I don't know how you feel. I feel super good to have a live audience because I have enough of Teams. I know there are many of you on the webcast, but I would like to thank you to have come, and I hope you will enjoy this afternoon as much as we will do. Before I start, priority number one is safety. Do I click here? I think I do. Here we go. I just want to remind yourself to find the exits. There is an assembly place at the parking lot if there's an evacuation. You have some fire extinguishers, and you have a defibrillator in the lobby. Because of COVID, we placed you a little bit far apart. I hope you don't mind. Also during the mingle, please keep your distances.
For those of you who are following us over the web, I hope you are safe, and you know what to do if something happens. Okay. Before we start, I want to introduce you to the team. I've probably two people I don't need really to introduce. One is Lena Schattauer, our Director Investor Relations, and one is Ivar Vatne, our CFO. I think all the others are maybe a little bit less known, so I thought I will just introduce the MT and the presenters and please, say who you are, keep it to the point. I start with you, Andreas.
See if this is on. Hello, everyone. My name is Andreas Mattsson. I'm the general counsel of the company. I'm heading up the legal and compliance work in BillerudKorsnäs. I've been with the company for nine years since the merger of Billerud and Korsnäs, and I have a prior background in corporate law firms in Sweden and in the U.S.
Thank you, Andreas. I have the benefit of being responsible for human resources in BillerudKorsnäs, and I've been heading that position the last five years. My background is from huge international companies within the pharmaceutical area, such as Johnson & Johnson and Pfizer, and lately also within fast-moving consumer goods. Unilever and Arla was my prior employments before I was happy to join BillerudKorsnäs.
Thank you, Paulina. I am Nina Ekstrand, VP Communication and Brand, and I joined the company six months ago, and coming from a broad background on marketing, communication, and branding, and both from the private and public sector. Before joining Billerud, I did the World Expo in Dubai, which is currently running, the Swedish participation there. I'm really looking forward to delivering excellent communication and branding work for Billerud together with my team. Thank you.
I think I have my-
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No.
No.
Very good. Good afternoon, everyone, here in the meeting room as well as online. My name is Anna-Maria Tuominen-Reini. I'm actually a Finn. You know, you probably will hear it in my accent. I am heading wood supply at BillerudKorsnäs. Been in the company now seven months, and my heart actually beats for supply, sourcing, and supply chain management. That is my professional background. I have been working in mining in forest and paper industry, but as well as fast-moving consumer goods business as well as packaging before. Nice to meet you, everyone.
Hello. My name is Tor Lundqvist. I am Head of Operations since August of last year. I came from Stora Enso into Billerud in 2010. I've been heading up the Skärblacka mill, and before I joined this position, I was working for a few years in our solutions part of the business in the United States. I have, all in all, about 25 years of experience from the pulp and paper industry.
Good afternoon. I'm Mikael Nilsson. I'm heading up product innovation, and I joined BillerudKorsnäs six months ago. I have a background in fast-moving consumer goods, and the last I came from Nomad Foods, where I head up the Nordic R&D, being responsible for product and packaging development.
Hello, I'm Matthew Hirst. I'm the Executive Vice President for Commercial. I'm British. I'm actually based in Stockholm, and I'm happy to say I've just completed my third month in the company.
Mm-hmm.
If you look at my professional background, I spent my entire career in B2B companies, my entire career in sales and commercial roles, and I spent the last 16 years working for a company called Essity in their professional hygiene business area. Thank you.
Very good. Thank you. Last but not least, I also would like to introduce our chairman, Jan Svensson. I think many of you have greeted him already. Thank you to be here today, Jan. Good. Agenda. We have a relatively short agenda of presentation, and we have tried to leave significant time for Q&A. I know from experience that that's what you're after, and you find that probably more interesting. We wanted to give you a good overview of our thinking of where we're going, what is the priorities we are having, where we see the challenges, what needs to happen to make us a really performing company. We start. I'll give you a quick introduction of our strategy of what I found when I joined the company. Then we talk about the market opportunity with Matt.
We talk about innovation, and that's why we have Mikael here today. Tor will take on the operational journeys that we have to go through. Mari will talk about wood supply. Finally, Eva will have to bring all that together and talk to you about the sustainable and balanced finance that this will deliver. We go for Q&A. During the Q&A we take questions online so you can already, I think, ask questions soon and provide them, and we go between the room and online and see how the discussion goes. During the break and during the mingle after that, if you are ready for that, you're most welcome to talk to everyone. That is, everyone has a name sheet, and I think the team is really eager to talk to you as well.
Take that opportunity and, I'm looking forward to talk to you as well in a one-on-one capacity in the break. Okay? Very good. When I started, I think many of you asked me, "What did you find? Why did you join BillerudKorsnäs?" I think I'm now 1 year and 17 days or something. I think over the time it was very clear that the things I found are probably all what you normally do when you join a company. Some things are absolutely brilliant, and in some other areas, there are some challenges. Before I go there, I just wanted to let you know, even when I joined, I did not realize how tremendous the opportunity for BillerudKorsnäs was.
We're really on the sweet spot of trends, of materials, of the products we are making, and the opportunities to innovate and bring that forward. These trends are the climate crisis and the circular economy. I mean, you all have heard about the COP 26, and in the COP 26, a lot of discussion about fossil fuel. BillerudKorsnäs is already 97% fossil-free. You have heard about the issues of coal. We don't use coal. You have heard about the challenges with plastic and what has to happen. I think this particular trend is really the sweet spot where our material with primary fiber really has a role to play. We also see a lot of change in consumer behavior and shopping behavior, and that drives brand owners and our customers to find different solution for different of these, in particular in e-commerce.
I remember, I think I was three weeks in the job and one of my colleague asked me, "Hey, we're talking to Amazon. They want a different solution. They wanna go from basically their plastic, automatic plastic packing to paper packing and these type of things." A tremendous opportunity, not just from an environmental, but also from the kind of behavior changes that we see in the market. Finally, a lot of people forget that our material is actually the, I would say, the source for recyclability when it comes to paper and cartons, et cetera. Because without new fibers, there would not be any recycling. Today, in Europe, the recycling scores are actually quite disappointing. I was told in average, only a fiber would be recycled about 3.5 times.
That has nothing to do with the physics of the fiber nor with the recyclability. That has to do with behavior in the market of basically bringing the things to be recycled. If you take machinery into account, you can probably recycle fiber between 7 and 14 times. If you go a step further, there is no reason why fiber cannot recycle endlessly if you treat the fiber and the recycling process in a good way. Okay? Renewable resources and raw material is super important. If we would stop using primary fibers, you end up with nothing to recycle within a few turns of the fiber. Finally, digitalization.
I mean, it sounds maybe funny that I talk about that, but when you look at our list of customers, you find a number of them are really, really big, and then it goes very, very quickly in very small numbers. Therefore, the digital opportunity for us to sell online and have an online relationship with most of our customers is actually huge opportunity for us. Because at the end of the day, once we have created a relationship, customers don't want to talk to us every day. They want to order their stuff. They want to follow their orders in our systems, and they want to have their product on time in spec and full, et cetera. Clearly, that's an opportunity. That's the external one. The internal one is probably even as big.
As you know, we have been a company who came from many, many different parts of the industry, put together in 2012. I think even since 2012, not all the integration has been done properly at the point of saying, "We are one BillerudKorsnäs." We are currently also running in parallel to our strategy a process to harmonize our processes, to do best-in-class on those, and then digitalize them to make our working internally much more efficient, cheaper, and also more effective for our customers. These trends are super good for us going forward. What did I found in all this? Most of you have already heard them, so I will be very quick. What was great? I talked about that. Excellent market position, sweet spot of trends.
One thing we often underestimate, we have a huge amount of very dedicated and very qualified people in the business. Okay? When you look at the performance of the past of BillerudKorsnäs, it's not because of the people, it's how the people were challenged to basically deliver the energy on one direction, which was maybe lacking, but not the quality and the people in themselves. Finally, the same for innovation. There's enormous amount of technology, IP, and other capabilities in BillerudKorsnäs, but maybe it wasn't so focused and so commercial in the past. These are the good things where it's just very simple to put focus in good system to get a better result. What were the challenges? Clearly, I mean, if you have accidents, the company's number one is safety.
We work in an inherently quite dangerous industry with big machines, lots of chemical reaction and things like that, and we have to get better at this. I think we have made progress, and Tor will talk a little bit about that later. Still, that is on top of the agenda. Lack of common vision and focus on the core. I mean, when I joined BillerudKorsnäs, we had solutions, we had ventures, we had lots of different other businesses, and I think you've heard about them. If you compare those to really our core, they're relatively marginal, okay? I've learned in my long career that if you want to succeed, you focus on a very few thing and do them very, very well. Our strategy is actually a lot about focus of the core business that we have and which is very competitive. Production stability.
Over time, I think we lost a little bit the plot. We have a stability which is not in line with industry best practice, so we need to get there. You're all aware of our adventure with KM7, which I think is now under control, and you have seen the results already this year, how well it's going. Production stability overall is still a big thing for us, where we see enormous opportunity for organic growth. Finally, financial performance. You know all about that, probably even better than I did when I joined. It was not so great. I heard already this morning when we released our press release that some of you were a little bit disappointed that we didn't put, you know, the EBITDA target sky-high. You know what? We've never reached that EBITDA target. Okay?
I think we will walk, and once we know how to walk very solidly, then we start to run. That is why, in my view, in the debate we had with Ivar and the team, it was really, we wanna be a minimum of 17%, and that basically sets the bar that actually we wanna be better. Let's get there first. You can see on the slide, compared to our peers, we have lost a bit the way on profitability in the past. I think the management team, before I arrived, did the absolutely right thing. The company wasn't doing too well in the beginning of 2020, and they put a plan in place of saying, "We only do four things," which I think is the right thing to do.
Ramp up Gruvön, cost and efficiency program, safe and stable production, competitive wood supply. I think these were exactly the right thing to do. As you all know, during the quarters, I have never changed that. I think this is the right thing to do. What it lacks now is, I think, a future direction, the next five years, the next ten years. What we have done is we took these priorities and integrated them in the overall strategy. What is this strategy? Well, in very simple terms, it's setting the priorities of our business going forward. Maybe what is different of the past is that we did not put the assets into the middle and then said, "Okay, now we have these machines, what will we do with them?" Okay?
