Svenska Cellulosa Aktiebolaget SCA (publ) (STO:SCA.B)

Investor Day 2017

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May 31, 2017

Investor Day for the future forest products company SEA. My name is Bjorn Ringfeld. I'm responsible for communications within what is now a business unit within the SEA Group, but soon to be the independent forest products company, SEA. First, let me tell you that if something happens in here, you can evacuate this room in all the four corners of the room, and there is a heart starter in the reception. So just let us know if it's too exciting, and we will manage that as well. The program for today, we will have presentations now during the morning. We will have a coffee break. And at the end of the presentations, there will be a question and answer session. So it will not be an opportunity to ask questions immediately after. We'll have lunch, and then we will have a bus that will bring you to the site visits. And that bus will something else than what we intended when we said it. So please continue to follow us and take part of the information who will give an overview of this company. So thank you for that, Bjorn. And once again, most welcome to this event. We are really happy to see that so many of you have come here, and we hope and believe that we will be able to deliver an interesting day. And as Bjorn said, we start with some presentations before lunch. And after lunch, we will look at the operations, which is maybe the most important and interesting part. I think it's appropriate with a short introduction of the senior management team. And as they are a little bit spread out in the room, I think I give name and position. And if you then, in the team, please stand up so we can have a look at you. And I think I start to the left on this beautiful picture and Oke Westpeyre, where do have Oke. Oke is responsible for our pulp business unit and he's been in the company since 1974, forty 3 years, okay. Soon time for the 2nd gold watch. That is impressing. Perfect. And then we have Bjorn, he has already presented himself in charge of communications. Ole Thalland, responsible for strategic development. And in this staff, we find R and D, M and A, technique, sustainability and more or less everything. Then we have Jan and he's in bed because he's got a coat. So he's in bad shape. Ingela, please stand up. Ingela responsible for the big expansion project at Ostrand, which you will hear much more about later on. Toby brought in from Asia from Vinda. He's the CFO of the company, has just recently arrived. Mats Nudlander, responsible for Paper, will also be one of the presenters later on. Jonas Mortensen, Head of Wood, not the wood head, but Head of Wood. And then we have Matsangen, responsible for our forest, been also in the company since 1990 no, 1982 with a short break. Thank you. Mikael Sjergren, Renewable Energy. And then we have Magnus Svensson, responsible for purchasing and logistics. And last but not least, Stina, responsible for HR. So and maybe finally, I say should say some words about myself. I've been also in the company since 1992, 25 years, and done a lot of different things. Started in the forest department, responsible for the, let's say, logistical operations in the north and responsible for the wood procurement for a while. Been also managing a forest district in Angemaland back to Pitjoh, responsible for building up, at that time, the most modern sawmill in Europe in Monksund, which by the way was a really successful project. Then we acquired Groningen in 2000 and 1, and I was responsible for the merger between our sawmill operations. Since 2003, responsible for the wood business. And since 2008, I've had my current position as responsible for the forest division within SEA. And also since then, I've been a member of the senior management team in SEA. So but now we are going to have this split and that will, of course, mean an increased strategic focus. And you have also seen that we just currently or recently have appointed a new Board of Directors. And we are happy to see that we have many people with great knowledge and experience from the industry. Martin Lindqvist, SS Abe, Lantebel, Boliden, Lotalura, IKEA and soon in Klas Olsson. So I think that will be beneficial for us going forward. We are already today well positioned as a stand alone company. I mean, we have a good cash flow. We have good profitability. The asset base is well invested and not the least important, we have really good people. It doesn't really matter what kind of investments we do if we don't have the right people in the system that enable us to deliver on these investments, and we have that. We also have a strong brand, and that is good to have when it comes to customers. And I think that many of my business unit managers, they will give you some information in what way we have been able to develop the business in close cooperation with big strategic customers. But a good and strong brand is also good to have when it comes to the current the employees that we have in the company today and also the potential employers. And it's also good to have when it comes to suppliers. As you know, we are a big buyer of wood from private forest owners in this region. So then it's good that they like to do business with SCA, of course. We have a really dedicated management team, and we are fully convinced that we will be able to increase the shareholder value in the long term. That's the reason why we are here, of course. In this slide, I like to give you a short overview of the operations within the new independent SCA. And first, among other things, we are the biggest private forest owner in Europe. We have 2,600,000 hectares of forest land, and that is an area equal to more or less the size of Belgium. In this area, we harvest every year 4,300,000 cubic meters and that give us a degree of self sufficiency of about 50%. At the same time, we have well managed forests. We have also quite young and fast growing forests. So we have a net growth in our standing volume of 3,000,000 cubic meter per year. All our forest holdings buy from private forest owners. And today, we are buying every year between 3,000,000 and 4,000,000 cubic meters per year. And at the same time, we also buy from the state owned forest, the church and so on. If we then turn to wood, we have a world class operation here, and Jonas will tell you all about it later on. But I think the most important thing here is that we have been able to grow this business by 10% per year as an average during the past 20 years. So that is something. We have increased the saw capacity a little bit, but not too much. But we have done substantial investments in our sawmills. And by that, I can say that we are world class in terms of cost efficiency, productivity among our 5 sawmills. We are just now also running maybe the biggest industrial project ever in Sweden in Ostrand and the English is responsible for that project. We are investing close to SEK8 1,000,000,000. And the main reason for this is, of course, that we have a growing demand in the tissue and packaging business. But at the same time, we are, as I said, the biggest private forest owner. And I mean to be in pulping, that is a quite good consuming game. You need 5 cubic meters per ton pulp. So it is also, of course, good for the value of the forest to have a project like this close to our own forest holdings. In paper, we are the leading kraftliner producer and by leading, I mean that we are the biggest independent player. Since we divested our corrugated business in 2012, we will never risk to compete with our customers, which is a good thing. And last but not least, we have a good potential in renewable energy. We already today do a lot of things in this area, but maybe the most interesting things is what we are looking into possibilities into liquid biofuels, and I will come back to that later. But just to summarize this slide, I mean, we have the size, we have also good profitability, good cash flow. We have growth opportunities. And last but not least, we have great people in this company. When European Union had its climate meeting in Copenhagen 2015, it was clearly said that the forest industry and active forest management was an important part in combating the climate change. And we can do that, of course, in 2 ways. First, you know that it is growing forests that bind carbon dioxide. So that is one thing that is important. But the other thing is that from the products that we can make from the produce from the forest, we have the opportunity to replace fossil based materials with renewable materials, which is also not the least important in this perspective. Another strong trend is the increasing trade in e commerce. And e commerce put big requirements on high quality packaging solutions. I mean, we can see an increase in demand for packaging materials, that's for sure. But the actors in this trade, they like also to present the products in high quality packaging producing high quality packaging solution, which is also beneficial for virgin fibers. So here we have really good position. The 3rd trend, which is not mentioned here, is maybe that step by step we see that it's not so easy to get access to recycled fiber of good quality and also at the same time, the price is going up. So we think that is the 3rd big thing for being in virgin fiber going forward. The base for our operation and our business is the forest, our golden egg. On this natural and unique resource, we have built up an entire industrial ecosystem. And I'd like to give you one example from this region, from the Sonnsvall region, how this integrated value chain can work. It is a little bit the map is maybe not perfect, but I hope and believe that you can follow my thinking here. Because if we start in the forest and we cut the tree, the bottom part will be brought to 1 of our big 2 sawmills in this area, Volstad or Tunadal, depending on what species it is. The upper part of the tree, the pulp would be either brought to for producing pulp or to Utveken for producing paper. When we process the log in the sawmill, we get 30% chips and that will be brought to for producing pulp. Then we have 10% to 15% sawdust. The sawdust will be brought to the biggest pellet mill in Sweden in Hennesand. From this pellet, we fuel our limekins. We also today fuel our steam boilers. And by that, we have been able to reduce the carbon dioxide emissions with 60% during the past 5 years. So I can say and I'm proud to say that these industries that we can see after the northern coast here have the maybe the lowest carbon footprint in the world if you compare with similar industries. So that is really something. And at the same time, and that is not the least important, 20 years ago, we had a real problem to get rid of the sawdust. Today, it gave us a net contribution of SEK 100,000,000 to SEK 150,000,000 in the last row just due to this system. If you look to the left in this slide, you can see our research center on campus with the mid Sweden University, and we have a close cooperation here, a close cooperation between the university, our R and D center and also with our mills, of course. And in this cluster, we have world leading capacity and competence when it comes to how to use the fiber. We also have it when it comes to printability and things like that, which is, of course, good for ourselves, but it's also really good for our customers and it's really well appreciated by our customers. Finally, if you are located in the northern part of Sweden and we have no choice, We have our forests there. We have our big industries. You have a long way to old customers because this is a global business. We have to distribute our products all over the world. And we have a logistic company into Nadal Harbor. And through to Nadal Harbor, we can reach all over the world in an efficient way. So we have a really strong integrated value chain here. We have been able in the past to show that we can benefit from this integrated chain, and that is also maybe the main reason for me to strongly believe that we should really keep this forest and the industry together. If we then turn over to the forest, we can see the value creation in the forest in 3 elements. First, we have our harvesting. And as I said already in the beginning, we do harvest 4,300,000 cubic meters annually, which give us a degree of self sufficiency of about 50%. I think that level is quite good because that level guarantee that we always can use the potential that we have in our own forest in terms of cash flow. We can always bring out from our own forest what we like to bring out. The second part is the net growth. We have well managed forests. We have also relatively young forests, and that means high productive and fast growth. So we have every year net growth in our standing forest by 3,000,000 cubic meters per year. And the 3rd leg here is the land value. We don't know what's going to happen in the future, but we for sure know that a piece of land has every year been a little bit more expensive tomorrow than it was in the past. Mats Sangeran, responsible for our forest business unit, will tell you more into details about this. Then we have wood. And many of you sitting here, you think that wood is boring. I think that wood is fantastic. And we have been able to grow this business, as I said, 10% per year as an average during the past 20 years. And the main reason for that is not that we have increased the capacity. We have done that, but that is not the main reason for this increase. But the main reason is that we have developed our go to market approach in a quite interesting way. And today, more than 40% of our sales in wood goes to the Village Merchants retail business. Of course, we sell a piece of wood. We sell also some sheet materials. We do distribution. We have information. We have knowledge and we charge for the whole package. So that is really good to do. And Jonas will tell you, who is responsible of this wood business unit, will tell you more about this later on. But it is a fantastic development, and we also see good possibilities in this area going forward. At the same time, we have definitely done a lot of restructuring in our sawmills. So in 10 years, we have reduced the number of sawmills from 11 down to 5. We have also done substantial investments here, little bit more than SEK 2,000,000,000. And I'm absolutely convinced that the 5 mills that we have today, they are absolutely world class when it comes to cost efficiency, productivity and so on, if you compare with mills with equal log size because that is important in this part. Ostrand, as I said, maybe the biggest industrial project ever in Sweden, and we are absolutely in the middle here. We will spend close to SEK8 1,000,000,000 into this project. And the basis for the investment, as I said, is, of course, the growing demand in tissue but also in packaging and not the least white packaging. When we start up next year, we don't know what has happened with the dollar. It might be strong. It might be weak. We cannot really foresee what's going to happen with the fixed prices. But what we are really convinced is that we have created a mill which will have absolutely world class in terms of cash cost. And that is also the most important thing in the long run because this mill will be here for 40, 50 years. 