Good afternoon to our guests here in the room and to everyone joining us online. My name is Ulla Paajanen, and I will be responsible for WISA's investor relations. A warm welcome to WISA's first Capital Markets Day hosted here at UPM's Biofore House. I would also like to remind you of our clear disclaimer since we might be making forward-looking statements. Before we begin, let me briefly go through some important safety information regarding the premises. Safety is a top priority for WISA. Therefore, I would like to remind everyone here that in the event of evacuation, please leave all personal belongings behind and proceed outside as quickly and safely as possible. Our designated meeting point is located directly in front of the Biofore House.
Your today's presenters are Chair of the Board, Tapio Korpeinen, whose distinguished career spans leadership position as a CFO and business area executive at UPM. Joining him is President and CEO, Tuija Suur-Hamari, a highly respected leader with extensive experience across the forest industry, particularly in materials-based and industrial businesses. Completing the team is Chief Financial Officer, Lasse von Hertzen, who brings a unique combination of capital markets expertise from investment banking and deep financial leadership experience from UPM. Let us now turn to today's agenda. As you can see, Tapio will begin by sharing why UPM believes WISA is well-positioned to create greater value as an independent listed company. Tuija will then provide an overview of WISA's market strategy and investment case. Following these presentations, we will open the floor for a Q&A session with Tapio and Tuija.
After a short break, Tuija will continue with a deeper look at WISA's operations and product offering, and Lasse will present then WISA's financials profile. Before our final Q&A session with all presenters, Tapio will conclude the formal presentations with closing remarks, and we expect today's event to conclude approximately 4:00 P.M. Helsinki time. At this point, thank you for joining us. We look forward to an engaging discussion and to answering your questions throughout the afternoon. Before we begin, a few words about questions. For those joining us online, a chat function is available on the event page. We encourage you to submit your questions throughout the event, and we will address them during the Q&A sessions.
For those joining us here in person, please raise your hand if you would like to ask a question, and a microphone will be brought to you. We welcome your active participation and look forward to engaging discussion.
Now let's move on to today's presentations. Tapio, please.
Thank you, Ulla, and good afternoon. Welcome on my behalf as well. Quite a historic moment, the first CMD for WISA Group, even if it's a long-established industrial company, but about to be listed there for the first CMD. I will give a bit of a background to the demerger and also, let's say, the rationale for the demerger and the listing of WISA. In terms of background, to start from two years ago when we had a Capital Markets Day for UPM, we laid out the priorities for UPM as such, and also the focus for looking for new growth for the company. Since then, we have disclosed two important portfolio initiatives, actually last year, the joint venture that is in the works between us and Sappi, which addresses communication papers, which is the business within UPM portfolio that operates in a structurally declining market.
Of course there the rationale is to look for synergies in combining the two businesses and an upside for the business as an independent joint venture going forward. The other news from last year was the strategic review for the plywood business of UPM, and now we are at a stage where at the end of August the shareholders of UPM approved the plan to demerge WISA Group from UPM, and here we are at the first CMD. Of course, in the case of WISA, the rationale is different. It is about distinguishing the potential that the business has in terms of value creation and also profitable growth. WISA Group is a leading player in the plywood business and with a focus on the premium categories of the market, so with a premium position in the market.
WISA has a strong track record of being able to deliver good results in terms of returns and cash flow throughout the business cycle during the past years. Also, the focus of the group means if we look at the market segments, geographies where the business operates, we expect to have the market grow by more than 5% per year during the coming years. There is room to grow, and now WISA will have room to pursue its strategy to deliver value, deliver profitable growth, also, I would say the capability and the capacity to do so. Then also we can make basically those value drivers and actions more visible to the investor, and distinguish the value that can be created in the WISA business standalone and as a listed company.
We have an experienced leadership team also, and today you have a chance to discuss with some of them and especially hear from Tuija and Lasse, as was shown in the agenda. About the transaction as such, just a short note on that. Basically, as was approved in the EGM, WISA Group will be carved out or separated from UPM through a partial demerger. That means that each UPM shareholder will receive one WISA Group share at the time of the demerger. Therefore, on day one, the shareholder base of the company will be exactly the same as it is at that time for UPM as a whole. Then the plan after the demerger, which will take place at the end of October, plan is to list those shares as quickly as possible in the beginning of November in the Helsinki Stock Exchange.
I believe that in the Helsinki Stock Exchange, in the list of companies, WISA will be a quite unique investment case for the shareholders. As said, it is a well-established leader in the plywood business with a premium focus. The sort of dynamics or fundamental drivers of the segments and customers of the market where WISA Group focus is means that, again, we believe that there is healthy growth more than 5% per year going forward. The premium position, which I have mentioned a couple of times here already, is based on both quality and service capability that is tailored for the customer and end-user segments that WISA is focused on. That means that first of all, that is evidenced by the price point that WISA is able to fetch for its plywood in the marketplace.
Tuija will show more about that, and also it means that WISA has a quite resilient, sticky customer base to base its business on. When you combine that with the fact that WISA is able to manage and control its costs in the different points of business cycle, then therefore also this resilience and good cash flow throughout the cycle has been there. The final point there is that when then looking at the business at hand, what WISA Group has in terms of the customers, but also in terms of the asset base, the portfolio of plywood mills, the potential for growth and reaching the financial targets, which we will talk about later today, it is possible without any major capital investments during the first coming years here.
In that sense, there is a case also for profitable growth, improving performance in a very capital effective, efficient way. Maybe I will stop there, and we will have a chance to discuss and dig into each of these points deeper today.
I will hand it over to Tuija, who will then tell you about the business and the strategy in more detail.
Dear guests, welcome on my behalf as well. My name is Tuija Suur-Hamari, and I am the future CEO of WISA Group. When I joined UPM Plywood about a year ago, I thought that plywood is a good business and has excellent opportunities. Now after a year, I truly feel that this is the case and even stronger. So very excited to start the journey as WISA Group. I believe that after today, you will also see WISA as a company with strong financial track record and potential for clear growth and future development. It is our pleasure to introduce WISA Group to you. WISA Group is one of the leading plywood producers in Europe, focusing on those end uses where the requirements for the material and for the service are the most demanding ones, so in high and medium requirement end uses of plywood.
WISA has a diverse product and market exposure and strong financials. Our sales in the previous 12 months have contributed to EUR 457 million, comparable EBITDA to EUR 67 million, and EBIT to EUR 49 million. Together with our net debt position, these figures demonstrate strong financials and room to grow. Plywood as a material is a very versatile material. It can be used in various end uses because it possesses properties that are superior compared to, for example, other wood-based materials. Those are properties such as the high strength-to-weight performance, durability, wear resistance, and dimensional and thermal stability, to name some. In WISA, our strategy is really to take the maximum out of these excellent properties of plywood and bring them to the end uses that are most demanding and where plywood is the material of choice and difficult to replace.
