Earnings Call: Q3 2025

Oct 24, 2025

Good morning and welcome to this presentation of SCA's 2025 third 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, and also from my side, a good morning. Happy to present the results for the third quarter 2025. When I summarize the quarter, we can state that SCA continued to deliver a solid result in a rather challenging environment. Our high degree of self-sufficiency in strategic areas continued to be an important factor to mitigate higher costs, not the least related to wood raw materials. Our EBITDA reached SEK 1.64 billion, and by that an EBITDA margin of 33% for the third quarter. In Q3 2025, we had substantially lower prices in the pulp segment in comparison with the same period last year. Our planned maintenance stops in pulp and containerboard were also considerably more extensive compared to the same quarter last year. Delivery volumes in the containerboard segment increased this year compared with the same quarter last year, driven by the continued ramp-up of our Obbola containerboard mill. The uncertain market situation, mainly dominated by changing tariffs, continues to affect market conditions. The forest industry in general is momentarily challenged by a weaker market with soft underlying demand in many product areas. Turning over to some financial KPIs for the third quarter 2025. As already mentioned, our EBITDA reached SEK 1.64 billion in the quarter, which corresponds to a 33% EBITDA margin and a 22% EBIT margin. Our Industrial Return on Capital Employed came out just over 6%, counted for the last 12 months, and the leverage was at 1.7 times, while our net debt to equity reached 11.2%. I will now make some comments for each segment, starting with forest. Higher harvesting levels from our own forest have not the least contributed to a stable supply of wood raw materials to our industries during this 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. Regarding pulp wood, we have now passed the peak, I guess, and prices have started to come down during this quarter. Demand for saw logs continues to be high, especially for spruce logs. When one compares Q3 2025 with Q3 2024, sales were up 14%, while EBITDA was up 17%, mainly due to higher prices for wood raw materials. Turning over to wood. In general, we still have a slow underlying market for solid wood products. As said before, we have noted signs of improvement in the repair and remodeling segment this year in comparison with last year, but the uncertainty in general economic development continues to affect the market recovery negatively. Stock levels remain on the high side among producers for pine, but are at normal levels for spruce. Stock levels at customers continue to be on the low side. The volumes in both production and deliveries were good for SCA during the quarter, resulting in a close to unchanged stock level of own goods. The price for solid wood products decreased by 5% in the third quarter of 2025 in comparison with the second quarter of 2025. This development is in line with what I said when I presented the report for the second quarter. As expected, the cost for saw logs has increased from the second to the third quarter, and we also expect them to continue to increase going into the fourth quarter. Sales were in line with the same quarter last year. EBITDA margin decreased from 19% to 15% due to higher raw material costs and a negative currency effect. 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 level is on the high side, especially for pine, while the SCA level is rather normal. As can be seen in the diagram to the bottom left, the Swedish and Finnish sawmills production has been on a normal level during the first eight months of 2025. In the diagram to the top right, we can note that the price decreased during the third quarter. The decrease in pine has been larger in comparison with spruce products. Going into the next quarter, I estimate that prices on average again will decrease by up to 5%, somewhat more for pine and somewhat less for spruce. This is driven by the momentarily high availability of pine products. In the construction sector, we can conclude that start of new buildings continues to be low. As said before, uncertainties are still present, but we see improved consumption in the repair and remodeling sector. The level of duties now put in place on wood products from Canada delivered to the U.S., about 45% in comparison to the level for wood products from the European Union delivered to the U.S., about 10%, has strengthened the competitiveness for EU producers in comparison with Canadian producers. It's likely that the price level in the U.S. will increase when stock levels are coming down from today's high levels. Over to pulp. When comparing Q3 2025 with Q3 2024, sales were down 21%, mainly due to lower prices, a lower delivery volume, and a negative currency effect. EBITDA was down 57% compared to last year, mainly due to lower prices, a negative currency effect, and higher costs for wood raw materials. The cost for the planned maintenance stop was SEK 83 million this quarter compared to SEK 35 million in Q3 2024. Global demand for pulp was at a healthy level during the first quarter of 2025. During the second quarter, the market changed with reduced demand and prices came under pressure, much due to uncertainty related to U.S. tariffs. During the third quarter, prices on MSK pulp were stable at low levels. On the demand side, we saw increased activity in China during the quarter. The weakening of the U.S. dollar in relation to the Swedish krona, which started already in Q1, continued to have a negative impact on the price in SEK, also in Q3. Tariffs on MSK pulp from the EU to the U.S. were removed during