Sincerely welcome to SCA and to this press conference, where our President and CEO, Ulf Larsson, and our CFO, Toby Lawton, will present the year-end report and take questions after the presentation. Ulf Larsson, would you please take the stage?
Thank you, Björn. Good morning, everyone. I'd like to start by summarizing 2019. 2019, in fact, is the best year ever we have done in SCA, SEK 5.3 billion on EBITDA level. Sales was up 4%, that is mainly related to our ramp-up of Östrand. The EBITDA, already mentioned, up 1% versus 2018. We also had a very strong operating cash flow during the year. If one should mention some highlights for 2019, first and foremost, maybe the ramp-up of Östrand. We are more or less now on full capacity, which we are very happy for. We have also acquired 30,000 hectares of forest land in the Baltics. We have earlier announced that we should, in five years' time, reach around 100,000 hectares. We've done 30% of that.
We also just recently took the decision to invest SEK 7.5 billion in a new kraftliner machine in Obbola. That one will be the biggest in the world by far, producing 725,000 tonnes annually. The result of that was that we have 11 million cubic meter more than we earlier thought standing volume. That is also one of the bases for the revaluation of our forest asset. The new valuation is SEK 70 billion, which is a little bit more than we expected in the fourth quarter. We had a range of SEK 63 billion-SEK 67 billion. It's also important to underline that all these figures are excluding effects from the changed accounting method for valuation of our forest assets. Some KPIs for 2019, as mentioned, SEK 5.3 billion on EBITDA level.
That gave us a healthy EBITDA margin of 27%. Our industrial return on capital employed came down to 12%, mainly, of course, due to weaker market, also due to the fact that we now include the total Östrand investment in the balance sheet. We had a stable leverage of 1.6x, even if we now have started to pay on the Obbola investment. The proposed dividend is SEK 2 per share, which is 14% increase in comparison with last year. That give us a payout ratio of about 50%. If we say some words about Q4 2019, one can see that we have had decreasing sales of 12%. Volume is positive, that is, as mentioned, related to Östrand. On the other hand, we have had a stepwise weaker market during 2019. Price and mix had a negative impact of 12%.
We now feel that the market is stabilizing. We feel an increase in demand. We also feel that inventory levels, not only in SCA, but more generally, has come down to a rather good level. EBITDA was down 29% versus Q4 2018. One reason for that is, of course, the market and lower prices. We also have had some big planned and also unplanned stops during the quarter. The cost for planned and unplanned stops during this period has been SEK 255 million. If we compare that with Q4 2018, in Q4 2018, we had SEK 97 million. That has had a substantial impact, of course, on the result. The performance for Q4 2019 is SEK 1,055,000,000 on EBITDA level. By that, an EBITDA margin of 24%.
If I then say some words about each segment, starting with the forest, we can just state that we have a very stable situation in the forest. Good supply, good availability of wood. We also seen, as we mentioned before, that prices now, new contracts are lower. As also mentioned before, we have a lag effect when it comes to pricing. That's also the reason maybe why the forest result is very good and sales was up 10% due to volumes, but also due to prices. EBITDA was up as much as 42% due to prices, but also higher earnings from revaluation of biological assets. That counts for SEK 60 million. We also had a capital gain from forest transactions, and that counts for about SEK 90 million.
If we turn over to wood, we've had, as you might know, an oversupply in continental Europe. That is mainly due to the spruce beetle disease, and that also gave us a little bit scattered picture of the market. We see that we have a pressure on low-quality white wood products due to the lots of damaged wood in these areas. On the other hand, we feel that we have a good demand in high-quality products from spruce and also from pine, of course. When we also look into the market in China, Japan, and also in North Africa, we have seen increasing prices for the first quarter. On the other hand, we have also set our six months contracts in Scandinavia with somewhat lower prices in the first part of 2020 in comparison with 2019.