WISA's industrial footprint is close to where the forests are. We have our mills in Finland and in Estonia, and our sales is close to our customers, positioned in our markets, serving our customers in their local language and supported by warehouse hubs located strategically close to the customers. Responsibility is built into WISA's business model, and this continues to be so also in the future. That's because it's in our values, but also because that's what our customers expect of us. Our responsibility approach has six pillars. Firstly, responsible sourcing. We know our suppliers, and we know where our wood comes from. Secondly, efficiency in terms of energy efficiency and both also in material efficiency. Third pillar, we are a reliable partner for our customers and close to them. We keep our promises, and we do the right things right.
Fourth point, we want to continue developing WISA as a safe and engaging workplace also in the future. Fifth, renewability and low carbon performance. Plywood is part of a solution, and WISA is part of a solution in the decarbonization journey where plywood as material is a biogenic carbon sink. Lastly but not least, also we continue R&D for fossil substitution in our own processes but also offering solutions for our customers. Like I said, WISA has a very focused approach towards the end uses that we serve. We focus on four key end uses. Biggest one of those is panel trading and construction, so different construction end uses in the European market. 58% of our turnover comes from this end use.
Vehicle flooring. Floorings for commercial vehicles, like trailers and reefers, trucks, 12% of our turnover coming from that end use. Then maybe the most demanding end use there is for plywood is the LNG shipbuilding business, where plywood is used in the cargo containment systems of liquefied natural gas as an insulation material around the gas tanks. 14% of our turnover comes from this end use. Then the smallest end use for us, focus end use, is the parquet manufacturing, representing 4% of our turnover during the past 12 months. You may notice that we have there marked that there is both Birch and Spruce plywood in our portfolio. We have this premium positioning across both hardwood and softwood plywood. We produce hardwood plywood out of Birch.
Birch, as a wood species, is more dense, so we get the stiff and strong plywood produced out of Birch. Whereas our other wooden product lines, our Spruce plywood, Spruce as material is less dense, and therefore, the plywood produced out of is this more lightweight and excellent for structural use, so in different construction end uses. Share of these two product lines in our sales is about 50%/50%. These Birch plywood products are used in a bigger variety of key end uses. Therefore, because those are the more demanding ones, also the average gross price that we get from Birch products is significantly higher than that of the Spruce. In this picture, you can also see that our delivery volumes for Birch have been lower, and we also have a lower capacity than for Spruce plywood.
One thing that Tapio already mentioned and can be found out in this equation here is also that we have available capacity in both Birch and Spruce plywood, and we can capture the market growth with our existing capacity without any major investments. Plywood production as such is a highly technical process. You need to have access to quality raw materials, rightly harvested according to the plywood needs, brought to the mills in an efficient manner, and favorably from as close distance as possible to minimize the logistics costs. Plywood production has many stages. Efficiency is needed in each of these to reach the qualities needed for the different demanding end uses. This is a core of WISA. We are very good in this plywood operations and production and can do this in an efficient manner.
Let's take a bit closer look into WISA's markets and competitive environment. The global plywood market is in volumes about 107 million cubic meters large. In values, this represents about EUR 39 billion. WISA's focus market, these high and medium grade applications in Europe and the global LNG market, that's of a size of 4.6 million cubic meters in volumes, translating to value of EUR 3.1 billion. There you can also calculate from this that actually, even though WISA's focus market is less than 5% of the global plywood market in volume, in terms of value, it's almost double of the share. Sizes are almost double, so close to 8%. WISA is focusing on the demanding industrial applications, high and medium end uses, and selected customers in Europe, and then globally on the LNG market.
The good news is that these focus markets of WISA are expected, estimated to continue growing until 2030 at the pace of 5.3% annually. You can see in this picture that the biggest single key end use here is the construction market, but all of these key end uses are estimated to continue growing. That's because of the attractive end market dynamics and geopolitical landscape. So in the LNG demand, the global demand for liquefied natural gas has been growing, and already we know that there is a large backlog of LNG carriers to be produced also in the years to come. Construction business has been in a low cycle for some years already. That is expected to turn into growth part of the cycle.
Good to note that even though this has been the case in construction sector for some time already, WISA has nevertheless been able to show good financial performance. There is a big potential in this one. Vehicle flooring demand is also expected to grow following macroeconomic conditions, but also because there is aging fleet in Europe and there is a new European directive, VECTO directive, coming into force, forcing then commercial logistics companies lowering their CO2 emissions. All in all, also the demand for sustainable products is expected to continue growing, also supported by regulation, for example, by intensifying the use of less carbon-intensive products. Let's take a bit closer look into these two biggest key end uses of WISA, so construction and the LNG market. In this picture, you can see in the graph below the distribution of WISA Group sales in construction segment by different countries.
You may notice that the Nordics, Ireland, and the U.K., and Benelux are the biggest construction markets in Europe for WISA. If you then look at the upper graph, showing the estimated construction market growth in Europe, you may notice that WISA's focus market in construction is expected to grow faster than the European average. On the right-hand side, you see a very nice house. There is a lot of plywood in there, and that's picturing the different end uses or different ways of using WISA plywood in construction across the different usages. So lovely house. Like I said, the LNG vessel fleet and LNG market is estimated to continue growing close to 9% a year until the end of 2030. WISA is one of the few suppliers globally who is able to supply this very demanding market, where the barriers for entry are the highest.
In order to become a supplier in this segment, first of all, you need to have certification from the French technology owner, GTT, who certifies who can start supplying. You need to have, obviously, the required technical qualities with your products, and you need to have relevant volumes to be able to supply that market. Obviously, you need to win over the shipyards as well and be continuously able to deliver quality products with quality service. In this market, the customers are also sticky. They prefer to work with suppliers who they know they can trust on. We have good market, and to turn this into good business, we also need a strategy how we're going to capture that market growth. Let's take a look into WISA strategy as well. Also in the future, WISA will be winning with focus, partnership, and disciplined execution.
We have clear strengths that we build our strategy on, also going forward. WISA continues to rely and be focused on those premium applications of plywood. We continue to work closely with our customers in a true partnership-led commercial model. We continue to run our two strategic product lines, Birch and Spruce plywood. At the same time, developing our operational footprint and efficiencies in our existing mills. All of this then built on the continuous improvement and cost control that is part of our culture in WISA. We also have a robust growth agenda in place for WISA, targeting industry-leading profitability, and it has three pillars. The pillar A here is commercial excellence. How do we plan to capture the growth that is on the market? How do we grow in our focus end uses?