We started by actually looking in a much wider way of saying, "Where is the market moving? Which regions are growing? Where are the opportunity? Where are really the brand owners and customer segments that we think can, you know, will have a competitive advantage using packaging materials that we are making?" We started from there. I remember in March to May, we really, really focused on that. We had a long debate with the board. Is this the right direction? What is our capabilities? Can we actually leverage on those? Only then we went back to Tor's organization and say, "Hey, can we make these things?" Okay? What is the best way of making them? What assets therefore needs to be prioritized and what assets maybe less so?
In which assets we need growth and in which asset we actually have innovation capabilities for added value, even keeping the growth or the production at the same level it is today. Then finally, the question came to Mari and said, "Hey, Mari, where's the wood?" Okay. We're in a tight wood basket in Scandinavia, as you all know. Sweden probably tighter than some of the neighboring countries, but still. Okay. If we want to grow in a good way, 3%-4% year-over-year, which we haven't done in the past yet, clearly we need raw materials and fibers. Basically, what we will do this afternoon is take you through the strategy. Matt will talk about commercial, and he will talk about why priority on cartonboard and containerboard.
Why do we think the U.S. is a great market to grow while Europe still remains our core? What are our choices we do in liquid packaging board? Why do we think value added in Sack and Kraft is so important? Tor will tell you why we need a little bit more CapEx to move from maintaining what we have to move it into best in class, in particular modernizing some of our factories and not just doing the CapEx to maintain them exactly as they are. Finally, I think you also realize I always said 25, 26. It's very hard to be precise on the date. We will run out of organic volume growth opportunities. The question at some stage will come, should we buy a factory and convert it? Should we build our own mill somewhere else, and where?
Can we have existing assets in our stable, so to say, that we can further change and add productivity, move away from being a forestry organization to a proper wood sourcing organization. Using the tools and the processes and the things that you have in the industries all around the world and apply that to our fiber supply. Very important change, and Mari, you will talk about that a little bit later. You all know that a strategy without three major building block is deemed to fail. If you don't take care about sustainability, if you don't have the right people, and if you don't have a good business system behind, all this will either be very painful or very slow. Okay. When we talk about sustainability, there are clearly three areas.
There's one area which is the whole area which was a bit towards our customers, recyclable materials, strong materials. How can we give them solutions that they can shine and contribute to their customers and their consumers at the end? In operations, it's all about our scientific target to be 100% fossil free, but in the next 10 years, people will start to argue, well, biogenic CO2 is also important because it's CO2 at the end. It doesn't matter if it comes from a tree or from a fossil. What is our view there?
In wood supply, being a little bit less of a size, but still we have transport, logistics and inter, you know, within our shunting costs, within the factories, how do we make sure that we are fossil free and actually using as little CO2 as we can. Win with our people, we will not go in detail, except we have time at the end, but it's basically about talent management, succession planning, the right skills at the right time. I think a lot of you in quarter three asked me, "So is recruitment of high skills in the countryside now easier with COVID?" Okay? Which I thought was an interesting question.
Actually what we see in our mills, there is enormous potential of people who want to work in our mills and all things, but we are competing against other people who sit also, you know, a bit decentralized. It's important that BillerudKorsnäs remains a fantastic employer if we want to take the strategy at the right level to 2030. Then finally, I've already mentioned it, OneBK is really about this, I would say, the integration debts that we have to bring our systems and processes and methods to the 21st century and be one company and not different mills with different system and different ITs. Good. That was basically the strategy in a nutshell. I'm sure you said, "Oh, Christoph, this was so boring because you never go into the detail." That's why I brought my colleagues.
They will now go into the detail and tell you a little bit and give you color. I hope that we have an exciting Q&A session after all these presentations, when you get to see a little bit in the kitchen of what these ladies and gentlemen are doing for a living. Good. Having said this, Matt, may I ask you to come and I hand you over this little click.
Thank you very much.
There you go. Thank you.
I think I just got my brief, which was, "Don't be boring." Okay, I'm gonna spend a few minutes talking a little bit about our market opportunity and also our commercial strategy. I'm gonna start with some strategic choices. The choices we have made is relevant to our business areas and the role that we would like our business areas to play within the total portfolio. If we look first to Paperboard, we consider Europe to remain our powerhouse. We'd like to ignite growth with some focus on North America. If we look to Liquid Packaging Board, here, we'd like to accelerate growth, but with some select opportunities. If you look to Sack and Kraft, this is gonna be very much about improving mix through profitable applications.
What I'm gonna do over the next few slides is give you a little bit more color as to how we've landed upon some of those choices. In addition, we've reexamined the role that innovation plays within the company, and we'd like to strengthen its contribution back towards the core. We're gonna do this by stepping up impact-led innovation. My good friend and colleague, Mr. Nilsson, is gonna come up after me and be as equally interesting, I hope. Okay, so let me paint the biggest picture. The paper and board market is big. It's really big. It's about 420 million tons big. We choose to play in what you can describe to be a relatively large niche, which is primary fiber packaging.
This particular part of the market contains product segments such as containerboard, cartonboard, sack and kraft papers, and liquid packaging board. We think we are really well-equipped to compete in this space. Why? Three things. We've got access to really good quality raw material. We've got a really competitive manufacturing footprint, which, by the way, only happens to be almost exclusively powered by biofuels. We've got huge knowledge and expertise. What we're able to do is mash those things up, and we're able to develop sustainable packaging grades. These packaging grades deliver superior performance that enable us to meet some of the toughest demands that our end users have.
If I give a little bit more color to that, our materials are really, really well suited when characteristics like strength, like durability, like attractiveness, like appearance, like product purity, like sustainability or even runnability are important purchase considerations. We start from a really good place. You could say that actually in this big world of packaging that Billerud is actually quite a small company. If you look to our serviceable addressable market measured in terms of capacity, you can actually see that we are the fourth largest player globally. Actually, and as Tor will share with us a bit later, we've got a super strong platform from which to grow. As we start to think about growth, and as we start to think about our investment choices, we would like to say that we are clearly prioritizing board over paper.
We're making that choice after carefully assessing our ability to serve our customers across an entire business cycle and after assessing the competitive dynamics, the growth rates within the market segments, and the financial attractiveness back towards ourselves. If I was to give one small example, maybe I talk here to container boards, where the primary fiber portion of the market is expected to grow by some 2%. We have a superb position, number 2 position on semi-chemical fluting in Europe. Here we're providing products predominantly towards the fruit and vegetable producers in Southern Europe. The reason they choose us is 'cause our product performs the best in humid conditions. It's very simple. We're gonna continue to focus on areas where we've got a complete set of advantage.
If you look from a geographical perspective, Europe today represents about 70% of our packaging material sales. It is, and it will remain our home market. We see that there is attractive opportunities for us to continue to grow. If you look to the other parts of the world, if you look to the Americas, here we're kind of excited. We see there's a really good opportunity to grow. Specifically, we're talking about cartonboard and containerboard. I'm gonna share a little bit more detail with you on this over the next couple of slides. If we look to the other parts of the world, if you look to Asia and maybe the rest of the world, our intent here is to grow with the market and take selective opportunities as and when they arrive. Now I pause.
I take a sip because I'm gonna share with you a little bit more on North America. Why is it that we believe we can succeed with cartonboard and containerboard? Well, this is a story about opportunity, and it's a story about opportunity in the land of opportunity. Okay? If you look at the addressable market in North America, it's absolutely huge for primary fibers. If you looked at the underlying domestic capacity, it's somewhat limited, and one could argue that maybe that the competition is less fierce right at the top of the pyramid, where performance characteristics are so important. Thirdly, we believe after our assessment that there's going to be a strong pull from brand owners and independent converters based on the prevailing market structure.
I'm gonna go now into cartonboard just to explain this a little bit further. If you looked at cartonboard today, the market's estimated to be around 6 million tons. It's pretty big for primary fibers, and it's gonna grow. We estimate it's gonna grow another 1 million tons by 2030. Secondly, there's a growing preference in North America for packaging to be produced and constructed from FBB, so folding boxboard construction over and above SBS constructions. Now, for those that don't know, FBB, folding boxboard construction, is the preferred construction that exists in Europe, and it's been there for quite some time. It also happens to be the construction that underpins our own CrownBoard range.
You could say, "So why is there a growing preference?" Well, actually, this is simply associated with cost and sustainability advantages that come from light weighting. For those of you that don't know, light weighting is effectively about producing same level of performance, but with less fibers. This is a story we already recognize to say, "Hey, that's gonna fly with brand owners. That's gonna fly with converters given the existing trends that are out there." Then the third feature I think on the North American market is kind of interesting is if you looked at the folded carton converters, about 36% of the industry today is independent. What does that mean? They've chosen not to vertically integrate and produce their own packaging materials. So what? Well, I think, and we think there's quite an exciting opportunity here.
We think there's an opportunity for some long-term positive sum relationships, particularly with big friendly Swedish companies like ourselves. All in all, in North America, we're very excited to say, "Yes, we feel there's something here." Let's move to liquid packaging board. Liquid packaging board is our biggest segment. We've got a leading position within the global category, and actually the leading number one position when it comes to long-life ambient packaging. If you look at the market, with some annual demand of around 4-5 million tons, this is actually the smallest market in which we play today. We're overweight in this position compared to the other markets in which we trade in.
If you look at the growth rate of the liquid packaging board market, we expect it to be positive, some 1%-2%, but this growth will be predominantly skewed towards the markets outside of Europe. If we stand back again, I would also conclude to say is, "Hey, look, we are really well positioned to compete in BillerudKorsnäs." Why? Well, two things. We've got relationships with every major customer in the market. Secondly, we're kind of famous for producing really high-quality board. What we will do is with the volumes we allocate towards this business segment, we will pursue growth selectively, and we'll do so by optimizing our mix with our customers, with our products, and with the markets in which we're playing using the board system that we have in manufacturing.
The last point, I think relevant to talk around in Liquid Packaging Board is that together with our customers, we will continue to work on improving the product portfolio, and we'll improve it towards demands that we see that need to come up in the future. Specifically, I think in Liquid Packaging Board, the industry needs to start to solve the sustainability issues in the long term, specifically around recycling. If we can find a way to help our customers to help them find alternatives to the aluminum they're often putting on our products, then we're gonna be in a really good place for society. Okay. Now to Sack and Kraft. Sack and Kraft, relatively speaking, is the smallest of our business areas. Makes up about 25% of our net sales last year.