I think that I said last quarter that prices in Q4 2019 should be 6% lower than Q3 2018, and the outcome was more like 4.5%, something like that. I think that we will see the remaining 1.5% now in the first quarter before prices will start to pick up in the second quarter. Nevertheless, sales down quarter-on-quarter 12% due to prices, and EBITDA down 45% due to prices and also higher cost for wood raw material. Pulp. As I mentioned, we had a rather big, long planned maintenance stop, and that went very well. We did replace the economizer. We did more than 2,000 activities during this planned stop. When we started up the mill, then we had some disturbances when it came to our conveyor belt for transporting the chips up to the pulper.
Not only once, but twice, and that costed us SEK 50 million during this quarter. You can also see on the production curve that we had a bad production in October and the beginning of November due to this breakdown, but now we are more or less on design capacity here. We said earlier that the ramp-up should take between 12 and 18 months. It's more like 18 months, but we're very happy with the achievement that we've done here, and we now feel that we are 100% focused on maximizing the availability of this mill. Pulp market development. We have now seen increased global pulp deliveries, as you can see to the upper left-hand side. We can also see that we have decreased softwood and hardwood inventories.
When it comes to hardwood, we are more like 48 days now in stock, which is more or less the average for this period. In softwood pulp, we are approximately on 34 days, which is also almost on average level. That is good. In a way, price is lagging behind. We have seen that Chinese prices have started to pick up. Today we have more or less the same price level in China and in Europe. We've also seen quite many announcements now recently for price increases from 1st of February. In Europe, SCA, Metsä, Södra. In North America, we've seen that Domtar, Canfor, West Fraser, and so on all have announced price increases from 1st of February. Quarter-on-quarter, sales was down 14%, increased volumes, but lower prices, and EBITDA was down as much as 95%.
Prices, of course, high cost for wood raw material, but not the least, these planned and unplanned stops. We walk over to paper, starting with containerboard and also a slide about the market. We can also, here on the left-hand side, see that we have had a pickup in European prices, and in European deliveries, sorry for that. We also see that we have had a decreasing inventory level. Every December, we have a peak, both in 2017, 2018, and 2019, but that is a seasonal effect. Otherwise, we have had a very stable inventory level just now. We've also seen a stable increase when it comes to books demand and a good order inflow.
Here we know that producers of test liners, they have started to announce price increases between EUR 40 and EUR 60 per ton from 1st of February, and that is the situation just now here. When it comes to publication paper, we have seen increasing prices since Q4 last year or 2018. Just now, we feel that prices will come down a little bit in the first quarter. We have a pressure here. Might be some effect from the Finnish strike, but that is the market as it is just now. Sales was down all in all for paper by 13% due to lower kraftliner prices and lower volumes, and EBITDA was down 29% due to kraftliner prices. Also, we had a fire in Ortviken during the fourth quarter that costed us around SEK 20 million for the quarter.
As mentioned, we have conducted a new forest survey during 2019. The outcome from that was that the standing volume is 11 million cubic meter more than we thought. In addition, we also have 3 million cubic meter in the Baltics. This 11 million cubic meter increase is related to a higher growth, of course, but also to some extent from a refined measurement method. Annual growth, as you can see on the right-hand side, is 1 million cubic meter more per year than we thought earlier. It's also fair to underline that we haven't done the harvesting plan. That one should be calculated now in the coming months. As we can now see that the highest increase in growth is related to young stands, we don't know exactly what kind of impact this will have on our harvesting levels.
That has to be seen now during the coming months. With that, I hand over to Toby.
Thank you, Ulf. Good morning, everybody. I will start just with a few slides on the forest revaluation before coming to the result. Just a reminder here, I think you've seen this before, we have our forest mainly in the north of Sweden. We also now have some forest in the Baltic States, in especially Latvia and Estonia, which you can see. Our total forest is 2.6 million hectares. The total volume, as Ulf showed, is just over 250 million cubic meters. That's why we're Europe's largest private forest owner. When we look at the statistics, those market prices and market statistics have been around for quite some time for valuing forest land.
