Earnings Call: Q4 2017

Jan 30, 2018

Early welcome to the presentation of SEA's Year End Report. My name is Jan Rimpelz. I'm Senior Vice President, Communications of SEA. The report will be presented by our President and Chief Executive Officer, Ulf Larsson and our Chief Financial Officer, Toby Lorten. After the presentation, there will be a session for questions and answers. Please, Ulf? Thank you for that, Bjorn. Good morning, everyone. Happy to give you some more details about our Q4 results and also for the full year 'seventeen. We have had a strong continued strong markets for our industry, more or less in all geographies in U. S, Asia, but also in Europe. We have also strong position for all our product segments and with some exception for publication papers, but otherwise, it has been a strong year, 'seventeen. We did a good sales growth of 8% last year. The main driver for this was, of course, prices. But 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 good contribution. We were negatively hit by currency, mainly the U. S. Dollar. And they also, this quarter, had some extra costs related to the big investment project in Ostrand. But they are, again, according to plan, SEK28 1,000,000 for the quarter. Otherwise, the project in Ostrand is running according to plan. We have now done 70% of the investment or SEK5.5 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. So we took the wood handling department, we're up and running already in the autumn. Now we have taken the operation plant up and running from January. Now we will have the packaging line and also the drying machine up and running in February. And then we'll have the big, big thing in April, May, where we will extend the operation sorry, the recovery boiler. But everything so far is running according to plan. Mentioned good cost control. We've also had a year of strong production. Production record at Obora Mill, Kraftliner Mill in Umea. We had record production in Tunadalso mill in Sonnsval. We also had record production at paper machine number 5 in Utrikken, our uncoated machine. Otherwise, we are confident on profitable growth. Ostrand is one example. Another one is the investment that we took recently in increasing the capacity of White Top kraftliner in Munchoond. We will not increase the total capacity, but we will increase the capacity of Whitetop with 50,000 cubic ton per year. So if we then take a look at our full year figures, we increased our EBITDA by 15%, up to SEK3.76 billion. If we look at our return on capital employed on the industrial side, that was 13%, but we exclude investments that we have done in Ostrand, which we cannot really use yet. We have proposed a dividend of SEK1.5, which is 56% of the net profit. Our EBITDA margin was up from 21.3% up to 22.6%. And our net debt was on a good level of 1.6x 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 'seventeen and earnings per share, 2.67 So it was a year over stable and strong performance. If you look on the left hand side with sales, we can see that we have increased sales from 16% to 8%, but it is more or less in line with what we've had since 'fourteen. To the right hand side, we can see the EBITDA margin. And as mentioned, prices has 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 4th quarter with an EBITDA margin of 25%, which is on a good level, but we are back on track when it comes to EBITDA. Then I walk over to our 4 segments, and I'd 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, prices going up just now, but we feel that we have a good control of the price development here. Last year, we did harvest 4,400,000 cubic meters, which is according to the long term harvesting plan. The year before that, we were hit by the storm. So then we had to harvest a little bit more on external land. But this year, we are back on track also, so to say. We have also started to prepare in terms of wood supply for the big start up. We will need between 2,000,000, 2,500,000 cubic meters more annually due to the FSM project and we are prepared for that. Sales remained flat. EBITDA was up 6%, and that is mainly related to higher share of harvesting from our own forests in comparison with Q4 'sixteen. And also 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've also had a very strong market. And as you can see to the left hand side, we have had continued price increases since quarter 1 'sixteen. 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 in comparison with Q4 'sixteen, and that was mainly driven by prices also here. We also had a strong production. I mentioned that we did a production record in Tunadal sawmill. Also the other sawmills, they have been performing well. And one thing that is worth mentioning is timber yield. We have a situation where 67% to 70% of the cost for sawmill is related to the log. And just now, we have a little bit more than 50 percent yield in our sawmills, and we have rather narrow stocks, so we are very happy about that. And that also gave 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. Fixed prices today are at $10.30 and we've seen announcements in the market of $10.70 There's some projects according to plan. We will start up June 2018. It is a sequential start up, which will give us good possibilities to fulfill the plan. We have some project related costs, but they are also according to plan. And of course, we have had some impact on the production volume during the ECB because we have connect the new mill into the old ones. So that has caused some volume losses, but 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 '17 in comparison with 'sixteen. Higher prices, we also in Q4 'sixteen 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 'seventeen, SEK58 1,000,000. We had a small one in Q4 'sixteen, which was, yes, about SEK23 1,000,000. If we then turn into paper, last but not least, the kraftliner market is super strong. And if you see the graph in the left hand side, you can see that we have had a strong