Here, the materials that we are providing are suitable for quite a broad range of applications. These applications range from building materials to food, to retail, to hygiene, to medical. It's a very broad portfolio of applications. I think it's important to recognize that the competitive intensity varies between applications in this space. It also varies within an application depending on its position within the business cycle. Why do we see this competitive intensity? Well, it's simply down to substitution effects. It's simply down to the fact that there's lower barriers of entry. What are we gonna do within this context? We will focus our energies towards a portfolio of applications that will deliver sustainable quality returns over the entire business cycle.
If we stand back and ask yourself, "Well, what does that really mean?" It's about matching where we feel that we've got superiority advantages in terms of the products we produce with perspectives that our customers have towards value. What does that mean? It means we're interested in finding those applications where value is a relevant discussion, where total cost is a relevant discussion, and we're kind of not wanting to put so much efforts into those application areas where it's all about price. Okay? If we then say if we look at Sack and Kraft, I think another exciting opportunity in this particular space relates to brand owners. We're really pleased that actually a number of brand owners are actively reaching out to us. No demand generation needed. They're coming to us.
They're coming to us to help them try and solve how they switch from going from plastic to paper in their own packaging solutions. That's quite incredible. When it comes to Sack and Kraft, I think we're quite clear that we're not going to invest for growth, but we will continue to invest to add value and for innovation. When it comes to innovation, one particularly important development area for us is going to be around barriers. Okay. Now, I've kind of given you a little bit of color so far on where it is that we're going to play, but we're also really confident about our ability to win in these spaces as well. Why is that? 'Cause we've got a really compelling value proposition. It's built on three legs.
I've talked already a little bit about in this presentation about producing superior products, and we will continue to produce superior products and services measured in the eyes of our customers. The second leg that we talk to is about being the easiest to do business with, and this goes beyond reliability. I think as Christoph mentions, our customers need us to be able to service them in the way and through the channels that they need us to. The third pillar, the third part of our value proposition, is about being the most sustainable choice. Actually, here is something that we have a competitive advantage around. We are widely regarded to be best in class. When the indices come out, we're either at the top or we're somewhere near the top of them. Why? Well, we've already told you about the biofuels.
We've got 100% of our raw materials come from responsibly sourced sustainable sources. At company level, we've got this really nice story. Actually, we're finding really smart ways to bring this down to our customers. Through our superior materials, through our superior services, like our BoxLab that we have, and our intelligence and expertise. We're able to enable our customers to develop their own climate-smart solutions. I think at this point, I'm now gonna call my friend Mikael to the stage, and he's gonna share a little bit more about how we'll look at impactful innovation.
Thank you, Matt. As Matt already mentioned, we re-examined the role of innovation, but we also did some adjustments in how we run innovation during the last months. For the last four, five months, we changed our innovation process and also the related governance structure of our projects. The ambition was to drive transparency in projects and portfolio, to really strengthen the commercial focus, and also to drive prioritization to make sure that we invest where we get the best bang for it. We did some really basic stuff. We introduced one process, regardless if it is a short-term application development or a longer-term innovation project involving new technologies. We also established some very basic tools, which I'm used to from the FMCG world, to give us a good steering of the portfolio.
We know when the innovation hits the market, we know the total value we have in the pipeline, and we know how disruptive versus how core innovation we are. What defines our innovation agenda then? Well, we are committed to challenge conventional packaging for a sustainable future. What does this mean for us? Well, if we ask our customers and brand owners, this is the answer that we get. This is actually the result from a survey that we did earlier this year. As you can see, sustainability, recyclability, plastic replacements, it's all among the top comments. You also, as Matt already mentioned, find barriers in various comments, and barriers can mean a lot of things.
It can be the more traditional extrusions when you laminate a plastic film to a board or to a paper, or it can be more new advanced technologies when you have a dispersion of a barrier that you pour into paper and build up the barriers by that. We think that those more advanced barriers will be the solution going forward to meet the future sustainable materials. Of course, there are also other drivers for us. We have legislations. We have regulations. We had a Single-Use Plastics Directive that came earlier this year that also gives input to us when we define our innovation agenda. What is good is that we have a solid base to build from in terms of doing innovation to meet those trends.
If we take food as an example, it's really important to understand what you would like to pack in a certain material. You need to understand how the product interact with the material and vice versa, how the material interact with the food. You need to understand if you should protect versus water vapor, or if you have oxygen, or if you have grease and fat that you need to control. All this will be packed together when you do the solution of the barriers. We also have a very strong foundation within sustainability, as you know. We are using virgin fibers. We are 97% fossil-free in our production, so we can do this really good. The basic material we are using in terms of the paper also have very good properties.
When we start to build barriers on this, we start already on a high level. To produce a very good barrier product, it's really important, and if you want to have that easy recyclable, it's really important that you have thin, resource, efficient barriers or layers. To get this, you need to work with certain technologies. We already mentioned the dispersions and how you build that. You also, of course, need to have the technology in form of a curtain coater to put the barriers on the paper. If we can produce the paper and you also add a vacuum coater, you can metallize the surface, put a small thin film of metal on the surface, and then you can remove, for example, aluminum foil. All this will help us to build the sustainable materials for the future.
We also continue to invest in Paboco, and we do this together with ALPLA, which is a strong partner, one of the world-leading partners in bottle manufacturing. I know you have seen this product before, but I think we are in a very interesting phase now when the first generation of the paper bottle has been launched together with some pioneering brands. We are also, at the moment, accelerating the development of the next generation of the paper bottle. The next generation will be a paper bottle with a fully integrated bio-based barrier, and it will hit the market in early 2023. For the moment, some brands like Coca-Cola and also L'Oréal has done or is doing market trials with volumes of the paper bottle.
We also have Procter & Gamble coming in, starting to do a market launch and test next year, early next year. It's also important that we continue to innovate on our core and also drive superiority. I think that the Pure Supreme is a good example of when we drive superiority. In this case, it was enabled by the new board machine at Gruvön, which made it possible to further improve this material. We could make a material that has a better strength and stiffness, and we got a very good customer feedback saying that it now runs better on printers and on converting machines. We also have the Oatly project, where we worked very closely with a brand owner, and this is a brand owner that is known for their strong sustainability agenda.
Oatly came to us with a request of developing a new secondary packaging for the Asian markets. For the Asian markets, you have a very demanding climate. The request from Oatly was to have something that reduced the carbon footprint. It should be based on recycled fiber, and it should have an FSC claim. Really challenged the conventional here, and also understanding the needs of this customer, both in terms of performance and in terms of sustainability. Our experts at BoxLab could design a box made of our virgin fiber that meet all those criterias. In fact, we reduced both the cost and the environmental impact with this new material. It ended up with having 35% reduction of the carbon footprint.
Sorry, a 50% reduction of carbon footprint, 35% reduction of packaging material, and we also reduced the water consumption with 58%. Before I end, I just would like to emphasize that for our innovations, it's really important that we work close with our external partners, close with customers and brand owners to make this happen. It is also really key that we have the commercial focus in all projects we are doing already from the beginning. We also see barriers, and in particular dispersion barriers, as one of our main focus area going forward.
All right. Thank you, Mikael. I would suggest we have now a break, about 20 minutes. For the online audience, maybe if you're back at 2:10 P.M., and the same for us, we are back at 2:10 P.M. Please take the opportunity to talk to us in the break, and I think the exit is over there, and we have a coffee in the foyer. Good. Thank you.
Am I on here? Thank you, Christoph, and welcome back from the break, and I hope you have enjoyed the program so far. It's all about sustainable and profitable growth, and Matt has told you that, he wants to sell more cartonboard, more containerboard, and more liquid packaging board. Of course, for me and my operations team, that means that we need to push the boundaries of our volume output from our mills. We have a plan for that. The mission within operations, this is quite straightforward. At all times, we want to maximize the capacity utilization at our mills at the lowest possible cost. This is our job, so to speak. We also want to do it with premium quality products, and we want to do it with good delivery service to our customers.
The strategy that we put forward in operations, we have three choices that we are going to focus on. First, up until the 2025 mark, we will focus on continued efficiency improvements at our mills. We will also look at particularly the board mills with debottlenecking investments to push that capacity boundary a little bit higher so we can get more product out. Of course, still a very important building block for growth is the continued ramp-up of our big investment in Gruvön. Looking beyond 2025 and towards 2030, to continue the growth, we would need to make a little bit more bolder moves. We're assessing our current production footprint to see where can we make good changes to improve and increase our capacity.
On top of it, we are open for M&A opportunities in our targeted segments or in assets that we can convert into our targeted segments. That's the summary. First then, let me talk a little bit about safety. Christoph said in the beginning, this is our highest priority. It will always continue to be so. Our vision here, of course, is that no one should be injured in our paper mills or in the forest operations, and that goes for own employees as well as for contractors. We're not performing on a top level here, as Christoph also alluded to. I would say we're about average in the industry. We have made improvements over the years, in particular, I would say, on the contractor side. A few years ago, the contractor lost time injuries were double than our own employees.
Now they are on the same level, but still a little bit too high. We need to push this improvement agenda furiously forward. We have set ourselves a target in 2025 to go down to manufacturing industry standards, which is below 1.5. You can see it's a long way to go there. We have a trajectory going down. We need to improve by 25%-30% a year here on our KPI, which is lost time injury frequency rate. We are making good strides here. I just want to show you this trend over the current year. We are actually precisely on that curve that you saw on the last slide. We are looking to improve by about 30% this year, and I am very happy about that. Our employees are very happy about that.
Our contractors are also very happy about that, and we're gonna continue this trend. Going forward here and getting out of the COVID framework, if you will, we're also looking forward to having much more on-site face-to-face safety trainings, and most importantly, visible leadership out there, which is the most important factor to really improve the safety culture, which is what we're working on here. All right, back to growth. What you see here is a time trend of our production volume output, 2017 up until what we think this year will end. Naturally, you see here at least 2017, 2018, 2019, it's not growth, it's actually decline in volume. If you look at the efficiencies of this time, it's not growth either. It's rather a sideways movement. We haven't really managed that in the way that we have set out to do.
Why not then? Well, several reasons behind this, of course. The biggest one, I would argue, is the two major investment projects that we had in Skärblacka and Gruvön. When you make brownfield investments like this, when you take something out and put something new in, you will have a dent in a curve like this. It's sort of natural. Secondly, over this period, we've also had a little bit of a slowish market, so we haven't been able to really fill our production capacity in the way that we had wanted. Thirdly, there was a bit of a split focus within operations when we organized our company into two divisions, where we split up the operational framework into two, that took away some of the benefits of having one agenda in the operations network.
