Good day, ladies and gentlemen, and welcome to the Sappi Q2 Results Conference. All participants are currently in listen-only mode, and there will be an opportunity for you to ask questions later during the conference.
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I'm sorry. I'm going to redo this introduction, if you don't mind, sir. Good day, ladies and gentlemen, and welcome to the Sappi Q2 Results Conference. All participants will currently be in listen-only mode, and there will be an opportunity-
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I'm sorry, sir. There is a delay in this conference.
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Operator?
I'm sorry, sir. I'm not sure what is causing this interruption.
Okay. Do you want to proceed?
Yes, sir. Ladies and gentlemen, if you need assistance during the call, please signal an operator by pressing star and then zero. Please also note that this call is being recorded. I would now like to turn the conference over to Mr. Stephen. Please go ahead, sir.
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Thank you. Good afternoon, everyone, and good morning to those in the U.S. I will be going through.
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the presentation. We seem to have a little bit of a technical problem. Apologies.
I'm sorry, sir, about that. I'm trying to trace that for you.
Operator, must I proceed?
Would you mind holding one moment for me, please, sir? I'm going to create a new call and transfer you all across to that call.
Okay. Thank you.
Thank you for your patience, ladies and gentlemen. Please, sir, you may continue with your conference.
Thank you. As per previous investor calls, I will go through the investor presentation, and I'll refer to page numbers as we go through. I'd like to start on page four, which is the highlights for the quarter. Profit for the period was $100 million, which was almost double the $56 million that we achieved last year. Earnings per share was $0.16 as compared to $0.11 last year. EBITDA was $195 million. That's up 15% on the $170 million we achieved last year. Pleasingly, our debt continues to come down, and we ended the quarter at $1,652 million. That's a reduction of $264 million from the prior year at the same time. On slide five, you can see graphically the evolution of our profits, and they've been up considerably over the last couple of years, both on an EBITDA and operating profit perspective.
The net debt to EBITDA ratio has now come down to 2.4x by the end of the quarter, and our margins have improved considerably, and we achieved a 15.1% EBITDA margin for the quarter. Moving to slide six, you can see our earnings EBITDA bridge from 2015- 2016. Firstly, I'd like to draw your attention to the favorable price and mix bar. We have higher selling prices in South Africa for both our dissolving pulp and our packaging business. At the same time, in Europe, our prices are still marginally above where they were a year ago. On the fixed costs, you can see that there was a red block there. Primarily that relates to the fact that we had an extended shut at Ngodwana, plus other shuts, timing of other shuts as well. Exchange rate was negative.
That exchange rate relates entirely to translation impacts from converting our European results and our South African rand results back into U.S. dollars. Moving to slide seven, the product contribution. Firstly, on the EBITDA side, you can see that paper, it is a decrease in share, but paper still represents 54% of our overall EBITDA, so still an important contributor. On the right-hand side, you see the operating profit. Obviously on this side, the specialised cellulose represents a significant share at 63%. Moving to slide eight, the net debt to EBITDA. I've talked about briefly, but this graphically just demonstrates how we have come down in the last few years, and we would expect that trend to continue as we move forward and as we get closer to our 2x net debt target, net debt to EBITDA target.
On page nine, we have the maturity profile of our debt. The first one to call out here is the 2021 bonds. Those have been refinanced and pushed out to 2023. The other major maturity we have in the short term or the medium term is this 2017 bond. They mature next year, and we anticipate using our cash reserves and our cash generation to repay a substantial portion of that when they do mature. Slide 10 just summarizes the key points from our recent refinancing, which we completed last month. The new bonds are at a rate of 4% as opposed to the 6.625% on the existing bonds. That's a savings of approximately $8 million per annum. The costs incurred in that refinancing exercise were one-off costs of $23 million. Just to call it out, those will be in the Q3 numbers.
Slide 11 has the CapEx projections, it's consistent with what we've talked about in prior calls. We estimate that for the year, our CapEx will be approximately $250 million. Roughly half of that is maintenance. The efficiency projects primarily relate to the debottlenecking opportunities and the boiler upgrade at Ngodwana. Moving to the divisions and talking about the product categories. Firstly, on page 13, we have a summary of some of the key paper market trends. It's fair to say that the overall demand is still soft. In the European market, we saw things over the last 12 months or so holding up. In recent weeks we have seen a further slowing down in that market. The U.S. continues to be negative, we've been able to manage within that environment and gain market share. Selling prices on the coated wood-free side have been relatively stable.
