Earnings Call: Q2 2018

Jul 25, 2018

Welcome to the presentation of SCA's interim report for the Q2 2018. We regret the slight delay, but the presentation will now start. The report will be presented. Thank you for that, Bjorn, and good morning, everyone. I'd like to start this presentation exactly in the same way as I did Q1 earlier this year by saying that we have a continued really strong market out there in all regions, in Europe, Asia and also in U. S, but also for all product segments. And we can also see now that during the Q2, the market for publication paper has strengthened further, which is, of course, nice. We've seen a strong sales growth of 11% this quarter in comparison with Q2 'seventeen. Main reason for that is, of course, price and currency, but we have also moved volumes closer to our mills. So the mix has also have an important impact on the sales growth. On the other side, we have seen that volumes due to the planned maintenance or start up stop in Ostrand has went down by 7%. On EBITDA level, we are up 43%, mainly again due to higher prices and also currency. But we are, during the Q2, negatively impacted by the startup stop in Ostrand, which has costed us approximately SEK250 1,000,000. As we did announce during our Capital Markets Day in May, we have formed a partnership with SD1 and SCA in order to see in what way we can produce renewable biofuel based on crude tall oil. We have started up a pre project. We believe that in the beginning of next year, we are ready to take a decision over SEK 500,000,000 investment in order to produce 100,000 tonnes of biojet. And last but not least, in this summary, we are happy to say that the expanded Ostrand pulp mill is now up and running. We have started up well. We are well ahead of the startup curve or the expectations we had in the investment case. And on the other hand, we have just run the mill for 1 month, but a really good start. So far, so good. I'm also happy to say again that we are on time and on budget in Ostrand. We have also started to deliver the pulp, and the quality is surprisingly good when it comes to brightness but also to cleanness. It's perfect, more or less. When it comes to strength, it's a little bit more volatile, but we have already now seen that we are able to produce a high strength in the new mill than we could do in the old mill, and the old mill was really good. But we see a great potential in this area. Yes, now we are focusing on the ramp up progressing well, focused on calibrating the plant to quickly achieve full production but also to further improve the quality. If we then look into our performance in Q2 and look into some financial KPIs, we can first see that we have done a little bit over SEK1 1,000,000,000 on EBITDA level. And then again, we are negatively impacted by the startup, the planned startup cost that we've had in Ostrand by minus SEK250 1,000,000. Our industrial return on capital employed is 19%, when we exclude Ostrand as we during the Q2, we haven't had any positive effect from the investment that will come now in Q3 and Q4, of course. Our EBITDA margin was a little bit over 22% in the quarter. But if you look to the right hand side, you can see that when we exclude pulp, we've had really positive trend during the past 5 quarters. And Q2 'eighteen would have been better than Q1 'eighteen if Ostrand would have been up and running as it did in the Q1. So we would have been closer to 30% also in Q2 'eighteen. So all segments, except from pulp, is performing very, very well and better than we did Q1. Our leverage is 1.7, and that means that we financed a big project in Ostrand with our operating cash flow. If we then walk you through each segment, starting with the forest side, I can just mention that as you've seen probably, we've been hit by a lot of wildfires in this region and in the whole of Sweden during a couple of weeks now. Between 200,000, 25,000 hectares has burnt down all over the country. We have seen that many small private forest owners have been hardly hit and which is, of course, a catastrophe for many of them. We had, at the end of last week, 200 people from SCA out trying to help wherever we could. So far, luckily, we are not hit in the company Too much, 600 hectares of SCA land has been burnt down, and that is equal to what we normally burn every year in order to keep our FSC certification. But we still have dry and warm weather, so still it is a danger out there, of course. We've had a stable wood supply during the quarter, and we also had a stable wood supply during the winter. We had a harsh winter conditions. We have had now dry and warm summer. But as we have a high degree of the wood that we need from our own forest, we can handle that in a good way. We've seen some price increases in the market, especially for imported wood. But again, as we have around 50% from our own forest and as we also buy a lot of wood from the domestic market, we are not especially impacted by import prices as it is just now. We have, during this period, built up inventory in order to meet Ostrand's increasing demand. And as Ostrand now is well ahead of the startup curve, it may challenge us a little bit more, which is, of course, positive. We had some lower volume this quarter in comparison with Q2 'seventeen, and that is, of course, due to the expansion stoppatorstrand. EBITDA was up slightly from 30% up to 32% EBITDA margin due to higher prices. Prices has went up since at least Q2 'sixteen, and I think even the Q1 'sixteen was that we had increase in prices. Q2 'eighteen in comparison with Q1 