Earnings Call: Q4 2020

Jan 29, 2021

Good morning, and welcome to this webcasted conference call following the publication of BILRUD KOSCHNE's 4th Quarter 2020 Year End Results. Our President and CEO, Christoph Michalski and our CFO, Ivar Wachtne, will hold the presentation. And after that, we will open up for questions. So by that, I would like to hand over to you, Christoph. Thank you. Good morning, ladies and gentlemen. This is Christoph Michalski, and I will take you together with Ivo, through our announcement presentation. On the first slide, you have our key highlights from quarter 4. And as you can see, our net sales were flat. If you exclude the currency effect, The growth was 2%. Sales volume increased by 5% and adjusted EBITDA was 10%. We have seen an encouraging market evolution and continued positive operational efficiency Across all sites. And as you always have seen in the past, we had our structural saving program has Performed very well with an additional structural savings of SEK 10,000,000. For the year, It basically means we have grown we have declined in overall sales by 2%, but our sales growth has been neutral If you take the exchange rate effect away, sales growth was 4%, supported by a good ramp up At Guggen, adjusted EBITDA margin is 11%, and cost and effective program delivered above target. So overall, the whole year on that front has been very successful. And this resulted in strong cash flow delivery, which you have seen in our report. During the year, we have also, Again, took the leading position in the Dow Jones Sustainability Index, and our Board will propose SEK 4 point SEK 30 per dividend share to the AGM. Let me move to Page number 3, which Business status and market outlook. I think here you can see our perspective on the market. So I start with the Food and Drinks sector in quarter 4. It has been stable. And I think if I take the whole year into account, the stability of food and drinks has been quite remarkable As well as Medical and Hygiene, we have only really seen over the time some effects on the Consumer In the Industrial segment, mainly driven by the corona pandemic and the consequent economic decline in key markets. But if you look at quarter 4, I think we see much more stability across all things except maybe industrial where the Picture is a little bit more mixed. But I think going forward, the market outlook seems to be a bit more positive. Food and drinks, I think is a key one. Medical and Hygiene is relatively stable. Consumer and Luxury is stable. And I think this is driven by the fact that the travel industry is very much down still and it will take Time to recover over 2021. And Industrial, I think overall, we are a little bit more positive. If I move to the next slide, we announced also yesterday evening our investment in the Frovi Mill. The total investment is estimated at SEK 2,600,000,000. This will Increased efficiency and further integration of the mill, and it will also improve our environmental performance. This is a long term project. We expect everything to be in operation by the end of 2023. And currently, we are planning to finance the whole amount by cash flow from operating activity. And in 2021, it basically means about SEK 700,000,000 will be taken on. The existing recovery boiler will continue until the new operation is starting up, and that will result in some Minor depreciation now over the next 3 years. If we go to the next slide, About KM7 and our quarter 4 and 2021 perspective, I think in quarter 4, we saw some excellent Continuation of progress on this new machine. Overall, the negative EBITDA The effect is reduced to SEK 50,000,000 in the quarter, and we and the accumulated effect for 2020 was SEK 4 €50,000,000 We have produced 350,000 tonnes, mainly uncoated material. And During the ramp up, we still see some wastage in second quality, in particular, in the first half of the year. And this has improved steadily over the 3rd Q4. Key focus for 20 2021, this improves the mix towards higher value segments. We have seen run of high quality product, Which had a very good acceptance in the market. Also as we go along, the speed will increase. And in 2021, we will see a continuous qualification for the liquid packaging boards. Currently, we are qualifying with all our key customers, and we expect this to be finalized latest by the end of 2021, assuming everything goes as planned. We will reach breakeven during the year With that machine, and I think from then on, we will not speak in particular about KM7 anymore. I know it has been a big focus during the last years. But I think we will bring the machine now to continuous improvement like in all other mills. As you know, we have a big, big focus on that everywhere. If you move to the next slide, on net sales, here you have the waterfall With the basically flattish performance, you can see that there was clearly pricing decline of 2.5%. We had some currency effect, But very good performance when it comes to volume and to some minor mix, which basically recovered us To 0 growth for the year despite currencies and pricing. I think on the next slide on EBITDA impact By maintenance, we just cleaned that up. And if you then do the comparison, you see the effect of pricing and currency, but then Good help by raw materials, the volume effect, the cost efficiency and then a minor portion of others, Which result in an EBITDA of 500 around 570,000,000. I don't know. Ivan, do you want to add maybe one thing on this one in particular? No, no further comments. Okay. Good. I will anyway hand over to Iver now to talk a little bit about the more details of the financials, and we'll take over later End of presentation. Ivo, please. Yes. Thank you, Christoph, and good morning, everyone. So we start just a small Update on raw material and input costs. In