price development. And during 'seventeen, we increased prices 3x by €50 per ton each time, and it has been gradually implemented during the year. Now we have also announced another price increase from February, and that will also be by €60, €60 per ton for both Unbeliefcraft and also for Whitetop and that will also be gradually implemented during the spring. I did mention the all time high production in Opelar, which is 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 tonnes annually. In publication papers, we still have a challenged market. And if we look to the other graph, you can see that we have had a flat price development since 'fifteen and up till 'seventeen. Anyway, just now we feel that the market is a little 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 in mainly in the uncoated production. So we feel a little bit better also in that segment just now. Sales was up 11%, 'seventeen versus 'sixteen in 4th quarter, and that was mainly due to krafting 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. So with that, I hand over to Toby. Thank you, Ulf. So here, I can show you our income statement both for the quarter and for the year. And 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 4th quarter of SEK 1,078,000,000, which gave us an EBITDA margin for the full year of 23.6%. We had no items affecting comparability in the 4th quarter, But for the whole year, we had some CHF113,000,000 which is related to the company and the spin off of Vercity in the first half primarily. And we have financial items of £7,000,000 in the quarter. And then after tax, that gave us a net profit in the quarter of €596,000,000 and in the full year then of €1,874,000,000 which is an earnings per share of CHF 2.67 billion. The proposed dividend, as Ulf mentioned, is CHF 1 crown and fencing fee further, which in relation to the earnings per share of CHF2.67 equates to a payout ratio of 56% of net profit. Looking here, this is a, shows you the several year perspective per segment. And you can see if I take first the forest segment, the net sales are off to the stable in this segment, as we've discussed before. The EBITDA margin is, and as you can see, is also stable. We have a slightly higher level this year than we've had in the previous years, and some of that is due to less effects from the storms that happened some couple years ago and therefore, a higher level of harvesting from our own forest as well this year at 4,400,000 cubic meters. The Wood segment has grown year on year for many years and also had a strong growth this year, driven also partly by price and partly by volume and a stable margin development with 11% EBITDA margin for the year. And as we've also mentioned before, because the capital turnover is higher in the Wood segment, even though it's the lower EBITDA of our segments, it has a healthy return on capital. The pulp segment has been affected the last 2 years by the project, and this year, we ended with a 19% EBITDA margin. So you can see that that's affecting 2016 2017. The quarter had a better trend with some of the higher pulp prices coming through, although we didn't have a maintenance stop in the Q4 this year related to the project. So we ended with 86% in the 4th quarter EBITA margin. And then the Packet segment, the top line declined in 2016 after we closed one system machine in Horn Creekham versus increased this year with primarily volumes and prices related to kraftliner, and you can see that coming through in the EBITA margin as well with 18% EBITA margin for the year. Just to show you the waterfall for the 4th quarter here for net sales and the biggest impact is in terms of price mix in the 4th quarter. And that's coming both from the Wood segment, the Pulp segment and from kraftliner. We had a slightly negative volume difference for the 4th quarter due to the planning mainly of maintenance stops. And we had a slightly negative currency impact as well, mainly from the U. S. Dollar. If I go over the temperature for EBITDA, and here you see the main factors, again, price mix on EBITDA with a €390,000,000 impact in the Q4, again for prices for wood pulp. Kraftliner, slightly negative volume again. We had positive trend well, very positive trend for raw material and for energy. Energy driven mainly by the one off items taken last year is not driven by the general trend in energy cost, which is more flat. Currency again was negative primarily due to U. S. Dollar. And then we had some a few items in the other column here. We had a larger maintenance structure this year in the 4th quarter. We had more cost related to the project in Ostrand this year than we had last year. We've also had a bit of catch up in terms of the separate corporate functions related to establishing the company, the separate independent company. And we had some effects due to one off positive items we had last year in Q4, which, of course, we don't have again. So that, when you look at it this way, it's a negative difference. So overall, we have a yes, as Ulf mentioned, a 31% increase in par with a margin of 25.4 percent for the quarter. And the cash flow, we had a cash flow of operating cash flow of CHF 842,000,000 in the 4th quarter. We had a strategic capital expenditure for Ostrand in the 4th quarter is a bit lower than we expected of 779,000,000. We've now spent some €5,500,000,000 of Bjergstrom capital for 50%. So a large part of the remaining amount will come during this year, 2018. And then for the full year, we had an operating cash flow of 2,273,000,000. The working capital was slightly negative, driven by the growth in sales and the capital expenditures was 638,000,000. Euros If I go on to some information about the Ostrand project costs, We talked about this before, but now a bit more detail on what we expect in 2018. When we have the project related costs this year in 2018, we expect to be €60,000,000 of which €10,000,000 is depreciation and the remaining €60,000,000 is Qatar related costs. We expect that to