Holmen AB (publ) (HOLMB) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Holman Year-End Report 2024 Conference Call. I am Jota, your Chorus Call operator. [Operator Instructions] The conference is being recorded. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Henrik Sjolund, President and CEO.

Good morning, everybody, and welcome to the year-end report presentation for the Holmen Group. It's me, Henrik Sjolund and Anders Jernhall. We will go through the presentation. And then as usually, we take your questions after the presentation. So let's start. Well, in the fourth quarter of 2024, we were able to deliver a bit over SEK 700 million. It's, as you know, a bit slower in the fourth quarter. It was a bit slower also in the fourth quarter for us this year, a bit slower maybe than normal. And we had 2 stops. And as I said, the market a bit softer. Still a good result. And if you look at the full year of 2024, SEK 3.7 billion. It's in a historic perspective, a really good result. If you look at our industry, we were able to deliver 16%. And if you take it in a historic perspective, we've been able to deliver actually a return on capital employed of 19% over the last 10 years. And to be honest, in 2024, we didn't have any contribution from Wood Products. So if you look at Board and Paper, we were actually a little bit over 20%. We have had a meeting in the Board of Directors in Holmen. And given the good result, our business model and the outlook and our financial position, the Board of Directors have decided to propose to the Annual General Meeting an ordinary dividend of SEK 9 and an extra dividend of SEK 3. Our position is strong, as I said. And just a reminder, what we have done the couple of last 2 years, we've actually distributed to the shareholders SEK 6 billion through dividends, extra dividends and some share buybacks. Changing subject totally, Anders before we go through the Forest valuation, a few words about the wood market. And I think I've been standing here for a couple of years now, at least talking about wood prices only going up. And that was the case also in the fourth quarter, especially timber became more expensive. And as we stand today, pulpwood is maybe slightly better balance, not as much pressure as it is on the sawlog side. You can see also here that there is a spread between the average cost for us in this case, between sawlogs and pulpwood. And it's in south of Sweden where the timber is extremely expensive. And also in the case of us, we are -- especially our sawmills down in the south are in the area most affected by spruce bark beetle infestation, which we'll come back to a bit when we discuss the Wood Products business. But this has been going on for a long time, and this is a challenge, especially the big difference between the different parts in Sweden. If we then look at -- and this is our own calculation to see what's left after you have sold wood products and pulp and paid for the wood. If you look at the wood products side, the sawmills operations, well, there the relationship between what you pay for the wood and what you have left is fairly normal. But if you look at the pulpwood sector, still there is a quite good margin, isn't it? It's not bad. So as it looks right now, yes, the pulp mills can pay the high price for the pulpwood in the market. Higher cost for wood, bad for the industry, good for the forest.

Good for the forest owner. Yes, Henrik. We have seen that these price increases that have been going on for 3 years now have increased our cash flow from harvesting by 80%. And if you look at the -- specifically the third quarter, we have seen that profit went up a bit due to seasonally normalizing level of logs, which is low in the third quarter. And as usual, in the fourth quarter, we update our book value for the forests. And this year, we arrived at a figure close to SEK 58 billion. An update on how do we do this. As you can see on this map, our assets are spread over the country, and there is a price difference as what you're prepared to pay for properties where you are located from north to south. But there's also a difference if you're close to the coast, which normally is where you have production facilities or if you are up towards the mountains where the trees grows a bit slower and you have a longer transporting distance to the wood-consuming entities. And to take this into consideration when we do the valuation, we look at the transactions that have occurred during 3 years and to get 3 years' worth of -- and the reason for that is that individual assets or property sales have a bit too much influences on 1-year transaction statistics. So we need 3 years -- or our assessment is that we need 3 years to get the accurate valuation methodology. And we use 3 ones. We use 2 price statistics that are delivered by Svefa and Ludvig & Co, and it's from their databases on how they have compiled all the transactions that have occurred in Sweden, and they slice it a bit differently between them. And then we have our third methodology, which is based on all transactions that have occurred during this 3 years period, where we take into account which part of a county that you have traded in. Some of these countries are huge like Västerbotten, and they have both coastland and inland. And we take into account how much trees are standing on the forest properties that have been traded and how fertile the ground is. And by using these 3 methods that are done a bit -- have slight differences in between themselves, we arrive at a value that actually this year was within plus/minus 1% of each other. So it's a very narrow range of this close to SEK 58 billion. And it's also -- and I want to highlight, we don't value 1 million hectares. We value 4,000 properties or a bit more than 4,000 properties we own across Sweden. Average size of this is a bit more than 200 hectares, and you can compare that to the market statistics. Over the last 3 years, we have traded a bit more than 900 transactions in these areas, and the average size of that has been around 100 hectares. And just a reminder, on forest properties, this is a 20-year history that shows the average price expressed per cubic meter in Sweden. And that has been quite a stable development, and this is 1-year transactions for the whole of Sweden. And so when you see the headlines that prices have moved up or down a lot, you have to take that with a bit of a grain of salt because prices don't really move that quickly. They are affected to a large extent, which population you use and compile for a year. Normally, you have a good correlation between selling prices of wood and the price development for forest properties. But the last year, you can see that wood prices have clearly outpaced the price development of forest properties. After these reflections, Henrik, back to you.

