Earnings Call: Q1 2020

Apr 24, 2020

Good morning. My name is Bjorn Linktelt, Vice President, Communications. Sincerely welcome to this press conference and the presentation of SCA's First Quarter. President, Ulf Larsson and CFO, Toby Lawton, will present the report, and then there will be the opportunity to ask questions. Ulf, the floor is yours. Thank you for that, Bjorn, and also from my side, a warm welcome to this presentation of SCA's performance in the Q1 2020. I'd like to start with this slide to summarize the Q1. And during this Q1, our business, of course, has been impacted by the coronavirus pandemic. Our main priority has been to secure the health and safety for our employees. And by doing so, we have, despite the circumstances, also succeeded in securing a stable production level in, I must say, a rather challenging environment. The effect related to the coronavirus on production, deliveries and demand for SCA's products has, in other words, so far been quite limited in the Q1. As a precautionary measure, we have worked to secure the long term financial health of the operations. We have had a firm focus on securing the current cash flow by avoiding unnecessary expenditures, stock managers and things like that. When it then comes to the demand, it has been affected differently within our product areas. We see, for instance, in increased demand for pulp, for tissue, hygiene products and also for specialty papers, while the demand for pulp for printing and writing paper has declined. In kraftliner, we see increased deliveries and declining stock levels due to an increased demand for packaging paper for e commerce and essential products and even electronics. On the negative side here, we have a decreased demand for industrial packaging in general, but packaging for spare parts is reasonably okay. During the latter part of the Q1, the demand has been negatively affected mainly for printing paper, but also for solid wood products, and there is, of course, uncertainties for these areas going forward. The sales level was well maintained during the Q1 2020 compared to the Q1 2019, owing to strong volume development mainly for pulp from our rebuilt pulp mill, but also for kraftliner. Prices within all product areas have, however, decreased substantially in the Q1 2020 compared to the Q1 2019. But here we should then bear in mind that the prices in principle peaked around the Q4 2018 and the Q1 2019. The sharp decline in prices has, of course, had negative impact on sales, but above all on EBITDA, which dropped 34% quarter on quarter. On the other hand, during the Q1, we've seen lower costs for raw materials such as wood, OCC and so on. Finally, I will also in this summary mention that we have based on the survey made out of our forest holdings during the summer 2019, verify that we can gradually increase the harvesting in our forest holdings from today's level of 4,350,000 cubic meter to 5,400,000 cubic meter. And this is really good news, and I will come back to this later. When we look at our financial key figures for the Q1 2020, we can note that we deliver SEK 1,030,000,000 on EBITDA level, and this is a reduction by 34 percent, as mentioned, compared to the top quarter Q1 in 2019, and that you can also see in the graph on the right hand side. Although we still have delivered an EBITDA margin of 21% and an industrial return on capital employed of 9% calculated over the last 12 months. Our leverage increased to 1.9%, as you can see, and that was mainly as an effect of the currently lower EBITDA level. Now I'd like to turn into each segment starting with the forest. And during the Q1, we had a stable supply of wood to our industries despite mild winter. And as you might know, SAA has a high degree of self sufficiency. We have a geographically dispersed forest holding, and this means typically that we are in good position when it comes to our fiber supply whatever weather conditions. So as I mentioned last time, we now have significantly lower pulpwood prices, both for the pulpwood that we import as well as for the wood we buy on stumpage. In addition, the price for Sologs is dropping, but much lower. And today, we have no impact on price or quality from spruce beetle damages in our region, which we are very happy for. As a result of higher demand from the pulp and kraftliner industry, sales increased by 11% quarter on quarter, although wood prices fell. As you can see here also that EBITDA increased by 37%, mainly due to the increase in net growth in the forest from 3000000 to 4000000 cubic meter per year and by now that we have in earnings from revaluation of biological assets. In wood, we have had a stable consumption during the Q1 2020, and the prices have been on a level due to oversupply in Continental Europe, but that is not the least because of the problems with the spruce beetle that we've talked about before. My estimation a quarter ago was that prices for solid wood products should decrease by around 2% from Q4 'nineteen to Q1 2020. And we now know that the actual outcome for us was more minus 2.7% for the Q1 in that comparison. Yes, now it's hard to foresee the market development for Q2. We had somewhat divided development on the market, and I will come back to that in a while. Sales NOA was down 14% and EBITDA 68% when comparing quarter on quarter, but you should bear in mind that the restructuring of SCA Wood France provided