Hello, welcome to today's webcast presentation with Rottneros. With us today we have the CEO, Lennart Eberleh, and the CFO, Monica Pasanen, with us. My name is Martin Westerlund, and I work for Finwire. If you have any questions for Lennart and Monica, please use the form that is located to the right. With that said, I'll leave the word to you guys. Please go ahead.
Thank you very much, Martin. Hello, everybody, to this webcast for the full year report of 2022. It's with great pleasure that we are here today and presenting a record net profit for the company of SEK 565 million, a number that we haven't seen since the financial crisis. We have taken care of our balance sheet, which continues to be extremely robust, and the strong cash flow has led to a strong cash position. On the basis of that, the board is proposing a dividend for the year of SEK 1.40 per share. The year as such has also had its challenges. Based on the declining market for newsprint and graphical papers, we took the decision to discontinue the groundwood pulp line, which was weighing on the results.
During the fourth quarter, we had a turbine failure at our Vallvik Mill, which had an impact on the last quarter's results. We will go into the figures in a short while together with Monica, and prior to that, I will give you a brief overview of the company. The reasons to invest in Rottneros continue to be the same. We are in the middle of a green transition, and the forest industry, as much as pulp and paper, will and can contribute to that. We have a proven track record of a long-term profitability and creating stable shareholder returns. We are aware of the fact that we are operating in a cyclical environment, and thus a robust balance sheet is important. We have a target of more than 50%, and over the last time, we have been north of 65.
Last year, we came in at 66%. Given our products and product lines, we have developed strong market position in selected niches, which help us balancing out market fluctuations and price movements somewhat better than average. That brings us over to the market. Where is the pulp market currently at? If we look at the price graphs, the dark line is the NBSK in Europe in dollars and the lighter in Swedish kronors. You see tremendous upwards movement during 2021 up until quarter 3 of 2022, when we, in dollars, came in just at $1,500 at the end of the quarter. These are quarterly average prices you see here. During the quarter, the pulp prices have started moving south.
We lost some $70, down to $1,430, that movement continued at a slower pace at the beginning of this year. By the end of January, we were down to $1,410. From top notations, we lost some $90. More important maybe to see it on the monthly average, which is the dark line, but also the balance in the market, which we think is given and is good described in the balance between supply and demand. Here you see the stock development. It has been stable during the last two years. We have notes of small decreases in the stock numbers, but so far, no dramatic changes. A lot of stock has been tied up in transit over the last time.
There have been continuous reports of logistics issues and containers being short and ships being out on the seas not being able to load and unload at the harbors due to the pandemic. These volumes are now slowly coming into the market as well and should impact the stock figures. Of course, it's also a question of demand. If we look at the demand and compare the first 10 months of 22 with 21, we see that the graphical papers once again had a very negative development during the course of the year, but also containerboard was coming in weaker than usual. Whereas board, graphical board, packaging board, and liquid packaging board has been just above zero. Tissue continues to be a growth market.
But just looking at the annual change maybe doesn't say that much, and it's more important to look at how these segments in Europe develop over time. If we look here for the last five years, paper, packaging, and tissue and their respective development, we can see that there is a structural decline for paper. In tons, it's a decline of roughly 30%, whereas board and packaging has seen an increase. That is also one of the reasons why we are shifting our focus away from graphical papers into packaging grades.
Tissue, although it is a very large segment, remains to be a growth opportunity for us rather than a strategic opportunity that we're pursuing. If we're looking at the market for chemical market pulp, first 11 months, we see that there has been growth in Europe, North America, South America, whereas China had a very slow year. The dark lines or the dark bars are the full 11 months, whereas the lighter ones are the first eight months. Here we see how it has changed during the last three months of that period, where you can see Europe has a very obvious slowdown as much as North America. Whereas in China, still negative, but less negative than for the first eight months.
There has been a growth, and we have seen also price announcements coming in from China. China has had a weak year, much affected by the handling of the pandemic in China, but that seems to be now over and opening up. As soon as China's coming back from the current lunar year, which is celebrated now, we believe things will turn more positive there. For Rottneros, we look at our split of segments. We have a new segment here at the top, fiber cement, where fibers, cellulose fibers are replacing, asbestos fibers. A small but growing segment. Packaging is growing. Filter, electrical, and special is stable, and printing and writing has been declining and will decline further as we now have closed the groundwood line. With that brief overview, I leave over to Monica to take us through the figures.
Thank you, Lennart. Yes, we had a record high profit in the year, very satisfying to see. We start with the fourth quarter, which came in on SEK 1 million plus in EBIT. We, of course, had a very big help of the market with price and currency, but we also had some negative effects in the quarter. The main thing is really the steam turbine in Vallvik Mill that was out of operation, due to a failure, that has led to increased variable costs in terms of purchased electricity. We, of course, have had maintenance costs on the turbine and also slightly lower production, meaning lost revenue. When talking about the variable cost, we are also affected by inflation.
Price for pulpwood is higher than last year, but the big change is really in chemicals and fuels that have increased dramatically year-over-year. On the fixed cost side, we had the maintenance stop in Vallvik in the fourth quarter, whereas the previous year, it started already in September, so that has an impact. We also have planned maintenance work that was more than the previous year, and we have also had unplanned maintenance, like, for example, the turbine. On top of that, we see that inflation is affecting our fixed costs.
We can look at the full year, which is on, on the price and cost side, it looks very similar, but we increase our EBIT from SEK 267 million to SEK 550, which is a record level for us. The two main items affecting the full year on the cost side is the steam turbine, but also the closure of the groundwood line at Rottneros Mill, where we have taken all the costs mainly during the third quarter, but also to some extent in the fourth quarter. Yes, we ended up with a record year, SEK 550 million.
