Earnings Call: Q4 2014

Jan 30, 2015

Thank you very much and good morning. I have severe cold, but I will do my best anyway to keep my voice intact. Just let me start a little bit with macro environment that we are living in. And as you all know, we still have a very weak development of the global economy. Europe, we don't really see any positive development. We see currency being difficult in many countries in the emerging markets. China's growth is also slowing down. We still have a lot of geopolitical problems in the world that is of course impacting demand in different areas. In spite of that, we still have a reasonably good growth in our hygiene business even in the mature markets. We also with the strength of dollar, of course, have a headwind when it comes to raw material because most of the raw materials is priced in dollar. Having said that, coming into our result, we do have the highest profit before tax in the history of SCA. We have good organic growth. We have a very strong cash flow. We also as we I'll talk about a little bit later, very strong growth in our emerging markets. We have higher sales and profits in all our business areas. And we continue to work with efficiency, and we are in line with our plans in efficiency. I've talked a lot about innovations earlier and I will come back to that also and we have a very successful year when it comes to introducing new innovations to the market. We have also successfully transferred our business in China into Vinda and that creates a very interesting potential for further growth. We continue to be including in key sustainability index, which is also very important for us. And we propose an increase of dividend by 10.5 percent to 5.25 Just one comment around this also. Just to see the impact of raw material, if you take the full year, we have about SEK1.2 1,000,000,000 increased cost in raw materials. And of that, 40% is impacted by currency. But we have been able to offset that by reduced costs and price mix etcetera. Another way of looking at it is in this way. We have an increase of sale of 12%. If we exclude acquisition, acquisition is about 7%, but then we also had divestment that had a negative impact of 1%. Organic sales growth 3%, Including Vinda's organic growth, it's actually 4%, because Vinda had quite a good growth during the year. Operating profit increased by 14%. If we take away the big profit we had in forest swaps last year, it's actually an increase of 18%. Also operating margin is going up, earnings per share up by 19% and we also had a very strong cash flow. Efficiency program, we have been talking about that since we started it. If we look at the hygiene business total now, we have implemented the blueprint in all our sites. That doesn't mean that the impact of the blueprint is yet seen in all operations. But now we have a very clear way of how we should work, how we should improve, how we should reduce cost in our operations. We also more and more are using our scale when it comes to buying raw materials, etcetera. And we also in some areas, cooperate with other buyers like in pulp. So today, we are the biggest pulp buyer in the world and that, of course, helps to get good terms in the market. The warehouses is a bottleneck many times and we used to have too many warehouses maybe in too many places. Now we are looking into that. We are changing that. We are combining warehouses with different categories. That's the work that's been ongoing, but that will continue also. That will improve, of course, the efficiency in transportation, efficiency in stock handling, etcetera. Forest also in line with plan and we will reach the SEK 1,300,000,000 this year. We were at SEK 1 point 2,000,000,000 in the end of the year. We have been closing 2 sawmills. And in doing that, we actually keep the same volumes as we did before we closed them, which means quite a big productivity improvement in our sawmill operations. We also have combined the maintenance organizations up in the north of Sweden and that's also a very good efficiency impact on maintenance. And we work continuously of course on the harvesting and how we harvest and improve the productivity in that. Then of course we had a storm that had a negative impact on that because it's so much more expensive to walk into a forest that is lying down than actually do it in a planned way. Georgia Pacific, we reached €80,000,000 and the target €16,000,000 is €125,000,000 Blueprint has not finalized. It's ongoing in the Deutsche Pacific synergies. But we feel quite confident that we will reach the target that we have communicated to you. Another way of looking at this 10% machine efficiency improvement in Personal Care, 4% in converting and tissue, 3% in Papermaking. And of course, the 3% in Papermaking is a much more bigger impact and more difficult than maybe to do it in the converting side. Sourcing costs down by 5% logistic costs 5% energy consumption 6%. So we can truly see that what we are doing has an impact in all areas where we actually are working. And this work is, of course, not going to stop once we have reached the target of the different programs we have announced. We will continue with this and we still see some interesting potential going forward. We are not going to set up a new program, but now we will do it in the day to day business. Innovation, as I said, very important. We launched 4 very important innovations this quarter. 1 in Tina pants, which is 20% thinner. It's safer and it's more comfortable. And the same with the T and LAD in normal also safer and takes away kills some of the problems with odors in the diapers. We also have introduced our baby diapers with the longest lasting as long as 12 hours. New tempo with a new exclusive theme around SENSE that has been introduced during the Q4. Looking on a yearly basis, we have introduced about 30 new innovation globally. And as we have talked about a lot of time, we have a much more efficient innovation process than we used to have. And the bottleneck should be in the market. The bottleneck should not be in innovation. And we are in a situation where the bottleneck is in the market. Company and the difference Just to show a little bit the change in the company and the difference between mature and emerging market. 