the third quarter, and this allows us to maintain a competitive offering in the U.S. Looking at CTMP, prices have been unchanged in Asia at low levels and have decreased slowly in Europe during the third quarter. Inventories of softwood and CTMP have been increasing in July and August, as you can see in the diagram, and are now on the high level. Hardwood inventories, on the contrary, were stable during the third quarter. Moving over to containerboard. Sales were up 10% in Q3 in comparison with the same period last year, driven by higher delivery volumes and higher prices, somewhat mitigated by a negative currency effect. EBITDA was down by 39%, very much driven by a long planned maintenance stop with a cost of SEK 204 million versus SEK 87 million in Q3 2024. Higher costs for wood raw materials and a negative currency effect also had an impact. We have seen a softer box demand during the last quarter, but still with a positive development on a year-to-date basis. The retail business remains a positive driver. On the other side, we continue to see a weak European manufacturing industry, which for the moment drives the demand in a negative direction. After a stable first half of the year of European demand, containerboard has started to decrease in Q3. Due to the current turbulent macro environment, it's difficult to have a view on the long-term demand. In Q3, we have seen additional supply coming on stream, with the vast majority coming in test liner. We do not expect further capacity increases in Q4, except from the ramp-up effect of newly started machines. Kraft liner inventories remain above average level in Q3, as you can see in the graph. During Q3, the availability of OCC has been good, driven by the lower demand in the quarter, which in its turn has led to decreasing prices of OCC. Moving into Q4, we see the availability of OCC to be stable and expect prices to be more or less unchanged. Prices for brown kraft liner in Central Europe have during Q3 decreased with €20 per ton, driven mainly by slow demand and reduced prices of OCC. White kraft liner has remained stable. Finally, I will say some words about renewable energy. In this area, we have had a weaker quarter compared to the same period last year, mainly due to lower prices in wind power and solid biofuels. Continued improvements in ramping up Gothenburg biorefinery are partly compensating for this. The market for solid biofuels in northern Sweden continues to be weak due to warm weather and low electricity prices. This fact increases our export share and by that reduced margin. For liquid biofuels, we have seen higher margins compared to previous quarters. The main reasons are tighter supply due to maintenance stops in biorefineries, European countries implementing RED III, and better control mechanisms within the EU regarding imported feedstock. We expect market volatility in renewable fuels to remain high as Europe ramps up the blending mandates both in HVO and SAF. Electricity prices were low during the quarter, which impacted our wind business negatively, but it's good, of course, for SCA as a net buyer of electricity. SCA's land lease business is stable at 9.7 TWh, which is equal to 20% of installed capacity of wind power in Sweden. Installed capacity on our land is expected to reach 10.5 TWh by the end of the year. By that, I hand over to you, Andreas. Thank you, Ulf, and good morning, everybody. I'll start off with the income statement for the third quarter. Net sales decreased 5% to SEK 5 billion, driven by negative currency effects and lower prices, which was partly offset by higher delivery volumes. EBITDA decreased 18% to SEK 1.6 billion, driven by negative currency effects, lower prices, and higher costs for planned maintenance stops. EBIT decreased to SEK 1.1 billion, and financial items total minus SEK 103 million. We had an effective tax rate of just below 20%, bringing net profit to SEK 0.8 billion, SEK 1.19 per share. On the next slide, we had the financial development by segment. I started with the Forest segment to the left. Net sales decreased to SEK 2.4 billion, driven by lower delivery volumes compared to the previous quarter due to several planned maintenance stops at SCA's industries. EBITDA decreased to SEK 912 million due to seasonal lower harvest from SCA's own forest. In Wood, prices decreased compared to the previous quarter, while the cost for saw logs continued to increase. Net sales decreased to SEK 1.5 billion, driven by lower delivery volumes and lower prices compared to the previous quarter. EBITDA decreased to SEK 232 million, corresponding to a margin of 15%. In Pulp, net sales decreased to SEK 1.65 billion, driven by lower delivery volumes and lower prices. EBITDA decreased to SEK 242 million, corresponding to a margin of 15%. Higher costs for planned maintenance stops and lower prices were offset by lower costs. We had lower energy and raw material costs in the quarter, and Q3 is also a low-cost quarter for underwriting costs in all segments, which had a positive impact. In Containerboard, net sales decreased to SEK 1.8 billion, and EBITDA decreased to SEK 194 million, corresponding to a margin of 11%. The result was negatively impacted by planned maintenance stops in both Munksund and Obbola of SEK 204 million. The market for renewable energy continued to be weak. EBITDA decreased compared to the previous quarter and amounted to SEK 79 million, corresponding to a margin of 21%. The decrease was mainly driven by lower deliveries of solid biofuels. On the next slide, we have the sales pitch for Q3 last year and Q3 this year. Prices decreased 2%, driven by lower pulp prices. Volumes increased 1%, driven by higher volumes in Containerboard, which was offset by lower