From 2020 onwards, we have changed back, so we are now one team in operations. We can drive one agenda forward, which is very good if you want improvements to get done. We're sold out, so we have more than we can produce, which is also very, very good. Those two investments, they are coming into a good place. As you see in 2020 and what we think about this year, we have turned the page and we're turning this thing around, and we're quite comfortable that we will continue the growth journey going forward. About growth then, we want net sales growth. Of course, that's about production, but it's also very important that we have the right product mix in our system.
We want to have more valuable products and also place them in such a way that it makes our company more productive. That's a very important factor. Price, of course, is a big lever for net sales improvement. Efficiency is really the core of my job. Talking a little bit more precisely on efficiency, what are we going to do to make a difference here in the coming years? Well, we are focusing on two major things to increase the stability of our production. The first one is maintenance. What we are setting ourselves up to do here is to create a maintenance system, which is really generic for all manufacturing industry, and we want to lift ourselves, all our sites to the same level, implement the same way of working. We're implementing nine maintenance processes.
We're taking a third-party company from the outside to audit ourselves. This is being done now over the fall. The results from that audit, we will have a gap from where we stand at the different mills to best practice. This gap is going to be filled by actions, and we're gonna be helped by this company to formulate those actions and then just move forward and raise our performance there. This will help stability and also costs, of course, within maintenance. The second part is CapEx. You need investment money in our industry in order to maintain it, but also in order to develop it. For the last few years, the non-strategic base CapEx level, this is below the next generation of future platform MG and those, the recovery boiler in Frövi.
You have a base level that we use to improve ourselves and to maintain our mills. During the period of the big investments, we have deliberately depressed that level a little bit. Down to where we, you know, of course, we do the necessary parts, but the development piece has been put a little bit on hold for some time. Now we have decided to take that back, go back to a sort of normal level and even a little bit above it, so that we can get an opportunity to catch up a little bit and to start developing. This will also both improve stability, and we will have a positive capacity creep because we'll use it to do some debottlenecking.
Some examples of what you do with this money, you know, you have to exchange equipment that goes obsolete and modernize it. It's about electrical infrastructure, it's about control systems that needs to be modernized. It's about critical equipment here and there that you need to, you know, you can maintain them for a while, but then you have to exchange and then upgrade. We will do these things. We will of course also work then on bottlenecking, as I said. To increase the quality of our maintenance work, there is also now a fast development of predictive maintenance gadgets, if you will, that you can have out in your process that talks to you and tells you how the equipment feels and when it needs to be maintained. That's good. We will try to expand that agenda as well.
Of course, energy efficiency is always interesting, and we will go for energy efficiency investments with very short payback, use some money also for that. Those are the efficiency focus areas, maintenance and base CapEx. Going back to the board mills then. Now with the new investment in good ramp up, we have a new situation on the board side where we have four board machines. They have all good coating capabilities, meaning that they can make good print surfaces. They are all qualified for liquid packaging board. One is on the lower grammage range scale, one is on the high grammage range scale, and two are in the middle. This creates a perfect piano for us to play the board game. This is where, of course, we do the container board, the liquid packaging board, and the carton board products.
We will now optimize this system, not single machines, but the system, so that we get the best quality product for our customers, the best run series, the best output, and all these things. With the continued ramp-up and qualification of KM7, this is going to be a good play for us. Now looking a little bit ahead, what are the future, a little bit bigger, bolder moves that we can make in our system to continue growing? Well, what you see on the screen is what we have assessed to be technically possible. Take Gävle Mill, for example. This is our biggest board mill that we have in our system. It is also our most complex board mill. Eventually, you will have to make a little bit bigger investment, reinvestments there.
For instance, there will be a recovery boiler coming around 2030 somewhere. When we do these things, we also need to set up that mill for a future gain. If we do the right things in the pulp mill, if we introduce CTMP in the board, we will suddenly have fibers left to actually put a new board machine there. If the CapEx is feasible, if we can get wood at commercial good terms, and of course, if Matt can sell it, that is a possibility. In Frövi, there's a master machine there as well. There's more capacity hidden inside it, so we want to take that out. With the new recovery boiler there, we also have a possibility, if feasible, to expand the pulp mill there to make more of our own pulp.
Today, we use quite a lot of external pulp in Frövi. Again, if there is wood available and if that is a good deal also CapEx-wise, this can be done. In Gruvön, both KM7 and the fluting machine PM6 can be further expanded. As with all paper machines, you never really reach the end game. You can always play with them to make them bigger. This is already what we're looking at actually on KM7. In Skärblacka, we have a recovery boiler where we have spare capacity inside it. The pulp lines that we have there are maxed out as it is today. There is an opportunity there also to increase the pulp volume to meet the capacity of the recovery boiler, if feasible and if there is wood. That's about the growth agenda.
Now, finally, moving into sustainability. You've already heard that we're a sustainable company. Our production footprint runs on 97% biofuels, so there's 3% of fossil CO2 that we emit to the atmosphere. A few years back, we committed ourselves to the Science Based Targets that came out of the Paris Accords to keep the global warming below 1.5 degrees. We have committed to a 59% fossil CO2 reduction up until 2030. We are moving along with this plan. We're already purchasing all our electricity with fossil-free certificates. We have decided to build a backup electricity boiler in Gruvön to take away fossil top load from that mill that will be installed in April of next year. We have the recovery boiler in Frövi that will improve our energy efficiency.
The next step, mill by mill, and we're starting in Gruvön, already decided, we will do a fossil oil conversion going from you know, normal fossil oil to green oil alternative. And with this, so that that fuel is more corrosive, so you will have to change tanks and pumps and pipes and so forth to be able to handle it. We're gonna do that mill by mill. The next step is to also convert the liquefied petroleum gas or propane that we use in our MG production. That is a little bit more of a stretch. The market for such green fuels isn't really mature yet, so we have put that a little bit further ahead. The final step that you see here is conversion of natural gas.
That isn't relevant anymore because that was connected to our Beetham mill, which as you know, we have divested. We have applied for and will soon get new goals that is in line with the Science Based Targets with the Bedum natural gas taken away. This is the plan that we're following, and we're well into it. At the very end here now, I want to present you with sort of a vision for the future. As Christoph alluded to, CO2 is CO2 wherever it comes from. Of course, we do emit green or biogenic CO2 from our mills. We do. There are talks amongst regulators that also this CO2 will be sort of targeted for something. We want to prepare for this.
Actually, we have told ourselves that this must be an opportunity for us. We have five mills where we very concentrated emit this CO2. We are looking at technologies now for carbon capture and storage. We're already having a program with Luleå University together with our Karlsborg mill around this, but we will look more into this technology. We will also look into what other things can you actually do with the CO2. Can it even be a revenue stream in the future? We don't know, but, well, hey, there must be technologies coming, right, Mikael, around these things. We choose to see this as an opportunity, and I'll leave you with that thing as a very cool vision for the future. I would now like to welcome and introduce my dear colleague, Mari, who will talk to you about competitive wood supply.
Thank you, Tor. First I will do a little bit of move here because I think soon we may have an accident. Have to do that. Hey, I must say that I love it when Tor is talking about operations and of course from wood supply perspective, we want to make sure that his dreams and visions and plans are coming true. What I will talk to you about today is that how we are building competitive wood supply at BillerudKorsnäs, as well as then about the transformation that we are driving in this area. That's my focus for today. I'm pressing the wrong buttons here. Which one is it?
Green.
Now it works. Good. Actually, the problem was not here, it was here. Our mission in wood supply is of course that we secure competitive supply of wood fiber to operations in line with our growth ambitions. What we have done is that we have set four strategic choices or made four strategic choices to deliver on this mission. You see them here. What we will do is that we focus, first of all, on optimizing our fiber consumption, and Tor a little bit already talked about that previously. Secondly, we will focus on building partnerships, long-term partnerships, sourcing partnerships. Thirdly, we will work on securing competitive fiber availability, as well as then developing lean, green, and flexible wood supply chain.
Before I actually open up these and explain them a little bit more detail, I would like to actually tell you a bit more about wood supply. What is it actually that we do in wood supply at Billerud? We are consuming 10.5 million cubic meters of wood annually, and that actually translates into a purchase spend of SEK 5 billion. With this money, with this volume, we are one of the biggest consumers and purchasers of wood fiber in the Swedish market. In our supplier base, we have approximately 90 wood fiber suppliers, and we are doing business with approximately 4,500 privately owned forest owners. As you probably know, we have a long-term supply agreement in place with Bergvik Skog Öst, and that represents approximately 10% of our annual wood consumption.
We are mainly sourcing from the domestic market, so 70% of our volume is coming from Sweden, and the 30% is then from Baltics, from Finland and Norway. As an organization, we have actually very deep knowledge and roots in forestry. We excel that. Of course, I want to maintain that and build on it. At the same time, we are actively working on building sourcing excellence into our organization. My vision is that actually Wood Supply will be a supply organization that excels in sourcing, but as well we have deep knowledge of forestry. You know, I think you resonate with my logic here when you reflect what I was explaining just previously. I want to add one more thing to emphasize that.
That is that, 24% of our annual volume, we are actually harvesting on behalf of the forest owners, and 76% we are actually purchasing from our suppliers with supply agreements. Responsible sourcing is of course very important, and it's an essential part of sustainable wood supply, and we have set certain requirements on that. First of all, we are sourcing only from regions with growing wood stock. All of our wood suppliers have signed Supplier Code of Conduct with us, and that is actually a precondition for doing business with us. We control 100% the origin of wood so that we know where it comes from and that sustainable forest management practices have been applied. Then we as well encourage forest certification by our suppliers as well as private forest owners.
As a matter of fact, what we have is a group certification program that we are offering for private forest owners. Our ambition is that we have 260 private forest owners engaged in that program by 2024. In the end of last year, we have 213, and of course, we have been working on that further with private forest owners now during this year. We believe that sustainable forest management practices they are essential for preserving biodiversity, and that's why we are working so hard on this aspect in our wood sourcing. When a tree is harvested, the ambition is always that we utilize the full tree efficiently and effectively. You know, the whole tree, all of the parts for the best purpose that you can utilize the parts.