general, it's a very positive picture for us, and most of the trends are Going down. We had a significant help in Q4, as you saw from the bridge. It's down $150,000,000 versus year ago. The vast majority of that comes from lower fiber prices and also on pulp, And only the smaller help comes from the chemicals. In terms of the outlook and what we expect going into 2021, We expect the fiber cost to start flattening out, and we don't actually foresee any material change On in Q1 versus how we ended and how we reported in Q4. Chemical still going down, A bit of volatility there. We actually expect more help from the caustic soda than maybe on the Latex piece. But net net, we still expect Small help from the chemicals. For the energy, we do not expect any material differences In Q1 versus our Q4 status. So if you move into the next slide and around our cost and efficiency, Christophe already mentioned a couple of sentences on this. It's been a very solid success story for us during the 2020. We have exceeded the target now and we brought the target up, as you might remember, during our Q3. So SEK 335,000,000 delivered with then the contribution of SEK 100,000,000 now in Q4. And that performance has been split Pretty much in quite sizable buckets between FTE related savings, operational activities And purchasing activities. So that is also meaning that we have savings both in terms of our variable cost and also on the fixed cost piece. If we then look forward and what we expect now for 2021 and the remainder of this program, The upgraded program deliver of SEK 650,000,000 remains, meaning that we expect to have a run rate of additional SEK 315,000,000 By the end of 2021. And to avoid misunderstanding and maybe clarifying a little bit extra, that means that they have all activities in place by the end of the year, but probably some carryover effect going into first half 2022 will be expected. So we move into the next slide and a couple of comments Around our different product areas and starting with Product Area Board, in general, you can see that we had a very strong top line quarter for Product area board, net sales up 2%. Excluding currency, this is a plus 5%. Sales volume up 6%. And as you can see, most of this growth came from cartonboard and containerboard, which both had a very, very strong quarter. And this is also very encouraging news because a strong KM7 output has been instrumental in delivering this result And a clear proof that the ramp up is going into the right direction. And in particular, those two segments, Carcogn board and container board, we also have strong growth plans going into 2021. And in particular, on the Carcogn board, as we have been under capacity constraint for some time, and we can now start to really accelerate some of our expansion plans. Liquid Packaging Board came in slightly negative, but it's actually more related to a very strong base performance last year in Q4 2019 versus anything particular now for the Q4 2020 performance. And on the profitability parts, there are several impacts playing in at the same time, But some of the more prominent ones, negative pricing and currency dragging the number down, while it's been partly positively offset by higher volume, Lower input costs and some savings. And if you move into the next one and talk a couple of seconds around ProArt Area Paper. The market continues to be a little bit more challenging, as also Christophe mentioned in the beginning, although there are clear signs now That the situation is improving going into 2021. For Q4, our net sales was down 6%. And adjusting for currency, we are minus 2%, sales volume up plus 1%. And if you look at the different segments, SAC is now back to growth. It's been some time since we saw positive growth figures for SAC and in particular, we're helped by a very strong performance On the brown sack. The situation is more challenging for Kraftwafer, where in particular the white MG It's still in a pretty tough spot driven by market dynamic. So EBITDA impacted by the maintenance timing. There's also So a negative pricing impact and currency as we've seen for some quarters, and that's partly offset then by lower input costs and savings. So if we move into the next slide on cash flow and a bit of our financial position. We had a very strong delivery of our operating cash flow in Q4, and that also helped us to deliver in total For the 2020, a very strong performance on the cash flow. As you would expect, there are several impacts But the main and one of the bigger ones in Q4 is related to the working capital result and is the removal Of our obligation for the energy hedging collateral, some of you might remember that had us a pretty bad impact in our Q1 2020 result. And hence, with this move now in Q4, we pretty much neutralized this impact for 2020 in total. Investment for the year, pretty much as expected and clearly lower versus previous year. And this has also been the plan from the beginning of the year. In terms of the outlook for the year, dividend proposal of SEK 4.36 per share equals pretty much exactly SEK 890,000,000. Froobi has already been mentioned by Christophe. Plan to finance this, at least to a very large extent, through our future operating cash flow. And also a comment on The future depreciation rate, we expect now going into 2021 a quarterly depreciation rate of SEK 4.75, which take into account A bit accelerated depreciation of the current Vrboiler value. And that means if you start Adding up the new news on Frevy versus then what we tend to have as a base CapEx estimates, We would expect to land around SEK 2,000,000,000 in total for the CapEx for 2021. So with those words, I hand it back To Christoph for some closing words and also a bit of an outlook. All right. Thank you, Yves, for this This is presentation. As you know, I just