Good day and thank you for standing by. Welcome to the Billerud Third Quarter Report 2024 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question-and-answer session. To ask a question during the session, you will need to press star one, one on your telephone.
You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one, one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Lena Schattauer . Please go ahead.
Good morning, and welcome to this webcasted conference call. We have today published Billerud's results for the third quarter of 2024 . Our President and CEO, Ivar Vatne, and our CFO, Andrei Krés, will present the results and answer questions. So, without further delay, I would like to hand over to the speakers, and first out is Ivar. Please go ahead.
Thank you, Lena, and good morning, everyone, and thanks for joining in this beautiful Thursday morning. To be excited to present another solid quarter for Billerud, it's been a quarter with few surprises, and in general, we are pleased with the result we see on several fronts, so let's get into it then. Next slide, please, and in essence, we've seen strong net sales growth and a profit recovery trend throughout 2024 is continuing. We record plus 6% net sales growth, plus 9% organic and currency neutral, and our top line growth is coming from both regions and across most of our categories.
We see also for this quarter, significantly improved profitability, both versus year ago and versus previous quarter, and what is satisfactory to see is that the recovery is coming from both regions. Europe records its best profitability in over two years. I will continue my praise for our Nordics region. North America, another excellent quarter with strong results across the board, and coming in with 18% EBITDA, making it a long trend of superb results. Key for our strong progress to improve bottom line has been our relentless focus on fighting cost inflation through proactive pricing and mix management.
We have succeeded again this quarter on exactly that priority. Last but not least, we continue to deliver on our profitability enhancement program and add another SEK 220 million this quarter, making us well positioned towards a full year target for 2024. Next slide, please, and let's get into some of the categories and channels with market conditions.
Overall, and very much as we had expected, we experienced slightly better sentiment during the quarter, so during third quarter. We have not been operating at strong levels in any of our categories. Having said that, there is no doubt that we do see a worsening situation going into fourth quarter, and the underlying consumption is below where we expect the long-term trend to be. This is clearly a trend shift versus what we saw during first half of 2024. Keep in mind, situation is different per channel and per region. This is a very important point to keep in mind.
Add a little bit more detail. For food and drink, our biggest channel by far, we experienced normal conditions during the quarter. Going forward, we do expect stable conditions for liquid packaging board, while somewhat softening conditions for containerboard.
For our printing and publishing channel, it's been a solid quarter. Presidential campaign and closure of more capacity in US has improved our position as the natural choice and the clear market leader for domestically sourced graphic paper. We have started fourth quarter well for graphic paper. In consumer and luxury, that was a disappointment during third quarter, and we ended worse than what we had expected, and we experienced a clear negative shift of the sentiment during the quarter, and in general, you can say that carton board is in a tough spot with overcapacity and, in general, quite weak underlying demand.
And we see this in several of our big European markets, with low GDP growth and consumers holding back on spending. We're not too optimistic about carton board in the short term and expect it to go further down before we hopefully see a recovery later in 2025 .
And lastly, for our industrial channel, third quarter was pretty okay. We've seen decent demand and upward pricing for both brown and white sack. But also here, we see a worsening situation and a negative trend shift happening towards the end of third quarter. So we expect tougher condition towards the end of the year, in particular on the volume side. So with that, I hand it over to Andrei.
Thank you, Ivar, and good morning, everyone. As you, Ivar, alluded to, we've had a solid organic and currency neutral growth of 9%, and it has been a story of two regions. Our North American region has stood for most of the volume growth. While region Europe was mainly contributing to growth with higher pricing and also improved mix. Now, both regions did have a positive pricing impact versus last year, totaling some SEK 340 million.
Sequentially, versus the second quarter, we've again had a positive pricing development across most of the categories, which more than offset the input cost increase we had in the quarter. Next slide, please. Our EBITDA improved 33% versus last year. Now, higher volumes in North America and the positive pricing development in Europe were the main drivers for the uplift.
