Good day, ladies and gentlemen, and welcome to the Sappi Limited first quarter 2015 results conference. All participants are now in listen-only mode, and there will be an opportunity for you to ask questions after today's presentation. If you should need any assistance during the conference, please signal an operator by pressing star and then zero. Please also note that this conference is being recorded. I would now like to turn the conference over to Mr. Stephen Binnie. Please go ahead, sir.
Thank you. Good morning and good afternoon. I'm going to go straight to slide four of our presentation pack that was loaded on our website. The first item is the highlights for the quarter. Our profit for the period was $24 million, compared with $18 million for the same quarter last year. Similarly, EPS, excluding special items, was $0.05, up from $0.02 last year. EBITDA, which is an important measure that we measure ourselves against, we generated $140 million, that's broadly in line with the $147 million that we achieved last year. Net debt was $2,040 million, that's a significant reduction of $340 million from a year ago. Moving to the next slide, you can see our trends with regards to EBITDA and operating profit. You can see that typically Q1 is a relatively smaller quarter.
Our most important quarter is Q4 and Q2 as well. Overall, the trends are in line with last year, we would expect that momentum to continue throughout the rest of the financial year. Moving to slide five, we have an earnings bridge comparing our EBITDA in 2014 with our EBITDA in 2015. Firstly, you can see a negative impact there coming through on sales volumes, that's all associated with our CapEx projects that we had underway and that impacted volumes in each of the regions. We had some favorable price movements and mix improvements, which boosted our profitability. On the cost front, variable and delivery costs were up slightly, that's why it's a red bar, that's associated with the higher pulp costs mainly in Europe, also higher wood costs in the U.S.
Fixed costs came down, we continued to do good work on that front. We had an overall net impact related to exchange rates negative of $11 million. The next slide shows the product contribution split between paper and specialized cellulose. The trends are broadly in line with what we've seen in recent times. EBITDA roughly half half between the two, obviously that's reflective of the cash generation of the respective businesses. Operating profit geared or slanted towards specialized cellulose at 76% with paper 24%. On the next slide, we have our net debt to EBITDA development, you can see that net debt to EBITDA rose slightly during the quarter to just above three times. That's to be expected. We always have a seasonal outflow of cash related to working capital. In Q1, you'll see that trend in prior years as well.
Over the course of the rest of the year, we would expect that trend line to start coming downwards, and we'll end the year below where we were last year. Our maturity profile for our debt is reflected on the next page, and you can see that there's no significant debt maturing in 2015. In 2016, we've got our securitization structure, our international securitization structure. We don't anticipate any problems with that, and we should be able to roll that. We start to look beyond 2017 onwards, related to our international bonds. Some of those have call windows coming up soon, and we'll talk about that a little bit more later. Our CapEx development is shown on the next slide, and we estimate this year that our CapEx numbers will be just below $300 million, split roughly half half between maintenance CapEx and expansionary CapEx.
I guess we use that term expansionary quite loosely. It's mainly linked to efficiency improvement projects, some of which you saw coming through in the first quarter. Turning our attention to the divisions. On slide 12, we have Europe. On the left-hand side, you can see the margin development. If you look across the last six or seven quarters, we've seen significant recovery from the lows of mid-2013. Obviously, a lot of that's down to the good work done on the cost front in the business. Q1, you would expect to be lower than Q4 for the reasons that I described earlier, that it is typically a lower volume quarter. We would expect that trend line to continue in the same direction. On the top right-hand side of the page, you can see the demand development for our key product categories.
The blue bar is coated woodfree, red is coated mechanical. You can see that in 2014 we did see a slowdown in demand declines. That's helped us from a pricing perspective, particularly with regards to coated woodfree. Going forward, we have the RISI forecasts. They're about 4% negative. Our belief is that coated woodfree would be a little bit better than that. We estimate about -2%, but on the mechanical side, it's probably, certainly in the short-term, likely to be worse than that. In terms of the performance, we saw better sales prices coming through on coated woodfree, and the good work done on fixed cost controls has helped to improve performance. The weaker euro has negatively impacted or affected U.S. dollar-denominated variable costs, and that's mainly pulp for us, which is still very high.