What we've seen during the last year, in particular, is that there has been larger transactions which have shown that those market statistics are also relevant for large pieces of forest land. That has really led to this change in approach that we are now using the market statistics to value our forest land also in our balance sheets. Here on the right-hand side, you can see some of the statistics in terms of SEK per cubic meter, which is the most relevant price benchmark to follow. You can see firstly on the left. Our old book value was around SEK 136 per cubic meter, using the previous accounting method, which was not based on market. You can see we buy and sell small pieces of land every year just to improve our area.
We tend to buy, in the last year, we bought closer to the coast. Closer to our industries, and sold pieces which are further inland. We've bought, you can see here, for SEK 334 and sold for SEK 264 in the last 12 months. The market statistics in our area, and also the value that we then apply to our book value is SEK 276 per cubic meter. That's a statistic that's weighted according to where we have our forest holding, and it's also an average over three years. That SEK 276 is the number then we use to value the market value of our forest assets. If you look and you apply that SEK 276 per cubic meter with the 250 million cubic meters that Ulf presented before, then you come to the total valuation of our forest, which is now SEK 70 billion.
As Ulf said, this is a bit higher than we had guided a quarter ago. That's because of this extra volume that we have now seen from the new forest survey, which we didn't have when we presented last time. This increase in value, so it's a significant increase in the value of our forest from SEK 34 billion as it was previously up to SEK 70 billion. That SEK 70 billion is then split between the land value and the biological asset. Basically, the increase in value of the biological asset is something that goes through the income statement while the increase in value of the land does not. That goes through the other comprehensive income. You see different effects. Here, I think this is the only slide where I'll show the effect, including this big one-time effect.
Basically, if you look to the EBITDA line in particular on the quarter, you see that we have an EBITDA for the quarter of SEK 17 billion. Just next to that, we have the underlying EBITDA, excluding this revaluation effect, is just over SEK 1 billion, which Ulf also presented. The one-time effect of this change in valuation is SEK 16 billion on EBITDA, which is the effect on biological assets only, as I said. The only other line you can see here which is impacted is the tax line, where there's a one-time impact from deferred tax due to this change, which is SEK 3 billion. The tax line is also SEK 3 billion higher. You see exactly the same effect in the quarter as you see in the full-year numbers. One other thing to mention here is that this revaluation has no effect on cash flow.
Both the tax and the revaluation don't impact cash flow, of course. If I move on, then all the figures after here will be the underlying figures, excluding the revaluation as Ulf presented, which show the underlying performance in the quarter and the year. Here you see the income statement. For the full year, we had sales for 2019 of SEK 19.6 billion, an increase of 4% versus 2018. In the fourth quarter, we had sales of SEK 4.3 billion. Because the quarter four last year was basically the high point of last year and quarter four this year, the low point of this year, mainly due to the pricing. That's a decline of 12% versus Q4 2018. When you look at EBITDA margin, we had an EBITDA margin of 27% for last year on our SEK 5.3 billion EBITDA.
In the fourth quarter, we had an EBITDA of just over SEK 1 billion, still the margin was 24.5%. It held up reasonably, which is really a product of our integrated model, our integrated value chain. The margin held up relatively well even though it was a weaker quarter. When it comes to financial items for the year, we had SEK 126 million. SEK 25 million in the quarter. This is higher than last year, mainly because there's one effect from the increasing interest rate partly, but also we had a positive effect last year because we capitalized interest on the CapEx in Östrand before we started up the new mill. That had a positive effect last year. Tax line, we had tax for the full year of SEK 730 million.
Here also there was a positive effect last year from the change in Swedish tax rate, so that had a positive effect last year. We had a smaller positive effect this year because the tax rate changed again, but less. The main reason for the difference between the tax in the two years is these effects of changes to the tax rate, which again is a non-cash item. It affects deferred tax, but the main effect is not cash related. That then results in an earnings per share of SEK 4 per share, just over SEK 4 per share for 2019. When it comes to the proposed dividend, the Board has proposed a dividend of SEK 2 per share for 2019, an increase of SEK 0.25 versus last year. This results in a payout ratio of some 52%. 52% is adjusting for these two special tax effects.