Our raw materials and logistics costs were up versus a year ago, with pulpwood prices in the Nordics being the main factor here behind the cost increase. Our efficiency enhancement program continued to have a strong progress in the quarter, contributing SEK 220 million to the uplift. The other bucket of negative SEK 200 million comprises mainly of higher fixed costs this year, and that was due to normalized provision level for the short-term incentive program, but also somewhat higher maintenance costs outside of the annual maintenance shutdowns in the quarter.
Now, moving on to the regions, and next slide, please. To start with Region Europe, which delivered a solid profit improvement and reached 16% EBITDA margin. The profit uplift was driven by continued focus on pricing and also the very strong contribution from the efficiency enhancement program.
We continued with our broad-based pricing efforts in the third quarter and had a positive pricing impact versus quarter two across all segments, except liquid packaging board. Our sack and kraft paper segments have, by far, the strongest pricing momentum in this quarter, and our total pricing outweighed the cost increases. Sales volumes for the region were down 3% versus last year and 2% sequentially, and we did experience softer demand within some categories by the end of the quarter. And we expect that weakening to continue into fourth quarter.
So, to summarize region Europe, a clear profit uplift in the region on the back of further pricing efforts, but our outlook into fourth quarter is certainly much more cautious. And a couple of points on cost development for the region. Next slide, please.
As we expected, the pulpwood costs continued to increase in the third quarter, reaching new all-time high levels. The pulpwood cost increase had a negative impact of approximately SEK 150 million compared to the second quarter. On the other hand, we did have some positive impact from seasonally lower electricity prices, but also lower logistics costs, which offset much of the pulpwood cost increase. All in all, we had a cost headwind of SEK 70 million in the quarter, which was somewhat lower than we anticipated.
Moving now into fourth quarter, we expect additional cost headwind in the region of SEK 100 million, where SEK 70 million is from higher pulpwood costs and SEK 30 million from higher electricity costs as we now enter a colder period.
And as we expect continued cost inflation into fourth quarter, we will maintain our focus on pricing and mix improvement in the region, and we will prioritize value above volume. Now over to region North America. Next slide, please. The North American region delivered once again, very solid profitability with an EBITDA margin of 18%. Volumes increased with 14% versus previous year and 7% sequentially, with volume uplift across all categories. EBITDA margin was in line with quarter two performance, and our operating rates in North America stayed below 70%.
Heading into fourth quarter, we see relatively strong order books now in the beginning of the quarter, while we do expect some slower sales volumes at the year-end, which is in line with the pattern we've seen for the last couple of years.
At this point, we would expect total volumes for fourth quarter to be somewhat lower than we had in third quarter. Pricing for the paper segments within the region are expected to remain stable also into fourth quarter, while we will see further decline in pulp prices, and finally, just a note on the maintenance cost in the region. In the third quarter, we carried out our planned maintenance shutdown at Escanaba Mill, and that had a total negative impact of approximately SEK 90 million, and the remaining SEK 20 million will impact fourth quarter.
Next slide, please. Couple of words on the cost development in North America, which has been very much in line with what we expected. We did have a cost tailwind of approximately SEK 40 million compared to the second quarter, and that tailwind came from seasonally lower fiber costs and also lower logistics costs, driven by our destination mix in the quarter. Heading into the fourth quarter, we expect only minor movements in our input costs. Our current estimate would be a cost tailwind in the region of SEK 10 to 20 million.
Next slide, please. Now, our cash flow performance in the third quarter was heavily impacted by working capital buildup. We increased our inventory level in the Europe region and also had a negative cash flow impact from timing of our operating liabilities. The cash conversion in the quarter ended below 30%, and our year-to-date figure is in line with the level last year.
We have a clear target to improve our OCF conversion towards 80% for the full year, which we've also achieved for the past couple of years. As we've highlighted in our report, we finalized another successful transfer of our US pension obligation, which will have a positive result impact of approximately $25 million, that we will record in the fourth quarter as item affecting comparability, and after this transaction, our pension obligation is now at approximately $500 million, a clear decrease from the $1.2 billion we had at the time of acquisition of Verso, and we maintain our funding ratio of above 100%.