10 years ago, when we did look into this project, the big issue for us at that time was excess of raw material. And today, I'm really happy to say that we believe that we mainly can supply this mill with domestic wood, partly from SA Forest, of course, but also to a large extent from private forest owners in the region, but also from other bigger place as sawmill forest owners associations, state owned forests and so on. The main reason is, of course, the increasing demand in the market, but at the same time, this project will secure and also increase the value of the forest for us as a big forest owner, but also, of course, for other forest owners in this region. Ingela will give you all details about this project and you will also have the opportunity to look at it in live of the lands. Then we turn over to paper. And if we are favored by the digitalization in packaging papers, we are definitely negatively impacted in publication papers. And that was also the reason why we have substantially decreased our exposure to publication papers during the past years. 2012, we did divest the age for the Agedford and Lake. 2015, we closed down the oldest machine at Utviken. But still, one should know that Utviken is huge, close to 800,000 tons per year, which give a position around 7 in the world. And in this game, size is equal to productivity and cost efficiency. But of course, focus is on operational excellence, cash flow and so on. But at the same time, we have seen a fantastic development to Utviken. The innovation rate in Utviken is really high today. So as Kristina, who is in charge of that, Milne mentioned in the movie short movie here, 35% of the sales last year came from products developed during the past 5 years. So that is quite impressing. I don't think that we have anything similar, at least not in the forest part of SEA today. In Kraftliner, I said that we are the leading producer of Kraftliner. And by the leading, I also said that since we divested our corrugated business in 2012, we will not risk to compete with our customers. That is one good thing. The second good thing is that we have a super efficient production here. In Obbola, we have the biggest machine in Europe. In Munksund, we have the 3rd biggest machine in Europe. And again, size is equal to productivity and cost efficiency. At the same time, as an unintegrated player or an independent player, we have been able to really develop and focus on our own product portfolio, which has meant that we have increased the share of white top, wet strength and heavy duty liner. And Madsen Lande, who is in charge of the paper business, he will give you all details about this development. The third thing is that when we ask our current customer base and potential customers who they see as the leading kraftliner producer, they say that SEA is that. And that is also a very good starting point for future and improving cooperation. Then we turn over to energy, Renewable Energy. Renewable energy, liquid biofuel and green chemicals maybe offers the biggest additional growth opportunities that we have in SCA going forward. We are already today big in forest biofuels and we do produce 9 terawatt hours and that is to what we need to heat up 500,000 households in this region, so quite a lot. We do have a number of really good wind sites on SCA land. Today, we have a capacity of 2.5 terawatt hours of installed capacity, financed by different partners, but it's on SEA land and give us a good lease income here. 2.5 terawatt hours is equal to what is needed to heat up Stockholm City. But maybe the most interesting part in renewable energy is what we are doing in liquid biofuels. And as you might know, we have just recently invested SEK 50,000,000 in Obbola in order to see if we can extract black liquor from the process and through that produce liquid biofuel. We don't know if that will work, but if it does, we see a great potential not the least in Ostrand when Ostrand is up and running because now with a new mill, the bottleneck will be the recovery boiler at Ostrand. And if we can take out the black liquor, then we can also increase the capacity with very limited extra investment cost. And at the same time, we can maybe create good business in liquid biofuels. So very, very interesting going forward here. We really see in SCA that we are paving way for coming generations. We have a responsible management and by that we have been able during the past 50 years to increase the standing volume in our forest by 50%. And at the same time, we have also doubled the harvesting volume. And as already mentioned, it is the growing forest that bind carbon dioxide. And in our forests every year, we bind 4,000,000 tons of carbon dioxide. That is much more than we emit from in the entire operation from the forest to the customer. Also mentioned, but I can do it again because I'm really proud of that. We have been able to reduce the carbon dioxide emissions by 60% during the past 5 years, which means that we have really the lowest carbon footprint in the world in our industries here. So to summarize, we have good growth opportunities in more or less all product areas where we are present. We have this efficient integrated value chain, and we have really in the past been able to benefit from that chain. I really believe that the forest and the industry really should stick together because we have many opportunities there if we work in an innovative way. We have already today a well invested asset base, but maybe more important, we have really good people in the company. And as said, if we don't have the right people, it doesn't really matter what kind of money we put into these investments. And we have had in the past a strong and stable cash flow, and that is also what we're going to intend to have going forward. So by that, I think that I hand over to Torbjorn talking about financials. Good morning, everybody. It's great to see so many of you here in Sundsvall today. And to introduce myself, I joined SCA some 22 years ago and I've worked around a number of different parts of SCA around Europe, including Sweden, where I was responsible for the M and A function for SCA for some years, and then also Asia, where most recently I've been CFO for Vinda, which is a listed company on the Hong Kong Stock Exchange, which I think many of you will be familiar with because also SCA is a major shareholder in Vinda as well. And then I came here and joined Forest Products in the beginning of March this year and now part of this very exciting journey with Forest Products and the company. So and I hope to meet many of you and discuss with many of you during the day. If I move on to I mean to show the overall performance of the company. If you look on the left hand side here, you can see our top line development and over many, many years, we've managed to consistently and steadily develop and grow our business and at the same time adapt our business through that time as in many ways as Ulf has mentioned here as well to change the business, to change our product portfolio, our asset base and asset portfolio and also customer base to adapt to the changing market demands over time. So we've delivered a solid and growing top line and at the same time, we have a track record with a best in class EBITDA margin north of 20%, which we've had over many years as well. So it's a solid and strong and stable base. If I then move over to show you a bit of our different businesses, and we have 4 different business segments. So we have forest, we have wood, we have pulp and we have paper. And you will hear from each of the segments later today. So you'll hear much more about each segment. But to give you an overview of the financial performance of each segment, Firstly, Forest has a very, very stable, good top line and bottom line, and the top line from Forest is mainly or nearly all is internal sales supporting the other businesses. So that's how our forest business really supports the other segments and a very stable strong EBITDA. And in here, we also have the revaluation effect on our forest is also a part of our EBITDA in forest. So a bit less than half of that EBITDA typically over a full year in the forest is represented by the growth of the forest, which has a profit impact, but that's a non cash impact. Then we have our wood business, which has shown strong steady growth over many, many years, many years now. And in here, we have also we have our foreign operations in U. K. And in France, a part of the wood business. And we have a very strong sawmill base in Scandinavia with very strong efficient sawmills as well. And when we benchmark our profitability is best in class in terms of our wood operations. And even though you can see here the EBITDA margin of the Wood segment is the lowest of our 4 segments, but the capital turnover is also very high in Wood, so it delivers a solid return. Then we have the Pulp segment, and this is the smallest in terms of top line of our 4 segments, but it will grow substantially with the completion of the Ostrand investment, of course. And here we've also had some impact in the last 12 months from the project in terms of cost, but the biggest single factor impacting the result both top line and bottom line is really the pulp price development, of course. And then finally, we have the paper segment, which is our biggest segment here in terms of sales and here we have our packaging papers and our publication papers. We had an impact in 2016 when we closed a newsprint machine in Auteweeken, so reducing the exposure to publication paper. But aside from that, we've got steady growth in this segment, particularly from the packaging paper side, the kraftliner, and then a stable bottom line development as well in terms of EBITDA margin. So overall, we have 4 in their own right 4 strong businesses and then together with the forest business supporting the industrial businesses, we also have a strong package which deliver the track record EBITDA margin that I showed on the previous slide as well, north of 20%. If I move on to our a bit about our cost structure, and our cost structure is largely domestic based in Scandinavia, in Sweden. You see that if you look at the top right quadrant on this wheel, you can see some 14 plus 12, so about 25% of our cost is materials, which are largely locally sourced. Then we have another 16% personnel, which is largely based in Sweden as well. Then we have some others with transport and overall, the exposure of our cost base to either global market fluctuations or to foreign exchange movements is relatively limited. If I move on to our income side, here the picture is of course different since we are a major exporter. And here you can see on the left hand side some 14% of our sales go to Sweden. So yes, relatively limited amount go to Sweden and the rest is obviously largely exported. The biggest markets, 80% is Europe. U. K. And Germany are the 2 biggest countries. We also have 11% here in Asia, which is a growing part of our portfolio as well. So we're a large exporter. And on the right hand side you can see our currency exposure. And here we look at our invoice currency and you can see we have a large exposure when it comes to invoice currency to euro. A large proportion of our invoices are in euros. But I would caution a little bit here because even though we would invoice in euros, a large part of those sales are dependent on global U. S. Dollar based prices as well. So there's a dependence on global U. S. Dollar based prices and even global U. S. Dollar based prices are also dependent on the strength of the dollar. So there's a lot of, yes, interdependence between the currencies and I would summarize by saying we really our dependence is on having a competitive Swedish crown in a global context against a basket of global currencies. So when it comes to seasonality, and I can only show you 6 quarters here, but you can see it's the same picture over a longer period of time as well. And I would say we have relatively limited seasonality in terms of both top line and bottom line. To mention a couple of effects, we typically have our largest maintenance stops in the Q2. So that will that's a consistent pattern over the years. And probably the other thing I would say is if you look at the forest business in particular, we harvest more of our own forest in the summer and we source more externally in the winter and that does have an effect on how the forest business as well. But overall limited seasonality. And here when it comes to our CapEx, we have a tightly controlled maintenance CapEx level, which is supporting our well invested asset base, which you'll hear more about later. And the dark blue block you can see here is our maintenance CapEx level. And here you can see relative to the dotted line as well, we are the dotted line is our depreciation level. So we are maintaining our maintenance CapEx level is typically a little bit behind our depreciation. And then on top of that, you can see our strategic capital expenditures, which is dominated by which is really the Ostrand CapEx. And that will come over this year and also next year as well. If I just move on to give a bit more about the Ostrand investment, you'll hear a lot more from Ingele later about this project, but just to give you some guidelines perhaps on some of the parameters and financial elements. This project you see on the graph on the right hand side here that the capacity growth will go from 430,000 tonnes of NBSK to 900,000 tonnes, so a big increase in capacity in the project. The start up is planned for the middle of next year, for June 2018. And we as of the end of quarter 1, we had invested SEK3.1 billion. So the remainder, the remaining SEK4.7 billion dollars will come over the following 15 quarters. We expect to have an extended stop when we do the start up next year, so in the summer of 2018. And you can see on the bottom right here, we've had some costs from the project this year and last year, and we will come back towards the end of this year with the expected impact of that stop next year. So we'll come back at the end of this year with that. But the in terms of volumes, we expect that the lost volumes that we get from that stop will be compensated by the increased capacity for the period after the stop, more or less. And then we have also a ramp up period, which we estimate to 12 to 18 months. So 2020 will be the 1st full year when we have the full effect from the new capacity and in our line with a big step up in capacity that you can see on the right hand side. And up to then, so 2019 will be somewhat in between year. And finally, of course, the project has an effect on depreciation, and we expect an increase in depreciation of around SEK 300,000,000, which will come in from 20 19 in full. Okay. If I take you through working capital, we have a pretty stable level of working capital. As a percentage of sales, the top dotted line you see here, our working capital is between some 15% to 20% of our net sales, pretty steady through the period. We have had some increase in the last quarter driven to a large extent by the CapEx project as well. But overall, we would expect to be tightly managed