SEK 90,000,000 in the Q1 2019. Then we turn into pulp. And the demand for pulp is back on a good level. For instance, we see a strong increase in demand for pulp for tissue, hygiene products and specialty paper. As we indicated in the annual report, the price has started to increase and we note that the European MBSK pigs prices come from $8.20 up to $8.40 in March. SEA, Metze and other players have announced further price increases from $8.40 up to $8.80 to $8.90 per tonne. Stock levels for hardwood as well for softwood pulp are now on a normalized level and some capacity has also been closed down due to the coronavirus pandemic. Pulp sales increased by 5% in the Q1 2020 compared to Q1 2019 entirely due to significantly increased volumes. And as you can see from the graph below to the left, prices have fallen during the corresponding period, and this has resulted in EBITDA dropping 4% to 7%. If we then turn into containerboard, we have seen strongly increasing deliveries of kraftliner since last summer, as you can see in the graph in the upper left corner. And we had new statistics early this morning showing that deliveries in March 2020 was 8.5% higher than March 2019. And at the same time, we have noted lower production during Q1 2020 due to the Finnish strike and also because of the coronavirus. This has led to a continued decreasing inventory levels and the levels are now low. And again, according to the statistics that came this morning, we have a 30% lower stock level in March this year than we had 1 year ago. And we also continue to note a stable level in the demand for boxes. The price for test line has increased recently by €30 per ton due to strong demand and gradually increasing prices for OCC. Suppliers have announced another price increase of €30.50 per tonne for testliner, and we estimate that the price for kraftliner will follow an increase by €30 per ton as a first step. Overall sales went down 5% quarter on quarter for paper. As you can see from the graphs below to the left, prices have dropped, but the volumes for Kraft Diner has risen. EBITDA dropped 38% quarter on quarter due to lower prices, but that was mitigated by higher kraftliner volumes and also by lower raw material cost and a positive exchange rate effect. As I mentioned before, we made a new forest survey back in 2019, and this survey showed that the annual growth in S. A. Forests was 1,000,000 cubic meter higher per year than we measured earlier. We have now done some work and calculated a new harvesting plan based on this survey, and the survey shows that we can gradually increase the harvesting volume from today's 4,300,000 cubic meter per year up to 5,400,000 cubic meter per year 2025. And the ramp up is expected to be in year over 5 years. And after that, we will remain on the new level. In terms of cash flow, we estimate the positive impact will increase gradually to reach an annual effect of SEK 300,000,000 to SEK 350,000,000 per year in 2025, all other things being equal, of course. And the effect will come from both an increased cash flow from our from own forest holdings and an improved mix, actually relative higher volume from our own forest. And in terms of profit, the effect is estimated to SEK 150,000,000 to SEK 175,000,000 per year as an increased harvesting volume on non forest holdings will decrease the revaluation effect. And then my last slide before I hand over to Toby here. And in SCA, as I mentioned, we can only see a limited effect in Q1 due to the coronavirus pandemic, but we expect the continued uncertainty going forward here. But to summarize, in forests, we have had no effect whatsoever so far. In wood, we have seen only a limited effect in Q1, but we see, as I mentioned, a significant uncertainty going forward. As it is just now, we have stable volumes to Scandinavia and a well working market here. The demand in Asia is improving after a weak start of Q1. On the other hand, we can see that we have very low activity in Southern Europe, for example, Italy, France, Spain and so on and also in U. K. And we believe that we will probably need to reduce production in Q2 in order to meet the lower demand. And we will keep a thorough eye on the stock level and we will steer the production out of from that perspective. In pulp, we've seen an increased demand in Q1, as I mentioned, and especially for pulp to tissue and hygiene products. On the other hand, we see a low demand for pulp to printing and writing, but that is a minor part of our supply. So less impact from that part. In paper, we see a higher demand for kraftliner and significantly lower demand for publication paper. But if we start with kraftliner, an increased demand for e commerce and essential products, but lower for industrial packaging. In publication paper, we have seen a significant decline in demanding in demand, resulting in temporary production stops at ore tweaking going forward. Our main priority has been to secure the health and safety of our employees and also try to reduce the infection risk. And the procedures in place to minimize disruptions in production and distribution. We've also secured the wood the supply of critical raw materials. We are in this period helped by the fact that we have our own logistic company. And by that we have good access to distribution capacity, which is really important these days. We have had a firm focus on securing the current cash flow by