Sincerely welcome to the presentation of SCA's interim report for the first quarter. My name is Björn Lyngfelt. I'm SVP Communications. The report will be presented by our CEO and President, Ulf Larsson, and CFO, Toby Lawton. After the presentation, there will be the opportunity to ask questions, both from the participants here in the room and for those participating over the telephone. Ulf, please.
Thank you for that, Björn. Good morning, everyone. Happy to give you some more information about the first quarter of 2018, which has, in general, been a rather strong quarter for us. Still, we have a continued strong market out there for more or less all product areas, and still also in all market regions. We had a strong sales growth, 11% this quarter in comparison with Q1 2017. The main reason for that is, of course, price increases. On the other hand, as you can see, we had negative on volume, and the reason for that is that we just now have started the big stop in Östrand in order to prepare for the startup in mid-June. We have been forced to keep volumes in order to supply customers that need our pulp also during this long stop. I will come back to that.
EBITDA was up 47% from SEK 797 up to SEK 1,175. Again, the main reason is prices, of course. We have had also this year, harsh winter conditions and we've seen some negative effect on the cost side for our forest operations. Also when we look into our sawmills, you can see some negative effect from this strong winter. Östrand project is progressing according to plan, and we have now stopped for the final step, where we will extend the recovery boiler. So far, up to today, we have invested 80% of the total amount of SEK 7.8 billion. We've seen a stable wood supply during the first quarter and also before Christmas, despite harsh winter conditions. As you know, we are less dependent on external wood supply than maybe some of our colleagues, which have been a good thing this winter.
Of course, we can see some effect in the sawmill production, and also in the forest operations, as I said. We will add some extra costs here, but nothing big. Our pulp and paper industry hasn't really felt anything from this tough winter. We can also see that we have improved our product and market mix. Of course, in a strong market, we try to, so to say, move our customers closer to the mill, which we've done in a positive way, in a successful way. Another example is that this year, I think that we will not sell more than at maximum 3% standard newsprint. We have tried to find new products, and we try to move forward in the value chain also in that perspective. If we now look into some KPIs, as I said, SEK 1,175 plus 47% on EBITDA level.
Our return on capital employed in the industry is 17%. If we exclude the capital that is now invested in Östrand, as so far, we have no positive effects of this investment, but we have spent the money, of course, 17%. When it comes to the EBITDA margin, we have a positive trend, as you can see on the right-hand side, close to 27% this quarter. And our leverage is around 1.8. We've had a strong cash flow during the quarter, but the first quarter is also the quarter where we pay out dividends. I did show this slide at our AGM recently, just in order to show that we do continued investments in the profitable growth in order to maximize the value from the forest.
We are happy to say that the production in Tunadal, the new saw line in Tunadal, is now up and running, maybe better than we even thought. It is the world's fastest sawmill saw line today, and it's working 200% just now. We will start up the new mill in Östrand, the rebuilt mill from mid-June, as we've said, according to plan. We have now also started up the pilot facility that we have started up in Obbola in order to see if we can extract black liquor from the process and from that produce biodiesel and some other green chemicals and things like that. The equipment is working, but it's still too early to judge what we can do about it. It's working now as we also planned that it should do at this time.
As you know, we have an installed capacity of wind power on SCA land of 2.6 terawatt hours, and now we have closed further agreements. We today know that 2020 we will reach our goal, which is five terawatt hours installed capacity in 2020. We have also, during the period, announced that we will invest another SEK 200 million in our kraftliner mill in Piteå in order to increase the production of white top kraftliner, again, to move forward in the value chain. We have also started up environmental permit applications for a possible production increase in Obbola, and also at the same time for a biorefinery at the Östrand mill. A lot of things is going on in this area.
We've also announced some management changes during the period, if we start to the right, Jonas Mårtensson, he has become the new president of Forest since 1st of April. Jonas has a long experience in the wood industry. He is replaced by Jerry, to the left. Jerry has been in charge of Obbola mill for the latest three years, and before that, he has spent many years in the wood business as technical director. He's been heading Tunadal Sawmill and also Bollsta Sawmill, so it's a very experienced guy here. Last but not least, Kristina Enander. She will enter into the position of being president in Pulp from 1st of November 2018. Kristina, she spent almost 25 years in Ortviken and done a fantastic job at that mill. We're happy to welcome these people into new positions.