joined the company in November 2020. And since I I was able to make myself a picture of where we stand. I think we are very well set up to for a good Reasonable year 2021. The focus will be on the basics. It will be on the performance of our mills. It will be On making sure that we get our savings, it will be on operational discipline and also to investigate Opportunities for future growth in the mid-20s once we achieve our Full operational efficiency and KM7 is running full speed. I think what will help is market condition looks Better today than they looked during the pandemic year of 2020. But clearly, it's not over yet. So some segments will be Goodbye, the pandemic still going forward. And I mentioned already luxury and cosmetics, which probably will not take off before the mid or latter part of 2021. And however, we see also some Positive price movement, which clearly will have a positive effect on our margins. Even if fiber costs, As Ivo already mentioned, we'll probably be relatively stable. And I think all these things together With a focus on the current operation, will allow us to have a reasonable 2021. As you know, for those who know me, I generally don't comment on quarters because I think we manage the business over a rolling 12 months, and we try to basically drive long term performance. And therefore, I don't think in the current uncertain times, it does make a lot of sense to talk quarter by quarter. But I think if you take 2021 year overall, I see some positive signs, and now it's up to us to deliver the year. All right. With that, I think we stop here, and we will open up for questions. So Please, operator, if you could take over. Thank you. Our first question comes from the line of Martin Melfi from ABG. Please go ahead. Your line is open. Yes, good morning. Could you remind us of the next renewal of the liquid packaging board contracts? Joao, you want to take that? Yes. No, I can. So The if I get your question right, Maarten, is talking about some of the contract expirations and where we stand. Is that correct? Correct. Yes. So I mean, as you know, we never comment on any specific customers, but there's not a big secret There's 3 main costs for us. Contract length tends to be between the 2 to 3 years, meaning that pretty much Every year, we would have a discussion with 1 of the 3 big ones, and 2021 is no exception on that. That's pretty much As far as I would go on that question. Okay. And you didn't want to comment about the quarters, But given that you see some price increases, will these be effective for Q1 or more Q2? Yes. So I can also take that one. And I think as Christoph alluded to, there are now movements into Certain of our segments that we clearly tag along to. I think containerboard is one thing that we already have Seen for some time, and there we would expect to see an impact in Q1, not Probably from the Jan 1, but during Q1, we would certainly expect to see an impact on both liner and on fluting. We also see now, and I think it's been circling also in the media over the last couple of days, that there It's heating up now also a bit on the brown sack. And that's also something we clearly also expect to tag along to. There is a good pull, as I mentioned, some minutes ago in the brown sack. That pricing is probably a little bit further away. So that's more of an End Q1, early Q2 topics, so not a lot of impact for Q1. But during the first half, we would to see pricing impact of both segments. Excellent. Thank you. Our next question comes from the line of Johannes Kristelius from Kepler Cheuvreux. Please go ahead. Your line is open. Yes. Hi, everyone. It's Johannes Grunseles here. Yes, if I may start with a question on Kilometers 7, Christoph. You said you don't want to comment this so specifically perhaps, but it's Kind of difficult to do an assessment of Billerud without talking about Kilometers 7. But I mean previously, you have talked about what kind of premium grades you have In KM7, just an indication and bulk grades and the waste ratio. Could you mention anything about this? Where we're In the Q4. And where do you see this machine in the few quarters from here? Yes. Let me give you a wider perspective first, and maybe, Ivo, you can have a look That's some of the detailed questions. Look, I think I was very surprised when I joined Billerud Kosnes That's that every analyst knew our KM7 and very few had questions about the markets and our customers and all these type of things. And I think when I look at our current operation, I see clearly, yes, KM7 is a big contributor of future growth. The machine is in the ramp up phase. And despite being delayed in its overall project timetable, I think we are through the worst, and we have A very good ramp up as we speak now. But as you know, these things take time. Sometimes, For example, the liquid packaging board qualification takes a year or 1.5 years and this is due to the process of our customers and The complexity of these materials. And in the meanwhile, we will do premium products, and we will start Fill the machine and bring the operational waste and running rate up and waste down and things like that. But I think when I look at the overall Billerud Kochne, I see also many opportunities in all our other mills because our Operating performance, I think if you benchmark us to the rest of the industry, can still improve. And therefore, I think from now on, as KM7 is operating starts to operate in a good way. Now it's really about the output of KM7, where we sell, What are the premium products we can do? And it's probably less it will be a continuous ramp up in operational efficiency. I don't know, Iva, do you want to comment a little bit on the details? I can just probably add a little bit of context Because I mean, obviously, I agree with what you said, Christoph. I also know that