Altri, SGPS, S.A. ($ALTR)

Good morning. We welcome you to the Altri Q1 '26 Results Conference Call. [Operator Instructions] I'll now hand the conference over to Mr. Rui Cesario, the Head of IR of the Altri Group. Please go ahead, sir.

Good morning, everyone, and thank you for joining Altri's First Quarter 2026 Results Conference Call. Today, we will review our financial performance, market conditions, operational highlights and outlook followed by a Q&A session. Joining us this morning are Mr. José Pina, Altri's Chief Executive Officer; and Mr. Miguel Silva, the Group's Chief Financial Officer. I will now pass the floor to Mr. José Pina.

Thank you, Rui. Good morning, and thank you for joining Altri's conference call. We're pleased to welcome our investors and analysts today as we present our results and share our perspective on the current market environment and the key challenges we face. Turning now to our main highlights for the first quarter of 2026. As we start with the market environment, it is important to note following a very challenging year for the global pulp sector in 2025, we are beginning to see some more constructive dynamics emerging in early 2026. Supply and demand conditions have been more balanced and the tariffs announced by the United States have so far been largely absorbed along the value chain. In addition, stronger demand from China provided support to recent BHKP price increases while dissolving pulp continues to improve its competitiveness versus [indiscernible] synthetic fibers. These are reinforcing the long-term attractiveness of our product mix. That said, the first quarter was clearly impacted by extraordinary nonrecurring operational challenges. Several storms, severe storm in Portugal affected logistics, energy costs and overall operations, which combined with lower net pulp prices and the depreciation of weighted significantly on our results. As a consequence, EBITDA in the quarter reached EUR 5.4 million corresponding to margin of 3.4% compared with 14.5% in the same period last year. Importantly, these impacts were temporary. Operations have now been largely normalized. And as we move into the second quarter, we expect a meaningful improvement in profitability supported by better pricing dynamics and continued focus on cost efficiencies. Our strategy to diversify earnings while expanding to higher value of sustainable businesses continues to advance according to plan. As, the acetic acid and furfural project is progressing well and is expected to be concluded in June 2026 as planned. This project represents an important step in maximizing the value of our biomass energy streams and strengthening our positioning within the biobased chemical space. At Biotek, the migration of the BHKP production to dissolving pulp remains on track with full migration expected by the end of 2026. This transition is key to enhancing product mix resilience and capturing structural demand in specialty fiber applications. In parallel, we have initiated investments in the pre-industrial furfural unit aimed at scaling up AeoniQ, our share company in Switzerland. This allow us to increase production capacity, accelerate customer qualification processes and further position Altri in the fast-growing market for sustainable textile takers. These units will be installed in China. Taken together, these initiatives clearly illustrate our long-term growth strategy, disciplined execution, diversification beyond traditional pulp and higher-value products as well as continued focus on sustainable value-added solutions. Moving on to the home market highlights for the first quarter. Global pulp demand had a slow start of the year, reflecting the still cautious macroeconomic environment. Overall, demand declined by close to 4% year-on-year in the first quarter with softer consumption across most upgrades. That said, the structural trends remain unchanged and continue to support our strategic position. Hardwood pulp continues to gain share versus softwood with hardwood demand declining significantly less in softwood in the quarter. This trend reinforces the long-term attractiveness that Altri at the phase, which is fully focused on hardwood pulp. From a regional perspective, China once again outperformed the global market. While global hardwood demand declined by 2.4% year-on-year, demand in China remained broadly stable, highlighting the resilience of this key market and its importance for global pulp. North America also showed positive dynamics while Europe [indiscernible]. Then specifically to the dissolving pulp markets. Dissolving pulp continues to recover following a very challenging 2025. As we move into early 2026, the impact of the U.S. tariffs is increasing the [indiscernible] across the value chain, allowing market fundamentals to gradually reassert themselves. At the same time, the dissolving pulp is becoming more competitive versus furfural-based synthetic fibers. This is an important structural development as it supports demand in textile applications and reinforces the long-term sustainability case for solvable products. From a regional perspective, China remains by far the largest and most important markets of dissolving pulp. In the first 2 months of 2026, demand in China grew by around 4.5% year-on-year contributing to overall global demand growth of close to 1%. Asia as a whole continues to drive market recovery, more than offsetting weaker dynamics in Europe. Just to reinforce utilization rates at our customers, in particular in East Coast in China remained well above 90%. Overall, while the recovery is still gradual, the direction is clearly positive and fully aligned with our strategic