Then the second pillar is the operational excellence. How we develop our mills, increase the efficiencies, and maintain and improve our competitiveness. The pillars A and B put together our existing capacity and capabilities. By these, we believe that we can meet our financial targets without significant investments. As WISA going forward, as an independent company, there is also the pillar A that gives us additional potential and opportunities. This may be geographical expansion into attractive markets, could be selected strategic investments, or an optionality for M&A should an interesting opportunity arise in that front. If we take a little bit closer look into the commercial strategy of WISA, like I said, continuing to focus on our key end use is also going forward. We put together the strategy for each of the key end users considering selected customers, considering geographical areas.
The common denominators in our commercial strategy are how do we capture the market growth with our existing customers, how do we increase the share of wallet within our existing customers, but also on how do we create new key accounts, especially in markets where we currently may be underrepresented. A lot of potential there. In the operational pillar, so the B pillar, we are focusing on, let's say, classical operational improvement issues, productivity growth, improvement of yield, so getting more out of the precious raw material that we use, improving the product quality, having higher share of higher margin products produced in our mills, and then optimizing our maintenance cost, turning the focus from fixing or maintaining more into preventive maintenance.
We can also, and good to note, that we can increase our production with the existing fixed cost base, so without the need of adding significantly the fixed costs. All of this is, like I said, classical things, and also needs to be supported by targeted investments in automization, in smaller bottlenecking investments, and also in bringing digitalization tools to our shop floor and production units. One example of these kind of new digital tools that has brought our plywood production to new era is the Mill Data Platform, a new digital tool that we have now launched into all of our production sites during the past year allowing real-time data on operational visibility available for our operators and engineers, enabling then faster decision-making, and earlier identification of possible deviations. Also, better tool for analysis and planning the future improvement areas.
We can already see the results of the new tool in our KPIs. We've created a huge pool of data, and knowing that data has maybe today more value than ever. We're already now testing in our Otepää mill in Estonia, AI-based quality sorting. These type of examples and digitalization we will continue to bring on to our production sites also going forward as part of our strategy. These were the pillars A and B, and like I said, WISA is also well-positioned to capture additional potential across strategic growth levers. In our R&D laboratory, we have a major R&D project ongoing on developing next-generation plywood products. We may be considering extension of our product portfolio and M&A like we already discussed as well. The horizons are open for WISA in the future.
I hope by now we've been able to awaken your interest towards WISA as an investment case, and Tapio already went through the highlights in the beginning. Now let's take a bit closer look into those still. WISA is one of the leading European plywood producers, in an attractive position in the forestry value chain with high entry barriers. Here we have pictured, this is one way of looking into the leading, obviously. Here we have placed our main competitors, main European producers. Put them into order in terms of capacity. You may notice that WISA has a nice podium place there. You may also notice that there are two suppliers that are marked with gray. Those are our Russian competitors who are not currently able to deliver their products to the European market.
WISA is a significant player, premium supplier, and focusing on those most valuable markets. That's our strategy. We already went through the attractive market dynamics. The expectation of our focus market is to continue growing, so not going to stop there. That's good to remember that it's a growing business. WISA has its offering tailored towards the premium application, and that's facilitating us a strong pricing power. On the left-hand picture, you see a qualitative map of the different end uses of plywood. On the Y-axis, they are ranked according to the technical and service level requirements. You may notice that WISA's focus end uses are there on the highest end use categories, which then translate to the pricing position that we enjoy on the market. On the right-hand picture, we describe that. It's showing the hardwood and softwood markets in Europe.
On the X-axis, you again have the qualitative scoring, and then, sorry, on the Y-axis, you have the qualitative scoring, and on X-axis is the average price for the material. You may notice that both WISA-Spruce and WISA-Birch are in their categories in the upper right corner. That's how it can be interpreted as our premium position. One reason also behind the previous is that we have a clear commercial strategy, which is in turn facilitating a sticky customer base. We have shifted from a higher number of key customers, so from 400 key customers down to 100. For 10 focus end users down to four, and from 28 different applications to 10. This has brought focus to the whole WISA business. You can imagine that it translates in efficiencies throughout the organization.
Think about stock levels, for example, for different products and complexities in the production. WISA has now today a strong emphasis on serving large industrial customers and end users and distribution partners. As a result of this, the retention rate of WISA's customers varies between 99%-100% a year, which is quite amazing in my opinion. I haven't seen such numbers anywhere else. WISA has a resilient financial profile, and you can see it in this picture where we show in the upper graph, we show the turnover development of WISA during the past 10 years. The below graph shows the comparable EBITDA development in the same time frame. There's been a lot of things happening. There's been different business cycles, there's been a pandemic, and a couple of wars.
During this same time frame, the comparable EBITDA percentage has been hovering between 14%-18%. This, in my opinion, signals the resilience of WISA. One reason behind this resilience, you may find here. WISA's cost base is flexible. We have high proportion of variable costs, 76% of our costs are variable, meaning that we can adjust on different business cycles and market conditions easier than some other more fixed cost intensive productions. Also, the capital requirements for WISA have been low over time, and these have then led to consistently high cash generation and capital efficiency of the business. The average cash conversion has been 76% in the past three years and the return on capital employed, 18%.
The good news is that we still have significant upside like already mentioned. We have capacity to meet the market growth with our existing machine park. You see on the left-hand side here in this picture, our delivery volumes in 2025. Maybe a good reference is to use our record year of production, 2021, as a reference on how much we can easily grow with our existing current product palette, considering also that we've been able to develop our production since 2021, but that gives you some kind of a ballpark.
That concludes the first part of my presentation.
Thank you, Tuija. Just to remind audience online that you can ask questions through a chat function, which is available on the event page. Here in the room, if you want to ask a question, raise your hand and microphone will be brought to you. Antti, before we go to your question, may I ask a couple of questions here from the chat? Tapio, you elaborated about the investment highlights of WISA, but if you would like to single out one particular highlight, what would you like to share with us?
Well, I would say, like I was pointing out earlier, that WISA is a very well-established industrial leader in the plywood market with quite a lot of operating leverage, therefore able to actually deliver on the sort of financial targets in a very capital efficient and I would say, reliable way when we look at the next years to come.
Okay, thanks. Then maybe also to Tuija, here is one for you, that could you please elaborate why WISA is able to get premium prices for its products?
Oh, thank you for the question. I think that is a combination of the things that I explained. So focus on the premium markets, our clear commercial strategy, taking extremely good care of our customers, and on our sticky customer base. I think that is where it comes from.
Okay, thanks. Now, yes, why don't we go to Antti Koskivuori at Danske.
Thank you. Antti Koskivuori from Danske. Two questions. Thanks for the good presentations, by the way. Firstly, on the competitive landscape, one observation obviously from the slide was that there is quite a lot of capacity in Russia, which are now, I guess, more or less blocked from the European market. If we see a scenario that those volumes would be returning to the market, what kind of implications you see for your core markets and segments?
