Good afternoon, everyone. Thank you all for joining us today. For our next company presenting on the agenda, we have Rottneros. So I will first provide you with a quick introduction to the company before Mr. Lennart here will give you a presentation, followed by a quick Q&A session. So Rottneros is a producer of high-quality market pulp. Their story dates back all the way to the 1630s, with their initiation of pulp production in 1908. They operate two main mills, which is the Vallvik Mill and the Rottneros Mill, with a total production capacity of roughly 400,000 tons a year. They're also active in the packaging space and are currently undergoing an investment for a joint venture investment together with Arctic Paper, which I'm sure Mr. Lennart will talk a little bit about. So the floor is yours. Thank you.
Thank you very much, Ali, and hello, everybody, to this afternoon. Difficult to say what I should elaborate on here any further, or if we go straight to the Q&A session. That was a very good summary. Thank you very much. As Ali has said, we are a company that has been around for a long time, and those of you who do not know us, it's actually dating back to the 1600s. Over time, we have adopted our business model. We have changed the products we produce, but we've always worked with our governance model, making sure that we earn money to invest money, and also make sure that we can recruit the people we need to in order to drive the company forward.
Nowadays, you summarize that as ESG or sustainability, but for a company that has been around for 400 years, that is something that is at the heart of us. The latest focus is going into the next step in the value chain, how we can make packaging as a sustainable alternative for fossil-based products based on our pulps within Rottneros Packaging, and also minimizing a little bit our exposure to the energy market by investing in a solar farm, as well as a energy storage, a big battery, that will participate in the regulation of the grid when it goes up and down on its frequency, and there is some money to earn that. But that's just a little bit of a side business. Our main business is pulp, pulp from the Swedish forests, a sustainable raw material.
There is more forest than there's ever been before, so we do not have to be afraid that there will not be enough forest to feed the Scandinavian pulp and paper industry. We've got two mills. One is two hours north of Stockholm on the east coast, with its own deep-sea harbor, and the other one is Rottneros Mill on the western part of Sweden in Värmland. We've moved the packaging operations into a new location back in 2019 in order to be able to apply with food safety regulation, which is very difficult to comply with in a pulp mill. So we needed new facilities to make sure that whatever is packed in our packaging is not contaminated. And we also have a forestry arm.
We do not know any forest ourselves, but we are operating on behalf of private forest owners. In Sweden, half of the forest is owned by private forest owners. The average forest holding is some 40-50 hectares, and this is, of course, source of raw material for us, and we help them managing their forest in a professional and sustainable way. And thus, we get, of course, the logs, which we then can sell to the sawmills, trade that back into sawmill chips, which is an important raw material for a pulp mill, in addition to roundwood logs that we get from a radius of some 200 kilometers around our mills.
We also have a Baltic operations, where we can import some 10%-20% of the sawmill logs, sawmill chips, as well as logs, to Vallvik directly into the harbor in order to level out the local supply chains when such need is in place. So all these four operations together produce some 400,000 tons of pulp. These are the 2022 figures. We are now down to some 286 employees. We have been above 300.
We closed down the groundwood line in Rottneros Mill last year, and we also had an organizational review early on this year in Vallvik, and the total effect of all these reductions is some 20% of our workforce in order to be able to contemplate and work with the inflation that we see on other fixed costs. So this is, for us, one way of being away and ahead of what we saw was coming from a cost perspective. All in all, we generated some turnover of SEK 3 billion. So why should you be investing in Rottneros? Well, the forest industry as such is a part of the green transition. I've already mentioned it. We have a sustainable, renewable resource, the forest, and of course, our products help and can replace fossil-based products.
Over the last period of time, we have demonstrated that we have a long-term profitability, which enables us to adapt to current conditions, but also have the necessary means to invest in order to develop the company going forward. Part of the profitability is, of course, a robust balance sheet, where we work responsibly with the way how we allocate capital in order to have a balance sheet that is resilient against changes in the macro environment.... Coming back on that in a little while. We've created stable shareholder returns. In 2022, that was a total shareholder return of 23%, and of course, over time, we have developed certain niche markets where our products generate some unique properties for our customers in order to be able to compete with these very big mega mills that you see around the world.