Walk into our segments, start with the Forest. As already mentioned, we have had a stable wood supply. We have been able to run our industry to 100%, even if we have had tough winter conditions in the northern part of Sweden. In some areas, we've had up to 2-meter snow, which is quite hard to deal with. Also it's been quite cold, which is not, at least for the sawmills, a problem, really, in the production. We have now started to see some slight price increases in the region, and especially high prices for imported wood. We do not import too much, as we have our high degree of self-sufficiency, but still, we can feel that it is a price pressure upwards here. Sales was down 1% during the quarter. That is more or less flat, so nothing to comment, really.
EBITDA was down 6% or about SEK 20 million. As mentioned, we have had some extra costs in the forest operations due to the winter. Turn over to wood, here we can again say that we have a stable market with continued price increases. If you look to the chart to the left, one can see that we have been able to step by step increase prices since first quarter 2016, or maybe since the fourth quarter 2015 even. That is also something that we will do in the second quarter. We have set prices for the second quarter, and we will have another price increase of 3%-4%, something like that. Low inventory levels, really low inventory levels. Sales was up during the quarter 10% due to higher prices. EBITDA was up 90%.
We've already mentioned that we've had some extra costs related to the winter, but also due to increase in raw material prices. In Pulp, we also have a continued strong market with increased prices, and we are happy to say that the Östrand project is running according to plan. Sales during the quarter was down 8%. The main reason for that is that we have had lower deliveries due to inventory built up ahead of the Q2 stop. We have to supply some of our customers. They are more or less dependent on supply from SCA, and that's the reason why we have built up the inventory. EBITDA, nevertheless, was up 71%. Higher prices, of course. We had lower deliveries.
We have also, as we have announced before, some direct cost affecting the project, and in this area, we've also had some negative currency effect, but prices has overcompensated that fact. As I said, we have now stopped Östrand for the latest or the final phase in this rebuild of Östrand mill. This project has been run as a sequential startup, and that is a very good thing to have because that will mitigate risk, of course. I can just show you some slides here. This is from the wood handling unit, and that one was up and running Q3 2017, and that is today the only wood handling unit that we have. We've been running for 50% capacity up till now. Now from June, we will run it to 100%. This is already finalized, more or less.
The evaporation plant we started up Q4 2017. As you can see, we struggled a little bit in December, but from January and up till March, we have more or less 100% capacity in this plant. Of course, again, we have to speed it up to serve the full capacity in Östrand, but we believe that will be nothing peculiar with that. That's an easy operation, we think. Drying and packaging. This part is now handed over to SCA from the supplier. Again, we have tried all parts of this department, and it's working well. The fiber line is still under commissioning, which is also according to plan. That is the work that is ongoing now during the long stop that we have just now.
Finally, now we have started to extend the recovery boiler, and just today, as we speak, we are moving the big, big wall, and that will take between two and three days. So far it is really good. The white liquor filter is also up and running now. We have now also been able to look into the old recovery boiler. We have run that for 10 years now, and you don't really know what you will find there when you open up and go in. So far, no bad surprises. We are happy to say that we think that is working well, and it is according to plan, and we will start up mid-June. Finally, if we talk a little bit about paper, we have a continued strong kraftliner market, again, with higher prices.
If you look to the left-hand side, you can see that, as mentioned before, we increased prices three times EUR 50 per ton in last year. Now we have announced another price increase from this year of EUR 60 per ton. We have also seen some improvements in the publication paper market due to a better balance. Structurally, consumption of publication paper is still going down, of course, but it's always a question of the balance. All in all, sales was up 16%. That is more or less 100% related to higher kraftliner prices. EBITDA was up 119% due to kraftliner prices, high kraftliner prices, also higher prices for publication paper, but from a very low level, as you can see down in the left on this chart. We've seen some price increases also here.
Again, we have improved our product and market mix, and in this area we have also had a very stable cost development because this part of the business has not been impacted negatively by the harsh winter. With that, I leave over to Toby.