2012, we had about 24% of our sales in emerging market. This is non group level. I will get back into the different hiding areas and 14 about 31%. And if you look at the margins in mature market, we have come from 10.9% to 13.5%. Then in emerging markets, we of course invest to get the growth and that has an impact of the margin. So that's why we see a lower margin in emerging markets. But all in all, it's still an improvement from a group level in the margin from 10.1% to 11.4 And this is of course the balance we try to keep in the company. How much should we invest in growth in relation to which margin we want to have. We could grow faster then it would have a negative impact on the margin. We could grow slower and then we would have a positive impact on the margin. So this is a balance we try to keep all the time. But I think this is at least a good picture for you to see that the mature business is actually improving and we invest the cash flow from that into the emerging market. Another way of looking at that is also on return on capital employed. You know we have a targeting group of 13%. If you look at the mature market, we have reached 13% return on capital employed. Then of course, we invest in emerging market and that is bringing down the return on capital employed. Still, we will have the same target. And as you know, we have different targets in different business group. As an example, tissue, we want to reach 50% in Personal Care 30%. 4% is we want to be in the top quartile of our competitors. So those targets are, of course, still valid. Looking how the net sales has grown Q4 to Q4. We have a positive price mix of 1%. We have a volume of 3% then we have acquisition and we do have a positive currency impact when it comes to sales. So the organic sales growth all in all is 4% during the quarter. I think we are in a good position when it comes to this even compared to our big international competitors. Looking at where the growth is coming, we can see in total 4%, mature market 3%, emerging market 9%. And we do have some very, very sweet spots when it comes to growth. We have shown some examples here. If you take incontinence Russia, it's 23% tissue Russia, 16% incontinence Latin America, 19% Feminine Latin America 20%. So we do have some very strong position in some categories in markets where you do still find some organic growth in the market. So I'm very happy with that. And we will, of course, continue to emphasize the growth in emerging markets. If we look at operating profits, all in all, it's 3%. But then as you remember, we had about €455,000,000 gains in forest swaps last year and we have 3 year €3,000,000 this year. So if you compare apple to apple, it's actually an improvement of 20% of operating profit. We have better price mix, as I said. We also have higher volumes, cost saving. Quarter over quarter, it's about EUR 385,000,000 in cost savings. Then we have a consolidation of Vinda, but quite a lot of headwind in raw materials about €600,000,000 Q4 to Q4 of 55% of which 55% is currency. If we remove the forest swaps in this, then the margin in 2013 would have been 11.6%. So like for like, it's an improvement in margin also. Earnings per share is of course impacted by swaps, but also of item affecting comparability. And as I said also very strong improvement of cash flow. Walking into Personal Care, an improvement of sales of 7% operating 8% and also 20% basis point improvement of the margin. One thing you could, of course, be a little bit worried about when you see the mature market and the growth and probably in particular when you look at incontinence. If we look at Europe in all, we have 5% growth in incontinence Western Europe 3% growth. So the hit in growth here is actually mainly or only in North America. When we talk about Personal Care, of course, we need to come into Procter and Gamble and their launch in Inco in Europe. And if we look at well the past 4 weeks, of course, we follow this closely every week, they have not really gained any more market share. In U. K. Now when they started they had 2% market share. They have gained 5%, so they are now at 7% market share. And it's been sort of a standstill on that level. During the same time, we have been growing 2.5% in sales. So the market has expanded. As we also assume. You remember we talked about that that if we get another company, a big company driving penetration then the market will expand And that's actually what we've seen in U. K. You see a similar situation in France. And of course, they will go into more countries like Germany, etcetera, going forward. But so far, we have been reasonably successful in defending our position. And as I said in the Q3, the truth will come when you see the second and third repetition of buying because now everything is sold on promotion. So it's very difficult to say if the consumers actually like the product or not. And once more I want to emphasize there is nothing unique in the product. It's a similar or same product as we have. And then of course brands is very important and the perception that the consumers have on the market. But we don't underestimate them. It's a strong company. It's a big company and we will continue to do our thing and we'll continue to monitor this extremely closely. And you can also see here that in personal care is the category where we are have the highest presence in emerging market. Now we have 43% presence in emerging market. And I think I gave a statement a couple of years ago that we're aiming at 50% of