Coated mechanical has been under pressure from a demand perspective, albeit that prices are still remained reasonably stable. We've been able to offset any market demand declines by taking costs out of the business, we've also benefited from lower pulp prices and fuel and energy costs. Moving to slide 14, taking each of our regions in turn. Firstly, Europe. Another good performance from the European business. Volumes were up on a year ago, prices were still higher than last year. That's on the back of the price increases we implemented last year, if you recall. Coated mechanical is still in a tough place, volume declines were greater on that side. On coated wood-free, we've been able to gain market share, which has helped offset the declines in coated paper. Speciality paper packaging had a good quarter and volumes were up 19% on a year ago.
That's in markets where our products are growing roughly between 1% and 5%. Importantly, in that environment, across Europe, we've been able to bring down our variable and delivery costs 5%. North America has built on recent successes. As you know, at the start of last year, we had some tough quarters, but we've seen improvements come into the numbers. Paper volumes were positive, and we were able to take significant costs out of the business. Heavyweight web demand was good. However, pricing for sheeted products and lightweight web was under pressure mainly from imports. The dissolving pulp volumes were higher because of the fact that we switched a little bit of extra production to help offset the impact from the drought at Saiccor earlier this year. Moving to specialized cellulose on slide 16. Overall, demand continues to be strong. Operating rates for VSF were pretty good.
We're of the belief that most of the swing capacity has already entered the market as hardwood paper prices have come down. Spot prices for dissolving pulp fell in the early part of the quarter, but we have seen some recovery in recent weeks. Our position is obviously to maintain our low-cost position and to work closely with our key customers as we move forward on a common growth strategy. In South Africa, benefited for higher selling prices both on containerboard and dissolving pulp. It's important to call out that we did have the extended shut at Ngodwana and the Saiccor shut also occurred during this quarter. Those occurred in Q3 of last year. There was a $10 million negative impact related to that timing difference. We'll get the benefit in Q3.
Dissolving pulp volumes were better than the comparative periods, and the selling prices for Q2 were marginally above Q1. On the packaging side, it's important to call out that there was a later onset of the citrus picking season, and that did impact negatively on paper packaging volumes during the quarter. However, now that the weather has changed and the season has picked up, we would expect some acceleration as we move forward. Slide 18 just reflects the five pillars of our strategy that we've talked about in prior quarters, and I'll just talk about each of them briefly in turn. Moving to slide 19, we continue to focus on lowering our cost base. I think we've done a lot of good work here across the group to take out costs and as one of the main contributors to our successful results.
More specifically, some of the projects that we're working on, we've talked about the Ngodwana shut for the boiler upgrade, and that's putting us in a position for future debottlenecking opportunities at the mill. We also have a global procurement initiative underway, and that's work in progress, and we're targeting at least $100 million savings per annum. Moving to slide 30, rationalizing declining businesses. A lot of good work has been done in the last couple of years. We've simplified the South African business. We've more recently got out of some niche grades and out of recycled paper, two of the mills. What's key here, particularly in the graphic paper markets in the U.S. and Europe, is we have to anticipate demand and manage our capacity accordingly. On slide 21, in the short term, we continue to focus on debt reduction.
Within that environment, we do see moderate growth opportunities and there'll be moderate investments associated with that. More specifically in the short term, I've talked about it already, there is an opportunity to debottleneck at Ngodwana and Saiccor. We estimate that will give us another 10% volumes for dissolving pulp from our South African base. There are smaller energy opportunities in South Africa as well. Globally, we continue to look for opportunities to reallocate some of our production from graphic paper and grow our specialities business. We've been reasonably successful at that, and we will continue to focus on that as we move forward. Moving to slide 22. As I said, our primary focus in the short term continues to be strengthening the balance sheet.
We saw the sale of the two mills being completed earlier this year and the successful refinancing that I talked about earlier. Continues to be a strong focus on working capital as well. As we move forward on slide 23, as we get closer to our debt targets, we need to think about ways of growing our business. We do think there are opportunities to expand dissolving pulp further, specialities packaging, and we've got some nice projects on the bioproduct side, one of which being the nanocellulose work that we've done, and we've got that pilot plant underway. Moving to our outlook, firstly on slide 25. Specialised cellulose continues to benefit from the rising average dollar prices and the weaker exchange rate, rand dollar exchange rate. Demand remains good. We're fully sold out, and the outlook for this business is positive.
