I think some of them are delivered, but of course, there were also summer tires and those are not delivered to the customers. But I don't see that as a big kind of an issue as right now in terms of our guidance. But clearly, some of them are in our inventories.
Okay, that, that's clear. And, maybe the last one from my side is, really relating to ramp-up or preparation-related costs. Is the guidance for this year of roughly EUR 40 million still valid, and do you have some thoughts in terms of 2025, when you will be starting commercial production at Romania?
So the roughly EUR 40 million is a correct number. What we are guiding at this point, let's see at the end of the year what it will be. We don't give a guidance related to 2025 in terms of the ramp-up expenses, but those will, there will be those from Romania, but not from the U.S. anymore.
All right. That's clear. Thank you.
The next question comes from Pierre Quéméner from Stifel. Please go ahead.
Good afternoon. This is Pierre Quéméner with Stifel. I've got a quick questions, if I may. Coming back to the raw mat increase in the prepared comments, you said that you would expect a significant increase in raw material in H2, but I'm not sure I understood the comment you made about the magnitude of that impact in H2 from raw material? That would be my first question.
Yeah, I didn't say significant, but I said that they are moderating the raw material. So we've seen a decrease in the raw material prices, but at this point, we see that that decline is not continuing, but they are kind of more flattening out. So that's our estimation for the H2.
Okay, great. Thank you for the clarification. Second question would be on the price mix, which was, I would say, significantly positive in the second quarter. So I've got two question on that, on that one. How should we think about price mix into the second half of the year? Is it gonna be in the magnitude of 2%+ tailwind? And, was it more price or mix in the second quarter? Thank you.
Yeah. Yeah, I think it's rather somewhere around zero. But it's not the plus as we see right now for the H2. So zero is a better guess at this.
Right. Any indication for the second quarter, will it more price or more mix for the +2.4 in the passenger car tire sale operating profit?
We will of course see how the raw materials evolve and see how the market is pricing and as such. But obviously, what will happen is we have a big volume percent, and mix will be Central Europe driven more, so we have, of course, all-season tires and such that we are not in the mix with last year. Our mix, but in price, we expect that the higher than all soon.
Okay, understood. Thank you.
The next question comes from Pasi Väisänen from Nordea. Please go ahead.
Great, thanks. This is Pasi from Nordea, and I do have two questions. First one related to this new factory in Romania. So, what could be the expected sales volumes coming out from the Romania factory next year? And secondly, when I look at the market consensus, EBIT for this year, I think it's close to EUR 98 million. So are you truly confident about this full year consensus, especially regarding you already reported EUR 5 million from the first half of this year? So would it be possible that you actually reach 12% EBIT margin later on this year? Thanks.
So we stick with our guidance, and we cannot comment the consensus, as you know, Pasi. But when we look at the volumes in Romania, so we have a ramp-up plan, which is significant, but of course, we will not comment the exact volumes. When we go into the budget of next year, then we can talk about a little EBIT what the contribution of Romania is. But we are prepared to service the European markets based on volumes out of Romania factory, and we have about a slight less than 100 SKUs that we will make in Romania in 2025, and those will account a significant part of our volume in Central Europe.
But on top of that, we will have offtake volumes and offtake products that complement our revenue plan in Central Europe. But maybe more about that when we come into budget time and we talk about 2025 performance.
Okay, thanks. I understand. But regarding the full ramp-up in Romania, so should we expect the full run rate to be reached in 2027 or even 2026?
Should be ready in late 2026, and we should see a good volume in 2027. We install certain machines during the course of 2025 and early 2026, and we expect that they are fully capable and fully in place by the end of 2026, and then productive and up and running totally in 2027.
Yes, I hear you. Thanks. That was all.
As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. The next question comes from Michael Jacks from Bank of America. Please go ahead.
Hi, can you hear me? It's Michael Jacks from Bank of America. I just have two questions remaining. First one, just perhaps on Dayton. Could you share any color on how demand for the Nokian brand is developing in the U.S. particularly for summer and all-season categories? Any areas are worse than expected, and would you say that the volume here is defined currently more by demand or availability of supply from Dayton? And secondly, do you have any update for us on the government subsidy expected for the Romania plant? Thank you.
In North America, so we have the all-season, all-weather and winter tires and no summer tires really. And then, light truck is a new entry in 2024, so those are things. Our volumes in North America are today defined more by the availabilities and our production capability and throughput of our factory rather than the demand. So this is the situation today, and therefore, the most important job for us is to make sure that the productivity and throughput will improve. And then, Niko, about..