Well done, Anders. Yes, let's say a few words about the renewable energy market and electricity prices. It's quite strange situation we have right now where we see that prices in Germany EUR 100 per megawatt hour. And in Sweden, not only do we have in North of Sweden, where we happen to have most of our production, an extremely low price. It's been below EUR 15 per megawatt since the summer. But it's also spread, as you can see, between North of Sweden and what we call SE3, say, mid half South Sweden, where we have our paper mills where you can see the prices are EUR 40, EUR 50. And this is a situation which -- you know what the discussion is in Germany, how the industry is struggling to survive and simply because energy is extremely expensive. And what we see now is that in Germany, they are a bit scared of, well, how much gas actually there is and if they need more. So when they send a signal to the market, buy more gas to fill up the storage, prices go up. And to make the calculation, just to understand electricity and gas, well, you need 2 megawatt hours of gas to produce 1 megawatt hours of electricity and a gas price of roughly EUR 50, that means roughly EUR 100. And then you need to buy a bit of emission rights as well. So you land above EUR 100 as the situation is right now. It doesn't help us much that it's expensive in Germany, Anders. But on the other hand, the difference between Germany and SE3 is still -- it is a good base for cost competitiveness when it comes to our paper production. But as we're talking about our Energy division now, it's the blue line, SE2, where we have most of our production, and it's very difficult to make money when prices are that low. However, at least we've been able to actually get some premium when it comes to the production we have made, and we have got roughly 30%. But as the levels are as they are when it comes to the price, difficult, isn't it?

Definitely difficult to make a profit on producing electricity when the average price has been EUR 12 over the last half year. We cover depreciation. We generate a positive cash flow, but not more than that. And as Henrik alluded to, this is sort of not really a sustainable situation that you have this kind of cheap electricity in one part of Europe and very expensive in other parts of Europe. If you look year-over-year, we -- the drop in profits is completely price related. Q1 was a good profit level for the energy business. But since the spring, prices have been very -- historically at very low levels.

Maybe we should have mentioned also that when we look at this one here, the difference between SE2 and SE3 -- well, it's bottlenecks, of course, in our own grid in Sweden, but it's also the new phenomena with flow-based, which nobody understands to 100%, I think. We haven't had that during a number of months at least. But now there is a big spread, which is a bit difficult.

Henrik, maybe not everybody knows what flow-based is. But it's a new pricing methodology that is intended to even out the prices in the Nordics. But they actually spreaded since it was introduced in November. It might be due to that we have unusually much water in the northern part of Sweden, especially actually SE2. We have, for example, 30% more water in our reservoirs than normal this point of the year.

Absolutely. All right. A few words about Wood Products. I said in the beginning, it's been a bit of headwind for Wood Products, especially in the south of Sweden, where we have a couple of sawmills. And if you look at the market right now, well, prices are actually up a little bit. And if we compare to a year ago, prices are higher. But on the other hand, it's not that demand is good that put some effect on the price increases. It's not that. It's that -- it's actually a scarcity of sawlogs. And the sawlog situation is not only in Sweden, but it's quite an extreme situation, especially in the south of Sweden. And as I said before, especially in the area, actually the driest area in Sweden, where there was a lot of spruce bark beetle infestation, and we have a backlash now after a few years when forest owners just needed to take out the wood, now it's a different situation. If you look at the U.S. and the Trump administration and all the discussions about tariffs, which is on TV every day nowadays. To start with the current U.S. price, when we look at the future, it's slightly higher than the average price we get mill net when we sell to customers in Europe. But also when it comes to tariffs, we should remember that already today, there is a tariff between U.S. and Canada, where the U.S. -- the Americans simply mean that the Canadian sawmills are subsidized by the Canadian state. And that tariff, roughly 15% has been there for a long time. And then the next question is, well, how dependent is then the U.S. on importing volumes to feed their own demand in America or in U.S. First of all, these are the big exporting countries of wood products in the world. If you look at Canada, the biggest, everything from Canada, a bit over 20 million cubic meters goes into the U.S. And the total consumption in U.S. is roughly 100 million cubic meters. On top of the Canadian volumes, you also have to include Sweden, Finland and Germany. Those 3 roughly 5 million cubic meters currently going into the U.S., meaning that some 25% of the U.S. consumption of wood products is actually imported. We don't know what will happen to the tariffs, but it's at least information that is important to understand when -- trying to understand what is going to happen in the future. But Anders, there's a scarcity of sawlogs, sure. Prices...

