Investor Update

Aug 28, 2015

Press Release

Hello, everyone, and welcome to this telephone conference about our announcements today about SEA enhances its organization and invests. Today, I have Mr. Magnus Groots, our Vice President and CEO of SEA and also our President, of course. And we also have Frederic Roestat on the line, our CFO for the company. So with this, I hand over to our President and CEO, Magnus Grote. Thank you very much and thank you for calling in. We actually have 3 announcements today. One is that we are clarifying our organization further by starting the work to create 2 divisions, a hygiene division and a forest products division. And the reason for this is that we want to emphasize the value that we have in both these 2 different businesses and also show and actually enhance the synergies that we have specifically within the Forest Products division where we believe that by having the actual forest land, the forest assets and the related industry in one company creates a huge value that is not matched by many peers in the forest industry. Secondly, we announced investment in our pulp mill in Ostrand in Northern Sweden. And this is a very exciting investment that will give us a world class cost position for the future in NBFK pulp, which is a high quality, long fiber pulp, and that will also double the production in this facility. And this means that we increase actually the value add that we add to the forest land that we are managing and operating today. So that's the second announcement we make. And the third announcement regards the 85% of our business that is our hygiene business. And we have a strategy that we've been delivering on over the last 4 or 5 years, very much focused on globalization, emerging markets, efficiency, innovation and growth. And this is another evolutionary step in that direction with the clarification that Latin America is now a major growth area for us. So this becomes a separate business unit with direct line responsibility for the 2 supply chain organizations to further enhance our focus on efficiency on a large part of our costs. And thirdly, to increase the speed of innovation and customer focus in our 2 global brands, away from home with the brand Torque and incontinence care with the brand Tana. So those are the changes in hygiene. And with that, I would like to open up for questions. So please, operator, you can start the session and we have the name and where you're calling from. And your first question comes from the line of Celine Pannuti from JPMorgan. Please ask your question. Yes. Good morning. Well, I'll ask a few questions to start with. The pulp mill. Can you give us an idea of what it means for the CapEx layout? What is incremental and what will be already encompassing the current CapEx forecast that we have? And then can you kind of explain how you when you look at your decision to allocate capital, the capital allocation to the forest and the return you're going to make on that investment, Trying to if you could explain what kind of return are you looking at and what kind of value creation you were talking about the value creation in derived from this investment. I would like to if you could pinpoint that and give us maybe some number in order for us to get that clear. My second question is, you said that there would be some synergy having the land and the forest under one unit. Can you as well explain what you mean by that? And trying to for us to understand the value creation you seem to be emphasizing in your preliminary remarks? Those would be my 2 questions. Thank you, Celine. So we typically have a CapEx of around SEK6 1,000,000,000 per year in the group. And during the investment phase, CapEx levels will be higher. But at the same time, we will do quite some prioritization in Forest Products area. So they will actually reduce CapEx levels in other parts of Forest Products. So the entire amount of SEK7.8 billion will not be the increase during this 3 years. The increase will be less. So that was question number 1. When it comes to the allocation of capital, we have the capital and we have the balance sheet to invest in all attractive opportunities that we see both in Forest Products and in Hygiene. And I think it's important to emphasize that we are a Hygiene and Forest Products company and we believe that we want to operate these two businesses as efficiently and successfully as possible. So it's not one supporting the other. They both have their own merits. So this investment doesn't have any negative impact on any future positive investments in hygiene. When it comes to then value creation from the investment in the pulp mill in Ostrand, the value creation comes from 2 different perspectives. 1 is that we actually increased the cash flow from our forest assets and this also has to do with the synergy between the forest land and the assets because without adding value to the forest land, the trees aren't really that valuable. So we'll increase the cash flow by just increasing the pulp production. Secondly, we will see a significant reduction in our cost because there are just huge benefits of scale in making pulp. So this means that our we will be more competitive in the market and our margins will go up. And we will start ramping up this new facility it's not a new facility, but this investment in mid-twenty 18 and then ramp it up over a period of a few years. And just 4thly, what about the forest synergy value creation? I think I already touched on that. Yes. So is it possible to have an idea of this when you talk about significant cost reduction and being competitive? A, am I right to believe that we'll start only from 2018, number 1? And B, can you give us an idea of what kind of magnitude we are talking about? And