However, we did see benefits coming through from improved export margins because of the weaker euro. Good news is on the specialty business at our Alfeld mill. We've seen improved mix there, and we've been able to achieve higher pricing, and we're pleased with the progress that that business is making. Perhaps the biggest headache we've got in Europe at the moment relates to coated mechanical. The market is very tough, and that's not unique to Europe, it's globally. As I said earlier, that's where we anticipate the most demand decline will come from. The numbers that we included include a once-off charge related to the Gratkorn project underway at 12 million EUR once-off impact. Moving to North America on slide 13, we have a similar graph. As you can see, 2014 was a tough year for North America.
As the year progressed, we moved into Q4, we saw a significant recovery. Q1, although it's down on Q4 of last year, bear in mind that it does include a $10 million once-off impact from the Somerset project. The underlying trend for the U.S. is also moving in the right direction as well. Demand development is on the top right-hand side. You can see from this that demand declines, in recent years, have been a little bit better than you saw on the last slide in Europe, down about 2%. Interestingly, in more recent times, when we compare 2015 to 2014, we've actually seen a flattening of that. That's enabled us to get some price increases through in the U.S., and we've been able to successfully implement them. Going forward, as we project, we anticipate between 1%-2% declines as well.
The improvement came through from improved sales prices, which I've talked about, and the mix. Dissolving wood pulp sales volumes at Cloquet were impacted by the fact that we did switch some of the production back to paper pulp for our own use, that boosted profitability. Good work done on fixed and variable costs, they're flat to down on last year. That's despite the extended shut at Somerset, which would have had an impact on costs. We have a headache at the moment, a short-term headache, which is related to our release business, and that's been affected by weak demand in China. The currencies do have an impact because we convert our European sales back to U.S. dollars, and that has a negative impact on profitability. Turning to South Africa on slide 14.
On the left-hand side at the top, you can see the very strong progress that we've made in this business from a profitability perspective, margins have been progressively increasing now for some time. The dissolving pulp margins, as you know, have been relatively stable. A lot of this improvement, I'm pleased to say, is coming from our packaging business, which only a couple of years ago was actually making operating losses, has now moved significantly upwards. The graph on the right-hand side has the dissolving wood pulp demand. You can see in recent times, demand has been rising at 7%, 8% levels, has been strong. Even as you look at the long-term forecast going ahead, we would expect that to continue. The long-term fundamentals remain very strong for the business. The profitability improvement came from a number of sources.
Firstly, the exchange rate gains that we do get on our export sales. Locally, in South Africa, we got improved pricing on our packaging grades, there was some savings on our variable costs. The dissolving pulp volumes and the ZAR pricing for dissolving pulp improved year on year. Important to note that in Ngodwana, we did have some boiler tube leaks in December. That didn't have an impact on sales, but it did have a negative impact on production. On slide 15, if we had to summarize, firstly, on the global paper market trends, supply and demand. I think what we're seeing is that closures have broadly offset the demand declines. I've talked to this, that coated woodfree demand declines appear to be moderating. Still downwards, but they are moderating. The biggest concern at the moment is on the mechanical side.
In terms of costs and selling prices, coated woodfree selling prices have moved up both in the U.S. and in Europe, and certainly that's encouraging. However, on the cost side, we have seen a strengthening of U.S. dollar, and that has had an impact on certain of our input costs. However, oil and chemical prices have been coming down as well, so that we do get benefits. There's a bit of a mix there as you look at those issues. Our strategy is to implement price increases when the market allows. We'll never lose sight of the fact that we have to be amongst the lowest cost producers, and there will be a continued focus on both fixed and variable costs, and we'll continue to reduce capacity in line with those demand declines.
On specialized cellulose, in terms of supply and demand, we have seen a significant slowdown in capacity additions. There's been no new announcements in recent months, and the demand growth is normalizing as we see competing fibers pricing declining. However, as I said, the long-term prospects are still very good, and we've talked about the 6% type growth going forward. From a cost and selling price perspective, selling prices have come down probably more than we would have expected. However, input costs have declined, and that's particularly for producers with non-U.S. dollar cost bases. Obviously with us having a strong presence in South Africa, we've been able to benefit from the weaker ZAR. Our strategy is to manage capacity, strong focus on production, and to continue working very closely with those key customers. Moving to slide 18.