'eighteen is up a little bit more than 5%, 50% due to currency, 50% due to pricing. And we have already now announced that we will increase prices also for the 3rd Q4 this year. In general, we have really low inventory levels, and that goes also for our SCA mills. Sales was up 13% during the quarter in comparison with 'seventeen. That is mainly due to higher prices. EBITDA was up as much as 49% due to prices, due to currency, of course, but also we've had a good production during the quarter, and we also have good cost control. On the other hand, we have seen some slight increases when it comes to raw material Yes, in pulp, we've talked about Ostrand and the start up. We have now invested 85% out of SEK7.8 billion, so by that SEK6.6 billion. Production is now up and running. Quality is good. The market is super strong, which means that we can sell old pulp as prime pulp. We've done that already from the very beginning. We have a fixed price today at 12 $30 per ton. Sales during the quarter for SCA was down 17%, and that was only due to the expansion stop that we've talked about earlier. On the other hand, we had higher prices also in Q2 'eighteen in comparison with Q2 'seventeen. Our negative EBITDA is 100% related to the start up stop that we've had, which has costed us, as I mentioned, SEK250 1,000,000 at least during the quarter. Also in paper, we have a continued strong market in general, not the least for kraftliner. And as you can see to the left hand side, we've been able to increase prices step by step since Q2 'sixteen. We have now announced another price increase in white top kraftliner by €50 per ton from 1st September, and that will be gradually implemented during the 3rd Q4. And for us in SCA, that means that we have this price increase on around 15% of the total kraftliner volume. We've also seen an improved market in publication paper, and we have announced between 6% 8% price increases, slightly more for coated grades and slightly less for sorry, slightly more for uncoated grades and slightly less for coated grades. And as you might remember, twothree of the production in SCA is coated grades and onethree is uncoated grades. Sales was up 17% during the month, mainly due to higher kraftliner prices and currency, and EBITDA was up as much as 112% due to prices, due to currency but also due to a stable cost development and strong production during the quarter. So we have also, during the quarter, launched a new paper category, which we called fine wood containing paper. It is a paper based on chemical pulp, and that paper will compete with wood free paper. We have a super good brightness, good bulk in the paper and also good opacity. And while we base this quality on mechanical pulp, it we're really cost efficient both as for us as a producer but also for our customers. We have done between 5,000, 10000 tons in the market, and it has been really well received in the market. So we continue the work that we have done many years now in Utvegan to find new products to launch in the market. And as it is today, around 35% of the sales is coming from products that didn't exist 5 years ago. So that is a strong and good development, which will, in a good way, contribute to the profitability of our Ootveiken mill. So by that, I hand over to Toby. Thank you. Thank you, Ulf, and good morning, everybody. Right. I will start off by showing you the income statement here. And you can see, as Ulf mentioned, the net sales increased by 11% in the quarter, and the EBITDA increased by 43%, and we delivered an EBITDA in the second quarter of just over SEK 1,000,000,000,000,000, and that's after that's after taking into account the effects of the Ostrand expansion stop, which Ulf mentioned I will also come back to. So we had an EBITDA margin of 22.1%. We had financial costs of SEK 4,000,000, and you can't compare to the previous year here because the Q2 last year was also the quarter that we had the separation from Siti towards the end of the quarter. So those costs were largely before the separation. And then we have a tax a positive tax result of €369,000,000 and that's because of the revaluation of deferred tax, which happened here in the Q2 from the recent changes in the tax rates or the future tax rates that the Swedish Parliament decided recently. So that has an effect, a positive effect of some €530,000,000 on the tax line. But if you take away that effect, then the underlying tax rate is very stable. It's 21.4%. Here, I can show you the development per quarter per segment. And the net sales, if I start with forest on the left hand side, the net sales was slightly down because of the startup of Ostrand and the lack of supply to Ostrand during the expansion stop, which we've also mentioned. The EBITDA in forest was stronger in the Q2 than the Q1, and this is largely the seasonality with a larger delivery of wood sourced from our own forest in the Q2 versus the Q1, but also some effect from higher prices. The Wood segment had a strong second quarter on top line with some price increases and some positive currency, And it's also a seasonally strong quarter for the Wood segment. And the EBITDA was also strong in Wood with 13% EBITDA margin with some of the higher prices coming through and dropping through to EBITDA. Pulp, you can see the top line is affected by the expansion stop, of course, in the Q2. And the result as well has had a significant effect from the expansion stop, which I will come back to where we had, as Ulf mentioned, also some GBP 250,000,000 effects from the project in the Q2 versus the Q1. So