Clearly, welcome to the presentation of SCA's year-end report. My name is Björn Lyngfelt. I am Senior Vice President, Communications of SCA. The report will be presented by our President and Chief Executive Officer, Ulf Larsson, and our Chief Financial Officer, Toby Lawton. After the presentation, there will be a session for questions and answers. Please, Ulf.
Thank you for that, Björn. Good morning, everyone. Happy to give you some more details about our Q4 results, and also for the full year 2017. We have had a continued strong market for our industry, more or less in all geographies, in U.S., Asia, but also in Europe. We have also a strong position for all our product segments, and with some exception for publication papers, but otherwise, it has been a strong year 2017. We did a good sales growth of 8% last year. The main driver for this was, of course, prices, while volumes and currency were quite flat. EBITDA was up a little bit more than 30%. Again, the main driver was prices, but also we had a good cost position and also good productivity development during last year, which has been also a good contribution.
We were a little bit negatively hit by currency, mainly the U.S. dollar. We also, this quarter, had some extra costs related to the big investment project in Östrand, but they are again according to plan, about SEK 28 million for the quarter. Otherwise, the project in Östrand is running according to plan. We have now done 70% of the investment, or SEK 5.5 billion. We have just recently started up the evaporation plant, and as you know, which is also a big positive thing for this project, we have a sequential start-up. We took the wood handling department, up and running already in the autumn. We have taken the evaporation plant up and running from January. We will have the packaging line and also the drying machine up and running in February.
We will have the big thing in April, May, where we will extend the recovery boiler. Everything so far is running according to plan. We mentioned good cost control. We've also had a year of strong production. Production record at Obbola kraftliner mill in Umeå. We had a record production in Tunadal mill in Sundsvall. We also had a record production at paper machine number 5 in Ortviken, our uncoated machine. Otherwise, we are focused on profitable growth. Östrand is one example. Another one is the investment that we took recently in increasing the capacity of white top kraftliner at Östrand. We will not increase the total capacity, but we will increase the capacity of white top with 50,000 ton per year. If we take a look at our full year figures, we increased our EBITDA by 15%, up to SEK 3.76 billion.
If we look at our return on capital employed on the industrial side, that was 13%, if we exclude the investments that we have done in Östrand, which we cannot really use yet. We have proposed a dividend of SEK 1.5, which is 56% of the net profit. Our EBITDA margin was up from 21.3% up to 22.6%. Our net debt was on a good level of 1.6 times EBITDA, which is a little bit better than we maybe thought, due to a little bit lower CapEx, but also due to a higher cash flow during 2017. Earnings per share, SEK 2.67. So it was a year of a stable and strong performance. If we look on the left-hand side with sales, we can see that we have increased sales from 2016 by 8%, but it is more or less in line with what we've had since 2014.
To the right-hand side, we can see the EBITDA margin and expansion. Prices have went up during the year, but we also have had a good cost control, good production level. We are impacted a little bit by the big project, of course, but that is what we also planned for. We had a rather strong fourth quarter with an EBITDA margin of 25%, which is on a good level. We are back on track when it comes to EBITDA. I walk over to our four segments, and I like to start with the forest part, and we have a balanced timber supply situation. We've also had a stable price development with minor increases in our area. We can see that in other area, price is going up just now, but we feel that we have a good control over the price development here.
Last year, we did harvest 4.4 million cubic meters, which is according to the long-term harvesting plan. We had to harvest a little bit more on external land, but this year we are back on track, so to say. We have also started to prepare in terms of wood supply for the big startup. We will need between two and two and a half million cubic meters more annually due to the Östrand project. We are prepared for that. Sales remained flat. EBITDA was up 6%. That is mainly related to high share of harvesting from our own forests in comparison with Q4 2016. Here we have had a stable cost development, even this is the first real winter we've had since many years, but stable cost development.