Basically, after harvest, what happens is, of course, that the main part of the tree is delivered to the sawmills. While you know the pulpwood that is coming from thinning and the final harvesting, as well as then the wood chips that come from the sawmill processing, those are actually delivered to pulp production, and that is actually the product that we are supplying then to Tor in the end. We have previously stated and told that, and I think you know that, the fiber availability is actually very good on the market at this moment.
At the same time, I think we all know, and we are aware of the long-term pressure that is put on forestry, as well as we know about the predictions that the demand for wood and wood fiber may actually be increasing in the Nordic region. This pressure on forestry, it is, of course, coming from the forest debate and this political debate that we are having. There are views in this debate that state that forest should be actually a static carbon sink, while on the other side, you know, there are views that are saying that actually growing forest is positive for the climate change because of its ability to absorb CO2. What we know, of course, is that wood fiber is a very nice sustainable option for replacing fossil high emission materials.
That is actually triggering, of course, the interest and trend to utilize and consume more wood and wood fiber in the future. Preserving biodiversity, I think, is high on the agenda for all, but it somehow seems that we are not able to agree how we should approach that in the future. Conclusions from this forest debate, these political discussions, as well as the developments that may actually impact the wood market are not known. They are unknown, and they are in the long term. Of course, we have considered those when we were developing our wood supply strategy, as well as when we were defining our four strategic choices. I would like to now tell you a little bit more about those choices. How are we actually building competitive wood supply at BillerudKorsnäs?
Well, first of all, we will be optimizing our fiber consumption. How we do that? Well, we will analyze our consumption, and we will work on our raw material mix. We will evaluate our hard and softwood mix. You saw actually the split in the earlier slide, and we will work on increasing the use of CTMP, like, Tor was already referring as well. We will assess the share and split of pulp, internal pulp production versus the externally sourced share. The whole purpose of this is, of course, to find savings in raw material use, in the cost. You know, if you put it in the kind of one sentence, the goal is to utilize the fibers in the optimal manner. Our pulp consumption is 3 million tons per year.
We are actually sourcing 13% externally, and CTMP's share of the whole lot of that 3 million is 6%, so it gives you the magnitude. The second strategic choice concerns about developing relationships with our suppliers. We will be working on and building partnerships with our like-minded suppliers. We want to deepen and strengthen our relationships with our key strategic suppliers. This we of course do in order to create win-win situation, so that we can actually have a good fiber business and that we can grow together. That is the purpose.
Of course, I would not be working on supply and sourcing if I did not say this as well, that the ambition is to harvest the end-to-end benefits from the cost and efficiency improvement actions that we intend and want to actually drive with our partners. The third choice that we are making we are actually working on building competitive fiber availability through supplier-based development and diversification. What we want to, maybe I explain first the high level. What we want to do is actually that we grow selectively, our business with, some of our current suppliers. Then what we don't want to do is, to develop new sources of supply outside our current, sourcing region. If we talk about the current supplier base, we want to continue growing our business with the private forest owners.
We are today already seen as a reliable partner there, and we want to continue that journey. We will be focusing on the sawmill business. There as well, I have been interviewing a little bit how we are perceived, and we are actually seen as a strong and reliable partner in that segment. There is an opportunity to grow with those partners in that area. We will work on securing that we have a steady supply of fiber coming from the Baltics. In terms of developing new supply sources. Well, we know that Norway has potential as a harvesting region, and there is an opportunity for our suppliers and us to work on Norway as a region.
There are as well other potential regions that we are currently looking into, in order to identify and of course develop then alternative sources of supply, in the longer run. The ambition behind supplier-based management and this development is really that we deliver volumes for growth. There is as well the second aspect, that we want to manage the supply risks, be them then those, for example, supply interruptions, availability or supply risk, cost-related risks. We want to work on those. Finally, the fourth choice, we are developing our wood supply chain. We actually want it to be lean, green, and flexible. When you look at the wood cost, 50% of it is actually wood, 25% is logistics, and 25% is harvesting.
With this information, we know already, and based on the analysis of course, that there are opportunities to actually do cost and efficiency improvement in this and impact the wood cost positively. 60% of our fibers are moving on wheels, 26% on rail, and 13% on sea. What we wanna do is actually work on finding sustainable solutions with our logistics partners to contribute to our Science Based Targets delivery on the group level as well from my team point of view. Then finally, concerning this flexibility, we are working on developing our ability, how we are able to actually steer and manage the material flows in the chain in the most optimal and flexible manner. This is really a question about supply chain management and building that competence further in our organization.
We do that, of course, by developing the processes and the tools that part. As well, there is a lot of data that can be utilized. Digitalization is of course an option in there. I have to emphasize here as well collaboration with suppliers, so that we actually have an end-to-end supply chain, and we harvest benefits from this whole chain. In summary, our mission is to supply with competitive terms wood fiber to Tor and Operations, so that we can actually, not only he, but we together, we can actually fulfill our growth ambitions. How do we do that? Well, we are actually taking a supply and sourcing perspective to this in order to develop it. It is visible in our wood supply strategy as well as the strategic choices that we are making.
We will start with optimizing our fiber consumption in order to seek fiber savings. We are working on the long-term relationships so that we have actually partnerships that grow together, and we harvest benefits together. We are developing the supplier base in order to grow with our selectively, with our current suppliers, and developing new sources of supply. That for the reason that we deliver volumes for the growth, but as well that we manage the supply risks. Finally, we are focusing on developing the wood supply chain so that we become lean, green, and flexible. If you put it in one sentence, how are we actually building competitive wood supply at BillerudKorsnäs? It is through sourcing excellence. That is our ambition. Good. Now, you have actually heard about our strategy.
You have heard about the strategic choices that we are making commercial in operations and in wood supply. Now it is time to translate that into financials. Let me hand over to our CFO, Ivar Vatne, who will be talking about our balanced and sustainable financials. I promise to click this for you.
Thank you, Mari. Good afternoon. Sustainable and balanced financial, it says on the screen. Before we go into that, I just want to take a couple of minutes looking a bit in the rearview mirror, assessing a bit of the financial performance that we had over the last couple of years. I'm gonna start a bit with a busy slide. This is illustrating four of our main KPIs that we are pursuing and looking over the last couple of years, and you can see also an indication of the target range that we've had set for ourselves. I think it's fair to say that if you do a bit of evaluation on how we've done, it's a mixed bag. There's some positive and certainly also some on the delivery of where we thought we would be.
Starting on the left-hand side of that chart, looking into our net sales, yes, there has been a certain volatility in the performance, but actually overall, we've done pretty good. On average, we're not too far off from the target range that we've set ourselves between 3%-4%. Moving then completely on the other side of the chart and looking at the debt leverage that we've been able to achieve over the years, you would say that actually for the most of the time, we've been in a very comfortable position and actually sitting with a pretty strong balance sheet. Yes, this has certainly been enabled by the Bergvik investment that we did back in 2019.
Now, moving into the middle of the chart and building also on the point that Christoph made in his introduction, in profitability in particular, you know, we had a pretty long period where we clearly under-delivered, and we're on the very low end of what we had expected to see. We know the reasons for it, and there's not a very big surprise that one of the really big items have been when we are starting up our new flagship machine in Gruvön and the impact that has on our financials. That logic in terms of profitability deterioration flows very nicely and logically into the return of capital employed, and you see a very similar pattern. In essence, you know, we've added quite a lot of new investment and CapEx into our balance sheet, and we're still working to get the full value out of those investment.
Now there isn't, however, and there's some good news, and you hopefully also can see that on the last bar on the chart, in particular in the middle, that we are now starting to see really good evidence that our profitability transformation is on the way, and it's working. Yes, it is true that we've been helped by very good market conditions and market tailwind for most of 2021. I would definitely claim that we also have a large part of that because we've done extremely well on some of the internal priorities that we set for ourselves. I'll come back to that in a second, just to give a little bit more flavor on the progress there.
Rounding up in terms of our fifth and last target that we pursue in terms of our dividend, in essence, you can say that despite the profitability level falling and despite having a higher CapEx outflow over the period, we maintained the dividend flat in terms of SEK per share at 4.30 SEK. That has meant that for some periods, we moved up higher into the percentage of net profit, as you can see illustrated on the chart. It also meant that we've been able to offer good returns for investors and on average, a yield between 3%-4% per year.
Now then I want to go back to the point I just made a minute ago in terms of what kind of progress have we made on some of the priorities that we mobilized and rallied around the organization some years ago. I know there's one particular piece that I think 98% in this room are just waiting to see, and that is what's happening in Gruvön. I think this chart actually illustrates a lot of the journey that we've been through, and in essence, also illustrating the extremely good progress that we made. If you just, you know, think a little bit about what's happened since we started that machine before the summer of 2019. Yes, the first quarters, we had more trouble than we anticipated. Yes, the negative impact that we had to flush through our financial were pretty sizable.
From then, and I think this is illustrated in the chart. I don't know how easy it is to see the chart, but you're basically looking at the monthly output from the KM7 machine split between coated versus uncoated materials. Let's not kid ourselves, the real value and some of the true potential is found in the coated materials. This is where some of the attractive position that we really want to pursue. You can see the momentum we've been carrying up, and now we reach also state where we are 60% of the mix is coming from coated materials. We are in a position now to produce pretty much any material type that this machine was designed and configured to produce.
We have achieved the milestone also illustrating some of the bubbles on the chart ahead of business case and with very, very good specification result and feedback from both customers and printers, et cetera. Excellent progress on KM7, I just wanted to allude a little bit to the point that Tor made in his part, that if you want to understand the value and the potential of what's going on, it's not only about just what volume you're getting out. The mix piece is extremely important. Putting those two into combination will give you a real flavor of how we have been able to succeed. Great news on KM7, quarter by quarter, great progress, and it's more to come. I want to move into another part, and that is our ability and how we have performed on our cost and efficiency program.
This was a program that we launched in the fall of 2019. Quarter- by- quarter, we've pretty much been able to deliver on what we have said, and actually for the last year, been able to accelerate the delivery ahead of time. We have raised the ambition already once from 600 to 650, and we're going to raise the ambition yet again. Slightly stretching the time horizon we're looking for, but we are now going after a combined SEK 750 million with all of the building blocks in place by the end of 2022. As a reminder, this program was designed to go after what we call structural savings in all of our cost pockets, and in particular, in fixed cost and variable costs. We can draw the line between those.
