Billerud AB (publ) (BILL) Earnings Call Transcript & Summary

It is my pleasure to welcome you all to the Billerud Capital Market Day, this Monday afternoon. And a warm welcome to the crowd here in Stockholm. Great to see the good turnout. And obviously, welcome as well to the audience who are joining us online. A lot of things have changed in Billerud and around Billerud since we had our CMD last time in November '21. And in many ways, you can say that we are a very different company now than we were back then. I've had this day in my mind for over a year. And we spent a lot of time within the management team and in good collaboration with the Board to come up with a plan that we think is both solid and aspirational. And I cannot wait to get the chance to tell you more about it together with some of my esteemed colleagues here from the management team. You see the theme of the day on the screen. And those two words Evolve and Strengthened, we will come back to you over the next hours. And in my view, they represent in a good crisp manner, what we really have in front of us and the task that needs to be done. We have a full agenda over the next 3 hours, and I will soon kick it off, laying the foundation and talking about Our Way Forward, before we will hand it over to each of the region. And Doug and Brian will talk about our exciting plan of North America before we will have a break and reconvene at 2:15. Diving in then to Region Europe, which due to some leadership changes, will be hosted by myself and Gert. Ulrika will then take it over and talking about our future-looking plans in terms of sustainability before Andrei will round it up with a section on the financial targets and capital allocation. We certainly have a plan to arrange a proper Q&A before latest 4:00 p.m. that's the time for roundup, and my special plea to the audience here in Stockholm is that I hope a vast majority of you do have the chance to stay on for a bit of mingling and there will be refreshments served upstairs in the lobby. But listen, let's get going, and I do want to take a good part of this section to talk about our Way Forward. But before we do that, I want to talk a little bit about what are we most proud about in Billerud, and in many ways, what we really represent, because this is Billerud, the industry we're in and in many ways, what we're all about, a leader in high-performance paper and packaging materials. And every day, millions of people use material from Billerud across a wide range of categories and applications, enabled by our strong industry know-how and manufacturing expertise. That is core DNA of Billerud. And we do have a firm commitment and belief towards a future where materials are lighter, stronger, durable and more sustainable. And that is considered the norm and not some kind of one-off exception. We have an impressive reach, and we serve customers and consumers in more than 100 countries in -- across all continents, making us a truly global player. And in a massive paper and packaging and board universe, we choose to operate in roughly 20% of that, focusing on primary fiber segments, where we can match good market opportunities with our strong capabilities and know-how. And with one exception, all of our categories or the categories we have exposure to are supported by market growth and enabled through megatrends. Billerud changed 1st of April 2022. And it's my firm belief it changed Billerud for the better. Not only did we add 1/3 of incremental revenue and a profitable business in North America, we also got introduced to two highly competitive mills in the Upper Michigan and exposure to new paper and packaging categories. And probably more importantly, we welcome close to 2,000 new colleagues on the other side of the Atlantic. And honestly, I don't think we could have dreamt about the integration would have been so seamless as it has turned out to be. And it's never been us versus them. And I think we were surprised on both sides, how much of the same beliefs, how much of the same values we shared across the region. Now the inclusion of the North American region. That has enabled Billerud to have an even more diversified and even more balanced portfolio. And you can look at this from different lenses, either from a geographical point of view or from a product or category angle or if you look at this from a customer and channel dimension. This give us more legs to stand on and confidence going forward. Now over to one of my absolute favorite picture. And I think the heading here in such a good manner represent what I find most impressive about Billerud, and you know what, what I'm also most proud about in terms of representing the company. The strong positions that we built up over decades across several markets and categories. And we are in our sweet spot. When we can work with customers and brand owners to find solutions that require lighter, stronger and more sustainable material. That's when we and Billerud really shine. And it is not that I just stand here saying this as empty words. And we asked our customers early this year, at least a very big subsegment of our customer base. And the first question you asked them were the following: what are the first things or first attributes that come to mind when you hear the name Billerud. Here are some of the answers coming back. And I think you'll agree with me that is a pretty clear theme amongst the answers and quality and superior quality is such a wonderful platform to stand on. And we take that with us in Billerud for a very strong future. It is so that this is enabled through some of the industry expertise and manufacturing capabilities we build up. But it is as well empowered by our strong asset base. And what you're looking at here, if you start with the chart to the left is a map of our assets across two dimensions, looking first on the size of the assets on the y-axis and across the x-axis looking at the age in terms of, well, technical age. And with few exceptions, we have an asset base that are in line or more modern than the industry average. On the right-hand side of this table, we dive into our pulp mills. And as a company, we are fully supplied with our own pulp. And in many ways, the heart of any pulp and paper mill and certainly a key enabler for good pulp production is the solid recovery boiler. And it is so that we have solid recovery boilers of different age, but most of them have been subject to many renovation and overhauls during the years. It is also so that one of the boilers we have in Gävle is getting towards the end of life and will need to be replaced. But our latest estimate there is that is for 2030. So still some years ahead of us. All the other boilers will be just fine for at least 15, 20 more years before we need to do anything of significance. I want to move into a different section, and that is some of the key deliverables. What are some of the things that we've been most proud about within Billerud in terms of delivery. And there is one part here that is very important for me. And given that we operate in an industry which is quite volatile and the industry is cyclical. That means that the absolute performance will fluctuate. But if you ask yourself then, okay, how is the relative performance in Billerud? Meaning when we compare ourselves to a relevant peer group, how do we then stack up? What you're looking at here is over a period of 5 years. And on this pink, purple stacked line represent what we think is a good relevant peer group within our industry, and you have the green line with the Billerud performance, in this case, measured through EBITDA performance. And very encouragingly, over the last 5 years, we've been able to heavily reduce, and in many ways, eliminate this gap versus the peer group. And we are in our best position now that we've been for more than 5 years. And it doesn't stop here. I can tell you, and I'm certain also looking forward where we take the next big milestone to cross this line. Now as always, when you wanted to get into what's driving, what you see on the screen, there are several parts. But I want to highlight some of the things that have been very key for us in Billerud. And I want to start with this one. The ramp-up of our board flag machine, the KM7 in Billerud. Not only have we been successful of ramping up the volume over the years, but more important, and I want to stress this, more importantly, have we heavily been able to increase our share of the higher value, more sophisticated coated materials. And in fact, for most of these years, we've been delivering better volume and mix versus what we had in the original business case. Now there is more potential to come from KM7 and with an expected market recovery, we will get KM7 towards and to the design capacity we know it can produce. Another massive success we're proud about in Billerud last years is our efficiency enhancement program. And we put a pretty ambitious target for ourself in the beginning of 2023. And at that time, we said we hope that, that program would come to completion by end of 2025. And as you can see, we're way ahead of that timetable. In fact, in the very near future, we expect to reach this milestone of program completion. I've been positively surprised and energized to see how much drive, how much passion we've seen throughout several teams and very important stakeholders in this company. And we take very important learnings from this program into the next phase that I will talk a little bit more when we come to Region Europe. Expansion into North America. I already mentioned some words on this. But what the tremendous success that has been in terms of the profitability and the cash generation. And what you're looking at here is, first, you can say the gross cash generation measured in operating cash flow before we adjust for some investment we've done back into the region, landing on a net cash generation number. And 60% of the acquisition price have we been able to generate in 10 quarters. And I don't think I put out my neck too much when I say that we're not going to find too many examples like this when you look in our industry over the last 20, 30 years. Last but not least, I saw the recovery boiler in Frovi, put into operation a bit more than a year ago. And I can say a lot of eyes were on Billerud going into this project. And a question along the lines that, hey, with some of your challenges on the KM7 build, are you, Billerud, able to do a complicated engineering program in style? And the answer has to be resounding yes. It has been completed. It's done on time, on spec, stand on budget and also the work has been done safely. Given that a lot of this work was actually done during a COVID context, I think the team did a phenomenal job to maneuver through this and to get it done in a good manner. Having said all of this, there is no doubt that our industry, we are seeing some changing conditions, and you've probably seen some change condition already for some time. And this is in particular true for the European side of it. And February 2022, marks in that regard very much a milestone with Russia's invasion of Ukraine completely changed the dynamic in the Nordic and European pulpwood balance with a large chunk of import flowing into the region being basically cut out overnight. Coupling this with some new capacity coming online in the region, putting even more strain and pressure already on a tight pulpwood balance. There are new EU legislation coming our ways, and not only will that put more consideration in terms of harvesting, but it will also start to challenge even further producers and converters in topics like recyclability, reusability and traceability. And we have also seen within the industry, a bit of an industry consolidation wave over the last 12, 18 months, most notably from some bigger players in the U.S. and also in Continental Europe. That has put the European pulp and paper under some pressure. And what you're looking at here is for a pretty large subsegment or a peer group, the average profitability over time, again, in this case, measured as EBITDA percentage. And one of the things that is very noticeable here is that the fluctuations for a big chunk of that chart, especially in the beginning, was fluctuating in a relatively narrow band. In this case, what we have labeled as normalized level or normal level. This changed during COVID, but it also meant that the industry has been below this band for quite a bit of time. It has also changed in our view a bit on how the industry are looking now at investments in the region and going from a long period of announcing growth plans and expansions to a period of canceling those plans or delaying them or, in some cases, also scaling them down. Followed by relatively recent, much clear focus on internal efficiency and just in general, internal cost competitiveness. Now we are convinced that this graph will come back into the corridor based on the simple fact that in our capital-intensive industry, that is the profitability you need to get your competitive return on your capital employed. Now what will it take to get into the range? As always, it will probably be a long list. But for us, some of the clear big ones that we do expect to see reduced capacity in the region. Secondly, we also would expect that with falling interest levels across several European markets, that should stimulate demand, give a bit more consumer confidence, that should also trigger a bit more demand on the volume. Thirdly, would we expect the industry to continue to focus on internal cost measures? Yes, we do. And lastly, and maybe that's more in the unlikely bucket, that if it would be so, the EU and Russia would reestablish the trading relations, of course, that will be a completely new milestone in terms of pulpwood availability for the region. Having said all of this, we remain very positive on the long-term view of fiber-based packaging on a global basis, and we think the potential is significant. Now, do we see this growth at right now? No, we don't. But long term, we remain positive just because of the simple fact that consumer preference will continue to drive this away from plastic and fossil-based packaging and coupling that with the fact that more and more brand owners are committing to the very serious own internal targets of sustainable journey, fiber-based packaging play a very important role in that regard. So with all of this in mind, what is then the Billerud's way forward? And to start that question in a good manner, you need something to guide you, and you need a proper purpose. And instead of me trying to explain this in a clunky manner, we've made a video that exemplified this in a good manner. So let's watch the video, please. [Presentation]

