Hi, and welcome to today's webcast with Rottneros. Today, we have the CEO, Lennart Eberleh, and the CFO, Pia Ohlson, with us. My name is Martin Westerlund, and I work for Finwire. After the presentation, there will be a Q&A session. If you have any questions for Lennart and Pia, please visit finwire.tv and click on this webcast. With that said, I'll hand over the word to you guys. Please go ahead.
Thank you very much, Martin, and hello, everybody. Thank you for finding the time during vacation times and in a busy week with lots of reports to join us for our Q2 report. The short summary of this is that we had a very strong production, good deliveries during the second quarter, and in combination with higher pulp prices, that led to a record result for Rottneros in its current form. It is with great humbleness and respect for the environment that we're currently operating in that we're presenting this. We all know about the increasing uncertainties that are out there, the macroeconomics, the geopolitical tensions, as well as the climate change that is abundantly clear, a big challenge for us going forward.
Thanks to everybody's efforts in our company, we focus on the things that we need to focus on and delivered a good production and delivery with a very safe work environment. The pulp market, which I will come back to in a short while more in detail, has continued to be very strong. Despite the fact, we all know that the energy situation is worrying some. Gas, for example, is an important input for our customers in Europe, which are non-integrated paper and board makers that do need gas to run their drying sections. For us in our mechanical pulp mill, Rottneros, electricity is a key input, and we have seen strong elevated prices recently.
Therefore, we are also in the middle of an in-depth strategic review in order to ensure that all our business lines have a sustainable profitability in line with our financial targets going forward. We have no results to present on that yet, but we will hopefully come back on that very soon because we don't estimate that the environment we are in will change for the better in due course. If we go back to why we are here, Rottneros is a listed company, has been so for a very long time, and the business model of being a circular economy with renewable and sustainable raw materials has proven to be successful.
We have also started a cooperation with Söderberg & Partners investment department and RISE during this quarter to further enhance our circular approach, both to our process, but also looking into market aspects and the durability of our products and our customers' products. The business model of being a niche supplier with very dedicated and specific products for our customers continues to prove solid, and we're also continuously generating a very strong cash flow, not the least during the last quarter. A brief review of the market trends and challenges. As we have said, the pulp markets have turned back after a small dip at the beginning of the year.
This is the average quarterly prices, and also the strengthening of the US dollar has made the lighter underlying line merging with the darker one on top, which is the price in Swedish kronas per ton, which is of course a very good and healthy sign of where the European market is, currently. If we look more detailed, the curved line here is the price on a monthly average. At the end of the second quarter, the price was $1,430, and we had continued price increases at the beginning of quarter three, $1,470 is the current quote in the list price. That is of course a consequence of a market where things are more or less in balance.
If we look at the staples, those are the stock levels, and up until 2019, average good and solid stock situation was around 35 days. If we look during the course of this year, that has increased up to 42 at the beginning of 2021 and into 2022. However, this does not seem to be too large a stock situation, which could have put pressure on pulp prices. There is more pulp in transit. There are port congestions. There is a shortage of carriers, so rail carriers as well as containers and trucks. We estimate that about 2 million tons of excess pulp are in transit and not available to the market currently. The elevated level is not a sign of an oversupply.
On top of that, we also see structurally that there is more and more short fiber coming from Latin America, and due to longer transit times, there is also a structural increase in the balance here. All in all, good and solid performance of the pulp market. This is the European paper. Its share of various applications, in total for 2021. Still graphic papers are around about 1/4 of the market, but this is over time a decreasing share. We see a structural decline.
Nevertheless, currently the European market is enjoying a very favorable situation, which we can see here on the next slide with all except newsprint, graphical segments being on the positive side, and that is also as a consequence of imports from Asia not finding their way into Europe as freight is not available or too expensive. As a consequence of that, paper makers have been able to forward their price increases and their cost increases to their customers, and so far, that has also led to good prices on the pulp side. We can see that both the pulp makers and paper and board makers are enjoying healthy profits for the time being. Usually it's either one or the other who's having a good market situation. That is boiling down to the market pulp deliveries from January to May.
