Earnings Call: Q1 2020

Apr 23, 2020

Ladies and gentlemen, welcome to UPM's Quarter 120 20 Results Webcast. My name is Yussi Pesonen. I'm the CEO of UPM. And I'm here with our CFO, Tapio Korpeinen. Hello to everyone. First of all, UPM made a solid results during the quarter. In January, we made an investment decision for the 1st its kind biochemicals refinery in Germany. This investment opens totally a new and exciting market for UPM's future growth and value creation. In January February, we were affected by the strikes in Finland, our finished pulp and paper mills were down for 2 weeks and our finished plywood mills and so on timber mills were down for 4 weeks. The big news during the quarter was obviously the COVID-nineteen outbreak, which was already an epidemic in China, starting in January and then quickly turn to a internal sorry, into a global pandemic. Specialty Papers was the first UBM Businesses faced a situation having the large operations in China with extensive precautions and the proactive and diligent response of our employees, we were able to keep our employees safe run our operations without interruptions in China. And that, by the way, continues today. As the situation evolved, we quickly implemented similar extensive precautions elsewhere as we as well as protect the health and safety of our people to ensure the business continuity. All in all, the pandemic didn't have any material impact on our operations in Q1. However, pandemic and the related containments measures and lockdowns around the world have significantly increased uncertainties for the rest of We have the agile and effective operating model and this is, by the way, a once again, a great place to show how effective it is. And it is in place to adapt the changes in the business environment. Our businesses are competitive ones. Our financial position is exceptionally strong and in a good shape. We can continue to implement our strategic growth project during the these uncertain times. We could also pay a our dividend as planned in April. So we are in a good shape. Turning to the next page, and let's look at our results. UPM's Q1 sales decreased by 15%. From that of last year, there were 3 main drivers for this First of all, 30% lower pulp prices, 8% lower paper prices and 13% lower graphic paper deliveries, of course, partly due to strike in Finland. Our, as a result of lower sales prices, our comparable EBIT decreased by 26% from record first quarter EBIT last year. So our EBIT was 1,000,000 and EBIT margin was 12 2% and this I think is a very solid quarter having in mind that the EBITDA margin was also 70%. I'm particularly pleased to see consistent margin improvement actions bearing fluid in Raflatac and Specialty Papers. These two businesses made a record quarter and record quarterly result in Q1. At the same time, communication papers achieved nearly the same result as last year despite of 20% lower top line. But ladies and gentlemen, at this point of time, I will hand over to Tapio for further analysis of the result and then we will have some more discussions around the COVID and 2020. Tapio, please. So here we have the waterfall slide comparing the quarter to first quarter last year and sequentially to the fourth quarter last year. On the left hand side, if we start from there, as Yossi said, comparable EBIT decreased due to lower sales prices in all of our businesses. But we were able to compensate for more than half of the price impact with lower variable costs. Delivery volumes decreased. However, this impact we could fully offset with lower fixed costs. The strikes in Finland affected our deliveries, but also decreased fixed costs. Finally, changes in currencies had a small positive net impact on comparable EBIT. And then on the right hand side, compared to the fourth quarter last year, EBIT decreased due to lower sales prices. There as well, sales prices decreased by 4% sequentially for both, pulp and for paper. In the first quarter, there were no fair value changes in our forest assets. The increase in variable costs and decrease in fixed costs you'll see here are both mainly seasonal in nature comparing first quarter to 4th quarter. And then here on the following page, you have the EBIT development by business area quarterly. On the right side, you see the strong performance of Raflatac and Specialty Papers. Both businesses have been working consistently to improve margins and to develop the product mix both have been also actively reducing fixed costs. These actions, combined with the robust Consumer demand in the first quarter resulted in record EBIT in both businesses. Of course, Specialty Papers, also benefited from the low pulp prices. Communication Papers EBIT normalized from the year due to lower paper prices and seasonal factors. However, it's EBIT decreased only slightly from the first quarter last year. This is a very good achievement given that the top line for communications papers decreased by 20% year on year. Graphic paper demand in Europe decreased by 8% in the first quarter, which is relatively consistent with the slow economy in Europe during the first quarter. UPM deliveries were impacted by the strike in Finland So therefore, decreased by 13%. Energy performed well in highly exceptional weather conditions volatile energy markets. In the first quarter, we had exceptionally warm, wet, and windy conditions. In the Nordic area. Plywood achieved