focus on dissolving pulp and supports our ongoing version and growth initiatives. Let me now briefly comment on inventory levels. Turning to Slide #5. Inventories at European ports have remained broadly stable and close to historical averages since the second half of 2024. As you can see, stock levels have been consistently within the range of approximately 1.4 million to 1.5 million ton. This stability is an important signal to the market. Despite the weaker demand environment at the start of the year, in countries have not built up to excessive level, indicating that supply and demand remained relatively well done. Moving from demand and inventories to pricing, let me briefly comment on BHKP products in Europe in the quarter in Slide #6. In the first quarter, we started to see a clear picture recovery in BHKP in Europe particularly as the quarter progressed. On average, BHKP prices in the first quarter of 2026 were up 13% year-on-year in U.S. dollars but only up 1% in euros, which highlights the impact of the weaker dollar versus last year. Importantly, if you look at the sequential trend, pricing momentum improved meaningfully during the quarter. On a quarter-on-quarter basis, the BHKP prices rebounded by 12% in U.S. dollars or 11% in euros, indicating improving fundamentals as we move through the period. Consistently with that, the fixed index ended March at $1,286 per ton or EUR 1,112 per ton. Overall, these pricing trajectory supports our expectation of the improved profitability. As we move into the second quarter with more normalized operations and continued policies. Let me now turn to dissolving pulp pricing, which is more closely aligned to the value chain. Dissolving pulp prices were more affected during 2025 by macroeconomic uncertainty, particularly in the textile sector as a consequence of the potential impact from U.S. tariffs on Asian value chain. As a result, pricing dynamics in dissolving pulp, like those of commodity pulp during most of the last 6 months. In China, which remains the reference market for dissolving pulp, average imported hardwood dissolving pulp prices declined year-on-year moving from around $940 per ton in the first quarter of 2025 to approximately $810 per ton in the first quarter of 2026. These are net prices, as you know, in China. Pricing overall remains relatively stable through the second half of 2025 reflecting cautious demand and inventory adjustments along the textile chain. Importantly, we started to see a recovery in March prices borrowed early in the quarter and ended March at around $835 per ton and now more recently, already moving closer to $880 per ton, signally improving sentiment and the gradual normalization of demand conditions. While the recovery remains gradual, this recent improvement is encouraging and is consistent with our view that dissolving pulp fundamentals are stabilizing supported by improved competitiveness versus synthetic fibers and the long-term growth of sustainable base all aspect. Let me now turn to ultra-specific operational highlights for the first quarter in Slide #8. Production volumes in the first quarter of 2026 decreased materially compared with last year. This was primarily due to 2 factors: the program maintenance downtime at [indiscernible] and severe storms in Portugal, which affect the operations across all mills. This had a clear temporary impact on production. Importantly, they were largely nonrecurring in nature and indicate being fully planned as part of our maintenance strategy. Despite the low production volumes, sales volumes were less effective. This reflects our priority to maintain a regular and reliable supply to our customers despite all the implications of the storms, drawing on inventory management and operational flexibility to minimize disruption along the value chain. As conditions normalized towards the end of the year, operations returned to expected levels. And we went through the second quarter with normalized production improved availability and the stronger operational sales to benefit from the improving market and pricing environment. Let me now comment briefly on our sales mix in Slide #9, both by end use and by region. Production and sales volumes in 2025 remained broadly in line with 2024 despite a softer demand environment in Europe. Some logistical constraints temporarily delayed dissolving pulp shipments, but we expect coal normalization from the second quarter of 2026 orders. Issue remains our most important and new segment in the first quarter, representing 39% of total sales volumes. The decline versus previous periods, usually in the high 40s, were mainly due to temporary quarterly delay, as well as logistic complications rather than any structural change in that. At the same time, we continue to see as a key growth area. In the first quarter, [indiscernible] related applications represented already 14% of sales volumes, and this share is expected to continue to increase over time as dissolving pulp volumes ramp up, particularly at Biotek. From a regional perspective, Europe continues to account for most of pulp, represented 61% of total volumes. However, Asia already represents 19%, and these shares are expected to grow as our exposure to dissolving pulp and textile end users increase. Overall, the sales mix evolution is fully aligned with our strategic diversification objectives, maintaining a strong position in traditional tissues in the market while progressively increasing our exposure, higher-growth textile-related and Asian markets. I will now pass the floor to Miguel Silva, our Chief Financial Officer, who will walk you through the main financial highlights of the year.