Thank you, Ulf, and good morning, everybody. I just show you first the income statement here, and as Ulf has already explained, the top line increased by 11% up to SEK 4.4 billion in the quarter. EBITDA up 47% to SEK 1,175, which is a margin of 26.7%. I think you can see here, because we have basically flat in terms of depreciation and financial cost, the drop-through from the EBITDA to bottom line is very strong, and therefore, we've more or less doubled net profit for the period, and earnings per share is now SEK 1, more or less double what it was in the first quarter last year after the first quarter. When you come onto the contribution by segment here, first on the left, you can see the Forest, and the top line here is very stable.
We have a seasonality in the Forest business, which is largely driven by how much we harvest of our own forest every quarter. The first quarter is always a bit lower quarter seasonally, but we also had some effects from the winter here in the first quarter. I think without the additional effects from the winter, we would have had a slightly better first quarter in the Forest division. In the Wood division also, we've shown consistent growth over many years. We have a stable EBITDA margin. We have a timber supply business alongside our sawmills, which gives us a more stable development in EBITDA margin than maybe you would have in a pure sawmill type business. Here we also have some seasonality, so the first quarter is also seasonally usually a little bit softer than the fourth quarter.
Again, as Ulf mentioned, we had some winter effects here as well, primarily driven by slightly lower volumes. Volumes would have been stronger if we hadn't had effects from the winter. In the Pulp division, we have a very strong momentum, very good pricing environment. We had a top line slightly down, as you can see, which was driven by the fact that we're building up stock in the first quarter ahead of the stop, which has now started in the second quarter, in order to maintain deliveries to key customers now during the second quarter. EBITDA margin has increased now on 30%. There are still costs in Östrand driven by the project, which I will come back to. It would've been higher without those costs, but it's obviously a stronger development driven by the Pulp pricing, particularly. Paper, also a strong development.
Top line increased and EBITDA also increased, and now at an EBITDA margin of 25%. The biggest factor here, again, is kraftliner price development, but also publication paper has developed a bit better versus previous quarters as well. Here, the bridge on net sales from first quarter last year to first quarter this year, we have an increase of 11%. 13% is driven by price mix, so by far the biggest effect is driven by prices, and here it's positive in all major product areas in terms of price. We have a slightly lower volume, so volume has a -3% deviation, and the biggest one here is Pulp, which is again, the building up of stock ahead of the second quarter during the stop. We also have a slightly lower volume in kraftliner.
It is not production related, it is really that stocks are now much lower, so production is going well, but deliveries are a bit down on where they were first quarter last year, where we had a relatively high level of deliveries. Currency is a small difference, +1%, and here EUR is positive for us. US dollar is actually negative versus the first quarter last year, but our weighting in EUR is heavier than our weighting in USD, so the net effect is slightly positive. When it comes to EBITDA, again, the biggest effect, of course, is the same, is price mix, where we have higher prices for all major segments, and an improved product and market mix. Volume slightly down, a small negative.
On raw materials, we do see some cost pressure on raw materials, in particular wood cost slightly higher for the wood cost we buy in and chemicals, where we see some cost increases. Energy, largely flat. We had probably more energy cost, which I will come back to in the direct costs in pulp, slightly in the first quarter, offset by some other positive impacts in energy, but overall, largely flat. Currency, a positive. Again, EUR positive, US dollar negative. We have some small negative in other as well, which is really driven. Here we have the Östrand project costs and also some of the costs related to the winter, which affect the other column. Overall, a 47% increase in our EBITDA margin in the first quarter at 26.7%. On cash flow, you can see we had a strong cash flow in the quarter.
Operating cash surplus after we take away the effect of the forest valuation, which ends up on SEK 922 million. We had a negative working capital in the first quarter. Although our overall level of working capital in relation to sales is stable, we do expect an increase in working capital during this year as we build up for Östrand coming online as well. Capital expenditures, pretty stable at SEK 76 million, and operating cash flow then SEK 591 million for the quarter, where we are almost then financing the strategic CapEx in Östrand, which is SEK 634 million. We are almost financing that from our own operating cash flow this quarter. Now I will just come to a few details on the Östrand project, and I think a lot of this will be repetition to many people. Here there is no new information on the guidance here we give on Östrand project.