stable results despite only 2 months of operation at the finished mills. Bire refining reported stable results compared with the 4th quarter bulb demand from our customers continued on a good level, even in China. Pulp prices decreased 4% from the 4th quarter and production at the finished mills was affected by the strike. By refining EBIT was significantly lower than last year, due to the 30% lower pulp price Our first quarter operating cash flow was 1,000,000 as working capital increased by 1,000,000. This working capital increase is seasonal by net sure, typically in the first half of the year, we tie up cash into working capital. But then also the starting point reflecting at the beginning of the year, reflecting the fact that we had quite strong cash flow, record strong cash flow in the fourth quarter last year, including a large release from working capital in terms of cash. So our financial position at the end of the first quarter and at the moment is exceptionally strong. We have 1,000,000 net cash in the balance sheet. Including all kinds of accounting also for $570,000,000 in leases. Our liquidity totaled 1,000,000,000 at the end of the first quarter. We have no financial covenants and we have no meaningful debt maturities until 2027. All this considered, we are pleased that we could proceed with our AGM at the end of March with special arrangements ensuring both safety and shareholders rights, also with the support of our shareholders, So this way, the AGM was able to decide on all the important governance items, and we were able to pay the per share dividend as originally scheduled. And this slide just shows you are good maturity situation. You can also see here our new 5 year 1,000,000,000 of sustainability linked, revolving credit facility. In the current conditions, UPM does not provide an outlook for the of the year. Looking at safety and business continuity, we have implemented extensive precautions to protect the health and safety of our employees and to ensure business continuity. Despite these efforts, it's possible. That during the pandemic, the operation of some of our units or the supply chain or logistics could be temporarily disrupted. Looking at the demand for our products, many of our products serve essential everyday consumer needs fundamentally, and therefore may see relatively resilient demand during the crisis. These products include Pulp, Specialty Papers, and self adhesive label materials. Demand for graphic papers plywood and timber is likely to be affected by the pandemic related lockdowns and the following recession. The lockdowns limit a wide range of services and retail that use printed advertising, and obviously also impacts or affects work at offices. This is likely to have a temporary negative impact on graphic paper demand. We at UPM, we are planning to use shift arrangements temporarily offshore reduced working hours as required to adjust the different scenarios as they unfold. But all in all, we are in a very good position given our exceptional financial position and our agile and efficient working model. The pandemic and the required health and safety measures are challenged to large investment projects as well. As for maintenance shutdowns. We are proceeding with the pulp mill project in Uruguay and with the biochemicals project in Germany, with strict health and safety controls. Just to give one example, new workers entering the Parrotpaso Delos pulp mill construction site are being tested for COVID-nineteen. Despite these measures and effects, efforts, some changes to detailed timeline of the projects, are possible during the pandemic. But so far, the projects proceed in line with the plant startup timeline. Looking at maintenance, we have moved the maintenance shutdowns at the carcass and Pietas or remails from the second quarter to 4th quarter this year. Also the maintenance shutdown at the Olkiluoto 1 nuclear power plant in the second quarter will be shorter than usual. Due to the COVID-nineteen pandemic, fuel loading into Orkla-three reactor will not take place in June 2020 as planned. And now I'll hand back over to Youssef for some words on our strategic projects. Thank you, Tapio. UPM's long term value creation is driven by our spearhead of growth. These are sustainable businesses with the strong long term fundamentals for demand growth and session, we can continue implementing our strategy and our strategy growth projects. We have today reported a record earnings in Raflatac And Specialty Papers. Currently, we are ramping our latest specialty paper expansion in Germany and in China. We continue to see attractive growth opportunities in these specialty packaging material over the long term. Our highly competitive pulp mill investment in Uruguay is proceeding in line with the planned start up schedule, once up and running, it represents a step change in UPM earnings. Engineering and planning are ongoing for the biochemical refinery investment in Germany. In line with the schedule. This is also an attractive investment which is opening a totally new markets for UPM's long term growth. Development work continues regarding our next steps in biofuels as well. And finally, we will keep our foundation of this house in good shape and UPM. We will take actions as required to take care of our competitiveness and cash flow both short term, mid term and long term. The next page is a reminder and reminds you of