avoiding unnecessary expenditures, stock management and so on. And finally, I also I would also like to underline that we have a strong liquidity situation supported by our own forest holding. So and by that, I hand over to you, Toby. Thank you, Ulf. And I will start here with the income statement. And here you can see again on the net sales, we had a decline of 6% in net sales versus the Q1 2019, where prices had major impact negatively, while volume, particularly pulp, but also now kraftliner has had a positive effect. Our EBITDA margin in the Q1 was 21.5%, which is down from the high point in Q1 2019, but still resilient EBITDA margin level. Financial items further down are more or less in line with last year, slightly lower. And the tax has an effective tax rate of 20%. So normal stable and effective tax rate and a tax charge of SEK 121,000,000 which gives us a net profit for the period of SEK483,000,000 and an earnings per share in the quarter of SEK0.69 per share. Flicking to the next slide with the contribution by segment and quarter, starting on the top left with the forest. You can see here we've had an increasing trend over a number of quarters, which is really driven by the higher volume and demand, particularly from Ostrand in the pulp sector. The higher volume used to supply Ostrand is mainly externally sourced. That doesn't impact our bottom line in the forest division, which is really driven by the harvesting of our own forest and the revaluation effect in our own forest. So when it comes to the bottom line, you can see we've had a higher EBITDA this quarter versus the quarter 1 last year and that effect is really due to the new revaluation, which is around $100,000,000 higher due to the new valuation method of our forest holdings. But we are down versus the Q4 when we had seasonally, we had some more harvesting of our own forest, but we also had some capital gains on some sales of forest land in the Q4. So that had an impact versus the Q4. When it comes to the Wood division, on net sales at the top, we had more deliveries this quarter versus quarter 4 last year. But we, on the other hand, have lower pricing. And on the bottom line, you can see also the effect of lower prices versus the Q4 and previous quarters last year, which is partly offset now by somewhat lower wood cost. On the pulp, at the top, you can see the effect of higher volumes versus quarter 4. We had a maintenance stop in quarter 4 as well, which suppressed volumes a little bit, but we have now lower prices versus quarter 4 and versus earlier quarters last year. So that has a negative impact on sales. When it comes to EBITDA, again, we had no maintenance stop this quarter. So that's why we come up versus the 4th quarter. We also have a positive impact from lower wood costs, but offset by negative impacts again from lower prices, even though as the price increase came through at the end of the quarter. On paper, we've had better kraftliner deliveries in quarter 1 versus quarter 4, but pricing is average pricing is lower. And when it comes to the bottom line, the result is similar where we have a negative effect from lower prices, but we are offset by some better kraftliner volumes. We had, again, no maintenance stops in paper either in the Q1, whereas we had some in the Q4. And we have some positive effects from wood costs and FX here as well. Looking at the bridge now of net sales versus the same quarter last year, quarter 1 last year, you can see we had $5,100,000,000 of net sales in the Q1 last year. We have a significant negative impact from price of 16%, which is across all segments. This is offset with an 11% positive effect from higher volumes, which is both from the higher pulp volumes from the expanded pulp mill, but we also had strong volumes this quarter in kraftliner. We have a positive impact upon currency of 2% and then we have a 3% impact from the deconsolidation of Wood France, which happened early last year. Then on the next slide on the bridge for EBITDA, you can see here we had EBITDA of SEK1.56 billion in the Q1 last year and we have a significant impact of price on EBITDA of SEK9 12,000,000 and this is remembering again that the Q1 last year was more or less the high point price wise across most segments. This is offset then by volume, which is again pulp and kraftliner of $167,000,000 We have a positive effect on lower costs for raw material, both wood raw material and some other raw material, recycled fiber is another raw material of $174,000,000 We have a positive currency effect of $140,000,000 And then we have the effect in other, which is mainly the effect that we had a one off item in Q1 last year from the divestment of Wood France, which was $90,000,000 So that's the bridge and we land on an EBITDA level Q1 2020 of just over €1,000,000,000 and an EBITDA margin fairly resilient level at 21.5%. When it comes to cash flow, you can see we start with the EBITDA and then we take away the effect of the revaluation of biological assets. So and then we have our operating cash surplus. We have a change in working capital this quarter of minus $146,000,000 The Q1 is always seasonally has an expansion of working capital, but we're better than last year and tight this year, partly due to the fact that we have a very close control, as Ulf mentioned, on cash flow during the Q1. We have current capital expenditures in the quarter of $175,000,000 and then