The startup we expect is in June, according to the plan startup time. The ramp-up period we expect to take 12-18 months, and this year in 2018, we expect the volumes to be in line with last year. Again, the volumes that we lose from the stop, the long extended stop, will be compensated by the higher volumes after the startup. We expect 2020 then to be the first year at full capacity and 2019 somewhere in between. Overall, the project would double our NBSK capacity to 900,000 tons. We expect the fixed cost reduction, which will be the largest impact of some SEK 350 per ton. We expect an improved energy balance, where we will go from being a net consumer of around 0.1 terawatt hours before the project to a net producer after the project of 0.5 terawatt hours.
On the other side, we expect potentially there could be some higher wood costs as a result of having to source a higher volume of wood, primarily from further away. There's a higher cost to bring it to the mill. That's, again, nothing new with the investment cost SEK 7.8 billion. Here are some of the impacts in 2018. Again, this is largely also repeating information that we've already explained, but just to make sure people understand, we have three different kinds of cost impact, which we've explained. We have the project-related costs, which are indirect costs, which have been continuing at a very similar rate during last year and continue during the first two to three quarters of this year as well. There we expect SEK 60 million of project-related costs this year, of which SEK 10 million is depreciation.
As you see here, that's primarily during the first nine months. We have the maintenance stop, which is happening now in the second quarter, which is obviously a long maintenance stop, which as we show with all maintenance stops, has a cost impact. Here the impact in the second quarter is expected to be SEK 220 million. We expect a small stop in the fourth quarter of SEK 20 million in terms of maintenance stop as well. Finally, we have the direct cost impact during the ramp-up, which we expect to be around between SEK 100 million and SEK 250 million during the whole year due to the effect of higher costs for energy, higher costs for chemicals, some extra wood consumption, and a higher share of B-grade pulp during the ramp-up.
This effect is expected to be some SEK 100 million to SEK 250 million during the year, depending on how the ramp-up proceeds. We can't be any more specific than that. We have seen some of this cost already during the first quarter, a little bit, SEK 25 million we estimate during the first quarter from higher direct costs, primarily energy-related in the first quarter. Those, and you can see on the right, we've given the table showing those three main cost items. Lastly, we also expect working capital will increase during the year, particularly raw material inventory, and that's due to the higher volumes and higher sales, which will come through from Östrand ramping up. A little bit finally on balance sheet. Our book value of our forest is now SEK 31.6 billion. A very stable level. We have a working capital just over SEK 3 billion, 17% of sales.
Our total capital employed now at SEK 43.5 billion, which means with our net debt of SEK 7.3 billion, we have a net debt to EBITDA now of 1.8 times. As Ulf mentioned, our operating cash flow minus strategic CapEx is more or less neutral, but we paid the dividend in the first quarter. That's when we pay the dividend. That resulted in a slight increase in net debt up to SEK 7.3 billion, with 1.8 times EBITDA. Now net debt to equity is 20%. Ulf.
Yeah. Just to summarize again, we have a continued strong market in all product areas, all geographies. We had a strong sales growth, mainly due to price increases in the first quarter this year in comparison with the first quarter 2017. EBITDA was up 47%, up to SEK 1,175 million. Östrand project progressing according to plan. We will have our start-up mid-June. According to plan, according to time, and according to budget, which is, of course, a positive thing for us. We've had a stable wood supply, even if we've had a strong and hard winter this year. Of course, due to the fact that we have a high degree of self-sufficiency, which is a good thing to have in a winter like this. We have also been working quite hard to improve our product and market mix.
Yes. With that, we will open for questions. Please wait for the microphone so everyone can hear you, and please state your name and company when you address the question.
Thank you. It's Linus Larsson with SEB. I wonder if you just could clarify just a bit with the winter-related burden that you had on the first quarter. If you could in any way quantify that, and more importantly, talk about what to expect in the second quarter. Are there any reversals of those effects to expect in the near term?
Yeah, it's not so easy to calculate, but I think that we've had maybe SEK 20 million-SEK 30 million in extra costs. Of course, we will see maybe something in the second quarter, mainly in the distribution, but we have no big things. We have a good system with our rail terminals and so on. Of course, the big thing for us has been to move harvesters from the coastline into the inland because we've had too much snow, and you have to do some replanning and things like that, but no big things really.