volumes in Pulp. Lastly, currency had a negative impact of 4%, bringing net sales to SEK 5 billion. Moving on to EBITDA average, and starting to the left, price mix had a negative impact of SEK 99 million, and higher volumes had a positive impact of SEK 14 million. Higher costs for mainly wood raw materials had a negative impact of SEK 57 million, which was mitigated by our highest degree of self-sufficiency. We had a positive impact from energy of SEK 37 million and a negative impact of currency of SEK 169 million. Others were impacted by higher costs for planned maintenance stops. In total, EBITDA decreased to SEK 1.6 billion, corresponding to a margin of 33%. Looking at the cash flow, operating cash flow increased to SEK 1.1 billion for the quarter and SEK 2.5 billion for the first nine months. As you know, other operating cash flow relates mostly to working capital currency hedges, and should be seen together with changes in working capital. Looking at the balance sheet, the value of the forest asset totaled SEK 108 billion. Working capital decreased compared to the previous quarter and totaled SEK 5.6 billion. Capital employed totaled SEK 160 billion, and net debt decreased compared to the previous quarter to SEK 11.7 billion. We have now almost finalized our large ongoing investment projects. Equity totaled SEK 104 billion, and net debt to equity was 11%. Thank you. With that, I'll hand back to you, Ulf. Thank you, Andreas. Just to summarize, I mean, as I said, we have continued to deliver a solid result in a rather challenging environment. I guess the market has bottomed in more or less all areas except for solid wood products. On the other side, we will see a cost pressure coming in our solid wood business. While the price for pulp wood has now stabilized and is on its way down, I would say. In pulp and kraft liner, I guess the market is going sideways now, and we are 100% focused on what we can have an impact on ourselves, which means that we are focusing on the ramp-up of our big projects, and they are going very well, did go very well during the third quarter. By that, I think that we open up for some questions. Thank you. Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. Thank you. We will now take our first question from Jonas Masvoulas of Morgan Stanley. Please go ahead. Yes, good morning, and thank you very much for the presentation. I've got three questions, if I may. I'll take them one at a time. First, on pulp wood costs, given the small decline that you show in your slide deck for Q3 and the typical lags in your business, what shall we expect for cost development in your industries in Q4 this year and also Q1 2026? Thank you. You asked about pulp wood, and as I said, we see that now that the prices for pulp wood are coming down in the market, but as you say, we have a lagging effect. I could say that we have, it's around six months more or less, Andreas. Yes, so in the fourth quarter, I mean, fairly flat, maybe we're talking about 1% decline in pulp wood prices, so fairly flat, while the cost for saw logs will continue to increase a bit into Q4. In the beginning of next year? I think that pulp wood will slowly continue to decrease, but as Ulf said, I would say it's around six months of lag effect. In terms of saw logs, I think they will start to peak also around maybe Q1 next year. Thank you for that. Going back to pulp, looking at MSK pulp inventories on days of supply, we are pretty much at the top of the historical range. Do you see the recent temporary curtailments among your peers help rebalance the market in the short term, or do we need to see a more aggressive supply response? It's hard to say. Maybe I didn't say that, but we are still at a very high operating rate in MSK pulp, and we should because we have a very low cash cost, of course. On the other hand, we see announcements now from many areas where they have started to take curtailments. I guess also in the statistics that you see now, we haven't included the typical longer maintenance stops that we have had now during the autumn. I guess that the inventory will come down, and as always, it's a question, it's a supply-demand issue. I guess we will see a better balance, but underlying, we have to wait for an increase in consumption before we can say that we have a stronger market. Yeah, understood. Thank you for that. Just the last question from me on the FX hedging. Looking at your disclosure, you seem to have brought down your USD hedge ratios for the next four quarters. Is that a conscious decision to avoid locking in an unfavorable FX rate? Could these ratios come down further in the coming quarters if spot FX rates persist? We use a statistical model for our hedge strategy. For the next six months, we hedge around 50% to 85% of our net exposure, and then it goes down. It depends on statistically how favorable the currency is. We use a model, and for the U.S. dollar, we're currently in the low range of that, while for euro, we are in the normal range. Very clear. Thanks very much. Thank you. We'll now take our next question from Linus Larsson of SEB. Please go ahead. Thank you very much, and a very good morning to everyone. A couple of questions on use of funds. It seems to me that you have a very strong balance sheet. Cash flow is robust through the cycle. You're running at high operating rates. Like you say, Ulf, your competitiveness is strong. How do you look at buybacks in this context, given where your share price is trading and given your investment plans for the time being? If we start with the investment plan, as I said, we are just now 100% focused on ramping up what we have started, and we feel that we are doing that in a good way. As I also said, just now we sit on our