Sincerely welcome to this press conference where we will present SCA's report for the third quarter. The report will be presented by CEO and President Ulf Larsson and CFO Toby Lawton. After the presentation, we will invite questions on the report. Well, Ulf, please.
Thank you for that, Bjorn. I'm happy to give you some reflections and figures for the third quarter 2019. I'm also happy to announce that we have a stable, solid, strong result for the third quarter, and still we have rather tough market conditions out there. We have, if you compare this quarter with last year same time, a sales growth of 5%, and that is mainly driven by the ramp-up of Östrand, of course. As I said, we have seen this quarter when we compare that with Q3 2018, weaker market in more or less all areas, maybe except from publication papers. EBITDA was down 12% versus '18. On the negative side, of course, our selling prices. On the positive side, volume, but also currency. Pulp volumes during this quarter was slightly higher than Q2.
We are limited by the economizer in the Östrand pulp mill, as we have announced earlier, but we have just performed our seven-day planned maintenance stop. This part is now replaced in Östrand, we are looking very much forward to November and December now to see what we can achieve with the new economizer here. Early this quarter, we also announced a new big paper machine in Obbola, as you might know, the machine that we already have there today is the biggest in Europe, this one will be the biggest in the world. We also think that we will have a game changer when it comes to quality. The new machine will be up and running in the first quarter 2023.
We have also, in conjunction with the valuation of the forest value, we have, together with external partners, looked into the total return from the forest. When we have done that, we can state that if we bought one hectare of forest land back in 1956, and we have reinvested the cash flow from the operations year by year, that would have given a total return from this piece of land of 10% now 2019. We will come back to the calculation here, but we are not surprised, but it's rather impressing, I would say. We have also made a study that will indicate the market value of our forest holdings to approximately SEK 63 billion-SEK 67 billion. The value that we have today, the book value, is SEK 34 billion. Here we have some KPIs for the third quarter.
To start with, we had a solid EBITDA level of SEK 1.36 billion, which is 2% better than Q2 2019. As said, 12% lower than the third quarter 2018. That gave us a solid EBITDA margin of 27% and a return on capital employed in the industrial part of SCA of 16%. We had also really strong cash flow during the fourth quarter, and by that, the leverage came down to 1.4. As you can see also on the right-hand slide, we are just now comparing with, maybe not all-time high, but yeah, all-time high when it comes to the EBITDA margin and a very solid result back in Q3 2018.
If we turn into each segment, starting with the forest part, we can see also on the graph to the left-hand side, down to left-hand side, that the prices have stabilized on a high level. As mentioned already in Q2, we have seen that import prices now is coming down SEK 150-SEK 200 per cubic meter. We have also started to reduce prices on new contracts. As you know, we have a lagging effect here of three to six months. We will see the effect out of this in the first and second quarter next year. You can also see that the net sales has increased, and that is, of course, related to the ramp-up of Östrand. By that also, sales was up 28%.
EBITDA was more or less on the same level. The reason for that is that the additional volume that we now take in is external wood, and the result is driven from the wood that we harvest on our own forest. That's the explanation here. Otherwise, good availability of wood in all assortments, I would say. We are also impacted, of course, by the spruce beetle disease that we now have in Central Europe. The figure that we have just now is that more than 100 million cubic meters are infected in Central Europe. Also that we have five million cubic meters in the southern part of Sweden.
We haven't seen anything in our region and in our forest, but of course, we feel the impact from the wood coming out on the market here. If we turn over to wood, I would say that we have a rather strong underlying consumption in wood as it is today. Again, this market is now impacted by good availability of sawlogs, and that is due to the spruce beetle disease. I think that I did a forecast that prices should go down 5% between Q2 to Q3, the outcome was more like 6%. I feel that we will have more or less the same movement in the fourth quarter. Prices will continue down, although the market is rather strong out there. Again, availability of logs is the explanation behind that.
Sales was down 10% quarter-on-quarter. One thing is, of course, lower prices. The other one is the consolidation in Wood France. That represents minus 6% of the sales for the quarter. Turning into pulp, again, as I said, we have been disturbed by the economizer. That one is now replaced after the seven days planned stop that we've had in the beginning of October. The production, anyhow, was 2% higher in Q3 in comparison with Q2. We also had a problem now in the start-up after this maintenance stop. A conveyor belt one kilometer long was destroyed. That added three and a half days in this stop. That will impact, of course, the fourth quarter. Otherwise, we have lower prices this quarter in comparison with Q3 2018.