In wood, we have also had a very strong market, and as you can see to the left-hand side, we have had continued price increases since Q1 2016. Just now, as we speak, we have rather low inventory levels, which give a signal of a balanced market. Sales were up 5% this quarter comparison with Q4 2016, and that was mainly driven by prices also here. We also had some production. I mentioned that we did a production record in sawmill. The other sawmills, they have been performing well. One thing that is worth mentioning is the timber yield.
We have a situation where 67%-70% of the cost for a sawmill is related to the log, and just now we have a little bit more than 50% yield in our sawmills, and we have a rather narrow stock, so we are very happy about that, and that also give a good contribution to our profitability. That is related, of course, to some investments, but also to a lot of hard work in this area. Pulp, also here we have a strong market. Peak prices today are at SEK 1,030, and we've seen announcements in the market of SEK 1,070. Östrand project, according to plan, we will start up June 2018. It is a sequential startup, which will give us good possibilities to fulfill the plan. We have some project-related costs, but they are also according to plan.
Of course, we have had some impact on the production volume during (HCB) because we have to connect the new mill into the old one, so that has caused us some volume losses. Again, according to plan. Sales was up 1%, higher prices, but on the other hand, a little bit lower volumes and also negative currency effects. EBITDA, nevertheless, was up 46% Q4 2017 in comparison with 2016. Higher prices. We also in Q4 2016 had some revaluation of electricity certificates, which we don't have now. We had negative currency effects, and also we had a rather big maintenance stop in Q4 2017, SEK 58 million. We had a small one in Q4 2016, which was about SEK 23 million. If we then turn into paper, last but not least, the kraftliner market is super strong.
If you see the graph in the left-hand side, you can see that we have had a strong price development. During 2017, we increased prices 3 times by EUR 50 per ton each time, and that has been gradually implemented during the year. Now we have also announced another price increase from February, and that will also be by EUR 60 per ton for both unbleached kraft and also for white top, and that will also be gradually implemented during the spring. I did mention the all-time high production in Obbola, which is a really positive thing. We also took just recently an investment decision in order to increase capacity of white top kraftliner in Munksund. As I said earlier, that will not have an impact on the total production capacity, but it will increase the share of white with 50,000 tons annually.
In publication papers, we still have a challenged market, if we look to the other graph, you can see that we have had a flat price development since 2015 and up till 2017. Anyway, just now we feel that the market is a little bit stronger. We have seen some price increases announced for the beginning of next year. Uncoated a little bit stronger than coated, and that is due to closures mainly in the uncoated production. We feel a little bit better also in that segment just now. Sales was up 11%, 2017 versus 2016, fourth quarter, and that was mainly due to kraftliner prices, of course. EBITDA was up 74%, again, prices, but also to some extent due to improved product and market mix, and also we've had really good cost development also in this area. With that, I hand over to Toby.
Thank you, Ulf. Here I can show you our income statement both for the quarter and for the year. We had, in terms of top line, 8% growth both in the quarter and in the year, and that's driven by both volumes and higher price levels, as Ulf discussed. We had an EBITDA in the fourth quarter of SEK 1 billion 78 million, which gave us an EBITDA margin for the full year of 22.6%. We had no items affecting comparability in the fourth quarter, but for the whole year, we had some SEK 113 million, which is related to the spin of the company and the spin-off of Essity in the first half primarily.
We had financial items of SEK 7 million in the quarter, after tax, that gave us a net profit in the quarter of SEK 596 million, in the full year of SEK 1 billion 874 million, which is an EPS of 2.67. The proposed dividend, as Ulf mentioned, is SEK 1.20, which in relation to the EPS of 2.67, equates to a payout ratio of 56% of the net profit. Looking here, this shows you the several year perspective per segment. You can see if I take first the forest segment, the net sales are awfully stable in this segment, as we've discussed before. The EBITDA margin is also stable.
