Good morning and welcome to this presentation of SCA's 2025 first quarter results. With me here today, I have President and CEO Ulf Larsson and CFO Andreas Ewertz to go through the results and take your questions. Over to you, Ulf.
Thank you, Anders. Also from my side, good morning and a warm welcome to the presentation of our result for the first quarter 2025. During the first quarter, SCA again showed that we can deliver good profitability even in a continued challenging environment. SCA's high degree of self-sufficiency in wood raw materials mitigated a big part of the higher cost related to wood supply, and we reached SEK 1.65 billion EBITDA level, and by that, an EBITDA margin of 32% for the quarter. During the first quarter, SCA had strong delivery volumes, not the least in the wood segment due to productivity improvements. In other segments, the volume increase has been supported by the ramp-up strategic investments, and these investments will contribute to increased productivity and cash flow generation during upcoming years.
Prices in SCA's industrial segments were generally higher in Q1 2025 than in Q1 2024, and I expect these price increases that they will further contribute to earnings in the second quarter. Global uncertainty has increased with the U.S. tariffs. This also affects the global demand and business climate, and I will give some comments on each segment as we go through the presentation. Turning over to some financial KPIs for the first quarter of 2025, as already said, our EBITDA reached SEK 1.65 billion during the first quarter, which corresponds to a 32% EBITDA margin. Our industrial return on capital employed came out at 8% for the first quarter, counted as the average for the last 12 months. The leverage was at 1.5, and we have now finalized our big strategic investments in Obbola, Ortviken, and Gothenburg, which will, as already said, contribute positively coming years.
I will make some comments for each segment, starting with Forest. Stable harvesting levels from our own forest have contributed to a stable supply of wood raw materials to our industries during the period. We have seen a continuous long-term trend of increasing prices for both pulp wood and saw logs, as can be seen in the graph on the bottom left. When one compared Q1 2025 with Q1 2024, sales were up 15%, and that was mainly due to higher prices for pulp wood and saw logs, as well as higher delivery volumes to our own industries. When excluding the effect of capital gains for Henvålen in Q1 2024, approximately SEK 130 million, EBITDA was up 4%, mainly due to higher prices for pulp wood and saw logs, but also due to higher delivery volumes to our own industries. Turning over to business area Wood.
In general, we still have a slow underlying market for solid wood products. Despite the generally low demand, we continue to see some signs of improvement in the repair and remodeling segment where SCA is present. The uncertainties in the general economic development have, however, increased due to the tariff discussion between the U.S. and other countries. So far, no tariffs are added to Swedish export of solid wood products to the U.S. Stock levels are slightly higher among producers, but mainly on the low side at the customers. As estimated, the price for solid wood products increased with low single digits in the first quarter of 2025 in comparison with the fourth quarter of 2024. Our deliveries last quarter were strong, but our production was also at a high level, resulting in, for SCA, close to unchanged stock level of some goods.
As expected, the cost for saw logs has increased from the fourth to the first quarter, and we also expect them to continue to increase going into the second quarter. Sales were up 37%, and EBITDA was up 113% in the first quarter of 2025 in comparison with the same period last year. That has been driven mainly by higher prices, but also by higher delivery volumes. The EBITDA margin consequently increased from 10%- 16%. Today's stock level of solid wood products in Sweden and Finland is described at the top left on this slide and is shown in relation to the average for the last five years. As mentioned earlier, we note that the inventory is at a slightly higher level than normal among producers. That is mainly related to the pine.
As can be seen in the diagram to the bottom left, the Swedish and Finnish sawmills production has been on normal levels in the start of 2025. In the diagram to the top right, we can see small price increases during the start of the year and with a somewhat stronger development for spruce. Going into the second quarter of 2025, I estimate that the price will continue to increase by close to 10%, driven mainly by cost increase for sawl ogs, but held back due to the currency development. In the construction sector, we can conclude that the starts of new building continue to be low, while consumption in repair and remodeling sector will be early to respond in a positive way to lower interest rates. Over to Pulp.