I know it says on my notes here, ask for an applause. The essence of the strategy for me is around choices, and daring to be choiceful is choices what we should do, but also choices what we shouldn't do. The first choice of Billerud is to put safety first. And we choose to be safe every day. And not only do we owe that to our employees, their loved ones and family. But you know what, a safe company is also a good performing company. And safety and stable production, very often go hand in hand. Our purpose to guide us, you just seen it, we make high-performance packaging materials for a lower carbon society. That is the direction we're going. And we have two values that we can lean on and help us through day-to-day activities. We care for each other, representing the worthiness of Billerud, and in many case, what new colleagues constantly say when they join Billerud that they never seen this before or felt in the same matter in the previous work. And very consciously, we do what we say. A clear choice around accountability, executional certainty and deliver on our promises. In some ways and forms, this is the frame or the essence of Billerud strategy. And I would expect them to stay like this for some time. On top of this, we clamped down on four selected priorities in North America. We are committed to graphic and specialty paper. But the matter of fact is graphic paper is in secular decline, and we need more. And hence, we are looking to evolve our portfolio towards packaging material and paperboard. The [transport region] in Europe is different. The operating environment in Europe is different. And our role in Europe is to strengthen the performance through the existing asset base. We make a clear choice to move towards a stronger performance culture. But a stronger performance culture or changing a company culture is just not something you can decide on. It's not something I can just club through. And in that regard, there is a sentence that goes along the lines of the culture we have in the company, that's the accumulation of all the wanted behaviors that you celebrate, minus the unwanted behaviors that you tolerate. For me, that's a powerful sentence, and I think it's well said. And that responsibility sits right at the top. We want to take the next level in terms of sustainability and our next theme will be around how we can embed sustainability in everything we do. We come with some new and updated targets with a stronger focus on profitability and asset efficiency. Return on capital employed is back as our northern financial star while we revise our profitability target in line with changed or changing conditions in Europe. Our debt and policy -- debt and dividend policy remain unchanged while for long-term injury frequency rates, so that will be a measure for safety. We are aiming to be below 1.5 per million working hours, and that will take us towards best inside the industry. We have submitted new science-based target to also include our region, North America, and we have a firm commitment to reduce 42% in absolute CO2 when we come to the year 2030. Now this is the Billerud you can expect going forward, a higher or stronger predictability of our strategic choices. We are today and we will continue to be a leader in high-performance paper and packaging material. We've always been known for our strong performance within sustainability, and we certainly look forward to be one of the absolute leaders in the industry in exactly this field. We take a stronger focus on value creation and not least will this be visible in terms of our investment appetite over the coming years. And we do make a clear choice to put profitability over growth or sales growth, value over volume. And if it is deemed beneficial for the company, we are not afraid to adapt or take out capacity to run at higher efficiency. And in terms of our strategic CapEx profile going forward, we will label this as modest, where the vast majority of that will be allocated toward North America. So with that one that sums up my part. And I think the next section, I know there's a lot of interest in this. And I'm super excited to let the guys now finally have the chance to talk about it and present our plans. So with that, I would just like to welcome Doug on stage. Thank you.

Thank you, Ivar. Hello, everybody. My name is Doug Schwartz. I'm new to Billerud, but I'm not new to the industry, having joined the paper industry back in 1987 and in fact, was part of as a sales rep, the startup of Quinnesec, one of the two assets now that I find myself responsible for. So anyway, enough about me. Let's move forward and talk about Billerud strategy in North America. But before we get to that point, what I'd like to do is sort of level set everybody on what do we do in North America? What are our assets? Where are they located? And does that geography present any unique opportunity? So if we look at it, we have two primary mills that produce over 1 million tonnes of paper. They also produce a couple of hundred thousand tonnes of pulp. And our neighbor to our west, just a little bit in Wisconsin, we have a converting facility that can cut up 320,000 tonnes of sheets. So a couple of things to point out. Historically, we have made graphic papers here serving the printing industry that's comprised roughly 70% of what we've produced over time. And then about another major component has been our speciality papers, serving the label and label face stock market. Those remain very important to us. And of course, we underpin all that with our pulp production. Something very important to note, though, the assets, the four paper machines that reside inside the two paper mills are all first or second quartile machines on a delivered cash cost basis down to Chicago, which is our closest and largest commercial marketplace. You can all see this area on the map highlighted in green. We call this the Midwest or the Upper Midwest. And it has a special value and purpose and advantage that it presents for us. So let me introduce that a little bit. Not only does it house our assets, but it also is home to currently 70% of our customer base. And more importantly, looking forward, as we talk about our path as we evolve into packaging, it is home to 145 densely concentrated target-rich prospects. Our ability to serve in this market is an advantage. We have low logistics costs to serve in this region. Not only that, we also have quick service turnaround times, which enable us to help our customers reduce working capital and such. And one other very, very important point about this region, unlike that, that we all experience here in the Nordics, this particular area of the country happens to have abundant access to low-cost fiber. Not only do we have enough hardwood and softwood available. But should we continue to grow, which we plan to do, there is additional fiber, surplus fiber available, which should not have an impact on our overall cost. So now you've learned a little bit about who we are, where we play. What does that all mean? Well, as Ivar has referred to, we absolutely remain committed to the graphic and specialty papers marketplaces. They are foundation. The fact of the matter is, though, we're facing secular decline in the graphic market, which is the largest market we serve. We simply cannot fill our equipment only pursuing a graphic papers strategy. And therefore, we've reached the conclusion that we must evolve. The question then is where? So we looked at our capabilities. We looked at the market opportunities. We then kind of got on the idea that packaging seems like a pretty good space to go. And thankfully, we had some colleagues sitting over in Europe that happened to be pretty good at this space. So we collaborated with them. And from a technical standpoint, they gave us a huge head start and helped us really understand and figure out what we needed to advance these products and commercialize them effectively. So we have decided to evolve into the packaging space. And in doing so, we will have the opportunity to optimize our capacity utilization. We will also absolutely strengthen our profitability, and in doing so, we should see our returns over the business cycle to be north of 18% EBITDA. So this here represents a graphical depiction of our product mix. And as you can see, it is underpinned by our pulp production. But what we've also modeled here in the graphic -- in the gray, in the graphic paper space, is that secular decline. And you can see that if we choose to do nothing, we find ourselves in a very challenging position. However, this strategy to go after the paperboard market is real. We have the capability to do it. We have the assets to go after it. And fortunately, we have the customer base that seems to be quite interested in what we have to say. So to talk a little bit more about that, I'm going to introduce my colleague Brian Boland, to come up to the stage. Thank you.