Great. Thank you. Maybe a related question, but Toby, you showed on this graph the variable cost inflation year-on-year that we've had in the first quarter. As the year progresses, I think you showed SEK 65 million impact year-on-year. Do you think that number is growing as the quarters progress in the rest of the year?
It's very hard to give guidance, I think that was obviously Q1 last year versus Q1 this year. It increased to some degree during last year. I don't think we can give guidance on whether that would sort of increase or decrease for the remainder of the year. What we see is based on current prices, that is how much more expensive it is now than last year. We see some increase in wood cost, we see chemicals now are more expensive than they were a year ago, we don't see it becoming any more dramatic right now. I don't know.
If you'd rather comment on a sequential basis, talking about wood and chemicals and other variable costs, how would you describe that?
Risk of repeating, I don't want to sort of predict where they're going to go for the rest of the year. Right now, that's the effect we see. We don't see impact that they're going to go down significantly. We do see pressure on the wood side, which Ulf mentioned, again, we have a high degree of self-sufficiency there, only a limited part of that comes through and impacts us overall. Yeah, the pressure is there. We don't see it increasing dramatically from here. It increased a bit during last year, whether you would see a higher or lower effect in the second, third, fourth quarter is very hard to say.
Thanks.
Oskar Lindström from Danske Bank. A couple of questions. This quarter you had very good price momentum and support for your earnings from, I presume, especially the kraftliner side. You mentioned the 60 EUR per ton price increase that you announced. How much of that was fully in the Q1 numbers? What kind of momentum are you seeing for Q2 and the rest of the year?
If we start with what we did 2017, we had 3 announcements of 50 EUR per ton each, they have more or less all come in. The announcement now for this year, I cannot really see that we have had not too much effect in the first quarter. We hope that it will gradually be implemented during the second quarter.
You do feel that the market is strong?
The market is strong, you never know if you reach all the way. That's too early. The announcement is 60 EUR.
All right.
So.
Thank you. My second question, I guess, is a little bit related to the kraftliner side, is the pre-project that you've announced for Obbola. What's the status of that project? When do you expect to get an environmental permit? How soon can you move ahead with expanding capacity, starting up, et cetera?
It is a pre-project. That is what it is. Per Strand, who is the former mill manager there, he's gathered a big team. We will spend between 50 and 60 million SEK in this pre-project to do it in a thorough way. I guess that we will have a good view on this project in the beginning of next year, Q1, Q2, or something like that. The reason for us starting to work with these environmental permissions is that it is a long lead time. Even if the result of this will be that we will not go, still you have to start with this process anyway. That's the reason also why we have done it in Östrand. That's more a feasibility project, but still, we have to start with the environmental permission.
I realize I'm getting ahead of myself or getting ahead of you perhaps, but that's my nature, I presume. If you went ahead with this project, would that entail a startup sometime during 2020 then, or 2021 at the earliest?
Okay. If you have the pre-project running just now, if we decide to do this in, let's say Q1, Q2 next year, then maybe we will see something in 2021, late 2021.
My final question is, I guess also a follow-up on that is we're seeing a number of capacity increase projects, either already ongoing both in Sweden, Finland, and also in the Baltics. You have this potential project as well, on top of the Östrand expansion. How do you see the potential wood supply to support all these projects?
We had the opposite situation in the past. We have seen lots of closures, as it is just now, at least in our region, we have a rather balanced situation. For us, when we looked into the Östrand project 2006, we realized that we cannot really fulfill this. We built a recovery boiler, we couldn't really do the full project due to the wood supply situation that we had at that time. Today, when we have now done this project, we feel that we are in a good position when it comes to the wood supply. We have had many big suppliers that really like to come in and to secure that they can supply to the new mill. For us, it's a good and balanced situation as it is just now, I would say.
All right. Super. Thank you very much.
Mikael Joffs, Kepler Cheuvreux, a couple of questions. The first one relates to Oskar's question in a bit. We see that recycled papers are coming down quite sharply as a result of Chinese new restrictions. We haven't really seen how the testliner price increase announcement are going through yet. My question is really, what's the link between the recycle-based liner market and your products, if there is a link at all?