When the program is close to completion, we expect to see roughly two-thirds of the benefit landing in the variable cost and roughly one-third of that coming into fixed cost. It's also natural to assume that in about a year's time, we will come back with more information talking about how we're now planning to drive our cost agenda and how we're gonna drive the whole cost to the next level, yeah, when we come to second half of 2022. Moving on, you already got a glimpse of this some minutes ago. Our balance sheet is strong, and it keeps getting stronger. Quarter by quarter, we're bringing the net debt down and the leverage ratio improves. You can see that illustrated with two of the green bubbles on the chart.
We are comfortably below what we had set aside, and it's very much helped by an excellent operating cash flow delivery during 2021. The CapEx going forward, I think you already heard Tor explaining why we do raise that guidance now to 1.5-1.7 over the coming years and what we're gonna use it for. There's no new guidance on the Frövi recovery boiler versus what was said in our Q3 report. We expect that to be completed in the beginning of 2024. That should leave us with ample room on our balance sheet to pursue any opportunity that comes our way to kind of fuel the growth momentum going forward. Right. Let's move into the part around financial targets. In that sense, you can say that the targets are kept relatively unchanged.
The reason why we reached that conclusion is that we believe that they're actually still very relevant. Relevant for what we want to do, and also in terms of reflecting in a pretty good manner the ambition level that we set for ourself. Starting to the left, the net sales of 3%-4%. You heard Matt over what the spans are in terms of product, in terms of region, and you also heard some of the points from Tor on how we're planning to enable that from an operational point of view. The profitability piece is kept at above 17%. I want to stress the last point because it is above 17%. We've had a long period of time of clear under delivery, and now we have great momentum. In Q3 2021, we delivered 17% EBITDA, first time in years.
Now we want to establish ourselves and keep that consistency, and then we're gonna build from there. The last two boxes on the chart, and you can probably even argue that's more in terms of a policy, in terms of our net debt leverage, and also in dividend. We keep them relatively unchanged versus what we have today. The reason's simple, because we believe it reflects in a good manner the risk profile that we're willing to take as a company and also our ability to offer an attractive return for our shareholders. You can say the fifth box, which is not on the screen, which we have previously talked about, is return on capital. We've taken the decision for the time being to suspend that target because literally we don't find it relevant for the time being.
We're still getting out a lot of the value potential of the heavy investment rounds we've done, and this will take time. Naturally, we will assess from time to time if we feel that the time is right to put that back. This is now for the time being the four targets you see on the screen that we will be pursuing and target ourself on. Continue a little bit, and just to give you a bit of a visual roadmap of the journey we have in front of us. We're gonna start talking about the net sales on this piece. This is not necessarily a forecast. It's illustrating the building blocks we have in front of us over the coming four years to deliver the growth rate I just showed you on the screen.
The relative size of those building block, yes, in a pretty good manner illustrates the size or the relative size of what we expect those points to have in our pursuit of growth. There is no doubt that volume and the right mix will be the core components. We will still continue to keep a very close eye on price management, and certainly have that very, very tight onto the radar. Last arrow indicates that yes, there will come a point of time where we will say that we are getting close to the absolute maximum what we can get out, and we will need to find further capacity to fuel our growth, keep the momentum up, either through an expansion of our existing sites and/or M&A. I can just translate that same logic into the profitability piece.
Looking at some of the same building blocks that I just showed you in net sales, they're highly relevant also for what we expect on the profitability piece. There's a couple of pieces. Well, we've added, and I just want to comment on. We do expect, you just heard Mari going through her priorities of certain efficiencies and you know, more benefits coming from the wood supply organization. The last piece I want to explain, because it's not necessarily 100% intuitive. We do expect over time to be hit by inflation in several pockets of our P&L. With continuous focus and delivery on our cost program, we believe we can reduce that impact pretty significantly. It's a very big tool for us to still keep inflation under control. Do we succeed with OneBK and these good building blocks?
We have a very good view and very good confidence in our ability to deliver on the targets that we just showed some slides ago. With that, I just would like to invite my colleagues back onto the stage, and I'm going to hand it over to Christoph to facilitate, which is hopefully a very good and productive Q&A session. Thank you.
Thank you, Ivar. I suggest you just stand up and do a leg stretch, and we will start in two minutes while everybody gets on the scene, and we start the Q&A immediately after that. Madam. Stand here, I cannot see you properly, actually. All right, good. I suggest we do Q&A. Throw the question at me, then I will turn around and find someone who can answer them. That's the deal. We have also people online, I think who are going to ask questions via the computer, and Lena will bring them up. Maybe I start with the first question in the room. Any one of you would like to ask a question, and then we move to the online and play ping-pong back and forth. Please.
Maybe, because I don't have a piece of paper, we limit it by one question at a time, and we can make many rounds so that it's easier to get the right answer for the question. All right?
Thank you very much. My name is Linus Larsson. I'm here representing SEB. Thank you very much, Billerud, for inviting us for a physical interaction this way. Very nice and very informative so far. I have one question split into two, if that's okay.
Linus, I knew it. I knew it.
It's the old analyst tactics, and it's relating to growth but interlinked with wood supply. I think what you're talking about in that context is extremely relevant and interesting. I'm also curious and maybe starting with Tor, in your presentation, I'm curious about what you did not talk about when you talk about your various mills. You did not mention Karlsborg. That makes me very curious about Karlsborg, of course. If you could just say a couple of words how that fits in, because there you have, you know, a reasonably big pulp operation, a rather small paper operation integrated.
You have, if I'm not mistaken, a recovery boiler from maybe early 1980s and a replacement coming up in the not too distant future. In various ways, it may seem a bit peripheral. Do you agree with that? What's the future of Karlsborg? To me, it looks like a bit of an up or out situation. The second part of this same question
Why don't you stop there? Why don't you stop there and let Tor answer, and then I come back to you?
Yes, okay.
Tor, please.
Yeah, thank you for the question. I did not mention Pietarsaari either in my presentation because it was connected to board growth. That's why I primarily talked about the board mills. Both Karlsborg and Pietarsaari are important pieces of our sack and kraft puzzle. We have four of those machines. Like the board machine piano, we also play that piano in concert, if you will. Karlsborg, Pietarsaari, Gruvön, and Skärblacka are interconnected in that respect. We optimize the system as such. Karlsborg and Pietarsaari are core assets, and we will continue to maintain them, continue to keep them competitive. As Matt talked about, what we want to do there is find innovations to boost the value rather than the volume.
Great
Go ahead. Now you get your second one.
Thanks, Christoph. I'll make an attempt to make the second part of my question somewhat shorter. Maybe then towards Anna-Maria, when you talk about building long-term supply agreements, and I understand that is absolutely crucial for any, you know, growth in this industry or to maintain the volumes that you have for that matter. But would that potentially include transactions where you would invite your wood suppliers to become owners of your company or parts of your company? I'm thinking about something along the lines of what Metsä Board did at Husum, where the local wood supplier became a minority owner of their pulp mill, not the board mill, but the pulp mill up in Husum.
Thank you for the question. Of course, you are quite right, and I'm happy that, you know, I conveyed the message that indeed our strategy is to build partnerships in order to secure the wood supply, but as well, you know, to work on the cost and efficiency and because we feel that we are actually able to offer and be a really nice partner for a suitable like-minded suppliers, like I was saying. This kind of partnership, it can always entail different levels and different types of collaborations. Of course, if there would be an opportunity, if a window opened for this kind of thing, what you are describing here, we would of course evaluate and consider it. Yes. This.
Yeah, that is my answer.
Thank you very much. Thanks.
Thank you. Maybe Lena, do you have a question online before I turn around to the audience here?
Yes. We have got a question from Robin Santavirta at Carnegie. Expansion in North America sounds like an interesting opportunity. How will you do that? Will you produce paperboards in Sweden and export to North America, or are you looking for M&A or organic investments in North America? A follow-up to that is, how big do you-
We'll do the follow-up in a second.
Oh.
Maybe I turn to you, Tor, and you, Matt, to take that question on, and we start with you, Matt.
I gotta stand up. I can't sit down too long. At the moment, we're describing an organic story. We've already started our journey. You can see, I think in my presentation, if you can remember it, very small part of our business today in the Americas and an even smaller part today is actually in North America. But we do have established routes to get our products made from our four board mills into North America. Of course, then what we need to do is to continue to build out our organization as we continue to grow. That'll be customer service. It'll be sales. We need to put in place the right infrastructure. Yes, the plan is we can get our product across the water.
What we hear from our customers is the value proposition we're giving them, and we're already doing that today. They're very appreciative towards.
Tor, do you wanna expand a bit how we will operate and run the supply chain?
Yes, of course, just, you know, adding on to Matt, we are all already now building, you know, knowledge and experience in how to get our supply chain over from, you know, mostly Frövi at this point over to North America. Of course, you know, if there opens up an opportunity to be on the ground there, as I said in my presentation, we are open for M&A possibilities, when they open up and are interesting for us, either in our segments and in interesting geographies like North America, and also for conversion possibilities there.
All right. The follow-up.
The follow-up was, how big do you expect North America to become for you in five years? That's from Robin-
I think that is something for you.
It may be that-
Big.
That was big. I talked big, didn't I, before? Now the opportunity as we see it, you know, I come back. This is a big opportunity long-term. The market in North America for cartonboard, 6 million tons, for containerboard, it's about the same. There's a huge opportunity here, and I maintain that we've got very attractive value proposition to go and exploit that market opportunity. I explained as well, you know, why people are actually trying to want to do business with us as well. I come back, huge markets, 6 million tons for containerboard, 6 million tons for cartonboard, and we think we can go and take our fair share.
Thank you. Okay. Please.
Hi. Johannes Grunselius here, Kepler Cheuvreux. Thanks for the CMD, first of all. I have a question on the market growth rate you are referring to in the presentation and in your discussions, like liquid packaging board, for example, 1%-2%. I can see containerboard is a 2% market growth rate. Isn't those quite modest growth rates? I'm just thinking about all the pledges brand owners have committed themselves over the last years. You have talked about these growth rates, I guess, for a few years. Are these very moderate or do you still believe in these growth rates? That's my question.
Okay. Matt, do you wanna take that?
I can try. I mean, this is our best assessment as we have today. We're working with a large number of external inputs, as I guess most other companies are, and then we make our own judgment based on those inputs as well. Are they conservative? I would say that was as realistic as we see them as they are today. That's the best answer I can give on that one.