our sales in emerging markets. So we are well ahead to that target. Coming into tissue and here we have the impact of Vinda because that has been is now of course consolidated in the company. But we have overall a growth of 24%. Excluding Vinda, it would be 9%. We don't include the organic growth in Vinda Q4 to Q4 because they don't present that. So these figures we have excluded that in the presentation. Operating profits improved by 17 percent. It would be 7% excluding Vinda, so still a good growth in operating profit. And if we exclude Vinda, we will be on the same level when it comes to operating margin because they're operating in a slightly lower margin than we are. And here we have 31% of the sales in emerging markets. And the reason for that is also as we have discussed the defensive investment in the Asia Pacific in Europe to get the consolidation and synergies. And that of course reduced the size of the mature market because that was quite a big company that we did acquire. We have raw material cost increase of some €265,000,000 Q4 to Q4, of which 70% is currency. Then going into forest operations. They have quite a substantial improvement. You can't really believe that when you look at this picture. But once again €455,000,000 in the forest swaps last year and €3,000,000 this year. So if we compare apple to apple, the margin would have been €13,000,000,000 12.6,000,000 instead of 25.1,000,000. So Looking at the different parts, of course, we continue to see publication paper going down. And we of course anticipate that it will continue to go down. And the last estimate is that this year we will see somewhere between 5% 6% less volume in the market. So the situation in publication paper has not improved. It's still a huge overcapacity and it will still continue to be a very, very difficult operation for anyone in Europe today to reach any profitability. We need much more closure of the paper production if this is going to be a good business. Kraftliner well in balance and we have increased prices that we got during Q4. Our sawmill operations, volume wise, quite good. Growth is still coming on, in particular, North Africa, China. But since we had price increases last year, now the supply has increased and that is putting some pressure on price not the pressure on volume. Pulp is a little bit strange has a little bit strange behavior in the market because normally you see a clear correlation or a negative correlation between dollar and pulp prices. And we haven't really seen that last year, which is a little bit surprising. We do see now prices coming down in the market and they should come down with the strengthening of the dollar. So my at least guess is that we will see a pressure on pulp oil qualities during this year. And some of course are suffering quite a lot on the high pulp price. We have an advantage since we still have an internal hedge on pulp. So from a group level at least we gain something on that. It doesn't help tissue or personal care, but it helps the group. Well, once again increased by 10.5% up to 5.25%. We believe that we have a very strong balance sheet. We are on the loss side when it comes to debt. We have a very strong cash flow. We have improved our profit generation quite substantially. So we believe that this is a level that we can absolutely be in without risking any future potential acquisitions or expansions in the company. So to summarize, highest profit before tax ever, good organic sales growth, strong in emerging markets, strong cash flow, higher sales and profits in all our business area. Risk, the major risk is except the geopolitical risks, which we don't really know where they are is the FX, Where is the dollar going? Where are the other currencies going? In the countries where we have a dramatic change in currency like in Russia, we have also dramatic increases of prices and in Latin America the same. It's more difficult in Europe, but we are increasing prices in away from home. We will push whatever we can to increase prices in Consumer Tissue. It will not have an impact in Q1. It then will have an impact on the Q2. Sawmill operation, probably not the possibility to increase at least the first half year. Kraftliner, probably another price increase or price increases late in the year that will impact this year. Personal Care is a completely different game as you know. It's innovation, innovation, innovation. So it's not really just a price increase. But we do have a benefit in Personal Care and that is that oil price is going down. We have a lot of raw material that is oil priced connected, but we have a lag of 4 to 6 months before we have it in our P and L. Pulp, we have a lag about 4 to 5 days. So it's a longer lag to oil based materials than we have on the pulp. So with that, I will end my presentation and I will open up the floor for questions. Josephine? Okay. And we ask Friedrich Ristad also to join on stage. And Jan I just want to say Jan will, of course, comment everything that's been in Swedish media regarding business jet and hunting hospitality. And I think from the media, who is here, from Sweden, you have time the press conference, so we can focus now on the quarterly report and from the investors and the people who are on the call. So let's focus on the quarter report now on the Q and A session. Yes, the first question here. Okay. Thank you. It's Linus Glaser with SEBL starting somewhat different. And maybe if we could clear the table when it comes to the non recurring items in the Q4, they were SEK 887,000,000. And from what I can understand, you specified SEK 540,000,000 of those in the report. And I assume that the large part of the remainder is relating to previously announced cost savings program. But if you maybe could just comment on the residual SEK 347,000,000 of nonrecurring costs in the quarter, please? Fred, can I do that? Yes. I'll do that, Linnas. Again, we