You know that we had a peak price-wise in November 2018 of $1,230 per ton. Now we are down at $825. At the same time, we have seen the Chinese net prices is now up on close to $570, and that means that we have the same price level now in China as we have in Europe. We have rather good inventory level on NBSK, 37 days seasonally cleaned. It's more like 34, 35, which is absolutely in the normal span. We also feel that we have this rather strong consumption. On the other hand, we also see that the inventory level on short fiber pulp is far too high, 60 days. We haven't had any statistics recently, but we of course follow that very closely.
If we compare quarter-on-quarter, we have of course benefit from increased volumes due to the ramp-up of the expanded pulp mill. By that, also the sales was up 52% during the Q3 2019. I can also announce now that the planned maintenance stop that we have already announced in Q4 will cost us SEK 120 million in the fourth quarter. Then we have to add 3 and a half day for the breakdown of the conveyor belt. In paper, when we compare quarter-on-quarter, we've seen lower prices in Q3 2019. On the other hand, just now we see a good kraftliner order inflow. The inventory level is also very good.
Sales quarter on quarter was down 1%. One thing is, of course, on the negative side, lower kraftliner prices. We have had a strong production. High prices in publication paper and also strong production in kraftliner during the quarter. Also in this field, we will have a planned maintenance stop in Obbola during Q4. That is estimated to have a negative impact of SEK 50 million during the fourth quarter. That is planned and also mentioned before. In renewable energy, we have announced two new projects that will come up 2022, 83 turbines and additional 1.3 terawatt hours. By that, we will reach 8 terawatt hours of installed capacity in 2022. That will give an EBIT contribution of SEK 120 million. We have also increased the long-term target to reach 11 terawatt hours installed capacity on the SCA land after 2022.
By that, I hand over to you, Toby.
Thank you. Thank you, Ulf. Good morning, everybody. I will start with the income statement. Here you can see when it comes to net sales, our net sales grew between Q3 last year and Q3 this year by 5%. As Ulf mentioned, Q3 last year was pretty much the high point in terms of pricing in a lot of our segments. This growth is both a lower pricing environment, but more than offset by the growth in the pulp sales through the expansion of Östrand. Those two are the two big effects driving sales. We have an underlying growth driven by the expansion in pulp. EBITDA is down 12% versus last year. This is really driven by the pricing environment, as we say, between the peak in Q3 and the current pricing level we have.
When you look at EBITDA margin, it's 5 percentage points down from 32.5% Q3 last year to 27.4% this year, which I think, given the circumstances, is a pretty resilient EBITDA margin development. The EBIT is down 6.6 percentage points in margin, slightly bigger drop because we're carrying more depreciation this year due to Östrand. We have some SEK 26 million in financial cost this quarter, SEK 172 million in tax charges, which is pretty much the Swedish tax rate applied to our profit before tax, which all in all gives a net profit for the period of SEK 757 million, which is an earnings per share of SEK 1.08. If we just talk through a bit by the different segments, starting on the left-hand side here in forest.
You can see the top line in forest has been growing steadily for a number of quarters, and this is primarily driven by the increasing volumes used to supply Östrand in the growth in pulp. Those are primarily sourced externally, so they affect the top line and net sales, but they do not affect the absolute EBITDA, which then has a knock-on impact on margin, of course. When you look at the absolute level of EBITDA, you can see we're on a higher level versus where we were a year ago, and that's primarily the wood prices have increased a bit since last year. We're a bit down on quarter two, which is a seasonal effect. We have a lower level of harvesting in our own forest, typically in quarter three. That tends to drive the seasonal pattern in the bottom line as well.
When it comes to the three industrial parts, the wood, the top line has come down a bit and is driven by the pricing environment that Ulf mentioned, where the prices have come down since the Q3 last year. We have, in terms of bottom line, the margin is also then affected by this price development, and we're down at 12% EBITDA margin, which even so is, I think, a pretty resilient EBITDA margin given the pricing trends. Pulp, of course, we have the expansion in Östrand driving the growth, and particularly since last year, but then in the last two quarters, the pricing trend on the other side is reducing net sales, and that's really also what's driving the bottom line. You can see the margin has come down a bit quarter-on-quarter due to the lower pulp prices that we see today.