the main points of the Uruguay investment. I'm not going to go in details, but this is going to be a world class pulp mill, which will be implemented as planned. This is an attractive investment in various market scenarios due to its low cost position. The long term fundamentals of the pulp business are attractive and intact. Most of us cannot travel, these days. So, here, we have provided you and postcard from Uruguay showing, of where we are in developments I, myself visited Uruguay last time, early in March just before the pandemic started to expand in Europe and becoming a pandemic. On the left, you see the pulp mill site in parts of the Los Doros fencing and lightening works have been finalized while earthmoving and roadworks are ongoing. And then of course, the civil construction work are commencing. On the right, you can see the pulp pulp terminal site in Montevideo port, the 1st phase of degrading and the and the backfilling dressing and backfilling of the area have been completed, peer construction and piling our commencing as we speak. In the middle, you can see some of the several sites for housing for the permanent and temporary employees. Similarly, this slide summarizes the main points of the biochemicals refinery investment in Germany We will supply a sustainable 100 percent wood based alternative for fossil raw materials in various consumer driven end uses in commercial scale. It is a major milestone in UPM's transformation, opening totally new businesses and markets for the future growth. We also expect this to be an attractive investment area for the future as well. Our CapEx guidance is the last page actually in this for the year has been unchanged at the 1,000,000,000. This includes to Uruguay project and 100,000,000 related to biochemicals project in Germany. Our maintenance CapEx needs are consistently low less than 1000000 per annum. This was the prepared part of the presentation summarizing. I think that I'm not going to repeat. We are in a solid condition we are well prepared for the current uncertainties. We think about the world shorter, which is this lockdown We think about midterm, how to actually, adapt our operations and how we react on the following following recession that comes in, whether it's a V shape, U shape or L shape, we are prepared for that. And obviously, most important is that UPM is prepared for long term earnings growth and the kind of opportunities throughout our spearhead of growth investments. And many of the things today, what we see in this pandemic are also supporting that what we are doing long term. So ladies and gentlemen, we are ready for your questions. Dear operator, we can start Our first question we have is from the line of Alexander Bergland from Bank of America. Please go ahead. Two questions from my side. The first one is on graphic paper and going into Q2. I know it's very uncertain times and that you don't want to give kind of any outlook, but one of your competitors talked about a 30% demand decline in Q2 on volumes on graphic paper. So my question is just do you think that, that number is reasonable? And then secondly, also on graphic paper, more on prices, you give this chart on Page 31, where you look at the marginal cost producer versus the price. And it seems like that spread has increased a bit also now into the first quarter. So just looking at that, is there any risk that you might see any further pressure on prices, if costs continue to be at a low level? That's my first question and how I think I'll take leave it there and then let you answer it? Yes. If I may start, Tapio might follow-up after me, but as I said already that we are not at this stage providing outlook for time being and that is something that that UPM is very kind of clear with. Obviously, how do we react? We in UPM, we have I must say good plans, even not if not excellent plans for short term, medium term and long term kind of working. So basically, we are having a lot of people that are working on all of these issues. And when we are now in the lockdown situation, I. E, meaning that offices are closed down, no traveling, shops are closed and what had we Everybody knows it as well as we do. We have prepared ourselves to be adapting those circumstances in paper, but also in other areas as well, whether we have a positive opportunities where we are then trying to secure raw materials and securing the supply chain and some of the areas that are having a negative impact. We are definitely taking all the actions needed. Now we are leaving the lockdown effects and we have prepared ourselves for temporary layoffs, we have the Kurz Arpite in Germany, which is sorting working hours. That's how we react on that. Of course, this will follow a recession time, especially in Europe, tends to be quite quite much longer than elsewhere. So we are preparing for that as well. And obviously, we take all the actions to secure our strong cash flow and that we are running with full capacity. So basically this is how we are reacting on this this situation. And I think that long term, whether there will be structural changes in the businesses If any company in many of these businesses that we are representing, whether it's pulp, sulfur adhesive labels or papers, specialty or communication papers, UPM is having a very good end use study kind of capabilities and we will definitely use those and take the kind of commercial actions based