I appreciate that. Thank you, Doug. Good afternoon, everybody. I'm very glad to be here. My name is Brian Boland. I am the Deputy President and SVP of Marketing for Billerud North America. Not quite as long in the tooth as Doug, but I started my career 29 years ago, actually at our Escanaba mill. I've been with Billerud since February 2023. So what I would like to talk about before we talk about our evolution into packaging materials, I want to spend a little bit of time on our legacy businesses and just talk about those a little bit. Starting with coated freesheet. So really, what is it? For those of you that aren't familiar with the product, it is a graphic grade, and it's produced with at least 90% of its furnished in kraft fiber. Now that's important because that in part is a property that we call permanent. It's an archival property that allows that paper to maintain its whiteness and its brightness over time. So on top of that, I think if you compare -- so a great contrast is if you had a newsprint paper, like you take a newspaper, that's full of mechanical fiber. And if you set it out on a window sill and come back a day or two later, it's yellow. That does not happen with coated freesheet. And then on top of that, it's coated. So we use a clay coating that smooths the sheet. It allows us to impart a level of glass, but probably most importantly, it allows that ink to stay on top of the sheet. So instead of diving into the fibers, it holds it out. So image reproduction is very sharp, it's very vibrant. So high-quality print work, coated freesheet is material to use. And as you can see, it's used in things like corporate collateral, direct mail, magazines, catalogs, that sort of thing. So moving on to the market. I think the graph on the left here says the story. This is demand in North America. And as you can see it's going down. So we did see a bit of a rebound in 2024 from the destocking events that happened in '23. So in 2024, we've reached about 2 million tonnes of demand. But over the years out to 2030, this is going to decline, and we expect it to hit about 1.2 million tonnes. An interesting attribute that comprises demand, obviously, it's satisfied by domestic shipments from producers like ourselves, but also from imported volumes, and we'll talk about more of that in a moment. The right side of the chart shows the domestic production. So you'll note that there's three producers, but two of them, one of them being us. We have 90% of that operating capacity. So it's a pretty well-structured market. Beyond that, just a couple of things. 70% of our coated freesheet is shipped to that upper Midwest region that Doug is talking about. So that certainly provides some cost advantages for us. But from a customer perspective, there's a lot of service advantages. It's quick turnaround, security of supply, and they don't need to hold as much inventory for a shorter supply chain. And we will be a leader in this space. We've got first quartile assets. Arguably, our Q41 machine is one of the best in the world. We've got a very robust product offering for our customers. We offer rolls, sheets, light basis weights, heavy basis weights. And again, we have a very robust supply chain that efficiently delivers our product to the market. On to specialty label. So the first thing to talk about with specialty label is that this product category fits really, really well with our overall purpose. This is packaging material. And for us, specialty label is really mostly pressure-sensitive label. So I'm sure you've all seen unlike the name tags you have on today, we should have used stickers. But you have a face stock, you have an adhesive layer and then there's a release liner underneath that. We produce both the face stock and the release liner base. There's another subsegment of specialty label called glue-applied label, and it's exactly that. Think of like a soup can where it's just the printed face stock. It gets a hot glue or a cold glue applied and then adhered to the package. That's -- we produce the face stock for that. And then lastly, thermal label. So a great example is a receipt out of a gas pump or perhaps a shipping label on corrugated box. So we produce a base stock. We ship it to our customers, they apply a heat reactive coating. So the heat creates an image, and that's the label. So we're in those three areas primarily. Same sort of format is the free sheet, different data. We like the demand trajectory in this space a lot better than we like in coated free. This is the total of the subsegment. So it's about 640,000 tonnes in 2024, growing to just north of 700,000 in 2030. So it's a growing space for us. On the producer side -- the capacity side, there are more producers. And it's interesting because, one, we are the largest, which is great. So we're 34% of the operating capacity in this space. But what's quite interesting is the second largest supplier to this space is, in fact, an importer. So we'll talk about this in a second, but a little more on the supply chain. But our asset base, again, we have our E3 paper machine in Escanaba, that is first quartile. It's a leader in this space. We're dedicated to the market, and it's a good place for us to be. So before we get into packaging, I just want to take one moment to talk about the notion of regionalization. And I'm sure this is on all of your minds, it's on our minds as well. But regionalization, we believe will absolutely grow in importance in the U.S. So yes, we have a new presidential administration taking office in January. And yes, this administration has certainly mentioned tariffs once or twice, maybe, as a tool to stimulate domestic production, right, to improve the economy. Now what that ends up being? We don't know. Is it possible? Certainly, it's possible. We just need to be in the best position to respond. But beyond that, if you think about an import supply chain to the U.S., you'll notice I've got a bunch of different snapshots. Just grab these from 2024 alone. It's fair to say that the import supply chain is volatile, whether it's weather events that impact the Panama Canal, we had a bridge collapse for [ Gunasakes ] in Baltimore. I mean there's a lot of things that can potentially upset that supply chain. So what? Well, in our markets, in our core CFS market and in our specialty label, as I mentioned, imports comprise of a reasonable amount of demand. It's over 30% of the demand satisfaction for coated free. It's a little less than 30% in specialty label. And when I start talking about packaging, there's a reasonable import presence there as well. And we are in a very, very good position with domestic manufacturing, where these types of issues aren't going to bother us. We're not going to have to worry about tariffs. We're not going to have to worry about collapsed bridges. We have a very robust supply chain that gets market -- gets products to the market very efficiently. And just to give you a quick sense of what that really means, as an industry, I'll just use coated free as an example. If you look at third-party forecasters for next year, they say we're going to have, call it, 84%, 85% operating rates in that space. And we're going to have about 600,000 tonnes of imports. If as an industry, we displaced just 1/4 of that, 150,000 tonnes of displacement, that's worth 10 points of operating rate. So it goes from 85% to 95%. So again, with our supply chain, I think we're in a very good position to capitalize on that if need be. Now let's talk about paperboard. So Doug said it, but joining the Billerud family back in 2022, we've inherited a lot of expertise around technical capability and commercial capability as it relates to packaging. So that's going to help us commercialize in this space. So over the next couple of slides, I'm just going to talk in a little more detail about where we're going here. Starting with white linerboard. So white liners just in case you're not familiar, they are either uncoated or coated. You can have a board that's got a solid white surface and a brown back or it can be a fully bleached back. But what's important is these are used in corrugated applications. So think a box, right? You've got linerboard on the top, fluting the middle, a linerboard on the inside. This would be the outside layer of a box. That's white. So it can be something like a pizza box or it can be retail-ready packaging that you'll find on the shelf in a Costco. That's really what this is. In North America, it's a pretty good -- a good size market. It's 1.5 million tonnes. It's grown a couple of percent of year. We expect it to be 1.7 million tonnes by 2030. Now it's really a very interesting market for a number of reasons. We're really excited about this. There's one producer in North America that owns 75% of that capacity. And true, we've got about 300,000 tonnes of imports that come in, but the supply options are pretty limited. No new capacity announcements. So really if you are an independent converter, you don't have a lot of choices. So quick distinction, integrated converter versus independent converter. An integrated converter is owned by a company that has mills and converting assets. They have a great interest to take their paper production and fill their assets, whatever is left over gets sent to the market. So if you're an independent converter that doesn't own mills, you're relying on that either import supply that has that shaky supply chain we talked about or an inconsistent supply from an integrated converter -- I'm sorry, an integrated mill. But on top of that, an integrated guy, you're competing against them on finished cartons. So you don't have a whole lot of incentive to buy from them. So we will be an independent producer that can fill that market space very, very nicely. We expect -- one other quick point, too. We are making this stuff today in Quinnesec. We've got -- we've had really, really good customer interest. We've got a number of trials going today. So we're not waiting for capital investment. We have a very robust supply chain, and we are really excited about just the response that we've been getting in this space. So we intend to grow to 120,000 tonnes, which is roughly 7% share of the market by 2030. Let's talk about white cartonboard. So white cartonboards are SBS, so solid bleached sulfate. To a somewhat lesser extent, folding boxboard, FBB, and food service board. So what is that? Let's start with SBS and folding boxboard. That's really used for folding carton applications. So SBS is a single-layer sheet, single ply. It's got coating on the top and a very light coating on the back. FBB is a multiply sheet, same thing, coating on the top, light coating at the back. But they're used for, again, folding carton. So you think about a perfume box or pharmaceutical boxes. You see them all over the place, but folding carton boxes, that's what that space is for. And then food service board is exactly that. It's plate stock, cup stock, trays. So in total, this is an addressable market in the U.S. of 3.6 million tonnes, growing to 4.2 million tonnes by 2030, so it's growing. Now what's a little interesting here. True, it's consolidated up. We've got three producers that own about 75% of the capacity. Most of that capacity resides in the U.S. South. Imports are about 0.5 million tonnes, so a little bit more than we see in white liners. But I think we're all pretty aware there is decent capacity coming online. There's a machine conversion happening from a competitor in North America. We've seen new capacity coming online here in Europe and also in Asia. So that new capacity will hold operating rates down some. But I can tell you that from our point of view. Again, this is kind of our wheelhouse in that upper Midwest region, we're going to take our first and second quartile cost assets. We're going to take our outstanding print surface. And we're going to market to independent converters. So the independent market is actually reasonably big here. It's about 36% of the capacity in folding carton, is independent, and almost 60% of the capacity in foodservice is independent. So with those sorts of numbers, we're going to grow this business to 100,000 tonnes, which is about 2% market share by 2030. And last but not least, let's talk about kraftliner. This is probably what people are most familiar with. Kraftliner, again, corrugated, linerboard is on the top and then the inside of the boxes is just the brown paper that's on the outside and the inside. So this is one of the largest product categories in North America. It's 13 million tonnes, also growing. It will be about 16 million metric tonnes in 2030. This is likely the most consolidated market. So the top four producers own 90% of the board capacity and 80% of the converted capacity. And I dare to say that consolidation trends are alive and well. You're all probably quite aware of two very, very big deals that happen in this space. That's really consolidated up the market even further. But you know what, we like that, and we like it for a number of reasons. One, there are no new capacity announcements in this space. So we expect operating rates here to remain relatively tight. The competitor mills again in the U.S. South. So when we think about what market do we go chase after, that upper Midwest gives us a unique service advantage. And then last but not least, independent converters. 20% of 13 million, right, I mean it's a very big market. So from our point of view, not being tied to converting capacity is a big deal, and we're going to use that to our advantage to grow 100,000 tonnes of business, which is less than 1% share by 2030. So this is my last slide. What you see here is just a little deeper dive on our customer base. So all these little dots you see on here, all the different converters, whether it's a food service converter, whether it's a box plant. But you can see a couple of things. One, there's a lot of them. But two, we have the green region highlighted, again that mirrors what Doug showed a little bit ago. And that's our Midwest region. So our Midwest region is customer-heavy. It's prospect-heavy. We've got 145 prospective customers that chew up almost 7 million tonnes of board a year. And we will win here. And we're going to do it. I'm going to repeat myself, but we have a very competitive asset base. We have first and second quartile assets in Escanaba and Quinnesec that will be very, very competitive into that Chicago market. And you can see there's an awful lot of potential business there. And if you're a customer that service proximity is a big deal. Not only do we have surety of supply, where you may not get that from an integrated converter -- or I'm sorry, integrated mill or certainly an import, but we also have a quick time to market. We have great on-time delivery. And with short lead times, if you're a customer, you don't need to buy a bunch of inventory to insulate yourself against those potential upsets. Your working capital is lower. And not only that, in our machine platform, we have redundant capacity. So as an example, we can make SBS board on Q41 and E1. So we will have redundant capacity in our own system that just provides us another layer of security for those customers. Our products are really good. We've been making a great printing surface for 100 years in our business, and I'm not exaggerating, 100 years, and we're going to take that expertise and that know-how, and we're going to apply that, particularly to the white liner and to the white cartonboards. So if you're a brand owner and you need your product to stand out on the shelf, we're going to give you the surface to do that. And in the spirit of embedding sustainability in everything we do by being close to market, we're going to have a better sustainability performance. We're going to have a better carbon footprint, particularly on Scope 3. And then last but not least, I said this too, we are a great option for independent converters. You don't have to buy from your competition, you can buy from us. So thank you. I'm going to turn it back over to Doug, and he's going to take us home.

Thank you, Brian.

Thanks, Doug.

Hello again, everybody. We titled this slide, we're making a modest investment for growth. The modest is in context to a project that we had thought we might do called transformation, where we're going to put a whole new machine in. And obviously, we decided not to do that. So it's modest in that context. But I can assure you, it's not modest to us in our ability to execute our plans. It's not modest to our employees, to our employees' families, to the communities where we work, live and play or, in this case, to the entire region of the Upper Peninsula in Michigan. This is a big deal. It is a significant -- even if it's modest, it's a significant impactful investment. So what is it we're planning to do? We are planning to upgrade the woodyard in a meaningful and significant way. We are going to -- in order to fully realize the ability to play in all the markets that Brian just spoke of, we have the ability to tweak our equipment here to be able to expand the capability. So we're going to increase the ability to make heavier basis weight papers. We're going to -- the markets that we're going to be playing in tend to use larger rolls with larger core sizes. So we need to upgrade our roll handling capability to do that. We will also, in order to pursue the containerboard market that Brian alluded to, we will flow brown pulp to our E4 paper machine in Escanaba to give us the capability to produce containerboard there. That total investment package is going to cost us about SEK 1.2 billion. We also have plans to spend about SEK 200 million in Quinnesec again, to increase the ability to make heavier basis weight papers by doing some wet end adjustments and also adjust some sheet handling equipment. We're excited about this, and it's going to have a big impact in the marketplace. So just to bring things home. We have a highly competitive asset base that we have not only an opportunity, but an obligation to make sure we fill and fully utilize. The good news is we have an abundant source of low-cost fiber available to us and for a relatively modest, yet impactful, capital investment, we can adjust our assets to fully pursue all of the needs of the paperboard marketplace while remaining fully committed to the graphic paper space. We've talked a lot about this Midwest advantage, and it can't be underlooked. When we look at the packaging market, most of the producers reside in the south. So as they try to play in the space that we want to carve out, they have longer shipping lanes, higher costs, longer supply chains to deal with. We believe this advantage, the opportunity, the low cost, the proximity of our customers all play significantly to our advantage. They also play hand in hand with our sustainable leadership maneuvers. And we are also -- some of our investments are going to go to help us in our sustainability front. A big piece of what you'll hear about from Ulrika later is the play in North America. And lastly, because we have this responsibility to fill this equipment, we will evolve into the paperboard space. We are excited about the paperboard space. And more importantly, than us being excited, our customers and prospective customers are excited. I have personally been involved with at least a dozen conversations with different prospective customers, and they're clamoring for somebody else in this space for all of the reasons that Brian just spoke of. We cannot wait to get after this game plan. And these investments are just part of it. So anyway, thank you all for hearing us right now. We are going to take a break, a coffee break. We will reconvene at 2:15. So thank you all very much, and we'll be back at 2:15. [Break]

Welcome back, everyone. If I can just ask everyone to find their seats, please. Good. I hope everyone had a good break, got some coffee in, and maybe even the opportunity to establish some new relations. Here diving into the region, Europe, where the world strengthen will be of key importance. But before we do that, some facts just of the region. We have six production units across Nordic, five in Sweden, one in Finland with the accumulated capacity to produce north of 3 million tonnes. Three board mills, three paper mills, and as a total for the region fully integrated with our own pulp supply. We have a portfolio, which is skewed towards board products with liquid packaging board being the bigger brother followed by containerboard and cartonboard. And we have as well an exciting -- within the field of paper, exciting mix of brown and white sack and some kraft and specialty paper. And as I already talked a bit about in my section, there has been changing forces taking place in Europe, and it has also changed the operating environment with, in particular, pulpwood balance being changed post February '22, and coupling this with additional capacity coming online, again, putting more strain on an already relatively tight pulpwood market. And that means, for us, in Region Europe going forward, we have a clear objective to strengthen the performance through the existing asset base. And in that regard, we will talk about profitability and cash delivery. And for Europe, the task is to deliver above 15% EBITDA over and across a business cycle. We've made some clear portfolio choices in Europe, and we spell out five categories in particular, which we would label focused core, if you may. And for liquid packaging board, we have a strong position here today. We're the global leader on aseptic. And as many of you know, it's a consolidated market, both on the customer side, but as well on the supplier side. And Billerud has a reputation for sustainability, formability, solid and wide portfolio offer and flexibility in our supply chain. And our intent going forward is to maintain that strong position. I also said in my section that we are putting profitability over growth. But one exception we certainly do is the next one. And here, our intent is to accelerate growth. And we are a challenger today within cartonboard and coated liner. We have a good position within the segment premium or luxury goods. But our big opportunity in this space going forward is to take a chunk of the much more sizable food, frozen food and beverage segment. For the next three categories, you start to meet words as the drive, value and optimize. And in many ways, that represent that we are already quite close to operating at full capacity for those categories. And for our semi-chemical fluting, one of our absolutely crown jewels of our portfolio, we look to drive value in select applications. So what does that mean? Well, it means in particular applications where there's a big strain and focus on a longer supply chain and then go back [ mentally ] to the video, you saw some minutes ago, where vegetables or fruits are being transported across the Atlantic. That's a perfect example where our portfolio fits well. For MG paper or machine-glazed paper. Now this is a category which is fragmented and in general, high barriers to entry. And also here, our intent is to drive growth towards certain of the segments. In this case, in particular, towards medical and hygiene. And we also launched some very solid innovation recently in this space. Last but not least, sack paper are brown and white. And again, another one of our crown jewels, and we look to optimize further applications within the space of construction and food service. We have two other categories as well that we spell out, but they all are different. And the roll of uncoated liner and some of the kraft and specialty application will be to maximize the value for Billerud over a cycle. So what does that mean? It means that it tactically will use them as in and out offering of our portfolio pending on where we are. And it's an important tool to have with us as a complete toolkit. That are -- or that is our where-to-play choices in Europe. Now our portfolio offering in Europe. It represents also where we really thrive in Billerud, where there are high barriers to entry and we can couple that with our strong capabilities and expertise. And you see some selected examples here on the screen. And different versus what you heard as well from Doug and Brian in North America, all of our categories in Europe, they are supported by growth and positive momentum long term. We have flexibility between our mills and also between our machines. And this is a very important asset and value for a Region Europe. That means that we can shift our portfolio offering on a relatively short and quick manner in terms of where we are over market cycle. And first and foremost, do we have that good flexibility within our board system. But as well, we also have good opportunities to do the same within our paper mills. Now the task for Region Europe is to strengthen the performance. And in many ways, the relevant question then to ask is how are we going to do this? And these are our 4 selective and focused how to win choices for Region Europe. Secure cost or access to cost competitive fiber in Nordic, step change our mill efficiency, fuel the momentum from our efficiency enhancement program and be the preferred choice of our customers. And our intent now is to go through them one by one, and talk a little bit more about the content and our plans in them. And with that, I'd like to invite Gert on stage. He is already here and is eager to talk about how we will secure access to cost competitive fiber. Thank you.