Finally, our CapEx guidance for this year is unchanged at SEK 2.3 billion, and we will, of course, share more on our future CapEx projections at our upcoming Capital Markets Day. With that, I would like to hand it back to you, Ivar.
Thank you, Andrei Krés. Our efficiency program continues with full force, and we deliver another solid contribution this quarter. And this means we are very well on track to deliver ambition for 2024. In fact, as it looks right now, we should land comfortably above the SEK 700 million target we set for ourselves in the beginning of the year. As usual, some examples of tangible initiatives are found in the middle of the screen. We continue to make good progress on building up stronger positions among our private forest owners and secure the stronger value creation from downgraded material and waste.
We've also had good help from the FTE reduction program we launched pretty much this period last year. Next slide, please. So, we're starting to get towards the end of the presentation. Some last words on the fourth quarter outlook.
We are going into a quarter where we do see a negative shift of the market sentiment. That is at least true for several of our categories in region Europe. North America is different and is expected to operate in pretty stable conditions. And as Andrei just went through, we do see increased input cost, first and foremost, related to fiber cost inflation in Nordics. Next slide, please. And lastly, I wanted to take the chance to remind everyone of our planned Capital Markets Day, Monday, the 2 December 2024.
And needless to say, I hope as many of you as possible will have the opportunity to attend in person. I'm personally very excited to finally talk about our new plans for both regions and how we plan to maneuver going forward. So, with that, I hand it back to you, operator, for Q&A.
Thank you. As a reminder, to ask a question, you will need to press star one, one on your telephone keypad and wait for your name to be announced. To withdraw your question, please press star one, one again. We will now proceed to our first question. Please stand by. And the first question comes from the line of Johannes Grunselius from DNB. Please go ahead, your line is now open.
Yes, hi, everyone, it's Johannes Grunselius here. I have two questions. My first one is what you talked about here, Ivar, and the team, about the weakness in cartonboard. I was wondering if you, if you cannot have the flexibility on moving out from that category and go into the other categories being relatively strong. Do you have that flexibility? It would be interesting to hear your thoughts on that.
Yeah, good morning, Johannes. No, the answer is absolutely. As you might know, our cartonboard production is centered in Gruvön KM7. We also have a very good carton machine in Frövi KM5. Yes, there is absolutely flexibility to also maneuver towards liquid packaging and also to a large extent, other grades of containerboard. I alluded to it earlier, but containerboard as well is not necessarily super strong right now.
But you are pushing on something very important, that absolutely we will be looking for all pockets of how we can find volume in other segments, and containerboard will be a place where we will have a natural starting point. But we also need to be very clear, we want that value creation to be strong for that volume, and as also Andrei mentioned, value over volume. But that is our plan going into fourth quarter.
Okay, thanks. Also, on the US market, I mean, you are indicating pretty much stable volumes, I suppose, fourth quarter over third quarter. But if you look more into 2025, I mean, there is capacity being taken out that's in media. Do you expect the sort of levels in at least the first half of next year to be higher than the third quarter, fourth quarter in the US?
Yeah, it's a good point. I can take that. It's a small reminder that we tend to have also a bit of seasonality in the US, so I think from fourth quarter, although the sentiment is pretty stable, typically we would look at 10 to 20 thousand tons lower volume, fourth quarter versus third quarter. There's nothing dramatic in that. It tends to be the rhythm we see every year. And again, it's also linked to some of the customer purchasing patterns, etc .
But to your more maybe relevant question or important point about 2025, I think we go into 2025 with pretty good confidence on all fronts. I think on graphic paper and specialty. Specialty is in good shape, and you know, that is a category that's supported by tailwind overall, and you know, we're doing well.
I think it's fair to say that, you know, we do expect at least the same, maybe a little bit more, on specialty from our side. And I think it's somehow similar, but in a different context on graphic. You do know this is a category that is fighting secular decline, but you know, we are a very strong position, and we are the clear market leader in an attractive region. There has been closures already during third quarter, and there's another big one coming up towards the end of fourth quarter.