Maybe I should just mention on this graph, we have Russia included. This is official statistics that we have compiled. Our feeling maybe is that they are not really that much volumes in the market, at least in the markets where we act, but this is official statistics that we have included.

And the volumes from Russia today go most probably more to the East rather than to the West. Correct.

The result then. Of course, it's a very lackluster result. As Henrik already have said several times. The economics do work up in the middle and the north part of Sweden, but running a sawmill in [ Västernorrland, ] the county that we have our 2 sawmills located, it's difficult. It's a challenge. Looking year-over-year, we have the same lack of profit, the 2 years -- after the 2 super years, '21, '22, we have seen that all the prices have increased 10%. Wood costs have gone up net after income from selling ships and biofuels have gone up a bit more than SEK 200 million and have taken away the effect of the rising selling prices.

All right. Then to Board and Paper, the one still delivering a good result. First of all, a couple of words just about the merger we did roughly 1 year ago. And the idea was to merge the 2 capital-intensive process industry divisions we have in Holmen, Board and Paper, in order to make the best possible use of the competence we have in the company when it comes to process industry and also over time to make sure that we are as cost competitive as we possibly can be. And now after 1 year, I must say I have a really good feeling about what we have done. We see results, which is promising. We worked a lot to merge not the least the marketing department in those days, the 2 different business areas, and it's working fine. We have a slide here over the Braviken Paper Mill where we now are trimming in our new product on PM52 producing packaging paper as well, which will be interesting to see. So all in all, when it comes to what we've done, I think it's been absolutely the right decision and happy about what we have been able to perform so far. Okay. A few words about the paperboard market, already said, a bit muted, a bit slow at the end of the year. And when you look at the graph, you can see that, sure, '24 is a little bit better when it comes to demand than '23, but not back to where we used to be. And also a little bit more capacity in the market, which means that operating rates are not that good in the market. And in our case, well, our order books are healthy. We've been able to increase deliveries a bit and prices are more or less stable. Over time, demand will for sure increase so that the capacity utilization rate in the industry will come back to normal or really good levels. We have a situation when it comes to paper, but for different reasons, which are fairly similar, we have a structural decline over time. We see that in '24, demand was roughly at the same level as '23. On the other hand, we had a big drop in '23. Here, as it says in the headline, oversupplied market, for sure, it is. But here, it's also extremely important to make sure that you are not running with too low operating rate because then you have a problem to distribute your fixed tonne. If the volume is simply too small, you have an obvious cost problem. Another factor here, which is interesting to follow is, of course, it's not good for Germany, electricity prices are high, but it's actually good for our own cost competitiveness when it comes to our paper production that the cost level in Continental Europe is a bit higher. We've been able to do well. We have increased our market share. We have some interesting niches where we do really well like booked paper. And also here, prices are relatively or more or less stable as we speak. And we've been able to run with clearly higher operating rate than our competitors in the business. And Anders, as I said in the beginning, we've also been able to make some money.