come in the first half of this year before the start up. The start up is scheduled for June, and that's following an extended stop of around 45 days. And the impact of these maintenance stops, we also have in the materials for the start up, in particular in the second quarter, we expect the cost impact to be 180,000,000 euros and then there's 2 smaller stop schedules for the 3rd quarter and the 4th quarter, but that's the effect of the 45 day stop in particular. We also, apart from the project related costs, we talked before about there is an increase in direct costs in relation to the start up, 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, some €100,000,000 to 2.50 1,000,000. We expect it to be somewhere in between, but spending how well and how fast it's up close, it can be within that range, and we expect that impact to come mainly in the Q2 and the Q3 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 depreciation impact once the new mill is up and running, which comes once it starts, it comes from the 3rd quarter and onwards, and that's around GBP 300,000,000 on an annual basis. Finally, working capital, which we expect to increase 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 start up, particularly in the raw material inventory, which needs to be built up during the first half of the year before we come online. So then the balance sheet. Here, you can see the balance sheet at year end. We had the book value of the FOSS assets ending the year on GBP 31,400,000,000 If you take the working capital here, you can see £2,861,000,000 which is 18% of net sales, so it's in line with the year before that 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 ended the year at some €2,000,000,000 up from last year on €15,400,000,000 And the increase is mainly related to the Ostrand investment, which is yet to come online. And so we ended with capital employed of CHF 42,700,000,000 and then funded by net debt, which is just short of CHF 6,000,000,000 which represents a leverage of 1.6x net debt or in relation to equity, which ended the year on CHF 36,800,000,000, dollars 16% debt to equity ratio. So with that, I'm not sure if you have to summarize. Yes. Just to short summarize the Q4 'seventeen. Again, we had a strong market, all geographies and more or less in all areas, one exception in publication papers, but we see a slightly better market for publication papers also now when we have started 2018. Strong sales growth, EBITA up 31% driven by prices, but also we have a good production level. We have good cost control, which is not the least important. Kjersthan project, progress in Continental Plan, start up June 'eighteen. Good cost control, stable production, records in Obbola, in Cunhaal and also PM5 in Utreken and focus on profitable growth. As Hans mentioned, we've increased the decision to increase the capacity of White Top in Munggsund, so that is in line with the strategy. So please, I think we open up for questions. Yes. We will open for questions now. We will start with questions from the live audience, and then we will open for questions from those participating through webcast. And please, as you ask your question, introduce yourselves for those who participate by phone who can know who's asking. So let's see. Oskar, please? Oscar Lindstrom with Danske Bank. I have a question regarding first line transactions. And 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 plant? I can start with that one. I mean, today, we buy and sell for approximately SEK 100,000,000 per year. And I mean, it's always of interest for us to move the forest closer to the industry. This is what we've done in many years and that is also we're very interested in that movement also going forward. So we put more than we've done in the past, I mean, you need to find good possibilities. And when we find them, yes, we are interested. If I may follow-up, I mean, would you be interested if the opportunity was there to increase your forest plant holdings? Yes, I think that would be in line with our strategy, yes. But on the other hand, 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. So just a follow-up on that. I mean, 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. I mean, we have our course where we have the industry and vice versa, and I think that is a good way to have it. Thank you. Please hand on the microphone. Yes, please. Thank you. Linus Glaston with SEB. The Board has proposed a first dividend for the newly independent company. And I wonder if you could share with us in any way the thinking around that, what the policy is. And then that's just due to 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? Yes. I mean, maybe I could say this is the first dividend since this went off of SEK. And I think there's a guiding principles, if you like, we have our investment grade rating and we want to maintain our investment grade rating. So that's an important element for us. And the other element is, I mean, as this year had before, to have a stable and increasing returns and that's what we see as maintaining that policy going forward. But obviously, we're now setting the start point from after the spin off of SSP. So those are the guiding factors. I think I wouldn't read any more into it than that. Can 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 2,000,000, 2,500,000 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 would you manage that in some other clever way? We don't forecast. I mean, we need to get the wood that we need in order to supply our industries, and we've been good at that in the past, and I think we have also going forward. And I mean prices will vary over time. And as it is just now, we can just say that we have a stable price in our area, and that is not really the case when we look around us. But in our area, it's reasonable stable. We have seen minor price increases when we buy from private stores, owners and so on, but on a rather stable level. We are also rather well supplied