Obviously, you have a link between testliner and kraftliner to some extent. I believe if, at least in the past, they don't follow each other in a perfect pattern, they follow each other in one way or another, I think.
Okay. All right. Thank you for that.
If I may just add, I think on the one hand, recycled paper is a big input cost into testliner and kraftliner, there's some degree of substitutability, there are links on the output. From a cost side, there are impacts. From a demand side, we see very strong demand growth for kraftliner has been not met by capacity in recent years. We still see it very strong on the demand side, so yeah, exactly how it plays out is hard to predict.
No, no. Thank you. Final question, you mentioned that wood prices seem to be starting to go up now. Could you just remind us where are the current wood prices in relationship to your long-term DCF book value valuation of the forests? Is there a sort of in line or above or
We base our valuation of the forest on a five-year average of the wood prices. We even out. I think right now, this quarter, we would be a little bit above, but it's not dramatic.
Perfect. Thank you.
Do we have any more questions from the room? Otherwise, we will go to the participants that will ask questions over the phone. Could we first ask the telephone operator to instruct the participants to press the right buttons for getting access to us?
Dear participants over the phone, if you wish to ask a question, please press star and one on your telephone keypad.
The first participant over the phone is Christian Kopfer, Nordea.
Yep. Thank you very much, Björn. You have partly already answered this question, but just a follow-up on the market side here, primarily on the kraftliner side, as we've seen the strong markets continuing here in beginning of 2018 with a lot of price increases. Do you have any fears that you will see backdrops on the demand side for these products as prices have increased so heavily?
We have a strong demand as it is just now, but we don't know about the future. As it is just now, it is a really strong and stable market, and if we could produce more, we could sell also more. That's the current situation.
Right. A follow-up on that as well. You are looking into expanding your volumes on the kraftliner side, obviously. Do you think it's a risk that the market will be oversupplied of kraft? If you look not in the short term, but if you look four or five years ahead.
Long term, I think that the demand of packaging material, good quality, mainly fresh fiber-based packaging materials, the demand for that will increase due to e-commerce and things like that. The long-term trend is, of course, positive for the packaging business and not the least for the kraftliner business, I think.
Right. Thank you. Finally, maybe for Toby, maybe I missed this, but to clarify, if I understood it right, that you have hedged around 60% of your expected cash flows in EUR, that you have hedged the EUR SEK at around 10 or something like that?
Yeah, we've hedged 70%. In EUR, we've hedged 70% for the rest of this year at 9.96. Yeah, I think it is. We've also hedged 30% of our USD flows for this year as well.
On what kind of currency on the US dollar?
I think it's 8.11, yeah, if I remember right. I think that's in the report as well. You can read the exact figure in the report if I'm slightly wrong.
Okay.
I don't
Okay. Thank you very much.
Thank you. We have Alexander Berglund, Bank of America.
Thank you. I have a follow-up for Mikael's question on the kraftliner and testliner spread and the risk for substitution. It looks like the spread increased a bit more. Specifically in your conversations with your customers, have you seen any indication of increased substitution to testliner? Just looking at consumption of liner board generally, kraftliner is already quite at a historical low looking at the total consumption. Might it be that we have reached a limit where there is no real scope for substitution to the need of fresh fiber and also the application of requirements where you need to have a kraftliner?
As I said, I think if we could produce more kraftliner, it would be easy to sell it in the market as it is just now. The demand, again, for high-quality packaging material is really increasing. Again, the reason for that is the e-commerce, not the least. If you should send a package over the world, you like to have a package that is in good condition when it arrives to the customers. I think it is a good momentum for kraftliner and the general trends supporting fresh fiber-based material in general.
Thank you.
Thank you. We have Robin Santavirta, Carnegie.
Thank you. Regarding Östrand, you plan to reach full capacity in 2020, you said. Two years out. That seems as a quite long time to reach full capacity. Is the reason technical or is it commercial? Is it sort of a conservative plan? Is it simply how you realistically see it?