When it comes to paper, a very stable top line. Underneath that, of course, we actually have the kraftliner pricing has come down as well since Q3 last year, but the publication paper has offset that. We have those two going in different directions, which result in basically, it looks almost exactly flat top line. Those trends are going in different directions, and that's really what's, if you like, what's driven the trend versus a year ago, is the kraftliner pricing is lower now, but that's been offset in recent quarters by a better pricing on publication paper. A pretty stable bottom line throughout EBITDA margin throughout this year. If I just walk you through the bridge in terms of top line, in terms of net sales.
First of all, the first bar you can see is the impact on the pricing, the -15%. It is a significant impact from the negative price trend on, particularly pulp, but also kraftliner and wood, all significantly down since Q3 last year, which again, was pretty much the high point was Q3, Q4 last year for all those. Publication paper is not as big as those three together, of course, but has a small positive variation versus last year. Have the big impact from the expansion of the pulp mill, which added 20% in terms of top line. A 2% impact from the weaker SEK, and then a 2% negative impact mainly from this deconsolidation, where we deconsolidate the Wood France business this year, which we did not last year.
If we walk through the same bridge when it comes to EBITDA, you can see the impact on prices, the same impact we have on the sales, of course, which drops through to EBITDA. That's the biggest impact. This is offset by the higher volumes from pulp, which contribute a significant positive. When it comes to raw material, we do have a higher cost for wood this year versus last year for the wood we source externally, which, of course, is what impacts here. This is offset by some higher income for some byproducts that we sell. On energy, basically, the energy prices are not down versus last year, but we have some improved energy cost due to the improved energy balance, particularly in Östrand, where we're now a net seller of energy. We also have some impact from wind power as well.
Currency, again, is positive from the weaker Swedish crown, and a small other effect. Those effects all together, our margin versus last year, 32.5%, is now 27.4%, and total EBITDA is impacted by 12% versus last year. If I now walk on to cash flow. You can see basically, on the right-hand side, January to September, we have an operating cash flow so far this year of some SEK 2.3 billion. In the quarter, Q3, we had a strong cash flow. We delivered nearly SEK 1.1 billion just in Q3. Significantly helped by working capital is one factor, the underlying earnings, but also the change in working capital, which is with the price environment coming down, that helps in terms of working capital and delivers a strong cash flow. We have strategic capital expenditures pretty low in this quarter, some SEK 63 million.
We expect that to be larger in the fourth quarter. We will have some impact from both finishing the final payments on Östrand, also some down payments from the start-up of the Obbola project, which Ulf mentioned, where we will start to see strategic CapEx coming in for Obbola project as well. That will be higher in Q4. The impact of this cash flow on net debt, I think we have a good reduction in net debt this quarter. We started the quarter at the end of June with SEK 9.7 billion in net debt. We've had the operating cash flow of SEK 1.1 billion. We've had some strategic CapEx on the other side, we've also sold the terminal in Rotterdam, this quarter, which has resulted in a SEK 660 million impact on net debt. A significant reduction.
We've paid some tax, all in all, that reduces our net debt from SEK 9.7 billion down to SEK 8.2 billion. A SEK 1.5 billion impact, which when we look at our ratio, particularly net debt to EBITDA, we were 1.6 times at the end of Q2, now we're 1.4 times. A good debt reduction in the quarter. You can see the effect of that here on the balance sheet, here we compare to the end of 2018. If I just go through line by line quickly, you can see the forest assets, we're still accounting here the same way we have previously with the forest assets. We'll come on to the proposal which Ulf mentioned for going forward. We have an increase in the forest assets of just over SEK 1 billion.
Here we have the normal revaluation, but we also have some impact from the acquisitions in the Baltics on the forest assets. Working capital is actually slightly up versus December 31st last year, and you see an impact there, working capital on sales in the same way. Other capital employed has increased by around SEK 1 billion, which is partly Östrand, but we have the leasing assets, which we did not have in the same time end of last year. That has an impact. Our net debt to EBITDA is 1.4 times net debt around SEK 8 billion and equity around SEK 40 billion. I will hand back to Ulf.