When one compared Q1 2025 with the first quarter 2024, sales were up 9%, mainly due to higher delivery volumes. EBITDA was flat compared to last year, mainly due to higher cost for wood raw material and low prices for CTMP, mitigated by higher prices for NBSK. Global demand for pulp was at a healthy level during the first quarter, and we saw increasing prices on all markets. However, the weakening of the U.S. dollar has had a negative impact on the price in local currencies. NBSK prices reached the bottom in Europe in January at $1,480. Today, we are around $1,600 per ton after three consecutive months of increasing prices. In the U.S., NBSK prices have had a similar development to Europe. In China, NBSK prices reached the bottom in the summer of 2024 at $710 per ton net.
We then saw increasing prices up until March this year when the price reached $810 per ton. So far in April, the market is in, let's say, a wait-and-see mode. Regarding tariffs, all pulp supplies exporting to the U.S., except for Canadian producers, are currently subject to 10% tariffs. Canada and Europe are the main suppliers of NBSK pulp for the U.S. market, and SCA are at risk of losing market shares if having higher tariffs than Canadian suppliers over time. Looking at CTMP, prices have been unchanged in Asia at low levels, but increasing slowly in Europe during the first quarter. Inventories of softwood and hardwood pulp are on normal levels, as you can see in the diagram. CTMP inventories, on the contrary, still are on the high side. Moving over to container board.
Sales were up 2% in Q1 in comparison with the same period last year. We can note higher prices on the positive side, while lower volumes had a negative impact. EBITDA was up 70% due to higher prices, which was partly mitigated by higher costs for wood raw material and negative currency effects. We've seen box demand developing positively during last year and into 2025, and by that, we are now almost back to historical growth trend levels. We've seen an improved retail demand supported by increasing consumer confidence, which should support the continued growth in box demand over time. On the other side, we continue to see negative growth in the European manufacturing industry, which, for the moment, drives the demand in the segment in a negative direction. The European demand for container board has moved sideways in Q1 compared to the same period last year.
Due to the current turbulent macro environment, it's difficult to predict the long-term impact on demand. With regards to tariffs, we expect the direct impact on our business in container board to be relatively small. The potential impact mainly comes from the effect of tariffs on the overall business environment. Kraft liner inventories are slightly above average level in Q1, but trending downwards. The availability of OCC has in the later part of Q1 tightened, although prices have remained stable. Moving into Q2, we will see the prices of OCC substantially moving upwards, mainly driven by availability. European prices for brown kraft liner increased in Q1 by EUR 40 per ton, and white kraft liner has during the same period decreased by EUR 10 per ton.
SCA will increase white kraft liner prices in April by EUR 40 per ton, and we now feel a more solid underlying demand in combination with strong cost pressure. Due to that, we have recently announced another price increase of EUR 60 per ton in both brown and white kraft liner from 1st of May. Finally, Renewable Energy. In business area Renewable Energy, we have had a weaker quarter compared to the same period last year. The market for solid biofuels remained stable. Higher prices for sawdust in our pellet business were met by higher prices. In line with previous quarters, the green premiums for tall oil and liquid biofuels are substantially lower in comparison with the same period last year. As mentioned before, main reasons are lower blending mandates in Sweden and increased imports from China, creating an imbalance in supply demand in the renewable fuels market.
We expect market volatility in renewable fuels to remain high as Europe ramps up the blending mandates both in HVO and SAF. Long term, our outlook is positive, but in the short term, we expect continued low refining margins and bio premiums. The small recovery in biofuel prices we saw at the end of Q4 impacted Q1 positively. However, with the current geopolitical landscape and decline in oil prices, we expect the market to be challenging going forward. Electricity prices were low during the quarter, which impacted our wind business negatively. SCA continues to grow in land lease for wind power and has reached 9.7 TWh of wind power on SCA land by the end of Q1. That is equal to 20% of installed capacity of wind power in Sweden. Finally, I can mention that execution of our windmill project Fasikan is progressing according to plan.
By that, I hand over to Andreas. Thank you.