then a follow-up question on this cost reduction. You also mentioned that the hygiene restructuring would lead was the premise for further efficiency. Can you as well explain that? I've not seen you alluded to that in your preliminary commentary. It's your last question, Arceline. I didn't get that. The last question? Yes, please. Yes. The last question was in your in the press release, you talk about efficiency for hygiene. Could you as well explain what kind of efficiency this new organization will allow? And if there is any number you could share, it would be even better. Thank you. Okay. So starting with yes, the added capacity will start ramping up mid-twenty 18. We will run the current pulp mill at full speed until that date. So it's not that there will be any shutdown of the current pulp in this. So that one will continue to operate and that's a very profitable business already today because of the pulp prices and dollar exchange rate. But the benefits we should start seeing then in 2018. The magnitude of the efficiency improvement, I don't really want to elaborate on further, but it's a significant improvement. When it comes to efficiency in hygiene, as I've stated before, we will not announce any. This organizational change is not related to a big cost saving program or anything like that. But the increased focus on supply chain efficiencies and on global innovation and customer focus will bring synergies to the Hygiene business. Thank you. And your next question comes from the line of Linus Larsson. Please ask your question from SEB. Yes, thank you very much and good afternoon. Very exciting news this morning. But let me ask a couple of things. You talked about creating 2 new divisions, but how does that actually change anything? Is that not how you already are organized and already are operating? And if your intention is to actually break up the company in 2 separate parts. Why don't you clarify that please? You're right that this is how we are organized and how we are operating today. But if you look at the assets, they are actually in different parts of FCA with most of the forest land in the parent company and actually industrial assets in various other parts of the company. And it is this that we will put together into 1 division and this will require quite a lot of legal work and other work. And that's why it will take until the end of next year until we're done with that. So that's the actual difference from today. So to be very specific, the aim is that the Forest division will be a daughter company with the parent company then including the hygiene business. There are different ways of doing this and we're still looking into different options. So that's the change from how we are set up today. But wouldn't you agree when you talk about emphasizing you want to emphasize the value. That's what you said initially when you talked about the reason for creating 2 divisions. If you want to emphasize the value, wouldn't you agree that the only real change that will emphasize that value is a true separation of these parts, I. E, breaking the company up into 2 parts. How does this actually change anything until you've done that? No, you're right. This is a journey that we have started now to make this separation of the assets. And as I said, it's quite complicated, so it will take a year and a half. And in the meantime, of course, we're also making this huge investment that we are very excited about. We think it's a great investment and that's why we're doing it. And in the meantime, we are continuing to operate the business, of course, to improve every day and to improve our performance every day. That's very, very interesting. And I think all parts of the company have their merits in their own basis. But when you say this is a journey that we have started, is the end, is the goal of that journey a separation into 2 distinct entities truly separated from each other. And with that, I mean, obviously, just to be crystal clear, 2 entities which can be invested into separately by different by equity investors? The decisions we have taken are what is stated in the press release that we are starting this process now with the aim of having these two divisions in place 1st January 2017, and we have not taken any other decisions. Okay. Just one. Can you also talk about your thinking around self sufficiency in PULP when it comes to your hygiene products operations? This is more of a financial hedge based on the fact that as we see currently today when pulp prices are quite high and the dollar is quite expensive to the euro, we get quite significant increase of our pulp purchase costs in the hygiene business. But to the contrary, we then have a very good profitability in our pulp business in Forest Products and this is the financial hedge that we usually talk about. And with when the pulp facilities that's operating at full speed, our sales efficiency would increase from 26% today to 43% going forward. But again, only part of the actual physical pulp moves from our forest products business to our hygiene business. Yes. I mean, that's the result of what you're doing today assuming that the group is get together. I mean, but how important is it for if you look at the hygiene parts of the group to have that high self sufficiency on pulp in your opinion and from a long term point of view? Yes, it's a financial hedge that's nice on group level when we meet now every quarter and we can show the good results from the Forest Products business while we are at the same time then working very hard to compensate for increased raw materials in hygiene with price increases, with efficiency improvements and so on. So that's the benefit. But both these parts of the business are self sufficient today financially