Thank you, Jose, and good morning, everyone. In Slide 10 and starting with our financial highlights for the first quarter of 2026. Revenues declined year-on-year, reflecting lower net coal prices and the weaker U.S. dollar versus the euro, which had a negative effect on reported revenue. And the main effects affecting net pulp prices was the increase in discounts implemented in January of 2026. In addition to pricing and effect, the quarter was also impacted by increases in logistics and energy costs, largely related to the severe storms in Portugal, Jose, referred to earlier. As a result of these combined factors, EBITDA reached EUR 5.4 million in the first quarter, representing a low level for the group. It is important to stress, however, that this performance was mainly driven by temporary and largely nonrecurring taxes, including operational disruptions and market conditions at the start of the year. As we move into the second quarter, we are already seeing a much more supportive environment with higher net pulp prices, normalized operations and lower extraordinary costs which gives us confidence in a sequential improvement in profitability. Turning to Slide 11, summarizes the evolution of our EBITDA margin over the last 5 quarters. As a consequence of the factors we have just discussed mainly lower net pulp prices, the weaker U.S. dollar versus the euro, extraordinary logistics and energy costs linked to the severe storms together with lower production due to the planned downtime, our EBITDA margin was under significant pressure in the first quarter of 2026. You can see that margins were relatively solid through most of 2025 with 14.5% in the first quarter, 16.7% in the second quarter of '25 and 15% in the fourth quarter of '25, while third quarter reflected a softer point in the cycle at 7.1%. In the first quarter of '26, the margin declined to 3.4% reflecting the combination of market headwinds and operational disruptions concentrated in the quarter. As we move through the second quarter, we expect the margin to recover sequentially supported by better pricing, normalized production and the reduction in exceptional costs. Moving down to the income statement in Slide 12. The lower EBITDA level in the quarter naturally translated into an operating loss and a net loss in the first quarter of '26. EBITDA margin remained under pressure in 2025 due to the already mentioned lower prices and the weaker U.S. dollar. In the fourth quarter, margins began to recover as market conditions and FX stablized. As shown on the left-hand side, we reported an EBIT of minus EUR 6 million in the first quarter of '26 compared with EUR 13 million in the fourth quarter of '25 and EUR 18 million in the first quarter of '25. This reflects the same combination of factors that we discussed earlier, lower net pulp prices, the weaker U.S. dollar versus the euro and the extraordinary logistics and energy costs related to the severe storms, together with the impact of planned downtime from lower production. On the right-hand side, net profit was minus EUR 7 million in the first quarter of 2026 versus EUR 9 million in the fourth quarter of '25, and EUR 8 million in the first quarter of 2025. In other words, a sharp decline in operating profitability during the quarter was the key driver of the bottom line outcome. Turning now to costs on Slide 15. As highlighted on this slide, operating costs were normally higher in the first quarter, mainly driven by logistics and energy costs, both of which were temporarily impacted by the storms in Portugal. We expect this effect to normalize in the second quarter of 2026. Nevertheless, we have started to see some inflation pressures, some cost items for the rest of 2026. On wood costs, hardwood prices in 2026 remained broadly in line with the 2025 average. That said, we may see some inflation during the year, mainly due to the recent storms in Portugal. These events temporarily constrain local availability and requires additional volumes sometimes from alternative or more recent suppliers. At this stage, we see this as temporary rather than structural. Moving to electricity and natural gas. The severe weather conditions in Portugal affected all mills leading to several days of downtime and production restrictions. This has a direct impact on energy consumption and production efficiency during the quarter. At the same time, the quarter also included program downside at Celbi, and we faced additional costs linked to power grid instability. Finally, energy prices, particularly as saw some upward pressure since March following geopolitical development in IRAs. On chemicals, prices have remained broadly stable since 2024, although as expected, they are correlated with energy prices. During the second quarter of 2026, we have started to see some inflationary pressures, mainly on plastic, but it remains manageable and within our expectations. Turning now to net debt on Slide 14. As shown on this bridge, net debt increased during this first quarter reflecting the fact that investment levels exceed operating cash flow in this period. Net debt moved to EUR 329 million at the end of December 2035 to EUR 348 million at the end of March 2026, an increase of around EUR 19 million. The CapEx level of EUR 15 million and other commitments exceeded the operating cash flow generation of EUR 5 million. In summary, the increase in net debt in the first quarter is primarily investment driven remains well controlled and is fully consistent with our capital allocation strategy. Importantly we continue to maintain a solid balance sheet and a very comfortable liquidity position. I will now pass it back to José.