hands. We will not start up new big projects. I guess, as all other companies, we also try to not do too many current investments because we have an uncertain market going forward. That is the position we have just now. The question about buybacks, that is more a question for the board, honestly. Let's see. We are now focused on ramping up what we have started, and by that, as you say, we expect that we will increase our cash flow capacity substantially. Yeah, that's great. I mean, principally, how does the board look at buybacks? Is there a principal view on whether or not buybacks is part of the toolbox? Again, that's a question for the board. As far as I understand, we have no principles in this matter. I think we have done since the split in 2017. I mean, we have invested 20% of the net sales in the company every year. For us, that's a lot of money. For all companies, it's a lot of money. We are more focused just now to realize the cash flow that we suppose that we will have from these ongoing investments. That's our focus now. Yeah, no, that's clear. Just to finish off that, what's your CapEx guidance for 2025 and 2026, respectively? If you look at CapEx for 2025, I think that current CapEx will be around SEK 1.5 billion. We might have some spillover to next year, so SEK 1.4 billion, SEK 1.5 billion. In terms of strategic CapEx, also depending on timing of some payment, around SEK 1.3 billion, SEK 1.4 billion. Maybe SEK 2.8 billion in total for current and strategic. It depends on timing of certain payments. For next year, strategic CapEx will go down. We have some payments left in the ramp-ups, but strategic CapEx will come down. I would guess that current will be slightly higher than this year since we have some spillover from this year to next year. Okay, how much will the strategic CapEx go down? Is it half a billion or a billion or around about? It depends on some timing, but I would guess we have a couple of hundred million SEK left on our current projects. Great, thanks a lot. Thank you. We'll now take our next question from Charlie Morse of BNP Paribas. Please go ahead. Yes, good morning, gentlemen. Thank you for taking my question. I wanted to start on the roundwood market. You mentioned obviously log prices are high, and if anything, still slightly moving up due to high demand. It sounds like the wood products market in general is still quite soft. I'm just trying to understand, is this a demand that's for other uses, or are you basically saying this is more of a supply issue for the market? If so, is this just a hangover from the bark beetle delivery from prior years, or is there any other reason why we could expect some better balance coming back on the supply side soon? Just on the pulp wood cost side, very helpful the detail you've given so far, but just in terms of the timing effect, do the changes in pricing of pulp wood hit the forestry and then the industrial segments at the same time, or is there a phasing effect whereby the P&L benefit on forest is reduced before the cost tailwind on the industrial segments comes through, or anything like that to be aware of? Thank you. Yes, if we look at the pricing, we base our internal prices off what the forest division pays for its sourcing. A lot you buy on stumpage, so you buy the right to harvest. You optimize the harvesting to try to have some larger areas to have efficient harvesting, so it can be varied. Some of these, what you harvest is a couple of months you bought it from, and some might be three months ago or six months ago. That average price, the industry gets to pay. The pricing is once, when the prices go down, the industry will get a lower price. Of course, our forest division will earn less money on their own harvest. On the one day, what they source externally, that they get paid for. The second question, the first question was around the demand for saw logs. Yeah, the coming demand. As we see just now, we have, as you saw on the graph, in Sweden and Finland, the production is still on a normal level, even if we know that low prices are very, very high and profitability in the business is in general rather low. We feel rather confident with the profitability we have in our own wood division, but up till today, we haven't seen any signs of decreasing log prices, actually. Yeah, okay. is also the difference between pine and spruce saw log. On spruce saw log, you have a much lower supply compared to pine saw log, so we also have a pricing and a demand difference there. Thank you. On the wood product side, you mentioned the relative competitive advantage for EU exporters to the U.S. now versus Canadian. Can you talk about the relative profitability of your U.S. business compared with your European business today? How big an opportunity might this be? Yeah, first, if we take the tariffs, as I said, the tariff just now going from Europe over to the U.S. is 10%, and coming from Canada over to the U.S., then the tariff is 45%. As it is just now in the U.S., the stock level is on the very high side. So far, we haven't seen any impact on the, let's say, the local price in the U.S. I guess when the inventory level is coming down, then, of course, customers have to start to buy, and they can buy some volume from Europe, and they have to buy some volume from Canada. I guess that prices can, in a short while, increase quite dramatically. We don't have a big volume for the U.S. We do, let's say, 80,000 cubic meters per year. Again, it's a global market. If we start to see a better trade in the U.S., that will, of course, have also an impact on the European market and also the Asian market and so on. We have to wait and see. As it is just now, I guess it's more a question of time. We will have a slow