Hello, and welcome to today's webcast presentation. We have Rottneros with CEO Lennart Eberleh and CFO Monica Pasanen, who will present the Q3 report for twenty twenty-four, and answer questions during the Q&A after the presentation. If you have any questions, please use the form that is located to the right. And with that said, please go ahead with your presentation.
Thank you very much, Martin, and hello, everybody, to this quarter's results presentation. We dive into the highlights. We see that, despite a little bit of a slowdown in the market, especially on the hardwood side, the softwood market has remained more stable, and especially our niches for UKP very stable. We've seen that some of our competitors have fallen out, and we've already signed contracts for next year, higher volumes, and maintained good prices. Also, SEK 40 million has been impacted materially by the continuously high [wood costs]. They are burdening the profit and loss statement that we're having, but on the other side, we feel very comfortable with the volumes and the inflow of raw materials into our pulp mills. 2024 is a year of high investments. There are projects going on in our two pulp mills.
Those are coming to an end and will lead to fruition in the coming coming year, making us more efficient, more competitive, and more resilient in this current climate. Seeing that the new forming machines are coming on site in both Poland and Sunne with one machine. So that is very exciting, and we are happy that these big investments, which nevertheless have taken a lot of time for us and our small organization. If we're looking into the market, we see continue to increase, especially driven by the development in China earlier this year. And in the future to be a bigger spread between hardwood and softwood of this presentation a bit more about that. But looking into our market, which is the softwood market, we've seen that prices have peaked.
As usual, this is the quarterly average price, which is now at the top of this cycle. And as you can see on the lower graphs, which are the net prices, spot volumes weigh into these indexes and driven the prices down a little bit. Again, stable demand for our softwood market. CTMP, however, is a bit hit by the fact that a lot more CTMP is going into Asia, and here the slow market in China has hit it, and volumes. However, still having a favorable exchange rate between the krona and the US dollars. Looking into the stock development, we've seen that earlier, stocks have come up, approaching levels which can certainly be seen as approaching 48 days. And this is, of course, always...
Here on the monthly list prices, you see that they have come down after the peak. Moreover, and this is an oversupply situation for the hardwood. We make softwood, but hardwood is impacting the total market. It's the biggest share of the chemical market, and a lot of projects have been started up during the course of this year. And the suppliers already have enough... erosion is not continuous, how that is going forward. America, as one of the three regions, still has a more balanced situation, but also there, 18% of our volumes go into the U.S., so Fed rates. Nevertheless, looking into Europe, which is the majority of our sales, we can see here how the pulp, the paper, and the board market has gone so far.
We see increases over 2023, but those increases happened during the first half of this year. Since the summer, we've seen. It's been a recovery so far. Hopefully, the economic activity is coming back with lower interest rates, which is some correlation to how paper and board is going on. The global pulp market, as I've said initially, is mainly driven by China, as you can see here in the dark blue bar, and China is some 40% of the market. Again, China is not a big market for Rottneros, but it impacts markets in Asia, and thus, we have to follow closely what is happening in China. It is setting the price scene both for the gap between softwood and hardwood is increasing, yet decoupled these two grades completely.
But they will pass on various paths. Some are still going into selected niches, which are good, more than I think we supply unique properties. Board market has been a bit slower so far this year. You see a decline of. As I've said, there are some suppliers pulling out of this market, so we will, and the electrotechnical applications. This is pulp for transformers, but also electrotechnical cables, is still very, very stable, not the least driven by the fact that there's infrastructure on the electricity side, with grids. The special applications also continued strong, tissue, as I explained, a regulating valve. If we see some decreases in other segments, we have, and when those other niches are becoming strong again, we can also more easily pull out.
There is not such a long customer-supplier relation within the tissue for our grades, and again, printing and writing. This is the overview of our nine-month delivery so far, with a continued strong and create unique properties for our customer. Over to Monica to guide us through the financial figures.
Thank you, Lennart. Yes, we are seeing in the quarter, in the year, squeezed margins, and that we can also see in our result. Where we are looking at the difference between the third quarter last year and the third quarter this year, what has happened? We go from forty-nine to forty, which is fairly stable. But here we see that price and currency has increased a lot. We have talked a lot about our prices, our sales prices lagging the market. A quarter or longer lag between the price movements, and here we are benefiting from the higher prices that's pricing in the second quarter of this year. What is really worrying is the variable costs that are increasing.