Thank you, Miguel. Turning now to returns on capital employed on Slide #15. As this slide illustrates, we are currently going through a challenging cyclical period of the global pulp industry which has resulted in a modest RLC. This level is clearly below our historic double-digit average, which stands at around 15%. And also well below the strong returns we delivered in previous upcycle years such as 2022 and 2024. It is important to stress that this performance is cyclical, not structural. Altri's assets remain high quality competitors and cash generating across the cycle, and our capital discipline has not changed. Let me now turn to ESG and sustainability, which remains a core pillar of this long-term strategy in Slide 16. A First, on sustainable logistics, Altri was awarded the annual sustainable transport Certificate 2025 by Medway. This recognition reflects our increasing use of rail transport, which directly contributes to the reduction of greenhouse gas emissions measured in tons of CO2 equivalent. Second, on partnerships, Altri formalized a strategic partnership with Ikaros, the company of the Caserones group during the CM event in Morocco. This partnership is focused on technical and scientific cooperation in forestry while also supporting the identification of additional sustainable sources of fiber. Finally, on Net Zero, Altri is actively implementing its transition road map, fully aligned with international best practices at long-term decarbonization strategy. During 2026, the group committed to the science-based targets initiative with the objective of achieving partner neutrality by 2050 and a 2-year time frame to formally submit our target. On Slide 17 to 20, we have some highlights of the growth and diversification projects we have underway. The first of these projects to be finalized is the acetic acid and production unit at Caima that should start operating in 2026. To conclude and turning to Slide 21 and 22, let me briefly summarize our perspective about strategic execution. We entered 2026 with a more supportive demand environment following a highly volatile 2025. We are seeing a recovery in demand from China in the hardwood segment where Altri has significant exposure as well as early signs of a more sustainable recovery in dissolving pulp. This improvement in demand is increasingly being reflected in pricing trends, in particular, the BHKP prices in Europe increased the 5 consecutive months between January and May. As usual, these positive price momentum reaches our accounts with the like of around 2 months dissolving pulp prices have also shown a favorable evolution, especially from March onwards. On the cost side, we expect a normalization of the nonrecurring impact cited previously in the first quarter, particularly in logistics and energy. Taken together, the combination of improving prices and the more efficient fast sales supports our expectation of a meaningful recovery in profitability in the second quarter of 2026 compared to the first or in parallel, we continue to execute on our strategic diversification project. The conversion of Biotek to dissolving pulp is progressing as planned, remains on track for completion by the end of the current year, with multiple customer qualification expected to be gradually overcome during the year. At Caima, the acetic acid and furfural project is expected to start operations in June followed by up ports near full capacity by year-end. At the same time, we continue to invest in AeoniQ with installation of the pre-industrial unit time supporting the acceleration of production and customer qualification in a sustainable textile fiber segment. To conclude, while the recent near-term environment with the near-term challenging, we are now seeing early signs of improvement in demand and pricing, alongside normalization of costs. At the same time, we continue to execute with discipline on our strategic priorities, strengthening our positioning for the next phase of the cycle. Altri remains financially solid, operational and resilient and focus on creating sustainable long-term oil side quarters. Thank you for your attention. We look forward to your questions.