Yes. After a stellar performance in Q3, where we delivered an extremely strong result, profit fell down in fourth quarter. We had a maintenance stop at Iggesund Mill, the usual one that we have during the autumn. We also had the rebuild that Henrik alluded to of the Paper Machine 52 in Braviken. Took a toll on profit by some SEK 250 million in higher fixed cost, maintenance cost, higher variable cost and some volume -- losses of volumes. But since the market was a bit weaker, we took more downtime anyhow, and that also impacted profit a bit. We had revenues from selling emission rights and a bonus from the U.K. ROC system of some SEK 100 million that contributed positively. We saw wood costs going up a bit more than SEK 50 million quarter-over-quarter. This is a gradual movement. We had a step change in fourth quarter, which is more of a technical nature, what harvesting we made. Year-over-year, we have seen that wood costs have gone up close to SEK 0.5 billion. We have been able to balance that cost increase by increasing volumes. We have increased quite a lot, both in paper and board. We have also been able to run our machines more efficiently, and we have been able to sell more support services to the grid. But the profit have gone down from the high level in '23. This is partly due to that we have had about SEK 0.5 billion of electricity hedge gains in last year or '23. And we also have seen that prices for paper have come down from super high levels in '23. And maybe a word on the fire at the Braviken mill. We had a fire in the biofuel burner just before Christmas. Production was out 4 days, and then we were back in operation for the paper machines. But the biofuel burner is out of operations. So we have to run a combination of other, a bit more expensive burners. This is expected to cost us some SEK 40 million in the fourth quarter. That's our deductible roughly on the insurance. And we're still researching how the rebuild will be by -- of the boiler, but we don't expect more cost than SEK 40 million from this event, and that will occur in the first quarter.

The fire is never good, but we were lucky to be able to run as we can right after the fires. Okay. One last slide. You know about our business model. We are happy to have a business model, which we think is working really, really well. And also, we are one of the few companies, we grow trees with long perspective. We substitute fossil alternatives. And we are, which is extremely important, also a company, one of the few actually being net zero already today. Thank you. I think, by that, we are happy to take on any questions you might have.

[Operator Instructions] The first question comes from the line of Ravi, Ephrem with Citigroup.

Just a couple of questions. Firstly, on the forest valuation, it looks like kind of the wood prices keep kind of going up and, clearly, kind of the valuations of the forests are also kind of relatively stable compared to your competitors in your areas. On the wood prices themselves, do you see kind of the rate of increase in wood prices starting to taper off? Or is the wood price rate of increase still what you are seeing at the half year stage or the third quarter stage? And secondly, on the dividends, clearly, there's been an increase in the base dividend to SEK 9, although your profits were lower and your net debt is higher. Can you give us some color on your thinking behind kind of increasing the base dividend as well?

Shall we start by the forest valuation. I can take the dividend.

The price increases of wood, as Henrik mentioned, there's still strong demand for logs, but the pulpwood market seems a bit more in balance, probably affected by more downtime taken by industrial producers. So it's -- now logs are rising at a slightly higher pace than pulpwood. But it's sort of -- I can't comment if the pace has changed, but it may be a bit more stable on the pulpwood side.

When it comes to the dividend, we find it's a balanced way of doing it given how our business work, the money we make, our financial position. So it's weighing everything in together. And of course, over time, we should be able to slowly increase the ordinary dividend over time.

And I can add to that. We use the extra dividend as an expression that we actually -- we do have a very strong balance sheet, and we have had a shift in levels of profitability and the base dividend more reflects the shift in level while the extra dividend is distributing excess cash to our shareholders and should be seen together with the share buybacks as well.

The next question comes from the line of Ioannis, Masvoulas with Morgan Stanley.

A couple of questions from my side. First, on Board and Paper. Results for the quarter were somewhat below expectations. Can you comment on the product mix here as I believe you had some tailwinds in Q2, Q3. Have these repeated in Q4? Or are we looking at a more sustainable product mix for Q4 and potentially into '25? And maybe I'll stop here for the first question.

The product mix is -- in Q4 was quite at a normal level as we had very strong product mixes, both Q2 and Q3. So we had a normal -- I could say, normal product mix in the fourth quarter. You can also look at the deliveries, third quarter was seasonally higher and the fourth quarter is seasonally low. Maybe as mentioned, a bit lower than normal for the season. But if you take the deliveries for the 2 quarters together, they were on a normal level, reflecting the run rate that we have right now.

Very clear. And second question on renewable energy. We've seen weaker pricing in the past couple of quarters and potentially a rebasing of some of the green power demand projections as some of the industrial projects are pushed out in the future. Can you talk about your growth projects here? And within that, how should we think about 2025 CapEx?

Yes, you're right pointing out there is excess capacity right now in the northern part, especially it's higher than normal, driven by a lot of water in the reservoirs. It's a bit of an unusual situation. As I mentioned, we have 30% more water than normal at this point of the year. And there is a postponement of some of the green projects. We -- CapEx-wise, we have SEK 0.5 billion -- SEK 1 billion to spend on -- sorry, SEK 1 billion left to spend on the wind farm that we are constructing. And for the rest of the business, we are investing in line with depreciation. We have one wind farm permitted, Stormyrberget, but we're -- that we're evaluating when it's a suitable time to construct.