On top of that, we have a financial net of + SEK 164 million, which comes from the electricity hedges that we had in excess of what we will be using this year and next year. Due to that, it's no longer a cash flow hedging, but a financial instrument. That meant that the net profit for the year is SEK 565 million. Based on this, the board has also looked at a dividend proposal. The earnings per share is 3.70 SEK, the proposal is SEK 1.4, and that would mean a payout of 214 million Swedish crowns if approved. We can look at the next slide and look at our balance sheet.
We have very strong cash generation during last year, 2022. The cash generation from operations was a bit more than SEK 540 million. In total, we have had a cash generation for the last five years, so SEK 1.6 billion. During this period, we have invested in our operations SEK 727 million and also paid dividend to shareholders of SEK 430 million, and this excludes the proposed dividend that I mentioned earlier. We have a very strong balance sheet, solid, good cash position, which also is the reason for the dividend proposal by the board. I hand back to Lennart.
Thank you very much, Monica. Let us look ahead what we believe can drive our business going forward. There are some macro trends that we sincerely believe will favor the consumption of cellulose pulp. One is a growing disposable income for the world's population, which leads to better living standards, driving the demand for tissue. We have also seen a strong shift over to e-commerce and ordering on the internet, which is driving the consumption of packaging, especially paper-based packaging and corrugated, but also primary packaging as folding boxboard. We have a green transition. Especially interesting for us is, of course, the development of solar and wind farms, which are not traditionally where the big power-generating units are. This needs investments in transmitting cables as well as transformators.
Here, this very pure pulp from Rottneros with low conductivity comes in at play, and we see a strong and stable demand from customers who are using this. Of course, the overall drive to be more sustainable and use less fossil-based products and going over to fiber-based products. There we ourselves are active with developing Rottneros Packaging as a premier supplier of high-quality molded fiber packaging. We have our technology center in Sunne, where we have developed the technology, and we are in the middle of developing a much larger facility in Poland together with Arctic Paper in a 50/50 joint venture. We're in the process of negotiating supplies of machinery. The hall is under renovation. It's a brownfield installation, which makes it much more efficient than a greenfield.
It's on the Polish-German border, 80 km east of Berlin, so right at the center of Europe. With the quality that we have developed, we have an oxygen-tight, modified atmosphere, fiber-based tray, which is certainly one of its kind, and we see that the demand for that is simply just growing. If we summarize quarter four in 2022, we see that we have record high earnings. As Monica mentioned, the net result is higher than the operating profit, thanks to financial items. We have taken necessary precautions to make Rottneros even more resilient for future changes in demand. We're decreasing our exposure to the graphical paper sector by closing down the groundwood pulp line, which also has been the product that had the most energy consumption per ton.
We are maintaining and focusing on keeping a very strong balance sheet in order to be able to fight periods of less economical favorable situation. Our packaging project is going on according to plan. We see the emerging of a Rottneros which will change its being and color going forward. With that, I thank you very much for your attention, and I'll leave the word back to Martin for questions.
Thank you very much for that presentation. Like I said, now it's time for the questions. Take the first one here. Are the rising costs for the fourth quarter something that you see continuing into Q1?
Yes, thank you for the question. We had some one-off items, and especially the steam turbine was such an item in the fourth quarter. With the higher inflation, that of course will continue, but we will not see the same amount of maintenance costs in normal quarters. The fourth quarter is the heavy one on our maintenance side due to how we schedule our maintenance stops.
Okay, thank you for that answer. Take the next one. How do you see the electricity crisis that we have in Sweden, both in short and long term?
If we look at the development of electricity futures, we see that they have come down now for the coming years back to a more reasonable level, around EUR 50-60. We have actually also taken new futures there. Given all of that, I would hopefully believe that we've seen the worst. Of course, we will continue to see volatile electricity markets as the emergence of sustainable energy continues. There's more wind power, there's more solar power. We are more and more connected with the continent. Yes, the inflation on energy prices is dampening. There has been a transition from Russian oil and gas in the European energy mix, but we see that the storages are full as well.
I'm carefully optimistic, but I believe that there will be a continued, volatile electricity market.
Are you seeing an increase or decrease in demand going into Q1?
I believe you mean the demand for pulp, and I think that what we've seen so far is that our European customers have seen a decrease in demand. Their orders books have shrinked in certain areas, but we also see that our special niches as filter electrotechnical applications as well as board maintain a stable position. At the same time, demand from China is increasing, so we will see geographical shift. We will see some de-stocking with our customers. Overall, we believe that the quarter one should be more or less in line coming to volumes, excluding of course the volume for the groundwood line, which is not with us anymore.
Okay, thank you. Next question is about packaging. Can you talk about how the development of the packaging is going, and what the revenue was in 2022 for that?
At this point, we cannot disclose any financial figures, as it's part of the overall Rottneros reporting. The technological development has really made a quantum leap forward, and we know exactly what it is we are doing. We know what we want to purchase and source for the factory in Poland in order to scale up the production.
Okay, thank you. Is everything running as normal at Vallvik following the problems in Q4?
Yes, we are up and running at normal levels, since December. The problem with the steam turbine has been managed. We are online again.
What can investors expect of Rottneros in 2023?
We will continue our shareholder focus, focusing on creating shareholder return by focusing on the things that we can impact. That's our production levels. It's our fixed costs. It's the creation of new businesses going forward in order to make a continued impact on the market. We see ourselves as a innovative supplier of sustainable solutions, and that's at the core of the business which we want to develop going forward.
Okay. Thank you very much, Lennart and Monica, for presenting for us today and answering our questions. A big thanks to all of you who followed this presentation with Rottneros. I hope you have a great rest of the day. Thank you and, goodbye. See you next time.
Thank you.