Even if you don't adjust for that, it's 49%. It's around the 50% mark in terms of payout ratio. I just come into the results per segment, I'll show here the long perspective over some six years. You can see, starting on the left, you can see the forest business. Here on the top left, the increase in sales in the forest business is primarily the growth in volume supplied to the new Östrand mill. That really increases the volume of wood that we're sourcing through the forest business. The bottom line is really driven by how much we harvest from our own forest, which is stable. The bottom line is not volume driven. The bottom line is really increasing due to the increasing average wood price during 2019 versus previous years.
Of course, that wood price is something that's passed on to the industry, so industry is having to bear that as a higher cost, of course. When it comes to the wood segment, the sales have increased a number of years with growth in that segment. In 2019, it's come down a bit, partly due to the average price being a bit lower. We've deconsolidated our business in France, where we no longer own the majority of the French business, so that has had some effect as well. The bottom line has also come down a little bit in EBITDA margin due to the average price being lower in 2019 versus 2018. It was really at its highest at the peak in basically Q3, Q4 2018. In the Pulp, you can see the growth in top line, obviously from the expansion in Östrand.
We're not fully ramped up on a full year basis in 2019, but we are at the end of the year as of presented. The bottom line, you can see the overall value has increased. The margin is a bit lower. Here, it's really the lower prices we have right now versus which are compensated by the higher volume coming through the mill. Those two effects counteract each other to some extent. On paper, we have the top line. It's really driven mainly by kraftliner and kraftliner pricing, where again, the average price this year is lower than the average price was last year. Again, it peaked Q3, Q4 last year. That's really the effect you see also on the bottom line, where the margin has come down a bit versus last year at 22%.
Here the bridge is just to show the bridges net sales. Firstly, we had an overall increase in net sales for the year of 4%. Pricing has a negative impact of some 8%, so quite significant difference in average price across our segments, compensated by the growth in Östrand primarily, which is the 11% volume growth. We have a positive currency effect and then a negative effect from this deconsolidation, which I mentioned in wood. The same bridge on the EBITDA for the full year. Here you can see the effect of the price, the SEK 1.5 billion effect on the left-hand side, compensated partly by volume with plus SEK 600 million, which is really due to the expansion in the pulp mill, as I said. We have a small effect from higher raw material costs from the raw materials we source from third parties.
A better energy mix, particularly in the pulp mill. Positive currency again. We have some lower costs for maintenance stops this year. We had a big maintenance stop to start up the pulp mill last year. We also have a positive effect from the change in accounting for leases. We sold our Rotterdam terminal in Q3, which had a positive impact during the year. Just to come on to more or less the same picture. But per quarter, so more short term. Here in forest, you can see the top line a little bit lower in the fourth quarter versus the third quarter. Our delivery volumes were lower, partly due to these maintenance stops in the fourth quarter. The bottom line for forest increased significantly in Q4. Here we had a one-time effect on the positive side from some of these forest transactions.
Versus quarter four last year, we had an extra SEK 90 million from forest transactions. We also had a higher revaluation versus the fourth quarter last year. Over the full year, it's some SEK 40 million, from these stops. We had the maintenance stop... With the p lanned maintenance stop cost us SEK 140 million in terms of stop cost. These problems with the conveyor belt, which I've mentioned, cost a further SEK 50 million. Those are the main reason for the EBITDA drop versus the third quarter. Prices were also a bit softer in the fourth quarter versus the third quarter. Deliveries were affected also by the lower production volume. In paper, it's really kraftliner again that impacts the result and the top line down a bit due to kraftliner and the bottom line also impacted.