With 400,000 tons, we are a small player, so we have to be very close to our customers, understanding their needs, making sure that we can tailor-made the product that we can produce in order to be suited for their products. But we're still playing on the market for pulp, and we will be looking into how that market has developed recently. We have seen some signs of stabilization after some strong headwinds during the course of 2023. But it seems that going forward, there is more stabilization ahead. Our main market is Europe. It's the paper and board market that consumes market pulp, and you see at the bottom part of that graph how the graphical paper is diminishing, and it is a big decrease in these papers this year. Again, it's a structural decrease. It's driven by digitization.
We read less books in printed forms. We read less magazines in a printed form. It's all consumed digitally. However, on the other side, the packaging sector is increasing, and here we actually generate good value and unique properties for our customers, and while they are growing, we are growing together with them. But 2023 has been a challenging year. As I've said, Europe is our main market. 67% of our sales go into Europe. And if we look at product by product, how they have developed, all products in Europe so far had seen a negative growth, all in all, some 16% for the first nine months.
So, so far, not even the packaging spot has helped this, but here we are pretty confident that this will change in the near future back to a more normal scenario, whereas the graphical packaging, the graphical side will continue to decrease, most probably. What does that mean for pulp deliveries? And here we take a global picture. Europe and North America had seen decreases during the course of the year, but China has been pulling up deliveries considerably. And the increase, this is in percentage, but if you look at tons, the increase in China this year has been by far bigger than what we've seen as a decrease in Europe, and what that means for the balance between supply and demand, I'm coming back in a second.
So this year, China, which already had been the biggest market for market pulp, and it used to account for some 33%, is now up to 40%. So we see an increased shipments of volumes into the Chinese market. The Rottneros sales by application looked like this. So this is the total split of our sales. You see that the board and packaging is now one-third of our volumes. It's a little bit decreased. As we've seen on the previous slides, the market has been under pressure. Filter, which is a specialty, it's not only coffee filter, but also filter for combustion engines and air filters, has seen an increase. It's a very stable niche. Electrotechnical applications has a very different life cycle.
Here we talk about projects which can take 2-3 years from origination to implementation, and that means that our customers in this spot also have quite long sales cycles. So here we see an upbeat, primarily driven by the transition to green electricity. All these windmills and solar farms that are popping up in Europe and the U.S. and all around the world need new transformers. Transformers contain very pure pulp, which we are one of very few suppliers in the world that we can supply, and this needs to be invested in going forward. And then we have some other special applications. What you see here is the tissue segment. It's a big segment for market pulp.
It's not really the spot we want to be, but in a market like 2023, when we've seen strong headwinds, we have been able to allocate more sales into that segment and thus didn't have to take any downtime on our mills, and that has been reflected in the financial results for the first nine months, which we will be coming to here just in a second. We will see that we still have a positive EBIT for the first nine months and on each quarter, and we have maintained a very strong balance sheet. Looking into the highlights, we of course see that this outcome or the positive result is the strength in our business model.
We are small, we are flexible, we have acted in time already last year when we see things will change, and we have downsized our fixed cost structure. We are focusing, as always, on the things we can control ourselves. That's our efficiency, it's cost control, it's how we can utilize our production unit in the best possible way. And of course, luckily, we also see that there has been signs of stabilization now, also in the European market. The low point of the pulp prices had been around some $1,140, and as of this week, we are back to $1,200. So even in Europe, prices have turned back up. That leads us into our results.
To the left, the big bar is last year's result, and we should not forget that 2022 was a fantastic year for the entire industry. Of course, also for Rottneros. Then we see how that profit has developed to the far right of SEK 239. Price and currency has had a negative impact, especially in the last quarter, in the third quarter, as prices have dropped over the course of the year. Volume and mix, also a slight impact due to the fact that we closed down one production line at the end of last year. But the big hit is coming from variable cost, and that is an area we have to be very cautious about.