this is a very hot topic for a lot of our external stakeholders. And I think if you just look into what happened during the 2020 in terms of the KM7 performance and what are some of the numbers we talked about, The trend is very clear. I mean, we had a minus 200 impact Q1, minus 120 Q2, minus 80 Q3, minus 50 Q4. So the trend is very clear and going into the right direction quarter by quarter. And I think we've talked about this over some quarters that the key of that projection and also a continued projection into the positive territory It's not only. It's clearly linked to what volume output we get, but it's certainly also linked to the mix. And in the beginning of the year, we struggled a lot with a pretty high waste and also a lot of secondary quality products. We've gradually been able to minimize that and now coming on a very good shape on this and gradually moving from the Pretty unsophisticated uncoated products to having a percentage of total higher coated material. And that is a very clear, you can say, projection and linear expectation of going into 2021. Yes, we expect some higher volume. But I think more importantly, we certainly expect the positive mix development to continue. That means, in particular, yes, carton board is a segment that I mentioned we have very good ambition plans for. We expect that to have a key growth component also for 2021. We have also some more coated liner you can say that we're planning to Put into that mix. Nothing for the time being on liquid packaging planned for 2021. The certification, as Christoph said, they are on the way. But yes, it takes time. So the commercial value of that It's not really before we get into 2022, but certainly, we can come back to part of those questions. So I hope that at least helps Johannes, on some of the thoughts you had behind the question. Okay. Yes, it does. I mean, what you're saying, Ivar, is basically that there is a linear improvement I mean, if I look at the Q3, the Q4, that sort of is that a realistic view, I mean, to think about the improvement sequentially here? It's not unrealistic at least. And you can say that probably more than 1 quarter we should have in mind. But there's no doubt that we're taking big steps. We continue to take big steps. Yes, we expect to come to that breakeven at some point during 2021. But I mean, you see for yourself where we are in Q4. We are not far off from coming to this year. Sure, sure, sure. Then I have another question on the announcement of this recovery boiler. Did you look at various opportunities or alternatives To it, I mean, Building 2, for example, recovery boilers. And most importantly, on my question here, I mean, what kind of do you foresee any kind of Benefit from an economical point of view? Or is it more or is it or this economical benefit, is that coming through Operational stability or how should we see the economical impact from that investment? Yes. So I think there There are 3 parts to this question. The first one is, yes, we have looked at many different options what we could do in Frobi in order To rebuild this boiler, we have thought about rebuilding. We thought about new. We thought about different ways how we could do that. I think you need to understand there's 2 aspects to this. A, 1 is the age of the boiler, second is the environmental permits which comes with it. And at the end, we The decision to go for the basically the better environmental solution, to go for the more efficient solution Of rebuilding the boiler. And in the past, the old boiler has a risk of breakdowns, and that's Clearly, big risk we have, and we want to avoid that. And on top of that, the new Boiler capacity will further help with the integration of the mill. And potentially, It is it would allow us to increase slightly the capacity if we take other steps in debottlenecking some of the systems. This is not part of the investment. This is a long term view on the site. But so there is a mixture of Further efficiencies with the boiler secondly, further how do you call that, Less of stoppages because of the new boiler. And in the more long term, there is further ways of how we can Increased capacity and offer the integration for the. So it's very good news. I'm when we looked at the investments, it Was one of the faster decisions because it's an obvious thing that we need to do. And the other positive thing is we also looked at the rest of our Industrial footprint. And from my perspective, we will have, over the years to come, Our running rate of normal maintenance of SEK 1,300,000,000, but there are no Very significant emergency CapEx that are needed as far as we can see today. Okay. Thank you very much for that. Have a good day. Thank you. Our next question comes from the line of Alina Slauson from SEB. Please go ahead. Yes, thank you very much, and good morning to everyone. Maybe I can continue just there on the Fruvi recovery boiler, like you said, Christophe, you've looked at various alternative solutions. And if we look at the For the recovery ball investment in a just somewhat bigger context, how do you see The Jebellet pulp supply situation, you have 2 old recovery boilers there as well. You say there's no Urgent CapEx needs, I appreciate that. But what is the long term plan there? And at what stage do you see The reinvestment of that pulp mill as well. Thanks for your question, Inos. Look, if I go through what we do I have a bit of noise of the line. Could you just put on mute wherever it's coming from? Thank you. Maybe a few lenders here in the background. I think when I when basically what we have started and then at home started that already some months ago, We have now started to look at all our footprint and look at the basically CapEx needs over time. And this is a bit of about the longer term projects driven by what is the market