operating cash flow of $341,000,000 And then we have strategic capital expenditures of $189,000,000 So we are still funding our strategic expansion well within operating cash flow and generating a reasonable operating cash flow. And then looking at the net debt bridge, you can see at the end of last year, we had a net debt of 8.6 €1,000,000,000 We have the effect of the operating cash flow, which reduces net debt by €341,000,000 We have the strategic CapEx on the other hand of €189,000,000 And then I want lastly to highlight on the right hand side on other, we have an effect this quarter from the net pension liability, which mainly comes from the asset side, where we have an effect of €600,000,000 versus the Q4 last year. So net debt at the end of the Q1 is $9,100,000,000 And then just to give an overview now of our financing and liquidity situation, there's a lot of numbers on this slide, but if I just focus on the table on the top left, you can see the breakdown of our total debt of $9,000,000,000 there and the different sources of that total debt of $9,000,000,000 I won't go into the details, but at the bottom left, we described some of the actions we've taken since the end of the period. And particularly, we have a new loan from SEK, the Swedish Export Credit Agency, which we've used to reduce our exposure to commercial paper. And we've also taken an additional RCF on board of SEK1.6 billion. So with those 2, we've increased our liquidity reserve to SEK7.5 billion, which means we both have a strong liquidity and we have a large liquidity reserve. And then to just come to the next slide just to show the balance sheet. We have our forest assets, which are now valued just over SEK 70,000,000,000. And then we have a total capital employed, including all the other industrial assets of SEK 77,000,000,000. And our net debt is now SEK 9,100,000,000, which gives a net debt to EBITDA of 1.9 times, an increase versus the end of last year of SEK 1.6 million mainly driven by a lower rolling level of EBITDA. And then we have an equity of SEK 68,000,000,000 and a net debt to equity ratio then of 13%. And I'll hand back to Ulf. So thank you for that, Toby. Well, yes, to summarize, I mean, as I said, so far, we haven't been too impacted by the coronavirus pandemic, but of course, we have the portion of uncertainty going forward here now. Sales declined versus the Q1 2019 and also EBITDA, but then we should bear in mind that the first quarter 2019 and the Q4 2018 was more or less the peak. And the good news that the higher forest growth enables increased annual harvesting volume. We will gradually step by step increase from today's level up to 5 point 4,000,000 cubic meters 2025. With that, I think we open up for questions. Okay. We will now take our first question. And our first question comes from the line of Christian Cooper. Your line is now open. Just starting off with your visibility right now. I mean, you talk about the COVID pandemic and you haven't seen much of an impact so far. But what's your visibility, I mean, across the different segments in terms of order books and so on? Yes. I mean, as I said, we are in pulp and in kraftliner, we have really strong order books. And in publication paper, as I mentioned, I mean, we have had a decline in stock of orders. And also, as I said, we will keep an eye on the stock level. So when needed, we will take curtailments in publication paper. And finally then, solid wood products, it is a little bit more unsecured picture, I think, for solid wood products. But we have, as it is just now, rather strong stock of orders. At the same time, we know that I mean, the Mediterranean area is still more or less closed. U. K. Is also more or less closed. On the other hand, we have a strong market in Scandinavia. We have strong markets in China and Japan as it is just now. And we have to keep an eye on this. I mean, it's not we have to be flexible. And today as it is today, we plan for some curtailments in also in solid wood products. But as it is just now, we don't know how much and when really. Okay. And in terms of the graphic papers, what kind of magnitude of the demand declines are you seeing? Sorry, what kind of magnitude in terms of? Demand declines for graphic papers in Europe. Demand. Well, I mean, you know that structurally publication paper is a declining market. And I mean, just now it's really tough for this business. And as we see it just now, I mean, we have taken 1 week of prepayments. We are taking 1 week just now, and we are planning for, let's say, another 3 to 4 weeks to come. And they will be spread out during the Q2 and maybe in the Q3 if needed. So we have a short stock of orders in publication paper. That's the Okay. And then just a final question on the kraftliner side. What's the mix in terms of end use for your products? Yes. I mean, typically for containerboard, you have, let's say, 15 percent industrial, you have maybe 10%, 15% fresh food, you have 25% processed food, you have beverage is maybe 5%, 10%. Consumer products is maybe 10%, 15% and then you have other. And it's not so easy for us to know exactly the end use because we are not selling to end users, we are selling to converters. If we then look into kraftliner, then you have a bigger part, of course, for industrial applications. But industrial is also divided between new production and spare parts. And we feel a little bit stronger