I think also when it comes to green projects, you're absolutely right that right now, it's -- you have seen a number of projects not being decided. But if you look at the difference in cost for producing something up in the northern parts of Sweden right now compared to, for example, Germany, which we looked at before, I'm quite sure over time, you will see new products coming on stream, could be data centers, could be other things, but definitely interesting part if you need green electricity, which you absolutely need in the future.

That's very clear. And sorry, just a follow-up on the CapEx. So is this SEK 1 billion left to spend going to be incurred in 2025? And in that case, is total CapEx around SEK 2.5 billion for the year?

Yes. Yes, it will be spent during 2025, the bulk of it. And roughly SEK 2.5 billion in CapEx expectation for the year in total.

Including the wind farm.

Yes.

The next question comes from the line of Lars Kjellberg with Stifel.

It's Lars Kjellberg at Stifel. I just wanted to check a bit what -- if you're seeing any changes in terms of the dynamics of the industry considering the high wood cost situation and also in Finland, of course, where wood cost seems to be even higher. So ultimately, the question is, are you seeing any actions to reduce demand for wood? Or is it just business as usual? And the kind of the question that comes next is the European consumer board industry is quite dependent on exports. And given the sort of isolated wood cost increase that we've seen, how does that change the export opportunities and the competition you're having from clearly lower cost regions and increasingly so?

Where to start?

We can't really see that -- you can see maybe that all mills are not running full, but we don't really see anyone -- to see a change in demand, you need to close down definitely. And we don't see that, that has happened.

Maybe you saw the slide I showed where we said that it's our calculation based on what you pay for the wood and what you have then left. We should be able to pay for the wood, and that's also what we see in the market that they are running.

And when it comes to paperboard, we can't speak for the rest of the market, we can speak for ourselves. We sell on quality. And for us, we have a normal relationship between price and variable costs. But it could be a different situation for different players, but for us, we're selling on quality and not price when we -- not in any market and not even when we sell outside of Europe.

All right. Just one more question, if I may. In terms of the rebuild that you've done at Braviken, what -- is that back to normal operations now? And what sort of mix are you trying to run on that rebuild machine?

It's up and running as it should, and especially we are now running the products we have already produced before on that machine like book paper, et cetera. The new products, we are just trimming in. So it's a bit too early to say, which volumes to what markets, et cetera. It's still to be seen.

I think, just to be clear, this is a very novel product, and it takes some time to reach the product quality that we are happy with and are prepared to launch in big scale to the market.

The next question comes from the line of Perry, James with Citi.

James Perry here from Citi. I'd just like to ask about Wood Products. Would you be able to give any more commentary on how you see the trajectory of the market for 2025? And really, are you seeing any indicators of recovery?

Actually, we don't see anything for the better when it comes to demand picking up. I think even more important right now, and as I said before, when you see that the price is actually a bit higher, it's because you have to look at the supply side of wood. It is a global scarcity of sawlogs, which is restricting what supply actually you can see. And the question is when it picks up, what will then happen, which is extremely important. But so far, we haven't seen it.

The next question comes from the line of Santavirta, Robin with Carnegie.

First question I have is related to the Board and Paper segment. I don't know if I missed it, but could you distribute the sort of top line and bottom line or distinguish between the paperboard business and the graphic paper business?

You didn't miss it because I didn't say it. 50-50 in turnover, slightly higher EBITDA margin in paper than in Board. But there -- it's not that a big difference between them.

All right. And then could you just briefly describe how the year has started when it comes to order intake of those segments of Paperboard and Graphic Papers. I guess you said that demand was quite lackluster. We know demand was quite lackluster throughout the year 2024 and especially in the end of it, has the year started better than it ended in either of those segments in terms of order intake.

Robin, you know that January is the slowest month of the year when it comes to order intake. It's a bit too early to say where it's going. It's always slow.

I understand. The final question I have is related to harvesting conditions in Sweden. And in the Nordics overall, we have had quite a mild winter. Has that impacted harvesting conditions for you guys? What are you seeing? And then in relation to that, you alluded to the point that the scarcity of wood raw material globally. If you would compare the cost of logs and pulpwood for you guys compared to your global competitors? How is that situation at the moment?