and they can both develop going forward without any financial that you would have to kind of subsidize 1 of the units with the other. They are both very strong financially. And I think, Ilene, as you already know, it's important to note that, of course, all raw material of pulp transfer in the group is arms length market prices already today. So from that perspective, the result you see in hygiene, the result you see in Fora story today is the sort of true market result. Got you. Many thanks. And just one final question. Would you care to share any guidance on what kind of returns ROCE or any other math metric that you would expect from the pulp mill investment on its own? We don't disclose that, of course, for competitive reasons. So that's we never do that for CapEx, as you already know. But of course, we wouldn't have done this investment if we didn't believe it will yield a good return in excess of our requirements and our weighted average cost of capital. So it's a good investment. Of course, it creates a cost advantage, a very cost competitive position. And that also, as you've seen from the press release, leads to higher income, but also a very good margin and good return. Could you just remind us what's your hurdle rate in terms of We haven't stated a hurdle specific hurdle rate, but it's clearly exceeding our cost of capital, Linnis. And again, we don't disclose return on capital for individual capital expenditures because that gives competitive knowledge that we simply think is unwise to give. Very nice. Many thanks. And your next question comes from the line of Oskar Lindstrom from Danske Bank. Please ask your question. Yes. Good morning, gentlemen. I have a couple of questions. Lina has picked off a few. But starting off with the Forest Products reorganization and Ostrand investment, I have three questions, maybe I'll read them off first for you. And then the first one, is the forest land move to the forest products division connected or will it entail any financing or balance sheet changes? For example, what's the impact on the deferred debt? So that's the first question. The second question is, I think you talk about synergies to be created from having forest land and industry in the same vision. What synergies will you achieve through this ownership change that you can't extract already today? And preferably if you could quantify this. And finally on the Ostrand Forest Products part, do you have any what kind of changes to wood supply in Central Sweden will this investment entail? And do you need to make any further forest land swaps or purchases or changes to accommodate the increased capacity? So those are my questions on the forest product side. Maybe you could answer those first and then I have 2 more on the organization. Okay. When it comes to wood supply, we see all of Northern Scandinavia's wood supply area. And we have worked very hard with this entire project for the last couple of years. And we have a very efficient wood procurement organization. And we are already have, I think, both the infrastructure and the knowledge and the contracts in place to manage this in a good way. So of course, this supports the value of the forest land, but this is and this is something we can manage with forest or wood supply from the region. A follow-up on that specific question. What will be your sort of self sufficiency throughout the group in terms of wood supply? 50% approximately. 50%. 50%, yes, which we think is a good balance because then it gives us flexibility also. And where are you today if I We're at the similar level today for yes. This will not this will just basically consume increased growth and harvesting? Yes. And also whatever changes you can foresee foresee in going forward to 2018 2020, where we have a declining demand for publication paper, for instance. And your first question was maybe I'll have Yes. Any cost, I mean, just to give you a little bit of perspective, it's the total land is 2,600,000 hectares, as you know. Most of that, not all, but most of it sits in the parent company SCA AB. And of course, that will be transferred into 1 unit. So that's one of the actions that needs to be taken. And there this is not just one piece of land. This is a multiple of very a significant number of different plots that we own and then that we will transfer. So we it's too it's premature to talk about the cost, the total cost implication of it, but we think this could be done at reasonable cost. And then your question, is there going to be a change in the balance sheet or net debt? No, we don't anticipate that to happen. We don't believe that that's going to be impacting that. Likewise then, just to be clear, no impact on the deferred debt? No, that's not what we envisage. Okay. And then when it comes to the synergies, yes, you're right that the operational synergies we are very much focused on and we're realizing those 2 to a high extent. In the longer term, this will also open up for opportunities to have, I think, financial synergies between the forest land and the industrial operations that have quite different characteristics from a as you know, from a cash flow perspective and a value growth and stability perspective. I mean overall, if you look at the overall SGA situation, we have a hygiene business where a lot of the value comes from growth and from margin improvements and strong cash flows. In the forest part of the business specifically, the forest land, the value is derived partly, of course, from selling the timber and the wood, but to a larger extent also from the pure value enhancement, which is non cash of the forest growing every year, while we then have a cash flow related growth or value created in the industry that's quite volatile depending on raw material