Thank you, Ivar. Good afternoon. My name is Gert Larsson, currently heading the operations in Region Europe. I have a background in different type of industries in roles, management roles such as sourcing and supply chain, sales, operations, product management, et cetera. I spent the last 6 years in a peer company in paper and pulp here in the Nordics, and are now into my -- I think it's the beginning of the sixth month in this fantastic company, Billerud. And I will take you through the first two areas here, the cost competitive access to fiber and the operational efficiency. Starting with this one. This is our three focus areas in cost competitive access to fibers. We have the partnerships. We would like to grow with private forestry owners and the fiber optimization, both with efficiency and mix. But starting with the graph, you can see here on the X and Y axis that we have the cost and the accumulated quantity, the volume. And if we start to the left with the field purchasing of forest owners close to our mills, less transport, thereof lower cost. And then far to the right, we have the marginal wood, which is mainly coming down from the Baltics, could also come from Germany and Poland with a lot higher transport costs. And that -- with that said, higher cost. And what we would like to do, that is to push the volumes for -- as far as we can to the left. We are happy, very happy and proud to announce that we have signed a letter of intent with Sveaskog to deepen our cooperation. And our aim is to gradually increase our wood purchase across Sweden with Sveaskog. But into this cooperation, we have also these [indiscernible] Forest Holdings that we will work together. To grow with our private forest owners, we have reinforced our organization now in the last 2 years. So you can see here now that we have been growing from 12%, 13% up to 14%, 15% in the total share of purchased fiber. And our aim is to grow to 25% over time long term, with private forest owners such as [Sonja Strandberg] that you can see here to the right. With regard to fiber efficiency and the fiber mix, we are also working in three areas. We have developed and improved existing products. And here, we are working with to optimize the recipes that we have today in our products. That could be to increase the amount of CTMP, which has had a higher fiber yield, and we can use less fiber. To increase the flexibility in the fiber mix itself, that is to optimize the mill mix with the different wood species that we have here up in the Nordics to understand how we can utilize the availability and the best cost base, but also to include them in the fiber mix, the eucalyptus, if needed and where we can. We also work with the fiber losses, and we have done a benchmark in all our mills, and found the best practice, and we have now set targets in all our mills to reduce the fiber losses and with that use less fiber. Into number two here, step change, the mill operating efficiency. So what you have in front of you here now is what we define the mill efficiency, these five areas. And they are all connected together. So with that said, if we improve one, we will indirectly improve the others as well. And we have selected the production efficiency as the lever, the driver. And that's the overall equipment efficiency, the OEE. And how are we going to do that? I think we have aimed to do that many times, but now we do it differently. We have created our own Billerud production system, a new standard. And it's built on lean, world-class manufacturing and total productive maintenance. And if we take world-class manufacturing total productive maintenance, it is very machine-driven, equipment-driven, engineering, while lean is more people, ways of working, mindset and behavior, the culture and the leadership. And we have blended this together now to our own standard, the Billerud production system based on these four integrated dimensions, as you can see. And the big difference from the past is now that we are going to do this ourselves, with a lot more emphasis on mindset, behavior and leadership. And we have created our own central team with specialists as well, and they will act as our internal consultants. So now we are driving this for the first time by Billerud resources. And what have we done so far? We designed the production system in '23, started to roll it out this year. And next year, it will be implemented in all the mills. And our plan is to improve the OEE with 2 percentage points per year. And you can see that, that is already done now between '23 and '24, and that will remain. One percentage point is approx EUR 1 million -- SEK 1 million EBITDA. And with this said as well, because this will continue now year-by-year. We state that we have a hidden, I would say, machine in our system, board machine or paper machine. And how are we going to utilize that? And we try to grow with the capacity if we can find cost-efficient fiber or the alternative is to close down capacity and then remain with the same level as we are today with less fixed cost. So that is the plan going forward. We have only one big sizable investment plan, and that's the recovery boiler in Gävle. And we are currently working with a couple of different options to find the most cost-efficient option. And the plan is to take the decision here in 2027, and the current plan is to have the boiler up in production in 2030. So I think that was all from me. So thank you, and back to Ivar.

Thank you so much, Gert. I mentioned also in my part in the beginning how we've had very good progress on our first phase of the efficiency enhancement program. And we are entering now a different stage of that program. And instead of probably finding a lot of what we had, the low-hanging fruits, we will focus more on three big items going forward. And here they are. And if I start to the left and talking about pricing excellence, we're good on pricing today, but we have to be excellent. And why do I say that? Well, the cycle comes faster now, and we simply cannot afford just not to be at our best and being on our toes to make sure that we are not leaving any money on the table. A lot of this point is around strengthening our internal capabilities. And truly, when we say that you go after a value-based pricing for -- sorry, value-based pricing solution. What is that? And is that something we think we know what value you bring to the customer? Or is it really value added? And unless we have an even better way of finding exactly those targets and adjust [fats] we are not going to succeed. In that fast space of new information and changing conditions, we need to act with speed. And hence, we need those insights fast and we are already starting to experiment on how we can get some support on the back engine to equip our team in the best way possible. And with clarified governance, we are confident we will take the next step in terms of pricing excellence. The next bulk, that is representing more when we have several of our clever heads within Billerud putting their heads together and making a decision that is better for the company, but not necessarily for their function or for their mill. And the classical example here is between procurement and operation, where we could find solution to look at alternatives in terms of raw materials, looking in terms of chemicals. But it means very often in terms of piloting and testing and getting it into gear, a bit of a painful period, and it certainly drops in terms of efficiency rates. We've seen so much good potential and a big chunk of what has delivered the value for our first wave so far on efficiency enhancement program is coming exactly for this bucket. And we're convinced there's more potential, and that is what we're going to go and honing in on. Hey, last but not least, fixed cost optimization. We did announce a bit more than a year ago, a 6% global FTE reduction. And we're certainly on track on that. But we have to have the mindset to continuously look for, hey, what further opportunities do we have, internal benchmarks between the mills and between the regions and also in terms of external benchmarks. And in that regard, a big item is in this bucket sitting with maintenance and how it can even be better at preventive maintenance. And we've had a very good pilot case up in Carlsberg. We've also used that with some established partners, and that's given us a good results. We want to roll that out on a larger scale within the company. The last piece and it maybe goes without saying, but it doesn't really matter what we say in Billerud if we think we have the best on vessel, so we have customers embracing that and being a preferred choice. And we will continue to drive value for the customer and be their preferred choice to keep on delivering outstanding products, be the most sustainable choice and being known and recognized that you're easy to do business with. Innovation has always been a cornerstone for Billerud, and it will continue to be so. And we will focus our resources and R&D efforts across these three efforts. Superior packaging materials, and then we are into the space of strength, porosity, hygiene, how we can offer credible alternatives to fossil-based packaging solutions such as plastic and aluminum. And last but not least, how we can from existing solutions challenge that even further. It can be done better. It has to be done better. And lightweighting in this case is important, take out weight and also less material usage. And I just wanted to show you quickly this with three examples. And starting with this superior packaging material. So this is one of our brown sack proposition, one of our latest go-to-market plays where versus then the previous or standard solution industry, this enable faster filling time and a significant reduction of dust, very important key pillars for the converters. This is a real example where a customer comes to us and talk about what kind of solution they have on the flute box today, where we relatively fast can also demonstrate that, you know what, using the Billerud flute and applying our line of the pure performance around that, not only do you get material saving, you could also lower CO2 footprint, and the product waste because of our product quality is exceptional. The last example, I want to spend a bit more time on. And I will start with example to the left because this is a favorite story of mine. And the story here goes that one of our packaging engineers belonging to the application team. He went shopping himself, and shopping for some duvets and shopping for some, yes, blankets. And he was shopping that in a relatively well-known Swedish warehouse that I think many of you could maybe recognize to say it like this. And he was surprised negatively to see how dominant that plastic wrapping really was. And he single-handedly took on this challenge, contacted the brand owner, coming up with a pilot, sending samples over, getting some feedback on performance along the way, flying down to Poland to sit with the converter physically to overseeing the first trials to see that everything went well. And here we are now, a bit more than a year later that all the global, in this case, duvets and pillows of this customer, on a global basis, will be wrapped with Carlsberg kraft paper with our ConFlex heat seal that we have trademarked by the way. And I think that's such a wonderful story and a great example of what we want to do and also what we represent as Billerud. The example to the right is from the beverage industry. And this train has started to move, and it will continue to move faster. And how also in this case wrapping of six cans has been dominated by plastic wrap but you are now getting to the point where we have really solid solution within the fiber packaging space to come with a credible offer. In this case, it's the crown board kraft solution that we can offer from Frövi. Both of these cases, 50% less carbon footprint versus the original wrapping, I think that is phenomenal. Be the most sustainable choice. We are the best performer today within Region Europe in terms of carbon footprint. And funny enough, that is also what is causing us to lose and likely lose vast majority of our mission rights, some further years down the line. But we are not happy when we still have a certain CO2 per tonne that we emit. And we want to challenge us even further forward. And that is starting to be challenging in the regional levels as you do. But as an example, we are taking that challenge on, and we expect Gruvön as our first mill to be 100% fossil-free production over the next 12 months, and that is obviously a massive milestone for the company. Being recognized as easy to do business with from a customer-centric mindset. And the point on the left, you can see that, wow, isn't reliable, robust, efficient supply chain. It sounds like a ticket just to play in the category. And it's not some kind of like a hygiene factor. Well, maybe it is. I can also say that we've been able to test this over multiple times the last couple of years. It's been in COVID, it's been strikes in Finland, train strike in Germany, or disturbances around the Red Sea. And we passed all of these tests with flying colors and even get recognition and reward from the customer of our commitment and our flexibility to deliver the product on time and in full. In an increasingly complicated jungle, probably that word is used with some exaggeration. But there is a lot of things that is happening within the area of sustainability and regulation and coming from EU. We want to be recognized as more than just a supplier that we want to be an adviser and certainly something that has the relevant expertise to have relevant conversations. And the last piece to the right. When you talk about dedicated technical service and application team, I know it might sound fluffy, okay? It's not. And I will prove it to you because it happens all the time. We have certain teams, and they are approached from time to time from certain customers. And in this specific case, we are approached by a customer who has a problem with a product. And we're in the space of food and frozen food, and in particular, we're in the product of peas. So let's see what the problem is. [Presentation] No soup for you. Classical case, come to Billerud and say need your help. We take that challenge head on, experiment with different offering, try different pilots, and let's see what we came up with. [Presentation] That's performance folks. This is the pure exemplification of our purpose, high-performance packaging solution. It's right there. Now you might think we cheated and put some super glue on the joints or something. We did not. Because the core of this issue is to be tacked so what we call sudden impact is the fiber of the pulp mix we use to create a better fiber bonding. That's what gives the strength, that's given the performance and to even say cherry on the cake on this, our solution is actually thinner, meaning that it's lower grammage, less material used than the original case. Listen, to round up Region Europe, it is so that the operating environment has changed. And we have a clear role or we take a clear choice for Region Europe to strengthen the performance from the existing asset base, and the role of the region is to deliver above 15% EBITDA over and across a business cycle. We made clear category choices underpinned by attractive fundamentals and supported by megatrends. We have significant flexibility between our machines and between the mills to optimize and give us best possible maneuverability through the cycles. And we go forward, what we will at least label is a lower CapEx profile for Region Europe, over the coming years, first and foremost, focus on the base CapEx. And we made four clear priorities to improve the performance, secure access to cost competitive fiber, improve our mill efficiency, fuel the momentum of our efficiency enhancement program and be the preferred choice for our customers. That's all from us from Region Europe, and we're moving in now the deciding world of sustainability. And with that, I'd like to invite Ulrika on stage. Thank you.