We had a slightly higher level this year than we had in the previous years, and some of that is due to less effects from the storms that happened some 3, 4 years ago, and therefore a higher level of harvesting from our own forest as well this year at 4.4 million cubic meters. The wood segment has grown year-over-year for many years and also had a strong growth this year. Driven also partly by price and partly by volume, a stable margin development with 11% EBITDA margin for the year. As we've also mentioned before, because the capital turnover is higher in the wood segment, even though it's the lower of the EBITDA of our segments, it has a healthy return on capital employed.
The pulp segment has been affected the last 2 years by the project, this year we ended with a 19% EBITDA margin. You can see the last effect in 2016 and 2017. The quarter had a better trend with some of the higher pulp prices coming through. Although we did also have a maintenance stop in the fourth quarter this year related to the project. We ended with 52% in the fourth quarter EBITDA margin. The paper segment. Top line declined in 2016 after we closed 1 paper machine in Ortviken. Has increased this year with primarily volumes and prices related to kraftliner. You can see that coming through in the EBITDA margin as well with 18% EBITDA margin for the year.
Just to show you the waterfall for the fourth quarter here for net sales, the biggest impact is in terms of price mix in the fourth quarter. That's coming both from the wood segment, the pulp segment, and from kraftliner. We had a slightly negative volume difference for the fourth quarter due to the planning mainly of maintenance stops. We had a slightly negative currency impact as well, mainly from the US dollar. If I go the same picture for EBITDA, here you see the main factor is again price mix on the EBITDA with a SEK 390 million impact in the fourth quarter, again for prices for wood pulp and kraftliner. Slightly negative volume again. We had a very small positive trend for raw material. For energy driven mainly by the one-off items taken last year.
It's not driven by the general trend in energy costs which is more flat. Currency again was negative primarily due to US dollar. We had a few items in the other column here. We had a larger maintenance stop effect this year in the fourth quarter. We had more costs related to the project in Östrand this year than we had last year. We've also had a bit of catch up in terms of the central corporate functions related to establishing the company as an independent company. We had some effects due to one-off positive items that we had last year in the fourth quarter, which of course we don't have again. When you look at it this way, has a negative difference. Overall, we have, as Ulf mentioned, a 31% increase in EBITDA with a margin of 25.4% for the quarter.
The cash flow. We had an operating cash flow of SEK 842 million in the fourth quarter. We had a strategic capital expenditure for Östrand in the fourth quarter, a bit lower than we expected, of SEK 779 million. We've now spent some SEK 5.5 billion of the Östrand capital, 70%. A large part of the remaining amount will come during this year, 2018. For the full year, we had an operating cash flow of SEK 2,273 million. The working capital was slightly negative, driven by the growth in sales. The current capital expenditures were SEK 638 million. If I go on to some information again about the Östrand project costs. We talked about this before, but now a bit more detail on what we expect in 2018. We had the project related costs this year.
In 2018, we expect to be SEK 60 million, of which SEK 10 million is depreciation and the remaining SEK 50 million is EBITDA-related cost. We expect that to come in the first half of this year before the start-up. The start-up is scheduled for June. That's following an extended stop of around 45 days. The impact of these maintenance stops, we also have in the material. For the startup, in particular in the second quarter, we expect the cost impact to be SEK 180 million. There's two smaller stops scheduled for the third quarter and the fourth quarter. That's the effect of the 45-day stop in particular.
Apart from the project-related costs we talked before about, there is an increase in direct costs in relation to the startup, which we expect, which comes primarily from increased energy usage, increased chemical usage, higher wood consumption, and also a higher share of lower quality B-grade pulp during the ramp-up phase. We've given a range for this cost impact from SEK 100 million-SEK 250 million. We expect it to be somewhere in between, but depending how well and how fast the startup goes, it can be within that range. We expect that impact to come mainly in the second quarter and the third quarter of the year. We've not mentioned here, but we've mentioned before the depreciation impact as well, which is a non-cash item, but there will be a depreciation impact once the new mill is up and running, which comes once it starts.