Thank you, Ulf. Good morning, everybody. I'll start off with the income statement for the first quarter. Net sales increased 13% to just below SEK 5.2 billion during the high volumes and higher prices. EBITDA increased 3% to SEK 1.65 billion, remaining the higher prices, which are partly offset by higher cost for wood raw materials. The EBITDA margin was 32%. EBIT increased to SEK 1.1 billion and financial items total SEK -114 million. With an effective tax rate around 20%, bringing net profit to SEK 800 million or SEK 1.14 per share. On the next slide, we had the financial development by segment. Started with the Forest segment to the left. Net sales increased to SEK 2.5 billion during the higher prices and higher deliveries to SCA's industries.
EBITDA decreased to SEK 879 million due to seasonal lower harvest from SCA's own forest compared to the previous quarter. Our prices for wood raw materials continue to increase. In Wood, prices were slightly higher compared to the previous quarter. Net sales increased to SEK 1.5 billion and positively impacted by higher delivery volumes. EBITDA was in line with the previous quarter and amounted to SEK 236 million, corresponding to a margin of 16%. Higher prices and higher volumes were set by higher costs for wood raw materials. In Pulp, net sales decreased to SEK 1.9 billion compared to the previous quarter, while EBITDA increased to SEK 320 million, corresponding to a margin of 17%. Lower costs for plant maintenance stops were set by lower prices and negative currency effects. In Container board, net sales increased to just below SEK 1.7 billion.
EBITDA was in line with the previous quarter and amounted to SEK 239 million, corresponding to a margin of 14%. Lower prices and negative currency effects were set by lower costs for plant maintenance stops and higher delivery volumes. The market for renewable energy continued to be weak. EBITDA increased compared to the previous quarter and amounted to SEK 134 million, corresponding to a margin of 22%. The increase was driven by seasonally higher deliveries of solid biofuels and higher results in liquid biofuels, while electricity prices continued to be low. On the next slide, we have the sales spread between Q1 last year and Q1 this year. Prices increased 6% with higher prices in Wood, Container board, and NBSK. Volumes increased by 8% driven by higher volumes in Wood and Pulp. Lastly, currency had a negative impact of 1%, bringing net sales to just below SEK 5.2 billion.
Moving on to EBITDA bridge and starting to the left, price mix had a positive impact of SEK 325 million and higher volumes had a positive impact of SEK 64 million. Higher costs for mainly wood raw materials had a negative impact of SEK 147 million, with a marginally positive impact from energy and a marginally negative impact from currency. Last year, we also had a capital gain of SEK 128 million from the sale of Henvålen. In total, EBITDA increased to SEK 1.65 billion, corresponding to a margin of 32%. Look at the cash flow, with an operating cash flow of SEK 485 million in the quarter. As you know, other operating cash flow relates mostly to working capital currency hedges and should therefore be seen together with changes in working capital. Look at the balance sheet. The value of the forest asset totaled SEK 107 billion.
Working capital increased to SEK 5.6 billion, mainly driven by higher volumes, currency, and VAT receivables. Capital employed increased to SEK 160 billion. Net debt stood at SEK 11 billion and equity totaled SEK 105 billion, corresponding to a net debt to equity of 11%. Thank you. With that, I'll hand back to you, Ulf.
Thank you, Andreas. Just to summarize, I think that we've done a solid quarter, slightly better than last year and also slightly better than Q4 last year. We have implemented price increases in more or less all product areas from the first quarter, and they will be successively implemented during the second quarter. We have seen substantially higher raw material costs, but again, our high degree of self-sufficiency in SCA can mitigate the negative effect of that in a rather strong way.
We see higher delivery volumes in more or less all areas, and not the least is that due to our ongoing ramp-ups in strategic investments. I think by that, Andreas, we open up for questions. Operator, can we please open up for questions? Technical problem, and we try to solve that as fast as possible.
Ladies and gentlemen, if you wish to ask a question, please signal by pressing star one. Our current question is from Ioannis Masvoulas from Morgan Stanley. Please go ahead with your question.
Yes, thanks very much. Can you hear me okay?