fourth quarter as we always have, and I guess it will be rather slow also in the first quarter. I guess in the beginning of the second quarter next year, we might start to see something. Can Canadian volumes get displaced into other parts of the world or even coming into Europe to offset that benefit? Yeah, not really. I mean, of course, you will see some Canadian volumes in China, and you might, I don't think you will see too much of it in Europe. You have the distribution cost, and many of those sawmills are located inland. It's also a question of distribution, inland distribution cost within Canada. I guess if this remains, which you never know, then you probably will see further closures and capacity reductions. Honestly, I don't know really how the U.S., I mean, we know that the U.S. needs a lot of solid wood products coming into the U.S. I guess it might be that we see some further changes going forward now, also when it comes to tariffs and things like that. All this, I think we had a question before, but tariffs, we are not directly too much impacted by tariffs. We can handle that in a good way. I guess that this discussion has created uncertainty globally, and that's the reason also why we have a rather slow demand in Asia in more or less all product areas. That is, I guess, the worst thing with tariffs. It is creating some kind of uncertainty in all areas and globally. Yeah, thank you. Thank you. We'll now take our next question from Robin Santeverde of DNB. Please go ahead. Thank you very much. Firstly, I have a question related to the containerboard business. Looking at the delivery volumes now this year, they have been quite steady, but it seems still Obbola is not running at full capacity. You have the long maintenance stop. Could you give some guidelines on volume out for that segment in Q4 and early 2026? Should we expect a bit of a step change or more of a slow gradual ramp-up during the end of the year and next year? When it comes to Obbola, we have said that Obbola will produce 600,000 tons this year, and they will do so if nothing unexpected will happen in the fourth quarter. It is a tough market in kraftliner. We have seen during the third quarter increasing inventories in kraftliner, and that's the case. As you said, we also had a rather long maintenance stop in Q3, which also had an impact on deliveries. Production-wise, Obbola will reach 600,000 tons this year, and the plan is to reach 700,000 tons next year. Okay, thanks. Can I ask about this EU deforestation regulation? How do you view that? Will that have any kind of impact for your businesses in Europe either way? What is your view? Yeah, I mean, it has also created a lot of uncertainty. I guess for us, we can manage EUDR, but of course, it will be an administrative burden, which we don't like. We can handle it. What about your competitors? Could there be a setup where some power has been imported from some countries or some containerboard that has been imported from Asia or the Americas? They could end up in a bit of difficulty to do so in the future. Will this impact trade flows at all in your view? Yeah, it's very hard to predict. We have been working quite hard to find out the system which will not create a lot of administration. Typically, we are for free trade. I think that's good. I think that the EU in the long run, they will benefit from free trade. We don't know how this will be implemented in the trade up till today. This is also another thing that really creates uncertainty. The honest answer is we don't know how this will play out. The only thing we can do is to focus on our own ability to meet the requirements that might come. Yeah, for sure, for sure. Final questions related to the bulk market. What is going on in the softwood bulk market? There's a lot of curtailments now during early autumn. Certainly, Finland, Sweden, and Spain. I understand some in Canada as well. Historically, when you do that, you tighten up the market quite quickly. Now we're not seeing that. Is this a bit of substitution into hardwood pulp? Is it some Chinese volumes that, I mean, historically, they do not produce a lot of softwood pulp? Now I understand there's some production going on in China as well. Why is the market not tightening despite the quite significant production curtailments in the northern hemisphere? I guess the first thing is that the underlying demand is weak. That's the first explanation. The second thing is substitution. I don't think that we will see more of substitution today than we did last year. It's not as easy as that. We have always had a delta between hardwood and softwood prices. If possible, I guess it would have already been done. I haven't heard anything, no structural changes in that area. What we know is that a lot of capacity in pulp will be built up in China. Of course, sooner or later, that might have an impact. As it is just now, we are more considerate about the CTMP volumes. As we have understood, the board market is very weak. While companies in Asia close down the converting and stop producing boards, they still produce CTMP. That will, of course, give a surplus in the market. I guess that the statistics that we also saw on our slide was from August, was it so, Andreas? I guess we will see some other figures now coming into September, October, and so on. We also have had a lot of big maintenance stops in pulp. You're right. We also hear that companies are taking curtailments now. So far, no big changes. The prices maybe, I guess that the price has already bottomed because at this level, we see that curtailments are taken instead of continuing to produce and, of course, creating a negative cash flow. We have reached the bottom. I guess we will see some result