needs, what are the immediate investment we need to do, and clearly, That also covers Yevle and etcetera. We do not see an immediate need to invest And you have lots of time. So we're talking in a time horizon. So nothing is planned for the next 5 to 7 years from a major investment perspective. So what we need to do in order to get our operational efficiency right is basically Ensuring that we do preemptive maintenance, ensuring that we work through the bottlenecks we have here and then our Different plans, ensuring that we also get clearly line in line with our health and safety records and a good trend. And I think that will deliver that. So from a big CapEx, like doing another recovery boiler in Ghevele, that is, at this stage, not on the agenda at all. Great. Thank you very much. And then just one more question, if I may. You've been with the company Not that many weeks or months as of yet, but I'm sure you've created A good idea what's going on. And today, if you look at 2020 This is a company with a 3% EBIT margin. I mean, not long ago, EBIT margins were double digit. So my question is really, now that you look at the company, do you see that all elements for Improvement to get back to double digit EBIT margins are in place? Or do you see some obvious things which are still Not there and that you really want to drive in terms of change in the company. Yes. Look, you are totally right, and I put the caveat of 3 months in the company on my statement. But what I found arriving It's basically I found a good team. I found a reasonable manufacturing footprint. I found some Variable markets in which we are operating, which kind of some going up and down. And then on top of that, over that was color, the corona pandemic. I don't think there's anything structural in our way to improve our profitabilities over the years to come. It's Just about hard work, getting organized, getting focused. And I think the initial approach to refocus a little bit the management team and To basically now put the steps in place that we deliver on clear programs, on cost savings, on operation, on safety, On whatever you have and also then being a little bit more focused on our market portfolio management, customer And product portfolio management. I think there is nothing which should stop us to deliver a very good Performance over the years to come. It will come slowly because these things doesn't happen overnight. It's hard work. But I think there is nothing which stops us. Where I think we need to do some more work, which is a little bit unclear for me, we have I think a very good growth agenda for the 3, 4 years to come. And the question for us will always be then what happens in the future. And as you know, in our industry, things takes time. They're CapEx intensive, and we need to decide Three things takes time. They're CapEx intensive, and we need to decide where do we put the next steps or the next poles in the ground for future growth From 25% to 30%, 35% and what are the Is it M and A? Is it CapEx? Is it Greenfield? And in which geographies considering all the different factors that play in this Question. So in summary, I think it's just up to us to make it work. In the current market context, it's I think it should be feasible. And when it comes to the longer term, yes, there is more work to be needed to really have a perspective of the long term growth path Of BILOURAKorsnes. Great. Thank you very much. That's very helpful, and best of luck in doing that. Thank you, Lidus. Our next question comes from the line of Oskar Lindstrom from Danske Bank. Please go ahead. Good morning, Oscar. All right. Good morning to all of you. I have three questions, And maybe I'll ask them one at a time. The first one is, I mean, you had a rather good Result in your business areas, but you seem to have had a sort of larger than normal Negative item in your other line, if we exclude the positive effects of the revaluation of the associated company. Could you tell us a little bit more about what's behind the negative number in the other line? Yes. I will hand that over to Iva because this is a is based in exchange rate issue I think you are referring to. But Iva, why don't you go and explain? Yes. No, thank you, Christoph, and good morning, Oscar. I mean, you also probably remember that we changed now a bit the Different reporting structure this time and keep that just in mind when you compare to, I mean, previous reports. But I think Christophe is absolutely right that if you look at the performance in our, what we call, solution and other, I think the managed packaging is probably not too much to comment on because that is anyway Continuing the trend from what we've seen earlier in 2020 with a pretty tough brand owner situation For our, yes, big customers in the managed packaging. And if you look at the kind of the balance of that, what you can probably then say is other, A lot of this is related to the currency situation. So clearly, it's changed quite a bit From what we saw in Q3 going into Q4, in particular for the last 10 days of December, I think all of you have seen that the Swedish kroner strengthened quite significantly. And clearly, that impacted our hedging results. It impacted our revaluation of receivables. And that tend to be a pretty significant driver if you look at kind of the events of the quarter in the group Other. All right. Thank you. So, yes, I mean, is this something we should expect to be repeated in coming quarters? Or were those big negatives sort of I mean assuming that exchange rates remain where they are at the moment. Yes. I mean the let's just say that if the spot rates Today, where it ended on the 31st December, you will not expect to see a revaluation effect, so that should be neutral. And then clearly that's the next question then will go to hedging. And that