Yes, we can.
Perfect. Thanks very much for the presentation. First question from my side. You show solid European box demand at the start of the year, which has supported your container board price hikes. What are you seeing in recent weeks as tariff frictions escalated?
Is there any visible slowdown in parts of the market, or is it still too early to say? The second question is on the currency, where we've seen the Swedish krona having strengthened quite materially. Can you provide us a quantum of net exposure you have to USD and euro to get a sense on overall sensitivities? Also, are you looking to continue hedging the FX crosses at these levels? Thank you.
Thanks. If I start with tariffs, I mean, it is too early to say. I think the driver behind the price increase that will come now is the cost increase that we see, not the least now in OCC. We know that test liner producers, they are already in the market, and they have been there since a while and asking for compensation for OCC prices.
I mean, also on the Container board side, we have seen an increased cost pressure due to increasing cost for, not the least, for wood raw materials. I mean, that's the main reason behind. The demand has been okay during the start of this year, and it is far too early to say what kind of impact tariffs and other things will have on the demand. As I said earlier, I mean, generally, it's not good with unsecurity, and that is what we see in all markets just now due to different reasons. I think, Andreas, you can say some words about currency.
Yeah, if you look at our net exposure, and that is our sales minus our purchases in different currency.
We have a table in our annual report which shows the exact net exposure from last year, but it's around $600 million and EUR 400 million and GBP 100 million. In Pulp, it's mostly dollar exposure since the prices are set in dollars, while in Wood and Container board it is mostly euro, SEK, and on British pounds.
Thanks very much for that. Sorry, just to clarify on the hedging strategy, are you looking to continue hedging at the current levels?
We have a statistical model that we follow, so we lie within a range for the next couple of quarters, and it decreases. That depends on how much the currency goes down or goes up. We are either a bit higher in that range or a bit lower in that range, or we follow that model.
Okay, great. Thanks very much.
Thank you.
We will now move to our next question from Robin Santavirta from Carnegie. Please go ahead.
Yes, thank you very much. First of all, two questions. First one related to pulpwood and log availability in the area you operate on. What is the current status there? How do you expect the pulpwood and log prices to develop now in Q2? The second question I have, if you can answer this, is regarding the U.S. tariffs and related to what are you seeing at the moment in terms of your exports of pulp into the U.S.? What is the demand? What is the pricing strategy you have taken? Also, how has the current trade tensions impacted overall business sentiment for you guys in Europe so far?
I can start with, and then you can take the rest, Ulf, on the prices.
We had on pulpwood and saw logs, prices from Q4 to Q1 increased around 5% to 6%. Going forward to the second quarter, we expect industry will pay around 3% more for pulpwood and around 5% more for sawl ogs.
Yeah, I must say, I feel that the market is much more balanced for the moment being in pulpwood nowadays in our region. As mentioned before, we have a lagging effect, and Andreas described that part. I feel that it is a more balanced market for at least pulpwood supply just now. When it comes to saw logs, I guess still we will see increasing prices also in the market. They are on a very, very high historical level just now. We will have the lagging effect, but still it seems to be a rather good demand for sawl ogs.
As mentioned also earlier, we will see during the second quarter a price increase of 10% in SCA, and I guess other places will see somewhat similar. That will, of course, also give some extra space to pay more for the saw logs. The second.
Can I? Sorry to interrupt. Can I ask you, that 10% in SEK, or is it in EUR, USD, and so forth?
That is the average for, I mean, including all currencies.
Yes. All right. Thank you.
As it is just now, I mean, it can be something completely different at the end of this quarter, but as it is just now. When it comes to the export to the U.S., I mean, as I said, we have a different situation in different areas when it comes to our solid wood products.
I mean, we have no tariffs at all as it is just now. And you know that Canadian solid wood products, they face, I guess it's a 14% tariff level. I mean, in that perspective, we are favored still in the U.S. In pulp, I mean, the tariff today is 10%, and from Canada over to the U.S., it's zero. I mean, that business has changed, of course. It hasn't really yet had any impact on our flow, and I guess we are in a little bit of a wait-and-see mode just now. If this situation, if that remains, then of course we have to reposition some of the volumes from the U.S. to other markets and then mainly Asia, I guess. In Container board, we are not really impacted by, we don't do too much business in the U.S. in Container board. I understand.