In North America, variable costs are down significantly while volumes are stable and we've been gaining market share. The European business continues to improve good operating rates, particularly for coated wood-free and lower variable costs. Encouragingly, the specialities is showing strong growth. Based on market conditions and assuming current exchange rates, we expect the growth in second half EBITDA to be in line with the growth in the first half's EBITDA. We expect a strong increase in our earnings, bottom line earnings based on this improved operating profit and the lower finance cost. Those will be somewhat offset slightly by the higher taxes that we pay on the profits. Net debt will continue to come down further, and we should get very close to our target of two times net debt either later this year or early in the new financial year.
Operator, I'm going to put it back to you for questions.
Thank you very much, sir. Ladies and gentlemen, at this time, if you wish to ask a question, please press star and then one on your touchtone phone. If you decide to withdraw your question, please press star and then two to remove yourself from the queue. Again, if you wish to ask a question, please press star and then one now. Our first question is from Roger Spitz. Please go ahead.
Thank you, good afternoon. How much of the significant improvement in specialised cellulose EBITDA was driven by the weak rand versus the strong U.S. dollar?
Look, if you're comparing it year-on-year, the rand is obviously significantly weaker than it was a year ago. The dissolving pulp dollar price, our average dissolving pulp price was marginally up on an average basis compared to Q1. Obviously, from a cost perspective, we were able to control our costs. Yes, the weaker rand did contribute significantly, but there were other factors at play as well.
Okay. I'm looking at slide 16, the very last bullet point, investigate adjacent dissolving pulp grades. Can you elaborate on what you mean by that? For instance, is this referring to perhaps considering looking at the acetate and/or ether grades of specialty dissolving wood pulp?
I'll let Gary expand further. Yes, we continue to look for opportunities to make higher alpha products. Currently, we're predominantly in textiles, but we continue to explore different avenues. Gary, do you want to expand further?
Thanks, Steve. I think as Roger has highlighted, there's work happening in ethers and acetate and also in the pharmaceutical grades, plus improvement on our current grades. That's where the focus is going forward.
Just a last one on follow-up on that. I know virtually all of it goes to viscose now, but how material are you in the ethers and/or acetate grade right now in terms of volumes actually put into the market?
Very small.
Roger, it's very small. It's almost predominantly in the viscose space, textile.
Thank you. I'll turn it over.
Thank you very much. Our next question is from Nishal Ramloutan from UBS. Please go ahead.
Hi. Yes, good day, guys. Just a couple of things from my side. The first one is, you indicate in North America prices where we're softer on the paper side. Can you maybe just give a number to that? Then on Europe, do you think that paper prices will actually follow input costs down? Then just on specialty paper, maybe just some color in terms of how you receive that good growth in specialty paper.
Okay. I'll give a brief answer, and then I'll hand it over to each of the regional guys. Firstly, on the U.S., on an average basis, this is just our all-in average price for all our products was down about 4% year-on-year. If you recall, after the softness that we saw in the early part of last year, we did have to pull back prices a little bit. Mark, do you just want to expand? Anything you want to add to that?
Yes. Thank you, Steve. Yeah, it's predominantly in the sheet area and the lightweight web where we're seeing a little bit of market softness and also combined with a lot of imports coming in from Asia and Europe making that market a little bit more sensitive on price. As you mentioned, we're down about 3%-4%, depending upon the grade in those segments.
Thanks, Mark. The second question, Nishal, I think was you asked about whether Europe could look at lower prices as we move forward. Up till now, we've been able to hold our prices in Europe, and in fact, they're up on a year ago. Clearly, the market's a little bit soft now, but we've been able to maintain our prices so far. Bear in mind that we have been able to gain market share, and at the same time, a lot of capacity did come out of the market over the last couple of years. I'll let Berry expand a little bit further.
Yeah. On the price side, I think you've more or less said it all, Steve. There has been remarkable stability, I think possibly also due to the fact that the contracting season for mechanical papers is over, so you see a stability for six months, and the commercial print market has been relatively stable as well. There have been, from that point of view, quite a good period. As far as the specialty growth is concerned, Nishal, we have seen two things at work there. The first is that we have been able to grow outside Europe. We've got quite a bit of new business coming in from export markets, which we didn't have before because we just didn't have. The second reason is the fact that the qualification periods for a number of these customers is now over.