as it is just now. I mean, 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, but we are used to having that kind of challenges, I would say. So we have a balanced situation just now, and we think that we can supply also first down with wood mainly from the region where we are. Planning for the increased volume for Sverdrup has been going on for some time. So it's, I mean, we're confident in that the supply is going to be stable for Ostrand. You mentioned, I mean, we will tie up some capital. Now we need to prepare for this start up, of course. I mean, we need to add a couple of extra 100,000 cubic meters, the terminals and things like that. But that bank is ongoing now and is according to plan also. We'll move the microphone there and then we'll take the next one. Please. Nick Galioff, Kepler Cheuvreux. A couple of questions from my side. You talked a little bit about publication paper pricing. And when we look to this, we can see that for depending on paper grade, prices seems to be up between 5% 12% depending on the subgrade. So how do you see this development? I mean, you're talking slight there, but things are quite big percent numbers. Yes. 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 uncounted grades, which is also the fact in leases statistics and slightly less than in quarterly rates. I would say we are not between 5% 12%. We've done price increases, but not to that extent. But on the other hand, we also tried to formulate the mix. We try 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 I mean, on the net profit. But 5% to 10% is a little bit higher than my feeling. Fair enough. And then my second question is around your harvesting, Roeland. You have your harvesting plan. Could you just remind us what should we expect for 2018 in harvesting? On the normal, we try to reach the long term level, which is 1,300,000 cubic meter. But then as Toby mentioned, in 'fifteen and 'thirteen, we had these big windfalls and then we have to compensate for that. So and then we do another inventory in 10 years. Every 10 year, we do an inventory and then we set the new harvesting level, but we try to keep it on 4.3% during this period. Peter Hoppe from Nordea Markets. Just a few follow ups. On the paper side, you mentioned the 50,000 tonnes extra on white top kraftliner. When do you expect that to kick in? That will kick in late 2019, 2020, I would say. Yes, late 'nineteen, I would say. And do you see further possibilities to convert new volumes? Or is it, have you reached the so called No, you can always convert volumes, but it's a question of cost and profitability. I mean, we look into all always look into all opportunities for profitable growth. And I mean, Kraftliner 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, and we have, of course, options. We have 2 strong mills. We have number 1 and number 3 in terms of capacity in Europe in our 2 kraftliner machines, but we can, of course, increase capacity further. So unbleached will be the same and wipe off will increase and then application will come down some more, sorry? You mean in capacity? Yes, 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. And I mean, as it is yes now, you can I mean, 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? Expect the market to continue to be tight during the full year of 2018? Or what's your outlook? Beyond forecast. But I mean, as it is just now, we have just recently announced a price increase of €60 per ton from a very high level. So of course, the market is tight, definitely so. And I mean, we have also seen the testliner prices as that they have also announced some price increases, and I think they will come through also. So I mean, it is a tight market, definitely. Thank you. Then we have some questions from outside. Let's see. I have to take a close look here to see. Alexander Beilund, Bank of America. Please, the floor is yours. Thank you very much. A follow-up on the kraftliner and price hike. I know you don't want to forecast, but can you give any more color on how those negotiations are going? And do you see an indication that you will get the full €60? And is there any difference kind of compared to negotiations during last year? And also is there a difference between the white top and the brown on the negotiation process? Thanks. If we start with 'seventeen, I mean, last year, we announced €3.50 for Ambrecht kraft. And step by step, that was more or less implemented 100% last year. For White Top, we did 2 announcements, €50 per time and they were also implemented during last year. Now we have announced plus €60 €60 a ton for both unbleached kraft and Whitetop. And I mean, our ambition is, of course, to reach this level. And as it is now with a tight market, I think that we will gradually see that coming in. Okay. Thanks. Thank you. Then we have Martin Melby from KBK. Yes, good morning. Following on my question, which what kind of price increases will you get in Q1 based on the price increases you had in 2017 already Or is that already realized on the Pathfinder? That's almost all in already in the run rate we have in Q4. So not much left of that to go at all. Okay. And then this first round, the ramp up costs and everything together. So there will be in Q1, everything is as normal. In Q2, it starts to get non normal, and you will have the SEK 100 to NOK 250,000,000 but then you will also have lower project costs by plus NOK 110,000,000, right? And then the depreciation of the €300,000,000 from Q3. Any other factors there? You say lower on projects, I think you have to strip out the depreciation. So you're just really looking at it before or after depreciation. But let me just find the slide. So we have £60,000,000 in project costs, which we expect to come in the first half, let's say £30,000,000 per quarter. And last year, we had $150,000,000 spread through the year, which and that's some of that slipped between depreciation and EBITDA related costs, which you can see in the material. Does that