Yes. Thank you. Yes, the case, like I said, is today so that Russians are not able to be present on the European market, but we do consider the fact that one day there will be peace in Europe, and most likely we also get more competition from Russia. Even today, we are competing with the Russians in Asia, so they are present on the LNG market, so that picture wouldn't be changing. They also don't have Spruce plywood in their portfolio. That picture wouldn't be changing either. They have been importing significant volumes of Birch plywood to the European market earlier on. Our assessment is that they would first come to those end uses and applications where they were present before the war.
Quite a lot of the capacity that has left, or the Russians haven't been able to bring to Europe, has been then filled with imports from outside Europe. Our expectation is that that would be kind of the first battle there. At the same time, we also believe that when there is peace in Europe, also the construction sector most likely will turn into strong growth mode and the absolute cake also grows for everybody to take their shares and grow. Still, one point is that then it also remains to see what happens to the wood imports and wood pricing in this type of scenario. Can't give you an exact answer, but it's not a black and white picture.
Great. Thank you.
Also, kind of what Tuija was already pointing out, these players are no strangers to us. Before the war, we were competing with them and we did so quite well. Then we will see what the situation is if those circumstances come that they are able to come back to Europe, but then the market will probably look quite different as well.
Thank you. Second question would be on WISA as a separate company versus part of UPM Group. I wonder, how do you see the potential dis-synergies coming from the spin-off to WISA? I guess one thing that comes to my mind is wood sourcing, for example. WISA, as a procurer of wood, is a quite much smaller player than UPM as a whole. Do you see that this type of this particular thing or other topics similar matter would have an impact on WISA's potential to operate as good as it has been going forward?
WISA has already been independent in terms of business, so we've had our independent mills, our independent sales. Where we have been relying strongly on UPM is the different functions serving us. Now during the past year, and since springtime, more significantly so, we've been able to build our own organizations and also actually during summertime, we also carved ourselves out of UPM SAP. We've built the independent WISA already. We know that our fixed costs through to, and I think Lasse will come more into details into this, but we will have higher fixed cost as a standalone company.
There will be continuing some agreements with UPM also going forward. Wood sourcing being another one of those. I'll actually come back to the wood sourcing agreement after the break. The other win-win cooperation that we are continuing with UPM is, UPM continues to be our logistics supplier, where volumes matter and business has significant volumes to be shipped out of Finland to European continent.
All right. Thank you.
Okay, thanks. Linus, before we go to you, I had taken one from here from the chat, which is an interesting topic. Tuija, you mentioned in your presentation about the possibilities for M&A, and here is a question that is WISA expected to grow through acquisition? If yes, what businesses the company is looking for?
That is an option for WISA, and if we go that way, then the target needs to meet our strategic or be aligned with our strategy one way or another. As we know, the plywood market in Europe is fragmented, so there are different avenues depending on how we look into it.
Good. Thank you. Now I think it is Linus Larsson from SEB.
Thanks a lot, and thanks for your presentation so far. I wonder a bit about business practices and how they may change now for you as an independent company. What constraints have Tapio put on your business while you have been part of a big group, and how may that change? Maybe in particular, in terms of your growth aspirations, what you may let loose and how you may try to grow differently from before?
Don't know about the constraints, but maybe a way to put it is that WISA has been the smallest business area in UPM, and when capital allocation is being considered, maybe we have not been in the forefront of the investment decisions. Now going forward, besides able to, let's say, use the money it's making. Maybe Tapio has a better comment on this.
Well, maybe first I would sort of turn it around also this way that, of course, let's say UPM has a kind of a certain level of excellence that we look for from all companies and all businesses and of course from the company as a stock listed company. So in that sense, there's a very strong base in terms of practice for WISA as a new listed company to build on in terms of what a listed company must be able to do and how to manage its business and so on and so forth.
Then of course, it's a question that when looking at a, let's say, global large scale, large cap company like UPM, we have many kind of requirements that are put on us and probably there will be obviously now we have been focusing on getting ready for the day one and getting the sort of business ready to fly in the beginning. But probably there will be also chances to sort of really kind of sharpen the focus in terms of what WISA as a listed company needs to be able to deliver to its investors and where there is, let's say, chances to sort of simplify.
Thanks.
Good. We have some very good questions here on the chat. Some of them will be addressed in the second part of the presentation, so I will skip them and leave it for the final Q&A. But here is one for you, Tuija. There is a question about the WISA's financial result is heavily dependent on workers' union relations, as we saw first quarter 2025. What has the message been from the personnel on the demerger?
Yes. Obviously, when the announcement was made September last year that Plywood is under a strategic review, the first impression was a surprise, and obviously as a shock, at least in some people's minds. Then it took a time to digest the topic, and since then, I would say that now our teams across the mills, but in different functions as well, are very motivated in creating something totally new and getting a new start. Not going to be able to speak for every individual, but that's the big spirit we have, and actually, we've been also measuring and following this as part of our transformation journey, how people take the situation, and to make sure that we also communicate and bring information in a timely manner to our people to understand where we are heading to.
Yes. Good. Thanks. Then I think it's Tomi here from DNB Carnegie.
Hi. Tomi Railo, DNB Carnegie. Sticky customer base, premium pricing, can you talk a little bit about the pricing trends and fluctuations over the years? Is it highly linked to the volumes, or how do you sustain the pricing picture?
We have a principle of value-based pricing. We hang on to our prices, and that's part of our pricing excellence, that we don't only sell volumes and products, but truly the value proposition. That is respected also by the customers. Obviously, when there are big changes on the market, then our pricing follows. We'll actually be discussing the pricing a bit later. But we are not changing our approach after every cycle or market movement.
Okay, thanks. Then I think it's Joni Sandvall from Nordea. Please go ahead.
Yeah. Thanks. Joni Sandvall from Nordea. Maybe one question still on the competition, especially from Chinese competition. Those are more on the low end of requirements of end users. But how you see in the future, is there a possibility that the Chinese competitors would develop their products as they have done maybe in the packaging space historically? Is there a risk that these competitors would enter, let's say, on the medium requirement market?
If we have learned something from where the world has developed over the recent years, I think it's not to underestimate the Chinese capabilities. I can't say that there wouldn't be a risk like that. We can only concentrate on our game and maintaining our sticky customers and developing the sales from our perspective and bringing in new solutions because that's what WISA has in its tradition to be a forerunner in the industry.
Okay. Thank you.
Okay. Let's go here to the chat because there are no other questions here in the room. There is a question to you, Tuija, again. What would you characterize as the main competitive advantages of WISA?
I would say coming back again to our premium focus. Customer knowledge, business understanding, quality of our products, but also quality of our services. For each of the key end use that we have, we have defined a specific value proposition, and then worked on the value proposition, to develop it to a higher differentiation factor from our competition.