Also affecting the third quarter are the volumes, slightly lower production, but especially on the sales volume side, we are comparing against a quarter last year, where we had very high sales. On the fixed cost side, it is related to maintenance activities and more of a timing issue than significantly higher cost, and then we will look at the full year. 2023, we started very strongly, so that is why we go from a very high result of 239 to 74 for the first nine months. Price and currency. We actually see a slightly increasing sales prices versus last year, but we also have a slightly stronger Swedish crown, which is affecting negatively, so the production volumes and sales volumes are slightly down.
We had production problems, especially in the winter months, in the beginning of the year. That is affecting these nine months and also affecting our ability to. The impact is from the variable cost 75. Increased cost is from wood, and I think we can look at the next slide, where we see that 5% of our variable costs are from wood. Input cost that we are having, and we have seen very dramatic change in the wood prices. Timber and wood prices, and we should look at that is mostly affecting us, is the orange one, called Svealand and Massaved or pulpwood.
If we compare against the bottom, which was at the beginning of 2023 and our current prices, or let's say the prices that we had almost half a year ago, it has basically doubled, and we still see increases in prices on. So of course affecting the whole market, and this is really squeezing the margins on all companies active in this. Then we can have a look at the balance sheet. Lennart mentioned the big investments, and that is what we see on this page. The light green bar is the net debt or net cash. We had many years of cash situation. Now, with the big investments, 319 million SEK so far, and we forecast that we will have 460 million SEK in 2024 when we end the year.
We will and our accumulated cash from previous years to pay for these investments. So that's why we now see a million. We can anyhow still balance sheet. We have a 60% equity to assets ratio, and we have good available liquidity. With that, I hand back to Lennart.
With this brief overview of our current situation, let's look into how we think things will develop in the future. Hence, which still are for cellulose, both hardwood, softwood, chemical and mechanical tissue, as an indicator of world standard of living. People with more available income are spending more on their well-being, and this is driving demand for tissue, and tissue is one of the big. A few integrated pulp and tissue producers, and there is a good all the volumes that are built in new pulp mills. Packaging, not the least, driven through e-commerce and our ways of consuming products, so the majority of packaging is based on recycled fiber.
That you can only recycle a fiber a certain number of times, and then you have to add the fresh fibers, either as a part of the fiber furnish in the paper machine or as a hundred percent primary fiber-based quality, for example, within the food sector. So this will continue to drive the demand, and there has been a big increase per qualities for corrugated and board packaging based on recycled fibers. So there is an underlying demand here also for primary fibers in the future, which we can serve to. I briefly also talked about the renewable energy sector in North America and Europe are becoming old. They have to be rebuilt.
They have to also be adopted to the new way of making energy based on wind and solar, which needs a lot of transmitting capacity, a lot of cables that have to be put in place, and also technical items are needing very few to make the best quality. We see that here our customers are continuously asking for more order books into the future, which also will be seen in the split between ECF, which is the white grade, and the UKP, which is the brown grade, and it's over time, becoming more and more brown in our Vallvik Mill.
And then, not the least, the drive for climate change, finding fossil-free solutions for everything we do, and the forest-based products are. This is, A, driving the demand for fibers, but, B, it is also driving the possibility for us to find new business opportunities. And here we are serving this kind of market with our own packaging arm, where we have formed fibers and formed fiber solutions for especially food. About the access to fiber and what is happening here on a global basis, there is a limited growth potential for softwood, while there is a continued demand. This market will continue to be more and more imbalanced going forward. It's sourced from the northern hemisphere, primarily Canada and the Nordics.
While in Canada, there has been a couple of factors which are negatively impacting the output of softwood pulp, which has led to continuous good production in the Nordics, but we have a lack of raw material. There has been a substantial export from Russia into Finland and Ukraine, that export has ceased, and that has brought a tightening balance with price increases. You see the curve that Monica showed just a couple of slides before in Sweden is coinciding really with the exit of those exports. In the southern hemisphere, you see predominantly the production of hardwood or softwood. Brazil is one of the major exporting countries, and there are more pulp plants in the planning to be made. But also here, we see an increase in cost for land and money, as well as logistics.
The good sites are taking. They've been on the coasts. Now the more you go inland, the more still cheaper than the softwood, but it will become more. China has built a tremendous amount of capacity, both in pulp production. Here, the pulp production is based on imported chips from Indonesia, Vietnam, Australia, South Africa. As that capacity increase has been so dramatic, the demand for it is increasing, which is also driving up the prices here. It's gonna be interesting to see how that will play out in the future, but it's a certain sort of cash costs limitations to how low those prices can become.
So hardwood in the future, less softwood, but as there are unique properties in the softwood we are supplying, we believe and see that our customers are very keen on securing the supply of those kind of qualities. And so softwood will become more and more of a specialty, and within this specialty, we are one of the foremost sources of very distinct specialties. So summarizing, the third quarter continued to stabilize our operations. The CTMP plant in Rottneros Mill is going very well. We have stabilized the operations involving our start of twenty twenty-four in the winter months. We are finalizing major investments to be more resilient and more efficient going forward.