I think I may add to it. I mean, clearly, if you cut paper or cartonboard in different segments and sub-segments, et cetera, there are clearly those which are growing faster and some which are growing slower. So this is just a real big average. I think what we wanted to portray to you today is it's 6 million tons. There's 1.25 million tons, which we see to the end of 2030. On top of that, within that, we want to play in the premium segments, which probably should grow a little bit faster than the average.
Maybe I can just continue on the same question. Do you see any signs of like, let's say, increased market growth because of plastic substitution, e-commerce taking market share and these things? Or is it still too early to say?
Let me talk a little bit about that. I think everybody in this company, in BillerudKorsnäs, is super excited by the opportunity to replace plastic. I think a lot of consumers would agree with us. A lot of brand owners do as well. However, plastic is an excellent packaging material for what it does. Okay? I think a lot of brand owners, whilst they want to push towards paper, they will always judge still, does their product arrive at the right quality and the right spec, so to say, at the consumer. Therefore, I think paper has clearly opportunity to go there where we fulfill the product need. Don't forget that. Nobody will take our wonderful idea of Paboco and put something in it, and then it doesn't work. Okay?
We have to prove with our material that we can be a reliable, cost-effective and quality substitution to plastic. Okay? I think everybody talks about it. I think there will be a shift. I think Mikael is challenged by a lot of technical issues. Clearly today, brand owners have big packaging machines. They have a machine park installed for flow wrap, for example. We cannot just say, "Here's a piece of paper. It works as well, but you have to change your total asset base in order to pack your products." We have to be realistic. What I see in the market is that over proportionally, the solutions to replace plastic are with us in primary fiber, and especially when it comes to food products, food safety, purity, quality, and things like that.
On top of that is why we bet on barriers, and in particular also on paper barriers, because it's our paper volumes in particular, which are very good suited for this type of plastic replacement. But I'm not standing here and say, "Plastic will be dead within five years." I'm not. Okay? Plastic is a very good packaging material with lots of environmental and sustainability issues, and I hope to some extent they will be solved, like recycling and things like that. But there are many applications where paper has no disadvantage whatsoever, and we will go into these niches. That is why we like to talk to you about these big, profitable niches in primary fibers, because if you compare to the world market on 420 million tons, it is a niche.
It's only 76 million tons. Yes, we will be one of the guys who will take over business from plastic. All right.
Digital.
Lena.
Yes, a question from Oskar Lindström at Danske Bank. What will happen with your solutions business?
Okay, let me take that. Hello, Oskar. Solutions we have, we have a number of businesses what I think are widely called solutions in part. We have managed packaging, we have venture, we have a solution business and Mats business, and they all have slightly different meanings. Managed packaging is a service business where we basically develop the packaging for brand owners, and we qualify the suppliers, and we help them to really have a fantastic sourcing strategy for this type of packaging. We have ventures, which was basically a number of businesses that were acquired over time from a very small, you know, like a venture capitalist approach and say we saw interesting insights in that business and we wanted to participate.
Then we have Mats business and solution, which is basically talking directly to brand owners and developing solutions for them, which then would use our material at their chosen converters in order to create a product. Okay? As I said, focus is we'll do the magic to deliver growth and profitability, okay? Undoubtedly. BillerudKorsnäs is basically a fantastic material, packaging material supplier based on primary fibers, and that's where the focus is. What we will do now over the next months and six months, a year, we will review what are the synergies and what are the leverage we can get out of the smaller business that we have on the side, which are relatively marginal, and how can that enhance Mats and Tor's and Mari's and basically our combined core to make it fly faster.
If we come into a solution that this is a great idea and there is great leverage or synergy, we will keep them. For those businesses that we don't feel fit in our stable, we will find different solutions. In the room? Or is there a follow-up question from Oskar?
No, not for now.
Good. Question in the room? Or we hand back to Lena. You seem to be busy, Lena.
Yeah.
Okay, go for it.
We have also Harri Taittonen from Finland and Nordea on the line. He would be interested in hearing more about our vision on how to address the Americas market opportunity in FBB. If we choose to increase FBB capacity in Americas, would the initial investment cost include a fiber line, too? What hurdle rates or investment criteria would be applied?
Ivar, do you wanna take that?
Me?
Yes.
I'm the lucky one. No, I think it's just almost repetition of what Matt and Tor already said, that you know, the ambition has been laid out and we're looking for, you know, option along the way. I think for the next years, we are good. I think that's at least unless you want to build on that.
I will sell it. This guy will make it. We made that clear.
That's right.
Okay. Anyone in the room? Guys, you must have told such a convincing story that there's zero question. I can't believe it. Do you have one?
Yes. Martin Melbye at ABG Sundal Collier. You talk about profitable revenue growth to 2030, but without specifying a potential level. Can you indicate sales in 2030, please? We know that the 3%-4% sales growth target, but CapEx is also needed to deliver this.
Well, you take, 3%-4%, you multiply that over 10 years, and that is approximately where we will end up. I hope really that in a few years, I will stand here and say, we have taken up that target as well because our success in the U.S. was so big, and the same applies for profitability. As Ivar stated, let's learn to walk and let's go to the 17% EBITDA. If we see that over a cycle, we can do more, we will come back with a more ambitious target. I think it's important that we get to what we promised first, and then we make new promises. Yes, please.
Thank you. I'm just curious about why have you suspended your return on capital target? I know that you addressed it in your presentation, but you have your margin targets, you have gearing, you've got payouts. So in theory, we should be able to figure that out, what it's gonna be. Is it because you have big CapEx plans or M&A? What's the situation?
I can take that. It's a good question. You're right, we could still have kept it, and even if we said that for next period, yet we cannot lower the target. The rationale we did was to say that for the time being, we are so far from what we believe is a good competitive return on that matter. It's not really the relevant point to now really focus on for the next years. We will still report it, and you will still find that in our, you know, different reports and a matrix that we also internally have, but it's not one of our core four KPIs for the time being. Then we will do the assessment, if we come further down the line to potentially reinstate that. That's the choice we've done.
You can believe me, I will be behind working capital. I think Tor, even with the increased ideas of what we think we need to do, we will always ask the question that every CapEx we spend is either absolutely mission-critical or will deliver higher growth, better utilize productivity, OEE type of things in our thing. I think in our production. I think what we should not forget, I think there were some comments this morning by some of you who follow us. When we do these additional CapEx, it's the cheapest way for us to basically create more productivity and more output. Okay? The CapExes we are talking about is about modernizing our factories instead of just making sure they work. Okay?
I see the opportunity when Tor talks about the OEE or productivity improvement over the years. That is really where this is coming from. If you take something you don't see, you see things when they're really happening. You saw Gävle had an issue in June or May, June. We had the problem with the water after the torrential rains in Gävle. What you don't see are all the minute little stops here and there which are not planned. That is what we have to go out of the system. That is what Tor meant when he said preventive maintenance, but also new technology to monitor the machine so that we intervene and plan stop to do maintenance work before the machine breaks down.
that is, I think for me, the key driver of productivity increases, at least until 2025, and then we need to have new capacity coming from somewhere. All right? Linus. Or should I move first to you, Lena? Linus, do you mind? We take Lena first, and then we move back to you.
Okay. A question about innovation from Robin Santavirta. Regarding innovation in paperboards, where do you find the largest potential? Is it lightweighting? Is it plastic-free coatings, printability, or is it something else?
I think in terms of paperboard, it can be both actually. Lightweighting is probably a very interesting area going forward, and we also think that barriers can fill a place also in paperboards. I would say both of them are really important and relevant for us.
Linus.
Thank you. I'd be curious maybe if you could, describe a bit in relation to financial targets and performance, how, the management team is going to be incentivized.
Okay. Look, we are a good Swedish company. We pay base salaries. We have basically our bonuses. We have long-term incentive. Currently, the long-term incentive is about earnings per share, which runs over three years and basically renew itself every year. We have short-term incentives, which are about 12 months. I can tell you one thing, and my team, you just don't listen now. People leave because they don't like their boss. It's not the money. The money must be right and correct and really good. They would leave because of me or because they find a fantastic opportunity. Therefore, I think we as a team, we really will work hard on two things. A, that we are a great team and that we have this ambition to deliver the strategy.
I always think that you need to create a vision, and then you let the team co-invent. This is our strategy. This is not my strategy, okay? If Tor doesn't believe in it will never happen anyway, okay? All of us are super engaged in this. All of us, we will make this, we want to make this happen. All of us, even more, have the responsibility to make sure that our talents and great people we have in the company also excited by this to deliver and to stay with us. Okay? One of the things I haven't addressed, which we maybe should have addressed in more detail, is Winning with People, which is a program that Paulina has developed. This is probably the only consistent strategy in BillerudKorsnäs since you joined.
There are two particular aspects that we have broken out. One is succession planning and talent management, because I want to have all of you to develop the talent who will take my job, your job, and the level below, et cetera. The second part is we need to make sure that we create a new generation of skilled people coming in and running through the company. You know, I think when you look here, you could say, "Well, there are lots of new faces and new people coming to Billerud." And my view is, you know, it's very hard if you bring too much DNA, new DNA into the company too quickly, okay?
You need to grow from within and ideally replace in your succession planning by the people within, and they are better than what you can find in the market. Sometimes it doesn't work because you need experts of fields you don't normally deal with, or sometimes your pipeline runs a little bit drier, and then you go outside and bring them in. Ideally, you want, I don't know, 20% of new people against 80% of the thing and, you know, bring them in. Otherwise, you create a culture which is difficult to manage.
Maybe if you allow me, Christoph, just one
Go.
One last comment that, on the short-term incentive program or basically the yearly bonus you can refer to. It typically is somewhere between 2-4 KPIs. They could change year on year, and we have a discussion with the board in terms of what's the right level and they are. I don't think I'm saying too much that what we now presented on driving net sales and profitability going forward will be instrumental part in that. I think that's pretty much what I just wanted to add to your point.
Good. Thank you.
Thanks.
Nina, please.
Yes. Mikael Doepel at UBS, he writes like this. Given the need to develop new products, would it make sense for you to integrate downstream to converting operations, which would bring you closer to brand owners compared to mainly supplying converters as you do today?
Let me take that. Look, I worked in a converting business, and it's a tough business, okay? Yes, in certain circumstances, that would make sense. Like other people believe it makes sense to own a forest in order to have a paper mill, okay? I think what I like about BillerudKorsnäs is the independence to pursue the market opportunities that we see because we are not chained to a forest or chained to a downstream, converting business. I think the brand owners should always be free to choose the converters they need, okay? It's either in regions, in countries, and things like that, and I don't want to be limited by that. We can ship our paper easily across geographies, as we just alluded about the U.S. The second part is, I think with my resourcing strategy, we will open new opportunity to source fiber.