That's the fiber cost, which has been impacted by Russia's attack on Ukraine, which led to that the Russian exports of wood to Finland has stopped. Some 10% or 12% of the Finnish raw material has disappeared overnight, and the Finnish players then looked for raw material in other markets. That has driven up demand for Swedish forest products. So here we have seen that prices have increased tremendously over the course of the year compared with last year, but for the last month, we've seen that they've stabilized, and our belief is that we have reached a plateau, so they should hopefully not further increase from here going forward. You see the effect of our fixed cost, and in others, you see the effect of the closures that we have taken.
They have been taken here as an one-off item that is impacting the results. If we look over in what is really driving our results, that is the pulp prices above all the other things that we can control ourselves. Here, these are average quarterly prices, so the gross price, always consider that there is a big rebate you have to re-withdraw from the top lines. Then you get to the net lines on the bottom. The net lines have leveled out a bit earlier. On a quarterly average, the gross prices still are in a downward trend, but that trend has changed. We see that in the monthly prices, and China has been the leader in this development. Already, at the end of the spring, China started to buy pulp in huge quantities.
As the prices had reached the bottom, it was the signal for the Chinese buyers to now start to destock again and get out of their restocking, or no, it's they restocked, and they got out of the destocking. So they start filling up their stocks with pulp, and that has led to the global market coming much better into balance. And the balance we always see as the stock levels, and the stock levels are the bars. And you see there a big peak at the beginning of 2023, almost close to 55 days of consumption that were in stock, and that has now come down to some 40 days. Thirty-seven days for long fiber, which is our main grade, and 39 days for short fiber.
There you see on the monthly prices, that the net prices already have turned up and also the gross price here in the recent weeks. So it seems to be that, we have got steady ground under our feet, and once supply chains have been emptied from all this surplus of deliveries that have taken place during the coronavirus pandemic, we believe that with business activity coming back, we are coming back into a much better and positive mode. Looking at the profit development over time, once again, we see that 2022 has been an exception, but also with these strongly declining prices in 2023, we can see that, we still have an average EBIT margin over rolling 12-month of 8%, which is historically a little bit above the average year, so that feels safely.
I talked a lot about our balance sheet. Our equity to assets ratio is still at a safe 66%, positive cash flow from our operations, and a very comfortable availability, available liquidity of some close to SEK 700 million. That is reflecting, of course, the dividend that has been paid early on this year, in order to increase our shareholder values. Looking ahead at what's driving pulp sales in the future are a couple of mega trends. One of them is the growing population in the world with a larger disposable income at hand that is driving demand for tissue that will consume a lot of the pulp, which is around and available and leaves the space for us in our niches and will reduce competition. E-commerce is here to stay. We see that more packaging is needed.
With a decline in graphical packaging, that means also that there is less recycled pulp available. That is one of the key sources for packaging, and these producers of packaging materials then have to rely on other sources, and part of these sources can be virgin pulp. We talked about renewable energy already. That is all around the world happening, investments in the grid, investments in renewable energy that needs cables, that needs transformers, and of course, societies wish to get away from fossil-based products in our daily lives, and here we also are strongly represented with our molded fiber packaging. Some words about that, we have invested over a long period of time in molded pulp. We are, I think we can still say that, the first producer of a modified atmosphere packaging, which is in the market, which is fiber-based.
That means that our customer produces and packs food in a package which then goes into cold chain and not a frozen chain. You all know Dafgård's and the Köttbullar you can get through the frozen chain, but in a cold chain, historically, that has been plastic-based packaging in order to have an oxygen barrier. And here we have a fiber-based material in the market, and we are now building our plant in Poland in order to scale this up, and we're coming back on that next year when we have more things to show about that. So to briefly summarize of where we are standing, we have been coming through troubled waters with our balance sheet in good shape. So far, for the first nine months of this year, we see a positive result, which we are very proud of.