within that band of 15% to 20%. And here, I'd like to emphasize we have a we also have a very strong operating cash flow. If you look at our result, we of course have an effect from the forest revaluation, which is a non cash item. So that is the light blue box here. But if we adjust our operating profit for that item to the sort of middle dark blue, you can see that over consistently over a period we should be and we are delivering a cash flow, which is in excess of the adjusted profit taking out that item. So and we should be given that we are our maintenance CapEx is slightly less than depreciation and that we are tightly managing working capital. So we should over time deliver a good conversion of our profit into cash flow. And we have a track record of doing that. Coming to our balance sheet here, and you can see basically the biggest number on the page on the top right hand side is the valuation of the Forest asset and I know there are many opinions on the value of this asset. This is one opinion and this is obviously the opinion that's relevant according to our books and according to the accounting standards we use to value forest. And that's SEK 31,000,000,000 we have as the valuation of our forest in our balance sheet. We have to adjust that for deferred tax. So after taking deferred tax, we have some CHF 24,000,000,000 as a net value of our forest in our balance sheet. If we then take the other the remaining items, we come which is mainly the industrial assets we have, we come to a total capital employed of some CHF 41,000,000,000. That will go up slightly over the coming 12 months as we complete the Ostrand project as well. But that is our capital employed. When it comes to our financing side, our net debt and equity, we have not reported for ourselves yet independently. That will happen first in the second quarter, which will come out in July. But you can see here on a pro form a basis based on the $5,000,000,000 net debt that has been announced, which is the intended net debt that we will take over, but based as at the end of December last year, We will have, yes, around CHF 5,000,000,000 net debt to start with, which will grow a bit with the Ostrand project as well. We'll have equity of around SEK35 billion. And this means we'll have in terms of leverage, leverage to EBITDA around 1.6 times at the end of the first quarter or net debt to equity around 15 times. So a safe secure level of leverage in the company as well. And to describe a bit where the financing comes from, and I think some people here today have been involved in this financing, so thank you for coming. And we have a financing package of SEK9.5 billion. The biggest part is a revolving credit facility, which we have with a bank group of 4 Swedish banks, which you can see the names here, Handelsbanken, SEB, Danske Bank and Swedbank. And we have a maturity some tranches 3 years and some 5 years. And then we have an additional portion which is from Svenske Export Credit, which is another €1,500,000,000 with also 5, 6 or 7 years maturity. So a fairly good duration And yes, and on top of that, this financing includes an allowance for completing the Ostrand project, but also we have a reserve of 10% of our annual net sales, which is a reserve we build into our financing structure as well. And we have an investment grade rating from Standard and Poor's, which is BBB investment grade rating. So on top of this, I could also mention we intend in the medium term to look for look at commercial paper as another funding source to look at other funding sources. I think this is a very good package to start with to set us on our way. So just to summarize, I know it's been a lot of financial figures and a lot of not many pretty photos like you might see from some of the other presentations. But if I was to ask you to take 3, yes, 3 takeaways or 3 messages to take away, I think number 1 is really our track record in terms of EBITDA margin of delivering strong EBITDA margins, best in class EBITDA margins above 20%. I think number 2 is really that we have a good cash conversion and a strong cash flow and a track record of good cash flow. And number 3, I think that those both of those are really supported by and secured by having a forest asset supporting and working in combination with the industrial assets to support those 2 EBITDA margin and cash flow, both of which will also be enhanced in future by the Ostrand project as well. So I think that's the key. If there's some key messages to take away, that's what I'd like you to take away. Okay. So with that, I will move on and hand over to Mats. Thanks very much, Toby. Good morning, ladies and gentlemen. As presented, I'm Mats Sandgren. I've been responsible for the forest side of SCA now for almost 9 years. Otherwise, I'm an old timer within SCA. I started out back in 1982, and I had held different positions within SCA Forest. I also worked for a time as a sawmill manager down here in Tunaal for SCA Timber. Now I've been with Sverdas Goksegana for the years between 2,030,008. I'll give you some figures, and I'll come back to the figures later on during my presentations. As Ulf said, SCA is Europe's largest private forest owner. Our land area adds up to about 6% of the Swedish land area, 2,600,000 hectares of land and of which 2,000,000 hectares of productive forest land with a standing volume of 230,000,000 cubic meters. So it's actually a huge value asset that we have within SCA, and all the land is close to our industries. The net growth at the moment is 9,500,000 cubic meters sorry, the net growth the gross growth we will have and the net growth is 3,000,000 cubic meters. And our harvest, dollars 4,300,000 that gives us a sufficient rate of 50%. And as I said, I'll come back to the figures. SCA has a relatively young forest or forests that drive our biological growth. And you can see on the slide that most of the forest that are growing are between 20 80 years old, and that's why we have this strong growth. And part of it is, of course, due to a very offensive and ambitious silvicultural program that started out right after the 2nd World War, I would say, but also due to having introduced the Lodgepole Pine into our forests. The large pole pine was chosen after a very solid research work that was done in the early '70s by the people in the silvicultural department. And they were looking at different tree species to see which species would grow fast, fast, as fast as possible and also would suit our industries. And after that, solid research work, dodgeball pine was chosen. And today, we can see that, that was very wisely done because it's growing 35% to 40% faster than the domestic pine does. So it gives you us a very strong growth. And we have also, of course, started to use it in our pulp and paper mills. And some people doubt that it's possible to use it in the sawmills, but that's done all over Canada and North America. And if you look down on that end in the room, you'll see a squared box and on top of that some pieces of wood and also a bowl made of large pool pine. We've had opportunities to try the large pool pine in the sawmills after the storms that we had. So we made trials and we have I think we have very nice products to look at. As mentioned, we have a harvesting level that corresponds to about 50% to 60% of the available annual growth. The harvesting level will be increasing over time when the young sands that we have reached harvestable age and we will reach in 100 years some 6,000,000 cubic meters or so in harvesting level, and the rice will start maybe around year 2,000 and 35. When you have a high growth rate and when you have a strategy not having to reduce your cutting levels in the future, but stay at the same level or rise it, you will also have a continued increase in standing volume. Our net growth, as Ulf mentioned, is 3,000,000 cubic meters yearly. And if you're looking back, you can see that the standing volume has gone up with about 50% over the past 50 years. And of course, this increase will continue, and you will see an increasing value due to that. And how can we be so sure of this? Well, SCA has made forest service for a long time. We do them every 8 to 10 years. We have did the 9th forest survey the years 2012 'thirteen. So we are quite sure that we will have a continued increase in our standing volume in the coming years also. As mentioned, 4,300,000 cubic meters, together with the ships from our own sawmills, will give us a self sufficient rate of about 50%. But the other half of the volumes that we need, we have to get from other sources. The most important source is what we're buying from private forest owners, and it's between 3,000,000 and 4,000,000 cubic meters yearly. And that means that we are buying standing volumes, so we are harvesting them, are in control over the wood flow from not only our own forest, but also from the forest that are owned by private forest owners. And we feel a responsibility we have responsibility also for the private forest owners for us because when you look at the storm that we have in December 'thirteen, of course, we will have to help also the private or forest owners to get their wood cut and delivered to a good price. And we will also help them when we have or might have some insect attacks like from beetles, bugs that they attack spruces, 1st of all. We also buy timber from other forest owning companies like SVASKOG and Holmen. We are buying wood from timber traders, and we also have, as a reserve, 2 fully owned companies in the Baltics, 1 in Estonia and 1 in Latvia. Latvia. When it comes to delivering wood, we have an extensive timber exchange, and we are changing timber to minimize costs and to lower emissions, of course. And I'll give you an example. We if Holmen cuts prime sawlogs outside our mill in Bolstad, they will deliver into Bolstad. And we are cutting sawlogs of pine in this area. We might deliver them into the Holmens sawmill in In that way, we will reduce the distances of transportation, and we will save costs. And this is possible due to the way we have with the measurement unions that are neutral between the selling and buying parts in Sweden, but quite important for cost saving and efficiency. But we also have a very efficient transportation network. Within SCA, we use the railroads a lot. We have 8 terminals railroad terminals of our own, and we transport about 50% of the volumes by rail. If you look at the prices in the northern region in Sweden, you can see that we have steadily rising prices, not heavily rising but still steadily rising. And looking at upon that from an SCA perspective, we're quite happy with that because as we have said, we need to buy half of the volume from other forest owners and we are happy with a stable price development. If you look at the figures, you must know that this is road list prices that are presented by the Forest Service. And when it comes to what's actually paid by the roadside, you have to know that there are premiums as well, premiums because of volumes or seasons or something. But they are substantial, I would say. So you have to add this on this figure. And I emphasize once again is roadside prices. As in all businesses, when you in your daily work, you have to be efficient and you have to be cost effective. And when you look at the productivity and harvesting, for example, I must say, I think we have been quite successful. Last time, we had an all time high productivity in harvesting. We did 65,000,000 cubic too many millions around, 65 cubic meters per man's day of work last year as an all time high. And looking back 30 years, you see you can see that the productivity was not even onethree. And this is, of course, due to the technical development and also to the different organizations that we have today. But if you're looking back to 1985, you might have had 2 machines to fell the tree to the branches and to cut it. You went over to a 2 grape harvester, and today, we work with a 1 grape harvester. And it takes about 20 seconds to cut the tree, fell it, the branches and to cut it into pieces. And going back 30 years, it took a minute, so 3 times as much. And of course, this affect our costs. And if you look at the cost of harvesting, you can see that the price has gone up about 20% in 30 years. But if you compare it to the consumer price index, the consumer price index has doubled. When you're into managing forests, you have to be sustainable, of course, and you have to acknowledge all the demands that are in native conservations. And our forests are certified, as mentioned, by FSE and PEFC standards. And that will be a guarantee to our customers that what they are demanding is actually fulfilled by our management policies. When we are felling and harvesting trees, we are replanting 3 new seedlings for every tree that we cut And the seedlings are produced in our own nursery. You might have seen it coming from the airport and passing the inlands river, inlands Elwynn, sorry, in those Elwynn and you'll see our nursery. And it's the biggest nursery in the world with production volume of about 100,000,000 ceilings yearly. We'll sell about half the production to external buyers. And when it comes to that part of the business, also there you, of course, have to be looking at how you can be more and more efficient, not only in the nursery, but also when you're doing the regeneration. This is a kind of seedling that's called jackpot. There are 67 plants in each and every cassette. And our people in Burgunde, they developed a smaller plant with the same survival rate and growth capacity as the larger plant. So this smaller plant is called Power Port. And this gives us an extended efficiency of between 12% 15% in the operations when you're regeneration forests. Quite impressive, isn't it? You can carry twice as much with you as with the other plant. We are selling both, of course, but quite nice. But the most important thing when it comes to developing seedlings, maybe it's the plant breeding because the plants that we are producing today in the nursery is growing 25% faster and natural plants are growing. So that's an important part of getting the growth rate up. Forest land can be used not only for forest production, but also, of course, for producing wind power. We have land with excellent wind conditions, of course, and it's our strategy to make the land available through leasing or partnerships. And average annual production is 2.5 terawatt hours yearly, and we have an ambition to double that wind power production to 5 terawatt hours in year 2020. So to finalize, we are Europe's largest private forest owner. We have a very sustainable forest management that will see through that we will have as much timber, biological diversity and natural experiences tomorrow as we have today. The growth is significant to the relatively young stands that we have. We have a long term stable and increasing felling rate. I would say that we have a world class productivity in our forest operations and a very efficient value chain. So we will have a security and biodiversity level for future generations as well. Thank you very much. Thank you for your attention. We will now have a coffee break. When you will have the opportunity to look around at the exhibitions here, you will have the opportunity