have continued the operation, as Jan alluded to with our Perform to Grow NGP. So the absolute majority relates to those 2. We also had a closure of a part of a facility in Germany and we had one in U. K. So that's pretty much all of that remaining part. So normal efficiency work as we have done before. But you wouldn't give a figure on what's relating to the previously announced cost savings program, the GP and EUR 300,000,000 program? If we take the U. K. And the German facility in combination, totally, it's a bit over €150,000,000 another €150,000,000 roughly relates to GP and Perform to Growth. That's great. Thank you very much for that. And then just looking more at the operational side, the raw material headwind in the quarter was DKK 138,000,000 across the group. And just taking into account what you just said about the lag effect, the currency which is embedded in this, will that impact sequentially be bigger in Q1 versus Q4? Or how should we think about timing of the FX related cost inflation in particular? Well, I mean, we have, of course, some delays in the system due to some hedges and the contractual situation, but they are quite short. So of course, if you look at the FX development, it will come in during the Q1 mainly, I would guess. Yes, absolutely. I mean, we'll have it continuously because the average if we assume that the average dollar rate will be for the year as it is right now, then of course, it's going to be a stronger dollar throughout the year. So we'll have negative impact. And of course, Q1 will have that will compensate to some degree by the oil based products should the oil price stand. But of course, it is a higher dollar rate and therefore higher raw material costs. We'll see that throughout the quarters. And the oil which in which quarter should we expect that oil cost related tailwind to occur? Well, we'll see that to some degree in Q1. But I think Jan alluded to, we got a 4 to 6 months lag relating to oil products. So it's nonwoven for instance or SAP and backsheets and those kind of products. So of course oil doesn't necessarily play in all of it. So if you have a 50% decrease in oil price that doesn't necessarily translate into 50% to SAP, but it has a large impact. 50% to SAP, but it has a large impact. And it has a large impact with approximately 4 to 6 months delays. So the net impact of currency and oil price in Q1 is of course likely to be or it's going to be negative. And we have as you know seen oil price coming down gradually. So of course, if you go 4, 6 months away then of course that will kick in now. And then just finally if I may on the Q1 and the start of the year. Sometimes in the past, you've talked about the seasonality of your hygiene business that Q4 tends to be strong, Q1 tends to be somewhat weaker. Could you comment to any degree upon that on, I guess, volumes in particular in hygiene? I think when it comes to normally, the major impact of that was in incontinence because there was a lot of pre buying if institution had cash left in the end of the year. We have tried to even that out by different way of giving bonuses and things like that. But then of course seasonality in terms of how much snow it is and if the people are getting cold as myself then we will sell more hankies etcetera. That still remains. And in U. S, for example, the strongest season is when the ice cream season starts. So that means that when it's cold and snowing, it's a lower season. So you have some seasonality and Q1 is normally the weakest from that perspective. Sorry. Talking too much with my hair. Thank you very much. Now we have Michael. Thank you. Mikael Jovs, Kepler Cheuvreux. I have two questions. The first one is around the ForEx effects for this year. I mean you have an excellent table in your annual report regarding the long term effects from currency changes, but there are a lot of them going on now. So in your words, if you try to summarize what we have seen so far from all the currencies, Net net is the currency effect a positive or a negative for SCA's operating profit going forward? With the currency rates we have today, it's a negative. Okay. Thank you. And then the second question is on advertising and promotion. Last year you said that you would keep the budget unchanged but reallocate. Can you give some guidance for the coming year? A and P and trade spends are obviously 2 items that we can very short term have impact ourselves. And looking at the situation we have now with incontinence, we need to keep a readiness to do things if Procter suddenly changed their plans, etcetera. But having said that, I think you will see a slight increase next year in relation to sales, but it's not going to be any dramatic. And if we need to do something dramatic, we will reallocate. I mean, that's a good thing with these 2. I mean, you can manage them. Perfect. Many thanks. Next question. Yes. Thank you. Karri in the Handelsbanken. If I look at the report, it seems that Vinda had a strong 4th quarter, especially compared to the Q3. Is that sequential increase fully due to the changes that you made with them so that they take care of the Personal Care business as well? Or is there something else that helped them to perform so well in the Q4? And how do you see the 2015 outlook in near term? The benefits in the wind operation is that when we transfer all our business to them, we took a lot of restructuring costs in SA. That's what you see also in the quarter results. So from that perspective, of course, because they had all the infrastructure, they didn't need all the sales people, they didn't need everything. So they took it on their own platform with a few people coming in. So the business we were managing is, of course, now giving a better result in Linde. So partly is due to that, but they're also doing very strongly in their core business, in the tissue business. So it's a combination. Okay. Thank