of actions taken now later this year. Again, the fundamental challenge is the underlying demand that must come back. I understand. Thank you very much. Thank you. We will now move on to our next question from Oskar Lindstrom of Danske Bank. Please go ahead. Yes. Four questions from me, if I may. The first one is just on the lower wood costs. You mentioned this in the pulp division sequentially, but not in containerboard. Sorry, not lower pulp costs, lower wood costs having a positive impact on pulp, but it didn't seem to have it on containerboard. What's the reason for that? Should I go along with the other questions? No, we take one at a time. I mean, we have maybe 1% lower pulp wood prices in both containerboard and in pulp. In pulp, we had a better yield in the quarter. We had lower consumption of both energy and wood. I mean, generally, we have a low-cost quarter. I would say it's more on the consumption side that we have lower costs on pulp in this quarter. In containerboard, was it just the maintenance stop that sort of? In the containerboard, we had a large maintenance stop in both in Monsun and Obbola that cost around SEK 200 million. That quarter was impacted by that stop. Right. Moving on to cash flow, you say that you will increase your cash flow significantly in 2026, and I presume beyond as well, while CapEx looks as if it's going to come down quite a bit. If we only look at the ramp-up of Obbola, can you say anything about what kind of contribution you expect from that in 2026 versus 2025? If you reach the 100,000 tons, could you put a monetary value on that? Currently, I would say it's hard to put the money on the excess volume because we've said that currently you have a weaker market, and that means that the extra volumes you will place on, you have a worse customer mix and country mix on those extra volumes. That will, of course, depend on how the market development develops. If you have a stronger market, I mean, those volumes will be placed in customers in Europe and places nearby, and that will have a larger impact. If you have a weak market, of course, then we'll have to put it further away. It depends on how the market develops. And also. Also, to add, if you have, yeah, maybe that was exactly what you said. If you have an additional volume already this year, if you go from a little bit over 400 up to 600, that puts pressure in a tough market. That puts pressure on the market side, of course. You also have a ramp-up, a ramp-up production-wise, but you also have a ramp-up in the market. Of course, we have to find markets overseas, not the least as it is just now. Of course. My third question is, we've seen other companies in your sector announcing cost savings and even structural changes as a consequence of the tough market, which both they and you seem to feel is not about to change anytime soon. Do you see any need for you to take actions if demand does not improve, either cost-saving actions or structural changes? I mean, if we go back to 2017, as I said, we've been invested 20% of the net sales more or less every year. By that, we have also top-class sites as it is just now. We have also, during this period, closed down our publication paper business, and we have focused on pulp, containerboard, and also solid wood products, and to some extent also renewable energy. Step by step, I mean, as soon as we see that we can reduce demanding or if we can do something else to improve our cost position, we will do that. For me, I don't like those programs because that means that you haven't done your work, your ongoing work, so to say. For the last one and a half years, we had a program to reduce our personnel at our pulp division with around 80 people. That has gradually begun to give an effect. We reduced demand by 800 people when we closed down the publication paper business. If you have structural changes, you have to follow up with the person reductions. Otherwise, that is something that you have to do. That's the everyday work. Right. Thank you. My final question is on CapEx, which you talked a little bit about here. You say that you expect next year for current CapEx to be, I can't remember the exact wording, but slightly higher. How much higher is that? You said strategic CapEx would be, I think, a couple of hundred million. How many couples of hundreds of millions are we talking about? Is it possible for you to be a little bit more precise? I'm just wondering. It depends, of course, on how much overspill we have to next year. It depends. I mean, we have our base CapEx for next year, and we have some potential projects. It depends on which of them we go through with and which timing. If we go around SEK 1.5 billion this year, then we're talking maybe, yeah, SEK 100 million more next year on current CapEx. It depends on what projects we do. Also, on the strategic side, it will be between SEK 0 and SEK 1 billion. It depends on the timing of our strategic CapEx. For example, we have one payment that would rather go in the end of this year or early next year, which is around SEK 150 million, and we have a couple of hundred million next year. It depends, but just to give a rough figure. CapEx will come down. Yeah, CapEx will come down, yes. Right. Thank you very much. Those were my questions. Thanks. Thank you. We'll now take our next question from Martin Melbaugh of ABG Sundal Collier Holding ASA. Please go ahead. Yes, good morning. Given tariffs and new volumes to place, could you give some hints on prices for pulp and containerboard at volumes heading into Q4, quarter to quarter? Yeah, I mean, we don't know. That's the honest answer. As I said, I guess we are in pulp at the bottom level just now. As we said before, we have seen substantial