Outokumpu Oyj (OUT1V) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the Outokumpu Q2 2021 pre-Silent Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Linda Hakkila. Please go ahead.

Thank you, operator. Good afternoon all, and welcome to follow Outokumpu's Q2 '21 pre-Silent Conference Call. My name is Linda Hakkila, and I'm the Head of Investor Relations here at Outokumpu. With me today, we have our CFO, Pia Aaltonen-Forsell. Today, we will first start with a short update from our CFO, and then we are happy to take your questions. But now without any further comments, I will hand over to our CFO.

Thank you, Linda, and good afternoon, good morning, everybody. I hope you are keeping well in the middle of the summer here. And I think the weather has been rather hot at least here in Finland and it seems so even globally. So certainly, hope you are all keeping safe and well in these circumstances. But let's talk a little bit about markets and about the situation also relative to Outokumpu's business today. So I mean let me just get right on with it. So starting with the market situation, Obviously, we have seen a much stronger market environment already in Q1. And you recall that our guidance on volume, first of all, for the second quarter was to say that we will be in a rather small bracket, 0% to 5% higher on a global level for the stainless deliveries. And here, I would say we are safely within that bracket seems now here at the end of the quarter, that we are probably quite middle of the range there. So I think there, please keep in mind that our capacity utilization was high already in Q1. So the volume that we have produced has really been operating on those sort of high levels of capacity utilization, certainly also in the second quarter. Maybe a little bit of sort of description of the market sentiment per se. I think we are still in an environment, if I first look at Europe, where we have -- we are experiencing long lead times and what it means in practice is we said 5 months last time, I think it's extending even up to 6 months right now. So it means that we are very firmly booking into December or even beyond at this point in time. Obviously, then something that is still worth noting as well is that we, at this point, and I think I have May data points, so that's the most recent I have. But just looking at inventory through the chains and distributors in Europe, we are still clearly at lower level than average. And I think that may be something worth noting as well. I mean we are, of course -- we have seen this rebound from the COVID. But still, I think worth noting is that if we really look at what's going on from an underlying demand perspective, we wouldn't sort of necessarily say that, hey, this is some sort of new sort of high level, rather it's maybe a return to sort of a more normal level or even return to a more sort of 2019 level. But obviously, we have had so empty supply chains and this sort of refilling of them is clearly still ongoing with still low inventory volumes here. Maybe still just sort of from a mix perspective, I first want to confirm what we said earlier that while we have seen the rebound in the segments that are maybe kind of closer to end customer, we started to see the rebound first in appliances, in automotive, et cetera. And we have seen the rebound through all of the classical standard grades. We still talked last time at our info about the fact that for the more value-adding grades, we are more sort of dependent on the investment cycle and we expected the rebound of those to occur a little bit later in this cycle. And I think that's exactly what we've been seeing in Q2 per se and in the weeks -- mix still was, I would say, not back to pre-COVID levels, it was just slightly hovering there around similar low levels as in Q1, maybe just like really small sort of incremental improvements. But in the order intake, we have seen more of the rebound also to the value-added grade. So mind you haven't seen sort of the scrubber business return yet, but a lot of the others sort of value-added grades, certainly from an order intake perspective are back now. I'll jump quickly over to Americas as well. I think that's another significant market for us. And obviously, in Americas, we have the same sort of situation with a strong market, obviously, also still low inventory level at distributors and clearly a very dynamic market environment right now with clear GDP growth and also a lot of stimulus, a lot of activity in the economy right now. So a good market environment there. And maybe still kind of as a final note on the market, I'll just also comment on ferrochrome. Ferrochrome, obviously, benchmark price for Q3 confirmed to be at Q2 level at the $1.56. We've also seen here a tight market situation. And a part of this is, of course, even tragical if I may use that word, if you look at some of the sort of key-producing countries in South Africa, this is visible in the figures that the third COVID wave is really shaking the country right now. But also from some other sort of ends of production, inner Mongolia still suffering from significant electricity squeezes, et cetera. So clearly, with good demand and a somewhat challenged supply situation, the sort of rollover of the benchmark price was maybe sort of well aligned with that one. Trade protection, I think you have all noted there, the safeguards continuing for another 3 years, basically with the sort of same scheme also with the 3% relaxation per year. And I'm sure you also noted the antidumping on Indonesia and India on cold-rolled imports from those countries. So that was also confirmed during the quarter for Indonesia, it means about 20% anti-damping tariffs. So I think those were sort of good conclusions. Obviously, what is still ongoing is the sunset review of the earlier Chinese antidumping tariffs. But so a lot of sort of confirmatory or sort of concluded actions there on the trade protection side. And finally, let me then move on to the cost side, where I think there's certainly a lot of interesting elements we could talk about. Maybe I'll start a bit with scrap. I mean, just maybe not to discuss cost per se, but specifically just the situation in the market given that we have a good stainless steel demand, obviously, that also translates into a lot of demand for scrap. So we have seen there somewhat tightening situation. And I think we have -- I just want to reassure you that to the level of sort of optimal usage of scrap, I think we have been able to get access to the scrap that we have set out to procure. And from that perspective, situation has remained under control also in the second quarter. Then sort of more generally on costs, obviously, from sort of a variable cost perspective, there's something certainly to be said also about variable cost efficiency and overall efficiency in a situation with high volumes. Efficiencies have been good. So even with a little bit of inflationary pressure in the second quarter, I would say, particularly from a European perspective, I think we have managed really, really well on the cost side there. In the Americas, I think we have a little bit sort of a tightening. The freight costs have increased a little bit, I think that may be worth noting, but freight cost and ferrosilicon cost. But the fact that I'm mentioning these does not mean that they are really significant. It's just to say that from an overall variable cost perspective, I think if we are discussing inflation, we should probably more be looking into the later part of the year at how inflation will be playing out there. It's not really a Q2 topic per se. And on the fixed cost side, obviously, we had some more maintenance in the quarter. We talked about 10 million extra for the month -- quarter compared with Q1. And I think that's pretty much where we will land also from sort of a wages perspective. I just want to say that we have definitely continued and already executed quite a lot on the significant personnel reductions. However, please take into account that with an improved result and also with an improved situation when it comes to, for example, production volumes, production bonuses, et cetera, there will be somewhat more bonus payments also accounted for in the period. And then finally, a note on the balance sheet. In the second quarter, obviously, an important private placement equity issuance, and that EUR 210 million was all used to pay down debt. So we've had an improvement also in our credit rating. And then from a seasonality perspective, Q2 is typically one still building working capital. And I think with good sales as well through the quarter and throughout the end of the quarter, I would expect there to be still from a sort of seasonality perspective building working capital in this quarter and then typically in Q3 and Q4 sort of getting the cash back in. But I think with that said, my brief introduction is done, and I think we can now open up for the Q&A, please.