to meet and mingle with the SEA team. And before we break for coffee, there is one person I would like to introduce to you, and that is a person of probably high interest. Mr. Nils Lindholm, can you rise? Nils is our IR manager and a good point of contact now and in the future. We will have a coffee break now until 10:15, so you will have ample time to drink coffee and to mingle and chat. I will bring your attention to the clock when we approach 10:15 so we can keep the schedule that we have announced for our non present participants, the people watching the webcast. So thank you for the first session. And 10:15, we will start the There is always a risk breaking up for coffee. Okay. Are you all ready? Okay. Good morning. My name is Jonas Mortensen. And as Ulf mentioned, I am the President of SA Wood. I'm not a woodhead, Ulf, but I'm passionate about wood. I've been in the wood business for close to 20 years now, and I've been with SEA for a bit more than 10 years and in this position since 2,008. So let's start. I will start by giving you a brief overview of our business. As you can see, last year, our net sales were a bit more than SEK 5,400,000,000. We have in total 1200 employees, mainly in Sweden, U. K. And France. We are the 2nd largest producer of soft ore in Europe, and we are number 1 in Sweden with an annual capacity around 2.2 1,000,000 cubic meters. As Ulf mentioned and as you have heard, we have invested quite a lot in our sawmill operations. Today, we have 5 highly automated and efficient sawmills, closed our forest holdings in Sweden. We also which not so many knows about, we further processed quite a big share of the volume that we produce in our sawmills. That volumes go into our own value chain for further processing. We have, in total, 10 planning and 3 painting facilities, either closed our mill sawmills here in Sweden or local into our core markets in Sweden, U. K. Or France. Our strategic focus is on value added products for the building material trade and the wood industry, and I will come back to this later on in my presentation to describe how we work with these two segments. And also, it's good for you to know that a bit more than 60% of our net sales comes from value added products in from these two segments. But I will talk more about that as well. So if we move on to picture number 43. Wood has an attractive market outlook, as Ulf mentioned. There are some favorable macro trends such as sustainability and carbon footprint that are driving the demand for renewable products such as wood based products and solutions. Wood is also taking market shares from other more traditional building materials such as concrete and steel. The softboard market has grown by 3% year on year since 2012. The growth is mainly driven by the current market conditions that you see in Sweden in terms of building activity and renovation. We also see an improving construction market in Europe as well as a pickup in the U. S. Housing market. Additionally, we see also good growth in the repair and renovation market, both in Europe as well as in the U. S. Finally, in recent years, we have seen a strong growth in softwood consumption in China. And China is today the 2nd largest global market for softwood, and it's been growing very fast the last 5 years. So all in all, this give us a market with a very positive outlook. So this picture shows our net sales last year by region. And as you can see, we have a very strong to grow our business in value added products for the Billez merchant, as Ulf said, also in the U. K, but also in France and Scandinavia. As you can see, our exposure to the MENA region is also relatively small. We have had we've made a strategic decision some years ago to move volumes from that region because it's an unstable region, mostly for standard products, volatile and standard products. And we have shifted volumes from the MENA region to Asia. And our sales to Asia goes mainly to Japan and to China. We started our sales office in China more than 10 years ago. This was earlier than most of our competitors. Today, we have a very good and deep we have a good and deep connections with our customers. We have a very good infrastructure there as well, and we have 2 sales offices. And as I mentioned, China has developed very good during the last 5 years, and we've been able to capture that growth. So today, our business stands on 3 pillars: value added products for the building material trade, such as planned and painted product that you can see on the picture here on the left hand side. And also value added products for the window industry, with window for the wood industry, mainly for the window, door and furniture industry. And the picture in the middle shows a wood component that we produced for 1 of our window customers. And then we also produce what we call standard wood, and I will come back to that a bit also. As I mentioned in the beginning, our focus is on the building material trade and the wood industry. Some 10 years ago, we did a rather thorough strategy review, where we decided to, firstly, to continue to produce products for the wood industry that we have already started in the mid-90s. But we also decided to start a new business area and to enter the building material trade. That was, as I said, 10 years ago. The main reason for choosing the building material trade as a new business area were primarily we wanted to continue our journey to move from volatile commodity standard products to more value added products with higher and more stable margins. This was especially true where the fiber from our forest holdings in the north of Sweden give us a competitive advantage. Our fiber are well suited for products with invisible end use. Mats mentioned that we have some examples of contorta over there, and I would say that you should go there and look at some of our products. Contorta is a perfect or a lodgepole pine is a perfect species for producing products for visible end use, and we have some examples over there, as I said. We were also looking for an area where the consumption of wood suited the capacity of our business, but also our growth ambitions. However, even though we focus on building material trade and the wood industry, we still need to produce some standard wood. And the reason for that is we need to maximize the wood recovery. The log cost stands for the majority of our production cost, around 65% to 70%. So to be profitable and to have a very good performance, we need to be very cautious about how we take care of the logs and how we maximize the wood recovery. So therefore, we will always produce some standard products and sell that in a more traditional way. So if we move on to this picture. We have grown significantly during the last 2 decades, as you can see. We have also been able to establish 2 new business areas. We started our focus on the building trade 10 years ago. We have grown this business from 0 to a SEK 2,300,000,000 business. And today, this business stands for 40% of our total turnover. As I said, we stand robust today on 3 pillars, but we still need to produce some standard wood. In our strategy, we have also tried to select the best customers that we can find. Ideally, we prefer customers that are big, they are growing and they are profitable. And if you look at the right hand side of this picture, you can see some examples of customers where we have been able to have long term business and good relationship. And they have, of course, been an important part in our success of driving the business and grow like this. So I will continue to talk about our Building Material business. We started this from 0 10 years ago. And today, we have a very strong position in all our 3 core markets. We have a number 2 position in Scandinavia. We also have a number 2 position in the U. K. And a number 4 position in France. To occupy these positions, that reflects a business on the way up. And then it's the question how we then achieved this. Today, we have a solid business model that works well for our customers in our core markets. We also have an attractive and a broad product portfolio. We offer high level of customer service and support. Our mantra is OTIF, on time, in full, nothing less. We not only bring products, we also bring ideas to our customers to help them to grow their business. So in short, we are more commercially interesting to our customers. We have also invested in production and distribution capacity in all these three core markets. As we have announced, as you may have seen, we have built a greenfield planing mill in the U. K. Close to the port in Hull. We are right now upgrading our planing mill here in Sundsvall, and we have also built 2 new painting lines during the last couple of years. So we have made these infrastructure investments today to be able to grow our business tomorrow. As our sawmills and our planing mills are located close to the coast, We can charter our own vessels to bring raw material from our Swedish mills to our planing mills in France or in the U. K. By that, we have a very efficient logistics systems, and we can reach our customers in a very cost efficient way. Our ambition is to continue to strengthen our position in these 3 core markets by continue or by offering them value added products and solutions, and we see great opportunities to continue our growth in both Scandinavia, in the U. K. And in France. So if we move on to the business that we call the wood industry. For our wood industry, customer ambition is to create value by offering them value added products and our know how in wood processing. By using the technology that we have in our modern mills, we can sort out the logs that is the most suitable for the end purpose. And a couple of example includes sorting logs, for example, with high strength properties for the construction industry or sorting out logs with x-ray with a special type of grain for the furniture industry. So together with our priority customers, we develop and design new products and supply solutions to fulfill their specific needs. In some cases, we have also invested in production facilities to produce custom made products for them. For some of our customers, we are also responsible for their total raw material need. We have control of their incoming need, and we make sure that they always have the right products in their inventory. So together with the right customers, this leads to a business with growing volumes that is less price sensitive, where we can also reduce cost in the value chain, and that will give us higher margin. And as you all understand, the barriers for entry are also higher. So innovation is one of our strategic priorities. An increasing part of our sales comes from innovations that we have launched in recent years. We have dedicated resources. We have system. We have KPIs to drive our innovation process. On this picture, you can see some examples of innovations that we have launched during this spring. We have launched a pine decking board with a 99% heartwood guarantee. And heartwood is the high density nonliving center of the pine tree. And that part of the tree has the same durability against rot as a treated product. This is a good example how we use the technology and the competence that we have in our mills to utilize our North Swedish pine in the absolute best way. This is an environmentally friendly product that has the same features as a treated product. Another example is what you can see on the right hand side of this picture. This is a solutions solution that we call Smart Timber that we are launching right now in Scandinavia. This solution includes a number of new innovative products, but not only that, it also includes logistics service, it includes in store and web training as well as point of sales and marketing material. By offering innovative products and solutions, we will drive both sales and margins, both for ourselves and our customers. So as you have heard already heard and as you also saw in the film in the beginning of this presentation, we have very modern sawmills. For more than 10 years, we have channeled our investments into a few number of mills. We have, during a 10 year period, invested SEK 2,000,000,000 in these mills. As a result, we now have 5 modern, highly automated and efficient sawmills close to our certified forest holdings here in Sweden. Today, as you have heard, we produce more in our 5 mills than we did 5 10 years ago in 11 mills. You can see our average capacity today is 430,000 cubic meters per mill. As in comparison, the average capacity in Sweden, if we look at the Swedish sawmills, is around 140,000 cubic meters. Olaf said that we do not produce so much more today. We produce 2.2 1,000,000 cubic meters. But as you all understand, productivity has increased, and production cost has decreased significantly. So we can conclude that this investment decision was a really good one. To minimize the risk with the investments, we have moved raw material and business from the mills that we have closed to the mills where we have invested and increased production. And our strategy is to deploy the best known sawmill technology that we can find on the market and implement that in all our mills. By doing that, we can transfer know how and competence between our mills when we invest in new machines and ramp up production. So to summarize this, we produce more in fewer mills with fewer overhead costs, and we use world class technology. As you saw in the beginning of this presentation, SCA utilized 100% of our forests, and we utilize 100% of the log. The bark is used to produce heat for our kilns, and the pulp chips that comes from the log cutting process goes into our own pulp and paper mills closed our sawmills. As you heard, around 10% to 15% of the log remains as sawdust. So it's important to have a well developed pellet business to contribute both to profitability and sustainability. Our 3 pellet facilities, they are located close to our sawmills. We produce 300,000 ton of pellets or 1.5 terawatt hours of green energy every year. Our pellets mainly goes to energy companies or to wholesalers or even directly to end customers. But also, as you have heard, onethree is used internally in our own operations. So in conclusion, I would like to emphasize the following points. We have a very strong position in our core markets when we talk about the building material trade. We will continue to focus on value added products in this business and in our core markets, Scandinavia, U. K. And France. And we will do that by being more commercially interesting to our customers. We have 5 highly automated and efficient sawmills close to our certified forest holdings in Sweden. As you heard, we produce 3x more than our competitors or the average in Sweden. That is a remarkable output statistic that makes us totally unique in terms of performance. You have seen that the global soft market has been growing by 3% year on year since 2012, mainly driven by the construction and the building activity in Europe and the U. S. But we also have a good support from good growth in the renovation and repair market, both in Europe and in U. S. Wood is also one solution to reduce CO2 emissions and to contribute to better climate and a greener world. As I said, wood is also