on that. So basically, this is where we are. I'm not in the position to comment any of my competition kind of figures and, kind of guidance, we are not providing, unfortunately, to guidance this point. Okay. That's understandable. And my other question was just on the Uruguay Mailland I'm also just looking at the pictures that you provided. Seems to be relatively lot of houses there. So I'm just wondering how do you ensure during these times at construction site that you don't get a spread of the virus, during the construction phase? First of all, I think that we were having a kind of good benchmark coming from China. In China, when when this whole pandemic or then it was only COVID-nineteen at that time started to spread, the Chinese operations were making a great benchmark for UPM, how to actually act on in various situations, how to secure the kind of safety and health and safety of the people coming into the mill site. And And we haven't had any, suspected cases in China. We haven't had any corona case in China. And we do have 1284 people in China. So basically that was making a benchmark actions, which we have now copied with pride to different locations like in Uruguay. Today, when the mill site is actually once again, going forward, we have been testing every single person that goes into the mill site. And every day, we are then testing the temperature as well. So we have a good kind of practices and what comes to anything else that which is very common to all of us, we use those lot of, kind of, kind of practicing and kind of we have been telling to the construction companies and our contractors how to how should we act That's the way that UPM has been operating globally in China, in Europe, in Europe as well. And that's how we we believe that we can really secure the health and safety of our people by testing, having to protective equipments and, and then every day kind of, measurements like temperature. Okay. Thank you very much. Maybe if I can just add to that, of course, we are lucky in that we are still in a relatively early stage in the project. So the more labor intensive stages where you have then thousands of people on the site are still well ahead of us. In that sense, this situation right now and during this year is obviously more manageable. Thank you. The next question we have is from the line of Lars Kjellberg from Credit Suisse. Please go ahead. Thank you. I just wanted to ask a bit about the exceptional strong step up in performance of Raflatac. Have you seen in those numbers any specific benefit from COVID? I mean, one of your competitors, namely Avery Dennis, and we're talking about very strong demands in labels specifically in part related to that. I don't know if you if you can shed any light on it because the step change in margins is quite remarkable. So that's one topic. And they're also on the specialty paper side if they have the same So the benefit in that business from changing behaviors and increased, I guess, stock to building in e commerce, etcetera? Lars, thank you for the question. Yes, yes, I think that it is fair to say that the end use is that we are serving in Raflatac, which is typically food packaging and then home and personal care type of things have been important during this period as well. And therefore, there has been a good demand for for that. It is related to 2 things. It is margin management where we have been doing more than 2 years, a kind of kind of work that is now paying off as well in the margin management and taking action to provide good margin. And then the quarter 1 has been pretty solid on reasons that I I just earlier mentioned that there are kind of things which are related to food packaging, home and personal care plus maybe the logistics, I. E. The e commerce type of labels needed at this time of the period So basically, these two factors. And then finally, of course, we have been very efficiently running our operations. We have we have been able to have a full run for the operations. Can you comment at all if anything of this has changed? I mean, we are hearing that some of the retailers are seeing a more normalization of of demand. Is that something you can note in that business, if you can comment on that, that'd be helpful. Basically, we are once again, we are not now providing kind of outlook, but then it is very much related to how this will evolve and that we do not have, kind of a clear visibility to how it goes. The basic fundaments are supporting, at this, even this short term outlook, which is the lockdown but that but how it evolves later remains to be seen. Just maybe one if you can comment on the strikes in Cindon, the financial impact of that, if you can share that with us. Also on costs, I mean, wood costs have been relatively consistently relatively high, especially on the pulpwood side. Are you starting to see any benefits on the variable cost side from cost movements? Maybe if I'll take that and just to continue still on Raffodak that, again, the fundamental fundamental thing has been that, the margins have been very good. And whatever impact in the market markets we may have seen, it was at the very end of the quarter. So for the most part, the quarter benefiting from the fact that, we had the margins in the good shape and, obviously, then whatever additional boost we got towards the end, we were able to sort of take advantage of, And then now we'll see how the mix