So, it's pretty fair to assume also that we will have a bit of a further uplift on the graphic volume going into 2025. Difficult to say how much, but we are certainly confident that we will have another uptick, everything else equal, on what we know right now.
Okay. Thank you very much.
Thank you. We will now go to our next question. Please stand by, and the next question comes from the line of Linus Larsson from SEB. Please go ahead. Your line is now open.
Thank you very much, and a very good morning to everyone. Maybe starting off with price, if you could help us, as you often do, and maybe per region, giving some more detail on the sequential price effects that you expect in the fourth quarter, please.
Yes, I can take this one. Good morning, Linus. So, in terms of pricing, if you look at region Europe, we do expect overall flat pricing heading into fourth quarter. If we look at region North America, as I mentioned, the paper grades are expected to have a stable pricing in fourth quarter. However, we will see some decreases in the pulp prices. Our estimate at this point would be a negative impact of somewhere around SEK 50 million into fourth quarter compared to the third quarter.
Sorry, did you say five, zero?
Five, zero. Yes.
Got it. Thank you very much. And then, that, that's very helpful. That's clear. Thank you. And then maybe on the delayed CTMP project in Norway, what's the latest on that, and how do you expect to proceed? And in relation to that, if you could give some early indication of your thinking on CapEx for 2025, please.
Yeah. Good morning, Linus. I can take that one. To be very honest, I don't have much more than what's already been written in my CEO comments in the report. But it was a surprise when our permit application was rejected. We will appeal, and we're looking to complete that appeal, I think, towards the end of next week. Let's see. That's all I can say. I think we felt we had good arguments, yeah, you know, well documented. So again, we will go in with renewed optimism on that. How long it will take and what outcome is obviously very difficult to estimate at this point.
I think it's important to keep in mind that that was a chip in a whole Europe COVID sourcing and fiber strengthening position. You know, we also have all the parts on top of this. So, let's see if it isn't successful or, and what we do then. But for the time being, that will be an appeal. We first look forward to see how it's being processed.
Now, on your second point, I will probably dodge that question and ask for a bit more patience. All of this, pretty granular, even I would argue, we will go through in our Capital Markets Day. So sorry for not being able to answer, but in six weeks, I think you will get the ample level of details.
No, that's very, very understandable. But is it, is it fair to assume that relating to any CTMP project or, or, you know, anything that could replace that, we should not expect anything for 2025, at least?
I would just hold that question. It's probably not going to be a big one anyway. If it comes out as a positive message, it takes time to get organized, as you know. But we will cover, I think, the necessary details in six weeks.
That's great. Thank you. And maybe just a final question on seasonality and costs. You did comment on rising energy costs in the fourth quarter, but what about fixed costs? What's the seasonality that we should expect fourth quarter and third quarter?
Yes, Linus. So, in terms of seasonality, we have, as you know, the vacation accrual release that we have in third quarter, that we will not have in the fourth quarter. So, this is gonna be a negative impact of roughly SEK 130 million quarter over quarter. Now, in fourth quarter, we also tend to have some more activity than we have in third quarter due to vacation periods. So that would add probably additional SEK 100 million .
And then finally, as I mentioned, on our working capital position, we will have a high priority to adjust our working capital in the fourth quarter, which means that we will make changes to our production schedule, and that will result in some fixed cost under absorption to restore the inventory levels. At this point, we would estimate that impact to be in the region of SEK 50 to 100 million negative in fourth quarter versus the third quarter.
That's super clear. Thanks a lot.
Thank you. We will now take our next question, and the next question comes from the line of Cole Hathorn from Jefferies. Please go ahead. Your line is now open.
Good morning. Thanks for taking the question. I'd just like a follow-up on North America and graphic paper. You talk about kind of better graphic paper volumes into 2025. Is that just from share gains from, you know, Sappi that's converting into boxboard? I mean, how do you think about and explain that kind of volume improvement? And then, focusing on Europe next, which end markets you've given some good color on, you know, sack and kraft paper, but I'm just wondering if there's anything that you can call out there, because we've seen recycled containerboard come down a little bit, but wood costs are up.