curtailments taken now, so I guess pulp prices will, if they, the only way from this point, I guess, is upwards. When will that come? It remains to see, I guess. I think for containerboard, we have more capacity has come on stream during the third quarter. No additional capacity will come on stream, but we will see some ramp-ups. I guess we will see some closures in testliner going forward. The balance for kraftliner is much better, of course. The only additional volume coming in now is our own from the ramp-up in Obbola. On the other side, the inventory level is on the high side, coming down a little bit now when we had the new statistics. It's a question of supply-demand balance, of course. My best guess is sideways. Maybe we will start to see upward trend in pulp and maybe sideways in containerboard. As I already said, I guess we will see somewhat decreasing prices in solid wood products. I guess another 5% in the fourth quarter. The first quarter is always, it's tricky to increase prices in the first quarter. If something is happening now in the U.S., that might have a faster impact on the pricing for solid wood products. Otherwise, I think we have to wait for the second quarter next year. In terms of volumes, yeah, forest, we harvest a bit more from our own forest in the fourth quarter in solid wood products. As I mentioned, you have a seasonally weaker quarter compared to the summer months, so there we have lower delivery volumes. In containerboard, it will be slightly higher since we had a big maintenance stop in the third quarter, which we won't have in the fourth. In pulp, I would say it's slightly up or flat. Okay, thank you. Thank you. We'll now take our next question from Cole Hathorn of Jefferies. Please go ahead. Morning. Thanks for taking my question. I'd just like to ask, what do you see would be the positive catalyst for each of your segments? I'd like to take it in turn, maybe starting on pulp. What do you think is truly needed to exit demand? Do you think it's going to be capacity closure, potentially something out of Canada, considering they've got elevated wood costs and you see a sawmill go down and then pulp mill closure that tightens the market? Wood products, is it ultimately just demand that's needed rather than any form of supply response? Containerboard, I'm just wondering, what are you looking for in the market for kraftliner? Do we need to rely on the recycled closures to follow that, or are you seeing the ability to kind of keep this premium versus recycled, considering there are less imports from the US and much better supply-demand balance in virgin? If we start with pulp, I guess it's again, it's about demand. The tissue business is rather slow, of course. It might be impacted by closures. Also, again, it's a supply-demand issue. It might be so that, just my speculation, but I mean, if we will have a tough, if tariffs will remain in Canada for solid wood products, that will have a negative impact on the raw material supply to the pulp mills. That might have an impact over time, of course. Otherwise, it's demand and mainly then in the tissue segment. In wood, as already said, I mean, we are in a slower season just now in Q4 and Q1. I guess that sooner or later, Americans, they must start to buy solid wood products. If the tariff level from Canada over to the U.S. will remain on 45%, that definitely will mean that we will see increasing prices in solid wood products. Even if you're not a big supplier to the U.S., which we are not, but still, that will have an impact on the global trade rather immediately, I would say. We know that it can start to move quite fast. I guess if you look at the inventory level in the U.S., we have to wait for at least a quarter before we can see something. In containerboard, I mean, yeah, we look at the box consumption and we feel that we have a slow demand from the industry while, I mean, in other businesses for food and maybe e-trade and that part, that is going quite in a normal pace. The industry for us, I mean, heavy duty, spare parts, and things like that, where we typically can find a premium for kraftliner. I don't know, but my guess is also that we will see closures in testliner. I guess that the main part of testliner producers just now, they don't make money. I guess we have a chicken race on the testliner side as it is just now. The balance both for containerboard, kraftliner, and also for MSK pulp, it's much, much better than for recycled-based production. Thank you. Maybe just following up on capital allocation, you were clear that you're ramping up your projects, you're past peak CapEx, and beyond that, you've got flexibility for considered capital returns via dividends and buybacks. You didn't mention anything on M&A, and I'm just wondering how you think about that and what are your criteria there. Would you consider anything in Central Eastern Europe if a very low-cost asset came available, or are you staying with your production base in Sweden? Just like your thoughts. Thank you. Typically, we are a company based on organic growth, and typically, we are a company focused on Sweden where we have our own forest. We don't like to stay in countries where we can see a higher risk, really. I guess we are, but on the other hand, you shall never say no. Typically, we are based on and focused on organic growth as it is. As Ulf Larsson mentioned before, currently, we're focusing on our ramp-up of our current project before we add too much complexity. Thank you. Thank you. We will now move on to our next question from Andrew Ian Jones of UBS Investment Bank. Please go ahead. Andrew, you might want to unmute your audio from your end. Can you hear me okay? Hello? No, we hear you. Sorry, apologies. I missed