So thank you very much, Ivar. Yes. My name is Ulrika Wedberg, and I am Executive Vice President, Sustainability and Public Affairs. And I have been with Billerud for 1.5 years. I'm going to talk a little bit more now in detail about sustainability and how we are going to continue to embed sustainability in everything we do. And my focus today will be environmental. But of course, sustainability is broader than that. And the social and governance aspect is just as important. And of course, it's always safety first. Talking now about sustainability. We have been working in Billerud with sustainability for many years and sustainable materials are at the core of our business. In 2018, we were the first company in our industry to set science-based targets. Our Region Europe is now 98% fossil-free, and the last percentage point came through with a new recovery boiler in Frövi. Looking at the raw materials of wood supply. That has been sustainable for years. In 1903, Sweden was the first country in the world to get a legislation on forestry because Sweden at that time was about to be deforested. Years of iron ore manufacturing of using wood for furniture houses had left Sweden deforest. So this legislation came into force demanding replanting after every harvesting. And that is why Swedish forestry has doubled in the last 100 years. The same legislation added a part on biodiversity in 1979, and we have been working with biodiversity since then. Very close for our suppliers, the big ones, driving very many activities themselves, the smaller private forest owner, relying very much on us in helping us how to source and how to manage the forest with adequate biodiverse activities. Such as leaving all deadwood and forests in the forest, and also leaving high stops and looking at special -- specific species that needs to be conserved. Also taking our products, we see a clear demand in Europe for product with a low carbon footprint. And in both regions, we see there is a movement going from plastic to paper. As Ivar already mentioned, the two products, the one which was developed in Carlsberg with all the covers and pillows and duvets being covered and wrapped in a paper alternative compared to plastic alternative. And also the beverage cartons that are now being using the crumpled kraft for the wrapping instead of a plastic alternative. So there's a clear demand, customer wants alternatives to plastic. And also in the U.S., we heard Brian talking about the growth in white cartonboard, and that will be driven by a substitution of plastic and consumer preferences. So there is a really good opportunity also for North America to leverage on the substantial platform that we already have in Europe when it comes to sustainability. Working with sustainability, especially in Europe, is also affected by many legislations. And they might be a challenge, but they can also pose an opportunity. If we take the packaging and packaging waste directives, the PPWR. And if we take our sack and kraft segment and also cartonboard, they already fulfill all the requirements from that legislation when it comes to collection and recycling. So for them, it's a huge opportunity to move into new applications. And take, for an example, single-use plastics, they would be forbidden by 2030 with some exemptions. Great opportunity to move in that direction. If you take the European deforestation regulation, that is a challenge. And it takes a lot of resources to put it into place. But that's exactly what we're doing now. We are developing a very sophisticated IT solution, which is also very user-friendly and will be a very important part of our custom offering. And if our North American region wants to move into Europe, they can actually utilize the same solution. So they had an advantage compared to their competitors because they don't have to start from 0. Looking at fiber availability and legislations affecting also fiber availability. We have the LULUCF, Land Use, Land-Use Chase and Forestry regulation. That requires more land to be set aside until 2030 because EU wants to reach your reduction targets. And it's true. If we set more land aside now, it will be a part of actually reaching our targets of 2030. But new facts from the Swedish forest energy show that for 2050, we will not, in Europe, reach our targets because trees when they're standing, they don't bind as much carbon as when they are growing. So we are putting these facts now and taking them ahead, and we are also giving them to science-based targets and now they're making a new path for the removal of reduction of carbon emissions from the forestry and we're taking it further to the EU as well. And when it comes to the Nature Restoration Law, we are working very close with our peers in Sweden and also with the government to find a good solution, which both can combine biodiversity and availability and continuous usage of forestry. Moving then a bit further on and talk about carbon reductions and science-based targets. And I said that we were the first company in our industry to set science-based targets in 2018. Now we have actually handed the new ones, which also covers our North American friends, and we have a reduction target of Scope 1 and 2 of 42% until 2030. And as already said here several times, our European region is already at a very good level, both when it comes to CO2 in relation to production, but also in absolute numbers. So where the biggest part will come is from North America. And we have made clear roadmaps, and we have also approved investments to reach those targets. And if North America, we look at energy efficiencies, we will improve our fiber handling system, and we will also start using all the rail tiles as an energy source. And in addition, if you look at the logistics, as already been said by Doug and Brian that we also close to our customers will also have a positive impact on the CO2 from transport. We will not leave Europe completely aside, and the fiber efficiency and the over operation efficiency that Gert talked about will also result in lower CO2. As he mentioned, all those five affect each other. But then also, as said by Ivar, Gruvön will be our first mill in next year to become fossil-free. So we are moving ahead at a very good pace. But looking even a bit further, and I'm talking 2030 and beyond. We at Billerud has a very valuable asset called biogenic carbon emissions stemming from a renewable raw material. With that, we can do carbon capture either for negative emissions or as a replacement for fossil fuels. So how does it work? If you look at the upper line, that is carbon capture and storage. That is the so-called easy solution where we capture our emissions from a mill and then is liquified and transported on a boat to a place where it will be stored underground permanently. And right now, Norway is the leading country when it comes to storage and locations. Then we create negative emissions. And there is also a market slowly starting to grow, we deal with carbon removal credits. There are over 7 million credits already out there. There is also another alternative, and that is carbon capture and usage, CCU. That is a little bit more complicated, and it requires a lot of renewable electricity, but it's still manageable. In that case, carbon emissions are still captured, but simultaneously, we are also manufacturing hydrogen after -- with use of water and renewable electricity. And then those two combined could actually be used to produce e-methanol for the fuel in the shipping industry, or as the feedstock for the chemical industry or to be used for sustainable air fuel. And already next year, there is a legislation coming on in Europe, requiring all airports to make 2% of sustainable air fuel into their fossil fuel. And that requirement will by 2040 be 70%. So we have two mills, very good located and suited for this, and that is our mill in Carlsberg and our mill in Gävle, both directly by the sea. And the mill Gävle is even said to be the best location in whole Nordics. In Carlsberg, we see around 300,000 or 400,000 tonnes of carbon emissions to be able to be captured, and we are just starting discussions there with some external parties. In Gävle, we're talking about 1 million tonnes of carbon capture and we are conducting a pre-technical feasibility study there right now. And there is a huge interest for our biogenic carbon emissions. But don't get me wrong here. Carbon capture is not a replacement or an alternative to carbon reduction. But it is a very good way of actually finding alternative to fossil fuels and going into a low carbon society. And this is what we're looking at 2030 and going forward. And talking about 2030 and going forward, we will now set a net zero target for 2040. It is an ambitious target. And will it be easy? No it won't. But looking at our industry and where we stand as a company, we use renewable raw materials. Europe is already near 98% fossil-free. By 2030, our North American region will have half their emissions. And as Ivar said in the beginning, customers ask for lighter, stronger and more durable products. And finally, we have our carbon capture to solve the remaining piece. So who could be better situated than us to set net zero targets, but also to reach our net zero target by 2040. Thank you very much. And I will now hand over to Andrei, who will talk about our financial targets and our capital allocation.