I'm just wondering if you see virgin containerboard, sack and kraft, effectively being able to hold pricing just because of the differing cost dynamics in virgin versus recycled grades, that I know you don't play in, but, you know, some of your competitors in the box market do. Thank you.
Hey, good morning, Cole. No, I think the first question I can be pretty quick on. Yes, it is related to share gain. As you know, this is a category that comes down pretty much every year, depending a bit on the different grades. But you know, we feel very confident about our value proposition of being well-placed in the Midwest and mixing cost curves of our production units there. And as more local or US-produced capacity is taken down, you know, we go into 2025 pretty confident in our ability to have a meaningful proposition to customers and also establish new customer relations.
I think to your second point, it's a very interesting question. I think if you just go a little bit back in history and say that pulping or pulp pricing be pretty good indicator of also what happens in some other packaging materials, you can certainly ask yourself if this will be slightly different this time. I think certainly in Nordic and Northern Europe, everyone is fighting the same challenge. It's not, I think, a company-specific item, but all virgin fiber producers are having cost situation, which is tough. Input cost is certainly not coming down, although pulp pricing on a global scale is coming down.
So, I think it will be a different game this time, where you would expect a lot of players to maintain focus on value over volume, potentially be able to not jump over or onto all volume opportunity arises. But it's a fine balance. You certainly also need to have a certain utilization to keep the mills in a pretty good shape. The situation, though, is slightly different, as I'm sure you can expect on the categories. I mean, liquid packaging board in general is holding better, that demand is more stable on a global level, you can say, or level, although China is maybe the concern also there, that it's a bit lower consumption.
But... And then container board and carton board just a challenge right now, and I don't expect that to be long-term or permanent, is that there has come quite a lot of new capacity in and installed capacity being ramped up now in 2024 and going into 2025. If you couple that with some of our key markets, you know, struggling with the underlying consumption and consumer spending is not really up to par, then I think everything points towards that it will be more price pressure and fight over some volume positions. We still remain confident long-term trend.
Packaging grades is in a good place, and they are supported by macro trends that should be a strong force going forward, with positive category growth for most of these categories we are exposed to. But yeah, no doubt, before we might see some meaningful interest level declines in Europe and starting to see some optimism on the consumer spending, it looks to be some tougher quarters ahead.
If I could just have a follow-up on your specialty kraft business. I mean, you're one of the few players that operate in that segment. I'm just wondering if there's any differing demand trends or pricing trends there?
No, I think it's you know, that category has done a good comeback in 2024, after 2023 was tough, as I'm sure you know, with inventory levels now being more normalized. It is a category that is in pretty good growth, also in US e-commerce, and e-commerce in particular is a good driver for this. You know, we are well-placed, I said, with good production location in the Midwest. You know, we continue to fuel momentum on that category. It's an important category for us, it's a prioritized category, and you know, we expect everything else equal 2025 to be better than 2024.
Thank you.
Thank you. We will now take our next question. And the next question comes from the line of Lars Kjellberg from Stifel. Please go ahead. Your line is now open.
Thank you. I have two questions left. One being, of course, the wood cost pressures you're seeing and the dominance of Nordic production into liquid packaging board. How do you see that working with your main customers in terms of trying to find any sort of compensation through pricing, considering that demand in that category is quite good? Also thinking about, again, kraft and specialties.
I mean, you called that out as being very strong in the US, I think... But I can't recall the exact percentage number, but it's a significant increase in volume. What are you seeing in that business in Europe, and are there any opportunities to tap into that market in a greater way, also on the European side?
Yeah. Hey, good morning, Lars. No, listen, the first one, there is just the fact that, you know, the input cost level has come up a lot in Nordic over the last couple of years. The dynamic and the contract length in liquid packaging is a bit different, as you know. It tend to be longer contracts. I mean, we have discussions with all of our customers, you know, going into 2025 . You know, there is a clear expectation that pricing is coming up in 2025, versus what we've seen in 2024, as, you know, that cost situation has put a lot of pressure on the region.