We like to say a few words about the forest revaluation. I start with this slide. You've seen it before, but value creation, financial value creation in the forest can be seen in three components. The first thing is the harvesting, the thing that we do every year, the direct cash flow. The other component is the net growth, because every year we harvest less than the growth. The increasing standing volume will, of course, be the future cash flow. The third component is the land value. Step by step, the value of the land is increasing. Of course, in addition, we have the positive climate effect due to the net growth in the forest.
You know that it is the growing forest that binds carbon dioxide, but also the possibility that we have to replace fossil-based both materials and fuels with renewable materials from the forest. If we quantified this, and this is on national level, Sweden, you can see on the left-hand side that we have increased the standing volume in Sweden since 1956, according to official statistics, up to 2019 with 55%, from 89 cubic meters per hectare up to 139 cubic meters per hectare. At the same time, we have more than doubled the harvesting volume, here measured as two cubic meters per hectare in a year, and today more than four cubic meters per hectare in a year, so 115%. At the same time, the land value has increased by 250% in real terms.
If we then look at this diagram, you can see exactly as I said, if you bought a piece of land back in 1956, then you used direct cash flow that you get from your harvesting operation and invest that in more land, step by step, now 2019, you can sell the piece of land that you bought, and you have had a total return on 10% in these three components. As I said, at the same time, you've done something good for the climate. If you look at the green line here, you can see that the net contribution now from our growing forests and also the substitution effect that we have when we replace fossil-based materials and fuels with materials from the forest, renewable materials from the forest, is on national level 94 million tons per year.
At the same time, we of course work to reduce our emissions from the industry. Here we have calculated the total fossil emissions from Sweden, and that is 2019 expected to be 38 million tons.
Thanks, Ulf. Now, I would come on to the revaluation in our balance sheet as well. Just here, more of a reminder, we have our 2.6 million hectares of forest land, which I think you all know, that means we are, of course, Europe's largest private forest owner. We now have on the map, you see on the bottom right, the forest holdings that we've acquired in Latvia and Estonia, which are included in our forest holding, of course, they're included also in the standing volume. You see here, we have an estimated figure for the year-end 2019, including our net growth this year and the Baltics volume, which is now 241 million cubic meters. Of that, around three million cubic meters refers to the Baltics. The Swedish volume is basically 238. That is 6% of Sweden's land area.
This is also a slide we have shown before, but just to remind, if I start on the right-hand side here, you can see the book value of our forest land is SEK 136 per cubic meter. We've got a few different market-level statistics. We have the levels that we buy and sell, and every year we do buy and sell land to improve our area. We've purchased it in the last year. This is at SEK 286 and sold SEK 268. We have a market statistic from LRF, which is one of the available statistics, which is based on transactions in Northern Sweden, which is SEK 269 per cubic meter. The market level is pretty stable between the different statistics. There are other statistics available which are also close to this level.
There's a pretty well-accepted market level in terms of price per cubic meter, which is pretty much double what we have in our book value. This is no secret. We've talked about this many times as well. What we have seen this year particularly is there's been a few larger transactions, which show that the transaction price on larger transactions is basically in line or even at a premium to the market statistics. We have three listed here. You see Bergvik Öst/AMF, Långvind/Holmen and then one in Latvia, the biggest one in Latvia, where Södra bought the Bergvik holding in Latvia. Even though the biggest is obviously the Bergvik Öst transaction, and we believe that one actually included a number of restrictions which affected the price versus the market statistics.
It was actually a little bit below the market statistic level, but it included restrictions on supply contracts and on buyback rights and not being able to buy or sell land and so on. If it was free from restrictions, we believe it would have been at least at the market statistic level. We believe this has demonstrated that also large transactions follow the same transaction price as smaller transactions, and the market value for smaller transactions is clearly double what we have in our books. This has led us to the review, which we announced at the end of Q2, and we've been undertaking. Basically, we want to update you on the findings where we are today. We intend to change our accounting method for accounting our forest land to be based on the level of market transactions in our area.