We also had a maintenance stop in kraftliner in the fourth quarter, which had an impact of some SEK 50 million. The Ortviken fire I've mentioned, which had cost some SEK 20 million in the fourth quarter. We had some significant negative effects and positive effects from these one-off items. When it comes to a net sales bridge, we had a 12% drop in total net sales, and that's all driven by the price difference between the quarter four last year and the quarter four this year. I flick on for the same for EBITDA, and you can again see the price impact was some SEK 686 million in the fourth quarter. The volume raw material and energy effects were basically flat. We had a positive currency. We have a positive, basically net effect.
We have the positive from these forest transactions that I mentioned and the revaluation, but they are offset by these negative effects from the maintenance stops, both planned and unplanned. In terms of cash flow, on the right-hand side in the full year, you can see we had a cash flow for the year of SEK 2.9 billion , an increase versus last year. Again, we're more than financing the strategic capital expenditures from operating cash flow, more than double in 2019. In quarter four, on the bottom line on the left, you can see we had some strategic capital expenditures in quarter four. Here, they're mainly related to the first expenditure on the Obbola project, where we're making some of the down payments, particularly for some of the machinery. That was nearly SEK 900 million in the fourth quarter.
Looking at the net debt bridge from 2019 quarter three to quarter four, so just over the quarter. Here you can see the net debt has decreased due to operating cash flow. There are SEK 600 million operating cash flow. We have the SEK 900 million strategic CapEx, which increases net debt. We also acquired one of the acquisitions in the Baltics, which had an impact of some SEK 250 million . We paid some tax, nearly SEK 200 million. We had a positive impact due to the valuation on pensions of some SEK 300 million . Overall then, at the end of the quarter, we had a net debt of SEK 8.6 billion, which is a net debt to EBITDA then of 1.6x . Finally, to show the balance sheet in here, obviously, we have a big change versus the end of last year due to this forest valuation.
There you can see on the top line, at the end of last year, we had SEK 33 billion in forest valuation. Now, we have just under SEK 70 billion, and that has a big impact. Working capital, more or less on the same level. Deferred tax has gone up because related to the forest asset. That's really an accounting item. Then other capital employed has increased due to the Östrand project and now the start of the Obbola project. Overall, we have a net debt of SEK 8.6 billion and, as I said, a debt to EBITDA of 1.6 x. The equity you can see has increased nearly SEK 30 billion from SEK 39 billion at the end of last year to SEK 69 billion at the end of this year. That's really driven by this revaluation. Okay. With that, I'll leave it to Ulf to summarize.
If we then summarize 2019, again, it was a record year when it comes to profit. We can also clearly see the result from our profit growth strategy. By the Östrand project, we have lifted up our EBITDA baseline. With the Obbola project, we will strengthen that position further. Strong cash flow and the highlights from 2019 is, of course, the ramp-up of Östrand. We are very happy where we are just now, and we are looking forward to continue to fine-tune the production in Östrand in the coming years. We have started our program for acquisitions of forest land in the Baltics. We have done 30% out of 100,000 hectares in five years, and we are also happy with that. We took the decision to go for a big kraftliner paper machine in Obbola, and we are looking forward to the start-up in 2023.
Last but not least, we could now state that we had 11 million cubic more standing volume in our forests than we thought. By that, I think we open up for questions. If we don't have any questions from the audience, I think that we can ask the operator to open up the line.
Thank you. Ladies and gentlemen, we will now begin the question- and- answer session. As a reminder, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Please stand by while we compile the Q&A queue. It will only be a few moments. If you wish to cancel your request, please press the hash key. First question comes from the line of Linus Larsson. Please go ahead.
Yes. Thank you very much. Good morning to everyone. Maybe if I may start with the Pulp division and the Östrand ramp up. You say that you are pretty much running at full capacity. In the first quarter, should we expect volumes in the magnitude of 95% of 1 million? That would be close to 240,000 tonnes. Could you just spend a minute on what kind of volumes we should expect, please?
We don't really forecast the volume. 1 million is the figure that you mentioned. It also includes CTMP. We are now close to full capacity. We will now focus on, of course, availability in the mill. We will be rather close.