Good. Thanks. I have here some more questions, but some of these are for Lasse von Hertzen, and some are that we will be covering them in the second presentations. I will park them until the end of the day. Are there any more questions here in the room for these two presentations that we have now already listened in? Okay, seems like not. We will have now a break. I would hope to see you all here in the room five to 3:00 Finnish time. It's about 25 minutes, and we all start again then. Thank you for the first session of today.
[Break]
Welcome back from the break. Let's continue with the agenda. Earlier on, we looked into WISA's markets, strategy, and key investment highlights. Now let's go deeper into operations and sales and financial figures. Starting from the wood supply, premium quality plywood needs, obviously, premium quality logs and secure supplies. Also going forward, forestry dynamics support WISA being the buyer of choice for veneer logs. Plywood producers have superior ability to pay for the most valuable part of wood harvested in the forest, for the logs, compared, for example, to the pulp producers or even to the timber producers. Having said that, there is a good symbiosis on the wood market with these actors.
It's good that there is an outlet industry utilizing the logs, having the capability to pay for them, and at the same time, there is a market for the byproducts of the timber and plywood producers, who can then use the byproducts as valuable raw material in their processes. The pulp and wood producers, as an example, and also energy industry. Also going forward, WISA continues to rely on its current wood supplier, UPM Forest, and in turn, WISA continues to supply its byproducts to UPM to be used in energy production and in pulping processes. We have a wood supply agreement in place and also the byproducts agreements in place that are in force until the end of 2030.
The first two years of the duration of the agreements, the supply will cover 100% of the needs, then the latter remaining two years with decreasing volumes ranging from 80%- 60%. There is an optionality to continue the cooperation, obviously, even after that. This arrangement then also allows WISA to develop its own procurement operations and test the market outside the single supply model as well. After we have procured the logs, we move into production, and production of plywood is technically demanding with lots of stages. First, we receive the logs. We need to work on the logs, soak them, debark, obviously, then scanning for potential defects and to determine the optimal cuttings towards cross-cutting, then we come to peeling, where the log is then peeled and produced into a few millimeter thin sheets of veneer.
Then we start processing the veneer sheets and making sure that we use them to the optimal. We also need to further process them to prevent waste resulting from our process. We do jointing of the sheets, we do composing of whole veneer sheets, full-sized panels from pieces, and we also do patching, repairing holes and knots in the sheets. This is needed when we want to produce the premium material that's in our focus. Then we start composing plywood out of these sheets of veneer by gluing them together. We may also add different kinds of further processings on the plywood produced depending on the end uses and needs of the customer. So several steps there, then we end up into packing of the premium plywoods that we produce. This is bread and butter of WISA.
We have been producing plywood for over 100 years, and we've been perfecting these processes ever since. Also, byproducts result from this process, and like already said, the byproducts of plywood production are valuable raw material for other industries. There is market for these and nothing goes to waste from the wood that we use in WISA. Our production units are located near the major forest resources. Our production footprint is very much based in Finland, but we also have one excellent Birch plywood mill in Estonia. Each of our mills is specialized. We have Birch mills and Spruce mills, and they have a defined portfolio, each of them supplementing the overall offering of WISA. Then obviously our sales are then located close to customers, whereas the mills are there where the forests are. Cost discipline is deeply rooted in WISA's DNA.
Here you see a graphic illustration of a smart spend program, which is actually the methodology in WISA that we use to make sure that we continuously develop our variable cost base. There are lots of things happening in the raw material space, for example, in the costs. We always focus on those things that we can influence. Finding savings, finding better agreements with our suppliers, more efficient raw materials, efficiencies on our production lines. Very disciplined way of looking into things. Since 2014, the cumulative savings of this program have amounted to EUR 99 million. As a message from this is that this is a methodology that we use, but I think it describes WISA way of working very well. We focus consistently on production optimization. The foundation that you can see on the bottom of this graph describes that.
Through lean methodology principles, we systematically improve our operations, and also through engaging everyone in the continuous improvement. Means of standardization, eliminating waste, fast reaction to deviations, and visualizations, they form the foundation. Then on top of that, we have our improvement projects, focusing on issues of removing bottlenecks in our production, in improving the process flows of materials, and then different kinds of improvement projects. Some of them may include CapEx needs, but not all of them. This is part of our mindset as well, continuous improvement. Now we've also produced the products, so let's take a look into what the products actually are. But before going into that, I want to highlight that we have a wide portfolio. We have nice, excellent mills, seven of those.
To manage all of the complexities we have with the portfolio of 3,000 SKUs, we also use efficient steering processes to make sure that we don't lose on time and/or resources. We do portfolio management on a central level, making sure that our product portfolios meet or are aligned with our strategy. We have centralized product management that ensures that our products meet the customer demands of today, but also those of the future. Very importantly, and there was a question on this, pricing is handled, pricing guidelines are done centrally within WISA. Followed up continuously monitoring where we are in terms of market conditions and facilitating the forecasting of our sales and results.
Last but not least, efficient sales and operations planning, making sure that our capacity utilization and the customer demands meet in the best possible way. These are needed to manage and produce the products that we have in our portfolio. For each of the key end uses that we focus on, we have a comprehensive product portfolio that is designed to meet the customer needs. But we don't sell actually only products. We have very much focused on value creation. What's our value proposition towards our customer? Actually in the construction segment it's not only about product, it's about the consistent quality and reliable availability of the materials. Thus, having our warehouses close to the customers, trusted long-term relationships with the customers, and responsible and traceable sourcing are the cornerstones of our value proposition in this end use.
If we take a look into the vehicle flooring end use, there also top-notch product offering supported by the value proposition, focusing on performance and durability of the materials in these heavy usages, floorings of trailers, for example, and optimized material flows, and also the life cycle value of the products in their end uses. LNG shipbuilding, the specific interesting market. There are also solutions for the different technologies on the market. Value proposition is built on the industry-certified quality and traceability of materials, on the reliability of supplies, and confidence built through long-term partnerships with the customers and WISA. Between. As the last focus end use and product segment, the parquet manufacturing, their application expertise and tailored solutions, consistent quality and performance, and reliable availability are cornerstones of the value proposition.
Now we have those products gone through and then still a few words about how we bring them to the markets. We have a strong own sales organization in WISA. We have local sales offices in each of the main markets. Where we are not present physically ourselves, then we rely on trusted sales agents to represent us or facilitate our sales in a given country. An example of such a market for us can be mentioned as an example is South Korea. We are also powering our customer service with digital capabilities, and we have launched MyWISA customer portal that is supporting our customer service, but especially the customers with real easy access and real-time data on their orders, on their deliveries, and other business-relevant data, for example, the certificates or needed strength properties and all when they plan for the use of material.
