Hello, and welcome to today's webcast presentation with Rottneros. With us presenting today, we have the CEO, Lennart Eberleh, and CFO, Monica Pasanen, who'll be presenting the Q1 report for 2026 and answer questions during the Q&A after the presentation. If you have any questions, please feel free to use the form located to the right, and we'll take that up after the presentation. Please go ahead with your presentation.
Thank you. Lennart Eberleh is my name. I'm CEO of Rottneros since mid-March, this is my first quarterly presentation for the company. I would like to start with presenting some highlights for the quarter. EBITDA minus SEK 36, this is in parity with Q1 2025. The results is affected by lower prices and weaker U.S. dollar. What is good now going in the quarter is that wood prices are coming down, that will have a positive effect on our operations. Of course, the environment we are living in today is filled with uncertainty, how that will have affected us here under the quarter, I think it's the same as everybody else. This is a challenge to understand where what is happening in the world.
To mitigate the situation we're in, we will continue to work on cost, we have been successful on fixed costs compared to previous years and have had a, let's say, a very strong fixed cost program in place. We continue to work on cost and efficiency. I'm gonna do a short recap of Rottneros. We are then driven by some trends. Here we have four major trends that affects our business. Electrification of society is really important. We have a strong position for these electrotechnical pulps. Sustainability as a general trend, going from plastic to paper, affects our business a lot. Here we need to serve this market with special pulp and packaging. E-commerce, of course, is a driver for consumption of fibers.
Tissue is a health trends, and personal hygiene is driving the consumption of pulp. If you then look into what end use areas we're active in, we have a strong foothold in electrotechnical papers. We have a strong foothold in filter and carton board. We also serve specialty paper producers, and also we are in tissue and printing and writing and some fibers in that. I want to point out here is that niches that we are trying to grow within is really important for our future for developing the business. You see on the percentages here that we are successful of improving the foothold in these segments. Just a short recap of where we're located.
We have the pulp mill in Vallvik, a pulp mill in Rottneros. We also have Rottneros Packaging in Sunne. We also have our fiber supply companies within Nykvist Skogs and Rottneros Baltics. Some comments on the markets. If you compare to going back a year comparing to comparable quarter, we can conclude that the markets are restrained. If you start to look on quarter on quarter, then we would like to say that the markets is moving sideways. We are then affected by exchange rates. Prices in SEK is affected by a weaker U.S. dollar. The global markets of stocks levels of NBSK is 44 days, and I think it's been around this level now for some time.
In this price charting here, you see that we in SEK then on, if you're positive, you see a little bit dip upwards here in the last points. Also the CTMP price have kind of even out here on a level that, yeah, hopefully is the bottom. Next slide. If you then look on Rottneros' main markets in Europe and see how the consumption of how different segments that we deliver into have developed, then you can see that compared to 2025 to 2026, there has been, it is not a very positive situation. We kind of back 2.2% on the different grades.
If you look on these others on the very right, where we try to be active in our niche approach, there we have seen a more stability than other grades. If you then look on from a regional perspective, the demand compared to 2025 has decreased by 2.6%. If you look on from a regional perspective, then Europe has the main impact on this decrease. If you look on North America, it's around zero. In China and Latin America, you have some growth. When you look on this picture, then you have to keep in mind that the Chinese share of the pulp market is approximately 40%. What's happening in China is affecting the market a lot.
I leave the word over to Monica, and she will talk about the financials.
Yes. Thank you, Lennart. As mentioned, we see some lower costs, but the currency has affected us when we compare to the first quarter of 2025. This is the waterfall and where the differences come from. We are going from minus SEK 27 to minus SEK 36. The biggest negative impact is from price and currency, where currency is a big part of the minus SEK 51. In the quarter, we started off by having a tough production due to the cold winter weather, and we did lose production tons. Total for the group, we are 5% below in volume versus a year ago, and this impacts us negatively.
On the positive side, we have the variable costs. It is the wood cost that has really decreased, starting from mid 2025. We saw some improvements in our results from these decreasing costs already last year. This quarter, we see that it starts making a big difference. A year ago, we initiated a bigger program to reduce our fixed cost. We saw that this program was finalized during end of last year. Now we can see that we are SEK 26 million better in fixed cost than a year ago. In others, we did have a positive effect in the first quarter of 2025 when we sold emission rights of SEK 10 million, which we didn't do this year. We didn't sell any emission rights.
If we exclude those, we are on a very similar level. All in all, we ended up with -36 for the first quarter in EBITDA. On this picture, we want just to highlight the importance of the cost of wood. This is our total cost structure in the first quarter and the cost of wood amounts to 44% of our cost base. It's imperative that we keep seeing lower wood costs for our business. Taking a look at the balance sheet, starting off by the loan agreement, as we mentioned for the year-end report, we didn't fulfill all the covenants at the end of December, mainly related to profitability targets.