Even if you look at Bergvik Skog Öst or something, which is based on both directions integration, it was only 10% of our business, okay? Of our supply needs, okay? I think being a partner, an honest partner to the downstream and an honest partner to the upstream is a very, very good position to be in order to drive a business which really looks at the market and is not limited then to move one way or the other. Now I have lots of skeptical people looking at me. Do you have any questions? Please. Maybe I can take another one then. How should we interpret the net debt to leverage target that you basically reiterate now?
I mean, at least in my numbers, you have the strongest net debt to EBITDA in 6 or 7 years or something like that. Are you happy to stick with a very strong balance sheet, or how should we sort of view this target?
Typically, when we get a question around capital allocation, we typically would say, "Well, that's a board decision, and that's not something that we per se have." I mean, we have our Chairman here now, and I know I'm putting a little bit on the spot, but if he wants to say a word or two about capital allocation. Would you take it, Jan? Do you have a microphone to give to Jan, please?
Okay. Well, a little bit caught on that one. Of course, I mean, you should see all these targets over time. It wouldn't be wise to stretch those targets too much. We also know that a few years down the line, if everything goes as the team has explained, we will need capacity somewhere, somehow. To change the target just because at the moment it looks rather good, I see no point in that. I think the target is a measure of our risk willingness, as it looks today.
Thank you, Jan.
Yeah. Thank you.
Thank you.
Thank you. Lena?
Yes. We have a couple of questions about capacity expansion. If I take the first one from Robin Santavirta, you talk about measures to grow capacity after 2025. Does that mean that you plan no meaningful capacity expansion before that other than capacity creep and improved efficiency?
Tor, do you wanna go for that?
I will go for that and thank you for that question. This is what I tried to explain in my presentation, that we think that short-term, we do have quite good leverage within our current footprint for efficiency improvement, product mix improvement, which will also boost capacity. As I said, we're looking at bottleneck investments with a little bit of higher capital usage. All these things will bring us more capacity over this period. It's not that we are not going to expand. We are. What we think is that after this period is gone, we sort of have filled up our system and got to a little bit of a more of a stretch than we are today. We would have to do bigger things at the mills or with M&A activities.
Very good. In the room? Lena?
Yes. On the same topic, capacity expansion. We have Oskar Lindström from Danske Bank, and he said, he writes that you say that you have enough capacity for the 3%-4% annual sales growth until 2025, but after that or by 2024, 2025, but then you will need more capacity, and you're open to both greenfield, brownfield, and acquisitions. He has two questions. The first one, you must have some idea about the main options and what your preferences are, which are they? And the second question, could you please talk about this as well as what type of assets you would consider acquiring?
Okay. Do you want to take it?
Yeah, I can at least start.
Yeah.
The building blocks that I showed on the slide, you know, the possibilities we have in Gävle, the Frövi board machine, the board machine in Gruvön, the fluting machine in Gruvön, and also the expansion possible in Skärblacka, which would support the board mills really with pulp. All of those are quite big chunks in themselves, and they compete with each other. Since they are not completely investigated, we don't really know yet what type of CapEx levels each of them have, but we will, after all these assessments have been done, and then we will, of course, pick the ones that suits us best. Same thing goes for anything that we would do outside of the company. Also that if an opportunity arises, that will also compete with these building blocks that we have internally.
We will choose which one we will do and in what order based on really the fundamentals of CapEx, wood supply, what type of product we need, and so forth. I think that we have a good outlook of opportunities there that we can choose from.
I think there's also another perspective here, as I mentioned before. I think, after this, you know, months of debating where we should go and where should we prioritize growth and, you know, is it carton board? Is it, you know, sack and kraft and things like that? Where is the opportunity? I think for me, it's much easier today because we have said it is carton board and container board. It's liquid packaging board, and the focus of volume expansion is there. While in sack and kraft, it's more about, you know, sophisticated products, innovation, various specialty papers, and things like that. That took away, at least when I arrived, a little bit this, okay, we need to do this, we need to do that, but how do I prioritize, and how do I actually reset the tone, okay?
Having done this now, I think, yes, we have an organic opportunity. Yes, we will acquire something if we find the right opportunity in the right market with the right wood supply, and therefore we have many options. I think today, it's maybe not so acute, okay, in terms of capacity need, but in the future there is no preference, so to say, in itself. All right. Good. We have maybe time for one or two more questions, and then. How many do you have?
Two.
Two?
Yeah.
Perfect. Go for it.
Okay.
Go for it.
Mikael Doepel at UBS, he's coming back to the question about capital returns. What minimum returns do you require for any upcoming investments? Is the focus more on the strategic growth opportunities any future investment could bring?
I can only say from my side, and I'm hoping you can also build on that, Christoph, it's the latter. Obviously, when we do any financial assessment, we will analyze that from different angles and parameters. Obviously, this is one of them. There's nothing I would say here that we have a specific number that I would go out with, but we will analyze this to make sure that this is a good investment for us. It's a good shareholder return. Yeah, use different KPIs on that. I don't know if you want to add anything on that.
Look, in my mind, you're correct, Ivar. In my mind, it's very simple. The return hurdle rate for a safety investment is nearly zero, okay? It's too important. The return hurdle rate to fix something and the mill is down is also pretty low because if the mill stops, we have a problem, okay? Then all the other additional investment when it comes to optimization, show me the return. When it comes to modernization, show me the return. When it comes to new capacity, show me the return. Clearly, they're above what the average of the companies and very significantly above if there's higher risk, okay? We do that exactly like most companies would do it, except for the safety one, where we are absolutely clear we will invest in the health and safety of our people.
Good.
That is, generally speaking, a smaller part because as Tor also alluded to, it's about a culture change. Last.
Yes. A follow-up from Oskar Lindström. Oskar Lindström on capacity. Can you please give a rough estimate of how much capacity in ton per year that you believe you can add in the coming three to four years period in your existing assets?
Maybe I take that because I was educated by lots of people in this fantastic team. Tonnage is not always a relevant indicator because what we are selling is actually money, okay? So lightweight paper can be incredibly low in tonnage and incredibly valuable in money. So that's one answer. The second answer is, what we are looking for is to find the right mix of products and tonnage and customer mix. So we have customers who buy very expensive products from us, but also require us to do something which is maybe less profitable in itself, okay? So it's a mix. So I think the whole discussion, how much tonnage we will deliver in the future, et cetera, is only relevant when we talk about long-term capacity expansion, et cetera, to fuel the growth, to have product to sell, okay?
I think I would like to bring that discussion much more into the growth discussion, contribution discussion, and EBITDA discussion at the end, because that is really what matters. That's mix, that's price, and to some extent, volume. Good?
Very good.
All right, ladies and gentlemen, you nearly did it. I'm in between you and refreshment. If you would like to leave the stage, I will just finish our session and go on. Can I just ask you what time is it?
It's 3:40.
3:40. Excellent. I will not take 20 minutes. Don't worry. Good. Thank you. Thank you very much for all your questions. It's clearly for us, the most important of this day is clear that you go home and that you got what you needed and that you have a better insight in our company and a better insight to judge what you think we can do and not do. My view is always that, clearly, a key component that is the team and the people, and you have met today along a big part of them who will deliver that. It's not just them, but it's also their teams. I think to finalize and to conclude, I just want to reiterate clearly what we are trying to do.
First, we try to reach our targets, and once we have reached them or we're close to them, then we will become more ambitious. Second thing is, in commercial, it's clearly the board area where we're going for growth. In terms of region, Europe is our powerhouse, and the U.S. is a fantastic opportunity or North America as such. We will pursue liquid packaging boards with select opportunities, and there are many around those. We will try to innovate and create great added value in sack and kraft, but we will not obligatorily expand, we will not expand volumes per se. In operation, we have moved to increase capacity. KM7 is clearly not full in its opportunity yet. We have all the other board mills in Gävle and in Fagerhult, we see opportunities for growth.
If it comes 2025 or later, we will now start to work on what is the next step in order that we are ready by 25, 26, once we need new capacity when it comes. Wood supply, very clearly optimization of the fiber use, partnerships, very professional management on the whole supply chain of wood supply, and it's really about sourcing, and it's not about forestry. Sustainability. If you've heard Matt, it's really all in the product and what the brand owners need for their customers and their consumers at the end. For Tor, it's clearly managing our Science Based Targets, which we have clear ways how to get there. They're all costed out, and they are part of our base CapEx we are talking about. There's this unknown opportunity, but very clearly important.
How do we use the CO2, which is the biogenic CO2, in order to reduce it actually as a net level, rather than just let the trees grow and absorb it again. When it comes to wood supply, what is the solution for fossil free initially? Then again, how can we improve our sustainable or our environmental impact there? All these things together, I think you will see we remain one of the best companies when it comes to sustainability in our industry. Winning with people. We mentioned it. I have 1 slide here. I will not go through it. It's in your deck. It's basically what we talked about, skills to meet the challenge, and it's about the talent so that we have a pipeline for the future. Finally, I would like to show you.
I also will not talk much about it's in your deck. It's really about how we get the integration finally done so that when Matt orders something, you know, it flows automatically to Tor, who can schedule automatically to wood supply, who will deliver the fiber, and that we have basically a very modern, integrated business model that is efficient and fast and transparent. What I would like you to take away from today, I think the first one, as I said in all in the beginning, is I think we are the sweet spot of market trends, product mix, and an innovation program that can really enhance and leverage our capability. We need to maximize our capacity and utilize it at the lowest possible cost. Okay. It will be a journey, but I think we will get there.
Build fiber sourcing excellence with deep knowledge of forestry is clearly one of the key points. Sustainability as an opportunity across the business, customers, operations and wood supply and future capacity expansion in own facilities and or M&A, whatever the right optimized supply chain has to deliver. Finally, people is the only thing which really matters in all businesses, I guess, and their talent and drive are critical for the success. I would like to thank you for your attention for the whole afternoon. I'm so happy to see you in 3D's, and I'm very sorry for those behind their screens not to be able to be with us today. But thank you very much. I would like to invite you for a few refreshment if you have the time and the opportunity to meet you in person.
For all of those online, I wish you an excellent afternoon, evening. Please, if you have any questions or additional comments you would like to make, if you could contact Lena or Eva, and they will give you that information. Thank you very much.