the start of the call. If you mentioned this, my apologies. On the actual solid wood products, usually you give a bit of a sort of guidance range in terms of pricing. How do you look at pricing going into the fourth quarter in the wood division? Also, I think in the last quarter, you sort of gave us percentage changes you expect in the forest division in both logs and in pulp wood. What sort of percentage changes are you thinking about in the forest for those two categories? Thanks. The first one, yes, we did mention that one. As I said, we lost 5% in terms of price in the third quarter in comparison with the second quarter. I guess that we will lose another 5% in the fourth quarter. That is mainly a seasonal effect, as the demand always, we always have a slower demand in the fourth quarter and in the first quarter. Forest, I'll ask you again. Yeah, so for pulp wood, I mean, they have peaked. We saw a very slight decrease here in the third quarter, maybe 1%. We expect fairly flat, maybe 1% down in Q4 because of this lag effect. In terms of saw logs, they will continue to increase a bit in the fourth quarter, maybe 5% compared to Q3. That is also because you saw that the logs were quite flat between Q2 and Q3. That is more of a mix effect. We had a lower dimension on the logs, which had a lower price. We did not get that. Underlying, the prices increased also in Q2 to Q3. Since we had that mix, we did not see that increase. Now we will get that in Q4, so maybe 5% up. It sounds like a pretty tough quarter in the fourth quarter if you're saying price is 5% down, log input prices 5% up, and you're probably seeing some seasonal volume weakness, I guess, maybe. It's about 5% last year. Anything to mitigate or offset those moving parts? Yeah, on the solid wood products, I mean, as Ulf said, the prices will go down 5%. Also, the log will continue to increase a bit. We're, of course, continuing to focus on cost and what we can affect. Okay. Just one question about the structural change on kraft liner. You've kind of talked about the market being more balanced in kraft liner, obviously, compared to test liner. How wide can the actual premium for kraft liner over test liner be in the medium term, given the sort of substitution potential? I'm curious to see whether that premium can be maintained in the nearish term. It's hard to say. I mean, the delta just now is €280, something like that. That is a rather wide gap. I guess if customers, if they can substitute, they will substitute. We see the same trend. We have the same question always in softwood and hardwood pulp, but the same answer. I mean, if customers, if they can substitute, they will do it because if something is cheaper, of course, they will use that instead. I guess my perspective is more that I think we will at least remain on rather high delta between testliner and test recycled products and based products and virgin-based products as virgin fiber will be a scarce resource going forward. Strategically, I guess we will widen this gap, which we have also seen in the past years. I think that will remain, honestly. Also, when you look at the capacity increase, the absolute main part capacity is coming in the recycled business. In order to get raw material to the recycled business, you must have some virgin-based production. Okay. Thank you. Thank you. We'll now take our next question from Pallav Mittal of Barclays. Please go ahead. Good morning. Pallav Mittal on behalf of Godabran. A few questions. Firstly, you and your peers have all highlighted good availability of pulp wood, because of which we are now seeing this decline in pricing. Given demand is weak and there are a number of production curtailments, how do you think these pulp wood costs could change if you start seeing some sort of improvement in demand? Yeah, that, of course, it might be so that you have a bottleneck again in raw material supply. To have a stable long-term increase in the market, the consumption must come up. The demand must come up. That's the simple answer. I mean, it might be so that if, when saw log prices, if they come down, but pulp wood prices, when they come down, then it might be so that you see additional capacity coming on stream. By that, the supply will increase for a while. If the demand is not picking up, you will have a pressure in the market again. It is as easy as that. It's always a question about supply and demand. If demand for the finished product goes up and the production goes up, that will, of course, increase the demand for wood raw material, which already has been tight. Sure. If I can add something on CTMP, you did mention that CTMP prices have declined in Europe. Now we are seeing new capacity in China as well. Does that impact your CTMP ramp-up? As it is just now, we have a rather profitable business within Europe in CTMP. As you say, we have a very—the margin is not too big in Asia. Yes, in that perspective, we are maybe in—it's always a marginal calculation. If we have days with high electricity price or, not now, but before, when we saw that we had a scarce situation when it comes to pulp, then we, of course, the first production site we took containers in was in Uttviken in CTMP. As it is just now, we are a little bit more focused on fine-tuning and also try to validate products for the European market and so on. It is a very small or, from time to time, negative market going from Sweden over to Asia in CTMP as it is just now. Great, thank you. Thank you. That was our last question. I will now hand it back to the host for closing remarks. Thank you. That concludes our presentation of the third quarter results. Welcome back in January for our full-year report. Thank you for watching and thank you for listening.