There are some 300 transactions in our part of Northern Sweden every year. We believe it's quite a reliable basis for determining market price to apply to our forest land as well. We intend to use those transaction prices and apply them to our forest land. If we do that, we use the available market statistics as they are today, we use the available volume estimated as of today, the impact of that change, you can see here on the right-hand side, is basically to change from our book value today is SEK 34 billion, it would increase to a range between SEK 63 billion-SEK 67 billion. We will allocate that then total value between land and biological assets.
In the past, we've only valued land at the original acquisition cost, which is pretty much zero for most of SCA's land because it was acquired a long time ago. We intend to value the land also to fair value and to divide the total market value then between biological assets and land. We will continue to use a discounted cash flow to value the biological assets in the same way we have done in the past. We intend to change the discount rate used from the WACC we used in the past to being a market return requirement for these types of assets. A little bit oversimplified, but the land then is the remaining value once you've taken the total value and taken off the biological assets. The land is also supported.
We have other cash flow streams which are not related to the biological assets, which very much support the land value. We have wind power, we have other items which support the value of the land. The land is then the remaining value, and we expect this to be split roughly 70% to biological assets and 30% to the value of the land. It's important to note also that the change in the value of the biological assets is reported through the income statement, while the change in the land value is reported through other comprehensive income. They get reported in different ways. It should be remembered as well, there is a deferred tax item which offsets the revaluation. You always have to account for the deferred tax on the increase. We view that as an accounting effect.
If you were hypothetically to sell these assets, you would sell them in a company form, and you wouldn't incur that tax. Yeah, accounting method is we have to report deferred tax on the revaluation. Finally, the review is ongoing. We are finalizing the details of the implementation of this method, which will continue into Q4, but we expect then to conclude this in Q4 and have this value then in our balance sheet at the end of the year.
If we finally summarize the quarter, we can say that we have delivered a strong result, although we have rather tough market conditions if we compare with the third quarter 2018. EBITDA was down 12%, it was up 2% in comparison with the second quarter this year. When it comes to the ramp-up of Östrand, pulp volumes were higher 2% quarter-on-quarter, we have been limited by the economizer. That one is now replaced and we're looking forward for the production figures in November and December. We also, during the quarter, did announce the new paper machine in Obbola, SEK 7.5 billion investment. You have to keep in mind that we have already financed the SEK 8 billion investment in Östrand through operating cash flow since 2015.
The total return from the forest in our region is 10% per year if we do the calculation from 1956 up till now, and we are looking into revaluation of the forest asset, and the span today is between SEK 63 billion and SEK 67 billion, to be finalized in Q4. By that, I think that we open up for questions, starting in the audience.
Thank you very much. It's Linus Larsson with SEB. I'll start with the forest revaluation, and you're basically doubling the book value of your forest holdings on your balance sheet. Does it in any way affect the way you operate? Does it in any way, for instance, change your view on indebtedness or any other aspect of the way you operate?
Maybe I'll start. I think the short answer is no. This is an accounting exercise that we think it's pretty well accepted that the market value is a very different value from the book value. It's been hard to explain, I think, for us and others why we can't value our asset at what is a pretty well-accepted market value. That's what we intend to change to move towards the market value. There's no intention to change the financial structure of the company or to change the way we operate. This is primarily an accounting exercise.
You will maintain a DCF model on the part which is the biological asset value. You will lower the discount rate. Will you also change some other inputs? For instance, what type of inflation will you apply? Basically, my question is, what's the implication on the reported EBIT for 2020, let's say, because I guess the other inputs there will be quite important to understand the ongoing biological revaluation report and the EBIT on a quarterly basis.
Yeah, I think that's a good question. I think basically the discount rate is what we expect to be the biggest effect in terms of the DCF. We're still finalizing the details, but I think the other assumptions we've applied in the past are still pretty much relevant to the current environment, using an average of wood prices and an average of harvesting costs and so on. I think in terms of biological assets, it's the discount rate that will be the biggest change in the way the valuation is done. If we look at the effects ongoing in terms of earnings profile, we have a net growth in our forest every year as well, which supports an increasing valuation. Basically, we see no reason why you would see a particular difference in the future trend versus the past trend.