With logs, it's quite easy because 70% of your production cost is a log. And our assessment, it sort of, we are not higher than the most important exporting countries on the log side. Pulpwood, it's difficult. You have to -- for example, in paper, it's actually more important and paper is quite -- you don't use that much pulpwood when you produce paper the way we do. We use more power. And then it's more important for us is in relative terms, how expensive is energy in Germany than in Sweden. That's a key figure for us to look at. In consumer board, we are such a premium producer. So the relative cost of pulpwood is not really key to us. It's an important element, but it's not super important.

And what about the harvesting conditions?

It is difficult when it's not frozen. That's obvious.

Great challenges. We are not in 2018 situation where you had this sort of panic in Sweden, but it creates some challenges and probably will add to some costs in the first quarter, but no significant ones.

All right. Can I squeeze in the final one, Södra is selling forest assets in the Baltics. Is that something that would interest you?

We can't comment on...

It's a good question.

It's a relevant question, but we can't comment.

But if you're not be interested at all, it would be easy to comment.

Well, then you know sort of when we no comments.

The next question comes from the line of Kopfer, Christian with Handelsbanken.

All right. Just one question from my side on Wood Products. If you look at return on capital employed, you have had pretty much 0 on that line for 2 straight years. So if you look ahead, what are you hoping for? I mean, realistically, you should not perhaps hope for lower prices for sawlogs, so can you do anything internally? Or is the only thing basically that you hope for is better market?

We do a lot of things internally, but with 70% of the cost being logs, of course, the situation on the wood market overshadows everything and especially in the southern part of Sweden. We have taken down production volumes. We adapted that. We are not going full throttle on production. And we're doing reshuffling of volumes, taking down logs from the northern part of Sweden to southern part of Sweden, of course, adding transport costs, but it's a bet. So we're trying to manage situation as well as possible. But you need the spread between log costs in the southern part of Sweden and pulpwood, what you get for the ships, the residues when you produce wood products is just too wide today in the southern part of Sweden.

It looks like pulpwood is more or less not exactly the same price. But the spread is not so big between the different parts in Sweden when it comes to pulpwood. But in sawlogs, it's really a big difference, which makes it a bit challenging as Anders described. But we have a lot of forest. We have logistics opportunities, et cetera. So let's see.

Right. But hypothetically, if returns on capital employed stays at these kind of low levels, I mean, year in and year out, would you just, in that case, continue to run it? Would you continue to invest in the business unit even if returns stay at a very low level?

Normally, you don't have these imbalances between different markets, regions. These tends to evens out. It's more of a matter of time. You can see that there are still -- it's not only us moving logs from northern part of Sweden to southern part of Sweden. You have different independent actors that are, of course, going up, fetching logs in the northern part of Sweden, transporting it down to the southern part of Sweden. So normally, these imbalances don't prevail.

And Christian, wait for the construction sector to normalize and pick up a bit, and then we'll see how it will be played out.

The next question comes from the line of Lindstrom, Oskar with Danske Bank.

A lot of good questions already. I thought I'd ask you a little bit about capital allocation. I mean you continue to distribute extra dividends and -- but except for the wind farm investment that's ongoing and will have some cash out this year. You don't really have any major projects. And I seem to remember that you sort of decided not to go ahead with a new sawmill project also. Do you feel that there's sort of a lack of attractive investment opportunities in the forest industry in Sweden for you? And if so, is that sort of a cyclical issue or more of a structural issue? And could you be interested in buying existing production units or assets instead? Do you have any...

It's very relevant questions, Oskar. I would say, if you looked at us, you have to -- we are probably the ones that invest most in our existing assets. We don't take out the old machines and put in a new one. We did that 25 years ago. And -- but in modern times, we have not done that. We are the ones that have invested most in paper assets. And hence, we are the ones that customers want to do business with if you're a paper buyer. And the board assets, we have invested targeted investments to ensure that our pulp mills is in very good shape. We make targeted investments in the board machines so that they actually are able to continue to produce probably the best board in the world. So I would say that we are very diligent in investing in our existing assets. They are, in relative terms, in very good shape. But we don't really build new assets because there is not any more pulpwood available. There are too many machines in the Nordics for the supply of pulpwood. And hence, we have not felt that we should expand our consumption of pulpwood.

The last part is extremely important because without access to more raw material, I mean, it's very difficult to distribute your costs over a bigger volume. And that's the -- yes, sorry.

I mean, you did acquire a sawmilling business a while back, and then you also bought some other sawmilling assets. Is this a segment that you're interested in growing in, perhaps if not by investing in new capacity by acquiring existing assets in the market?