taking market shares from more traditional building materials such as steel and concrete. You have heard that one of our strategic priorities are innovation. We will continue to drive our sales and our margins by offering innovative, sustainable products and solutions to our customers. As you have seen, this is a growing business with strong and stable margins with a marketplace where we have a positive outlook. So this is successful, ambitious, innovative, productive and profitable business that I am very proud to lead. Thank you. By that, I would like to introduce Ingela, EKBRO, one of our biggest customers in terms of pulp chips, at least. Thank you. Yes. Hello, everyone. My name is Ingela Jekkebro, and I'm General Director for Project Helios, the expansion project of Ostrand pulp mill. I started up in SCA in 1986 and been working in several positions. I've been responsible for the pulp mill since 2004 and President of the Pulp Business since 2,008. And when the decision came in 2015, I had the opportunity take on the challenge to lead the largest industrial project in Sweden maybe ever, and that was a challenge I couldn't resist. So I'm going to tell you about the pulp business within SCA today. The pulp business contains 1 strategically located, quite modern, but medium sized pulp mill. It is close to SEA Forest Holdings. It is close to SEA's sawmill business, who also is an important supplier of raw material and also close to SCA's efficient terminal in Tunadal from where we have access to the whole world. And pulp market is a global market. We have 2 production lines, NBSK, Northern Beech Softwood Craft, that has been produced in Ostrand since 1931 and CTMP, chemical pretreatedthermechanical pulp that has been produced since 1982. We also produce 0.5 terawatt hours of green electricity and supplies the district heating systems in Son, Sol and Himro municipalities with mainly recovered heat. The turnover in 2016 was SEK2.5 billion, and there are some 3.10 people working at Ostrand today. The headcount will increase after the project by only 20, and that will be some, the initial years after start up, mainly due to changes in sales organization and the need of more technical support. Our kraft pulp is sold under the brand name Celeste, and that is a clean, strong pulp with a super strong environmental profile. Our dedicated team has been working hard since the beginning of the '90s to reach a top position in the world for both our pulp products. The capacity today is 430,000 tons, and we sell around 15% internally to SCA paper to market prices and the rest of the pulp on the external market. The CTMP is sold under the brand name Star, and the capacity is 100,000 tonnes, and all of it is sold on the external market. NBSK and CTMP are produced in different processes that develop different characteristics of the pulp. So they the fibers from the pulp can play different roles in the customer's end products. Where Celeste contributes to paper products with brightness and strength, CTMP brings bulk stiffness and or absorption capacity. All paper manufacturers mix different pulps into their end products to get certain characteristics in their products. And for example, bleach hardwood craft cannot be as strong as a softwood kraft since the fibers in a hardwood is just about onethree of the fiber in a softwood. But hardwood brings softness and printability to end products. So all pulp products have certain objectives in an end product. The NBSK fibers grow in the Northern Europe, in Northern U. S. And in Russia. And we see a strong future for NBSK pulp, and I will come back to that. But first, I will summarize what Celeste offers to the market. And as I said, we have already a strong offering for our customers. We are a preferred supplier, and being a preferred supplier is really important to be profitable. Celeste, that is strong and easy to process for our customers, make it possible for them to reduce their costs by mixing in less softwood pulp still reaching their required strength and also saving electrical energy in their processes. But equally as important for many of our customers is the environmental profile. And a strong performing pulp in that aspect gives them a better opportunity to use the eco labeling system that their end customers demand. WWF has a ranking system, the EPCI, Environmental Paper Company Index, where companies can voluntarily report their performance regarding energy consumption, environmental impact from the pulp processes and how they source the pulp processes with the fibers. And last time, in 2015, our pulp Celeste ranked absolutely top in class. And this is an ongoing development. And the project will further strengthen this profile. So why is it important to be a preferred supplier? We don't add on a premium yet. But as many of you already know, I think, the normal setup for a pulp delivery is that the supplier pays the logistic costs to the customer's gate or to a closed terminal. So being a preferred supplier makes it possible for us to optimize our customer base and create efficient logistics solutions and reduce our costs. And SCA, who has our own logistic company, is really competitive in that aspect. So in a nutshell, it's important to be a preferred supplier in order to be able to reduce costs. Now having shown you Celeste's attractive offering on the market, let's get into the rationale for the project. Pulp is a raw material, and the raw material producer always need to improve our competitiveness. So and that means to produce more pulp more efficiently to an increasing market. The rationale for the project is, as Ulf had mentioned, firstly, growth. Market analysts foresee a long term market growth, and I will come back to that. Secondly, capacity. The project will, by doubling the capacity, create a cash cost leader mill by clever process design. And thirdly, environmental profile. As I said, it's important to further strengthen the environmental profile. Fourthly, flexibility. We will be able, by the project, to create a pipeline that can produce a wide product range to our customers. And finally, value. We need to support the forest value, and the long term healthy demand from a strong industry is supporting the forest value. The production start is planned to be in June 2018 with a normal ramp up curve of 12 to 18 months. And one contribution to the cash cost excellence is the energy efficient process that we have been able to make now. And we will produce 1.2 terawatt hours of green electricity when the mill is up and running on full capacity, and half of that will be supplied to the grid. And I will come back to that. So now let's go back to the market growth. What are the main drivers? Pulp market analysts foresee a long term growing demand both for softwood and hardwood, and that has been the case for several years. The drivers are increased global usage of tissue products and also Internet shopping that creates a strong demand for packaging papers. The tissue market is growing faster than the decline in the newsprint market. And the decline in newsprint market is also creating a shortage of recycled fibers that is replaced by fresh fibers. The increase in the tissue market has been more than 5% annually in the last 5 to 6 years. And the tissue segments now accounts for 29% of the total bleach softwound market. And SCA Pulp today is well established in the tissue segments. Last year, we sold around 60% of our production to the tissue market, a split we are very happy about since that is the most growing market. So to summarize this situation, global tissue demand is growing strongly. SCA Pulp is well established with a strong offering to our customers. We have the product knowledge. We have the proven experience in being a preferred supplier, and we soon will have more capacity in place. So we can and will exploit this market opportunity. Now let's take the second bullet point, the cash cost item. As I said, a profitable raw material producer must always improve costs and productivity. For the last 10 years, SCA Palp has been able to improve productivity by 40% by debottlenecking, working with cost savings and lean production. However, with the investments, we will reach a totally new level, and that is that it doesn't take double manning to run a pipeline twice as big. The ambition throughout the design process has been as few and as large process parts as possible, still being able to produce pulp of superior quality, of course. And also, as I already said, it is important for a mill to be close to the forest sourcing. And we will be able to source this mill mainly from local forests and sawmills. And almost half of this will be supplied to the mill by train. And that the project is making that possible by adding railways so we can take in 44 wagons at the same time to the mill compared to today's 6. For maximum flexibility, we already have a wood key on-site. The electricity production that I mentioned is created by a clever process design. We will significantly reduce electrical consumption and heat consumption in the pulp process and increase, at the same time, the electrical production per ton. So the increase to the grid will be 2 75 percent per tonne. All in all, that moves Ostrand from the middle of the second quarter for cash costs for softwood pulp mills to the very top, where a profitable long term pulp producer should be. So we haven't gone from bad to good, rather from good to great. And this clever process design can also create new options for SEA. SEA is quite a long way in its thinking in how to produce green hydrocarbons out of this potential. And hydrocarbons can be used for products such as green diesel, green gasoline, green jet fuel or green chemicals. We have an identified potential at Ostrand of 3 terawatt hours from black liquor and wood residues, such as bark and sawdust. And that amounts to 3.5% of all liquid fuel usage for transportation in Sweden today. So that's quite a substantial potential. And as Ulf mentioned, SCA to date has invested SEK 50,000,000 in a pilot plant in Obbola, where we will demonstrate the whole value chain from black liquor to green hydrocarbons. And the production just has started. This is a super exciting future, I think. And there are, of course, no decision yet for a full scale plant, but I think the time will come quite soon. SCA has a huge focus on making this happen. And this could mean those new businesses from green hydrocarbons, as I said, but also a technology business for SCA. So this can be a sleeping giant. It's just a matter of time. And this great potential is created by the expansion project. So that is the first important step. So today and more than a year ahead, my absolute focus will be on securing the delivery of the expansion project. The projects are still 6 44 days after the go ahead decision going according to plan. We have a well functioning project. We are on time, and we are on budget. We will reach our important goals for cost, quality and environmental profile, and we will do it on time. The new operating operation center is actually ready today. And that will be the place where the production organization, together with the maintenance organization, will run this mill in the most efficient way, but they will not move in yet. From now and the year ahead, the new operation center will be used for a massive training program. We have bought process simulators, so all people in the production, all operators will run their process virtually before the actual start up. And the operating operation center will also be used for all commissioning works and start up that we have ahead of us. And one important key differentiator in our project compared to, for example, a greenfield project is the sequential start up that we will be able to make due to the fact that we have an ongoing operation at site. So we will start up 3 important departments before the start of the fiber line and the recovery boiler in June next year. We will start up the wood handling department this summer. We will start an evaporation plant in November and a new drying machine in January next year. So this is a very important factor for us to mitigate risk. And we will do whatever it takes to deliver on time, in full, so SCA can capitalize on the attractive softwood pulp market and also continue to explore the exciting biorefinery options that we have. Thank you. And now I have the pleasure to hand over to Mats, Head of the Paper Business. So thank you. Very good. Excited to be here and excited to present paper SEA paper for you. First, a short introduction of myself. I've been in management positions of this industry for the last 25 years, and I've been covering, I think, most parts of the value chain and I would say also most parts of this globe in terms of continents. Africa is probably the only continent where I have not been actively working with this industry. I've now been heading this SEA paper for the last 2.5 years, and I'm really excited of being part of this creating this new company, SEA. This place and Soneswell is also my birthplace, so this is really important also for me. First, a short introduction to the business. This is a business a little bit short of SEK 8,000,000,000, generating a fairly stable EBITDA margin of 15% over the years. And as you can know, it and as you see, it is based on 2 quite different businesses. We have the publication paper business and the kraftliner business. At first glance, you would think that they don't have too much in common. And that is true when it comes to the customer base. And that's why we are operating these 2 businesses with 2 different sales forces and 2 different, I would say, go to market mill operational models, we are sharing many things and everything from our raw material base to our logistics systems out to the customers. And that's where we are trying to seek synergies and best practices. And my own experience is that it's easier to seek real hard cost synergies in between 2 different businesses, but with the same geography compared to having the same business, but in different geographies. So I think we are trying to somehow, we are compensating the lack of scale in total scale here with trying to seek synergies here in between the different businesses here. Our strategy and our improvement targets for the 2 different businesses are very clear internally today. And the role of the kraftliner business and our publication paper business is very clear for us. We have already delivered proof points of that so far. We have restructured the Utviken mill. It was in the very end of 2015. And we have also brought the kraftliner business as an independent supplier of kraftliner to the market quite successfully. Ulf was mentioning actually when we asked the kraftliner buying customers who was the leading kraftliner supplier on the market, on the European market, our company came up as clearly number 1. And that was a very good base of building this further on. If I then walk in firstly to the publication paper business. Utviken, it's based on 1 mill. But in this 1 mill, we have 3 paper machines. So we have 1 mill site. If you would look later on, you would see it just down the hill here. It's one of the biggest mill sites in the world, number 7. But in Europe, if