[Operator Instructions] Our first question comes from Manuel Lorente Ortega from Santander.

So my first question, probably it's on European trends. I'm a little bit struggling to justify the current price trend, especially considering the Chinese pricing backdrop or the -- as you were mentioning in one of your slides, the drop in demand in the quarter, and also the very complicated situation of the softwood regime in Europe. So I would like your thoughts regarding -- what is driving this pricing levers hence between Europe and China, especially in this context of somehow high risk on the softwood arena?

Thank you, Manuel. What I would say when we look at pricing effectively, progression of prices in Europe has been faster than in China, although the process originally further in China. I think in China, the recent event of integrated suppliers clearly have an impact in terms of resisting some of the price changes. But nevertheless, mainland China remains supportive. Demand in Europe is a little bit more subdued. But as you know, Europe is a relatively stable market. Overall, what I would point is the market remains balanced in Europe. And I think that has been the primary driver at these prices. Also the pricing structure, as you know, China works on net pricing. Europe works on contracts and the discount levels that were operated on the beginning of the year, effectively prompted the producers to be more active in terms of price management. What's clearly the case -- so when you look on a net-net basis, even though Europe has been enhanced, if I look at the inventories at port levels in Europe, they remain pretty much in line with historical trends. And effectively, there has been even a slight reduction more recently in March. So I think Europe is in a fairly stable place. The announcement of increase remain, we have, at this point, full confidence that it's going to go through, although as you know, it gets reflected in later on. The other aspect regarding the dynamics between softwood hardwood, we know there's been fiber substitution in the past, that has been at points reversed. I would say the more recent trend and because of the weakness in the softwood market is perhaps a demonstration that some of that substitution is potentially definitive and would not have the same dynamics we have in the past. I will continue to expect to see fiber substitution going forward and supporting hardwood price and in dissolving.

Okay. Understood. And then second question. So Q1 results has been a severe condition by the storm weather conditions in Portugal, as you mentioned. It will be great if you can give a sense of idea of what has been the impact, I don't know, in terms of revenues or profitability levels to address, let's say, the underlying trend of the business in the current backdrop.