The past has also been subject to changes in pricing and environment, but we've had a pretty reasonable and steady profit contribution year on year, and we see no reason that should change in the future. Of course, it's dependent on what happens in the future, which no one here can really say what that is. But the practice is pretty similar to today in terms of biological assets, and we don't see any big change.
Maybe just finally on the forest side, you gave one figure on the renewable energy EBIT contribution as you expected in 2022, I think you said. If you add up all the non-wood revenue streams, what does it add up to in annual EBITDA? I understand wind is probably the by far biggest, you have some other revenue streams as well. What's the EBITDA contribution today or some time out?
Yeah. I think I can give you the feeling you're after, but in another way, the wind power is the biggest other income stream. We've included already secured wind power income in the cash flow streams allocated to the land, together with the other two are really hunting licenses and gravel income, which we also have from the land. In future, there may be others, those are the ones we have today. When you look at the split, then in value between land and biological assets, it's driven by the relative cash flow streams from the biological assets and from those other income streams. Together with one additional component, which I'm at risk of getting into details here, the biological asset is a valuation over one production cycle. The accounting principle is that it's only the physical trees that are standing there today.
After one production cycle, of course, we will plant trees and then harvest them again, that's many years into the future, it's heavily discounted. That also has a value, that is also allocated to the land, that piece. Those two elements basically contribute to this 30% that I mentioned, which is the land value. The biggest part is this other income streams.
Okay. Thank you for that. Maybe just somewhat related, maybe, but somewhat short term. You touched upon it in your presentation, the wood cost or the wood price trends that you're seeing. In your industrial operations, when do you expect to see easing wood costs or to some degree, I think you already are seeing, but in a more meaningful way?
I think as I said, we have a lagging effect of three to six months. I think that's valid. We won't see too much in the fourth quarter. Then in the first and second, then that will come through.
Okay. Thank you.
Hi, everyone. It's Johannes Grunselius here, Kepler Cheuvreux. Just also related to the forestry side. Do you have plans for maybe open up the transparency even more in the next year on the forest side? I'm thinking about the non-wood profit streams that you might start reporting them.
We don't have any intention to report another segment. I think we have given information about the income we see from wind power. That we've given information on, but not as a separate segment. There will be some additional disclosure which comes in from the revaluation of the forest. The basic answer is that, no, we won't be separating out a different part and reporting a new segment.
Well, the major thing is the wind.
Yeah.
Hunting licenses, that's nothing in the northern part of Sweden, more or less, and gravel is minor.
Yeah.
Is what I mean.
Okay. You mentioned also in your presentation, the obvious benefit of capturing carbon emissions. If you think about the future in the next one to three years, do you see any sort of potential to get any financial rewards for that? There is pricing for CO2, like emissions. Do you think you can capture some of that?
Personally, I don't think it in the coming one to three years, but long term, I think it might be so. That is nothing that we calculate on, of course.
During the year, you have also made three purchases of land in the Baltics. What do you think there? Would you continue to buy land in the next few quarters in the Baltics? If so, how much?
Yeah. The long-term target we've said is 100,000 hectares in five years' time. Now we've done 30,000, and we are looking into new opportunities, and we like to buy land, both in the Baltics but also in Sweden, if possible.
Why do you think 100,000 is sort of the land area you want to buy? Is there any reason behind it? Any analysis or so?
Not at all, really. I think it's good to have a critical mass. I like to see the Baltic as the sixth forest district, and you need some volume from your own land in order to allocate resources for harvesting, silviculture, everything like that. Also, we like to buy forest from small private forest owners as we do in the region in northern part of Sweden. Also, we like to buy forest from bigger players. It could be the state, it could be entrepreneurs and things like that. I think it's more related to some kind of critical mass.
Okay. Fair enough. Thank you very much.
Long term, we are happy. As I said, when we calculate the total return from the forest, we have had 10% per year as an average since 1956, and we think the potential is maybe even bigger in the Baltics.
Right. Thank you very much. Christian Kopfer, Nordea. Just a few follow-ups for me. Firstly, if I did the calculation right on pulp in the third quarter, it looked like cost per ton came down a bit.
In Q3 versus Q2, was that the seasonal lower overhead cost or was it a combination of doing the business units more effective?