This is a slide you will have seen previously, and it just outlines our strategy as we move forward. The three short-term pillars, achieving cost advantages, rationalizing declining businesses, and going through moderate investments. I have slides later, which I'll talk to each. Ultimately, we want to focus on those, but our ultimate goal is to strengthen our balance sheet, reduce our net debt, and that puts us in a much stronger position longer term to grow the business. Slide 19. Talking to each of those three pillars. Firstly, achieving cost advantages. We will work to lower our fixed and variable costs, increase cost efficiencies, and invest for cost advantages. We've just listed a few of the projects, and I've talked about them on the call.
There's the Somerset lime kiln and boiler gas conversion project, at Gratkorn, the paper machine and pulp mill upgrade, the Kirkniemi power plant investments, and a bunch of initiatives that we're doing with global procurement. In terms of optimizing and rationalizing declining businesses, we spend a lot of time thinking about our future outlook for demand, and we recognize that graphic paper will continue to decline, and we will manage our capacity around that anticipated demand, and we will continue to focus on strengthening our leadership position in those markets. There's some smaller examples there, but we have stopped coated paper production in South Africa recently, and in Europe, we continue to monitor that decreasing demand that I talked about. The third pillar is on page 20, which is growing through moderate investments.
We will make smaller investments in existing areas where we think there's strong potential growth and quick payback with a strong focus on pulp, speciality grades, packaging papers and probably within South Africa, the energy opportunities that are out there for us. Some recent examples are the investment in lightweight recycled packaging paper at Enstra, and then we made some small upgrades to our capabilities at Tugela and Ngodwana on the pulp side. Ultimately, we want to strengthen our balance sheet. The next two years, we think it will come down significantly, the net debt. We want to have a cleaner balance sheet, which will allow us to grow in adjacent businesses. Again, we have examples. We continue to work on that Twello forestry deal, which we talked about last quarter.
That's an ongoing process and hopefully we can secure that as we move through the rest of the year. Then there's a lot of opportunities on the debt side to repay some of the bonds and refinance some of the more expensive stuff with significantly lower interest rates. Finally, on the outlook, moving to slide 22. As I said, the graphic paper markets remain challenging, but they are a little bit better than our expectations last year when we built our budgets, and that's particularly true in Europe and in North America. Demand has declined at a lower rate. Our pricing expectations have been met. The exchange rate volatility may affect, in a positive manner, would affect selling prices, particularly in Europe.
Dissolving wood pulp markets have been under further pressure. Yeah, the prices in dollar terms have probably gone a little bit lower than we expected, but that's alongside viscose, polyester, and cotton. However, I should point out that these lower prices are likely to be substantially offset by the weaker rand-dollar exchange rate. As we've seen today, the rand has depreciated significantly further as well. That will help us a little bit. The currency movements that we've seen both with the rand and the euro, the euro has depreciated some 20% over the last year or so. That will have both a transactional and translational impact on our numbers. The weaker euro and rand relative to the U.S. dollar does support local pricing, selling prices, and that tends to offset input cost increases.
As discussed last quarter, we are evaluating opportunities to utilize our cash resources to refinance a portion of our debt in order to lower our future interest costs. We expect to reduce net debt levels by the end of our 2015 financial year to below that of 2014. We're still on track to doing that. Nothing has changed there. The 2015 performance from an operational perspective will be largely in line with 2014. The improvement that we're seeing in the paper business is expected to be offset by the lower dollar dissolving pulp prices and those one-off impacts that I talked about earlier related to Gratkorn and Somerset. The other thing to bear in mind is that at current exchange rates, we have to translate our European and South African ZAR numbers back into USD.
When you do that conversion, they naturally would be negatively impacted by the currency movements. That's everything in the presentation. We want to hand it over now for questions.
Thank you very much. Ladies and gentlemen. Our first question comes from Caroline Learmonth of Barclays. Please go ahead.
Thank you. Thanks very much. A couple of questions, please. In terms of Cloquet, what proportion of dissolving pulp capacity has been switched into paper pulp, and what has been the incremental margin impact of that switch? Secondly, you've explained EBITDA margins in Europe impacted by the Gratkorn outage. Even adding that back, EBITDA margin seems to have contracted. Presumably, that's around the currency impact. Maybe can you go into a little bit more detail of how it works in terms of higher pulp prices versus the paper exports impact? In terms of your stated aim to redeem some of the debt or to pay down some of the debt, what level of liquidity do you need ideally in the business in the longer term, in terms of potential debt levels longer term?