prices and currencies and so on. And we see that having then the forest land and assets, the industrial assets together is also good from a financial perspective in the long term. If I follow-up on the financial side, the financing for the Ostrand investment, will that be done by SCA AB, the parent company or I'm trying to get a feel for if the financing will be done by the Forest Products division? No. Today, of course, all the funding in the group as a whole is done by SCA, AB as one group, and we don't envisage a change there. We will already today, we have balance sheets, of course, for all our businesses. But we look upon ourselves as a group. We also tax consolidate and we fund this one, and we will continue to to do that also after having done this. All right. Thank you. If I may have just more general questions on the reorganization and the hygiene part of the business. Mean, I understand what you're doing, but and you say that it will intensify growth in the pace of innovation. Open ended answer, but how exactly? I think to be very specific in a way from home to start with, we are extremely strong in washrooms in Europe, but weaker on the hotel restaurant catering side. In the U. S, it's actually the opposite. We are very strong in Orica and quite good, but not as strong in washrooms. And having this under one management and working then very closely with our global category, we think we can do a lot of knowledge transfer, best practice sharing and align also the innovation and product assortment over the Atlantic. And this will definitely speed up then innovation and growth where we are under trading in these two parts even though we have strong positions in both those areas. And North America plus Europe accounts for about 90% of our away from home business, which means that we are slightly under trading outside. But that outside end of this area, the regional D and E growth oriented business units work with all our brands because we don't have the scale yet to have a category based organization. And to be very specific about incontinence care, we have a very, very strong position in Europe where we are completely I mean, we have in many cases close to half for me, even more than half of the market, both in retail and in healthcare, while we have the same in Canada, very strong positions, but in the U. S, smaller positions. And we believe that we can develop incontinence care position in the United States better with this transatlantic setup. So that's very, very specific. And also the other benefits of having then 80% of the Inco business in one business unit and working very closely with the category on innovation and brand development and so on. And Latin America is doing extremely well, growing market share and become an important part of the group. And we've also recently decided to invest significantly in Brazil, SEK 650,000,000. And I think with this, I personally want to be more involved in that exciting opportunity going forward. And the 2 supply chain organizations, it's just easier to it just becomes even more clear who has the efficiency responsibility in the group for a large part of our cost of goods sold. So the supply chain including purchasing and it's now these two persons who are responsible. So it makes it easier to really, really set the targets there. Then the P and L responsibility is still with the other business units. Thank you. Very good answer. I think those were the questions I had. Thank you. Thank you. And your next question comes from the line of Stellan Eilinstrom from SCA. Please ask your question. Yes, hi. Stellan Armstrong from Nordea. It It seems to me a bit hard to see the operational or financial synergies from moving forward assets and products into one common company? Or do you see any such? And thus, it seemed to me that the logic for this is potentially allowing for a further separation of the businesses. And even as you have no such plans, would you at least agree that this increases your theoretical ability to eventually truly separate the businesses? I will not say no to that, but the decision we have made in the Board is to start this process of the contracts in 1 Force Products division. That's the decisions we have taken and this will take until the end of next year. Okay, very good. Okay, thanks. And your next question comes from the line of Karri Rinta from SHB. Please ask your question. Yes. Thank you. Kari Rinta and Spanken. First on the hygiene reorganization, just a clarification since it seems to be that you discontinue a specific U. S. Organization. So to me, that tells that you have taken a sort of a strategic decision to not to seek or expand your presence it comes to the U. S. You're happy with the segments that you're in and you are taking some effort to be stronger in those segments, but you are no longer looking at expanding into new categories in the U. S? That would be my first question. That's absolutely the wrong conclusion. We are strengthening the business we have. Yes, that's very true. But that doesn't mean that we're not continuously looking to strengthen our position in important markets. And the United States and North America is and Mexico, if you want to include it, but that's definitely a high priority for us. Okay. And then about the Ostrand investment. Can you confirm that this capacity expansion would increase your wood consumption by roughly 4,000,000 cubic meters per year. And that if you want to keep your self sufficiency unchanged at 50%, then you would increase your internal harvesting by some 2,000,000 cubic meters. I don't foresee that we will need we will need around 4,500,000 cubic meters when the new facility is up and running at full capacity. And then in order to keep your self sufficient set 