certainly will hit us. And then I think you know it depends also Versus then the hedging rates that we have on and clearly around SEK 10 per euro is a pretty strong currency. So You can say that, yes, you would expect to see an hedging impact, but with flat spot rates versus the year ended, you wouldn't expect to see any revaluation effect. All right. Great. Thanks. My second question here, maybe that's to you Christophe. I mean, when you talked about the Covering boiler investment in Frodi, I heard the words debottlenecking and increased Capacity in your comment there. And what are we talking about in terms of possible magnitude of capacity increase at Sveri? I mean, usually, you build a new recovery boiler with a larger capacity than the old one. So what sort of headroom are you building in here? We build Not a I mean there is some headroom, but it's at this investment perspective not significant. So basically today, we have about 20,000 Tons of pulp, I believe, in Provea, which we take into the mill. And we just made sure that the new boiler is able To cover for that going forward. But the investment you look at it now It's really focused on basically the operational lifetime of the old boiler coming to an end, and we need a new boiler in order to Safeguard to production and frovi and to renew our environmental permits. And then clearly, we sized it in a way that there is Some marginal upside in production. And that we will implement once we are going. The most I think one of the things we have learned The company has learned in KM7 is that we need to focus on the project management. We need to be incredibly disciplined. And my wording to the troops was a little bit in the line. Let's make sure we build a boiler which has a future, but the project 1st and foremost, focus of being operational by 2023 in time in specs in order to Then close the old boiler down and put the new boiler instead. And then we can look at further growth opportunities in the mill. So that is not part of any CapEx, I'd say it's a bit of upside. All right. Thank you. My final question is on the brown sack paper market where we've Had some market reports about price increases already now in January happening, I mean, even though we're in the winter. And then talk about more increases here in the spring. I mean, could you'd say you also see this sort of Improvement in market conditions. Could you tell us a little bit about why you believe conditions have improved Already now in the usual usually quite sort of slow winter season. And how sustainable do you Believe the sort of improvement in these market conditions are. And then finally, could you please just remind us how much The brown sack paper prices dropped to where they are where they were last year, I suppose. And what kind of sort of long term upside do you see? Yes. Look, I think if I look at brown SAC paper, Oskar, I think the first one, let's Put it in the economic and pandemic perspective first. I think what you have seen in 2020 was actually driven by pandemic and the economic development, Which really hammered that particular subject. So that was a little bit before my time before I joined. So I will hand over to Eva in a second. But I think what we are seeing, I think everyone is sitting a little bit on the edge of their chair and saying, okay, The vaccine is on the way, probably coronavirus by the summer, early, early autumn We'll further improve, and we will slowly go back to normal economic development and especially in the catch up phase as well. And therefore, I believe that the timid pricing, which are going up again, We'll probably be sustainable for some time. And then it really depends what's happening in the world economy as We go forward. But maybe, Eva, there was a specific question between going up and going down sorry, going down and now coming up again. Do you want Do you want to comment on that? Are you on mute? We don't hear you, Ivan. No, you're absolutely right. I think, Oscar, to the question, I probably don't want to sit and quote in specific how much it went down. But I can say, If you look at the average for 2020 versus 2019, I mean, it's significantly down. I mean, we're talking pretty high double digit Decrease in net sales per ton. I think also if you look at those prices then for brownsack during 2020 in a historical perspective, You are quite low on the curve. And I think from my side, I mean, it's pure speculation, but I think also there tend to be now also from the buying side A bit of a sense is that the only way now is up, and inventory has come down quite a bit over the last, I would even say, 18 months. So surely, there are some interest to start to stock up on what perceived to be good and lower prices before It will go up. But no doubt that I think we see the same trend as, I guess, industry Starting to report that there is a good pull. And yes, there is a clear expectation of pricing is moving, and we will do that, as I said, during the All right. Super. Let's I'll certainly follow that. Thank you. We have a question from the line of Michael Deppele from UBS. Please go ahead. Thank you. Good morning, gentlemen. I just have one question and basically continuing on the last one And about the sack craft market, so it seems to be a bit mixed overall. I mean, you have the brown sack Clearly improving, but then some other segments are not really. And so I was wondering if you could talk a bit about the markets Overall, about the different segments there, and what are the dynamics at play here? What is pulling the brown shag market right now? What are the positives underneath the surface? What about the other grades, white sack, MFMG and so on? So a bit around that, the current dynamics in the market across these different segments. But then maybe also looking a bit further out over the next couple