market for spare parts than for new production. And I think that we are I mean, the logic for us is more to industrial and fresh food and so on. But on the other hand, we have a big portion of Eurocraft from Obbola and that is maybe more related to general the general market for containerboard also including testliner. Okay. Our next question comes from the line of Christian Tuphier. Your line is now open. Okay. Thanks, operator. I'll try again here. Yes. So I missed your comments also from the EBIT effects on the Forrester side because of the higher harvesting. It's about SEK170,000,000 higher or can you just go through that quickly again, thanks? Yes. I mean, we will in terms of cash flow, we estimate that the impact will increase gradually to reach an annual effect of SEK 300,000,000 to SEK 350,000,000 per year in 2025, all other things being equal, of course. And the effect will come from both an increased cash flow from own forest holdings and an improved mix, actually relative high volume from our own forest. In terms of profit, the effect is estimated to SEK 150,000,000 to SEK 175,000,000 as an increased harvesting volume on our own forest will decrease the revaluation effect. So that's the thinking here. Thanks. Thanks for that. And on the pulp side, I was a little bit surprised on the costs here. If I deduct the maintenance stop effect that you had in the Q4 of 2019, then it seems like costs have gone up per tonne in the Q1. Is that something you can comment on? Yes. We don't give a running commentary on cost per tonne. Of course, in the Q4, we had the maintenance stop. And in the Q1, we don't have the stop. As we said, we see some improvement in wood cost going forward, but it's limited so far. But we do see some benefit in Woodcock's going forward. But we don't yes. Okay, Tobey. Yes. But was it something special that drove higher costs in Q1 if you adjust for the maintenance stop in Q4? No, no. We had a relatively stable Q1. Of course, in Q4, we had the maintenance stop and we also had some effects from the wood chip conveyor belt, which you can see. It's probably hard to split those out completely from the Q4 picture, but that's we didn't have those effects in Q1. So we didn't have a maintenance stop in Q1. Otherwise, relatively stable in terms of main cost items. As I said, slightly lower wood cost. You have an effect from you do have an effect from electricity prices, somewhat that we're a net seller of electricity in Ostrand and electricity prices lower in Q1. So that's on the other side. Right. And on electricity for the group, are you hedging that anything for 2020? Or how does the lower electricity price run through for you for the group? Yes. We have we basically hedge our net exposure. We are a net bioelectricity for the group. So overall, we have a portion of that hedged and we reduced that over time. So we have maybe for the next quarter, we have up to around 75% of the electricity cost hedged and then it ramps down over a period of a bit more than a year. Okay. And finally for me then on the Wood division, I don't know if I missed it, but if you typically talk about what you see in terms of pricing in the next quarter. Did you say something on that? Thanks. I didn't because this is it is I mean, we have a lot of uncertainties just now. And as I said, it's also a very scattered market. We are today, it is more or less strong in Scandinavia and in Asia, as other parts of the market is more or less totally closed in the Mediterranean area and North Africa, Morocco, Algeria, while Egypt is open and rather good market. So I mean it is very as you can understand, it's not easy to forecast today. Yes. Okay. I understand. Thank you very much. Thank you very much. Okay. Our next question comes from the line of Oscar Lindstrom. Your line is now open. Yes. So two questions from my side. The first one here is, I mean, you seem quite certain about increasing prices for Kraftliner. So far, as far as I can see, prices in Europe have increased about €10, €15 per ton out of the total €50 that you announced. I mean, what gives you the certainty about the further €30 being achieved? And when do you think that we should expect to see this? And also on Kraftliner, do you believe that the difficulties in recovered paper sourcing are having an impact on demand for kraftliner? Yes. Yes. I mean, first, I think we have seen that testliner prices went up by €30 per ton. And then we have also seen further announcements from some players now of another €50 per ton. And typically in this market, I would say that kraftliner will follow testliner. So I think we will reach, as I said, €30 per ton as a first step. And of course, increasing OCC prices will have an impact on the pricing for testliner, and that is also mainly maybe one of the drivers for the price announcements that we have now seen in testliner, and that will indirect have an impact also on kraftliner. But the market is strong. And as I said, we had new statistics this morning. And I mean, we have strong shipments. If we compare this March with March 2019, it's up 8.5%. If we look into the stock level, it's 30% lower today than it was 1 year ago. And of course, all these things together will have an impact. And are you seeing Oscar, just I can just quickly add that, but if you you mentioned the PPI price, but the PPI price for kraftliner is one many follow. And that went up EUR30 per ton, I