that and we also had the effect there from the lower volumes and the lower sales, which you can see on the top line. So that's on top of the, if you like, the project cost. Then the Paper division has a slightly improved top line from higher prices coming through in kraftliner but also in publication paper, and that's also dropping through to the bottom line with a strong 26% EBITDA margin. If I go here to the waterfall in net sales, And you can see the biggest effect we had in net sales was from price mix, where we had 13% improvement versus the Q2 last year. We had an effect from the lower volumes, particularly in Ostrand, with minus 7%, but currency again positive and particularly the euro positive in the Q2 versus Q2 last year with 5%. When it comes to the EBITDA waterfall, again, pricemix is the biggest effect. And here, we've seen a positive effect in all segments from the higher prices. We had an effect again from the volumes with minus €39,000,000 Raw material costs have we've a negative effect from some higher costs for raw materials, for wood and for chemicals and here also some effect from the Ostrand startup, the higher direct costs or the usage of raw materials in Ostrand and Chemicals. On energy, we have a small positive. The actual the electricity price is actually higher now in the Q2, but we've had some effects from higher price for electricity certificates, and we also had a negative effect from electricity certificates last year in the Q2. Currency, again, is positive, euros 80,000,000 And then in other, we have minus SEK 100,000,000, which is mainly the expansion stop costs in Ostrand, but also we have slightly less costs from last year with the separation. We had some separation costs which came in the Q2 last year. If I flick on to the cash flow, yes, if I take the half year numbers here on the right hand side, we had CHF 2,200,000,000 of EBITDA for the first half year. If we adjust that for the noncash items, particularly the revaluation of the biological assets, then we had operating cash surplus of 1.8 63,000,000,000 And then we had a growth in working capital, which we expected ahead of the start of Ostrand. So that's minus SEK 345,000,000. But even after that, we've and current CapEx, we've delivered a cash flow of SEK 1.265 1,000,000,000. So that means, as Ulf also mentioned, that we're funding then the strategic capital expenditures, which is the Ostrand project, entirely from operating cash flow during the first half. Just come on to a couple of more details on the Ostrand project, and this you've seen largely before. But just to help you understand the effects, Production began in June according to plan. The ramp up period is expected to be 12 to 18 months, and that means we expect 2018 volumes to be in line with 2017, and that means also that 2020 is the 1st year we expect to be at full capacity. The new mill will be world class in its cost position. It will double the softwood capacity. We'll have a fixed cost reduction of SEK 3.50 per tonne, and we'll have an improved energy balance with where we'll go from being a small net consumer of electricity to a net producer of some 0.5 terawatt hours. And we see potentially some higher wood costs from wood needing to be sourced from further away. And then particularly on the cost impact, and here, you've seen this table before as well, but we've updated for the Q2. And on the right hand side, if I just focus on the table on the right hand side, you can see the main effects from the project here. And you have the project related costs where we had €15,000,000 in the second quarter. We had the actual maintenance stop or expansion stop effect in the second quarter, which was GBP 236,000,000 and here, we expect CHF 256,000,000 for the full year. So there may be we plan for some small effect in the second half. And then we have the ramp up effects, which is the effect on direct costs during the ramp up period where we had some €50,000,000 in the second quarter, and we expect some €100,000,000 to €250,000,000 during the full year depending on the how fast and how well the ramp up goes. And that means, totally, we have around €300,000,000 in the second quarter versus €40,000,000 in the first quarter. So that's the €250,000,000 we mentioned is the basically the increase from the first quarter to the 2nd quarter. On top of that, we also expect, as it says on this slide at the bottom, an increase in working capital, which we've seen then during the first half year due to the higher production volumes coming through and particularly on raw material inventory. Then on the balance sheet here, pretty stable balance sheet. You can see on the deferred tax line, you can see the effect of that deferred tax adjustment in which came through the tax line. Capital employed has increased to GBP 44.5 1,000,000,000, which is largely the effect of the Ostrand investment. But again, net debt is stable at 1.7x EBITDA, even including the significant investments that we're doing in building the new Ostrand Mill, of course. So it's a stable leverage. Okay. With that, I think yes, hand back. Yes, if we then should shortly summarize the Q2 this year, we can again say that we have a continued strong market, all regions, all product areas. Strong sales growth. We were impacted by the start up stop in terms of volumes during the Q2, but still growth of 11% this quarter in comparison with 17%. EBITDA up 43%. And as we also stated that we are negatively impacted by the planned start up cost in Ostrand, which has costed us SEK 250,000,000 approximately. We have, during