you. And then the incontinence market and the I think in the report you wrote that in the U. S. You lost some volume. Is that because U. S. Is a different animal in terms of market structure? Or is it basically since PG that's their whole market and that's where they have put most of their marketing efforts? And you have maybe backed out a little bit? The reason is, of course, that P and G is going into the market, but the most impact is that KC is defending their position as we are defending our position in Europe. So I don't think they've been more successful in U. S. Than in Europe if you look from a POCTEL point of view. But there's a massive promotion, massive advertising and we are a reasonably small player in U. S. So we from that perspective, we suffer more than we would have done in Europe with the position we have here. And we have lost volumes during this war between KC and Procton. We haven't lost much positions though, which is probably more important. All right. Thank you. Yes, Stella? Hi. This Stellan Hellstrom with Nordea. I had a question on the planned price increases in tissue. I mean, how they're obviously only to a part, I would or a small part realized as of now. But the plans that you have, how far will that take you in terms of being able to offset the FX raw material headwind this year? Well, if we look at away from Home Europe, as I said, it's going to be a price increase from or there is a price increase from 1st January. Consumer Tissue with the contractual situation we have, it will not have any impact in the first half of the year. So that means that if the currency continue as it is, it will be difficult just by price increases to offset the impact of the currency. But I mean we do have more tools in the box also. And then we need to work even more with cost saving and maybe even more with innovations. We can get new products out on the market. But on the price increases for this year, everything else alike is difficult in Moscow and Tissue. Just also a follow-up on that. Having said that, it's necessary with the price increase. We have to do it. And all the market is in the same situation. Maybe we are in a little bit better shape because we have more efficient operation, but there needs to be a price increase. Sure. Questions also on the sort of cost savings. No big programs or additional programs planned for 2015, but I mean, you have had quite a lot of restructuring costs in 2014. How do you see that in 2015 then with the process? Well, we still have some left in the Austria Pacific. But if we don't start any new programs, then of course they will fade out. I don't know if you have a comment. No, not really. They will continue in GP as you said. Thanks. Okay. I got a sign. We also have questions from the telephone conference. So okay, just one question before from the floor. Before we open up. I'm Johan Hellicant from Selskadar Bladet. And we know that there is a very big also international interest concerning travel policies in SCA. It's been written back in Financial Times. So please, Mr. Jean Joanson, could you tell a little bit how can it be that you use a private jet to or a business jet to go to Brazil for the final in championships football? Well, we have a company like SA has many companies in the same situation with the same market presence. We have more than 100 countries today need to use business yet because otherwise it's impossible to really do a good job. And sometimes we do combine business trips with representation and that was the Brazil trip for example. When I was there, I did a lot of work. I did not I was actually invited I did not participate in the program from the person who invited me because I was working during the days. So it was a combination of work and representation. And it was absolutely in line with our old policy that we had. Can you comment on that your daughter should have been with you on this business trip during the championships in Brazil? Well, I can comment on the internal rules in the company, and I think those are probably the same in many companies also, is that if we have a business trip, we are allowed to bring a family member as long as it's not increasing the cost for the company and as long as we pay for that person flying in the plane. So that was as you know, we have changed the policy now. So now it's not allowed. But that was according to the previous policy that we had. But did you take this private this business yet to different cities in Brazil to assist to football matches? I was not in the cities mentioned in the newspaper, and that's the only thing I want to answer on this now. So you are in different cities with this plane? There is. And as you know, there is an external auditor and previous judge of Supreme Court who is going through all our travelers in SGA now. And why don't we wait until see the result of that? And then we can have a discussion on it. Well, it's we are now telling more and more about the travel policies and how they have been applied. And we see that there are lots of traveling that has not been told about with this private business yet. So But I don't think it's in my job to talk on all my travels with the news, but we have comment on all the travels that you have brought up. But I mean, if you're going to follow me around the world, then it's a lot of travels. Could it be that it is like SEK 3,000,000 to go back and forth to Brazil? No that's absolutely wrong. But that will be part of the investigation. And I've been asked by the people who's going to do this not really to talk about it anymore until they have concluded their research. And it's ongoing as we're speaking. So why don't we wait and see on the conclusion? Then we'll see if we're doing something wrong or if not. There has been a lot of turbulence in the leadership of the company. Sake Martin Neuhaus has left. So it's normal to tell to ask