think, around a week ago. So it's already in the market statistics that are coming, yes. All right. For Kraftwerk. Yes, super. A second question here is, I mean, you're now taking some actions to reduce production of publication paper at Orkluike. And then I mean, assuming the decline in demand that we're seeing now is not going to bounce back in a major way. And does this whole sort of corona situation and impact on publication paper speed up or trigger any thoughts about restructuring Utrechtgen, maybe sort of moving some pulp capacity from Orestan to Utrechtgen, etcetera? Your thoughts about that? I mean, no. I mean, yes, now we are focused on operational things. I mean, we have to keep an eye on cash flow, the financing, I mean, to keep people staying safe and also, as Toby mentioned, to keep an eye on the cash flow. I mean, we don't do smaller projects that we can now move. We do that and we try to reduce the stock level and whatever, stay close to our customers and all that kind of things that you had to do just now. So we are very, very operational focused just now. All right. Thank you. But it doesn't speed up any sort of plans around this after the current sort of crisis situation? I mean, I think I don't think this is the time for strategic plans. You have to do them when you are in I mean, when it's common easy and you can think more clear and long term. So I mean, now we have to react and handle on this short term situation. So I mean, you know the tech that we have showed you for development projects. And I mean, they are there, and we have done a sort of work around them. And then it's always a question about timing. But just now, we are 100% focused on operational things. Super. Thank you. Okay. Our next question I'd like to follow-up on the forest side and the harvesting plans that you present. First, what will this lead to in terms of self sufficiency in, say, 20 25 for the group in terms of wood self sufficiency, of course? And also, you said what the implications are estimated to be in terms of P and L and cash flow. But just for clarification's sake, what you're talking about now is reflected in your current valuation, right? Yes. If we start with self sufficiency, I mean, today, we harvest 4,350,000 cubic meters per year on annual base, and now we will lift 25% in a 5 years' time. And then again, it depends, of course, on what kind of industrial capacity we have at that time. I should know, but I mean the total consumption today is maybe between 11 12,000,000. 12,000,000 meters. So I mean, if we remain on that level, then you can calculate yourself. Self sufficiency also we include the wood chips from our own sawmill. So you can say when today we were around 45% self sufficient. Then if you add on 1,000,000 cubic meters of harvesting and then we would presumably get wood chips back for another proportion of that. So we would get well over 50% based on today's industrial volume used. Everything equal, yes. Yes. I'm sorry, the other one, Dinos. Yes. No, no. I appreciate. So that's very helpful. You gave the your estimates on P and L and cash flow impacts from the increased harvesting. But just for clarification sake, in terms of your value on the balance sheet? Are there any implications apart from what you have already presented? I think firstly, it's a preliminary calculation so far. So it's not confirmed, but it's preliminary and it will only be included in the books fully once it's been confirmed. So but we as you know, we value our forest asset at market prices. So the total value of the forest asset depends on the volume, the standing volume. So that is really unchanged in our balance sheet by this. What might have some impact is then the proportion of biological assets versus land value and that we'd have to come back on. But the total value in the balance sheet would again, it's based on market value, so it's not impacted by this. Great. That's very helpful. And then also, I guess, related to forestry, what's the current price trend in your area of operation? This is a little bit as I said, I mean, when it comes to pulpwood, we have seen decreasing prices for imported wood. Also when we buy wood on stumpage, we see that prices coming down. The efficient price lists that you have in this region, they have been rather flat from in the northern parts. When you look at the prices for sawlogs, I would say that they are slightly down, but not too much. But again, as I said, we are not impacted by acidity cells now by the spruce beetle disease, which we are happy for, of course. So I mean, it's rather stable situation here. You're not expecting a relief in the next 1 or 2 quarters in terms of your wood costs? We will not speculate in that. But I mean, as it is Yasnatik, we have come down quite a bit when it comes to the pulpwood prices. And as it is just now, I think we have high prices for solos in this region. And yes, but they are where they are. And I think as it is just now, they are there, and I would like to comment on what's going to happen. Sure. Great. Thanks very much. Thank you very much. Thank you. Okay. Our next question comes from the line of Cole Hathorn. Your line is now open. Good morning. Thanks for the question. Just following up on the pulp market. Can you just go back and confirm your end demand in pulp? Is it 65%, 70% to the tissue end markets? And have you got any color from your customers around effectively