It's SEK 93 million tall oil, so we can extract more of each cubic meter of wood that we take into Vallvik to make products which are sellable coming out. It's a reinvestment. It's not a new investment, but it will make us more efficient and more tall oil going forward. We're investing in the capacity increase in Rottneros Mill, going from 130 to 170 thousand tons, or SEK 220 million. Still a very cost-efficient investment if you calculate it by the investment amount tall ton. We have started some investment solutions, such as a solar farm of 2 gigawatt hours on an annual basis, and batteries, which will participate in the stabilization of the Swedish grid, which is generating new income.
As we've seen, we have a continued strong balance sheet to be able to manage these investments. Normal investment levels in the coming years going forward. With that, I thank you for your time, and leave the word back to Martin to see if we have any questions that we can answer.
Yes, thank you very much for that presentation. And like you said, now it's time for the Q&A section here. And we'll start with the first question: You sold SEK 11 million of emission rights. Do you expect to sell in Q4 as well?
We have looked at our emission rights and what we have in our books, so to say, and we saw that this was a good time to sell some of the emission rights, and we also look at the possibility to sell more. So that is the short answer to that question.
Thank you. Given that the molded fiber trays production start was postponed to Q4, when do you first expect to see revenues?
We have had already revenues during the last years when we were validating the technology. So there has been a very small stream of that. And now going from one machines to three, one in Sunne and two more in Poland, we will start seeing a little bit more of substantial volumes within that frame. In the beginning of next year, we'll be still marginal compared to the turnover size of Rottneros as a group, but it is now starting to ramp up and will over the coming year become more and more, but still on a very low level, but starting to be seen.
CapEx for 2024 is expected at SEK 460 million. What about 2025 and 2026?
Yes, that is correct. And, as Lennart pointed out, we have had several larger investment programs, and, all of them are finalizing during the fourth quarter. So, we will have some cash flow still in 2025 from, the bigger investments. And, looking forward, we see that we will, go back to the levels, that we had before, or let's say, we will go back to having investments that are approximately equal to our depreciation, which is, approximately 120 million SEK in that region. So that is what we can see, in front of us now going forward.
Sorry, my sound wasn't on. Now it's on. What can you say about volume and price development in Q4?
Yeah, if I start with volume, it will, of course, the production volume will be impacted by the maintenance shutdowns that we have at both mills. We have already completed in Vallvik Mill the maintenance, the annual maintenance shutdown, and the mill is back and producing. As we speak, Rottneros Mill has its maintenance shutdown, and a lot of the equipment that is invested in is being commissioned at the moment. You also asked about prices, and then we can only look at what other people are saying. We cannot have a view on the prices ourselves.
I understand. Thank you, and the investment program is in its final phase. What kind of return on investments do you expect from the expanded CTMP capacity, solar panels, and the tall oil plant in Vallvik?
They are three different type of investments, and makes difficult to lump them together like that. We will see different types of revenues if we start off with the increased capacity. Of course, the producing more tons with basically the same personnel and same fixed costs will drive or will improve the margins. Then when we look at the battery and solar panels, they are in operation, and the batteries are being qualified for the frequency market, so we will see good income from these. And with the tall oil plant, we are replacing old equipment, meaning that we are not investing in something totally new. So it's not a totally new revenue stream, but it's a vital part of the operations of the mill and is needed.
What we see from the new tall oil plant is that it is more efficient. We get more tall oil, which is a valuable by-product from the wood. So we see improved efficiencies from these investments.
Okay, and how do you plan to manage the slowdown in demand from China and the broader decline in the packaging board segment, especially considering the reduced profitability in the CTMP market?
As always, it's a cyclical market that we're seeing, and we are preparing for these downturns by being more efficient and becoming more resilient. China is a limited market for us, so all market areas are in other places where our quality is also very much appreciated, so we have to see these over a couple of years development, and in general, I would say we are very well placed and suited to find new homes. There's a couple of developments going on and new applications, but in general, we all believe and see that there will be continued growth within the packaging boards market, so I wouldn't be too pessimistic about the development.
It's more of a temporary hiccup, and the larger downturn is on the hardwood side, and we are not as much impacted by that.
Okay, and that's a wrap of the Q&A section here. Thank you very much, Lennart and Monica, for presenting today, and also answering all our questions, and a big thanks to everyone who followed this presentation with Rottneros, and until next time, thank you very much, and goodbye, everyone.
Thank you, and bye-bye.
Thank you.