you look on the chart here now, there first of all, there are no more there is no mill sites with that have 4 paper machines today. There are quite a few with 3 paper machines. And in Europe, there is only one that is clearly bigger. But as you can see, there are many, many publication paper mills that have 2 or 1 paper machines and that are in total smaller than the Utveken mill. We believe that this is a good fundament going forward when we are focusing on achieving operational excellence of the Otriggen mill that this will be a cash generating unit and it will be competitive for some years to come. In our strategy, you could say, our ability to source fresh spruce and select fresh spruce fiber together with our peroxide bleaching technology that is state of the art, makes it possible for us to compete with high value wood free products. We can produce ultra white publication paper grades. And this is also forming our strategy going forward because this is a competitive advantage for us. And traditionally, you would say I've been segmentizing the product ladder of printing papers in a very schematic way here. You would have recycled based products, wood containing products, that is what we do at Urdwieken or we would have wood free products. And in a simplistic way, you would have quality on one axis and price on the other axis. They are somehow competing and to a larger extent going forward, competing with each other. And we are feeling challenged, of course, by recycled based products. But due to our ability to make ultrawide products, we can compete with wood free products. And our strategy is to reduce our dependency competing in the lower segments and increase our ability to compete in the upper segments. And this has been driving our innovation work and our product renewal work. And as said, 35% of our current products did not exist 5 years ago. And this is one reason also why we are gradually exiting the newsprint segment. So today and this year, new Sprint will only represent 3% of our total production at Utvieken, and it's going down. So if you want to know a lot about newsprint, we are perhaps not the best source of that information going forward. So there will be 9,000,000,000 people on this planet by 2,050, and that requires us to use renewable more renewable materials, and we need to get more out of less. And this also supports a long term growth trend for packaging material and kraftliner. In on the globe, there is a strong growth of the middle class. And when you're going from poverty to a middle class situation as a family, your highest priority that is to start consuming hygienically packed ready made food because that changes your family situation so enormously. The women doesn't have to get up 4 o'clock in the morning to milk the cow, as one example. And this also grows food packaging very fast. And food packaging is the biggest packaging segment in the world. Globalization means trade, global trade, not at the least by e commerce, as we know. And this drives an increased demand for high performance packaging solutions. And we can see that the environmental awareness, not at the least in between renewable materials and plastics, is there is more and more awareness and we can see evidence of that discussion ongoing today. And that is driving the increased demand for fresh fiber products. At the same time, there is a lot of debate and discussions, even discussions about legislations in Europe because of food safety awareness, and that is also favoring fresh fiber products. So we believe that there is a fundamental strong I would say, the fundamentals are very strong here that we will see a strong demand for packaging materials going forward for a long time ahead. This slide, I think, is quite important when it comes to our kraftliner business. In the containerboard segment that is both recycled based containerboard and kraftliner based containerboard. Kraftliner, as we define it today, represents 17% of the total containerboard segment. And as a comparison, that share of wallet in the U. S. Is 50%. In Europe, it's 17%. And this is a it's a big segment. However, the growth for kraftliner in recent years have been very strong. And as if you look on the bars to the right there, you would see that in between the years 'ten to 'fourteen, the growth of containerboard excluding kraftliner was 2.6%, but the growth of kraftliner only 0.4%. You could read this as there is a higher demand for recycled based fibers. But in the years 2015 2016, the growth of kraftliner was almost 6%, corresponding to a volume of 600,000 tons, whilst the rest of the containerboard market grew 3.4%, all are good growth numbers. And in quarter 1 here, the growth of containerboard 7% 5%, still a very nice growth figure. But now I think comes the catch here. I believe that the fast growth pace now for Kraftliner by statistics will go down due to the scarcity of supply. One reason why Kraftliner grew so fast now from 'fifteen to 'seventeen, at least here, was that supply became available. So it's very hard to measure the real underlying demand because it's very dependent on the supply side as well. So what we have seen is a very strong demand now when supply became available. And this, I think, it's very, very important to remember. When it comes to our product strategy, well, I believe we have a clear strategy for our Kraftliner business. It's based on differentiation on one hand and optimization on the other hand. I would say our fiber source, but also our assets and know how, makes it possible for us to differentiate with the strongest and heaviest kraftliner product. We can also, as the only European producer, produce a wet strength kraftliner products. But we are also, I believe, best in class when it comes to the printing surface of our white top product. For the rest of the portfolio, we are seeking to optimize every SKU that we have based on profitability. We are, by this, building on our strengths, meaning that we are trying to grow what is good and we are also prepared to exit products not being profitable enough. For us, this means active product management. And this is perhaps one of the most important differences by being independent and being integrated with the corrugating units ahead of you. We can actually work very actively in trying to optimize our product portfolio to what fits, I would say, our strategic or competitive advantages. When it comes to our asset base, we have 2 of Europe's largest and most efficient kraftliner machine today. 1 of the machines are number 1 and the other is number 3 in Europe, although they are both 30 years plus of age. We have €3,000,000,000 in recent years into these businesses, but with a clear strategy. In Munson, we have increased the capacity and improved the quality for white top and high strength kraftliner. And as you can see on the right hand chart here, we have increased the share of these products faster than the total capacity increase in the mill. In Obbola, we have upgraded and renewed the pulp mill with the latest technology, which means we are producing more pulp. We have higher pulping capacity, and we can do that at a lower cost and a lower also carbon footprint from the pulp mill here. And this is a good base for us going forward. As an independent supplier of kraftliner, we have to trust we have to earn the trust from our customers every day. We have to bring real value to our customers to build the loyalty that we need going forward here. And to compete, we have simply to be the best in everything that we do. We are therefore driving innovation in close collaboration with our customers, both in terms of services, but also in terms of product performance. And when it comes to our customer priorities, we are focusing on the most demanding customers, and they are located in Central and Northern Europe. And this is where we are putting our priorities today. In our innovation work, we are dividing this basically into 3 streams. 1 stream being enhanced product features and there we have a priority on lightweighting. New applications, we're looking into new applications for our kraftliner business. It could be paper cups or paper bags or we are looking to completely new business models. And here, I will come into the what we call ARC wise a little bit later, and I will explain a little bit more in detail what that is. But this is also addressing the megatrends that we can see in society With material efficiency that we as we said or as I said, we have to learn how to do more from less. We are seeing the changing lifestyles and we are seeing the environmental awareness on renewable materials versus plastics. And that is something that we are trying to address with our innovation priorities here. As a very practical example of what we mean, I will show you this example. You can produce a standard box of corrugated box with different materials. And here to your left here, you see a box produced with our EuroKraft product. That's a kraft top product. That's a high share of recycled fiber. And here, we have been specifying that with 1 100 and 65 GSM grams Euro kraft products. So the total box weight here came up to 8 50 grams. But if you instead used our next generation, that is what we call next generation kraftliner that we are bringing out to the market now, you can exchange that Eurokraft product with a kraftliner product of 150 grams. So you're saving material. The weight of the total box goes down to 800 grams. It maybe doesn't sound too much, but in our world, we have reduced the kraftliner or the kraft containerboard weight with 10% here and the work is ongoing. This is a continuous work. And this means that we could exchange these qualities. But you can also think radically new, and that is what we have done with our Arcwise technology or our way of doing corrugated boxes in a different way. We have a patent technology to make curved corners of corrugated boxes as you see here. And now you're thinking in a completely new way, you can change the design of the box. And if you are making round corners, the box becomes much stronger. Nature tries to make round shapes if they want to make something really strong. And all of a sudden, you can radically change the weight of the box. Now it's 5 50 gram instead if you're using the same material as you did in the middle. This is a patent technology. We have no intention of starting to produce corrugating boxes again. So we have created a new business model here where we are seeking license takers and where we are getting a fee for producing the box, someone else is producing it. And we have created a new business within paper around this ArcWise technology, and we are coming out on the market now. So far, we have 8 license takers here in Europe, and we have more in the pipeline there. But we are focusing on getting products now out on the market. And there I can say there are already now 2 major product lines coming out of the markets in Germany and in the U. K. As we speak now. But changing packaging designs is a slow process. We know that. It takes a lot of time to convince big brand owners of changing their way of producing packaging design. It's such an integrated part of the brand of the product. But we feel that this is an opportunity for the future. And this technology has been developed in our R and D center here in Sonzval, and then we have we are now turning it into a business going forward. As a summary, I believe we have clear strategic and operational priorities. We have ready made plans, I would say, to meet the challenges and opportunities that we see ahead of us. Our publication paper business here, we are running that with a strict cash flow focus, where we are trying to improve the business without major investments. On the other hand, on our kraftliner business, we are building our strategy on our market leading position and the favorable growth trend that you see. We believe that we can leverage investments that we have already made to further focus our product mix on higher value products, but we have also the optionality for further capacity investments in Obbola due to the increased capacity of pulp making that we have today And also product mix improvements in Munson with clever investments if we choose to do so. And I believe that this is a very good business going forward. Thank you. And I believe with this, I would ask Ulf to come up. So by that, we are at the end of the presentations, I would say, and it's not really easy to summarize anything here. But I hope you can agree with me when I say that we have a strong story to tell here. And we also have a strong management team leading a highly dedicated and competent workforce. And they are really eager out there to deliver on all those growth opportunities that we have, and I hope that can have that we have been able to show some of them here today. It is also so that one can say that the base for our business is and also for our operations is the forest, the golden egg. And on this, we have created what we call an industrial ecosystem, super efficient industrial ecosystem. And in this integrated value chain, we see lots of opportunities. To summarize a little bit, we started with the forest and Mats said that we are the biggest private forest owner in Europe, which is really something to have in the portfolio. And it is well managed forest relatively. It's quite young and by that also fast growing. So the growth is tremendous and the net growth and the increasing volume, standing volume today is about 3,000,000 cubic meters per year. At the same time, the forest is certified according to the FSE and standard, which to some extent guarantee a sustainable forestry. But I think the track record of increasing the volume 50% during the past 50 years and at the same time double the harvesting volume, that is proof enough. Wood Junas. We can clearly underline that wood is not boring. It's profitable and it's really exciting. The development here has been fantastic during the past 20 years. We have had a growth of 10% per year. We have had a profitable growth, which is not the least important. At the same time, we have done a lot of things in our sawmills. We have reduced the number from 11% to 5%. We have spent a lot of money. But I think the most important part in the wood business is really what we have done in the market and our go to market approach. Lot of innovative work has made it possible to have this profitable growth. So that is something to remember. And in pulp, Ingela, it is anyway the biggest industrial project ever in Sweden, and you heard that we are really convinced to deliver on the goal that we have had. And so far, on schedule, on time, it looks it might looks to be easy to run a project like this, but you will see it when you come out there. And it's not so easy to, at the same time, run the old mill and build up a new one brand new world class mill. And one thing that you mentioned, Ingela, which I think is important that we are not going from bad to good. We are going from really good to great. We have a good position already there. That you can also see in Toby's figures, but we will create something really special here. The basis for the investment is, of course, the increasing demand in the market, in the tissue market, in the