50%, you would then increase your own harvesting by half of that? Actually I can't answer that question. I need to check then with our Forest Products division. So maybe we could check that and come back to you. The investment cost is a bit on the high side, because I had expected this to be more of a brownfield investment. But now the sort of the investment cost per ton implies that essentially you're building a new pulp mill or not new pulp mill, but there isn't that much that you can reuse. Can you quickly go through the what exactly are you investing in? It's almost €8,000,000,000 I think if we could do that together with the Forest Products division, I would appreciate that. And we are replacing many components, but not all of them. And I don't agree with your conclusion that it's that the investment is on the high side. That's not the benchmarking that we have. But let's look into that specifically. Okay. And then finally, this announcement that you you will investment, why do you announced it already today when you don't have all the permits in place on IFRS? Because we are very certain that we will get the permits because of all the pre work we have done over the last couple of years and the very close dialogue we have and also for the reason that this facility will have absolutely world class environmental performance. So this will be best available technology and best in class environmental performance. So we feel very confident about that. Okay. Thank you. And your next question comes from the line of Michael Jaff from Kepler Cheuvreux. Please ask your question. Yes. Hello. Good morning, everybody. Most of my questions have been taken, but I have a couple of one housekeeping question and then another question. Is it so that with this new organization of hygiene, could you just confirm if you will sort of change the reporting accordingly as well or if the reporting will stay the way it is currently for the hygiene part of the business? I can take my question. It's a little premature. The assumption is, of course, that we will remain with the current set up with Tissue and Personal Care for Hygiene. But of course, we'll during the course of this and next year, we'll look through that as well if we can further enhance or create additional transparency that may be requested. But our assumption for the time being is that we will remain as we are today. We'll come back with that. Okay. And then my second question is more sort of on the history and sort of more of a discussion point. And that is, I mean, in the old days, we analysts learned that the strategy of SCA was always to be clearly short of pulp because of the market dynamics on the pulp market where you constantly see to have new capacity flowing in, pushing prices down. Okay, now we've had a period of elevated pulp prices. And still, post this new investment, you will be at the self sufficiency rate of only 43%. But do we see a change of this sort of old SEA mentality? Or is that premature to think along those lines? It's The self sufficiency rate is I think it's only interesting to the extent that I mentioned before that it creates a bit of a financial stability on group level for the 2 different parts of the business becoming divisions, but still the 2 different parts of the business, they can both manage the volatility on their own behalf. So it doesn't the pulp's efficiency doesn't have a strategic benefit from that perspective. Both businesses can do well separately. But on a group level, there is this financial hedge effect. Okay. Many thanks. And your next question comes from the line of Michael Hedlund from Nordic Paper Journal. Please ask your question. Good morning, RCA. Good morning, Mr. Good morning. Good morning. Good morning. We just heard that the pulp increase in Ostrand is for FCA's own use. Can you explain the flows of the approximately 500,000 tonne extra pulp? That's not correct. As Fredrik already mentioned, this is purely a financial hedge. Of course, we have some internal flows just because of the proximity of the plants using pulp and Ostrand also producing pulp. So I think today approximately 150,000 tonnes of the pulp made in Ostrand happens to end up in FCA hygiene facilities. And that will increase to some extent to about 250,000 tonnes going forward. But that's also you have to then remember that there will be a growth both in the hygiene business and then the expansion of course. And your next question comes from the line of Cole Hathorn from Jefferies. Please ask your question. Please could you give us a bit of a breakdown of how the €7,800,000,000 CapEx will be spent over the next 3 years? Yes, there will be I can do that. If I start with this year, 2015, there's going to be a small portion, but not a big deal not a big amount. And then if we take the final year 2018, of course, that's basically when we'll finalize it. There will be a very small portion also in 2019. But the majority of the money will be spread relatively evenly between 'sixteen, 'seventeen and 'eighteen. Just one clarification there. I think Magnus already alluded to it, but of course, the total amount of CHF7.8 is the investment, but we've also reduced a little bit in the forest business for other investments. So the net impact for these 2 year for these 3 years, 'sixteen, 'seventeen and 'eighteen will be considerably less than 7.8 Thanks. And your next question comes from the line of Kartik Swamy from Bank of America. Please ask your question. Hi, everyone. Kartik Swamy Nathan from Bank of America Merrill Lynch. Thank you for taking my questions. A couple of quick ones and then one on strategy. Firstly, I was wondering whether this new CapEx investment and the reorganization of your divisions could result in a lower focus on M and A. So