of years Across these segments, what do you expect in terms of demand, supply and pricing? Maybe I hand it over to you, Ivo, if you want to give a little tour around. Yes. Good morning, Mikael. I'll do my best. It's a big question and a question that has many parts, but I'll do my best to give a somehow condensed answer on this. I think the overall trend, I think, you can say is that the unbleached or the brown qualities are in pretty good pull, Probably more than on the white segments at the moment. That's partly trend related. I think also if you talk brown sack in particular and if you think about where does most of our brown SAC goal or how did where do they end up? Tend to be in industry. We export a lot of that to Asia. And you can say that, yes, there are certain signs that things are better and took a bit of a hit when the pandemic put in. I would probably argue that the fundamental So demand on this probably haven't changed dramatically. They tend to go a bit cyclical, as you know. But I will probably from my own point of view, we answer that some of the pull that we see now It's more of a kind of an inventory, 1st and foremost, adjustment up again on what is perceived to be Pricing at a historically good level and indication things are going up. I still think that the industry for us tend to be a good destination. We have ample room still to grow. But yes, it tends to be pretty cyclical and it had been some historically and expect it to do so going forward. I think on the white sack, I mean, clearly, the destination categories and the channels is a little bit different. We're talking more into food and drinks, for example. And I think in general, we've been keeping up, at least from our side, the pricing very well, and we haven't really moved that much as some of the BrownSach has seen over the last 12, 18 months. It still tends to be a good Segment for us, and we have very competitive products that we have excellent feedback on. It's probably not a secret that also more supply has It's been added into that category, and that clearly also do something with a bit of the balance and the pricing dynamic per se. But in general, yes, some short term heat up. But I think long term, it tend to be an attractive segment. We also expect to grow Very much on the tailwind of the, we call it, sustainability trends and more anti plastic focus with a lot of our customers and channels. I think on the EMF, it's a little bit similar. As you might know, this is a smaller part of our business. But I think brown tends to do better very much on the wake of some of these sustainability items I mentioned. And the white and the fish is not a very big segment for us, tend to be quite linked to some of the arguments I used for the white And MG. So that's pretty much the small storyline I had, Mikael. I don't know There's any add ons or you feel that was somehow answering what you were looking for? No, that's super helpful. Thank you very much. Our next question comes from the line of Karl Hawthorne from Jefferies. Please go ahead. Your line is open. Good morning. Just two questions from my side, and I'll take them in turn. Just first on the operating Performance and you're talking about kind of getting the operating performance of the entire business a bit better. You talked about debottlenecking, preemptive maintenance, getting health and safety right. And I just wanted to get more color on what you're thinking about the business mix going forward. When you look at Certain grades and kind of specialty kraft paper or other areas of your business, are you looking at your machines and Your product mix medium term and you're saying, are there any changes you need to make there within the business? If you could just give a little bit color on that. Okay. I think that when I look at the business today, I think that we had in the past Enormous amount of focus on our plans and what we could produce and etcetera. And I think I'm driving now the team a little bit more into the direction and say what does the market actually tell us and what we should produce rather than what Can produce. And I think when we look at our footprint and the history of Bilirud Kosnes, It was an organization which was very much driven by the mill and what the mill individually Could decide as a product portfolio and these type of things. And what we missed a little bit was to take a holistic approach in the business And say what can we actually give of our customers and then how can we optimize the production across mills and etcetera. And I think It's a bit like KM7. What you see is when you have a new opportunity like a new production unit is that You will then put on that production unit what makes sense, and then you can reshuffle in the rest of the operation To run longer runs, to run products which are well run-in this particular unit versus other units and things like that. And I think This is a process which takes time. And the same as what we have done, I think, which the team started to do during the corona crisis It's also to look, okay, suddenly the how would I say, the thoughts we had about the business It was very stable and then corona came and the life changed. And that allowed also to rethink of saying, hey, how should we optimize Our product portfolio towards the market and where are the margins now. And this is clearly I mean, Eva mentioned the brown Sac So going up and down and then you focus a little bit less on brownsack and now prices are coming back. So we need to have a certain level of flexibility. So that's a Market component. And then I think there's no secret. In the past, we did some benchmarking against As a whole industry in terms of paper production and pulp mill efficiencies and things like that. And we came to the conclusion that we're not the best in town. And that is the