[Operator Instructions] And your first question comes from the line of Patrick Mann from Bank of America.

I just wanted to ask maybe around inventories and revaluations, how we should be thinking about that in Q2?

Yes. Patrick, and really good question. Yes, especially as that was rather significant positive in the first quarter, it was on group level, about EUR 40 million, EUR 42 million, I recall, positive in the first quarter. And I would say, overall, it's still going to be a positive number, but not nearly as positive as it was in the first quarter. So I mean, we have not sort of yet closed finally the books to really have the final number. But I think it's probably more in the magnitude of a sort of very low double-digit figure as opposed to the sort of EUR 42 million that we saw in the first quarter.

[Operator Instructions] Your next question comes from the line of Tristan Gresser from Exane.

Can you please remind us what is your current status on carbon credit inventory, and especially when do you expect to run out and buy actively on the market, assuming no change to the current policy, which is right now a 2.2% annual decline?

Yes. Yes. Thank you, Tristan. It's a good question. And I think there's still some level of only sort of expectations and estimates here in what I will tell you. But I think we based on how we currently estimate both the reduction in our emissions and then also the sort of future free ETSs that we would get, I think we will go past sort of the middle of this decade before we are in a situation where we would need to buy. And if we can be more aggressive on sort of the CO2 reduction, obviously, the situation could still change. Then just from a policy perspective, obviously, we would take into account sort of the whole period and would be able to buy, if sort of the situation was right. So when you ask specifically that when would you start to buy, I think that would more be then sort of a tactical question of thinking around this. But certainly, just from sort of when would we run out, we would at least go sort of past definitely maybe sort of even closer to the end of this decade.

All right. That's helpful. And if I just may, a follow-up. It seems that stainless will be excluded from the carbon border tax -- carbon border adjustment mechanism according to a draft of the policy. What do you think of -- if this is the case, is it a net positive for Outokumpu's stainless sector? Or do you view this negative?