stocking up on that? How is the demand environment looking there? And then on Kraftliner, if you just dig a little bit more into the industrial end segments, how are you seeing customers managing their decline in demand for products and production stops that you've got in the industrial end market segments? Yes, I'll give it a try and Toby can maybe complement. I mean, starting with the pulp and I mean, for us, a little bit more than 70% of what we produce goes to, I mean, tissue and hygiene products, I would say. And then we have a rather big part that is going to our own publication paper mill, Otviken, close nearby. And as you know, the market for printing and writing is structurally a declining market. So we get less and less exposed to that kind of customers step by step here. And what was your second question in terms of pulp? Was that the story? I'm just wondering, have there been any changes in the orders from the tissue manufacturers on pulp? I mean, we have as I said, we have tremendous demand just now. We have more demand than we can deliver. So that is and from all regions really. So strong market in not only in the U. S, but also from the European market. So that is our view as it is just now. That might change, but just now it's super strong. Then I can give some flavor on the Kraftliner. You were mentioning the mix. I mean, Kraftliner is a mix between you have some fresh food and food sectors, which are growing strongly and consumer goods are going strongly. You also have home electronics is going is a sector, which is performing well at the moment. And then on the other hand, you have the industrial sector, which is obviously weaker. And so it's a split picture. And you could also add to that really that probably Scandinavia, we are a bit more overweight in Scandinavia, where the market is more healthy, and we also supply a large uses rather than industrial. So overall, we feel a strong demand in kraftliner and that's what's driving the market at the moment. And in the industry, we are also a little bit more focused on spare parts and things like that. And I think that is much stronger than new production. Thank you. That's very good color. Just one follow-up on Carfiner. Have you seen any benefit from the downtime, well production issues from IT and some of their mills not being able to export some volumes in the market? I mean, it's always a question about supply and amounts. So if production comes down a bit, then of course, you get a better balance. But just now you have lots of different components impacting the market. So it's really hard to predict what is what in this. But we have seen clearly, we have seen some production capacity being closed. We've seen some struggles with OCC supply. We have seen increasing prices for OCC. And on the other hand, we see, of course, that in some markets, the demand is coming down. And but in this balance, just now we feel that we have, as it is just now, strong momentum for Kraftliner. And as I said, we had the statistics now this morning and deliveries was substantially up and stock level is on a low level and it's 30% lower than it was last year. So I mean it is a stable situation for Kraftliner as well. Great. Thank you. Okay. Our next question comes from the line of Robin Santavirta. Your line is now open. Thank you very much. Three questions, please. First of all, what is your own availability of OCC at the moment? Secondly, you postponed or canceled the dividend now for the AGM in March. What is the reason for that looking at your liquidity, your debt level and the asset backing looks quite strong. So just sort of could you explain what is the reason for not paying out the dividend this spring? And then finally, could you share some light on the CapEx level for this year? What is the current plan? Thanks. So with the OCC supply, I mean, we are in a good position when it comes to the OCC supply. So we feel very secure in that part. When it comes to the dividend, I mean, as you say, we are a very stable company and we are well financed. We have the backing from the forest, But still, it is uncertain times. And we feel that it is better now to wait and see. We don't know what's going to happen with this coronavirus pandemic. And now we have all flexibility that one can wish. And that was the reason for not taking the decision in the AGM that we had in March. And CapEx, maybe, Tobik? Yes. I could say on CapEx, we previously guided SEK1.2 billion roughly for the current CapEx level, and I think we that guidance stands. So we have we got the same level. Then I think for strategic CapEx, which is primarily driven by the Obolav project, of course, which is continuing according to plan. But there, I think we've guided previously around $2,000,000,000 for the year, but we won't be at that level this year. We'll be a bit under that level, probably near $1,500,000,000 for the year. All right. Thanks. Okay. Our next question comes from the line of Marco Harfinen. Your line is now open. Yes. It's Marco from Handelsbanken. Maybe just continue on the CapEx. If the strategic CapEx comes down for this year, then do you sort of expect that to be spent next year? Yes. I think the whole project, I mean, the total cost of the whole project is the same and the project is on time. So there's no delay to the project. So some of that will be shifted to next year and the year after basically. Sure. And