Everything is there for them, and it's a portal that we are constantly developing. WISA has a diversified portfolio of customers and runs this focused partnership model. If you take a look into the pie on the left-hand side, you notice that actually top 20 customers of WISA bring in 48% of the sales. From the other perspective, looking it from the end use perspective, this panel trading and construction segment represents 58% of the turnover. There's also variation by the customer groups in terms of the way of doing business with them, meaning the customers' sales agreements. Typically, the panel trading customer contracts have a longer duration than of those in the industrial segment. Then the pricing updates on the panel trading side are, let's say, more frequent than what is the typical case in the industrial customer segments, where we sell directly to industrial customers.
WISA has strong market shares in the focus markets that we've been talking about. You can take a different approach by looking into this in terms of euros or in terms of volumes. You can see that in both segments, the market shares are relevant, but measured by value, they are higher. Once again, I think this represents the premium position that we have on those markets. That premium is facilitated by this value-based pricing approach that we have. We don't sell only products delivered at the door of the customer. But really starting from the premium end uses and then considering the unique value creation potential that we have in each of these key end uses. We've built our value-based pricing approach on these principles.
This is actually my last slide, and it's my favorite slide because I'm really proud for the whole WISA team to be able to share with you these high customer satisfaction numbers that we constantly get from our customers. We perform customer satisfaction surveys twice a year, which is quite an effort, but it's because we want to maintain our position at our customers, and we want to stay tuned to where things are going. We get the results twice a year and analyze them, identify things for improvement, and there's always something to be improved. These are not same numbers every time. They vary a little bit, but they remain on the high level. Customers show high satisfaction with WISA's quality, reliability, and customer relationships.
The Net Promoter Score of WISA in this latest study was 59, where the industry average in business-to-business markets is from 25- 30. It's a strong message from our customers and a repeatedly strong message. Most of all, I think this picture shows you the strength of WISA. It's not about one salesperson doing an excellent job or one mill having excellent production numbers or great quality or our sourcing making stellar agreements with our suppliers. But it means that the whole WISA is showing its strength and, yeah. Like it takes a village to grow a child, I think it takes the whole WISA Group to reach these numbers.
We have a great team in WISA, and that's where I would like to end my presentation today and invite Lasse von Hertzen on stage to show you more good numbers.
Good afternoon. My name is Lasse von Hertzen, and I will be the future CFO of WISA. I've worked 13 years for UPM, and before that, I worked in investment banking. Today, we'll look at WISA's financials. Let's start with sales development. So WISA's sales and deliveries have grown since 2023. You can see that from the top graph in the slide, where you see both our sales and deliveries. 2023 saw a low point in demand and economic activity, and since then, demand has grown steadily, and that is then reflected in our numbers as well. In 2025, there was an industrial action that impacted our sales and deliveries. Without this incident, our sales and deliveries would have been higher in 2025 than in 2024.
During this time period, the demand for Birch plywood has remained strong, whereas for Spruce plywood, the demand has been weaker because of the weakness in the construction sector. In terms of pricing, prices came down during 2023. They stabilized during 2024 and have remained relatively flat since then. In the bottom graph, you can see our sales per quarter and our seasonality. The typical seasonality for WISA is that Q2 tends to be the strongest quarter for us. Q3 is then impacted by maintenance breaks, meaning that we have slightly higher maintenance costs then. It also, of course, impacts the production volumes that we get out of our factories. It is the holiday season, summer holiday season, of course, then has an impact on demand as well.
Then going into Q4, October and November tends to be very strong months, and December then is impacted by the Christmas break and our customers' inventory optimization. If you move over to profitability and the picture here is very much similar to the picture that we saw on the previous slide when we looked at sales. One thing to note here is that these numbers are now presented on a carve-out basis. I think there was a question regarding the fixed costs earlier, and you may notice that these numbers are approximately EUR 4 million lower than the numbers that UPM Plywood segment has been presenting in the UPM reporting. This gives a relatively good picture of how WISA would have looked as an independent company during these years.
During the last 12-month period, our comparable EBITDA margin has been almost 15%, and the comparable EBIT margin almost 11%. On the right-hand side, you can see our Comparable EBIT and EBITDA from the first half of 2025 and the first half of 2026, and there you can see the impact of the industrial action. Our variable costs have remained stable during this time period. I'd like to draw your attention now to the table on the right-hand side, where you can see our variable costs per cubic meter. Wood cost by far is the biggest cost item, representing roughly 50% of the total cost base, followed by production wages, coating materials, and chemicals. You may notice that the costs have come down a bit. That is mostly due to the change in mix.
You can see that the total volumes in the table below, that the share of Spruce volumes have increased, and that largely explains the trend seen in the table. Tuija also mentioned earlier in her presentation that a significant part of the cost base, three-quarters of the cost base, is variable, and that means that our costs scale down in a downward scenario. Then the flip side of the coin being that when there is demand, we can easily take capacity into use without additional investments or fixed costs. That additional sales margin that is being generated then goes all the way down to the P&L, on the last line in the P&L.
WISA has well-invested assets that require relatively low operative CapEx, and that means that our CapEx has been around EUR 16 million in 2023 and 2024, which is very close to the depreciation level that we have in the business. 2025 and then the last 12-month period ending Q2 2026 then, of course, has been impacted by the strategic review, meaning that the CapEx allocation has been lower than normally. But the good news is then that when WISA is an independent company, we can of course then decide on the capital allocation, and when attractive investments emerge, we are in a good position to seize those opportunities. The low CapEx requirements then, of course, translate into high cash generation potential and a high cash conversion.
And with cash conversion, we mean, and you can see that in the table at the bottom of the slide, so comparable EBITDA, less change in working capital, less CapEx divided by EBITDA. The cash conversion has been between 60% and 85% during this time period. You may also notice then that the last 12-month period, the cash conversion has been lower. The reason there is that we had a big project that Tuija already mentioned, that we separated WISA's IT systems from the UPM landscape. That project was highly successful. Our factories started on time, and we were able to send invoices and pay wages and salaries to our employees.
But what it meant as well was that in order to do this, we had to pay our invoices in advance, which meant that our payables were extremely low. We also asked our customers to make orders in advance, and that meant that our trade receivables were also slightly higher. I want to stress that this was, of course, a one-off event. Generally speaking, trade receivables and payables, when we talk about the euro amounts, are approximately equal on average, meaning then that our working capital consists then of inventories if receivables and payables net out each other. The inventories are then mostly tied into finished goods, and as explained earlier in the presentation, we have several warehouses close to our customers that enable us then to deliver products to our customers with a short lead time.
Of course, part of the inventory is then also tied to raw material, but mostly to finished goods. Then, of course, when we look here in the table at the year-end numbers, those are then, of course, impacted by the general business activity at that point in time, at year-end. WISA will start its journey as an independent company with a strong balance sheet, and here we have presented the pro forma balance sheet, meaning that it shows how the balance sheet would have looked like had the demerger taken place at the end of Q2. WISA's assets would have been more than EUR 300 million. On the right-hand side of the table, you can see that non-current debt of a bit more than EUR 130 million. That consists of a term loan of EUR 130 million that will be drawn down after the demerger.