It comes from the third quarter and onwards, and that's around SEK 300 million on an annual basis. Finally, working capital, which we expect to increase with the increased volume and sales coming from the new mill. We don't expect the proportion of sales to increase. It's going to be in line with the growth in sales. We do expect it will increase ahead of the startup, particularly in the raw material inventory, which needs to be built up during the first half of the year before we come online. The balance sheet. From here you can see the balance sheet at year end. We had the book value of the forest assets ending the year on SEK 31.4 billion. If you take the working capital here, you can see SEK 2,861 million, which is 18% of net sales.
It's in line with the year before, but has grown in relation to the growth in net sales. The other capital employed, which is primarily related to the industrial assets, aside from the forest and not the working capital, but the other industrial fixed assets, end of the year, some SEK 2 billion, up from last year on SEK 15.4 billion, and the increase is mainly related to the Östrand investment, which is yet to come online. We ended with capital employed of SEK 42.7 billion. Funded by net debt, which is just short of SEK 6 billion, which represents a leverage of 1.6 times net debt. Or in relation to equity, which ended the year on SEK 36.8 billion at 16% debt to equity ratio. With that, I hand over to summarize.
Just to short summarize the Q4 2017. We had a strong market, all geographies and more or less in all areas, with one exception in publication papers. We see a slightly better market for publication papers also now when we are starting 2018. Strong sales growth, EBITDA up 31%, driven by prices, but also we have a good production level. We have good cost control, which is not the least important. Östrand project progressing according to plan. Start up June 2018. Good cost control, stable production. Records in Obbola, in Tunadal, and also PM5 in Ortviken. Focus on profitable growth, as has been mentioned. Recently, the decision to increase the capacity of white top in Munksund. That is in line with the strategy. Please, I think we open up for questions.
Yes. We will open for questions now. We will start with questions from the live audience, then we will open for questions from those participating through webcast. Please, as you ask your question, introduce yourself so those who participate by phone can know who's asking. Let's see. Oskar, please.
Oskar Lindström with Danske Bank. I have a question regarding forest land transactions. We've seen one of your competitors or peers selling some forest land at the end of last year. Are you looking to become more active in selling and buying, I presume, your forest land?
I can start with that one. Today we buy and sell for approximately 100 million SEK per year. It's always of great interest for us to move the forest closer to the industry. That is what we've done in many years, and we're very interested in that movement also going forward. Shall we do it more than we've done in the past? You need to find good possibilities, and when we find them, yes, we are interested.
If I may follow up. Would you be interested if the opportunity was there to increase your forest land holdings?
Yeah, I think that would be in line with our strategy. Yeah.
Thank you very much.
On the other end, you have the legislation, so you're not allowed to buy from private forest owner and increase the amount that way. You need to buy from a legal person. That's the only way to do it, as you know.
Just a follow-up on that.
Yeah.
How important would it be that that forest land is located next to your production units? Or do you see forest land also as an investment asset in its own right?
I think as it is just now, we like to connect it in our value chains. We have our forest where we have the industry and vice versa, I think that is a good way to have it.
Thank you.
Please hand on the microphone. Yes, please.
Thank you. Linus Larsson with SEB. The board has proposed a first dividend for the newly independent company, I wonder if you could share with us in any way the thinking around that, what the policy is. I noticed you put the dividend in relationship to the EPS. Is that the fundamental basis for the policy, or is this connected to cash flow, or what's behind the proposed dividend, please?
Maybe I could say this is the first dividend since the spin-off of SCA, I think the guiding principles, if you like, we have our investment grade rating, we want to maintain our investment grade rating. That's an important element for us, the other element is, as SCA had before, to have a stable and increasing dividend, that's what we see, maintaining that policy going forward. Obviously we're now setting the start point from after the spin-off of SCA. Those are the guiding factors, I think. I wouldn't read any more into it than that.
May I also ask around wood costs, maybe you could comment about market trends in the wood market in general, but also more specifically in your situation, given that you will increase your demand for wood by 2.5 million cubes per year or something like that within the next year or so. Will that result in a higher wood cost on average in 2018 for you, or will you manage that in some other clever way?