The products were getting qualified, have been qualified, and we're just taking up a greater space in that market area. Of course, the overall markets, particularly for release liner and for flex pack, are growing very nicely.
Okay. Thank you.
Thank you very much. Ladies and gentlemen, a reminder, if you wish to ask a question, please press star and then one. Our next question is from James Hutchison from Barclays. Please go ahead.
Hi. Good afternoon, gentlemen, congrats on another set of strong results. A couple of questions from my side, if I may. Firstly, just on any color around how much dissolving pulp was produced at Cloquet over the quarter, maybe just as a percentage of capacity. Presumably that should normalize over the course of the third quarter. I may be pushing it, but any indication of the EBITDA contribution to North America from dissolving pulp in the second quarter? Then just in terms of your outlook for dissolving pulp prices, you mentioned in the presentation that viscose staple fibre operating rates are currently high, also most of the swing production come back in dissolving wood pulp, given the differential with the hardwood pulp. In addition to the swing production, how much new capacity is slated for 2016?
We've seen estimates for around 440,000 tons per annum. Given that, where is the price support implied by your guidance for flat pricing for the rest of the year? Thank you.
Okay. In terms of the dissolving pulp for Cloquet, we don't give that specifically. However, overall, it's broadly in line with where it was a year ago. It's marginally up. Bear in mind we did take it down a little bit, and we brought it back up. There's not been a significant shift year on year. James, your second question, what was that again?
Just the outlook for dissolving pulp prices. I appreciate that the viscose staple fibre operating rates have been relatively high in China. You've mentioned that most of the swing production has now come back on. Have you got any sense of how much new capacity is slated for this year? I think RISI's got an estimate of around 440,000 tons for the full year of new capacity coming on. Just given that, where is the price supports implied by your guidance for flat pricing coming from?
Yeah. Look, you're right, that number is pretty close to the estimates that we have. We do believe that it will be about 400,000 or 500,000. Bear in mind that the demand side is also increasing. 400,000 or 500,000 is about 5% increased supply, and we are seeing similar increases on the demand side as well. In terms of pricing going forward, bear in mind that when we set our prices for dissolving pulp, for our contractual prices, it's done based on the price in the last quarter. We already know what the Q3 number should be, and we're now well into this quarter, we're getting a feel for what the Q4 numbers should be as well. Looking at the underlying fundamentals, you're starting to see a pickup in polyester prices. Cotton prices have risen recently as well.
As I said earlier, the viscose operating rates are pretty good. The underlying fundamentals are probably better than they were a few months ago. Nevertheless, based on our outlook statement, we believe that the estimate of the price being roughly where it is at the moment is a fair assumption. Gary, anything you want to add?
Steve, no, I think you've covered all the aspects. Thanks.
Okay. Thank you.
Thank you very much. Our next question is from William Hoffmann from RBC Capital Markets. Please go ahead.
Thanks. I've been having some technical difficulties, so I apologize if it's been asked before, but can you just talk a little bit about, in the dissolving markets, how much swing capacity you see coming in? Just because obviously with additional growth in hardwood capacities, we would expect a further push for the swing producers. I just want to get a sense of what the impact of that is having on the markets.
The estimate of swing capacity is about 2 million tons. Look, that includes our own Cloquet mill, and it does include some of the fluff pulp, dissolving pulp swing producers. Based on our understanding of the market, we are of the belief that at least 1 million tons of that has already swung back to dissolving pulp. Bear in mind that we're part of it, and as I say, some of the other producers are making fluff pulp, and they're not anticipated to switch back. In summary, we believe that the vast majority of the production that can swing back has already swung back.
Okay, thank you. With regards to the papers markets, the switch to the specialties, could you just give us some idea of how much specialties you have in both Europe and North America at this point and maybe what you can expect to get to?
Obviously, in Europe, firstly, we have our Alfeld mill that we've already converted. We're looking for opportunities. We've done a little bit of work at Ehingen and Maastricht to reallocate some of that production. We'll continue to look for other opportunities. In the U.S., it's relatively small. In the U.S., it's only about 10% of our production. In Europe, it's about 15%-20%.