Okay. Sounds good. Maybe on the forest side, you had forest land sales supporting EBITDA by SEK 115 million in the fourth quarter. What should we expect in the quarters ahead? Do you expect anything to come in the first quarter, and what do you think about 2020 as a whole?
Basically, going forward, we don't expect impacts from forest land transactions, and that's as a result of the fact that we are now valuing our forest land at market value. When we do these transactions, there is no difference to market value. We've always had some small effect recent years from forest transactions, but that won't be the case with the new valuation of the forest land.
We are an active player in the market. We are in the Baltics, but also in the northern part of Sweden. For obvious reasons, we don't know where we have good opportunities to buy forest land. If we can buy forest land, and if we can move the land closer to the industry, we will take the opportunity to do that.
Great. If we look at 2020 on the operational side, excluding revaluations. I understand revaluations will look somewhat different in 2020 compared to 2019 after the write-up of the assets. If you look on the operational side of EBITDA, what potential change do you expect 2020 versus 2019, please?
Yeah. Obviously, the biggest impact is price. As you know, we don't give forecasts. The main impact on our bottom line is what you think is going to happen in terms of the pricing environment in 2020. That remains to be seen.
Okay.
Yeah.
What do you expect, broadly speaking?
Yeah. No, like I said, we don't give forecasts. Yeah.
I think, anyway, you saw some slides in Pulp, that we've seen a lot of price announcements now from the 1st of February. We have a rather good level when it comes to inventories. That is one picture. In solid wood products, we actually do some forecast. We know already now that we will have somewhat decreasing prices in the first quarter. After that, I feel that we have a good possibility for increase in prices in the second quarter. Already today, as I mentioned, in some grades and in some geographies, we have already started to increase prices in China, Japan, North Africa, better qualities of spruce, but also for many of the pine grades. In containerboard, we have also seen some price announcements now of increasing prices for testliner, and normally they follow each other.
That's the picture we have just now.
Sure. Maybe, I understood that. I was actually asking about the round wood prices, so the price for the forest division?
Okay. Prices in the market have started to come down, and from a rather high level. We don't really expect too much of price changes in the market for the moment being, because we have a good availability of logs just now. I think it will be rather stable now going forward. Depends a little bit if we have any additional effect from the spruce beetle disease in Central Europe also. As it is now, it's a rather balanced situation.
Great. You're obviously quite far up north, but have you had any weather-related with your wood supplies this winter? Do you see any clouds on that horizon?
Not in our area. The normal summer in the northern part of Sweden is rainy and cold. That is good from this perspective, because that will not be good for the spruce beetle. You never know. We have had some wood damaged in this very southern part of Sweden, about between 5 million cubic meters and 10 million cubic meters in the very southern part of Sweden. In our area, we haven't seen any really effect from the spruce beetle this year.
Great. Just one final question, please, on CapEx. What's your CapEx expectation for 2020, and how much of that would be relating to Obbola?
Yeah. I can say that on the current CapEx, our guidance of SEK 1.2 billion per year is the same. We expect that to be our run rate on current CapEx. With Obbola, we've had around just under SEK 900 million now in 2019. We expect around the same amount in the last year, if you like, 2023. Then, the remaining amount is split pretty evenly between the years in between.
Excellent.
If that helps. Yeah.
That helps. Thank you very much.
Yeah.
Excellent. Thank you very much.
Next question comes from the line of Oskar Lindström. Please go ahead.
Yes. Good morning. A couple of questions from my side. First off, just coming back to the kraftliner pricing environment. You mentioned the price increase announcements for testliner. You say that usually kraftliner follows this. Is there some reason or some factor in the kraftliner market, which means that you don't see that this is likely to go into kraftliner as well? Or what are you seeing?