then perhaps further on the dividend, I suppose your policy is to stay stable and increasing dividend. How does that tie into your cash flow now? How do you look at that? Obviously, it remains, but I mean, conditions are a little bit different than normal. So I mean, we again, we have we took the decision not to pay out the dividends in March, but we also said that we have, as you can see, I mean, the underlying cash flow is stable. We have good stability when it comes to financing. We have the good backing from the forest holdings and so on. So I mean and all these things are good news, of course. But we live in uncertain times just now, and let us wait and see a couple of months and see the development. I mean, we don't know if we will have a second wave here of corona or and I mean, we don't know what's going to happen. And that was the reason why we took the decision not to pay off the dividends in March. And we will wait and see and evaluate development just now. Okay. Good. And on maintenance, is your schedule for this year unchanged? You mean the maintenance stops? This week actually in Obbola, which is unchanged. And then for the rest of the year also, we have remaining stops more in the autumn. So they're in the schedule as before. Okay. So no big change. Good. Then on Wood Products, you commented on demand, and you saw prices down, was it 2.7% in Q1? How do you see pricing developing going to Q2? I mean, as I said, that 2.7% was for us and Q1 compared with Q4 'nineteen. And just now it is tricky. I mean, if we just look at pricing, we are on a very low level. So I mean, in some markets, we have seen that prices come is coming up. But on the other hand, if you have restrictions when it comes to deliveries, that will have a negative impact. And again, Scandinavia, Asia, some other markets, good to rather strong demand just now. But on the other hand, you have some other markets that are totally closed in Mediterranean area, U. K. And so on. So I mean, we cannot really judge here. We have to wait and see a little bit and to again to we have to be flexible and we will adapt the production according to the stock level development. So I mean, we will not let our stock level increase. In that case, we will rather take curtailments. Okay. Thank you very much. Okay. Our next question comes from the line of Johannes Grunselius. Your line is now open. Yes. Hi, everyone. It's Johannes. So most of my questions have been answered, but perhaps I just have a little bit of a follow-up on the Forrester side and the new harvesting plan. I mean, do you see any big implications here for the Forrester uptake for this year and next year, if you can sort of help me with what your forecast in terms of forest outlook. I would take that, please. We've said that we believe in a linear increase from today's level up to 2025. So I mean, it will give approximately 200,000 cubic meter per year. Okay. Yes, got you. And then just a bit of a follow-up also on the wood product side. You already gave us a lot of color. But how should one use the mix in Q2, Q3 and so forth? I mean, I can imagine that the do it yourself market is extremely strong here when it comes to good products locally. But on the other hand, we have a weak other sort of markets when it comes to more high value. So on goods, could you help me talking a little bit I mean, I wish I could help you, but I can't really because it is so different between different markets. As I said, I mean, Scandinavia, the BM or DIY market is rather strong. So I think when people are home now and if they are okay, then they start to build things at home, and that is good for the consumption, of course. If you are in France and U. K, yes, in U. K, also against VM sector, we have felt also some signs of improvements now, but on the other hand, in France, it's quite dull. And I mean, it's just now you have to be flexible again. You have to know your market, and you have to move volumes from one market to the other and maybe from one segment to the other in order to make it possible to continue to produce. If you do that in a clever way, then you can run the production in a decent way. But again, too many things that we don't know about the future as now. So it's just better to I mean, wait and see, follow the market and try to be as flexible as possible. Just a follow-up also on pulp prices. I have a feeling that you had a little bit of discounts when it comes to Q1 deliveries. Am I right that those discounts will vanish here in Q2? In other words, that your realized price will be slightly higher Q2 versus Q1 on pulp? Yes. I mean, you know the structure in this business. So when we entered into 2020, you had somewhat increased discounts. So the first step from $820,000,000 to $840,000,000 was I mean, the effect was more or less 0 if you compare year on year. So what comes after $8.40,000,000 that will give us a net contribution. But the discounts, they are typically negotiated 1 year at a time. So I mean they are done now for 2020. Okay, understood. Okay, thank you very much. Okay, sir. There are no further questions at this time. Please continue. Okay, then. Thanks for the interest you have taken in our report. We look forward to hearing from you again in the 21st July when we present our report for the Q2 this year. Let's hope that things by then are a bit more normal and foreseeable. Thank you, Henry, and have a good spring.