packaging market. But at the same time, of course, for us as a big forest owner, we really will secure and also increase the value of the forest land for ourselves, of course, but also for all private forest owners in this region. And then Mats, we finalized with paper. And of course, in publication papers, we are hit by the digitalization and we've also taken measures here. We have reduced the exposure quite substantially. We did divest 2012 our mill in Lachiesen, our mill in Eisford. We have close to oldest machine here in Ludwigen, but still we are big, we are cost efficient, we have a clear cash flow focus. In our kraftliner business, that is a completely different animal. Here we are favored by the digitalization. We can see an increase in demand. We can, at the same time, see that we have a scarce situation when it comes to recycled fiber, and that is in the combination of quality and price. And Magnus Groot, he just recently when we released the quarter one report, he said that we will not anymore build a new tissue machine based just on recycled fiber. That will not be possible. I think that we have a golden egg also when it comes to virgin fiber and the forest again, of course. So I'm very proud to lead this. And myself and also my team sitting here, we are really looking forward to the journey ahead. And we are convinced that we will long term be able to continue to deliver an increased shareholder value, and that's also the reason for being, of course. So by that, I think that we open up for the Q and A session. And please, if you can come and join me, the management team that has been present this year. I think that would be good. So we will now give you an opportunity to ask questions to the team that has been on stage. I will try to keep a sharp lookout for you who opts for questions. We will have microphones over there. We also have spotlights in the face. So please lift your arms high so I can see you. And please introduce yourself as you get the microphone so everyone can hear you. Yes, we have the first microphone. I have. Okay. Olof Gjermaki, ABG Sundal Collier. Thank you very much for interesting presentations. If I may have two questions. First of all, when we analyze the profitability in forest, your division Forest, is it your true profitability that we're seeing? Or are you in any way subsidizing your downstream business? Do you want to take both questions first or do you want to That was the first question. And then secondly, we haven't heard anything about your profitability targets today. Is it fair to assume that you will have the same kind of targets that you had within SCA that is to grow in line with the market? Then the obvious question is, what is the market and to be in top quartile return on capital employed. But first of all, regarding the profitability in forest, please. Do you want to take it then? Yes. I can start at least. And I mean, the question the answer to the question is yes. I mean we base the price that our industry has to pay on the price that we have to pay to private forced owners in this region. But then when you do the comparison between different actors, which you might have done, you have a I mean, we cannot really comment on any other player here. But we do like this. We have quite substantial swaps, wood swaps. And what we gain from these wood swaps, that is in favor of the industry. You can do that in different ways, but we do it that way. We also have had when you look at the past 3 years, we have had quite substantial windfalls in this area, which means that we have had higher harvesting costs. We have also had a price level in the market that has been quite low for a while due to the fact that we have had a surplus of wood that has also had an impact when you look at the restatement, for example. We, every year, buy and sell forest land, and every time, we also have a capital gain. In our case, we put that under the line, which is not the case with all players here. And the 4th thing maybe is that we have the forest where we have the industry. I think that also have maybe an impact. Okay. And then what about the profitability targets, please? I mean, we haven't the new board isn't in place yet. So they need to have some time to find out what kind of financial targets we will have going forward. And up till then, we have the targets that we have today. Fair enough. Thank you very much. Thank you. Then we have 2 questions or at least 2 participants asking questions here at the front table. Who wants to start? Thank you. Thank you very much. It's Linus Larsson with SEB. I think you very convincingly have displayed the advantages of your integrated forest and forest industry strategy. I wonder if you would also be willing to acknowledge some challenges relating to that. And what I have in mind is as a big net buyer of wood, as a group, you will not have an incentive to have high wood prices, but rather low wood prices. How does that affect your well, the financial targeting for your biggest asset in your asset base, the forest land, that's pretty much 3 quarters of your balance sheet. How does that affect our ability to evaluate your performance in the downstream? Is the wood price representative and comparable with other competitors and constellations in the market? And maybe thirdly, how can we ensure that your investment decisions in the Downstream are based on the adequate raw material costs. I think coming back to what was just said about the wood price. I mean, we base the wood price between the forest and impacted of the structure of the ownership of the forest and so on. So I mean but that's the case. That is the case. Sorry. I mean, we are a net, a big net buyer of wood, and we set our internal price according to the price, which we are buying at as well, which is a market price. That is the market price we are using. So I mean, it's a clear market price between the different parts, but the fact that we're a big net buyer of wood, I mean, that we are and that we will continue to be for some time. But it's the market price that exists today. So it's not being driven in a particular direction for any other reason. And then just to add again, I mean and the value of the forest is, of course, 200% dependent on what kind of industry you have close to the forest. You have seen some example in Norway, for example, where an industry closed down, caused a situation where it wasn't really worthwhile to not to do the thinnings, but not even to do the final cuts. So I mean, of course, you have a connection. You can never get rid of that. And then how to judge? Well, I can see the maybe the challenge there, but I think that maybe you have to judge the whole chain from the forest to the industry. And in that perspective, SAA has been transparent since many, many years, and you can see yourself that we have been able to deliver really good result over the years. So I mean, I think that is the answer more or less. It isn't easy, not even to be an analyst. Okay. Please. Oscar Lindstrom from Danske Bank. So we've had a couple of questions about the forest side of your business. I thought I'd ask some questions about the industrial side of your business. First off, about the strategy going forward. Now I realize the new board is only just in place and you haven't had a chance to or they haven't had a chance maybe to set out the strategy. But in sort of your opinion, is there any logic in expanding the industrial operations beyond the Swedish fiber base that you have? Or are you going to be in the future and always sort of centered around the regions where you have a fiber supply that you at least partially control? And also, sort of following up on that question, is there a sort of expansion potential or logic to expanding, I guess, the paper operations given that you have a very good mill site in Utviken, which, to a certain extent, at least, is today producing products which are structurally declining? Okay. Two questions. To expand beyond Sweden, that's a strategic probably, Juerulf, would be And maybe, I mean, first, just to underline that, we have rather big and good growth potential in the current business, that's for sure. I mean, you have heard lots of possibilities here, and I think that is exciting and that is also something that we should try to deliver on. Growing out from Sweden, that, I would say, is maybe something that we have to discuss with the Board. But for me, I think the main focus just now is to grow what we have in Sweden. We have many opportunities here, if that is an answer, short term at least. In terms of paper, I mean, we will not grow publication papers, if that was the answer. I mean, it's a clear cash flow focus, and Mats has really showed that I mean, still we have a good innovation rate there. 35% of the products coming that has come out from the last 5 years has been developed. During the past 5 years, which is quite impressing, We can do a lot of things in the frame that we have today, but it is a cash flow case, definitely. So in Kraftliner, that is an opposite game. And Mats described here that we think that the reason for Kraftliner not growing as fast as maybe the test line has done in the past is that you haven't had availability. When you had the Warkaus mill entering into the market last year, you could really see a fast growth. And we think that Kraftliner is a good opportunity. I don't know if you'd like to add something, Mats. No. I think this is true. As you remember, perhaps, we made a trial in Utveken to make packaging material out of the asset base we have there. That was not very successful. We couldn't do it in a competitive way. And so we decided that had larger negative impacts than positive impacts. So I think for the Ootwiecan mill, we have to really focus on trying to be the best in class of that what we do there, If that expands a little bit, Johan. Yes. If I may, just a second question to you, Ingela, on the Ostrand Helios project. Can you give us any guidance in terms of the sort of profitability impact that, that project will have, both in the sort of start up year but then later on when it's fully up and running, either in terms of EBITDA impact in absolute terms or return on capital employed for that project? I think I pass that question to Toby. I mean, I think basically the future depends very much on factors like pulp price and so on. So we don't give forecast, but obviously the new capacity will bring a big effect and there will also be some efficiency gains which Ingele presented in terms of people cost and some energy, which will have some impact. But like I say, I mean, at the end of the day, you probably have a view on the pulp prices as much as we do, which will have a big impact on the result as well. All right. But that's about all we can say for now. Yes. We have a question over there and then in the back. There. And next there, okay. Thank you very much. Okay. I have noted 3 questions after yours. So please go ahead. Okay. Thank you very much. It's Christian Kopfer from Nordea. Just a couple of questions. Firstly, a follow-up on forestry. I think if you look at wood prices, currently are pretty much same level as they were 20 years ago. And Mats von Forster, you said that you are quite happy with stable prices. On the other hand, looking at your book valuation of these assets, you expect prices to go up quite substantially over the next 100 years. So I just wanted to hear your feedback on that. No, I mean, I can say when you saw the prices, they're relatively stable, but there's an yes, an upward trend to those prices in over 100 years is, of course, a long time. But basically, the when we do our forecast, which is built into the forest valuation, we're basing it on the historical trend. Okay. So you mean the next so the average nominal price increase has been around 2% per year the last 20, 30 years or? Yes. I don't have a figure in my head, but basically the I mean the future forecast is in line with the historical trend as well. Okay. Then on financial side, again for you, Toby then. Looking at the paid taxes, you have almost not paid any taxes, as I if I read it correctly, for the last 3 years. What's behind that? And when do you expect to pay taxes? Well, we I think stand alone, you'll start to see our stand alone paid taxes going forward. Now we've also been part of a tax pool in Sweden with the other SCA assets up to today. Going forward, our paid tax will also be impacted quite significantly by the investment in Ostrand, which will have a taxable deduction ahead of our depreciation. So that will keep the tax paid probably below the P and L charge for tax for some time as well. Can you comment on when you expect to pay full taxes? No, we can't comment on that. All right. And finally for me then on kraftliner. We have seen kraftliner prices coming up quite dramatically last couple of weeks, last couple of months. Can you comment a little bit what has behind been behind that? And if it's a risk in the current price level? I think I commented on the growth trend that you see that we have been operating very high operational rates and there is a strong demand for kraftliner. There is always risks ahead, of course, and the risk is on the demand side more than on the supply side as far as I can see. And even today, with today's price levels, if you would build a greenfield kraftliner mill today, you couldn't really do it with current prices. So that says a little bit. And there is a demand for new capacity. So you have to find other sources or other concepts there. So and but of course, kraftliner prices are not totally independent on the testliner prices. They are interchangeable. So I think it's very, very important to very difficult to give a forward looking, I would say, estimate of pricing going forward. We can only comment on the current situation. On the current situation, we have a strong demand and high operating rates for us and the industry. Okay. Thank you very much. Okay. We move the microphone to the next table, then to the back, and then we move over to our right, your left. Yes. Thank you, Mikael Ruben, Handelsbanken. A couple of questions. First of all, now when you spin off the Hygiene business, do you see any streamlining opportunities within the remaining SCA as a function of that? And then secondly, you have a very decent exposure to the euro, and I was just wondering about what's your hedging policy there. Okay. Streamlining opportunities, do we see any? Should I take the hedging question first and you can think about the streamlining of Okay. We hedge first and we streamline then. Yes. So we have as a big exporter, like many other big exporters in Sweden, we have a big exposure to the euro and probably the dollar underlying as well. We have in the Q1 report, I think you'll see the hedging position we have at the end of Q1, and it's the same today. We've basically hedged around a third of the euro flows up until the end of the year. Going forward, we after that point, we don't have a clear position to tell you. I think we don't expect to be extremely active in terms of hedging all the exposure. We think that is really not our core business, but like I say, we've got a 3rd hedged up until the end of this year and that's where we stand today. Okay. Something about streamline. I