the quarter, announced a partnership together with SD WAN in order to produce Biojet. And last but not least, we are now up and running with Ostrand. We are well ahead of the start up curve, and the quality is really good as it is just now. So by that, I think that we open up for some questions. So operator, now we can take questions from the audience. The first question comes from the line of Mikhail Jafs. Please ask your question. Yes. Hello. Good morning, everybody. A couple of questions from my side. The first one is around your Wood Products division that historically has been very cyclical and now it's doing very well. And I if I heard you correctly there, you said that you had price increases also announced going into the second half. Could you just elaborate a little bit on that market? And then also in conjunction with that, you mentioned that raw material prices are going up. Is that a is around publication paper. Normally, we are we should see decline in demand, but still we see paper price increases. Could you talk a little bit about that? And how long could we expect to see, let's say, a balanced paper market? Those were my questions. Thank you. Thank you. Well, if we start with the wood business, I mean, as we've said, we've seen price increases now for many quarter in a row. We know that we will have further price increases in the second half of this year. And the reason for that is, of course, that we still have a strong consumption in more or less all areas as it is just now. In general, inventory levels are very low, and that goes the same for SCA. So I mean, it's a balanced question. How long will it last? Well, it's not up to us to judge really. But as it is just now, it is a stable to strong market, I would say. And yes, we've seen that price on sawlogs is coming up a little bit again as we are in a good position in the way that we take a lot of the wood that we need from our own forests. We are quite balanced. But you're right, 70% of the cost for sawmill is related to the raw material costs. So but as it is just now, we've been able to compensate that increased cost. And again, for us, what's positive is really that we keep our cost control, and we keep also good productivity in our mills. And that is what we can really have an impact on ourselves. So that is really super important. In publication papers, I mean, it's still, you have these structural challenges that we have talked about earlier. I mean, the consumption long term is going down as a result of the digitalization. And just now, we have a better balance than we have before, and that is also the reason why we can now increase prices between 6% 8% during the second half of this year. And I don't like to speculate longer than that. We know that we will have a reasonable strong second half of this year, which is perfectly good for us. Everyone. Just to follow-up on the paper side. You mentioned here during the presentation, you have mentioned before as well that you have raised prices on Whitetop. If you just could put that into relation to unbleached kraftliner as we have not seen any price hike announcements on that. If you could just elaborate a little bit on the market balance on white top versus unbleached. Okay. I mean in unbleached, we've increased prices step by step gradually now during many quarters. I mean, we haven't seen any new announcements in unbleached. White top has been more flat in the past, and now we feel that we have a great demand for Whitetop. And that is the reason why we have announced a price increase from 1st September. And the balance in SCA is that we produce 8 165,000 tonnes of kraftliner. Out of that, 150,000 tonnes is Whitetop. Top. The next question comes from the line of Linus Larsson. Please ask your question. Yes. Thank you very much for taking my question and congratulations on the start up of the new Ostrand pulp mill. With regards to Ostrand, you talk about the direct costs and you said that they had an impact of expect in the Q3? You have put the total figure for the whole year. How do you see the timing of that? Is the impact in Q3 similar to Q2? Or is it bigger? Is it smaller? That's my first question. Yes. I think you can see our guidance that we've given this range because it does it's hard to predict and it does depend. So the range of SEK 100,000,000 to 250, we've given for the year. And the 3rd quarter, we'll probably see a significant effect. We expect that effect to decrease going from the 3rd quarter into the 4th quarter. But if you we take that full year amount, then we expect an effect also in the Q3. Whether it will be more or less than the Q2, it's hard to say. But that's the range, and we yes, we stick by that range for what we expect for the full year. Okay. Fair enough. And also a cost item in relation to the Ostrand ramp up, How do you see your wood sourcing and wood costs develop now that your own sourcing of wood is gradually increasing with the ramp up of the Ostrand volumes? I mean, in general, we see that prices is going up has gone up a little bit. And but I mean, we feel that we are in good control. We have built up inventories now. So we are prepared for this start up. Just now, we are well ahead of the start up curve. And still, I think that we are in good control. And so I mean, we have a controlled wood supply, I would say. Are you looking to increase imports of wood? And if so, does that automatically increase the average cost of wood for you? As it is, yes. Now we don't need to import more wood than we've done in the past. But I mean, long term, import is an