These statistics, as usual, are lagging a little bit behind. Globally, there is a small minus driven by China still being relatively weak, but Europe and North America being balanced, especially during the beginning of the year, also during the second quarter, of course, we have seen that our deliveries have been good. North America from a financial and economic perspective, probably even a bit better than Europe at this point, so we have to see where that goes going forward. These are our deliveries, and again, I can only reemphasize that we are more and more focusing on applications where there's growth such as board and packaging, filter or electrotechnical applications, whereas printing and writing is a declining segment.
Tissue is a growing segment, but it's very much exposed to short fiber, and this is not really the most suitable segment for our products. We do create additional volume and/or value for our customers, but it's a very tough economic situation in that segment for pulp suppliers. Now, with that, I leave it over to Pia. Please guide us through the financial numbers for the second quarter.
Thank you, Lennart. I'm of course very proud to present the record earnings for quarter two, and I will go through the financials by starting with going through the EBIT this quarter versus the same quarter last year, and what is driving the profitability. Well, we start off with the gray bar that is showing the EBIT for quarter two last year, and that was of SEK 97 million. As you can see, as the second bar, the blue one, it's the price and currency bar, and that is adding up to SEK 156 million. Lennart explained that the NBSK and the list price was higher, and during the quarter, we had an increase in the list price of 16%.
If we turn that into a SEK, it was actually greater, 36% higher list prices in SEK versus last year's quarter two. We also had a production record this quarter, so we see that the volume has a positive impact on the EBIT for this quarter. Then we go to the negative side, and that's the variable cost. We started off early this year by saying that we saw an increase in our input goods, the prices, and this has continued and even peaked during quarter two. It's mostly chemicals and oil and gas, besides freight cost that is increasing. On the positive hand, we see that they have come to a stop and even a decline in June, in the month of June, so that's good going forward.
We also know that for the next coming quarter, we will have a rise in the prices of wood pulp. If we look at the fixed costs, they are nearly on the same level, it's -4%. Also on the other hand, it's -5% for depreciation and other costs. We end up with our record high lever profit of SEK 219. We take a look at the electricity price development. Here we see a graph, and that is showing the Nord Pool day-ahead prices per month. We can see that during the end of last year, it has been skyrocketing. Even though we are in the summertime, the prices are still high.
If we look at the quarter-over-quarter we had last year, system price of 42 öre per kilowatt, and now it's this quarter it was 127, and it was nearly the same ratio in SE Area Three. If we look at the cost for electricity after our hedges, it was actually lower during quarter two this year versus last year. You can say that we have well-functioning hedges. Also we have a good hedge up until 2025, and the hedges that we have are around 32 öre per kilowatt. Still, it's a worrying development. If you take a look at the EBIT development, year-over-year up until June, we can see the same trend as in the quarter. It's the price and currency effect that is actually improving the EBIT.
If you look at the list prices in SEK, it was actually improved by 42% versus last year. As you know that approximately 50% of our sales is in US dollars. Also here, we can see a positive effect on the volume and of course, a negative effect on the variable cost. We have to focus and try to mitigate the higher variable cost by focus on the cost control and the efficiency in the company. Also, you can see that we have a high fixed cost that is working negatively, and that is due to one-off maintenance costs mostly. Anyhow, we actually improved our profit or EBIT the half year 2021 to 2022 by SEK 256 million, very good development.
If you look at the profit development over time, we see here a graph showing our EBIT and EBITDA over quarters. We can see that during 2021, it started to pick up again. Here in 2022, we have really nice bars. For the first time ever, we actually went over SEK 200 million on the EBIT level over a quarter. The increase from quarter one is actually 50%. If we look at the increase from quarter two 2021, it's over 200%, so a very good development. If we look at the EBIT per percent, it's 28 quarter two. We also have a record high net turnover. If you look at the balance sheet, we can see that we have a very efficient and solid balance sheet.
If we start by looking at the cash flow, as Lennart mentioned, we had a really strong cash flow during the period. In this graph, we can see the cash flow in the dark blue bars. You can see here that we hit over SEK 250 million, SEK 262 million for quarter two 2022. Really strong cash performance. If we look at the equity asset ratio, we have a goal of over 50%. At the end of June, we were actually on the 67% of that. We actually paid out the dividend during May, during quarter two. We are really happy to say that we have a very strong balance sheet. Also, if you look at the net debt, it's positive.