Good afternoon, everyone. For those of you who I haven't met before, my name is Andrei Kres. I'm the CFO of Billerud from December last year. I've been with the company for 13 years. I'm excited to stand here on the stage to provide you with some more information around our new financial targets and our financial ambitions going forward. And of course, key objective will be to provide you with some more color on our new financial targets and also on our capital allocation priorities going forward. But before that, I would like to provide you with some more context on where we stand today and also the differences we have in between the regions when reaching our financial ambitions. Our profitability has been mixed here represented by our EBITDA performance for the past years. To a large extent, this has been driven by the industry-wide challenges after COVID. Now the increase and subsequent decrease in the profitability and the speed of the change has been unprecedented, not only for Billerud, but for the whole industry. We are starting to improve our profitability level to our targeted level. And this is by focusing on the items that are within our control. We are talking about efficiency enhancement program. We are also talking about actively managing pricing to stay ahead of the cost curve. But we will do more. If we look at our return on capital employed performance, it has likewise been mixed. Here, of course, by far, the biggest investment in the history of this company, the investment in Gruvön into the new board machine KM7, increased significantly the capital employed base for our company. And the COVID period created the volatility also in our return on capital employed. Today, we stand at 4% return on capital employed, but aim to reach significantly higher level. And with limited investments going forward, which I will get back to, the main driver for the increase in return on capital employed will be our profitability. Now despite turbulent profitability level in the past, we have maintained solid financial position throughout the years. And today, we have a strong balance sheet. Even more so, we have a very stable financing situation. Well-diversified loan portfolio, enabling us to tap into several funding sources if needed, and also well-balanced maturity profile for our loan portfolio. And of course, the strong financial position and the strong balance sheet we have today has been made possible by our prudent capital allocation choices in the past. If we look over the past 5 years, almost half of our capital has been spent to secure competitiveness of our assets, both in Europe but also in North America since the acquisition. But more importantly, we have made significant investments into some of our core assets like Frövi recovery boiler, to ensure that, that asset stays competitive for years to come. And maybe the most importantly, we have expanded into North America, and that has been a significant part of our capital allocation choices previously. The rights issue in '22 was an important building block to enable Billerud to stay strong in these turbulent times. With that said, shareholder distributions have been an important part of our capital allocation priorities in the past. And we have, over the past 5 years, delivered, on average, 76% of our net profit as dividend to the shareholders, which has represented for the same period, an average dividend yield of 3.5%. And shareholder distributions will remain a key part of our capital allocation priorities going forward as we maintain our dividend policy. Looking forward, we have announced new financial targets. And these targets represent the core focus areas for Billerud going forward and reflect the new operating environment we are facing. Return on capital employed will be our key financial KPI, and we aim to reach a return on capital employed of above 11%. And again, this will be primarily driven by increase in the profitability rather than adjusting our capital employed base in any significant manner. EBITDA margin will remain our profitability KPI. And we adjust our threshold level to 15%, which represents or takes into consideration the new operating environment we are facing, primarily in Europe. Cash conversion has been a key KPI for us and key performance indicator in the past. We aim to convert more than 80% of our EBITDA into operating cash flow. This is the level we need to be in -- to be at in our investment-heavy industry. Our policy targets remain unchanged. We will maintain leverage of below 2.5x EBITDA, and we aim to distribute at least 50% of our net profit as a dividend to shareholders. When it comes to our return on capital employed target and also our profitability target, we aim to achieve those over a business cycle, which means that we acknowledge that we will face some periods where we will have below average demand for our products and also sometimes where we will significantly be higher than the target level. With that said, our diversified company in terms of product categories, regions, but also the fact that almost half of our product portfolio is exposed towards more resilient food and beverage packaging does provide a stability to our earnings and also provides the opportunities to cope with temporary supply/demand imbalances within specific product categories. Now in reaching those targets, I would once again like to highlight the differences we have between the regions. Here represented by the variable cost development in North America to the right and Europe to the left. And as we've said a couple of times previously, we are facing dramatically different conditions. In North America, the cost base has been stable. And we expect this situation to continue also going forward. In Europe, the situation has been much more volatile to a large extent, driven by the fiber supply situation in the Nordics. Another difference between the regions is the cost composition for our production. If we look to the left, producing 1 tonne of paper board in Europe, in terms of cost base, 75% of it is represented by the variable costs. That is our fiber, chemicals, energy, logistics. For North America, the corresponding figure is 56%. We also operate at significantly higher capacity utilization rates in Europe which means for Europe, we will focus on improving the gross margin level. That is both by achieving variable cost efficiency, but also through pricing. For North America, it's all about filling the machines and increasing the capacity for the assets we have in North America with very attractive cost base. Our financial goals imply that we target an EBITDA of above SEK 6 billion, again, over a business cycle. And for North America, it's going to be all about project evolution and increasing the paperboard sales in the region. You heard Ivar and Gert go through the four next building blocks to our profitability uplift. It's wood supply optimization, it's increasing the mill efficiency, it's about continuing the momentum from our efficiency enhancement program and ensuring that we capture value for being the preferred choice at our customers. These building blocks are all within our own hands and are at the center of the strategic choices we have within the regions. With that said, reaching EBITDA of about SEK 6 billion will require volume recovery to a more normalized levels, which needs to be supported by stronger consumer spending and also more normalized business cycle as we go further. Now we also know that we will face some headwinds like the general cost inflation on everything from salaries to services that are provided to our mills. And also legislation such as the change in the European emission allowance system will also be a headwind to our profitability. But we are confident that with these building blocks, we have the right actions in place to reach the targeted level, which means for the group, EBITDA margin of above 15% or SEK 6 billion. For North America, a margin of above 18% and for Europe above 15%. This is what we expect from the regions. Our other parts of business that are not residing with any of the regions will represent approximately 2% of our total net sales. And they also include currency hedging. So we do expect some volatility there just due to the fact that our hedging results will depend on our hedging portfolio. Of course, delivering over SEK 6 billion in EBITDA and converting more than 80% of it into operating cash flow will provide substantial capital for capital allocation choices. And we have our capital allocation priorities clear. Firstly, we will maintain solid financial position to execute on our dividend policy. Secondly, we will make select strategic investments into North American region to evolve towards paperboard production. And thirdly, in terms of Europe, we will have very disciplined base CapEx level in Europe to ensure that we maintain competitiveness of the assets. And in terms of the North American investments, Doug mentioned the total amount of SEK 1.4 billion. In terms of timing for that investment, we pushed the button immediately, which means that already this year, we will allocate SEK 200 million in CapEx to the North American regions in strategic CapEx. But the majority will be targeted to 2025. And the investments in Quinnesec are for now planned to come a bit later. And in terms of our total CapEx going forward, we will maintain a base CapEx level of SEK 2.2 billion in the midterm for both regions, which means that our base CapEx level is considerably below our depreciation level as we focus to reap all the benefits of the past investments made primarily in the European region. The strategic CapEx on top is primarily the investments in North America to evolve towards paperboard. Our strategic CapEx will also include some select investment to reduce our CO2 emissions in line with our ambitions that Ulrika mentioned and also the prefeasibility study for Gävle recovery boiler replacement. So to conclude, our two regions have clear objectives. For North America, evolving towards paperboard and filling the capacity we have on the assets there. For Europe, it's strengthening the performance through existing asset base. Succeeding with these two objectives will lead to reaching our financial targets, which imply EBITDA above SEK 6 billion over a business cycle. And for that capital, we have clear capital allocation choices. We will maintain solid financial position to maintain our dividend payout. We will invest SEK 1.4 billion in North America, and we will have limited strategic CapEx in Europe and focus on addressing the competitiveness of the assets through base CapEx. Succeeding with this will lead to continued strong Billerud that is focused on maximizing the value from competitive asset base. With that, I would like to conclude the presentation section and invite my colleagues for the Q&A session.

Very good. I don't know if this is the main event or not, but we will find out. So listen, we will have a Q&A section, and it will be a bit of a mix. I think there will be some questions here in the audience, I'm sure. So let's see that one here. I will try to moderate. And I'm certainly intending to pass the most difficult ones to you, and some kind of a reverse lottery. So please have you water folks. So let's get going. And who wants to start? Oskar, please.

Thank you. So my name is Oskar Lindstrom, and I represent Danske Bank. And this is to the North American team, very good presentation about the opportunities in the new packaging segments, which you highlighted. But we also saw a little bit later on that there's quite a low capacity utilization in your overall portfolio. So given that low capacity utilization, why not move ahead quicker with the great migration in order to fill out that capacity.

Good question, Oskar. Do you want to start, Brian, and maybe Doug can chip in if there's anything else.

Yes. Thanks for the question, Oskar. I would tell you that we are actually moving ahead before any CapEx. We've got a very robust product development pipeline. And of course, with transformation, we were focused on that. Until that project was canceled, we've really, really boosted up our PD efforts. So if we look across the entirety of our asset base, we've got projects that are actively progressing. I gave an example, Q41, we're working on white liners. On our E1 machine in Escanaba, we've got food service board, we've already been producing and getting that out into the market. E3 is really centered on label grades, but we even do more development there to further expand that product offering for our label customers. And then on E4, we're starting to advance that ball. That's a little bit of a longer put because getting brown pulp to the machine takes some CapEx. So that will likely be the last one to go, but we still got other active projects, believe it or not, even in the printing and writing space to help just get that machine time a little better utilized.

And the only thing I might add would be that as Andrei laid out that time line, I mean, we literally are starting to spend the capital now. It will be spent largely in 2025, kind of as fast as those projects can proceed. So we're here. We're getting after it.

Very good. Next question, please, Linus, if you want to go.

Thank you very much. My name is Linus Larsson. I'm with SEB here in Stockholm. And my question is relating to fiber supply and security of wood fiber sourcing. I appreciate the presentation and the initiatives that you have been taking, the alliances that you've struck. But maybe adding to that, I'd be curious how you look at capital allocation in that context. So first of all, in the past, you've talked about potentially investing in CTMP production together with Viken Skog in Norway. What's the thought and updated thinking around that and similar initiatives? And then also on capital allocation, you're now openly talking about the renewal of the recovery boiler system in Gavle. It's a couple of years out. But nevertheless, that is indeed a very significant capital allocation, probably like to the tune of SEK 3 billion. So tying fiber sourcing together with capital allocation, what you're thinking now you have a couple of years to prepare. Are you going to team up with someone in that big capital allocation? Or are you just going to invest that sort of money in spite of not having secure and abundant supply of raw material?

Okay. Very good. Thank you, Linus. Andrei, do you want to start with the section on Norway, and I can take the Gavle part?

Sure. So in terms of the capital and the capital -- CapEx guidance going forward, there is nothing included on the contemplated project together with Viken Skog to establish the BCTMP production in Norway. As you know, our environment and permit application has been turned down, and we have appealed that decision. Should the decision be overturned, we will continue the discussion with the Board on potential investment into that project. So we will just need to get back to that if we get another decision on that.

Yes. And thanks, Andrei. So I think to your good question, Linus, on Gavle. And the honest answer at this stage, we don't know. And we do have a bit more time, as we alluded to and also Gert mentioned that, everything points towards that 2030, we need to have a solution in place. But if you had an eagle eye on my previous slide around the different boilers, we have two boilers there today. That means you can make a choice to do a one-to-one replacement, you can also make somewhere in between. That have pros and cons. And that's still what we will evaluate. It can happen for sure, that we team up with someone and do something together. But right now, we do not have any discussion on advanced level on that space. And just as a little bit of add-on on this one that if it turns out to be 2030, is our target to get that bottom line, you would expect the vast majority of that of -- in '28 to '29. So there's still a little bit time forward before we start meeting a cash outflow. Next question. There are so many hands I don't know where to go. Robin, if you want to get the microphone to you.

Thank you very much. My name is Robin Santavirta. I work with Carnegie in Helsinki. I have a question related to the European production platform. I think you, Ivar, alluded to the point that perhaps even you could need to optimize the production in order to drive up production capacity in some of your mills. What would that mean in practice? Would it mean potential shutdown of a machine or even a mill? And also related, I know you spoke a lot about the efficiency, cost efficiency of your North American mills during the first quarter we heard. But we didn't hear anything about the European or the Nordic production plant. So could you describe where in terms of cost competitiveness those lie as well?

Yes. Good question. I think, unfortunately, that's such a good question. It's for me. I think on the first part, I think if we look at higher efficiency and look at the choices in terms of machine and mill, I would say that everything is in scope. And I think it is a new reality going forward that also we will push pricing forward, and we drive value over volume. And I think our North American region have led that with brilliance over the last couple of years. And even with a lower utilization rate, we kept good profitability level. And we take inspiration of that going into also Europe. And I think if we are succeeding with some of the points that Gert mentioned, we will have capacity to also get new volume. And if we find good profitable homes for that, we will use the whole asset base as we have today. If not, we will continuously evaluate and take out potentially capacity from a machine or from a mill. It's pointless today of me commenting what are then the culprits or what are then the suspects on this year because it really depends. But all I can say that this is something that we are not religious about and we will make the best decision. And you cannot just do that based on 1 week, 1 month, but if you see that the trend is clear, that it is troublesome to find, again, homes for a profitable base, then we take consequences of that. Now you need to remind me, what's the second part of your question?

[indiscernible] cost competitiveness.

Yes. No, yes, absolutely. I think in general, if I do the short version is that many of the asset base in Europe is found in second quarter. We have some even in the beginning of third quarter, and made some extreme on the first, but it's a little bit more scattered, but I would say that the average kind of is in Q2, that's the average for our European footprint. So next question, please. Johannes, if you may.

Yes. Johannes Grunselius, DNB here in Stockholm. So I appreciate this graphics where we can see the components of the EBITDA growth, and there's a lot of pluses, but have two minuses as well. But on European emission allowances, is that your forecast? Or is it a given? That's my first question on this picture. And on cost inflation, it's a relative game, of course. But do you foresee that you will face more cost inflation than Nordic peers here.