We've had very good discussions with our lenders during the first quarter, and in March, we could enter into an amended loan agreement with the bank. It runs until April 2027, next year. The new amended agreement has new profitability targets, and it also means that we have access to SEK 75 million in our revolving credit facility. We are really keeping our eyes on working capital. We did that already in December, but when we in last quarter decreased by more than SEK 200 million our working capital. When we compare quarter-on-quarter or Q1 2025 to Q1 2026, we have SEK 280 million lower working capital, and we continue having that focus. We also focus on our investments.
During the quarter, we invested SEK 7 million, which is a very low number. In 2025, we invested SEK 37 million in the quarter and SEK 166 million for the full year. This year, we expect the investments to remain at approximately SEK 60 million, so very low compared to previous years. We also continue to have measures to improve efficiencies, cost efficiency, and other measures in our operations. With that, I hand back to Lennart to summarize.
Yeah. To summarize this, the markets are moving sideways. Wood prices are coming down. As you saw in previous slides, this will have impact on our cost structure. Also, we are living in this year of political uncertainty, and we need to be ready to handle that if some strange things occurs. So far so good. We will also continue to work on operational efficiency and cost in all aspects. Thank you. I leave over to the moderator.
Thank you very much, Lennart Eberleh and Monica, for that presentation. We'll start with the Q&A here. How much bigger will the impact from lower wood prices be in Q2 compared to this Q1 quarter?
We are a bit careful with giving forecasts, we see that the prices have continued down, we will continue to see improvements. We don't want to give exact numbers. We can also see that for our Vallvik Mill, we have good availability of wood, and we also get a positive impact from the Storm Johannes that was in December, that means that there's additional wood available in that area.
Thank you for that answer. How did the weaker U.S. dollar against the SEK affect the Rottneros sales prices and margins during the quarter?
If we look at the U.S. dollar, it was 10.7 as an average for the first quarter in 2025, and 9.1 in the first quarter this year, this has a big effect. If you see our annual report, we say that 50 öre to the U.S. dollar will affect our profitability with SEK 68 million on an annual basis. You understand that this difference going down or with a weaker U.S. dollar had a big impact now in our first quarter. And in the minus SEK 51 that I showed earlier, a big part was currency. We have seen that the currency is improved.
We are more on an average of 9.2, 9.3, and that is, of course, improving the situation.
What were the main reasons behind the decrease in EBITDA compared with the first quarter of 2025?
The main impacts came from currency market prices, but also production. We had a very good production year last year and Vallvik Mill made a new production record, and it started already in the first quarter with good production. This year, as those of you who are in Sweden, realize, we had a very cold winter in January, February, which did affect us negatively with several smaller problems in Vallvik Mill, where we lost tonnage, and that also impacts our profitability.
Thank you for that answer. How is Rottneros adapting its production levels to the current weak market, the conditions for the CTMP?
Yes. The strategy for CTMP is that we are very diligent on what orders we are taking in and to secure margins. We also are exposed to a very volatile electricity market, so strict rules for how the mill is run according to electricity price is applied. Those two measures are the key measures to handle the situation. We also are very diligent on what kind of orders we accept.
Thank you for that answer. I believe you already touched upon this. Maybe you can add some more color. What impact did the colder winter weather have on the production at Vallvik mill?
I do not.
It was before you started, maybe, even then.
Yeah. It's gonna be like 2,000-3,000 tons of pulp that was not produced during this time.
A bit more even.
Maybe even a bit more, yeah. The issue is, when it's cold, it's more difficult to run these pulp mills. Do you have the correct figure for that?
it depends on what you compare to, but it's approximately 5,000 tons that was lost in Vallvik compared to budget or previous year. It's several smaller things and But when it's cold and icy, you don't get the same efficiencies in the operations.
Thank you for that. We'll take 1 final question here. What measures is management taking to improve cash flow, production availability, and overall operational efficiency?
We are in a process now to identify items that will be that affects these different line items in the P&L. This can be of a say, very different kind of things. The key thing here is to identify these things, evaluate them, and see what kind of impact this will give on the P&L, and take the We can line up very many different things, but focus on the ones that they gives the biggest impact for, with the least resource. This can be different things. It can be how you run the pulp mill. It can be cost things you can look into. Are we organized in the right way?
We will run a structured, say, program approach to deal with this, and hopefully this will give effect in the P&L going forward. Difficult to give any amount, so to say, but it will improve the company.
Okay. Thank you very much, Per and Monica, for that. That concludes this Q&A. I'll hand over the word back to you for some concluding remarks.
Yes. Thank you for listening in here. This was my first quarterly report, and, hopefully it will go better the next time. Thank you.