I guess just in the U.S., as you look for the difficult market conditions and the softness in demand, where do you think you can take that 10% over what kind of timeframe?
Yeah. As I mentioned on the introduction, we continue to look for opportunities at our mills, and that's an ongoing process on our part. It is work in progress, but certainly at our Somerset and Cloquet mills, we continue to look for opportunities. Mark, is there anything more you want to say there?
No, Steve, I think as you said, we have the ability to swing more time and more tonnage over to the specialty markets in the areas that we've already qualified grades, and we're looking to grow that over the next year.
Okay. Thank you very much.
Thank you. Our next question is from Victoria Lambert from Bank of America Merrill Lynch. Please go ahead.
Hi. Thank you for the call. I have two questions. Firstly, what opportunity is there to repay your high-yield bond, and when is this callable? How should this benefit net finance costs? Secondly, do you think that fine paper and chemical cellulose prices will come under pressure given the deterioration of hardwood prices?
Okay. I'll take the second question first, then I'm going to hand over to Glen to talk about the bonds. I think we've covered the dissolving pulp in quite a bit of detail already on the call, the fact that we think it's going to be stable in the next few months. On the paper side, Mark alluded to the fact that in North America, on the sheet side, prices have been under a little bit of pressure, and that's the reason why you will see a little bit of decline year-on-year. In Europe, paper prices have been stable, and we haven't seen declines as of yet. Clearly, that's something that we would want to hold on to as long as possible. So far okay in the European environment.
In South Africa, on the packaging side, we've been able to put through reasonable price increases to offset the impact of the weaker rand. Glen, over to you on the first one on the bonds.
All right. Subsequent to the quarter end, we completed the refinancing of our 2021 bonds and replaced them with seven-year 2023 bonds at a coupon of 4%. The 2021 bonds, their call window became available in April of this year. We have 2017 bonds that have a call window becoming available April next year. As Steve mentioned in his introduction, that we'll be looking to refinance that predominantly with available cash reserves.
Repay.
Repay, sorry.
Yep.
Yeah. Thank you.
Thank you very much. Ladies and gentlemen, again, a reminder, if you wish to ask a question, please press star and then one. Our next question is from Lars Kjellberg from Credit Suisse. Please go ahead.
Good afternoon. Just coming back to your guidance. What I suppose is happening, you got a sequentially somewhat stronger ZAR. You will have, I guess, the lower price realization in dissolving pulp and some pressure on prices. What factors are sort of offsetting those negatives? Because it sounds like you believe that H2 is going to be relatively similar in absolute quantum to what you had in the first half of the year.
No, just to be clear, Lars, it's not in absolute quantum, it's in growth. Our guidance is.
I understand that, but
Yes. Okay. Dissolving pulp is obviously a big part of our business. The prices are set a quarter in arrears. We already know the prices for a lot of our product in Q3. Q4's prices will be set based on the average prices in Q3. We're already halfway through that. In summary, we probably know the selling prices of our remaining year's dissolving pulp for three quarters of our dissolving pulp. That gives us a high degree of confidence on the dissolving pulp side. In South Africa, a lot of our prices are set annually, so we know the selling prices. Then in Europe, as I've indicated already, the prices are still holding up. We've been able to deliver at current price levels.
Looking at the outlook for the volumes and the order book, we're still pretty confident that we can maintain those levels. In the U.S., yes, there will be slightly lower prices on the sheet side. Again, we have a reasonable window of looking at the markets over the next couple of months. At the same time, a lot of our higher profit is coming from lower costs. We know what our purchase pulp prices are going to be over the next couple of months, and similarly, energy prices. We have a fairly high degree of confidence in the margins that are built into our estimates.
Understood. Just to be precise, what sort of ZAR rate are you factoring in? You were about 15.8, I suppose, in fiscal Q2. What are you now using for that guidance, just to be clear?
We use 14.75.
Very good. When you look at the procurement savings that you're talking about, which are very significant come 2020, is that something you can report today that you've seen a benefit from or is that entire value still to come?
That entire value is still to come. We'll start to see a little bit coming into Q4, but mainly into the new financial year in 2017.
Okay. The final from me. Okay, great. In terms of hardwood pulp, you're talking about securing longer-term increased supply from hardwood in South Africa. Is that with the ultimate target then to further expand dissolving wood pulp production?
Yeah.