Thank you, Manuel. Regarding the significant storms we had in late January and actually in all through part of February, sometimes, perhaps side of the country, the full impact has not been fully understood. I mean, we've had a series of storms, not just Kristin, but after Kristin, there were at least 2 additional storms very much in the same area. We have winds in excess of 200 kms an hour, which is highly unusual. The prior situation or close to similar conditions have been back in 2018. But obviously, we have, as we've explained significant impact, not just in terms of the stability of operations. We've had continuous shutdowns until operations stabilized. We were able to do control stops in all our units ahead of the storm or the day before the storm in expectation of the severity of the storm as it came through. But then beyond our facilities, I would say the 2 most significant impacts were on, first of all, obviously, energy because it requires significant more consumption for the equipment natural gas when you have unstable operations. The was shut down for close to 2 weeks. They sell with a particular incident where 1 of the cranes that is installed for the new one field, which will be operational by the end of the third quarter, actually collapsed even though the damage was minimized. So there was a series of events. But beyond that, you have logistics, apart from communications for 3, 4 days, there was significant restrictions in communications in the area. We've resorted to obviously satellite, and that helped us to overcome on some of the constraints. But on logistics, in particular, we have the main part of shutting down essentially 4 months. It has already had some complications back in December, which delayed some of the shipments. But then because of the storm, essentially was shut down for about a month. We've had rail shutdowns, the main line to Biotek, for example, was shut down because of damage in the line that's still being restored, and we don't expect that to be restored possibly for a few more months. So all in all, we start building all of these complications, reduce production levels very, very tightly controlled pulp because we wanted to maintain service levels for our customers, higher energy costs, high logistics costs and then on fiber, the fact that we have to resort to additional sources and more attractive sources of raw material of work. As you can imagine, I think the public figures, there's been well over 30,000 hectares impacted in terms of forestry that point -- that's now being resolved, but it will also be in line. So we would estimate at least that numbers in terms of full impact possibly close range of [indiscernible] and just to say, Manuel, that most of those situations with a few exceptions has now normalized, and this is reflective of the comments we made regarding how are we looking at Q2 and...

Our next question comes from Bruno Bessa from Caixa Bank.

I will start with the dynamics of the pulp industry following up on this topic. We are seeing prices going up, but it's true that we have also seen some resistance in China over the last month or something like that. It seems like the last price increase that has been announced for China has not been passed through and there are difficulties in the market to see that. It is also true that next year will be a year of significant new capacities coming to the market in Indonesia and already by the end of this year, it is also expected that some Chinese players accelerate again new capacities to the market. So my question here is I understand that you are more positive for Q2 because prices are going up, cash costs are going down. But how long do you think we could see an improvement in the market in terms of pricing, considering all these dynamics in terms of the supply evolution and the risks that exist on the demand front, considering the current macro backdrop? Are you concerned about prices heading into the end of the year? Do you think the price increase announced in China will be passed through? There is room for prices to go even above those levels until the end of the year. So just trying to get here a bit of your view about the potential for pulp prices to continue going up. This will be my first question. My second question will be related with the conflict in Iran. You already mentioned that there are some risks on the cash cost front because of logistics and energy costs, even though you are partially hedged. Just trying to understand if you are seeing any kind of slowdown in the demand caused by this conflict, and if you could guide us a bit on your expectations in terms of impact coming out of this conflict, it will be great. And the last one, just a bit of housekeeping work and looking to the message that you provided and the guidelines that you provided in the last earnings call. You mentioned that you were expecting by then cash cost to be up by low single digits in the year. You were also mentioning EUR 15 million to EUR 16 million CapEx for this year and net debt, we are at the same level seen in 2025, which I believe was EUR 329 million. So just trying to understand if you keep these guidelines provided in the last conference call or not.