Yes, yes. I think sort of from what I know about the carbon border adjustment mechanisms that are being planned for right now, there's also -- they would not take into account all of the scopes, Scope 1, Scope 2 and Scope 3. And I think especially in an industry like ours, the Scope 3 and sort of the full footprint really of also the raw material that we use is really significant. So I would say any mechanism that would be really meaningful would need to include all of the scopes. So I think that's sort of -- I think that's something that we are really sort of considering them and thinking about. And I think our primary focus will remain on reducing our CO2 footprint really for all of the scopes. And that's also what our commitment now is for working with Science-Based Targets initiative and partners.

Your next question comes from the line of Rochus Brauneiser from Kepler Cheuvreux.

A couple of questions from my side. Maybe just a brief follow-up on the border tax question. What is your view right now about the time frame until a definite solution on the way this will be designed can be expected? Is this just another year from now? What is your view on this?

You are asking a really, really challenging question because I think we've seen -- just look at some other fairly political processes, such as, for example, the safeguards. Obviously, we know that the renewal happened on 24th of June when there was exactly 6 days to go until the end of the month. So I honestly, I feel that I probably don't have any sort of better sort of final information than what you would already have at this point. So...

All right. Okay. I think you commented briefly on volume dynamics, Q2 versus Q1. And when you look at your order intake now, where would you see a bit more dynamic? Is this more now bound to Europe or to the U.S. at the moment?

Actually, both are really in sort of a positive, I wanted to say more, but the demand situation is good. I think in Americas, it's also seeing really sort of dynamically the whole GDP growth, the whole economy in a sort of very strong rebound. But we also see this rebound in our demand in Europe. And just comparing the lead times, lead times in Europe today, 6 months and beyond dynamic also when it comes to kind of customer inquiries. I mean customers are certainly interested in discussing annual contracts already for '22. And I think in some individual cases, we are already concluding on them. And I think then the same goes for U.S. as well. I mean, customers are really eager to book volumes. We have at least 4 month lead times in the U.S., which is long for that market. And certainly also having a lot of customers interested to discuss them too. So from that point of view, I think even though maybe the underlying dynamic is somewhat sort of from a GDP macro perspective, I think U.S. is really strong. We also see strong demand in Europe.

Okay. One question. I'm not sure how much you can comment, I was seeing some latest base price data for Europe pointing that the spot market could have reached to the EUR 1,500 level. Would you say this is a bit of a high number at that point in time? Or could you confirm it?

Yes. Well, anecdotally and for some individual case, you can -- of course, you can always see these kind of peak. But certainly, I mean, that is something very high, very unique. And more, I would say that just sort of looking at development teams, let's just look here back, I mean, in Q2 of last year, COVID started, and then we really started to see the pressure on prices and prices lowering from Q3, from Q4, et cetera. And we've certainly seen in already realized invoicing as well sort of the rebound from those very low COVID levels and back to something kind of more normal. However, when we now -- just looking at orders already received, it is clear that we see further price increases in line with, for example, CRU data and -- but that EUR 1,500 does seem to me as some sort of special case. So I think that would also historically be extremely high, of course.

Right. Great. And then, Pia, one last question is on your ferrochrome business, maybe to better understand that. Could you -- is it possible to give us kind of an average number, what the ferrochrome needs are across your typical stainless portfolio?

Yes, that's a good question. I guess sort of -- I haven't answered it directly in that way. Can I answer it sort of indirectly to say that in a sort of normal year we would use about 75% of the production that we do in ferrochrome internally, and then we would sell about a quarter externally. So that would sort of be on the balance of things. And obviously, we try as much as possible also for the fact, of course, that our ferrochrome is unique in being so CO2, sort of it's only 42% of average global CO2 emissions in our ferrochrome. So obviously, we really want to use that and our mills are sort of geared towards using this internal ferrochrome.

Your next question comes from the line of Krishan Agarwal from Citigroup.

You sound very optimistic on the volume side of the things, and then when you get to 6 months of lead time to the Europe, can you talk about how much of these volumes are basically coming from the stronger market? Or is there any case of a market share gain for you guys at least in Europe?

I think based on sort of the stats that we have so far, I think sort of the rebalancing that we certainly would like to see is kind of what's the balance between the input and kind of the business of Outokumpu and peers. And I don't think -- if I still -- now I only have April data, and usually the first quarter of the month, we still see this sort of higher sort of import levels, and they tend to go down in kind of months 2 and 3. So if I just look at that base, I couldn't yet confirm that we have a higher market share, but that's not really maybe telling for the full quarter. So I think we worked really hard also on sort of finding those right spots for our business. And through that, obviously, competing also to achieve a higher market share. But based on the data right now, I would say it more confirms that we have also seen a rebound in the market.