We don't forecast. We need to get the wood that we need in order to supply our industries, we've been good at that in the past, I think we will be good at it also going forward. Prices will vary over time, as it is just now, we can just say that we have a stable price in our area, that is not really the case when we look around us. But in our area, it's reasonably stable. We have seen minor price increases when we buy from private source owners and so on, but on a rather stable level. We are also rather well supplied as it is just now. We have had the first real winter for many years now, so we have a lot of snow.
We have had some problems with the railway and the infrastructure, as it always is, we are used to handle that kind of challenges, I would say. We have a balanced situation just now, and we think that we can supply also [inaudible] with the wood mainly from the region where we are.
If I could add just the planning for the increased volume for [inaudible] has been going on for some time, we're confident in that the supply is going to be stable for [inaudible] .
As Toby mentioned, we will tie up some capital. Now we need to prepare for this build-up, of course. We need to add a couple of extra 100,000 cubic meters at the terminals and things like that. That work is ongoing now and is according to plan also.
Great. Thank you.
Move the microphone there, then we'll take the next one. Please.
Nick Elios, Kepler Cheuvreux. A couple of questions from my side. You talked a little bit about publication paper pricing, and when we look to RISI, we can see that depending on paper grade, pricing seems to be up between 5% and 12%, depending on the subgrade. How do you see this development? You're talking slight there, these are quite big percent numbers.
Yeah. We have also seen these figures. I think that is a little bit higher than we can really feel in the market. We have somewhat stronger price increases for uncoated grades, which is also the fact in RISI's statistics, and slightly less than in coated grades. I would say we are not between 5% and 12%. We've done price increases, not to that extent. On the other hand, we also tried to find a better mix. We tried to move volumes back from Asia over to Europe, and that has been rather successful, and that will also have a positive impact, I think, on the net profit. 5%-10% is a little bit higher than my feeling.
Fair enough. My second question is around your harvesting volume. You have your harvesting plan. Could you just remind us what should we expect for 2018 in harvesting?
Normally, we try to reach the long-term level, which is 1.3 million cubic meters. As Toby mentioned, in 2015 and 2013, we had these big windfalls. We have to compensate for that. We do another inventory in 10 years. Every 10 years we do an inventory, and then we set a new harvesting level. We try to keep it on 4.3 during this period.
Fair enough. Anything? Please.
Mr. Wall.
Okay. Thank you very much. Christian Kohl from Berenberg. Just a few follow-ups. On the paper side, you mentioned those 50,000 tons extra on the white top kraftliner. When do you expect that to kick in?
That will kick in.
Late 2019, 2020.
Yeah.
Yeah.
Late '19, I would say.
Okay. Do you see further possibilities to convert new volumes? Or have you reached the so-called maximum?
No, you can always convert volumes, but it's a question of cost and profitability. We always look into all opportunities for profitable growth. kraftliner just now is a good market, has been a good market for many years. Of course, we are just now looking into what we can do there. We have, of course, options. We have two strong mills. We have number one and number three in terms of capacity in Europe, two kraftliner machines. We can, of course, increase capacity further.
unbleached will be the same and white top increase, (application) will come down somewhat.
You mean in capacity?
Yeah, right.
I didn't say that. I said that we can always increase capacity, but it's a question of what kind of profitability you can get. As it is now, we have a really strong market for kraftliner just now, but you need to look at average and see what kind of possibilities you have.
You expect the market to continue to get tight during the full year of 2018, or what's your outlook there?
We don't forecast. As it is just now, we have just recently announced a price increase of 60 EUR per ton from a very high level. Of course, the market is tight, definitely so. We have also seen that testliner prices have also now some price increases, and I think they will come through also. It is a tight market, definitely.
Yeah. Thank you very much.
Thank you. We have some questions from outside. Let me see. I have to take a close look here to see. Alexander Bylund, Bank of America. Please, the floor is yours.