Thank you, Bruno. Let me start with the first question regarding the product dynamics. And you mentioned multiple comments regarding, I'll say, more recent resistance particularly in China. I think I've commented already regarding the European situation, which we believe has been supported and will continue to be supportive. In China, effectively, there has been some more resistance. Regarding the last price increase, we don't see it as not having gone through, I think, partially went through, not fully as we originally intended to test out some of the dynamics related to the market and some of the new integrated capacity is coming off the market as well. But when you look at it in the near term, in the next year, 1.5 years, the fact that in Indonesia have 2 projects that has been already delayed. There is an expectation that perhaps it will not necessarily come on stream as expected late to early next year. We'll have to see for that. But the project has been delayed. As you know, Indonesia has implemented significant forestry limitations, restrictions. Those haven't yet fully panned through, but we believe that's going to create some constraints in terms of volatility and our fiber volatility for some of those needs, but Q2, all focused on the Asian market. So we don't expect least directly, certainly in Europe, perhaps indirectly through some of that fiber filtering through into other markets. But Asia Pacific, as you know, we have half of the global -- more than half of the global population and more than 50% of the increase in middle class over the next 5 to 10 years will be in Asia Pacific. Asia Pacific will continue to be a significant engine of growth across some of these products in respective of. So even though the additional capacity, I think if and when it comes onstream, we're not, let's say, overly concerned in terms of the deployment and dynamics, at least on our core markets. In China, effectively by the end of this year, there's no capacity on stream. You follow the trend prices on fiber in China, they have been on the way up. It is expected that, that trend likely will continue. There are questions related to replanting forest because of the return compared to what was recently achieved in construction. But nevertheless, there's more availability altogether, I think that's about 6 million factors of for us or close to in China, but not all of them are being exploited for production in a regular way. But I said, the price levels for fiber have been increasing, which is likely going to impact at least some of those new capacity. China, although has been working on more self-sufficiency. They've also continued to be pressure with deflation, and we have now a trend towards what we call an evolution to try and manage any excess capacity in the industry that could naturally give their own operation. So that's a phenomenon that I think going forward, we may see some potential changes or eventually some we the project, although we have no doubt that China will continue to increase, but this is primarily integrated asset. Moreover, and beyond purely just the pulp market, BHKP market, let's not forget that we're increasingly more exposed to dissolving pulp. The dissolving pulp process have been supported. There is no new capacity in dissolving markets in China. There's a series of nonintegrated players. There's no new viscose plant being built with the exception of a couple of licenses for the players who will be converting part of their own production in dissolving that is all captive. But we see a lot of growth in other fibers, particularly in where actually capacity has more than doubled in the last 3, 4 years. And that's likely going to continue, not just the largest incumbent in Asia Pacific but from multiple other nonintegrated players, some of which are or customers of ours. And obviously, that's supply that we aim to cover. Just as a side note, besides the tariffs that were implemented last year that has significantly restricted activities, textiles and viscose, this year, we've seen and recently with China, we've seen utilization rates at these plant above 90%, which is very, very significant. I don't think they've been high for a number of years. Part of that is also driven by the fact that polyester staple fiber has been done and a fossil-based fiber close to double prices because of the price of oil. And those dynamics are also finding in terms of demand here. Turning to your second question, Bruno, on Iranian implications. We -- in terms of our exposure, obviously, natural gas has been an area of concern. We are significantly hedged this year. So we haven't seen a significant impact there. We've seen some impact, as I said, now in fact, the greater interest gain from consumption because of the stability of operations during the first quarter as we recovered from the storm. Apart from that, I think potentially most impact on logistics. We do have more freight container logistics, particularly to Asia. And when I say Asia, also in the Pacific, so China, India and a few other places. And those returns, obviously, larger or longer routes does have an impact on overall cost. So we'll closely follow that. Hopefully, the geopolitical situation will stabilize in the next few months, so everyone expects. But nevertheless, will be tracking that very closely. But those will be outside to potential impact that you may see. Now on the other hand, as you know, historically, pulp prices have benefited from geopolitical disruption. And we've seen that in terms of some of the demand on a few of our customers. They tend to we gave over specialty patch some of their supply chain risk, and that's been a little bit the case although not to the level that we've seen a few years ago. But we're not overly concerned in terms of any future significant destocking. We're keeping our own pulp inventories relatively low. And when I say relatively low, below what we would normally carry as a precautionary measure. We ensure also that we continue on the 1 hand to serve customers, but beyond that, that we manage our working capital carefully. On the cash costs, regarding your third question, the indication we gave for 2026 was in the range of middle single digits for the year on variable costs. That is still the case despite the fact that we have some cost pressures in the first quarter because of the storms. But I would say that's still our common objective. We look at the remaining of the year, we believe that's still achievable. There are some uncertainties, in particular on the fiber costs. So that could be one unknown that we'll have to track closely as well as on energy. The demand level seems to be relatively strong, and we hope some of that we also compensate overall that we see in our solution of fixed costs. Regarding CapEx, just before the regarding CapEx, we're still pointing towards the range of EUR 160 million. So that's in line with the special call and regarding net debt, depending on how the remaining of the year goes, obviously, with the first quarter that we saw somewhat of a increase in our overall net debt, we expect for the remaining of the year seems to be a bit more balanced. But nevertheless, we would still likely see a slight increase in net debt versus the end of 2025. I hope I covered all your questions.