I think for a forest owner, like we are a big forest owner, it's a natural logic thing to own wood products, sawmills. And that's why we have -- if you look at what we have done in the last 5 years, we have invested quite a lot, both organic growth in the beginning. And after that, as you rightly say, also, we have done a couple of acquisitions.

But you have -- our fundamental value lies in our forest land. That's quite a low-yielding asset, as everybody can see. And we're quite disciplined on when we keep capital in the company and we invested in the industry into sawmills and industrial assets. We -- our focus is to get a good return on capital employed, the capital that the shareholders have let stay in the company. Sawmills are quite a good place to put that money because it's not a capital-intensive business. It doesn't require a lot of investments to maintain. You can run them. Maybe the curse of sawmills is that it's very difficult to put sawmills out of business. So you have to be a bit careful not to put too much capital into that business.

That wasn't really the answer you wanted, but it's a good description of how we think.

That was a good answer. Just a follow-up on your forests. Do you have any guidance for your harvesting levels both this year and perhaps 2 years out? And are you planning to do any sort of inventory, forest land -- forest inventory updates in the near future?

We have a harvesting plan, which is for the period 2020 to 2029, we should harvest 2.8 million cubic meter per year. We harvested a bit more due to the spruce bark beetle a few years ago, so that's why we're a bit below right now that 2.8 million, but that 2.8 million should be the average level for the years going forward. And normally, we take -- do this inventory every 10th year, and that's what most likely will be the case that will be the stock taking 2029 or something like that.

The next question comes from the line of Larsson, Linus with SEB.

First question on this very illustrative slide that you show on the disconnect between wood markets and forest property pricing. What is Holmen doing to capitalize on that? Or what could Holmen be doing to capitalize on that disconnect, please?

Unfortunately, we are not allowed to buy forest land from private individuals unless we sell the same volume. So it's not really anything we can do to capitalize on this disconnect. But it's sort of -- the pricing today for -- what you can note is that especially forest land with a lot of a high volume of standing trees that are ripe for harvest at relatively cheap in Sweden today when you compare to the wood prices. But unfortunately, we can't capitalize on that.

Unless you buy land in -- outside of Sweden, I guess?

Yes.

Yes, you can say that.

And then maybe a couple of follow-ups on your Board and Paper division, just dissecting the results a little bit. And for instance, in the fourth quarter, could you say what income you may have had from energy hedge activities or you mentioned this carbon-related and ROC's income. So if you could maybe put any type of numbers on such P&L impact in the fourth quarter and if there are any significant changes in the first quarter, please?

Hedging, we hedge the electricity price. So that's more or less fully hedged for the quarter. Next year, our hedging levels are roughly in line with what we have today, slightly lower. So some tailwind, but it's not a significant tailwind. Other than that, it's SEK 100 million roughly income from emission rights and ROC's bonus that we had in the fourth quarter where that was sort of out of the ordinary.

So that was SEK 100 million in the fourth quarter, and you're not expecting any of that in the first quarter?

No.

No.

And then maybe -- I mean, just I mean to the extent that you can comment on pricing, I mean, we've had an environment, a market now with low operating rates, yet prices have held up reasonably well. How do you see that dynamic develop in the year that has just started? And I'm thinking about, I guess, both board and paper within Board and Paper.

I think for paper, remember that we've had quite low operating rates for some time now, and it's more about costs rather than the operating rates. And we'll see where it goes. But right now, as we discussed before, cost is quite high on the continent. And when it comes to board, as I said before, prices are stable.

Right. Okay. So you're not really seeing any change in the immediate future at least. Okay.

The next question comes from the line of Mittal, Pallav with Barclays.

A couple of questions. Firstly, on tariffs. So as you were highlighting, there is a significant risk, especially regarding the import of wood into U.S. and the key countries right now are Canada, Germany, Sweden and Finland. So do you think if there are some tariffs imposed, then there will be more supply domestically in the Nordics? Do you think that will impact the wood prices and there is a scope that it comes down because of that?

Very difficult topic, this whole tariff topic to have a view on. It's a lot of ifs. The challenge for the U.S. is actually to -- how should they live without the imports from -- especially from Canada. So it's a dynamic that it's difficult to see through.

Sure. In terms of the maintenance shutdowns, can you just clarify how we should expect that quarter-by-quarter in '25 versus '24? Because based on the release, it seems it will mainly be Q2 and Q3 in 2025?