Thank you very much. I have a follow-up on the kraftliner and the price hike. I know you don't want to forecast, but can you give any more color on how those negotiations are going? Do you see an indication that you will get the full EUR 60? Is there any difference compared to negotiations during last year? Also, is there a difference between the white top and the brown on the negotiation process? Thanks.
If we start with the 2017, last year we announced 3 times EUR 50 for unbleached kraft, and step by step, that was more or less implemented 100% last year. For white top, we did 2 announcements, EUR 50 per time, and they were also implemented during last year. Now we have announced plus EUR 60 per ton for both unbleached kraft and white top. Our ambition is, of course, to reach this level. As it is just now with the tight market, I think that we will gradually see that coming in.
Okay, thanks.
Thank you. We have Martin Melbye from ABG. Please.
Yes, good morning. Following on that question, what kind of price increases will you get in Q1 based on the price increases you had in 2017 already? Is that already realized on kraftliner?
That's almost all in already in the run rate we have in Q4. There's not much left of that to go at all.
Okay. These Östrand ramp-up costs and everything together. There will be, in Q1, everything is as normal. In Q2, it starts to get more normal. You will have SEK 100 million-250 million, you will also have lower project costs by + SEK 110 million, right? The depreciation of the SEK 300 million from Q3. Any other factors there?
You say lower project costs. I think you have to strip out the depreciation. It just really look at it before or after depreciation. Let me just find the slide. We have SEK 60 million in project costs, which we expect to come in the first half. Say SEK 30 million per quarter. Last year, we had SEK 150 million spread through the year. Some of that split between depreciation and EBITDA-related costs, which you can see in the material. Does that answer your question?
Yeah, I think I have it. Okay. CapEx for this year, where is that?
We still, I think, expect our current CapEx guidance to be around the same level, to be our long-term level of around SEK 1 billion a year. We were slightly under or quite a bit under in 2017. We came in a bit lower than we expected at the year-end. Some of that is timing of payments. We also had a timing effect on Östrand as well, we expect more of the CapEx to come in the fourth quarter than did come in, but that will come back now in 2018. The total cost of the investment in Östrand is the same.
Okay, good. Thank you.
Thank you. We have Mikael Bertil from DNB. Please.
Yes. Good morning. A couple of questions. Just to clarify on Ostrand, you have the higher maintenance costs due to the 45-day stop. Do you expect this negative effect to basically be reversed in the second half of the year when you have higher volumes? Is this correct?
Yes. The higher volumes in the second half of the year will compensate.
For the full year, we expect the volume to be around the same level in 2018 as it was in 2017.
Yeah. Okay. The depreciation that you expect, the SEK 300 million from the start of Q3, is that the full run rate? Or is that on top of the depreciation you have had already in 2017?
No, that's the additional depreciation once the new mill and new line comes into use. That only starts being depreciated once it's in use, which is then from Q3 and onwards. It's SEK 300 million on an annual basis.
Yeah.
You can say SEK 75 a quarter from Q3 and onwards.
Okay. Just to get back to the kraftliner and the pulp markets, you said that the kraftliner markets are quite tight right now, and you see further possibilities to raise prices. Why do you think that the markets are so tight? What do you think are the reasons for the tight market right now?
I think you have a lack of capacity in recycled fiber. It's not easy to get access to recycled fiber. If you get, you have to pay a lot, and the quality is not too good. Yield is going down. You have a momentum from the e-commerce, of course, in fresh fiber give a better quality in the product, and that will also drive the demand. I think if we could produce more kraftliner in the market as such today, we could easily sell it. Just now you have all capacity that we can perform that will be taken up by the market as it is just now. I think you have to some extent some changed pattern, really. You have a high demand for high-quality packaging materials, which we can provide, and also you don't easily get access to recycled fiber of good quality.
What's the reason behind that, why you don't get access to good quality recycled fiber?
The publication paper market is going down. You cannot get access to fiber. That's easy.
Yeah. Okay.
That's also the reason why you have an increase in consumption of pulp, of course.