mean, we didn't really brought anything from Stockholm in terms of overhead or anything like that. So I mean we have built up what we need here in Sverdswald, which is 15, 20 people in order to run corporate functions, such as, well, Investor Relations and Treasury and some functions at that part, financial part. I think that when it comes to continuously keep an eye on the cost development, we have been quite good at that in the past. And we have, let's say, well functioning system for that, which we call just an improvement improve. But it is more or less in our DNA. So I think we do continuously benchmark with what we can do benchmark with, and we more or less always find out that we are cost efficient. We can always do more. We can always do better. But we are really focused on keeping our cost on a low level, and we will continue to do that, of course. So the first thing now when the split is over is really to try to look over the cost structure, but because it's quite costly to spin off something. I can guarantee that. Yes. Okay. We move the microphone to the back. And then over. Thanks for taking the question. Mines on Project Helios again. On Slide 60, you talk about going from the 2nd quarter in terms of cost competitiveness to the 1st quarter. I just wondered if you could actually put some numbers around that, however you feel most comfortable in quantifying that move. I'm just trying to think of the relative change here in terms of returns. No, I don't want to put figures into that, but I think it's also really important to notice that this is compared to other softwood producers. Okay. And it's based on the branch statistics when it can? Yes. Okay. Thanks. Okay, please. Thank you. Robbie Santo Werta, Carnegie. Could you comment about the pulp business profitability, which obviously has been extremely good, '14 and 'fifteen and then declined significantly last year and also now in Q1. I do understand that the prices of softwood also decline, but it seems as if there's something else as well. You mentioned some costs are already now taken from Ostrand. So what's behind that? And what should we sort of expect going forward before the ramp up of Ostrand? Yes. And I think if you in the Q1 report, you'll find some more explanation behind it. But the biggest factor is the pulp price, of course, which has changed between 2015 2016 and Q1. There's also some project costs, which are specified in the Q1 report. So you can and I think on one of my slides, you can see there. And then the third factor we had also in quarter 1, which we mentioned was we wrote down some of the L certificate, the green energy certificates in quarter 1, which had an impact and further impact, which was a one off effect in quarter 1. Right. Going forward then regarding the project cost? Are these recurring now for the next sort of So we I mean, we've shown you the project cost also for 2016 sorry, 20 17 in the report. So you can see the full year effect of the project cost. For 2018, we're going to have to come back at the end of this year with the effect, but there will be a prolonged stop in 2018 in conjunction with the start up. And there will be some costs associated with that, of course, and we'll come back on those. But then going forward, I mean, I know I have a few questions trying to sort of get further details. We're not giving forecasts, as we say, but I mean, there will be obviously big impact from the extra volume. The drop through depends on the pulp price at the time, of course, which we don't know. And then there will be some efficiency gain as well. But we can say that in the Q1, we said SEK48 1,000,000 was impacted by the project. And that is, I mean, you have double manning in order to educate the people that is going to run the new mill. You have some write offs because we are now starting up the new wood handling system. The total amount will be close to SEK 150,000,000 during 2017. We have close to SEK 40,000,000 due to certificates in the Q1. 2016, we had some struggle in the production. We had the biorefinery went down in the beginning of the year. That was also communicated and some other things. So 'sixteen was in production perspective, not a good year. 'fifteen was a fantastic year. And of course, we have some challenges in the operations now to run the old mill at the same time as we build a new one. And that, you will really see when you come there because it's tight. It's tight out there. Good. And then another one, if I may, related to CapEx going forward. You give some guidelines excluding the Strand investment? What should we expect now over the next 2, 3 years? I think you can look at the history as a pretty good guideline. We've invested a bit less than SEK1 1,000,000,000 per year in maintenance CapEx over the history, and we don't expect that level to change very much going forward. So below depreciation? Yes. Thank you. We had another question center right over there in the back. Center right. It sounds like politics. Ian Wood, Redburn. Just a couple of questions. So I think you mentioned in the presentation a planned step up in harvesting in around 2,035. Could you give some indication on what this might do to the profitability per timber field of that operation in terms of the scale? And then on the second question, the pulp mill. I think you've shown a slide before of where Ostrand is on the cost curve, and you talked about it again today. I wonder if you could talk about what FX rate these comparisons are struck at. Thank you. Okay. Increased felling. Mats, do you want to comment upon that? Yes. So we are pretty sure due to our Forest Service that we will increase, of course, the cuttings. But your question was something else, wasn't it? It's on the impact of profitability. On the impact of profitability. On the impact of Well, that's impossible to say, of course. But I mean, larger volumes often reduces costs. So I'm looking forward to it. But at that time, you are retired, so Yes, I am. For sure, maybe more than that. We're pegging up for our successors. And then there was the question on Fab cost. Yes, yes. I think I mean, all I say, when you saw the picture with the 1st quartile, 2nd quartile, that was based on a study from 2015. So it was using exchange rates at that time. Okay. Thank you. We have a question over here. Thank you very much. Mick Corr of the DMP. I just wanted to ask about this liquid biofuels opportunity. What are you thinking there? What's going to be the marketing going forward? What kind of regulatory items you're looking at? Would you need some kind of partners there to market it? How will this process go from here? I think we hand over the microphone to Mikael Kjellgren. He's in the audience somewhere. Yes. Mikkelgren responsible for our Renewable Energy business. Yes. Thank you. We're very early in the process, as I've said before. And Ingela, we have 2 parts. 1 is where we're developing our own technology, converting black liquor into hydrocarbons. The other one is converting sawdust and bark to hydrocarbons. On the other hand, we're investigating and securing the prerequisites for a commercial plant in Ostrand with permits and detailed planning. But it's early in the process and no decisions has been taken besides the decision in the pilot plant in Obbola. It's for the first, it's technology development. We have a lot of challenges ahead. And the second one is there are no large biorefineries today, so not with this technology. So it's new permitting process and so on. So yes. So technology permissions and then the regulatory status when we come to a position when it's possible to evaluate an investment. Any more comments? Okay. Any more questions? Thank you very much. Again, it's Linus Lassen with SEB. Just a follow-up question on the previous question regarding the liquid biofuels. It sounded in the earlier presentation as you're very close to a full scale decision. Could you maybe elaborate a bit more on that? I mean timing wise, size wise, it sounds as if this could turn into a big CapEx project and size and timing of that would be very interesting. I mean, we are exactly as Mikael said, we are in the first phase. We have taken the decision to spend or invest SEK 50,000,000 in Obbola just in order to see if this is working. We have a couple of patents that we need to that we have secured, which is, of course, important. But I mean, we have no we don't know if this will be a commercial rate produced by a liquid fuel. But if it will work, then we say we have great opportunities. And we have great opportunities around, let's say, the infrastructure that we will now create around Ostrand, not least, but we have other also other chemical pulp mills. But around we will have a fantastic infrastructure and if we can utilize that in different ways. And one way could be liquid biofuel, but another important thing is really to extract black liquor from the process and by that also give the opportunity to increase the capacity with very limited investments. So that is really a fantastic development if it works. Too early to say anything about We maybe should add that we have started a permission process at the Ostrand site for a potential investment. And as you know, permission process, they take long time. They are quite crucial for the conditions when you are at the point where you actually make an investment. But in that process, of course, we have needed to become a bit more concrete on what sort of mill, what sort of process, what sort of site will we need permissions for. If we started permission processes only when we knew what to do and were just before any investment decisions, there would be no permission process was finished. But there is some indications in the documentation around that permission process. And I guess that is public information. That's public information. Could you share with us the scope of that permission that you've asked for? What's the size of this facility, particular facility? Maybe Mikkel. Is probably the one who's in the best position. But bear in mind, this is the first step in a permission process. I remember a time when we started to the permission process for expanding the Ballsta sawmill, and we sort of sought permissions for everything we might want to do for 15 years or so. And the Mayor of Keraun Forsch, he almost blew a fuse because he realized that, oh, this is €1,000,000,000 investments. And that was he told the local newspaper that during a silent period, which was not very good. So permission processes is one thing, investment decisions another thing. But the first comes first and the second comes sometimes later. And I think maybe I could just add before Mike or sorry, but I think basically we're saying it's too early to draw any financial conclusion or any financial estimate. It's definitely too early for anything. We think it's an interesting possibility, but there's no sense in trying to make a conclusion. If and when we get to a stage where it does become more concrete, we will of course come back and explain in much more detail. And we genuinely hope that, that will happen, but it's right now, it's too early. Yes. The permitting process is, as Ingelad said, it's a large biorefinery with 2 lines, 1 with black liquor and 1 with sawdust and bark converting into hydrocarbons. The volume is 3 terawatt hours annually. And it's about 3.5% of the total usage in the Swedish transport sector. So it's full scale commercial biorefinery. Thanks. Now that you gave me the mic. Just one more question on CapEx. You have an ambition to double your windmill capacity in a short period of time. Could you talk about the financing of that project? Will that be at all based on own CapEx? Or is it other partners' CapEx? Or is it a combination? Yes, the model we have at the moment is that we do not invest our own CapEx in wind power. We lease the land. So we have a lease income from the land. There may be some small investments around infrastructure, but very limited CapEx from our side. That's the model we have at the moment, yes. The strategy is to the windmill power capacity that should be established in the northern part of Sweden should be established on SCA land. That is our focus. Excellent. Many thanks. Please, Oscar. Thank you. Oscar Lindstrom with Danske Bank. Regarding this the black liquor project that was mentioned in Ostrand, I mean, the other side of it is, as you mentioned during your presentation, that it would free up capacity in the boiler and that would enable you to increase capacity or production of pulp further. So on that note, I mean, 2 follow-up questions here. First of all, how much could that sort of potentially free up in terms of increased pulp capacity? And second, what would be the size of debottlenecking investments necessary in order to reach that capacity if the capacity was made available in the boiler? There is a number of ifs in that question, but it's It's part too early to I mean, as already said, we are just now investing in knowledge. And we have this pilot, SEK 50,000,000. We have employed a couple of competent people in this field. We also dedicate some resources at our research center. But I mean, we don't know if this will work, and we don't, of course, not know what kind of capacity we could add and definitely not know anything about the cost. All right. It was a nice try. Thank you. I can just add that a recovery boiler is not just a boiler. It's a chemical processor. And one of the investigations that are carried out now and for the coming years is actually about how much lignin can you remove without disturbing the process. So that will be a part of the investigation. So it's R and D rather than CapEx as yet. Okay. Do we have any more questions? Lunch time is approaching. Okay. Well then, thank you for your attention. Lunch will be served just behind you in well, it is actually served, but you're not there yet. I'd like to mention a few more things. When you leave here, you have boxes. You heard Mats elaborate on this Arcwise technology. You will be able to test it because the boxes over there, they are produced by they are arcwise boxes containing useful material, the presentations, but also some other items that you may find, I hope so, useful. There is also seedling, so you can start your own competing forestry business. We're ready to meet you anytime, anywhere. The buses to the mill sites will leave from the front of the hotel, 1300 sharp. So I will remind you, and then the Bougrund at Nursery. These are actually 3 quite unique places to visit. The most modern and efficient and fast sawmill in the world or at least in Europe, the biggest investment project in Sweden ever and the largest tree seedling nursery in the world. So that's something to see. And we'll also keep schedule and make sure that you are safely delivered to the Sundsvaldimro Airport, so you can catch the 16/15 flight from there. The bus will then return to the city center, to the railway station and up here to the hotel if you have other plans than leaving by that flight. Yes, I think that was all. I'd like to thank you all and hope that you have appreciated this opportunity, this first presentation of the future forest products company SCA. There will be more. So please,

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