[Operator Instructions] The next question comes from Antonio Seladas from AS Independent Research.

First one is related with -- if you -- I think that you mentioned a rough estimate for current costs on the first quarter, but I was not able to work. So if you can confirm the figure. The second question is related with your COGS pressure or performance over the first quarter. I think that there was -- well, basically COGS increased by around EUR 12 million sequentially from the fourth quarter to the first quarter. Meanwhile, your tons sold were more or less the same, so I think there's some pressure here on COGS, if you could provide some color on it? And last question is on revenue side. On the other business, which is bulk biomass, figures were also on the weak side. I don't know if there's any particular reason to explain it, seasonality, the storms or any other reason.

I'm sorry. Can I ask you to repeat your first question, didn't seem to be clear?

I think that -- well, I think that you mentioned as estimate for no current costs on the first quarter related to storms and so on, but I didn't here the figure. So if you could clarify, if I understood well.

Yes. Okay. Thank you, thank you. So I'll ask as well Miguel to comment a little bit on the cost side, but regarding the figures in terms of the impact, from what we see and again, all on site, I mentioned logistics operational stability, obviously, the difficulties we have with sourcing fiber because of not only availability but also we have to go to more locations. And some of that instability obviously remained and had an impact in terms of our overall production levels, plus we have , which is a different topic where we have off program remain operate. But purely related to the storms, we estimate something closer to about EUR 10 million.

You mentioned EUR 10 million.

I'm sorry.

You mentioned EUR 10 million, yes?

Closer to EUR 10 million overall.

Closer to EUR 10 million, sorry.

And let me ask Miguel perhaps comment on your other question.

Yes, if I correctly understood, I think it's related to the increase of costs from the previous quarter to this quarter. And what happened in the fourth quarter is that we have some nonrecurring positive effects. Well, not exactly nonrecurrence, they usually happen on every fourth quarter of the year, and that has a positive impact of on the cost of that quarter, which are not in this first quarter. This is the only significant effect that I remember.

Okay. On the biomass, maybe you can provide also some information.

So on the -- we are providers of biomass products to reinvolve as well. We have Bioproducts. Our Bioproducts business is very much related to also production levels in particular in Caima with the. But in essence, it's basically due to seasonality and some -- related to some of the revenues associated with our, as I said, tertiary biomass business.

There are no further questions from the conference call. We'll start now with the written questions. Our first question comes from Gere Meneva. Of the one-off effects during the quarter, what is the impact directly related with Kristin storm impact?

This was already replied. So first question was the reply -- answer to this and just now, already asked.

Okay. Thank you very much. There are no further questions. So we'll now hand it over the session to Mr. Jose Soares de Pina, Altri's CEO.

Well, thank you very much again for joining the call. As we've stated, we're seeing a positive development in the current near-term scenario on the business. We're now operating under normalized conditions. So we're looking forward to the rest of the year. And obviously, a positive evolution as well in terms of the industry. So thank you so much for joining, and have a good day.

This concludes today's event. We thank you all for your presence. Ladies and gentlemen, you may now disconnect your lines.