answer your question? Yes, I think I have it. Okay. And CapEx for this year, what is that? We still, I think, expect CapEx current CapEx guidance to be around the same level, to be our long term level of, yes, around £1,000,000 per 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. And then we also had a timing effect on Ostrand as well. We expect more of the CapEx to come in, in the Q4 than did come in, but that will come back now in 2018. So I mean the total cost of the investment in Ostrand is the same. Okay. Thank you. Thank you. Then we have Michael Burton, Understood. Please. Yes. Good morning. A couple of questions. Just to clarify on Ostrand. You have maybe higher maintenance costs due to the 4 to 5 days stop. But 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. Yes. So the higher volumes in the second half of the year will compensate. So for the full year, we expect the volumes to be around the same level in 2018 as it was in 2017. Okay. And the depreciation that you expect the SEK 300,000,000 from the start of Q3, is that the kind of 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. So that only starts being depreciated once it's in use, which is then from Q3 and onwards. So it's CHF 300,000,000 on an annual basis because of CHF 75,000,000 a quarter from Q3 and onwards. Okay. And then 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 lack of capacity in recycled fiber. It's not easy to get access to recycled fiber. If you're pet, you have to pay a lot and the quality is not too good. It's going down. You have a momentum from the e commerce, of course, I mean, fresh fiber, give it better quality in the product, and that will also drive the demand. So I think if we could produce more kraftliner in the market as such today, we could easily sell it. So I mean, just now you have all capacity that we can perform that will be taken up by the market as it is just now. But 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. And what's the reason behind that, why you don't get access to good quality recycled fiber? Because the publication paper market is going down. I mean you cannot get access to fiber. So that's easy. That's also the reason why you have an increase in consumption of pulp, of course. It's the same logic and yes. Okay. Well, that's clear. Then 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? And as a follow-up on that question, do you expect to be able to cover these cost increases by FX? I could say, I mean, 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, I mean, some costs more than others, and we worked 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. So that is the same in our outlook for this year than it was last year. Every year, we have a productivity creep of 1% to 2%, and that will mainly normally cover the cost inflation. And we have done that for many, many years. And 'seventeen was also good here in that perspective, which is I mean, we have done a lot of other things in 'seventeen. We had a split and all that kind of work, but still we have had a good cost control during 'seventeen, and that is our DNA more or less. So I think that will continue. And then we have Robin Santavista, Carnegie. Please. Yes. Thank you. Just a follow-up on cost. So 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 'eighteen? We had some effects in the middle of 2017, particularly on publication paper from FX and some other items, which then eased off towards the end of the year. So overall, yes, 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? I mean, our total production is 775 tonnes and twothree is coated, onethree is unprinted. Right. You have some new sprint capacity as well still? I mean, we are 200% flexible in that perspective. We can do new sprints if we like, but we mainly produce improved new sprints, and we also do some other grades where you can say it's more similar to SC grades and things like that. So I mean, we are always striving to move forward in the value chain and we do so also in these uncoated grades. But from time to time, when you have a local market, it can be better to produce some of the new streams. Good. And then 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, yes. And what about the outlook now with these price increases, which may not be as hefty as 5% to 10%, but still they must be quite high. What's the outlook for AT? It's mostly for higher publication paper business earnings, I assume? Or is there something else that comes to play here? Well, I think we will do a slightly better. I mean Utrecht is still a fantastic meal. It's 7 in the world in terms of size and size is equal to productivity. So I mean it's a good meal, but nevertheless, the market is dull and but of course, when we have some percent up on prices, that will have an immediate effect. And 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. So onethree of the sales last year came from product development during the past 4 years. I mean, we do a lot of development work also in this area. Good. And then finally on your pulp, your market sales. Now as I understand, all of that is in Europe at the moment. Are you looking at the Asia given the tight market there in China, I guess, recently and especially in the future? Or is it time to sell the additional capacity in Europe as well? When we add 500,000 tonnes of NBSK, we need to find other markets than Europe in order to balance the supply demand situation. I mean, we will sell some volumes for Asia. We will do it also for U. S. So we have prepared that already and but that will be the case. 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 Q1 in the 26th April, and I hope to see you Paul, again then. And slightly after that, on the 22nd May, we will have a Capital Markets Day that is focused on forest that will be held in Sundsvall in the lovely spring forests of Northern Sweden. So please bring your rubber boots and come to Sonsvall on the 22nd May. We look forward to seeing you there then. Thank you.