The majority of this will be used to pay down the debt that UPM allocates to WISA after the demerger, but then also partly to fund a cash position that you see on the right-hand side of this picture. This EUR 42 million cash position that you can see here is sufficient for our daily liquidity needs. This then translates into a net debt that would have been, at the end of Q2, EUR 94 million and a net debt to comparable EBITDA of 1.4x.
To summarize, WISA is a profitable company. We have clear opportunities to grow without significant investments, and we have a strong balance sheet, we have strong cash flow, and that gives us an ability to pay dividends. We also have a great team in WISA. We are very enthusiastic to start the journey as an independent company, and I'm confident that that will translate into good numbers.
I'll hand over then to Tapio for final remarks.
Okay, thank you, Lasse. We have now heard quite a bit of facts and figures around WISA and WISA business. I would say about the strengths of the company also, let's say, the kind of levers to pull on to develop the business further and to improve performance, deliver value. Maybe to sort of wrap up, let's go back to what the investor can or should expect from WISA as a listed company. Maybe obviously the good way to sort of discuss that is to go through the financial targets that we have published for the company. Well, first of all, we have talked about the market growth and the sort of operating leverage and the potential that exists in WISA and in the customer base and markets that it serves.
Therefore, of course, we also have, as a target, ambition to grow the business and to reach sales exceeding EUR 550 million by the end of this decade by 2030. Then obviously also, there is a target for profitable growth to improve profitability, let's say, through efficiencies, through, of course, let's say, further leverage of the assets at hand. Our EBIT margin percentage, we target to be at 13%, again, by 2030. So profitable growth, annual sales exceeding EUR 550 million, and EBIT margin more than 13%. That obviously is improvement on both accounts. Well, as Lasse already pointed out, we are kind of setting the company up with a solid balance sheet, and intention is obviously to keep it that way. So kind of a financial policy.
The target is to keep leverage on net debt to EBITDA under 1.5x . Then as said already several times, we believe that it is possible to reach these targets without, let's say, extensive investments. Basically, using the potential in the business and also in the assets base that at hand at the moment. Therefore, we believe that the company will generate healthy cash flow and therefore also be able to deliver good dividends to the shareholders. Then the policy in terms of distribution to the shareholders is set such that over time, the target is to distribute around half of the profit to the shareholders. So that is, let's say, the kind of a fair way where we want to land over the coming years.
And of course, I think it is valuable for the company, but also for the shareholders and, let's say, financers of the company to have kind of a predictability and stability in terms of also distribution to the shareholders and obviously keeping the financial standing of the company overall in solid shape while pursuing the targets for growth and profitability as well. Then we have in the slide also the guidance that we have given at this point for the full year profitability this year. It is a range on a comparable EBIT basis, approximately between EUR 32 million and EUR 50 million on a carve-out basis. As it's pointed out there as well, is that we are guiding for improving profitability for this year.
I think, again, we have heard quite a bit about the business as such, so I think now it's a good time to go to the final Q&A session. I believe we will all be available for questions at this last part of the discussion.
Okay. Thank you, Tapio. Just to remind everyone that those joining online, please submit your questions through the chat box function in the event page. And in the room, please raise your hands and we will bring a microphone to you. But I was advertising in the previous section that there will be questions for Lasse, so why don't I start with one for you? As you showed in your slide, WISA has had a great cash conversion during the past years. Do you expect that to continue also in the future? And if so, why?
Yeah. Tuija explained our business model, and we saw from the numbers that our cash generation has been very strong, and we're not planning to change the business model, and we can also reach our financial targets without significant investments. So yes.
Good. Thanks. I guess now we could start from the room. Linus Larsson from SEB can go first.
Thank you very much. I am curious to hear more about your organization and how you will inspire the rest of your organization to create shareholder value, and if you could talk just a little bit about the incentives you provide on the top level, but maybe also in other parts of your organization. Thank you.
Thank you. WISA already has main part of the organization has been established, and then we have been adding on new functions, new recruitments to the team. While bringing in new team members and while going through this huge carve-out project like we have had during this year, this already has put everyone's focus on the future, and the mindset is there. Obviously, then we need to make sure that the motivational things are in place also for the future, and big changes in our current rewarding structures are not planned to be made. At the same time, then you had a question on the top management rewarding. That is something that is board's responsibility, and under planning at this stage, because obviously we are not the WISA yet. Those will be published then in due time.
The board obviously has started preparing for that. Those decisions will come when the company actually starts as a listed company, and let us say again, both long-term and short-term incentives are part of the structure as is the case with listed companies. Of course, we are looking for metrics in a sense that are well-aligned with the shareholders' interest and also, let us say, well-suited for this particular situation that WISA is going to be now as a newly listed company. More to come on that.
I can confirm that actually the excitement is really tangible in the team, that we are becoming an independent company, and our future is in our own hands, and that is really visible in the work that everybody does in WISA.
I think then Antti Koskivuori from Danske.
Yes. Thank you. One on capital allocation. Obviously, dividend is going to be a big part of the story. You left a little bit the CapEx level open, I guess, for going forward. If you could a little bit quantify how do you see where we should expect the CapEx to land on an annual basis. On the M&A side that you also talk about quite a bit, how do you see the firepower? How do you see the balance sheet metrics? How much there is a flexibility if there is a very attractive M&A opportunity?
Yeah. Okay. Good question. Of course, we have had a strong cash flow and cash conversion historically, and we can use them I guess there are four ways to use the cash that we generate. We can pay dividends, we can invest it, we can pay down debt, or preserve cash. When it comes to investments, historically, our depreciations have been a bit less than EUR 20 million. That in a way sets the expectation, I guess, for if we want to maintain our assets that you need to invest the same amount to keep the same asset base.
When it comes to new investments, we evaluate of course investments, we scrutinize them. UPM has an extremely rigorous investment, in a way, program or how we look at our investments and decide which we implement. We plan to take that to WISA as well and then implement those investments that benefit the company and the shareholders. We have a lot of investments, and then we pick the best from there.
Then one more specific on the 2026 guidance. The range is quite wide, right? If we take the last 12 months numbers, you just put them in and you end up at, I guess, to the higher end of that range. What would be the main kind of levers or variables that you would expect to land on the lower end or the higher end?
Sure. There are, of course, uncertainties in the geopolitics that we see today. I think if we think about the current situation, for example, in Iran, oil price is a component that impacts our chemical and coating costs. Then, of course, the uncertainty has an impact on the demand in the end users where we supply our goods. That, of course, creates some uncertainty. Then we have completed a major part of the carve-out, but we still have some things to do, and that, of course, is another thing that we need to finalize still during this year.
All right. Thank you very much.