But having said that, you know, we also need to continuously do better ourselves and have that mentality of take cost out and, you know, look at our own internal efficiency. And that's also very much in line with our efficiency enhancement program that we have ongoing. I think to the second point you have, we talked about US I think in Europe, it's, you know, it's a bit of a difference between the grades. We can maybe quickly go through them. I think on sack, and I can take sack and kraft paper combined, and brown sack, as you know, the main destination that we have on our side is towards construction.
That is a tough, say, call it channel or a industry globally these days. Asia is certainly not in the best shape, so we definitely see that, you know, Europe is weak. It's tough demand still in Asia, and, you know, we go into 2025 with probably an expectation that this is coming down for some quarters. A white sack is somewhat better, and that's also related to the destination categories and channels being slightly different.
But we also sense that there is quite a different shift now that we see going into fourth quarter and putting pressure on, I guess, all of the players, but it's not necessarily in the same negative league as we've seen on brown sack. On our MG side, yes, there is price pressure, and there is definitely also some volume issues that we see.
But, you know, we have pretty good flexibility on our machines, and we can have a bit of a flexibility in the different application. That helps us to drive different mix and find some sweet spots that we are very good at and have a good point of difference. But we certainly expect some pricing pressure when we come into 2025. On a brown MF, that's still a pretty good... It's a smaller segment for us, but that is in a better shape. You know, e-com, particularly carrier bags, is a pretty good match these days, and we have more confident view on that item.
In FibreForm, smaller, little broader, but it's a pretty unique proposition for us. It is pretty okay, and that's also where we should have a bit more room to grow. So, I mean, all in all, you know, that segment has been good for us in 2024. We start certainly to see that towards the end of the year, it's cooling down, and we're holding pricing well towards the end of the year. Tougher to say into 2025, but, you know, we're certainly going to an expectation of 2025, with volume coming down and some increased pricing pressure from first quarter.
Thank you, and just one clarification. When it talks about the sequential changes to fixed cost, that if I do the math, it sounds like you're expecting a ballpark SEK 300 million higher fixed cost in fourth quarter versus third quarter. Did I get that right?
Yes, that's correct. That's on the, on the fixed cost per se. Now, Lars, you should also remember that we do have somewhat lighter maintenance shutdown schedule in fourth quarter. So, we get approximately SEK 240 million in positive impact quarter over quarter from lighter maintenance schedule.
Sure. Thank you.
Thank you. We will now take our next question. Please stand by. And the next question comes from the line of Sean Ungerer from Chronux Research. Please go ahead, your line is now open.
Good morning, thanks for the opportunity. Just in terms of your comments around European pricing being flat heading into fourth quarter, is it fair to assume that does definitely apply to sack paper segment? And then I guess, sort of heading into 2025, how are you guys thinking about, you know, sort of balancing higher input costs while demand seems to be moderating somewhat? That's it. Thanks.
Do you wanna take the first part, Andrei? And maybe I'll take the second part of that question.
I can take, in terms of pricing, I mean, we do expect only minor movements within the segments. On the total level for the region, we do expect, you know, overall pricing to be flat. Now, on the back of somewhat weaker demand that we expect to have in fourth quarter, we might see some negative impact from the mix. But in terms of pricing, again, we will prioritize value over volume and expect to hold pricing quite firm into the fourth quarter.
Yeah, and maybe I just jump on the last point going into 2025, and I think you mentioned it, but to be very clear that it's a very different, well, difference between, you know, US and Europe. I think we went through how we are much more optimistic about the North America going into 2025. But I think, listen, for Europe, it's a good question, and it's something that we will, you know, maneuver and probably fight on a weekly and monthly basis. Input cost is not coming down, and that is just a fact.