Yes, we will have 2 stops. We have a biannual stop at our English mill in Q2, and we have the Iggesund stop in the Swedish that we have annually in, I think, it's the third quarter.

The next question is from the line of Hathorn, Cole with Jefferies.

I'd just like to follow up on your Slide 8, where you're giving the margin gaps between pulpwood and the pulp producers. I'd just like your thoughts on what about the other cost inflation that we're seeing there? Because pulpwood, everyone knows has been exceptionally challenging for the market. But we've also seen inflation around labor. We've seen inflation around the non -- kind of direct costs. Do you think that margins are probably more challenging than the traditional just pulp price less wood cost? I'd just like your thoughts around that. Are margins probably more challenged than just the pulpwood would suggest?

Yes, they are, of course. You have -- I would -- sort of our calculations based on our experience is that chemical costs are up 40% pre-COVID or pre-energy crisis. Personnel costs are up 20%. So of course, you have a margin compression, but you can look at the numbers distributed by all players producing pulp. They're still showing pretty decent numbers despite these cost deflations of both wood and other materials.

I was just going to say on paper, Holman has done exceptionally well. I'm just trying to understand what do you attribute the strong performance in the paper business to? And how should we think about it going forward? Is it the -- what you've talked about, the gap between old newsprint and recycled fiber and energy costs on the continent versus how much has been being able to run your business with low operating rates? I mean, should we expect if energy prices come down and recycled fiber come down, then obviously, the margins of the paper division come down with it? Or can you maintain a stronger performance throughout the future just because of your own self-help running the business with lower operating rates? I'm just wondering how big a fact is the cost versus your own internal actions have made?

I think if you look at what happened between '22 and '23, you saw that prices came down a bit, and that's mostly related to cost in Continental Europe, exactly as you mentioned. Recycled fibers are important. Energy even more important. And for us, it's energy that's absolutely most important. And then, of course, we make use of more expensive pulpwood these days. But it's not only cost, but cost is important. We're also quite good in some niches where you actually need the virgin fiber.

You're quite humble, Henrik. We are very good at -- or our paper guys are very good at innovation. We are -- it's not -- of course, a big and very important thing is energy gap. But we actually help our customers save money by delivering paper that is lighter than our peers. We are committed to paper. We are the ones that have invested in rebuilding paper machines. If you're a paper buyer, you know that we will be here. We never closed down capacity when cash flow was 0. Our competitors did. We didn't.

[indiscernible] company, yes, absolutely.

And we help them save not only costs, but we help them reduce their carbon footprint. We are producing essentially carbon-free paper that's sort of if you buy from a German producer, your carbon footprint is 20, 30x higher. So we add quite a lot of value to our customers as well. So it's a combination of factors. It's not only that we have been lucky with the cost differences.

And then finally, on sawlog and pulpwood costs. If we did get any Russia-Ukraine resolution, and I know no one has a crystal ball, but do you think that any resolution there would encourage smaller Swedish and Finnish forest owners to give up their harvesting rights and kind of give some relief to pulpwood and sawlog costs quite quickly, if there was ever that scenario?

There is a difference between sawlogs and pulpwood. In the old days, when we had the imports from Russia, remember that there weren't really coming any sawlogs. It was pulpwood that came into not Sweden directly, but influenced the system a bit. So -- but who knows, it's impossible to know.

To be clear, it's actually only birch pulpwood that entered into Finland and you have chips coming from sawmills. The rest didn't actually come from Russia. But of course, it would have a psychological effect, if anything, if there's peace. Of course, it would add to the feeling that you actually could have a relief and that could have an impact on pricing.

Mr. Hathorn, are you done with your questions?

Yes.

The next question comes from the line of Melbye, Martin with ABG Sundal Collier.

Do you foresee any big price changes quarter-over-quarter Q1 versus Q4 on cardboard, paper, lumber?

We don't give the forward guidance, but I can -- I think you can sort of -- generally, there is quite a stable pricing environment in all the markets we operate right now.

Okay. And say, what would be the yield on the forest? If you were to buy a forest, you illustrate -- you hint that the profitability is good. What would be the yield on the forest today in your opinion?

Implicitly, depending on how you do the DCF, but it's higher than it has been for 20 years. But I will not comment on a level. It becomes such a complicated topic.

[Operator Instructions] Ladies and gentlemen there are no further questions. I would now like to turn the conference back over to Holman management for any closing remarks.

Thank you very much. Very good questions and for taking your time and showing interest in our company. Look forward to see you soon again. Bye-bye.

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