Johannes cheated. He asked two questions, didn't he? Said only one. Okay. So that sounds like it's in your camp here, Andrei.

Now in terms of the European emission allowances, as it stands right now, we will lose all the allowances, and that is from 2027. So we get our last allocation of the allowances in '26. Sorry, I only listened to one because that was the instruction. What was the second one, sorry?

On the cost inflation, if you're sort of worse off because that's another negative delta.

No, I wouldn't say that we are worse off. But then again, we are confident that the cost inflation that we are meeting on everything from services to salary inflation. We have the building blocks to offset that, and this is entirely in our own hands to compensate for.

Very good. There is a question on line here as well, so we'll try to mix it a bit in. Will you be able to increase the sales prices for liquid packaging board in 2025? The answer of that is yes. I am not able, and I'm not willing to give any further details at this stage because we literally sit in some of these negotiations right now. But just based on the pure fact that the pulpwood prices in the region have increased quite a lot during 2025, we will see a significant pricing increase from Jan and onwards. And I hope I can give you more details on that when we come to our Q4 call in Jan, but not now. Next question from the audience, please.

Lars Kjellberg, Stifel. Actually, a follow-up question to the North American team first. Your scale disadvantage relative to your North American peers, given you're going to be 100,000 tonnes of this, this and that. How do you position yourselves into the market as most of the peers would be in the opposite direction, adding meaningful mills with high production efficiency. And in that context then, of course, you become a marginal supplier. So why would anybody care? And I just have a question to you Ivar about pricing excellence. You're not a packaging solutions provider where you could add value, you're a material supplier. It's principally commodity markets. So how do we get pricing excellence and get ahead of the curve, which, of course, it's been a struggle for the industry forever in the factory.

So Doug, do you want to start to answer the question first, and I'm sure Brian could add.

Sure. Thank you for the question. I think that the key point here is sort of the inverse of what you just asked, which is we only need to make a very minimal share grab in each of these buckets to make an incredible difference in the financial performance of our business. So it's about open capacity utilization right now. And if we can pursue -- identify specific markets that fit our capability, and we can use that to fill our equipment, we can drive a return that's significant. So are we -- we're never going to be a market leader in these grades and nor is it our intention to do so right now. What we do know is the target market has an appetite for not buying from their competitors, from buying close to their mills and all the things we talked about in the presentation. So we do think the opportunity is ripe, and the point of being a small player, we're viewing that as a positive because it's a very achievable objective as opposed to trying to bite off something that becomes a pipe dream. Anything to add?

Yes. I think the only thing I would add is that you saw in one of Andrei's slides that we are operating at a 68% operating rate in 2024. When you operate at those sorts of rates, you get really good at getting up and down the machines. I would call that -- I mean, I hate to say it, but it's almost a core competency at this point that we know how to cycle machine. And even in our freesheet business, long gone are the days back when we would run 5 days of the exact same grade for a big publication. We're really good at getting up and down, and that competency will help us in this space as we ramp up.

So to the second part of your question, it's a really good question, Lars. And I can say the following that, yes, we are an industry where you can say that the large segment of that is commoditized to a large extent. I would also certainly argue that there are certain segments and there are certain niches where your pricing power plays in a bit differently, in particular, when you move into segments that has high barriers to entry. And we talked about some of those examples. But I think the -- one of the big things is that in the past, maybe they was visualized in my 10-year graph in the industry that the movements were somehow subtle. They weren't that extreme. And that kind of meant that the way of doing business was relatively normalized. But now given that the cycles come faster and the much more extreme, you just cannot be at your absolutely best and be fast because you leave money on the table and in 1 month, 6 weeks too late, that is just lost opportunity. So it is really around our capabilities, but will that solve everything? No. But it will be a big check to really see, are we actually pricing for the value that we bring to the table? Or do we think we bring to the table? And coupling that with some internal efficiency drives and really screw even tighter in terms of cost base, that will be a pretty good recipe, I think, for it to be competitive also going forward. Hey, another question here online, and it is a long one. I need to breathe deep now. So clarification on the new and reasonable above 15% EBITDA margin and above SEK 6 billion EBITDA target. Should we see these as mid-cycle targets achievable over the next 3, 5 years plus the SEK 6 billion include potential headwind from losing emission bites like some peers, Norske Skog, Yes, I think that was -- there were some other ones, but I just stop it there. So it sounds like it's for you, Andrei.

Yes. I mean, first of all, as I mentioned, these are the targets that we -- in terms of profitability and return on capital employed that we intend to achieve over a business cycle, whether it's going to be in 2025 to 2027, I mean I talked about the building blocks that are within our own hands, that we now focus on as a management team. But I also said that we would expect some market recovery to a more normalized level to be able to achieve that target. And if that comes, yes, then we are in a good place to reach that target. The second question was around emission allowances. Yes, despite -- as it looks like -- now the loss of the free emission allowances, we are confident that the building blocks we have in place now are sufficient to reach that target.

Yes. And if I just add the building blocks you shared was at SEK 6 billion, above SEK 6 billion across the market cycle or business cycle, including the loss of the emission rights. Good. So more from the audience, please. There will be a microphone surfacing here in a second.

Ephrem Ravi from Citi. On the capital employed part of the ROC, almost all the presentation was about increasing margins. But if I look at the denominator, I put 2 questions, one, I suppose. One, is there any -- did you actually look at kind of reducing the capital employed and decided that it was just too tough or not feasible? Or were they kind of low-hanging fruits that you have identified, but are not willing to kind of commit to at this point. And on the other side of the capital employed in North America, especially given that you've had a 2.5 or 3-year payback period on the acquisition, is your appetite vetted for more bolt-ons there, maybe not exactly in Wisconsin, but maybe in some other converters that you would be selling to and what are the pros and cons of that?

Boy, am I glad I don't need to answer the first question there.

I can take the first.

Andrei, please.

Now in terms of our capital employed, I mean, we are currently at roughly SEK 34 billion in capital employed. And I mean, most of it is our fixed assets, right, that are tied up in our mills. So of course, significantly changing that would imply significantly changing our asset base. And that is not part of our plan. Now with that said, we do have sizable working capital position. That represents approximately 10%, 11% of our sales, which is on a very competitive level, I would say, if you look across the industry. We are always looking at our working capital position and try to reduce that, but that would be some a couple of hundred millions in the SEK 34 billion area. So it wouldn't be significant to alter our return on capital employed. And maybe on the second part, because I'm interesting, we're moving a little bit into the kind of M&A side of this. And let's say that the following that these are now the choices that we will focus on, and that's where we put all our effort. Will we keep our eyes and ears open for potential opportunities that come up? Sure. We will do this. And I can honestly also say that in the current environment, buying versus building is certainly the theme, and I agree with that theme. But just keep in mind as well that if you do some of the things, like when we go back to April '22 when it took a reversal, it's a pretty hefty distraction as well in terms of resources for management and from the teams. And it can derail the focus pretty fast. So you can decide to keep it as a stand-alone side business. But yes, we will think twice and 3 times. And of course, the Board will be an instrumental partner here. But right now, there is no specific cases we have in mind. And right now, we feel that we have just the right appetite on the right cases for both of the regions. So what else? Christian, please?

It's Christian Kopfer from Handelsbanken. I think my question goes to Doug or to Brian, and it is regarding the wood supply or the wood sourcing. I mean we have such a tight market in the Nordics and in the continent here in Europe and also in Canada. And for you guys, it seems pretty much the other way around. So -- and I saw on your -- I think 1 of your slides, you insinuated that this -- that situation will stay on. So my question is, is there a risk that something will happen on this market in the U.S. that will bring things upside down when it comes to wood prices and so on.

Brian, you start on that one?

Yes. Thank you for the question. And yes, Doug showed the chart that showed the available wood in the region. So first of all, cost aside, we are in a relatively low cost region. And the availability is quite good. And the unfortunate fact is that there have been other closures of pulp and paper assets in our region that have actually increased the availability of the wood. So I'm trying to think what sort of risk would be there. And I think that it's quite, quite low. There's a lot of wood. It's available, it's economical for us so...

So. And if I may add in that there are no further expansion projects, all greenfield in that area. And we are, as far as I know, the only company now put actually money into the existing mills and developing them further...

In that region I agree.

Good. I take a question here from the online community and it's to the U.S. guys. And again, let's see, Brian or Doug. Can you quantify the import tariff opportunity and its possible impact on EBIT. We talked about this, Brian, do you want to start maybe again?

Yes. The import opportunity, again, I think I could just tell you that the import supply chain is subject to upset. We talked about it on the printing and writing side and the specialty side. There are potentials there. And on the packaging side as well, there's 300,000 tons of imports in white liner and 0.5 million in white carton board. So from our point of view, it doesn't take a lot of displacement to make a big difference. It goes back to exactly what Doug was saying to help us get some volume on the system. And I think we will do that because, again, local production is such a big deal to that very customer dense region in the Midwest. That is a tremendously concentrated market around that Chicago-Milwaukee corridor. And we're in a really, really good position to make some hay there.

I would simply add that just the mere discussion of potential tariffs is a motivating factor for some buyers to maybe choose to put a little bit more in the domestic bucket. And that may be just to push they could -- I mean we -- those things are favorable from a business perspective for Billerud.

Very good. Please a question to you Microphone, please.

Gaurav Jain from Barclays. So if I could ask 2.

Well, the other ones as well. So join the club.

Just continuing on the tariff discussion, it could help the U.S. business because there are imports into U.S. but it could hurt your European business because there are exports from Europe into U.S. especially on FBB. So could you just help us think comprehensively around how it would impact different parts of Billerud if there are tariffs imposed by President Trump. So that's one. And second to an earlier question around adding capacities in various buckets, in the U.S. assets. So we know that the consumable market will get oversupplied next year. We also know that on the container board side, there is probably not much in terms of capacity addition for the next couple of years and we can see those assets are getting a very high valuation. So why not just change the entire investment on the -- from consumer board onto the containerboard side of things?

I can take the first part. But do you want to start with the second part of the question?

Yes.

If you remember.

Yes, yes. So the question, as I understand it is, why don't we just go fully into the containerboard side as opposed to the consumer packaging side. And I think it really boils down to just having optionality in the assets. And to do it with a low CapEx approach as well, very modest CapEx. We can't do a wholesale machine conversion per se. So we're going to lean towards things these machines do well. And in either case, I think that the share requirement is still really, really achievable. We're only talking about 100,000 tons of product across folding carton and food service board in relation to that particular segment. So again, combined with good competitive assets in that customer-rich segment, I think that it's very achievable.

And to the first part, it's a good question. And -- and the answer is yes, it could be troublesome. I think not only for us, but for many European producers of cartonboard going into U.S. I think if you want to say the good news for us is that we're still finding our feet on this. So we don't have a very big exposure. So we're more in the 40,000, 45,000 ton right now of all the FBB that goes into U.S. That's relatively moderate. And if it turns out that a chunk of that is not going to be competitive, we'll find a different home for that. But there is now a big shift as well, as you know, going on in cartonboard in U.S. that SBS is the dominant force. And FBB with lower CO2 and more CTMP inclusion is finding also a little bit of traction and we plan to be part of that, and we want to use this as a little bit as a complete paperboard offering in the U.S. not only with the locally produced containerboard. But also in terms of the import. But if the tariff comes, then they will be as scary as some comments indicate, and then we will take consequence of that. Right. So more questions, please, Lars. Starting on round 2.