some clarity on your strategic direction would be useful. Secondly, I was also wondering with the collapse of the legal structure and focusing on one daughter company to hold all of your forestry operations could result in a reassessment of book value? And could that trigger you to revisit your accounting assumptions? And then the final question was on the reorganization of Latin America. In my mind, it seems to be completely consistent with the strategy you'd stated earlier, making bigger bets on a smaller number of large emerging markets. So the question is, is there any kind of similar shift reorganization that may be necessary in Asia or China as part of this process? Thank you. Okay. So to answer your first question, no, there is an unchanged high hygiene business. And we have the financial firepower to do that. And there's absolutely no change in that. When it comes to if there are any balance rate, I will leave that to Frederic. Yes. No, this process doesn't trigger any of that. Of course, we already have a, as always, a normal IFRS accounting and the normal impairment testing of all the assets. So there should be no specific actions from this reorganization or this legal restructuring. There is no such change. And the third question, yes, I'm happy to hear that you see that this is in line with fewer bigger bets. And this is now the organizational change that we have announced today. So that's all I have to say. And your next question comes from the line of Oskar Lindstrom from Danske Bank. Yes. I had a final question. You mentioned in the press release, I believe, that you will expand reporting for the Forest Products division. First, when will that happen? Only once you've transferred the forest lands, I. E. 1st January, 2017? And what kind of new information do you see already that you will be communicating? Oscar, maybe I can answer that question. We haven't actually finalized exactly what that's going to look like. But of course, The first of our initial thoughts is that we'll basically provide full disclosure there, so you'll have an income statement and balance sheet for the different parts or for the Forest Products division. So you'll see much more than you see today. But exactly how that will look, we'll finalize during the course of next year and we'll be out there in 2017. But basically, we will work as a separate daughter company. Hygiene operations. Sorry, you were saying? Will you do the same for the Hygiene operations then as giving us a full P and L? Of course, the group will consist of the hygiene division, if you put it that way, and the forest division. So, of course, by definition, if you do one, you have the other. And your next question comes from the line of Celine Pannotti from JPMorgan. Please ask your question. Yes. Thank you for allowing me. I have a few follow-up. The first one is, maybe I misunderstood, but on the forest book value that you have currently, I think there has been question in the past on whether you had maybe a cautious view in terms of some of the assumption you were taking. So question here is that are you looking at that? And will there be a revaluation of the forestry asset book value? The second point is if you separate the balance sheet of these two division, To which extent that could have an impact of your ability to finance a large acquisition in hygiene? Because I was thinking that some of your debt capacities as well as the debt agencies are looking at your forest asset as a collateral. So if you could come back on that. 3rd point, is there any further view in terms of further assets to be trimmed in the Forest division? I think that was as well what previous management's team aimed for. Do you see a better outlook there? And then finally, since we last spoke after Q2, there's been a bit of wobble on the growth, FX, raw material changes. I just wanted to see if you have any short term message for us to take into account for the second half of the year. Thank you. I will start with the last question. We have no new information of course on performance. We report that quarterly. Then when it comes to the future balance sheet split and using the forest as collateral and debt capacity, I'm happy, Celine, that you see the benefits of keeping forest and hygiene together. Now I'm a little bit cheeky here now. But anyway, from an SCA perspective, we're a hygiene and forest company and it will not change the group's ability to finance growth either through acquisitions or organically going forward. And maybe you want to fill in on that Frederic. No, no. We are still just one group. So that doesn't actually change, of course, the funding of the group as we've already elaborated on. So we will still fund in SCA. Maybe also your first question there on the revaluation. I actually didn't fully hear your question, but the way we do this is we look at a harvesting plan, which is basically 100 years, and then we calculate at the market prices and the estimated costs. We calculate the net present value of all the poorest land. That's the accounting method that we apply and have applied for quite some time, and we'll continue to do that. So this creation of a division doesn't actually change the way we do things. So there should be no anticipation there of any change of method or change of valuation as far as I can I can't envisage that? And then you had a third question a 4th question about further assets in the Forest business that I didn't really hear. If you could take that again, Dalia. Sorry for that. So, yes, on the Forest division, I think there has been a few disposal over the years. And I was wondering whether you see the outlook for further disposal opening up or not. I'm thinking maybe in the newspaper side. And then just a follow-up on