Yeah, the Romanian state aid. So, we have applied that and it's subject to the European Commission approval. And as I said earlier, we are expecting some results hopefully during Q2 this year.
Understood. Thank you. And maybe just one more question, if I may. Shipping costs, shipping rates are obviously becoming a headwind for the broader industry already since Q2 and the Red Sea crisis. Is this something that could be an incremental headwind for you for H2, or is this something that is already in the base in Q2? Thank you.
If they continue to increase like they've been, then it is a headwind, but at this moment, we are okay with it.
We had quite a bit of headwind in the first half in inventories and high inventory levels in Finland, for example, because we couldn't ship anything and had to stop the production and all that. So we had a lot of supply chain headwind in the first half. So though that will... or a big part of that will go away, but then, of course, if these shipping rates are significantly higher, then they may create additional headwind.
All right. Understood. Thank you very much.
The next question comes from Boleslaw Lasocki from Thomson Reuters. Please go ahead.
Hello again. I just have a question about the United States, and the possible impact of the presidential election there. What kind of impact do you think there could be at all? I'm talking about the tariffs, for instance.
Yeah, that is something that we need to assess and capacity, but obviously important for us is that we have a fully invested factory in the U.S. and therefore, we are able to service the market locally. Then, whatever things will come with the tariffs or imports and so on, so we need to assess. Obviously, a big part of our winter tire imports go to exports from Europe go to Canada, and therefore, most of the North American, the U.S. market is being served by the local factory. This is a good situation to be in, but as you, your question implies, there may be surprises, and there may be things that come or the company's way in the future. But so far, we are quite pleased with the position that we are in.
Thank you.
The next question comes from Thomas Besson from Kepler Cheuvreux. Please go ahead.
Thank you for taking my follow-up question. So I love the way your machine pronounces the Kepler Cheuvreux in French. Whatever. First follow-up question, please. Can you comment on the proportion of winter tires that have been shipped already in Q2 to wholesale or to retail distribution? And we were used for almost 20 years to the fact that Nokian was already shipping a decent amount of winter tires, I think mostly because of your Russian exposure. So is it fair to assume that there was a low amount of winter tire volumes shipped in Q2, and most of it will be in Q3, or you already had a decent proportion in Q2?
If you look at the, the mix we had, we reported in the first six months, winter tires were about 45% of our total shipments. So, that's a pretty normal level, isn't it? So, not really a whole lot of advance shipments neither late shipments, so we are pretty much on a normal course at this point.
Okay. Thank you. May I ask you, at what point and at what level you expect Nokian's net debt to peak over the next 12, 18, 24 months, please?
Yeah, I think interest bearing it will be peaking by this year end, so that is the highest, as you, as Jukka said as well, in his presentation. So during this year, we are at our peak.
Thank you. Last question. I understood, but maybe I misunderstood at Q1 stage, that you are gonna give a more precise guide for the year, at Q2 stage. Did I misunderstand, or do you want to wait until the Q3 stage to provide your guidance?
Yeah, I think we need to wait and see until Q3 in terms of guidance. But still, we've said that we've kept the guidance as such, and let's see in Q3 are we able to give more precise guidance for the full year then.
Understood. Many thanks.
The next question comes from Miika Ihamäki from DNB Markets. Please go ahead.
Thanks. This is Miika from DNB. Still, to clarify the raw materials and prices here. So do I now understand right that, for the whole year, raw material picture expected to moderate, but they still will be a headwind, for the second half? And then you mentioned that, flat or zero contribution into H2 from price mix. So doesn't this, this imply a headwind, to margins?
So, still, what I said, that the raw material prices, how we feel, how we are seeing that are moderating, i.e., that we see some slight increases there as we speak. But I've also said that we in earlier calls, that we guaranteed some part of that volume and the prices, and also the unknown, more unknown there is recyclable and renewables, but that's more towards next year. But still, we see that they will moderate, i.e., that this decrease is not continuing. And there will be a headwind from that in our H2 as well.
And then, when you look at the price mix, so the mix will be probably a negative component because we have more Central European volumes available this year compared to prior year. However, the price we expect that we match the price with the raw material development.
Okay. That's clear. Thank you.
There are no more questions at this time, so I hand the conference back to the speakers.
Thank you. If there are no additional questions, it's time to finish the call. Thank you all for participating, and wishing you all a nice summer. Thank you.
Thank you. Have a nice summer.
Thank you.