So coming back to your category growth, if you like, what surprised me that you're talking about just sustaining your bit in the liquid paperboard, which seems to be one of the stronger growing categories with only essentially 3 suppliers. Why not be more ambition in that segment, in particular the contest of saying accelerate growth in cartonboard, which is clearly the most competitive segment where there's excess supply. And to me, that makes no sense.

Yes, I think the -- it's a good question. I think from our side, we take now the choices to maintain. And again, we have a very strong position. It's a big weight on our portfolio. We've seen that we've excelled really well on the premium segment of that cartonboard. But we really found traction in terms of our cartonboard proposition both in terms of brown but also white cartonboard. And we literally starting to dip our toes into the water in terms of the sizable food and beverage market. Yes, not going to lie, there's more capacity coming in online. But we've got very strong, let's call it, customer dialogue and traction around our offering in terms of value proposition. So the honest answer is that right now, and it can change. But right now, we actually see a better proposition for the company to get more exposed and grow in food and beverage business versus adding more volume into liquid packaging. So it's pure financial driven.

And pricing excellence at the same time.

That's right. That's right. That's part of it. Please, yes, Johanne, there is round 2.

Thank you for that. Only 1 question this time, Ivar. But on your updated financial targets, I mean, the dividend of more than 50% payout ratio stays and of course, you have a lot of flexibility through that giving back shares to shareholders. You're not mentioning anything about another sort of option buybacks in your presentation. Can you sort of give us an idea what your thinking is about buybacks versus more dividend than sort of 50% of EPS.

Mr. that's your name all over it.

Sure. Good question, Johannes. And I mean the management team right now is focused on reaching the action plan that we have now set out for ourselves. When we are in a position where we have EBITDA of above SEK 6 billion, and we convert over 80% of that into cash flow, we'll, for sure, have a discussion with the Board around how to allocate that capital in the fourth priority, which was not mentioned earlier today during my presentation. But for now, we're focused on delivering on the plan.

Next question, Robin.

I have a question related to the tight wood raw material market you have in Scandinavia or in Region Europe. What are the things that you can do, if anything? I'm thinking about fiber furnish. Can you add some recycled fiber into some of the products you spoke about mechanical pulp but also in terms of region importing. Could you import something from North America? It seems to be quite competitive. The price, I know it's tricky to import wood raw material, but could that be the case for North America or even from Latin America. So what do you do in terms of fiber furnish and related to that, the second one, what is the current status of the Swedish or Nordic pulp wood market, if you will, has the sort of ceiling being found? Or is there still upward trend at the moment?

That question remind [indiscernible] so that I have 1 question, but it's split in 10 parts. But we will do our best to dissect in a good way possible. So if you get ready to comment on the recycle. I think one piece is exactly as you say, more mechanical pulp, more CTMP. It's certainly some of -- well, 1 very important building block, more yield, as you know, out of the mechanical pulp. And if in many ways, say that pulpwood is the gold, then, hey, finding a solution to use less on that is probably clever. Recycle the vehicle.

Yes. I mean if you look at our products and the applications where we deliver into, that's very high demand and very difficult to use recycled materials. I mean we have the floating where we have a little bit of recycled aspect and you also need to consider, we are placed very close to where there's fresh fiber. So it's very short transport distance. And where all of our products are being used, that's much more down in Europe, Central Europe. So in order to also to be used to recycled materials, it has to be shipped back to us, which is not the best part either because you're transporting more or less waste. So trying to utilize what is closest to you is the best way of utilizing most of the assets and the production chain and the value chain always need fresh fiber to come in. We can't just leave on recycled fiber. So it's a tricky situation, but we're doing it where we can.

And listen, I don't know, to your third part of that question. Yes, we will evaluate different regions. And I think [indiscernible] also mentioned Eucalyptus from South America is a part and it could be that chips probably more than anything else from U.S. it's an option. It's not maybe a massive surprise that long distances of pulpwood is the enemy of all profitable pulp and paper mills. So we're not there yet, and it's not as close to we will say that we are going to do this, but it's not miles off, and we are somehow standing by to activate this if we see that there is further escalation or more arbitrage possibilities to take. I guess the last point around short term, fourth part short-term pulpwood outlook, Andrei.

No. I think as we guided in our quarter 3 earnings call, I mean, we do expect the pulpwood cost to come up in quarter 4. With that said, I think we have reached kind of a plateau for now. Now is that on the back of some weaker demand that we see at the end of the year? Probably yes. Is that due to capacity curtailments we have seen in the industry. Yes. So I think it's temporary plateau, but on the back of stronger demand, the situation kind of remains.

I take a question here from the audience. Thanks for interesting presentations. So what are your thoughts on the new EU regulations affecting forest and forestry impact on supply of forest biomass. Ulrika, that sounds quite your way.

Yes. And I think I already touched upon the legislation affecting us right now in my presentations, and there are some that we need to mitigate to make sure that new facts are being put on the table. And also when it comes to PPWR, for an example, the waste directive, there's opportunities for us delivering into that. And I think also I would like to mention the EUDR, the EUD forestation regulation is not really affecting our fiber supply because we don't source from deforested areas. But what it does do is demands an enormous amount of resources to be able to track each tree going to the mill through the whole operations, through our customers and to the final packaging and paper. That's what the legislation requires also do. So to put that solution in play, that demands a lot of resources but it doesn't affect the fiber availability as such.

Yes. Very good. Another question here just from the audience. So what does the partnership with Sveaskog entail? It's a good question. And I can say the following we talked for some time about how we're trying to find partners and establish partnerships. And I have to say, I met with the Sveaskog team over quite a bit of time and also their CEO, Eric. And it really is a phenomenal organization and we quickly realize how much things we share in common in terms of our long-term view, in terms of how we also will look to say that, hey, what is then the next generation of sustainability and is there life after FCS, et cetera. We're starting this now across, call it, several fronts, but there is no doubt that there is a piece around this on how we will look to increase our purchases from Sveaskog. Sveaskog is the biggest seller of Pulpwood in Sweden today. We are the biggest buyer. So in that sense, that there is a match right there. But it's not only about this at all. And we also look to partner up in terms of our Marma Skog Holdings. So that's a nonproductive forest holding. It's around 46,000 hectares that we possess and how also we can help each other and also Sveaskog will evaluate those assets as part of their own journey, not least within areas within the EchoPark, et cetera. And carbon capture has been mentioned as a potential partnership, again, long term and just at a very early stage. But I have to say, I'm super excited and very glad to announce that we are now taking the next step with Sveaskog and I hope that will be a fruitful partnership for both sides over the coming years. We have time for some more questions, I think. Shouldn't have said that.

[indiscernible] from Nordea. Maybe 1 to Ulrika about the CO2 emissions, and especially in the U.S., you have plans to reduce this quite substantially. So could you give some indication of key steps there and if it requires some capital expenditures on this.

Yes, I can. There is -- the step is really to work with energy efficiency improvements. That's the biggest part. And if you improve your energy efficiency, you also reduce your costs. So that goes hand in hand. And then we're also looking at how we're handling the bark improvement, bark handling system and also when it comes to using as the old wooden rail tiles sleepers as energy to burn them as energy because it's also consider being biogenic. And there are some investment connected with that, and we're talking in Europe and in North America, around SEK 100 million right now, and that is also part of what Andrei told us that. So those are actually in plans. So we are very clear on how to reach the 2030 targets. We're not just talking. It's really a clear road map, and we know what investments are needed.

Good. [indiscernible] please? Question to you.

Pallav Mittal from Barclays. So a question on your liquid paperboard. So you said that the supplier base is also very consolidated, and we know the customer bases as well. But the customers mentioned that the contracts are much longer versus other consumer board categories. So how should we think that contract structure will impact the pricing that you're trying to take? And the second part of this question, the consumer board capacity in Europe is oversupplied. So is there a risk that there is a substitution or a transition from other grades to liquid paperboard? Is that a risk to the pricing power that you have in this category?

Yes. No, that's a question for me, I think, and thanks for the question. I cannot answer for others, but I think we've also been quite open that it is so that historically, those contracts have been on a more long-term basis. 2, 3 years have been a bit of the standard. Given the volatility we've seen over the last couple of years, the norm tend to go more on a 1-year basis, so shorter periods, and that also taken into account that we have seen a pretty hefty fluctuations in terms of the raw material and as a consequence to pricing. So that is what I would expect going forward. And please, can you just repeat the second part of the question.

Is there a risk from other consumer board grade being like the mill capacity being changed to liquid paperboard because, for example, FBB is looking oversupply for can those suppliers change the capacity to LPB.

I cannot say never say never, but I think there's a reason why that market is as consolidated as it is. And doing business within the space of liquid packaging is different. The requirements and the strength you need to work on hygiene and extremely protective and regulated food products is super strict and I'm not lying when I say that we've accumulated that kind of knowledge over decades. And it's not something we just stumble across. And I think, again. Yes, of course, the opportunity is always for some people to come in, but I would argue that this is one space where the barriers of entry are not insignificant and that will take time. So it's certainly not something you can flip quite fast. In the back there, that's also a question.

I'm [indiscernible] from AFA Insurance and Stockholm. May I ask you, I mean, input prices and product prices vary. And there's not a lot you can do about them. But if you look back on the last 12 months of the things that you can influence what has been disappointing.

No. That question come in the end. Do you want to start and I think of something you're able to say.

No. But I think I mean efficiency within our mills is certainly a key building block. Now -- that will be the biggest profitability lever when you also have a more normalized market. But I think if you look at our mill efficiency performance for the past years, and this is something that we have brought up several times as a key building block for Billerud to lift profitability. I would say that probably has been a bit of a disappointment, at least.

No. And I can add to this. I don't think that there's a lot of disappointments or regretted moves we made. I think in hindsight, you can always try to make some learnings. And maybe I would just say that in some cases, we should have been faster to activate some choices. And as I said, in terms of pricing as well, if you wait too long and do a little bit of analysis, you are leaving in some cases, opportunities on the table. And maybe those are the only few cases on top of what Andrei mentioned. But no, in general, I don't think that there's a lot of things that we look backwards and regret. The clock now on the screen is blinking red, and that means that we are on over time. And I would like to conclude this Q&A section. And maybe if I can ask my colleagues to find their seat, and then we will just very shortly round it up. Very good. Listen, we are coming towards the end, and it's not much more left. Some concluding remarks from my side. And hopefully, you would agree with me that these are some of the points that we have been through over the last couple of hours. We do have strong market position and flexibility in our production and we remain positive about the long-term potential and the role fiber-based packaging can play across several application categories. We do feel that we set the foundation of a more predictable Billerud, and in North America is all around evolving to -- or the product mix towards paperboard and packaging materials. Role for region Europe is different, strengthen the performance from our existing asset base and we have a clear aim to drive a stronger performance culture in the company. And our next level of sustainability journey will evolve around embedding sustainability in everything we do. We commit new and updated targets. And in terms of profitability, we do aim to be above 15% or delivering above SEK 6 billion in absolute over and across a business cycle. And coupling that with a strong cash conversion will make us well placed going forward. And in terms of the strategic CapEx, our profile for the next years is on the modest level and the vast majority of that will be enabled or channeled through North America. Now that's 13 seconds past 4. So I think we time, in that case, pretty well. And it concludes our Capital Market Day for today. I would like to thank the online community and audience for staying on and again, my special plea to the folks here in the room is that I hope as many of you can stay on a little bit, join us upstairs in the lobby. There will be some refreshments served. And I promise you, you might even get another round of getting your question answered. So on behalf on the full team here in Billerud. Thank you so much, and bye for now.