Just very quickly, how have wood inventory levels in North America changed since the end of the quarter? The boiler leak at Ngodwana, just to check, I think you said it didn't impact sales in the quarter.
Yeah.
Sorry, will it impact sales in the next quarter? Thank you.
Yep. Okay. That's a few questions. Firstly, on the switch between dissolving pulp and paper pulp, we are approximately just above 200,000 tons of dissolving pulp and 150,000 tons of kraft pulp in terms of the volume. In terms of impact on profitability, it's not a significant impact. That's not a number that we've been disclosing to the market.
Right.
The European margins, Caroline, what you're forgetting is it's Q1, you can't really compare it to Q4. You've got to compare it to similar quarters in last year. The underlying trends in the business are better and continue to be so. The next question relates to the redemption of the debt and how much cash we need to hold, and I'll let Glen, our CFO, handle that one.
We finished off the quarter with cash reserves in excess of $300 million. We have available facilities as far as our RCF is concerned of EUR 350 million. We're busy renegotiating the RCF levels to levels higher than EUR 350 million. That still needs to be finalized. On an ongoing basis to take account of the volatility that we experience on the working capital, we feel comfortable with cash reserves of between $150 million-$200 million.
Thanks, Glen. Mark, do you want to just talk briefly to the wood inventory?
Yeah, sure. We're gaining some good ground on the wood inventory from quite a low point a quarter ago where we were. We've had good harvesting go on both in the Midwest and up in the Northeast of the U.S. Which is typical with winter, and we're making ground. We're not where we would like to be normally at this point in time because of how low we were coming into the winter season, but we're making good progress and pretty comfortable that we'll be coming out of the winter harvesting season very close to our targets.
Okay. Thanks, Mark. In terms of the boiler tube leaks in Ngodwana, as I said, there was no impact on sales for Q1. Alex, do you just want to talk for the remaining quarters?
Yes. For the rest of the year, the net impact will be about 10,000 tons of sales.
Yeah.
Great. Okay, thank you very much. That's helpful. Thank you.
Our next question comes from Nishal Ramloutan of UBS. Please go ahead.
Hi. Yes, good day, guys. Just a couple of questions from me, if I may. Just on Cloquet, considering that you're now running hardwood pulp, will we see an impairment on Cloquet? Also still on Cloquet, just what sort of level would dissolving pulp prices need to increase by, assuming current hardwood pulp prices, to actually make you switch back to producing full dissolving pulp from that mill? Even if you give a percentage increase, 10% or that sort of impact. Just on lower oil prices, can you just give us some guidance in terms of what is the impact? I know you mentioned a few things in the presentation, but how much more can we see? How much of oil price is your cost base actually exposed to?
Just finally, I see Eskom, they are looking for bids in terms of electricity generation from different companies. You'd be one of the suitable candidates. I just want to understand if you are actually involved in that.
Yeah. Okay, thank you. In terms of the impairment, as I said to you earlier, the long-term fundamentals are still good for that business, and we don't expect any impairments related to that. Bear in mind, this is a competitive strength, the fact that we can switch between the two.
Yeah
that helps boost our profitability. In terms of how much does it need to go up for us to go back to dissolving pulp, you can't really quantify that because there's too many moving parts there. You've got hardwood kraft pulp prices dropping, and that may help the switch backwards. We can't give you a specific number there. Naturally, the opportunity in the long term, we think, will be to switch back. On the lower oil prices, we've done some high-level maths there, and we estimate it's probably smaller than you would expect. It's probably between $5 million-$10 million annually, the lower oil prices. The reason for that is that oil is a small portion of our purchased energy profile, and it's actually less than 2% of our overall energy costs. Bear in mind that our energy costs are about 10% of our cost of sales.
There will be opportunities on the transport and logistics side to bring down costs, and the related chemicals as well, there'll be some savings opportunity as well. Overall, if you take everything into account, it's not a major impact on our overall profitability numbers. The final question related to Eskom. We, along with a number of other large manufacturing producers in South Africa, have been approached to see whether we would be able to generate more electricity to sell into the grid. This approach has come through, and it's something that we're working on at the moment. With all the challenges in the country, there is a demand for that increased capacity, and we're working with Eskom to hopefully be able to do something on that front.
Okay. Do you have any sort of estimates on that Eskom electricity sale? If you do, go ahead with that.