of end users will impact the going forward. But then, to your question on the cost side, let's say, obviously, the impact of the strike was mostly felt January February has said. And if you kind of look at the immediate impact then, in sort of round figures, It was about 1,000,000 for us. But then how much of that in a sense was permanently lost, how much was then in a sense, something that partly was mitigated later on as the sort of month involvement can say so that, of course, Some of it is mitigated Floss production at the pulp mills, of course, was the most significant sort of permanent loss. In the paper business, we have sort of capacity elsewhere that we can compensate for the disruptions in Finland. Then, let's say, on the cost going forward, we do see, let's say, moderation on costs, obviously, as everyone can see oil prices down energy costs, electricity prices down. Which obviously impacts our costs directly, but we'll likely have impact through lower logistics costs or inputs where energy or sort of supplies where energy is and or oil is an input like chemicals or raw materials for Raflatac And when it comes to wood, we have seen if you look at the stumpage price, some, let's say, moderate decline, taking place here in Finland and then we'll have to see what the impact of everything that is going on around us and in the economy going forward will be. During the coming quarters The next question we have is from the line of Justin Jordan from Exane BNP Paribas. Please go ahead. You. Good afternoon, everyone. I've got 2 sort of very different questions. Firstly, just within communication paper, the 45,000,000 special item that you've taken in Q1 for I assume this is all relating to Chappell. Can you break that down for us between cash and non cash? And I assume that the $45,000,000 is assuming essentially no disposal, a full potentially shut down and all redundancy costs environmental costs And then clearly, if it were to be, so potentially some of that might have written back. Sorry, that's my first question, and then we'll got some pull ups. Well, it's mostly cash impacts of cost of eventual shutdown where that's the way to go. And as you say, then if there is a kind of deal to be done in terms of, sale of the assets, then obviously depending on the conditions or terms of the deal that could be, could be sort of mitigated, but remains to be seen obviously whether there's a deal or not. Sure. Okay. And just Thinking and so I'm sorry, just to follow-up on a completely different topic. Clearly, reading trade press, you're in consultation with various worker groups and union group, regarding potential temporary measures at various mills globally. I guess my question is, have you at this point already taken some downtime, some temporary shifts off at this point around the world, or how quickly can you bring on those measures as required potentially in Q2? You see here, I think that we are well prepared for what they were is needed actually in in all of our businesses where we see a requirement for that there are changes like in Finland. There has been a change in the agreements of the unions on national level that you can have a fast track on implementing a temporary layoff, so that's done. And we have been preparing on those businesses where that is needed similar in Germany where the courts are by possibility. So basically, we are well prepared for those actions. And that has been our main focus to be prepared to mitigate the lockdown effects. Sure. Okay. One final question, just on the spearhead to growth. Am I right in inferring? Essentially, there's no change to the CapEx guidance. There's no change to the anticipated timing of both Uruguay and the German bike and the club coming on stream in, let's just say, second half of twenty twenty And at this point, clearly, I know you've had some temporary construction delays, but nothing of any materiality to the timing or total capital cost of either project. Thank you. The next question we have is from the line, I think, of Henrik Taittonen from Nordea. Please go ahead, sir. Yes, so hard of me. Rather, I don't know if that's been a nightmare. Can you talk a bit on the on the biofuels kind of what is the performance? What are the performance drivers for that business now with this, the extreme kind of oil prices to sort of remind the kind of mechanics work and possibly related to that, how does does it somehow affect the kind of the preparation or studying of the various raw materials, etcetera, for the technical solutions for the potential of Kotka by a fuel project. Well, maybe if I'll comment on that. So, maybe to start from the point that we are producing so called Advanced Renewable Fuels, which is also the aim with the, plant expansion in the biofuels, meaning that the achieved reduction in greenhouse gas emissions is high over 80%. And then in our new project could be even higher than that. And in the markets where we sell, the pricing is driven by that greenhouse gas reduction, which sets the buyer premium that is paid for the fuel and that buyer premium has been quite solid and good for us. So I would say that, again, when there are strong movements like there has been now with oil. And however, it sort of translates through the refining industry to the outputs, there can be some, let's say, timing impacts in terms of then how the sales price on one hand and the feedstocks on the other for