questions about this. What do you think about the continuation? In the Sergey is in the Board of the company. It's not in the management of the company. I mean that has been solved by the main shareholders in the industry, Warden. I have not really participated in that process. So you have to ask them about that. Do we have any more questions from the floor before we open up? Then we open up from the telephone conference. Operator, can we have the first question please? Thank you. Your first question Your first question comes from the line of Celine Pannuti from JPMorgan. Please ask your question. Yes. Good morning. A few questions from my side. First on Personal Care, you commented on the growth rate in Inco. Can you as well sorry. Can you as well comment on what has driven the strong Feminine Care performance as well as Diaper? And how much of that strong growth is recurring as we go into 2015? My second question is on Vinda. You mentioned about the good Q4 as well as the restructuring that has had margin. Are we do you think that we are now in terms of margin and pressure in China? Have we reached a bottom? What do you see for 2015? And finally, can you comment about what should we be looking at sustainable tax rate? Thank you. Well, if I start with the Vinda situation, our assumption is that there will be a major reconstruction in China. I think I talked about more than half of the market has an average capacity of less than 5,000 ton and the rest in 20,000 ton. And we do see that happening and it's also being more pushed by the government because the environmental problems with these small sites are quite enormous. And I also believe that we have seen some of this huge investment announcement in your capacity has been withdrawn as we also anticipated. But I feel the competitive situation is still very strong. But Vinda has a very strong position and Vinda is the only one with absolutely premium products, only virgin fiber products, the most modern machines you can imagine. So they are in a very good position really to be a winner in this consolidation. But whether or not the pressure will ease up this year or not, I think it's too early to say. Tax rate, same level as Approximately 26% roughly, Celine. Yes. But I missed your first question, Celine. It was a little bit bad. Yes. And in fact, yes, so my first question and it's a follow-up as well on Vinda. So my first question is the growth rate in Personal Care sorry, in Feminine Care and diapers has been quite strong, especially at the end of last year. What kind of growth should we I mean, what have been the drivers of that? What should we expect 2015? And a follow-up on Linda, at which point can we expect that the newly acquired asset from you in terms of Personal Care will start to benefit as well the top line for the Personal Care division? If we look at the driver, we have had some very successful innovation launches in Latin America that has been driving the growth and also in Russia when it comes to incontinence. We actually had also good growth in Baby in Europe, but less so in Latin America. The target we have is around 5% to 7% organic growth. And that's still the target we have when it comes to Personal Care. Then we have the currency situation etcetera, etcetera. But we have been quite good at dealing with that in emerging markets. When it comes to Vinda, I think they or I think I know that they are taking on this new business extremely seriously and with great passion. We have education ongoing for all the people working in the personal care area in China with all our best staff. And some of them are actually attending twice because they thought it was so good and so interesting. So I feel very optimistic when it comes to the potential growth in Personal Care. We do need to upgrade some of the products before we can really push a hard launch in Baby and maybe also in Feminine. So don't expect any miracle this year, but maybe next year. Okay. Thank you. Okay. Operator, you can keep on with the questions. Thank you. 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. I had 2. The first one was on the Hygiene business. Could we please get some color on the operating profit drivers for Personal Care and Tissue? It wasn't quite clear what the big drivers were behind the other line. Could you just clarify whether it was all cost cutting or whether there were some other factors in play? And my second question was on Personal Care. I think I recall comments on the management commentary part of the presentation mentioned the pipeline is full and that the market is really now the constraint for launching new products, which is, of course, a good position to be in internally. But could we get a bit of elaboration as to how this potential constraint, as you put it, will impact your price and mix into 2015 and whether you still see scope to launch new product and push up pricing? If I take the second one then you take the first one. So to start with the second one, we do have some interesting innovations in the pipeline that absolutely will be launched during 2015. I think I talked a little bit about that also maybe last quarter that we have a very detailed 8 quarter plan on launches. And this is the only way of actually communicating with the consumers is to have a new innovation, an upgrade of innovation etcetera, etcetera. If we don't have that all the time then we cannot really improve the pricemix and drive the growth. So I feel as positive for this year as we actually executed last year. And just a quick follow-up. So is the ambition really to try and offset all of the cost inflation that you have seen and are seeing in pulp? Or is this business as usual? When it comes to Personal Care, it's absolutely part of the solution. And then we are helped also by as we talked previously by the lower oil prices, which is a big part of the costs in Personal Care. Should I take