I think probably it's a small change. The wood cost is stable, the volume is slightly better, and the trimming is getting better all the time. There's slight improvement. You should remember, part of this Rotterdam sale, the logistics operation is part of each business unit, and part of that also helped. I think underlying, it's a small cost improvement. The wood cost is the big one, of course, and that's flat. We expect that also to be flat into Q4, before the lower wood pricing that we see now starts to come through to the industries early next year.
Understood. Thanks. How far are you from If I remember correctly, you expected cost to come down around SEK 350 per cubic meter with the new mill. How far from that are you now?
I think we're on track, pretty much in line with the volume development. It's really driven by the volume development and the fixed cost coverage. We're not yet there, but we're closing in. I think once we get there, then we'll have that. You could say we're probably two-thirds or three-quarters of the way there based on the volume development.
Okay, that's great.
Yeah.
Finally from me. You mentioned that you had some income from byproducts in Q3. Was that income or is that income pretty representative for also the coming quarters ahead or?
It is actually a little bit seasonal. We're a big seller of wood pellets in Sweden. This quarter has been seasonally as a strong quarter. Of course, it's a winter market. I don't think you would see that level all year, but I think it's more of a winter market. Q3, Q4 tend to be stronger seasons for that market.
What's good for us is that we're working in this integrated value chains. We benefit both from a higher sawdust price, but also from producing pellets, and we used lots of pellets in our own boilers. Also, it's sold externally.
Great. Thank you very much.
Hi. Thanks. Gustav Sjödin from Pareto. Just one question from my side. On your geographical pulp sales split now in Q3, if you've done any changes to that versus the last quarter. Thank you.
Yeah. Good question. We mentioned in the last quarter, we had a big increase to Asia. That's pretty stable between Q2 and Q3. We haven't increased further from where we were in the second quarter, but we still have a significant volume placed in Asia. Over time, as we grow our volumes in our core markets, we expect that to come down again. That will take, a couple of years.
In general also, you can say that we have a stronger market in Europe nowadays. You also saw the report from Essity just recently. They had a healthy organic growth in tissue, and tissue is the main consumer of NBSK. We have a slightly stronger market for the moment being, at least.
Hello, it's Johannes here again. It was pretty obvious here that you had tougher markets in the third quarter, but how should we think about the fourth quarter? If you perhaps can mention what sort of sequential price decline we can have in kraftliner, for instance. That would be helpful.
As I said, in solid wood products, where you don't have any official statistics, really, we lost 5%-6% price rise from Q2 to Q3. I think that we will lose another 5%-6% in the fourth quarter. Again, it's not due to consumption, it's due to availability of logs, and it's easy to increase capacity. That is what's happening now, just in order to avoid destroying saw logs in Central Europe. Pulp, again, I think I said that we have seen our prices coming down to SEK 825, and we see net China prices was up now to SEK 569 or something like that. That is, if you take away the discount, more or less on equal level.
When it comes to inventory level, they are close to 35 days now in long fiber, which is on a healthy level, I would say. The question mark is the inventory level on short fiber, where you're up on 60 days. We don't know where that will go. kraftliner, we have had four consecutive months now with unchanged prices. We see that you have some price pressure now on testliner prices. We don't know really what kind of impact that will have on kraftliner prices. We see that inventories for ourselves is on a very low level, and we have a stable demand. We will have a planned maintenance stop in the fourth quarter. That's the situation for us.
I suppose you will have slightly higher cost quarter-over-quarter because Q3 is softer on personal cost, right?
Yeah, that is right. You have an effect due to the holiday period, which reduces the fixed cost somewhat in Q3. It is not dramatic, but.
It's about 50 or so.
Yeah.
Yeah. Okay.
The majority of that is in the paper division for us, but.
If we don't have any further questions from the audience, I think we can open up.
The telephone, yeah.
the telephone, the line. Please, operator.
Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced.
Looks very quiet.
Very quiet.
Once again, please press star and one for questions. No further questions. Please continue.
Mm-hmm. Good.
Yeah.
Okay. Yes. We more or less expected everyone to be on Easter leave, but they seem to come here instead, for which we are very grateful.
Easter.
Sorry.
Autumn.
Some kind of leave.
Autumn leave.
Thank you for the interest you've taken in SCA's report. We look forward to seeing you again after the year end on the report for the fourth quarter, January 30. Thank you very much.