other aspect. So once we have decided to optimize what is the type of market portfolio, How can we now optimize the run ability and the productivity and efficiency of our machines everywhere? And I think we have seen initial mills, some mills already really, really going down the track doing really, really well, and others can still catch up. And that gives us A certain amount of extra capacity, which we have by design, but which we are not fully exploiting By the way, how we run it. So that's basically the background to this comment that we have enormous Amount of scope over the next 3, 4 years to actually improve our business without significant CapEx investment For capacity. Thanks for the color. That was helpful. Ivan, then just a question on well, a follow-up question on FX. You've given some helpful color on the hedging impact, but I'm just trying to frame what the Potential FX headwind will be next year versus the offset from the hedging. Am I right in assuming the round number FX headwinds about SEK 400,000,000 and then you've got roughly SEK 200,000,000 positive from hedging impact. Is there any color you can give on Yes. No, I can. And I think the person who No, this for sure will get rich. That's all I tend to say on currency because that's all that we know is that what we think today is not going to be the case. But Alistair, I think you're on to a topic that is not far off from how we see this. We obviously, as I think most of us know, have been through a lot of years with the Swedish kroner weakening versus some of our core currencies. 2021 was a little bit of a, you can say, constant grain on that one. And now with the spot rates, That is seen from end December, the end of the year. It certainly looks that the Swedish strong Currency effect would just non hedged be a pretty sizable impact. I think the number you mentioned there It's not far off. I think then from the hedging, I mean, we even published this on our report, as you know. We don't hedge all of it. So clearly, something will go through. But you can say that, yes, Little bit maybe more than maybe what you mentioned there. It's typically the recuperated Hedging position we're looking at now. You're not far off, but I probably would add a little bit more to the estimate you gave. Great. Thank you. And if you just allow me one more on containerboard. You called out the fluting really strongly. You called out kraftliner Improving you are referring to kind of your white top kraft liner and the coated liner when you talk about the pricing for that segment, correct? Yes. And probably more on the white top liner than the coated at the moment. Great. Thank you very much. Our next question comes from the line of Robin Santandersta from Carnegie. Please go ahead. Yes. Thank you very much. Just a quick question related to input costs and especially wood costs. Now we have seen lease prices in Sweden declining in H2 also, I guess, in Q4 For us well. So I was a bit surprised that you called flat wood cost Q1 versus Q4. So just any color on that? And then what is the sort of view for the full year 2021 would Costs and other input costs compared to 2020. I guess it's difficult to say, but your view is probably better Than ours. Thanks. Okay. Thanks, Rob. Let me take the first part and maybe Yves will take the second part of your question. I think The reason why I'm a little bit careful on wood costs now going forward is because we saw a decline in H2, It's true, as you said. But if you look at the later part of Q4, I think we are in a very low area right now. And we do not see very significantly further decreases, so a bit more stability As we go and that is that basically Jove's comment we see stability. Yes, it will fluctuate a little bit, but we don't see the same type of significant decline as we have seen in H2. Maybe, Ivo, you want to make Decline as we have seen in H2. Maybe, Ivo, you want to make a comment on the full year? I can. And then maybe just add to what you mentioned, Christophe, and to your question, Robin, that there hasn't been any list price Decreases during Q4. And as you know, it tends to take the 3 months for us to see the impact. So again, we don't, At this stage, we expect to see any at least sizable impact Q1 versus Q4. I think to the second You're absolutely right that when you look at how did we end now the year in terms of our fiber cost and assuming that stays now and How would that look into the average for 2020? I probably don't want to sit here and talk about a number per se, but I mean Clearly, if you look at some of our quarterly bridges and look at the trend of that, I mean, we are in the triple Digit million SEK range. So we are in the 100 of 1,000,000 of help, assuming everything else stays flat. I think so that's kind of on the fiber and clearly, that's the biggest input part we have. I think for the time being, I will be much More neutral above both the chemical part in particular. And I think also on the energy from our side, 2020 was a very strange year because the spot rate, as you know, went very low. We had also done some hedging position that was on a pretty different level. So it kind of became Overall, on the year, although the spot certainly went down, now you might have seen that the spot rates have spiked quite hard end of December and the beginning of the year. So that's kind of reverse the situation a lot. But you can say that we expect a small help on energy As it currently stands, net net with hedging, 2021 versus 2020. All right. Thank you very much. Thanks. There are no further questions at this time. Please go ahead, speakers. Okay. As there are no further questions, then we will conclude this conference call. Thank you all for participating, and welcome back next time when we publish our Q1 results, and that will be the 27th April. Thank you,