our production move, but overall, the performance even in these conditions is very good for our biofuels business. And I would say that that just sort of further underlines the importance of the work that we are now doing for the potential expansion because, again, the focus there is for us to differentiate ourselves in terms of the mix of feedstocks that we are using including wood biomass and to even increase the impact to the greenhouse gas emissions compared to what we are able to achieved today, which would increase the buyer premium further. Exactly. Thank you. Thank you for that. Maybe just one more question related to China and given that some capital goods companies and also your peers talked about kind of operations getting back to normal. And so sort of what are you seeing there? Because you have basically the fine paper segment and the specialties there. What is the current portion for you in China between the specialities and fine paper and what sort of other differences in the market for those 2 main segments as you see now. During the Q1, to be specific, we did have and we have had globally quite strong demand for specialty papers and that has been pretty clear as well, we have had quite solid demand for the fine papers, office papers and and graphic papers in China. Obviously, you're right, Harry, that now China is getting back on more normal situation and that is visible when you are looking at the kind of roads and highways, you have lorries and and people back on those obviously still, having a lot of things to be controlled that there will be no second wave of this COVID-nineteen pandemic. So therefore, therefore, there are some restrictions still in troubling, for example, But basically, we have been running throughout the Chinese New Year, first of all, and the Q1 was in volumes strong in a special interspecialty part of the business. Excellent. And have you recently specified how much roughly of charms you output goes to specialties business and how much is find better? Or is it something you have not commented? We have not commented that, but basically, basically, the fall of PM3 is now specialties and then the rest is office and graphic papers. Thank you. We currently have 4 questions remaining in the queue. The next question is from Michael DuPont from UBS. Please go ahead. Thank you. Just briefly coming back to Raflatac and the exception on the strong performance. From a historical perspective, would you say that the price cost spread in the Raflatax business was exceptionally good in Q1 or Well, I would say, yes, it was, but again, as a result of work that has been done also over many quarters, not only that it happened this quarter because as mentioned, we have been improving the mix of business in Raflatac and now also, let's say, during the recent quarters, our focus has been very much on margin management. So in that sense, it was a very good quarter from the margin point of view, but we have been sort of building towards that for some time. Okay. And for the Specialty Papers division, just looking at the numbers, it seems as if the production costs were very low in the quarter and a key reason for the very strong margins. What was the reason for that? And do you see it as sustainable or not? Well, in that case, of course, If you look at the costs in specialty papers, that is the business where pulp has the highest share in terms of input cost. So, as I mentioned earlier, I think in the call, the low pulp prices, in a sense, benefited on the cost side, obviously, the strong demand And let's say, the very good position that we have particularly in label papers then meant that we were able Okay. And then just finally on CapEx, it seems as if you upped this year's CapEx by about EUR 100,000,000 compared to your previous guidance. What was this first of all, what was this? And secondly, was this a shift from 2021 rather than anything else? We did not change actually. Like you just said, we, we gave this guidance already in the beginning of the year when also we announced the investment decision to the biochemicals refinery in Germany. So that added 100,000,000 at that time, that information was already given that added 100,000,000 to the CapEx for this year. So then $1,300,000,000 was the figure in January already. Then just finally, on the Wood Products sawtimber business, I realize again, you're not giving guidance, but right now, what do you see in that in those businesses in terms of demand? Well, I said, In those businesses, we are, of course, serving end users that are related to construction, investments in logistics but also then refurbishment of buildings and so on and so forth. So for whatever impacts this lockdown has on that and kind of the economic conditions that follow from there, then that will be obviously felt in our Timber And Plywood Business as well. Thank you. The next question we have is from the line of Wobhan Suntar Vietta from Carnegie. Please go ahead. Yes, thank you very much. So in terms of the planned biofuels investment, Could you just remind us what is the currently planned capacity and what kind of investment in total are we talking about? And could you just give any guidance on what the timeline development looks like for that project, please? Well, what we have said, as far as the kind of rough figure for capacity is around 500,000 tons. And we have not given any number on the CapEx for