Yeah. Not really. Just now, as you know, we have a big spread between testliner prices and kraftliner prices. That is one perspective. For us, we saw, not at least in the EUWID index. We relate 60% of the business, I would say, in kraftliner to the EUWID index. Prices came down in the end of Q4, in December, and that will have a negative impact also in the first quarter of 2020. That we cannot really avoid. Otherwise, when we look into the market, we see that inventory levels are very low. We have a really strong demand out there. We have seen price announcements for testliner and some announcements also in Latin America for kraftliner. That is the position just now.
You say inventory levels are low. Is this due to good demand for kraftliner as well?
We feel it's a good demand. As you saw on the slide, the box production is rather high just now. Inventory levels are on a decent level, and also the demand is really good out there.
All right. Another question is on pulp and the geographic mix. I'm guessing you didn't sell that much pulp to China in this quarter. What's the outlook for Q1 when you should have better volumes?
Yeah. I think we will have a normal mix for the first quarter. We have had some problems, as you saw in the production in the fourth quarter. By that, we are more or less out of inventory just now. We will be quite focused on Europe and U.S. for the first quarter.
Okay. Finally, on your summary slide here. You have a picture of a forest, but there is also some wind power mills in the picture. How is that build-out progressing?
It's progressing well. We have installed capacity now, 4 TWh at the end of 2019. Step by step up till 2022, we will go up for 8 TWh . It is progressing according to plan.
You're still doing this through joint ventures?
We don't invest ourselves as it is just now. No.
Okay. Very good. Thanks.
Thank you.
Thank you. Next question comes from the line of Markku Järvinen. Please go ahead.
Yes, good morning. Markku Järvinen from Handelsbanken here. I had a few more questions. If I could start with the fair valuation. First of all, what do you expect the fair valuation of the forest, sort of on an operational level look like for 2020?
Yeah. What I can answer is, I think you will see in the valuation of the forest one relatively easy-to-predict effect, which is from the net growth in the forest we have, where we have a net growth of around 4 million cubic meters per year. That effect is quite then easy to see. Then, you know the price per cubic meter, so you can see the effect. You have to remember, though, that the value is split between land and biological assets, around 70% of the value increase normally would go to biological assets and 30% to land. If you do the math, you'll probably come out at around SEK 800 million value increase from that effect. The effect that's a bit harder to predict is what happens in terms of the price per cubic meter or the market value of forest land.
I think the latest statistics, it seems relatively stable, probably a small upward trend, but relatively stable in our area. It remains to be seen what will happen during 2020, of course.
The value of the forest land based on transactions that you will value end of 2020 or every quarter, or how does that work?
No. The formal valuation is at the end of 2020. We have to basically include a quarterly effect based on where we think we're going to come out. We'll probably be a little bit cautious in the beginning, if we see where prices are heading, we can also adjust towards the end of the year. We won't know until the end of the year where the price picture for 2020 ends up, of course. We will adjust throughout the year as we see that develop.
Should we expect you to use this three-year market average as your primary?
Yes. Exactly. That's what we expect to use going forward. From next year, you would then expect the average to roll forward one year, but it's still a rolling average.
Okay. If it's SEK 276 for the last three years, could you just say what it was for 2019, 2018, and 2017, so we get a picture?
Well. Actually, I think probably the best thing is, if you look in note three, you've probably not got that far yet. If you look in note three in the report, we show the development of it over, I think it's five-year history. You can see that trend.
Very good.
Yeah.
Very good. Just on Pulp, you said that you don't really have any inventory now with the production issues that you had in Q4. Do you expect to build up some inventory during the year or during Q1, or will delivery follow production, is my question.
Yeah. It's too early to judge, really. If we have a strong market, I suppose we will follow the production, and-
We normally want to have one month of inventory of pulp.
... yeah.
We're there more or less today.
Okay. Good. Okay. Thank you.
Thank you. Next question comes from the line of Cole Hathorn. Please go ahead.
Good morning. I wonder if you'd just give a little bit more color on where you're seeing the uptick in demand in pulp. Are you seeing it in specific end markets, if you have that color? Just following up on kraftliner, I know you said that you're seeing good demand and inventory levels are lower. Can you frame that inventory levels versus history? Have you gone out or seen anyone else actually go out to the market with price increases in kraftliner yet?