Just on Europe, I mean, there is a lot of uncertainty that you also said. Has that already now impacted order intake in any of your segments as a European business?
No, that is too early. I guess we have a rather strong order book for the second quarter. So far, so good. I mean, again, I mean, this discussion we have just now, that is of course not good for the general development and the general growth. I mean, it will in one way or another have some kind of impact on the global business environment, and that will also hit, of course, the forest industry.
I understand. Thank you very much.
Thanks.
Thank you. As a reminder to ask a question, please signal by pressing star one. Our next question is from Oskar Lindström from Danske Bank. Please go ahead.
Good morning.
Three sets of questions for me. The first one is on Pulp. What kind of potential do you see to raise prices for NBSK in Europe given U.S. tariffs and potential need to take some volumes out of that market? I think you also described the mood in China as sort of wait and see at the moment. That's my first question.
We take them one by one. I think that's easier for me at least. Again, I think it's too early to say. I mean, we know that we now will see around EUR 1,600. The index price in Europe for NBSK will be around EUR 1,600. As far as I know, I think the index price in the U.S. went up $30 per ton, something like that.
Again, as we said, I mean, in Asia, it is a wait-and-see mode, of course, as it is just now. I do not like to speculate in further price development in Europe or the U.S. at this point at least.
Yeah. All right. Fair enough. My second question is on Container board. I think your volumes were down 7% year- on- year. Does this reflect sort of a weaker market, mixed change, or volatile ramp-up of the Obbola machine?
I think we had, it is more a seasonal effect. We have a rather low stock level in container board. I mean, the ramp-up just now is going well, I would say, according to plan. We had a production record in March, and we are doing slightly better now in April. We are pretty happy with the ramp-up.
All right. Good.
Finally on FX, I know the question's been asked before, but given the hedging, I mean, you should be facing the full impact of the stronger SEK that we've seen so far towards the end of the year. That is, I mean, going to impact your competitive position vis-à-vis competitors based outside of Sweden. Do you see a need or a potential to cut costs or make structural changes to mitigate this, or is it all just going to have to come down on your bottom line in the end?
I think we always have a need to cut costs and be more productive and efficient. I guess.
Question. First, would it be possible to certify Greece for nuclear weapons? Second one is on your just low? Sorry. 2023 and 2024.
Someone is disturbing the line here, so.
Okay, Oscar, are you still with us?
Yes.
Yes. Good. We had someone else on the line, so maybe it was too random for someone. We do not know. I think we always have a need to work with our cost.
As a reminder to ask a question, please signal by pressing star one.
We always have a need to work with our cost efficiency and do what we can in order to control the cost level. I cannot really see that we have a—we always try to focus on what we can have an impact on. I mean, we cannot do too much about tariffs and currencies and other things, but we can be as efficient as we can, of course. We are 100% focused on productivity, cost efficiency, and so on.
We have no special programs that will be announced coming quarters here.
Also, the continued ramp-up of our big strategic investment will help to improve our cost positions as we gradually ramp up and trim those operations.
We have a question from Lewis Merrick from BNP Paribas. Please go ahead.
Hi. Thank you for taking the question. We'll just go back to the currency movements on the SEK. In terms of phasing and timing as to when that should come through the P&L, should we expect that to come through quite immediately, or should it be a bit of a lag?
Yeah. If we look at the FX, we have a table in our quarterly report on how much we have hedged for each quarter. For the dollar, we have hedged around 70% of the net exposure in both Q2 and Q3, then 50% in Q4.
I think it's 20% in Q1 in 2026. For euros, it's around 70% in Q2, around 50% in Q3, and then around 20% in Q4. You have the exact figures in our report, but around those.
Okay. Appreciate that. Also, on the elimination of the EBIT level, there's quite a big jump this quarter. Just wondering what drove that and how that might evolve moving forward.