that. And there we are in the sort of technical design and development work which is still ongoing during this year before then we would be in a position to start, let's say, going towards the actual investment decision. And, again, as I was discussing earlier here, already that that sort of technology work is particularly important for our strategy as far as the feedstocks are concerned. So there's still work ongoing. And after this year, we will know more. Would, could it be that you would already be ready to decide on this investment in 2021 or is that too early? We will see that's still early to start, let's say, talking about more definite sort of timing on that. All right. Thanks. Then, as you mentioned, clearly, you have a strong balance sheet and and a good financial position. Are you looking to be involved in any kind of maybe structural measures or transactions in order to strengthen your position if this then were to be a long recession or a long tough time for Payers in your industry. Or are you solely focusing on the organic projects that you have ongoing? This is Jose. I think that we are in a great position that we can consider both if needed. But of course, if, like you said, that are we looking for a strengthening our position, financial position for the future. Obviously, this pulp mill and then biochemical investments are strengthening our financial capability and capacity and result significantly for the future So basically, UPM is having a good growth investment. And that's one of the focus, but of course, if there will be interesting small, medium or even large size of the transactions we could consider that is not necessarily set that it isn't in our portfolio. But like I said, that we are having a very clear strategy within UPM and Obviously, this spearhead of growth is solid for the future. And even strengthening our our position and finance or sorry, the kind of profit growth for the future. So We'll see, but, but like I said, we are very kind of happy with the situation today. We do have a growth in pipeline. Thank you. And then finally, maybe to top your, could you just remind how much of the group's cost base is fixed? We haven't sort of given, given numbers on that as such, but, let's say, in round share, you can say, 20% or so. And do you have a rough split on that on top of your head? No, not further, further sort of split on that. All right. Thank you. Thank you. The next question we have is from the line of Mark from Handelsbanken Capital Markets. Please go ahead. Yes, good afternoon. It's Mark Cubermann from Handelsbanken. I had a few more clarifications here. I suppose, from Raflatac still, I appreciate you had strong demand and good efficiency, but you also mentioned a positive FX impact. Could you please quantify that and just comment whether that was normal translation transaction or what's there possibly a sort of a balance sheet impact from working capital or something like that? No, no number on that, but that was in the sort of ongoing operations on ongoing business. So that will sort of carry on to coming quarters? Yes. We'll see. Depending obviously how the FX develops. Sure. Sure. Then on the maintenance of the pulp mills that is now moved to Q4 from Q2. You've previously said, I believe, that typical impact is 1,000,000 does that still hold with current pulp pricing? Yes. Let's say so that if we had the strike in Finland in the first quarter now, then this pulp mill maintenance and the impact might have been might be in the same order of magnitude. We have said, let's say, about 1,000,000 per big mill in fixed cost plus block the sort of lost margin on top of it. And obviously, the lost margin depends on pulp price. Sure. Sure. Then just finally on communication papers, typically you have biennial contracts that are renegotiated for the 1st 6 months of the year in in magazine and newsprint, especially I was just wondering, did you see the full impact of the somewhat lower prices already in Q1 or is there some sort of a delta still in Q2. So did that pass through already fully? Yes. What was negotiated at the end of the year, yes, that that was fully implemented in Q1. Thank you. The final question we have at the moment is from Paul Hawthorne from Jefferies. Please go ahead. And just on communication paper, you mentioned your flexibility on temporary layoffs to curtail production as required. However, when you're thinking about your customers in this division like the various publishers and printers across Europe, are you doing anything different that you can call out to help like potentially extending payment terms in 2Q for those customers you think will do well and you want to continue business with? Thank you. Not we do many things with the customers, typically, but, of course, we have the deals and that is in between our as other customers, that is typically a thing that we do not comment. But obviously, we are We are actually taking the benefit of the market today wherever it goes. Thank you. Currently, there's no further questions for Mature at this time. Ladies and gentlemen, thank you for your interest. And And like I said, that UPM had a solid quarter. And, and like underlying that, great to be in this shape to be able to run through these projects that we have in our our kind of operations, I. E, the Uruguay and the biochemicals. With these words, thank you once again and see you. Thank you. Be safe.