It's still early days. They've only approached in the last couple of weeks, and they've asked us for proposals in terms of how much additional capacity we could produce for them. It's too early to give a specific amount, but we are working with them, and this could be quite a significant opportunity for Sappi.
Okay, thanks.
Our next question comes from Roger Spitz of Merrill Lynch. Please go ahead.
Thank you. Three questions. I see you swing your Cloquet mill between viscose grade, dissolving wood pulp, and paper pulp for internal use. Is there any sense in keeping this producing dissolving wood pulp and shifting some of your South African dissolving wood pulp mills to specialty dissolving wood pulp? Does the Chinese anti-dumping duties on U.S. dissolving wood pulp on the one hand and the challenges, disruptions of moving into specialty dissolving wood pulp on the other make that attractive option less attractive?
Yeah. We have a number of options available for us. You are right about the Chinese dumping duty or restrictions that are in place, it doesn't make sense for us to sell from the U.S. What we've done is we've switched our Chinese production Or the production that we sell into China, we switch back to South Africa. Within the U.S., it makes sense for us at current levels to produce the kraft pulp for our own usage. Over and above that, it doesn't make sense for us, at current levels, it doesn't make sense for us to produce any more kraft pulp.
Right.
Mark?
Yeah, if I could-
Sorry. I just want Mark to add to that one.
If I could just add a point and kind of remind people that when we did this conversion, we actually built it with the idea that we could swing back and forth and transition quite easily, and we do. There's no real cost or losses to us in going from SC pulp to kraft pulp and back and forth. The team out there is very good at it, and it gives us a lot of flexibility in terms of what we can do with it. Right?
Yep.
Excellent. Do you sell any of your South African dissolving wood pulp into the specialty markets today? If so, do you sell into the acetate or ethers or other markets?
The vast proportion of our product is sold into the textiles market, viscose.
Are you selling any into the-
We're not selling acetate at the moment, no.
No acetate. Okay. It looks like from your guidance, fiscal 2015 outlook, you said is roughly flat, going to be flat year-over-year with dissolving wood pulp under some pricing pressure. Should we take the implication that the paper segment EBITDA will therefore be up in 2015 year-over-year? Is that the right way to read that?
Yes, that's correct.
All right. Thank you very much.
Our next question comes from Bill Hoffman at RBC Capital Markets. Please go ahead.
Thanks, Steve, I wonder if you could just talk a little bit more about the paper market balances. What we're seeing is price increases announced over here in the U.S. for both coated woodfree and coated mechanical, interestingly early in the season. I wonder if you can talk a little bit about why you're seeing the firmness in the market. Is it because of some of the closures? The second question is, just given the shift in the U.S. dollar versus euro, how do you think about your European assets and potential to ship into the U.S. markets given the softness in Europe right now?
On your first question in terms of the U.S., I'll start the answer and then I'll hand over to Mark. We did put through a price increase in the middle of last year, and we were able to execute on that and pull through on that. More recently, we announced towards, I think it was in October, we announced a second price increase, which was effective in January. We didn't get through the full amount initially, but some of our competitors have now followed us with their price increase, and we're feeling pretty confident that we can get that full price increase through as well. There has been significant capacity reductions, Mark.
Yeah.
Yeah.
The coated mechanical side or the publication papers particularly are very tight. I think the operating rates in North America are in the high 90s right now, which is allowing for the industry to move a little bit on price. That spills over into the coated woodfree market as well. We've been very pleased with the demand that we've been having and foresee it probably continuing into the near future.
In terms of the euro impact on the European business, obviously the weaker euro is creating opportunities for us, and that's improving our profitability in the export space, which includes the U.S., as well as the Asian and American markets as well. That is boosting profitability. Barry, is there anything you want to add to that?
We've had a position in North America for quite a long time as part of our overseas sales, as part of our strategy. Over the last year, we've been creating some new products to expand that business and sit alongside our North American mills, and that's working extremely well. What has happened, of course, is that the margin from that business now looks a great deal better than it did before.
With that margin increase, do you see opportunity for incremental volumes moving into the U.S.?
There are some, yes. I certainly wouldn't say that the U.S. is the only opportunity. There are lots of dollar-based markets where the opportunities are extending to South America, Central America, Middle East. All these markets are dollar-based, and there you see a similar sort of opportunity.