the first question maybe Patrick? I guess your question is on the other remaining parts and there are several components. But if I just take the main ones, of course, efficiency by far is the biggest item. So a bit over €200,000,000 in tissue, close to 200 in personal care. So that's a very substantial part. Then we have had some as we've had also in Q3 some negative distribution cost influence primarily that comes from France and from the U. S. As we discussed in Q3. And the final part is, of course, the acquisition of Vinda, which contributes with their profit this year. And of course, we had some share of earnings in Q4 also last year. So those are the main components. There are bits and pieces, of course, more than that, but those are the main. Excellent. And of these, just to be totally clear, we don't expect any further negative distribution costs. And I guess it would follow logic that the internal efficiency would still have a positive impact into 2015 along with, of course, Vinda? If I may comment, I think we will expect some further distribution costs relating to these tax items. So in the U. S, it had to do with the number of hours that drivers can actually run on their vehicle before they took a break. And in France, it was road tax and we have a couple of other things. That happened largely in Q3 and Q4. So Q1, Q2 will have that adverse impact as we go forward. Understood. Thank you very much. The question comes from the line of Ian Simpson, Francisco General. Please ask your question. Thank you very much for taking the question. A couple from me. Firstly, looking at the input cost picture for Q1 2015, you very kindly quantified the impact in Q4 2014. It's €600,000,000 second Personal Care, € 265,000,000 in Tissue. Clearly, the quarter is not done yet. But if raw materials and FX kind of stay where they are, how should we think about the input cost headwind you'll have in Q1 15? Will it I'm guessing more than Q4 2014, but kind of how much more? And then secondly, just in Personal Care, you flagged that you'd had a couple of good innovations that had helped to drive the top line. Just checking on top line, is that a sort completely clean number that we've seen in the Q4? Or has it been flattered at all by pipeline fill associated with your innovations? The answer to the second question is easy, no. The first one. It's actually we will not give an exact number. I can only give you the components. So we'll have continued negative dollar impact, which is of course not insignificant. We'll have some positive oil based raw material with some lag, but it will still be positive. We'll also have some diesel cost positive impact and perhaps some energy. But the net impact of this will continue to be negative as it has been also in Q4. So we're not going to be able to quantify because partly it's also dependent very much on how we're able to negotiate for instance with various suppliers and of course also dollar rate development and other currencies. So it's difficult to give you an exact number, but of course, we'll report as we have done in this quarter, we'll also report for Q1. And then you have of course cost saving, pricemix, etcetera, offsetting it also. So it's a complex material. Thank you very much. Thank you. Your next question comes from the line of Oskar Lindstrom from Danske Bank. Please ask your question. Yes. I have a number of questions. And the first one is coming back to this other line for both tissue and personal care, which was significantly larger in Q4 than it had been for the 1st 9 months for both of these business areas. And I understand that it's cost savings and wind also in the case of tissue. But why were those factors not impacting to a similar size for the 1st 9 months? That's my first question. I can only comment. 1st of all, we had a good quarter in terms of efficiency and then Vinda had a good result. So those are the main differences. Right, which was not then the case in the 1st 9 months, okay? A second question comes a little bit the group net pulp purchases for 2015 and the net exposure to the U. S. Dollars, is that are those numbers that you could give us already now? You mean how much we are buying in pulp? Yes. Because now you we have the old figures for 2013, but of course the company has grown also through acquisitions since then. So I was wondering a little bit if you have updated net exposure towards pulp in terms of time being purchased? I mean, well, I'll give you just I think pulp is one thing, but of course, it's all I guess, you're all after about the dollar base. So we have raw material purchases as you can read roughly about SEK 27,000,000,000 Approximately SEK 13,000,000,000 of those are clearly exposed to the dollar. So that will give you a magnitude. It's actually more than that, but we also buy in dollars in the U. S. For instance. So what is currency exposed is roughly about SEK 13,000,000 of that SEK 27,000,000 So that will give you a rough idea. Right. And in terms of tonnes, if we're talking about the net pulp purchases? I mean, we can't give out any figure for this year. I mean, we have just started the year. But if you use the last year, I guess you get pretty close. All right. And what were those for 2014, if you're referring to last year? I don't have it in my head. Can we get back to that later? Sure. And talking a little bit about M and A, what's your outlook for M and A in your case for 2015? What are the opportunities out there? What are you interested in? What can you say about this? I mean, this was a big theme a couple of years ago, less so in 2014. What should we look forward to in 2015? I think we have been doing some SEK 30,000,000 acquisition divestment at the value of SEK 40,000,000,000. So we have been concentrating that maybe to consolidate that. But we are actively looking for new acquisition. And I've been quite clear myself that Brazil is one of our