That is the plan that we have just now. You need to have a plan, we have been looking into other projects, from that, we have judged that between 12 and 18 months. I think if you think it's conservative, I don't think it's conservative. I think it's quite aggressive, to be honest. As far as we know up till now, we are positive because, as mentioned before, we have had a sequential start up, we have many different parts of the mill is already up and working in a good way. We have had no bad surprises, even now when we have opened up the recovery boiler that has been used for 10 years. No reason for us to believe that we will not have a good start-up. I think it is quite ambitious to say between 12 and 18 months.
We will do our best for sure. Can we do it faster? We will do it, I can guarantee.
What do you think is a larger limit for reaching that, whether it will be sooner or later? Is it technical or is it commercial?
Definitely it's technical in that perspective. One thing is to produce the volume. For us, it's really important that we will serve the market with high-quality pulps. We will not start up with some B grades and things like that. We will fine-tune the process so that we can deliver high-quality pulp. It's a tremendous demand out there for pulp just now, and not least due to the restrictions that was mentioned in China now for recycled fibers also. It's a really strong momentum for pulp. It will be up and down, of course, but as it is just now, it's strong.
Exactly. Related to that, have you agreed with customers about the new volumes? Will it be mostly in China or any additional volumes planned in Europe as well?
Today we are more or less 100% based in Europe in this business. At an early stage, we did plan for bringing at least a couple of hundred thousand tons out of Europe. As it is just now, I think it would be possible to sell everything in Europe. I think long term, it should be a good balance. Some of the volumes, I believe that we will place in China, but also in U.S. In a project like this, it's so easy just to focus on, let's say, the production part, but we have really been putting efforts in the marketing side. We feel that we are really prepared also on the market side. It's easy to sell 1 million ton of pulp, but the tricky thing is to do it so you can make good money out of it.
I feel that we are very well prepared also in that area.
Good. Thanks. Finally, just a question on harvesting at the moment. What are the conditions now after a bit of a problematic winter?
Now it's spring also in the northern part of Sweden. God, thanks.
Well, are you sort of flooding?
The positive thing, we've had a lot of snow. It was rather cold in this winter, but the snow came before we had the coldness. I think the, what do you call it, the fall time will be rather short, so which is of course good for us. We have also our railway terminals, and we have a good stock now. I think in that perspective, in the wood supply perspective, we have no danger left. Now we are in a controlled situation again.
Okay. Thank you very much.
Thank you. Then finally we have Martin Melbye, ABG.
Yes, good morning. You mentioned price increases on kraftliner and wood, if you summarize each of the business units, and the price increases yet to come, i.e., not already in Q1?
Yeah. I think Ulf mentioned the wood part when we went through the slides with, was it 3%-4% we expect to come through. Kraftliner, we expect there's a bit of a time lag, so there will be some time lag effect coming through into the second quarter for kraftliner. Beyond that, I think we don't give sort of speculation on.
We can say in publication papers.
On publication.
That we've reached some small price increases from the first quarter. I think it was EUR 15, EUR 20 per ton. I think that we have also seen announcements now on coated papers from this summer of 3%-4%. In pulp, with fixed prices nowadays is EUR 11.30, and we've seen announcements now for May on EUR 11.70. That's the current situation. Of course, in kraftliner, we've done these announcements, and then we have to wait and see what will come through. It's still under negotiation.
Great. These wood prices that are moving up, can that impact your forest EBIT in a meaningful way or not really?
What we have done ourselves is that we have announced plus SEK 20 per cubic meter in both the pulp and sawlogs. That will, of course, have a positive impact on our EBIT level in the forest. It will have a negative impact on the industry side. As we have a degree of self-sufficiency of about 50%, as Toby mentioned, we will have a limited effect.
Excellent. Last question. The next 10-year forest plan, when is that due?
Yeah. You mean the survey? I think we are in the middle just now, so I think we will have it.
201920, I think
Yeah, around '20.
'20, maybe.
2020.
2020.
Thank you.
Thank you.
Okay. Thank you. That was the end of the list of questions, which means that we will now conclude this session. We hope to see as many of you as possible on the 22nd of May when we will have a capital market dedicated to the forest. Since we've had quite a few questions on wood and forest, that will be a good opportunity to have a deeper insight in the mysteries of forest operations and wood supply. Thank you, and look forward to seeing you soon again.