And just a note of caution, for the fourth quarter, our main mill, the Vallvik Mill, has had its annual maintenance stop. We guide some SEK 60-70 million in costs for that. That's both lost production and additional fixed costs that has been taking place in October. That will impact the quarter four results. Keep that in mind when you make your expectations and prognosis. But the mill is up and running again, so now both mills are running very well. And with that, I leave the word back to Ali for some Q&A.
Thank you so much, Lennart, for the great presentation. Just a few questions from our side. In your Q3 report, you discussed, and you said that you're quite agile in acquisition of new customers. Could you maybe just provide a little bit more flavor on your strategy on acquiring customers and retaining old customers? How do you see this mix going forward?
Our main priority is to retain our customers, as we have a dedicated set of customers, which we have very long-standing relations. In some cases, it's also quite a long validation for them to get in their pulp. I think that is reflected also in the way how we can actually sell the volume that we produce. But when they don't have enough production, of course, they cannot consume more pulp than what they need. And then we have been flexible in finding new markets through the agent network we have, as well as I've said, also allocating products to tissue. I think it's a demonstration of the reputation we have in the market. Although we are small, we are very customer-centric. We supply them with an additional service.
It's just a question of taking up the phone, making a call, and you will get a truck of delivery next year, next day. So I think it's, it's something that is sort of centering around our way of working with customers. But the main focus is, of course, on the long-standing relations because here we see over time that this will benefit Rottneros.
Okay, makes sense. Thank you so much. And, as we all know, the market is very cyclical. We're coming from a trough, and now hopefully the market is moving up. How do you position yourself competitively, and what are your strategies in maintaining your position going forward now?
We stick to our strategy, which is the niches that we're strong with. We stick to the products where we generate unique selling arguments for our customers. Packaging and board, electrotechnical, we see good growth. The electrotechnical segment this year is growing with some 14%, whereas the market for pulp, as we just saw, is some 2.6%. It's a small niche, but it's growing, and there are very few competitors. Filter is an additional area where we are one of the few who can sort of create the kind of pulp with porosity. So we maintain that strategy and follow it and follow our customers into new markets, and by that, making sure that we have a good capacity utilization of our mills.
Okay. Thank you. In terms of raw materials, I mean, we saw with the chart you showed, that, you know, it's difficult, the raw materials have been pushing the earnings down. In terms of the value chain, how do you see yourself positioning in terms of maintaining a good position in terms of the raw materials you source in, going forward now?
Well, again, it's about relations, as most businesses are. There are many smaller players, not just the big ones that you might hear of on a daily basis. Many family-owned sawmills that like to do business with a business partner that is not huge. It's always difficult to dance with an elephant, and if you dance as a small player with Rottneros, you meet each other on eye height, and I think that is a strength for us to source the needed raw materials. Of course, we have to follow the price, but we have the volume available.
Exactly. Makes sense. Thank you. And, also, you are currently working on a new tall oil production line or a new mill in Vallvik. How do you see tall oil representing your company going forward, and how will that change some of the dynamics in your company?
Well, pulp mills today are called biorefineries, so what we take in is the wood that consists of 50% fiber, 30% lignin, and twenty percent hemicellulose, which is a sucker sugar molecule, sorry. Tall oils is one of the residues which historically has been a side product, which becomes more and more important in the transition away from fossil-based products. We cannot make more than what the raw material brings in, but we can refine it to a better quality, and we can make sure that we maximize whatever comes in with the wood. We have a long-term target for 2023. 10% of our turnover should be coming from other sales than pulp. As we could see in the nine-month report, we are there.
So this will be part of the next step, and that which we have not communicated yet, but which we will communicate it in due course, what will be our long-term targets, and here we will see a step up in our ambition.
Okay. Thank you so much. I think that's what we have time for. Time goes quickly when you have fun. Thank you, everyone, for joining, and we will see you for the next presentation. Thank you so much.
Thank you.