If that is indeed the case, when can we actually see that happening?
Yeah. I'll let Alex expand a little bit further. In the short to medium term, we want to boost our dissolving pulp capacity in South Africa by 100,000 tons, and that's spread across Ngodwana and Saiccor. We have secured the wood supply to be able to do that. Now we must do the debottlenecking projects. Longer term, we continue to look for opportunities, and I'll pass you over to Alex.
Thanks, Steve. In terms of the short term, the 100,000 tons Steve spoke about, that will come in next year and in 2018.
The opportunity we're looking at is anything between 200 up to 500,000 tons of expansion in South Africa. At this stage, we're evaluating different opportunities at our various sites.
It's important to point out that's a 7- 10-year long-term plan that we're looking at. We haven't committed to anything there, clearly if the market continues to grow at 5% per annum and our customers continue to grow, we would want to match their growth. There's nothing immediately planned for that.
If I may, one more question to Berry. When we talk of weaker paper markets in Europe, what is, in your view, causing that? Is that a function of the strong euro versus the dollar, or is there something more domestic that you're seeing in your business?
I think it's a number of things. First of all, you've got a very strange May month this year because of late Easter. You get a bunch of public holidays bunched together. That always has an effect on the printing industry because they tend to take time off, and that has a short-term effect. In fact, if you look at the softness that there is, it tends to be in the export markets rather than in the European market at the moment. There's some uncertainty in Europe. I certainly don't see a large softening going on in Europe.
Okay. Thank you.
Thank you very much. Ladies and gentlemen, a final reminder. If you wish to ask a question, please press star and then one. Our next question is from Wade Napier of Avior Research. Please go ahead.
Hi, guys. Thanks for the call today. Just a couple of questions from me. Can you give us more color on your short-term tax guidance as well as your medium to long-term tax guidance by region? Just more of maybe a strategy-type question. As you guys are transitioning from graphic paper towards specialties, I noticed you're actually transitioning from your coated wood-free mills in Europe. Why aren't you doing it from your coated mechanical mills, given that that's a weaker market? Thanks very much.
All right. Just as far as the short-term tax guidance is concerned, our rate for the six months was 23%. Most of that coming through in South Africa, where we have an average rate of 28%, and we pay tax according to that rate, so at 28%. In North America, we've got an average rate of 38%. Because of certain nondeductible expenses, we're above that, slightly above the 40%. In Europe, we've got some significant assessed losses, which we're utilizing, and that rate comes down quite substantially to between 15%-18%. Overall, going forward on a long-term basis, we would anticipate that our overall rate would be around the 26%-28%.
Thanks, Glen. In terms of your second question, let me be clear that we are open-minded in terms of how we think about our capacity in the European mills. In recent years, obviously, we converted Alfeld, we got rid of Nijmegen, and more recently we had the Husum volumes coming back to us. That enabled us to fill the mills on the mechanical paper space. Clearly, with that market in decline, we need to be open-minded. It's not just coated wood-free we look at. It's just been at that point in time that we've had the opportunities. Barry, I don't know if there's more you want to say on the mechanical side.
You've answered it, Steve. That's it.
Thanks a lot.
Thank you very much. Ladies and gentlemen, a final reminder. If you wish to ask a question, please press star and then one. We will pause a moment to see if we have any further questions. We do have a follow-up question from James Hutchison.
Hi, gents. Just two more questions from me, if you don't mind. Firstly, just to get clarity on the maintenance outages at Ngodwana, just to confirm, that was contained to the second quarter, so no spill over into the third? Can you just remind us what the maintenance program for the remainder of the year looks like? The final question is just on the refinancing costs of $23 million. Does that get stripped out of the adjusted EPS number, or does it get included? Thanks.
Well, the second one is it does get backed out. We treat it as a special item. On your first question, there is a little bit of the Ngodwana shut in the third quarter, bear in mind, we had it in the third quarter last year.
Yes.
Other than that, what we've called out the $10 million impact, everything else is in line with last year.
Okay. Thank you.
Thank you very much. We have no further questions in the queue. Do you have any closing comments?
No, operator. Thanks. I would like to thank everybody for joining us, and we look forward to having another update call at the end of Q3. Thank you.
Thank you very much, sir. Ladies and gentlemen, on behalf of Sappi, this concludes today's conference. Thank you for joining us. You may now disconnect your lines.