the harvesting plan. Would that be the case that the harvesting plan will increase under your methodology and therefore the value at least would increase. And then I think the work taken is quite low versus your other players in the industry. So those were my questions on the revaluation. Well, we don't have any news on further assets to be trimmed in the forest part of the business. Nothing to add there. And when it comes to the harvesting plan No, there is I mean, you can say the harvesting plan, Celine, is done independent of usage. So just because we happen to we maximize the volume and value of harvesting. That's the way it's done depending on growth, etcetera. So this doesn't actually change because of the investment in the pulp mill. The harvesting plan is still there. We do that every 8 years, as you know, and then we recalculate based on market prices and estimated costs. So there should be no there's no change in assumptions because of this investment. Thank you. And your next question comes from the line of Chas Manso from SocGen. Please ask your question. Yes, good morning. I have a few housekeeping questions. So was the forestry merger a necessary precursor to the pulp investments given that you're using timber from the land? Or could you have done the 2 separately? Secondly, is there any sales benefits of your pulp investments? I get the cost benefit, but is there a sales benefit? Thirdly, when you now include the forestry land in your reporting, is there any income uplift from including the forestry land? And then lastly, on the hygiene announcements, I confess to being confused. At the beginning, you were talking about it as Latin America becoming a separate business unit. Then when you were talking about the benefits, you were really talking about integrating Western Europe and North America. So could you just clarify exactly what is happening with the hygiene division, the structure today and how the structure will change? Thank you. Okay. We could have done the investment in the pulp mill separately, yes, without doing starting this operation into 2 divisions. But we think that this fits very well together for the reasons already mentioned that in this way we even strengthened the internal synergies in this Future Forest Products division and create even further value from it through this investment. Yes, there will be a sales uplift from the investment in the pulp mill because we double the capacity. So yes, definitely. And if there's an income uplift from the forest land, I don't think so, but Frederic, no. So there's no change there. Again, there will be no change in how we treat the forest land in our accounting. And then the last question about hygiene. So basically, where we are big from already market share wise and sales and turnover wise and with big organizations and big categories, I see that the organization is mature to take the step to be category oriented. And that's why we're doing these 2 kind of transatlantic organizations for Away From Home and for Incontinence Care, which then include Europe and North America. While in the emerging very dynamic emerging markets, we keep to a geographical organization. So that's why we have one business already today called MEA, one called Asia Pacific, and then this will be a third geographical business unit. And the reason why we're not yet moving to another structure is that typically in these markets we are selling all our categories through the same distributors and we don't have the scale yet in terms of our own organization or how we go to market to move to our category organization. So that's why we have a mix. Okay. So just to clarify what you're doing in hygiene, you had Europe and North America run separately for away from home and for incontinence. And now they're going to be run-in an integrated fashion and you're adding a 3rd geographical unit. Is that right? Yes, that's right. And your next question comes from the line of Karri Rinta from SHB. Please ask your question. Please ask your question. Yes, sorry about that. Sorry to get back to the forestland discussion, but you say that you want to maximize the value of your trees and you are increasing your consumption of wood quite significantly. So to me, that would suggest that you will increase your own harvesting levels as well even ahead of the ramp up of this new capacity. And if you do that, the formula that you use to value your forest plant tells quite clearly that you should increase the value of your forest land that you book on your balance sheet. So what am I missing you're saying that you don't see any valuation impact from this on your book value of your forest land? The plan is not to increase the harvesting. So that's plan. So that's the reason why there will not be any corresponding value increase then on the assets. The value enhancement comes from the fact that there is a bigger in general than, of course, a bigger demand for wood in the area because of this additional capacity coming in. So this is a general value creates value in general for any standing timber in the region. Okay. All right. I don't get it, but thanks. There are no further questions at this time. Please continue. Okay. Thank you, operator. So with this, we will end the Q and A session. And I hand over to you, Magnus, again, for any final remarks before we end this telephone conference. Thank you, Josephine, and thank you everyone for calling in and asking all these questions. So very useful. We are continuing to develop SCA as a global hygiene and forest products company. And these are steps I think very much in line with our strategy and on a very evolutionary path going forward, not revolutionary, but moving forward both in hygiene and in forest products. Thank you very much.