It's the same logic.
Yeah. Okay. Well, that's clear. Just a final question. In terms of cost and cost inflation going into this year, can you give some general comments on what you expect? I know you don't want to go into details on specific cost items, but overall, what kind of a cost inflation outlook do you see out there? As a follow-up on that question, do you expect to be able to cover these cost increases by price?
I could say, I don't want to give a figure, but I think we, in our planning, we don't see a difference in the cost inflation trend versus previous years. We've had cost inflation in previous years, especially, some cost more than others. We work very hard to offset that with cost savings in a number of areas, and that is continuing in 2018, where we offset the cost inflation we have on, for example, payroll has some cost inflation, which we offset through improving our cost position with efficiencies that we work on every year. That is the same in our outlook for this year than it was last year.
I say that every year we have a productivity creep of 1% to 2%, that will mainly normally cover the cost inflation. We have done that for many, many years, and 2017 was also a good year in that perspective. We have done a lot of other things in 2017. We had a split and all that kind of work, still we have had good cost control during 2017, and that is our DNA, more or less. I think that will continue.
Okay. That's very clear. Thanks a lot.
Thank you. We have Robin Santavirta, Carnegie. Please.
Yes. Thank you. Just a follow-up on cost. What you're basically saying is that the chemical costs you're seeing, for example, the transportation costs you're seeing at the moment are in line with what you saw in 2017, now for 2018.
We had some effects in the middle of 2017, particularly on publication paper from caustic and some other items, which then eased off towards the end of the year. Overall, yeah, we don't see a big change in 2018 overall versus the average of 2017.
Okay, good. Regarding publication paper, how much is coated and how much is uncoated?
Our total production is 775,000 tons, two-thirds is coated, one-third is uncoated.
Right. You have some newsprint capacity as well, still a bit?
We are 200% flexible in that perspective. We can do newsprint if we like. We mainly produce improved newsprint, and we also do some other grades where you can say it's more similar to SC-A grades and things like that. We are always striving to move forward in the value chain, and we do so also in these uncoated grades. From time to time, when you have a local market, it can be better to produce standard newsprint.
Good. Thanks. Finally, looking at the Paper division, you obviously had a tremendous improvement in earnings. As I read it, all of that is driven by kraftliner. It appears that the publication business earnings are down year-on-year based on what you say, and based on what you write in the report. Is that correct?
It's more or less correct. Yeah.
What about the outlook now with these price increases, which may not be as hefty as 5%-10%, still, they must be quite high. What's the outlook for it? It must be for higher publication Paper business earnings, I assume. Is there something else that comes to play here?
Well, I think we will do a slightly better Ortviken is still a fantastic mill. It's number 7 in the world in terms of size, and size is equal to productivity. So it's a good mill. Nevertheless, the market is dull, but of course, when we have some % up on prices, that will have an immediate effect. Also, as I said, we try to move volumes from Asia over to Europe, and we try to find local customers. We also do a lot of work in terms of product development. One-third of the sales last year came from product development done during the past four years. We do a lot of development work also in this area.
Good. Thanks. Finally, on your pulp, your market sales. As I understand, all of that is in Europe at the moment. Are you looking at Asia given the tight market there in China, I guess recently and especially in the future? Is it time to sell the additional capacity in Europe as well?
When we add 500,000 tons of NBSK, we need to find other markets than Europe in order to balance the supply demand situation. We will sell some volumes for Asia. We will do it also for U.S. We have prepared that already, but that will be the case.
Okay. Thank you very much.
Thank you. We have no more questions announced right now, so I thank you all for participating in our year-end report presentation here. We will have a presentation of the report for the first quarter on the 26th of April, and I hope to see you all again then. Slightly after that, on the 22nd of May, we will have a Capital Markets Day that is focused on forest. That will be held in Sundsvall in the lovely spring forest of Northern Sweden. Please bring your rubber boots and come to Sundsvall on the 22nd of May. I look forward to seeing you there then. Thank you. Goodbye.