If we start with pulp, we have seen some reports from 70% of the pulp that we produce in Östrand ends up in tissue. If you look at some of the companies that have come out now, they announce rather good demand. Th at will correlate immediately to the market for pulp. That we feel. You can also see that the inventories, they have started to come down, as I said, both for short fiber and long fiber. Now it's been, as said, also already a lot of announcements of price increases from 1st of February. That's the picture that we have just now. In kraftliner, we feel that we have a strong demand there. Good order inflow. Inventory levels are on a low level. As I said, we've seen a number of price announcements in testliner.
So far, I think the only announcement for kraftliner price increases is in Latin America.
Great. Thank you very much.
Thank you. Next question comes from the line of Martin Melbye. Please go ahead. Martin, your line's open.
Hi, can you hear me?
Yeah.
Yeah.
Good. Previously, you've given some comments about price changes for the next quarter by segment. You said now 1.5% down on sawmills. What would be the best guess on the containerboard and the paper and the pulp in Q1?
Normally we don't guess. We do it on solid wood products, and I gave you 1.5%, and that is due to the fact that we have already closed a lot of agreements now. As I said, in some markets and in some product segments, we've seen increasing prices. For six months contracts, we have already agreed on decreasing prices, not least in the Scandinavian markets. We pretty well know the outcome for the first quarter. We feel also that the second quarter will be, I think, rather strong, not least due to the Finnish strike. The inventories are starting to come down to a rather low level here.
In containerboard, I said that we do a lot of business related to the EUWID index. In December, we saw that EUWID came down quite a bit. That will have an impact also for our business in the first quarter. That we cannot avoid, really. Pulp, you can judge yourself. We have not leased ourselves. We have said that we will start to increase prices from 1st of February, about $40 per ton. On the other hand, you might see some increasing discounts for 2020 in comparison with 2019. That have a negative impact on the net mill price.
Okay. Last question. You say that your annual growth is now 1 million cubic meters higher than you thought earlier. What does that mean for the actual harvest levels for, say, 2020?
Yeah. As I said also, it's far too early to judge that because we don't know really where we have the growth. We know that we have a high standing volume, but now we go into details. My personal view is that we have the main part of this increase in growth in younger stands, and you cannot harvest in younger stands. Let us do the calculation and then come back on the final result there in maybe Q2, Q3.
All right. Thank you.
Yeah.
Thank you. Next question comes from the line of Mikael Doepel. Please go ahead.
Thank you. It is Mikael with UBS. Just one question left for me. On the graphic paper side, could you quantify a bit what magnitude of price declines you're seeing now in Europe in the newsprint and the magazine segment? Also, do you see any improvements in the trends in terms of the declines that we saw last year, which were quite heavy for the market as a whole? Any improvements or, let's call it the mean reversion, there to some sort of historical trend demand declines? Thanks.
If we start with the demand, I think structurally, we know that publication paper is a declining market. That's the reason also why we step by step tried to reduce the exposure to publication papers. We've had now a period of increasing prices for publication paper, but it's just a question of supply and demand. The reason for this is, of course, that some capacity has been closed down. What we see as now in the market for the first quarter is that prices will come down for both coated and uncoated grades. If we start with the coated grades, I think the situation is better than for uncoated grades. Again, we have a rather good demand for coated grades, but I believe the price decrease will be around EUR 20, EUR 25, EUR 20 maybe, per tonne.
For uncoated, maybe another EUR 10, so EUR 30 maybe, EUR 30 per tonne. The demand will continue to come down, that's for sure.
Got it. Thank you very much.
There are no more questions at this time. Please continue.
Yeah. [Perfect], I think we close the-
Yep.
... conference. Thank you.
Yeah, thank you.
That does conclude our conference for today. Thank you for participating. You may all disconnect.