alternative, but we prefer to be domestically based in our inner sourcing. And the flow now from private forced owners is quite good. So I mean, we feel confident. Okay. Excellent. And then just finally on volumes, looking at kraftliner, you've had 7%, 8% year on year shipments decline in kraftliner in Q1 and Q2. Could you just explain why that is and what to expect in the second half of twenty eighteen, please? That's quite simple. I mean, we have had a really strong market for Kraftliner now for many quarters, and we are sold out. That's the reason. I mean, we have very low inventory levels in all product areas, and the same goes for Kraftliner. So that is a simple answer on that. So if I look at the Production is good, then I mean production is as strong this year as it was last year. So And then I was just going to say in the Q2 last year, we sold quite a lot out from stock. So that's when you compare it to the Q2 last year, then yes, then you see this effect. The next question comes from the line of Martin Melba. Please ask your question. Yes. Good morning. Some nitric, gritty questions on Ostrand. Say if the pulp price and the wood price is flat in Q3, what would EBIT be? Because you have all these different effects impacting EBIT, maintenance, direct costs, indirect costs, volume loss, etcetera. Joao, I mean I think the simple answer, you can take I mean if you're trying to model basically, you have this effect from the expansion stop, which you see, and that will not be there in Q3. The ramp up effects, we don't know. There will be some effect from that. Then of course, we expect the sales volume to improve somewhat with the production having come online. So if you adjust for those effects, you should be able to guesstimate the result for the 3rd quarter perhaps. So you add back the €236,000,000 And then you also soon say another €100,000,000 of startup costs, as you call it, maybe, in the second half altogether? Yes. And then you will have on top of adding back these costs, you will have an effect from the in the second quarter, we had a low turnover and a low volume because of the stop. So that will improve in the 3rd quarter. And depreciation, that is included in the 4 $6,000,000 to $5.56,000,000 because that hasn't really started until the second half, right? Or Yes. The depreciation will increase successively during the second half. So it won't all come in, in the 3rd quarter, the depreciation increase. All right. And these higher wood costs, when will that be visible in your Forest division or high wood prices? I mean, to some extent, you have seen it already in the Q2. But as mentioned, we don't have too high wood cost. So I mean, we have you have a price increase, but nothing really substantial. All right. Good. Thank you. Thank you. The next question comes from the line of Oskar Lindstrom. Please ask your question. Yes. Hi. This is Oskar Lindstrom from Danske Bank. Four questions here. First off, the Ostrand pulp mill start up, you're saying it's ahead of your investment plan after a month of operation and that the quality is good. And in general, I get the feeling it's progressing very well. Yet you reiterate the 12 to 18 month startup period, which you've talked about before the startup, should we sort of at least start to plan for maybe a 12 month start up period or perhaps even shorter? I mean, how confident are you in the startup after 1 month? In 1 month is 1 month, and it's a very short time. We are happy now to see that mechanically, we have no bad surprises. I mean, the mill is working now. And step by step, gradually, we can also fine tune and a lot of things to do, of course. I think the tricky thing now will be when we reach the design capacity, and that is really hard to predict because somewhere, we will have some somewhere and sometime, we will have some bottleneck coming up, and then we will really test the design capacity. And I mean, I think that we will have now a good start up during the autumn, but we I think we need it's too early to say if we need these 18 months or if we can do it faster. It's too early to say if we reach directly the design capacity or if we need to do some complementary investments in the lime the old lime kiln or in the yes, wherever. So I mean, it's quite tricky. But so far, we are happy because we haven't seen any mechanical issues, which is good. And step by step, we are getting on high capacity. It's very volatile. One day is super good, and one day is really bad. And I mean, we have to take it step by step now. But it's too early to say. I mean, we've just done 1 month. We're happy that we started on time. We're happy to say that we're well ahead of the start up curve. But of course, it will be more challenging the longer the time goes here now. But quality is good. I mean clean brightness, cleanness, also strength, that is all positive things and not the least that we already now see that we can produce a stronger pulp than we did in the old mill. The old mill was good. It was good in the benchmark, but this is really promising, I would say, quality wise. So I mean, you're selling it, as you said, all of the volume coming out of the mill is now being sold as prime pulp? Yes, we do. I mean and that is one reason is the good quality, of course, and one reason is the strong market. All right. A second question is on the other project, well, pre project that you announced is the Obbola mill expansion or potential expansion. I think you said that you would sort of come to a conclusion towards the end of this year, but any early news or further