Okay, then I believe it was you, Tomi. Tomi Railo, DNB Carnegie.
Thank you. If you could talk about the profitability, if there is a difference between the end segments, LNG applications, strong markets, how should we think about the link and the levels with?
Sure. Tuija had this great slide where she showed in a way the barriers to entry or the complexity or difficulty into getting into those end users. I think that it is a function of what the barriers to entry are, and that gives a good idea of the profitability differences as well.
Is there a certain segment which has more or less way to improve fundamentally if there are efficiencies to be gained or other measures?
I think that in a way in the efficiencies, there are always ways to improve and there was a slide about all these things that you can do, for example, on the factory and operation sides to improve the efficiency. Then, of course, taking the additional capacity into use, that is a big lever that we have and that is the most important one for us as well.
That is where we have more capacity available in Spruce.
Then maybe if I can continue on the[crosstalk].
Go ahead.
Cost elements on the variable side. If you could give a little bit of indications about your thinking into next year, what kind of cost drivers do you foresee on the different elements?
If we think about the cost base, wood cost was 50%, and that is in a way a big driver there that where wood cost goes, chemicals and coatings, oil price is a big driver there as well. Then, of course, production wages are relatively fixed. But then we can, of course, change the shift patterns in the mills and the factories, and that provides, of course, flexibility.
Okay. Thanks, Tomi. I think I go now to the chat here because we have some interesting topics that are asked here. This is for Tuija. It is about WISA will become an independent listed company, but UPM will remain an important supplier and commercial partner. How will you ensure that this relationship between WISA, rather than becoming unconstrained, and that it does not limit the company's independence or its ability to seek better terms elsewhere, for example, in wood sourcing and the sale of byproducts?
Well, like explained, we have a supply agreement in place that has been agreed on. There are, for example, terms on the pricing. It is based on market pricing, indexed on the development, on the movements on the wood market. That gives a certain security there. Obviously, we are good partners with our existing wood supplier, and at the same time, this agreement also gives us the possibility to start also testing the other suppliers and considering our own ways of wood procurement aside the supplies from UPM. There are means in this agreement to achieve both.
Maybe also it is good to remember as a kind of a starting point into this new life of WISA as a sort of independent company, is that the principle that UPM has been run on for quite a number of years is that its business, in a sense, the way to run the business is on a market basis, whether it is wood supply or something else, that everything is accounted for and contracted for between businesses on a market basis. There is a kind of a continuity there.
Then, of course, like Tuija was saying, when looking forward in the first instance, there is a commercial interest on both sides, for instance, in the wood supply. But then over time, also obviously, WISA needs to sort of and will be building its own kind of optionality around whether it is wood supply or other things so that they are not only tied to or dependent on UPM.
Good. Then maybe this is for you, Tuija, again. How confident are you with the EUR 550 million top line target?
It is a realistic target. Looking into the market development expectations, knowing that currently the biggest end use that we have has been in a silent or no growth mode, I consider it is a realistic and achievable target.
Okay, thanks. Next one to Lasse. Given WISA's target of reaching a 13% comparable EBIT margin by 2030, what are the two or three operational levers that you believe are most important to close the gap? Product mix, pricing discipline, capacity utilization, or cost efficiency?
I think it is the latter two, and by far, the capacity utilization is clearly the most important for us, and then maintaining the cost discipline and implementing the efficiency measures. Not to forget, of course, pricing and the commercial side as well, that to get those volumes, you need to do things on the commercial side as well.
Good. Why do not we continue with you, Lasse, here. You mentioned the H1 cash flow was impacted by the IT project during H1. Was the same impact visible on the timing of the revenue as well? Does Q1/Q2 revenue include revenue that would otherwise have come during Q3/ Q4?
As I mentioned, trade receivables were slightly higher at the end of Q2, so there was some pre-ordering in June, but not as significant as, for example, on the payables side, that the impact on the trade receivables and pre-ordering was smaller.
Good, thanks. I still continue with you, Lasse. What is WISA's long-term ROI percentage target? How can you still improve your returns?
We have not set a ROI percentage target. We have set a long-term target of reaching a comparable EBIT margin of 13%. I guess that if this question related to a specific investment, I explained the rigorous investment process that we have and how we evaluate investments and pick the best ones from there.
Good. Any questions here in the room? Joni Sandvall from Nordea, please go ahead.
Yeah, thanks. Maybe question still on what you will be reporting as a listed company. Are you splitting, for example, Birch and Spruce plywood as a separate in the reporting?
We will just have the segment, one segment, and in a way, reporting in a similar manner that you can see from the numbers in the prospectus as well.
Okay. Then the question on the visibility of the business, can you elaborate anything on the backlog of the business?
You mean for the remainder of this year?
Yeah, or let's say overall, how long visibility you have through the backlog into the sales?
Well, it of course varies. There is seasonality in the backlog. But typically, we can see a month ahead or so. That is typically how customers order from us.
Differs also by entities.
Of course. Then as Tuija explained that in certain customers, we have annual contracts, and some order quarterly, and so on. Yeah, it varies. But if you just talk about orders, then yes, one month.
Okay, thanks.
Thanks. Good. Okay, we continue from here from the chat. Martin Melbye is asking, please elaborate on the competition dynamics from players close by, for example, Baltics, Russia, and et cetera. I think you already touched that a bit in your presentation, but if you could still recap something, Tuija.
Yes. Well, I think Russia, I explained that their actions we do not see on the moment on the European market. We know that there is some material being circumvented to Europe, and then at the same time, we are already competing against them in the LNG business. Then the other, it was Latvian and[crosstalk].
Baltics and Russia.
Baltic competitors. There are good competitors in the Baltics in the Birch plywood space, and little bit depending on their strategies. We do meet them on the market and compete against them. Maybe I do not go deeper into commenting into competitors' actions and activities, but yes, good competitors, and active on the same markets partially.
Then we have an interesting question here, which is really quite impossible for us to answer here, but maybe you can try to explain this a bit, Tapio. A question, As an individual who owns a handful of UPM shares, I'm interested in what is the estimated price of WISA shares once trading begins?
Well, yes. Obviously, we do not give guidance on neither UPM share price or WISA share price on this case. But again, I would say that you can look at the key numbers that we are providing now in the prospectus. Surely we will, from our analysts, getting some guidance in terms of what based on that one would expect. But I think that is not something that we at WISA or UPM will comment on as such.
Yeah, I think that just for everybody's knowledge, we have six sell-side analysts here in the room and more online, so I am sure they can help you out with this. Are there any more questions here in the room? We still have some time if you are curious about something about WISA. Okay, if not, thanks all the presenters, and thank you all for joining WISA's first Capital Markets Day. As a reminder, the planned first day of trading is 2nd of November of WISA share. We look forward to continuing this journey together with you. Thanks.