main company. Would something interesting come up in U. S? We would absolutely have a look at that to strengthen our position in the retail side. India organic, so I think that would be the main geographic areas where we're actually looking at acquisitions today. And we are growing extremely strong in Brazil and incontinence. We are in par with number 1 when it comes to volume now in just a short time. But it's not enough with incontinence if you want to be strong in retail. So we do need some more categories in a country that is lower penetration and still some interesting growth. Are you following up on that answer? Are you primarily when you say new categories, are those categories where you are present today in other markets like fem care and tissue and so on? Or would you also consider completely new categories for the group? We are looking into new categories also, yes. That fits into our system. Right. Another question comes back to the costs for cleaning up after the storm, which I guess were included in the Forest Products division for 2014. Can you give a number for how large those, I guess, extraordinary costs were for forest products in 2014? If you look at it from a P and L impact, of course, we did have some substantial increase in harvesting costs. At the same time, we had lower cost in buying external materials. So I would guess over time they will sort of take out each other from a P and L perspective. I'm not going to dig in exactly on the cost on this side, but it's sort of a wash from that. Time wise, not necessary in that, but over time, absolutely. And finally, you mentioned organic growth for tissue including Vinda. Was that sort of like for like as if you'd had Vinda also in the Q4 of 2013 included? We I did that on a yearly basis. I did not do it in a quarterly basis since Vinda is not reporting that. And before we consolidated Vinda, we did not have sales or anything in our account. It was just what do you call it? Share of earnings. Share of earnings, so which improved the margins of course because you didn't have the sales. And when we consolidated, you get the sales and you also have a double negative impact lower margin of wind removing it from the margin previous years. Okay. Can I come back to your question on pulp consumption? So again 2015, we don't comment on the exact consumption. But if you take 2014, we consumed 2,800,000 tonnes. And out of that, we are to roughly 26% or 25% to 26% self sufficient in our own pulp operations. So that will give you a hunch of the number of tons. The number which I was looking for. Thank you. Okay. I think we need to have another question because there are people waiting also on the phone line. I'm done. Thank you. Okay. Thank you. Thank you. Your next question comes from the line of Guillaume Delma from Nomura. Please ask your question. Good morning, gentlemen. My first question is on tissue. We saw some nice organic sales growth acceleration both in consumer tissue and mature markets to 3% sequentially. Could you shed more light on this acceleration? And still on tissue, if we look back at Q1 2013, you were off to a slow start in U. S. Away from home because of the tough weather conditions. We're currently seeing a snowstorm on the East Coast of the U. S. So should we expect again a slow start for away from home? My second question is on Personal Care. The acceleration in Q4 in baby diapers, to what extent is that reflective of the new private label contracts you got in Western Europe? And then my last question, I think I missed your answer on an earlier question on your tax rate. What is your guidance for 2015 tax rate? Thank you very much. Similar as this year. North America, of course, if we will have a similar situation as we had last year when people were forbidden to go outside, it will have an impact on all the business in U. S. In any company, in any categories. I guess the storm that was that we get a warning of that should be 1 meter of snow was 1 decimeter of snow and that will of course not have any impact. But if you have a similar situation anyone doing any business in U. S. Will be impacted. I forgot the first question already. I think you had baby diapers there if that new contract has had an impact. Yes. The answer is yes, it has had an impact. And we've also done we talked about that previously in the few quarters. We've done some rebuilds on machines and of course that's also part of the volume increase during the Q4. Sequential tissue. Sequential. Yes, the diapers. Can I just comment on the tax rate? We had a fairly low tax rate as you may have seen in Q4. So that pushed the tax rate down a little bit. For next year, we'll be roughly in line with 26%. I think I had that question before and I said 26%. So that's our estimate. It will be some volatility, but roughly in that order amount too. Okay. With that, I think we need to conclude this press conference. So Jan, any final comments from you? Thank you very much. Well, the conclusion is that we did have a very good year, best in history. We have had strong development in all our areas, including important part as innovation. And our forest operation has also been doing very good during the year. So from that perspective, I think at least we are reasonably happy with the year. And also since the interest is very high on how we travel in the company, I will just mention that we do use business airplanes. About 6% of the management's travel is with the business airplanes. About 4% of our travel costs is in business airplanes. And there are there will be 2 investigations in the company now looking into this if we have been violating any internal rules, external rules, etcetera. And I very much welcome that and I'm being particularly welcome that we get an external one that has been accepted by our shareholders. And then we'll see if we have made some mistakes in the company or not. So thank you