news on that project or potential project? No. We have said that the pre project will be finalized in Q1, and then we have something to take a decision on. But I mean, the pre project is running well, and it's run by the former mill manager, Per Sund. So but I mean, it will take until at least Q1 next year. Right. My third question is around the forest fires. You don't mention in the report, you have a press release out on your web page. It sounds as if that's not something that we should expect will have an impact on your wood supply in any significant way in the Q3. Is that how we should understand it? Yes. I mean, as I said, on SCA land, we've been very lucky so far. And we have had productive forest land around 600 hectares that has been burnt down, and that is equal to what we normally burn in order to keep the FSC certificate. Of course, we now try to be as careful as we can. We don't run our harvesters during daytime if it's dry and hot, and we use them during nighttime. So I mean that kind of disturbances we see, but nothing major really. But this isn't over yet. So if this weather will continue, then it might be so that it will cause further problems in the region. But as it is just now, it is controlled. Good. My final question is around wood products. You mentioned low inventory levels in the industry but also in your mills. And I presume that sort of finished product you're talking about. Can you increase volumes in your wood products operation further from where you are today? Or are there limits either to your own capacity or in terms of wood supply? I think it's more a question of our own capacity. We utilize the capacity that we have 200 percent just now. I mean, you can add another shift, of course. But in the sawmill, it is not as easy as that because the 4th shift in a sawmill is not necessarily a good thing to do when it comes to profitability. So we are we utilize 100% of what we have in plan, and I think we will continue that way. All right. So the types of volumes that we've seen over the past couple of quarters, that's what we should be expecting in the period ahead. Yes. And when you look at the sales, I mean, the main reason for increasing sales figures is, as mentioned, price and currency and so on, not volume really. The next question comes from the line of Robin Santavirta. Please ask the question. Thank you very much. So still one more on Ostrand. Now you say ramp up has proceed ahead of the plan. I understand it's only 1 month. But would you mind to quantify that in any way? And you're still, as I understand, sticking to the sort of guidance of the pulp division delivering equal amount of volume roughly compared to last year. Why is that if the ramp up is better than expected? It's I think it's too early to say something. I mean, we've had a good start, which is super good, of course. If and I don't like to quantify because it's just 1 month. But if this will continue, then of course, we will produce somewhat more this year in comparison with 'seventeen, that's for sure. But I mean, we are just in the beginning, and many things can happen. And we feel that it is better to when we see something that we have to adjust, it's better to close down the mill and do that and in order to prepare for the future. So I mean, we will not do whatever to reach a high volume the 1st year. That is the big issue. The big issue is to create a complete meal in different ways. So I mean, we don't feel any pressure. With this good start, we don't feel any pressure. Now we will take it calm and easy and do what's needed to create a really good future performance here. I understand. Then related to the pulp market strength. Now obviously, prices have been very strong and now you also call the market super strong. Is that also what you're seeing now during the summer in Europe? Or what are you seeing at the moment on the pulp market, especially when it comes to Europe? It is a strong and stable market. I mean, we haven't been able to deliver more or less just small volumes in the Q2, and that has caused our big customers big problems, and we are sorry for that. But I mean, now we can start to compensate them, and we feel that the demand is really strong. I don't know if we missed yet the situation just due to the long stop that we've had, but we feel it is a strong market in not only in Europe, but also in Asia and also in U. S. And have you decided where to place those volumes of the extra volume from Maersk and going into that part of this year and in 2019 then, will it be more in China or all in Europe? As we've said before, we just now we could place everything in Europe. But we think long term that we should place some volume in both U. S. But also in China, and we stick to that. When will be the starting point? Well, it's too early to decide really. As it is just now, we are more or less 100% focused on Europe. Good. And then the final question from me. In terms of input cost inflation, you guys seem quite relaxed. Is it fair to assume that sort of as it is now, the input cost inflation sequentially in Q3 will be roughly the same as in Q2? Yes. I think that's a fair comment. We say I mean, like you say, we don't see any dramatic change. We do see increased cost for raw materials, as we said, and chemicals. But we yes, we don't see any big trend change or increase in Q3 versus previous quarters. Thank you. Dear speaker, there are no further questions at this time. Please continue. So by that, I think we have to thank you for showing interest and also wish you all a good summer. So thank you from us.