Thank you. Steve, just a final question on the dissolving markets. Can you just talk a little bit about your contract positions in 2015 versus 2014? Just a general characterization. Were you basically at similar volume levels and prices, or how should we think about the general dissolving markets in 2015 versus 2014?
Yeah. As you know, we've had long-term contracts in place which incorporated pricing arrangements. With the market coming down as significantly as it has, we've had to make some concessions with our key customers. We've basically followed the market down with our pricing. If you look at the prices that you're seeing in China for dissolving pulp, our prices have moved alongside those. Gary, anything you want to add?
You covered it. Thanks.
Then just a comment on volume-wise, relatively stable year-over-year?
Yeah, volumes are fine. Other than the issue about switching to the kraft pulp at Cloquet, the volumes elsewhere are good and we've been able to sell that demand.
Great. Thank you.
Our next question comes from Wade Napier at Avior Research. Please go ahead.
Good afternoon. I was just wondering if you could probably unpack the performance of the Alfeld specialty mill in Europe. You said volumes have improved and pricing and product mix has improved. I just want to try to understand what percentage of Europe's revenue and what percentage of Europe's EBITDA does that specialty provide? And what scope is there going forward for further improvement from that mill? Then my second question would be, given Metsä Board's announced exit from the graphic paper market, what volumes of coated mechanical and the timing of those volumes does Sappi expect to inherit going forward, given that Metsä exiting the market? Thank you.
On Alfeld, as I said earlier, we've seen a significant pickup. That was generating losses last year and has moved into a profitable situation. We don't specifically disclose that number separately. I'm not going to give the number. What I would say is that if you look at it relative to our overall business, it's a relatively small percentage of Europe's overall EBITDA generation. Barry, do you want to talk about Metsä?
The Husum mill is scheduled to be rebuilt into a different product line at that particular PM8. Starting sometime at the back end of the year, we don't have a precise date for when it's going to stop producing yet. Its capacity is well-known as about 300,000 tons. At this moment in time, it splits its capacity between some papers for Metsä's own sale and some of ours. There will be north of 200,000 tons of paper that we can carousel to other mills at one point. We'll see, of course, how the market develops by then. If it continues to decline at the current rate, of course that volume will come down as well. An exact volume number I cannot give you, but yes, there will be some that we can carousel.
Okay, guys.
Ladies and gentlemen, a reminder that if you'd like to ask a question, please press star and then one now. Our next question comes from Chris Ellis of Babson Capital. Please go ahead.
Hi, guys. Can you just quantify the coated wood free price increase in Europe? When I look at volume declines in Q4, they look quite high. Can you split that sort of out between coated mechanical and coated wood free?
On your second question, as I said earlier, over the last year or so, we've seen coated wood free demand down about two percentage points. The coated mechanical has been in the high single digits, 7, 8% levels. In terms of the price increase, Barry, do you want to talk to that?
Yeah. What you see, of course, is the beginnings of the effect of the exchange rate already in this quarter. That is a noise factor because that obviously pushes the price up by a fair degree on those sales outside Europe. Within Europe, there was a price rise in the autumn of between 3% and 4%, it depended on the country. That's largely stuck.
Okay, thank you. I was asking specifically in Q4 volumes off the back of that price increase, just because I wanted to check that coated wood free volumes hadn't sort of come off given the price increase you've gone through.
No.
No, we didn't see it. No. There's been no effect like that.
Yeah. Our volumes in Q4 were fine.
Okay. That's great.
Bear in mind, you may be looking at the volumes that are in the accounts, but bear in mind we had the shut related to Gratkorn with the project. That's also changing the trend lines that you're seeing.
Okay. Your underlying market is still 2%?
Yes.
Just to check I'm reading it right, the EUR 42 million European EBITDA, that doesn't take or takes into account the EUR 12 million one-off cost. In theory, it would have been 54 without the Gratkorn?
Correct.
The EUR 40. Okay. All right. That's brilliant. Thanks, guys.
Ladies and gentlemen, a final reminder that if you'd like to ask a question, excuse me, please press star and then one now. Gentlemen, it would appear we have no further questions. Do you have any closing comments?
I just want to thank everybody for joining us on the call, and we look forward to discussing our next quarterly results in three months time. Thank you.
Thank you very much, sir. Ladies and gentlemen, on behalf of Sappi Limited, that concludes this conference call. Thank you for joining us. You may now disconnect your lines.