We have a positive net debt of SEK 143, and we can see that on the light green bars. It has been having a positive trend since quarter four 2021. We have actually used our option to prolong our revolving credit and bank loan, so now it's prolonged to July 2024. If we look going forward this year, we can see that we have an investment rate of about SEK 105 million for this year. With that, I turn over the word back to Lennart and the way ahead.
Thank you very much, Pia. By now, I think most of you have seen our estimate of what's happening in the future, and there are various trends favoring consumption of pulp and usage of pulp as it is a renewable product, solving many of the challenges we see. It's well fitted to help growing segments like the tissue or the packaging segment, which is underlined by a growing number of people in the world spending money. We are also helping the green transition on the power side. Transformers need pulp, cables need cable paper, which is made out of pulp.
Of course, we have a sustainability trend that is driving the usage of packaging, which is non-fossil based, where we also have our own efforts in the packaging factory in Sunne and now also in Poland together with our joint venture partner, Arctic Paper. There seems to be a lot of things that are in favor of a renewable product such as pulp, all in all. As I've mentioned, the joint venture is forming up. We are finalizing the drawings for the plant, and we'll later on this year after summer start procuring the equipment. We are on track by starting the factory by the end of 2023.
Again, so far at this point, we're also running the factory in Sunne on a commercial basis with the first yet Modified Atmosphere Packaging tray as we have seen it on the market. To sum it all up, so far the first half of this year has been very good for Rottneros. We do what we can do, and we focus on the things we can focus on. We have tools in place to mitigate risks. Electricity is, of course, something that we're working with and we have worked with for a long period of time, as it always has been an important input cost for us. We have, as Pia said, well-working hedges, and those hedges are stretching all the way out to 2025.
The elevated energy situation is probably also a lot due to the current economic as well as the geopolitical situation. We will have to see how long it will draw out in the future, as well as we do what we can do in order to complement our hedges with long-term power purchase agreements. These things are in progress. We continue to have a strong balance sheet. We create shareholder value. We do pay out a dividend, and we have the necessary funds to develop Rottneros going forward, both our pulp mills as well as our new business ventures within packaging, which is going according to plan. In order to safeguard what we have and what we do as a company, we are reviewing our positions both on a production and market perspective.
As a consequence of this year's somewhat weaker market on some of the products, which is groundwood pulp, we also took earlier a decision to go from 6 shift this year down to 5 shift, with the consequence that we will have a summer break of about 4 weeks, and that will impact quarter three with around about 5,000 tons. We've curtailed the least paying volumes, and we utilized the hedges we have in order to offset part of the fixed cost that we have anyway. We believe that will be a plus minus zero situation on that part, which is the smallest part within our power portfolio. Long fiber sulfate kraft pulp is strong.
Prices continue to rise, and we've also seen a very strong performance on the CTMP, where we have increased prices with more or less 20%, from second quarter of last year, and we continue to see a very good demand there. That is as we see it as of today. With that said, I leave the word back to Martin and see if there have been any questions.
Thank you very much, Lennart and Pia, for the presentation. Now it's time for the Q&A. How has the changed market situation affected Rottneros?
The market situation so far has not really changed. We see there is an increased uncertainty, but there still is a good and healthy demand. I would say we are still profiting from the good demand situation that we have. Europe is our biggest market with more than 60% of sales, followed by Asia, just under 20%, and the remaining part is in North America, which also is a very healthy market. Especially our niches, E-grades, electrotechnical pulp grades, and packaging and board has gone strong as well as filters. I think if it has changed, it has only changed very little from a very, very strong situation into still a strong and balanced situation.
As I've said, we can also see that the pulp prices at the beginning of the quarter three are continued increasing, and we're now at $1,470. The increase in June in the US went through as well, and there the list price is over $1,800. I think we are still enjoying a good situation.
Thank you very much. We'll take the next question. Pulpwood prices are on a rapid rise, and more price increases are announced by key market players. Could you please elaborate on your pulpwood sourcing and shed some light on the price increases you see in the market?