And to the contrary, we see still that, you know, we will be fighting, you know, a full quarter impact of announced fiber cost increases that has come in third quarter, and energy is coming up in fourth quarter now versus third quarter, just, you know, due to normal seasonality. And yes, on a global basis of the demand is soft, but I don't think we should panic either. This is not something that is a long-term trend. We are very confident for most of the categories that there is, based on the, you know, macro trends, sorry, the bigger macro trends, that this is going to be a, you know, a growth story going forward.
And our substitution effect towards fossil packaging is in the center of that. But yes, it will maybe be some tougher quarters. Tough to say, because I think the only thing that this 2022 onwards have in common is that the cycles are much faster and more frequent than it used to be. But yeah, we are not too optimistic, at least in Europe, before we start to come towards the summer. It means that we will be quite ruthless in terms of how we plan our production schedule. It will certainly go down in slow steaming for quite a few of our units.
Tough to say yet exactly what that means more than just volume will be quite a bit lower. But we need to and we have to, and we will prioritize value over volume, and that is a very clear choice that we will hold firm on going into 2025.
Excellent. Thanks very much.
Thank you. We will now take our next question. And the next question comes from the line of Christian Kopfer from Handelsbanken. Please go ahead, your line is now open.
Yeah, thanks, operator. Good morning, sorry, Andrei, for, I just wanted to clarify a little bit on the guidance here. Firstly, you talked about around SEK 100 million further higher fixed costs in fourth quarter. But I understood that was primarily seasonal, right? So, we should expect those, that to be a little bit more, well, one off, no...
Yeah.
...in fourth quarter. Yeah, okay.
That's correct. Yep.
When it comes to your prioritizing price over volume, that's perfectly fine. But just how much did you expect the volumes to come down in Europe for 2024? 20 to 30 thousand tons, sorry.
I think, where we stand now, and looking into both regions, I mean, we see a volume decline of 10 to 20 thousand tons, both in Europe and also in North America, in fourth quarter compared to third quarter.
Oh, okay. So, it was total up to 20 for the full group?
Yeah.
Oh, okay. Right. Gotcha on that. Sorry, sorry for asking that. And then, I was a little bit puzzled, Andrei, when you talked about—I mean, I understand that you prioritize price over volume, but on the front page, you say price pressure in Europe. But, so but still, given that, you expect to have a flat pricing on your European operations?
Yeah, I think, as we look into fourth quarter, again, we do expect...
Yeah, yeah
...to hold our pricing. Now, with the weakening of demand that we see happening in fourth quarter, we do expect some intensified pricing pressure, primarily into 2025. But for the fourth quarter this year, we will...
Ah, right
...firm on our pricing positions.
Ah, gotcha. Okay. So, sorry for that. Thank you.
No, no, that's okay.
Thank you. We will now take our last question. Please stand by. The next question comes from the line of Ephrem Ravi from Citigroup. Please go ahead, your line is now open.
Thank you. Most of my questions has been answered. Just one clarification on the working capital. Apologies if I missed it. Could you kind of give a sense of which areas the working capital increase was coming from? Is it from a geographic perspective, is it Europe or the US? And then, if it is in Europe, you know, and if it is, you know, inventories have gone up a bit, you know, which product types are kind of building that? Thank you.
Yeah. Hi, Ephrem. So, in terms of the working capital build up, this has been really happening in Europe, and inventory build has been, you know, one component. It has been the, the minor one of them. But we do build up some inventory ahead of our maintenance shutdowns and had some overhang of that inventory at the end of the quarter. As I mentioned, we will take production, you know, schedule choices in fourth quarter, so we do expect to bring down our inventory. Now, the second big part was really timing of our operating liabilities, also in Europe, that we had a negative timing impact in now in third quarter.
Thank you.
Thank you. As there are no further questions, I would now like to hand back to Lena Schattauer for any closing remarks.
Yes, then we will soon conclude this conference. Just a reminder, our next earnings presentation will be on the 4 February 2025, when we report our fourth quarter and year-end results. Already before that, the 2 December 2024, as you have heard, we will host a Capital Markets Day in Stockholm, and information on how to register for that event can be found on our web page under Investor Relations. With that, we say thank you for participating today, and goodbye.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.