You mean in others? Yes, in others. Firstly, we usually have a seasonal a bit higher costs in the first quarter. We also had some higher eliminations of profit in stock in the first quarter because of higher wood raw material costs. That's a one-time effect when the prices of wood raw material goes up.
Just one last one from me.
Just given the current environment, the recent experience of lower power prices, what's your appetite for further wind projects going forward?
I mean, if we go in, we are with the current faucet gun we're building now, we will be self-sufficient in the wind power. We never want to become a net seller of electricity. We won't do any further purchases or construction of wind power because we just want to be self-sufficient or almost self-sufficient, but never become a net exposure.
We can develop projects and then we can sell them. That's a part of our business, so.
Thank you. I'll turn it over.
Thank you. As a reminder to ask a question, please signal by pressing star one. We'll pause for a moment to allow you to signal.
Not really hear a question.
As a reminder to ask a question, please signal by pressing star one. We will now take a question from Victoria Adesina from Barclays. Please go ahead.
Hi there. Victoria here on behalf of Gaurav Jain . Just three questions for me. On the price increases, given the drivers behind those, just wondering if you could share some insights into how customers have been reacting to this, just given the current geopolitical backdrop as it could sort of risk a few slowdowns. I thought that was the question.
I could not hear.
Customer reaction from the price increases?
Customers, they always like low prices, so that is natural. I guess everyone sees that we will, I mean, the main driver behind price increases just now is not the fantastic demand. Maybe with an exception in solid wood products as we have a seasonal effect just now during Q2 and maybe also during Q3.
Otherwise, I mean, it is the cost pressure that forces us to go for further price increases as it is just now.
Okay. That's clear. A question on the segments and tariffs. Is that to say that Pulp is the most exposed or will be the most impacted?
Tariffs on pulp.
Tariffs on pulp. Yeah, as I said before, I mean, as it is just now, we face 10% tariffs from Europe over to the U.S. At the same time, Canadians, they face 0% tariffs. I mean, that of course changes the competition a bit. We have to wait and see. As it is just now, I mean, that is of course not positive for us. We have not really seen an impact up till today. If this continues, I mean, then we have to, as I said, reposition our sales of pulp.
I guess if Canadian volumes over to the U.S., if they increase, that will create space in other markets.
Okay. Final question. Is it possible to give any sort of time horizon when we could see a turnaround in the Renewable Energy segment?
Turnaround in the Renewable Energy.
Yeah, I don't know if, I mean, as it is just now, we have what we have. Electricity prices in the northern part of Sweden, they are quite low. I think the hydrologic balance is + 15 TWh in the Nordics just now. I mean, that is not beneficial for an energy producer. I mean, that gives conditions for our production or profitability in wind.
On liquid biofuels, I mean, we've talked about that before, but still we have the decreased mandate and that will still, and also of course, reduce the oil prices due to the, yeah, to the geopolitical situation. I mean, that also will have a negative impact on the market for liquid biofuels. On the pellet business side, I guess we have, it's a solid business as it is just now.
You just had to remember the self-sufficiency. I mean, last year around 80% self-sufficiency on electricity as an example. We still benefit from low electricity prices. Energy impact negative, our Renewable Energy business will be impacted negatively. We will have lower energy costs in our Wood business and our CTMP business and our Container board business.
Also with liquid biofuels, with low oil prices, I mean, we make less money on Renewable Energy, but we have lower costs for our Logistics operations and our Forestry operations. We still, as a group as a whole, benefit from low electricity prices.
Again, I mean, we fall back on our strategic position. We like to have a high degree of self-sufficiency in Wood, Energy, and Logistics. Over time, we believe that is exactly the right position we shall have. I mean, and that's also, I guess, why we can deliver a rather solid result also this quarter.
Okay. That's clear. Thank you.
Thank you. That are all questions that we had today. With this, I'd like to hand it back over to our speakers for any additional or closing remarks.
That concludes our first quarter report presentation.
Welcome back in July for our half-year report. Thank you for dialing in.