Yes. Pulpwood is generally sourced close by our mills, around about 150-200 kilometers away. We have a sourcing company in the Baltics in Letland, which is taking care of parts of the import that we're having, around about 15%. This year it has been lower. Remember back in 2018 when it was very high and dry, we actually increased the volumes through our Letland organization. We have long contracts with some of the bigger players in the market. All of that, of course, as we don't have any forest of our own. Part of the fiber base is coming from sawmill in form of sawmill chips.
This is part of the value creation from forest, the saw mills can only utilize certain share of the tree and the rest becomes byproducts, and one of the largest byproducts is sawmill chips. We have especially around Rottneros mill but also around Vallvik, lots of long-standing relations with the saw mills that are supplying us with their chips. You also know that as of 2020 we have Nykvist Skogs, which is an organization that works with private forest owners. We have actually improved our situation of sourcing the necessary raw materials. The raw material prices are not fluctuating as much as pulp prices, for example. Prices are set on a quarterly or mostly half-year basis, and yes, they are increasing. They're coming from a very low level.
They have been on a very low level for a long time, and the current increase is also fueled by the fact that around the Baltic area we have a situation where imports from Russia and Belarus are not there anymore. Finland imported some substantial volumes from Russia, and I think also Central European producers were importing from Belarus as well as Ukraine. Those volumes are currently not there, so consumers are focusing on the volumes that have been up further north historically in Finland and Sweden and the Baltics. All of that has driven up prices, and we have to see. At the same time, we also hear that there are some uncertainties around the sawmill industry, so that could also impact the activity in the forest.
We are still suffering in mid-Sweden of the bark beetle situation, which is forcing forest owners to continuously harvest trees which are slightly affected or just on the border of being affected, and that is still creating a good flow of volume. I don't want to give an exact figure because these are both trade secrets as well as number of various list prices which are out there. Yes, prices are going up, but they're coming from a very low level.
Thank you for that answer. We'll take the next question. You estimate SEK 50 million and SEK 61 million direct and indirect maintenance costs for in Q3 and Q4. Is that on the low side given the strong pulp markets? For example, higher indirect costs from lower production.
I leave that to Pia to explain how we calculate the cost for our stops.
Thank you. It's a combination of both. It's both the lost pulp or the lost sales that we have during the stop and also the increased cost by standing on the maintenance stop. It's a combination of both. Of course, those calculations were made during the springtime. Of course, with escalating prices, we're not sure that they are going to stop there, but that's our best guess right now.
Okay. Thank you very much. We'll take the next question.
Thank you.
Hi, Lennart and Pia. Would you be able to give an indication on how much the pulp wood cost will increase on average for Rottneros in the second half of 2022 compared to the first half, given what we know now about the pulp wood prices at this point? Thank you.
Yes, a similar question as we had before, but we do not give any forward guidance, over and above information which is readily available in the market. I have to decline answering that one unfortunately.
Okay, thank you. We'll take the next question. What is there to say about the upcoming annual general meeting not taking place in Sunne in 2023?
Well, that was an interesting question, and I take it as somebody is interested for us being in Sunne. We had up until the corona pandemic an alternating schedule between Söderhamn and Sunne, and Sunne is the seat of the company, and in Söderhamn we have our largest operation. We have restarted having physical meetings as of this year, and it was Söderhamn's turn. I hope the board will make a wise decision of coming to Sunne next year. I think the only thing that would be in the way of that should probably be something that is unforeseeable or a hopefully not but possible second or third or fourth wave of a pandemic. Let's hope for the best, and let's hope we can meet shareholders in Sunne next year.
I will certainly forward that to the board for their consideration.
Thank you. We'll take the last question of this presentation. Is there something that you're looking forward to a little bit extra for the remainder of 2022?
I really do look forward to continue meeting our customers. I think we've seen that over the course of the last years that, despite the fact how well we can do things digitally, a physical meeting is not replaceable, certainly not if you want to meet new customers and want to start new businesses. I hope, with the continued, vaccine campaigns that we keep the pandemic under control and can continue meet people both internally as well as externally. We as people and mankind are made to meet and not just talk on the phone.
Okay. Thank you very much, Lennart and Pia, for that presentation and answering all of our questions. A big thanks to all of you who followed us online today. I hope you have a great rest of the day. Thank you and goodbye for now.
Thank you. Bye-bye.