Okay. Right. Yes. And then in the context of 6 months of no lead times in Europe, you would have clear visibility into the third quarter volumes. On the other hand, we have kind of a seasonality kind of a volume going down. So how should we think about the third quarter situation? Are we looking for flat volumes or some kind of an increase this time around?

Yes, yes. No, that's a really, really good question. And I will need to come back to the sort of precise guidance when we give our Q2. And I'll explain from a market perspective, I think we have really good visibility until the end of the year, and then sort of the exact timing of some bigger maintenance that we typically do in Q3. So when you speak about seasonality, I mean, partially it's, of course, driven by the fact how our customers typically act. And then we have also very often chosen to do some of the bigger maintenance work in that quarter. And we won't have any big maintenance on the ferrochrome side. But on the stainless side, there's probably a couple of sort of bigger things we would need to do also on the melt side, et cetera. So that's where I think -- that's why I wouldn't yet really say can we stay flat on the volumes, or -- typically, volumes would go down for Q3, and then we would see a little bit of a rebound in Q4. That would be the normal seasonal pattern. And now obviously, with a strong market exactly how we will position that, I'll need to come back in the Q2 release.

Your next question comes from the line of Luke Nelson from JPMorgan.

Just a few for me. Firstly, on ferrochrome. Can you give us a sense of what the mix between spot and contract sales is quarter-on-quarter? I think at Q1, you mentioned that the sensitivity would be below the sort of typical EUR 10 million per EUR 0.10 move. So maybe if you could just give an indication of how that is tracking so far?

Yes, yes. Look, thanks very much. And actually, a really good question. And I think sort of based on the data points that I have today and also how you're sort of seen how my comment has been interpreted, I think there's been a lot of sort of sense and understanding into the fact that we got a little bit of that sort of price improvement already through in Q1. And some of the things that I tried to look into was also in a really good market situation, how have we been able to produce. Are we getting the volume out that the market is asking for and then how much of those benefits can we get in, and how can we kind of balance the contract part with any sort of additional spot part. And we've obviously tried to produce as much as we can, and I think we have been running fairly well as well through the quarter. But I think still, overall, when you just look at the normal sensitivity and then look at the fact that we got in some of those price improvements already in Q1, I think it's very much in line with what I said about a month or 1.5 months ago.

Okay. That's very clear. And then just following up from the comment you made before around Q3 and some maintenance in the melt shops. Sort of what's the quarter-on-quarter -- so what's the expectation of that in terms of absolute levels, but also maybe relative, I think, to this quarter, there's around EUR 10 million maintenance at a group level. Is that sort of similar level of maintenance in Q3?

Yes, I think it could be similar, I think Q2 or maybe just a little bit higher because of the duration of some of the maintenance. We are not talking any sort of significant step up. But if it's similar, then I'm really happy; if it's a little bit higher, I think it's still kind of within the boundaries for what we could expect. And I think the real sort of sensitivity here will be around how to do the volumes and sort of how to place the volumes Q2, Q3 -- sorry Q3 and Q4, in particular. And obviously, there's also -- we have to -- just looking at how much volume has usually dropped for Q2 to Q3, I mean, obviously, we are talking about tens of kilotons, and that is based on the ore production volumes in the quarter. So unless we kind of reposition that to later in the year, then that would sort of be the normal pattern. So we still have to come back with this guidance then in our Q2 really.

Okay. Sure. I suppose high level as well. I probably know that you're [ not supposed to ] comment on volumes. But given seasonal effects, heading into the summer periods, but you do have higher base pricing coming through. Is it still -- is it reasonable to expect that we can see further sort of significant EBITDA improvement given those moving parts as we head into Q3? Or is it still too early to make a judgment on that?

Well, I think I can comment on some of the parts, but kind of on the overall EBITDA guidance, I think it's sort of a little bit too early to give it at this stage. But I think -- I mean, exactly, as you said, sort of on the pricing side, you see that from the CRU stats, we can confirm that from orders that we have already received, it is to say that we are still on an improvement path, on an increasing path when it comes to prices. So it's sort of during Q2, we saw more kind of a return to something more normal, and certainly we will continue to see improvements after that. And those obviously are really important then for the contribution margin. And I think that's something definitely to keep in mind. On the other hand, volume is super significant for us, both sort of on the efficiency perspective, and then obviously, just from sort of playing absolute euros that we can earn on those. So it will be -- those will be 2 big drivers that will need to be taken into account. And then I think a third one, too, I think worth mentioning because it's been so significant this year is then also the impact of metal prices on raw materials and on hedging. And as I described before, I mean this was really supportive in Q1, and it's only going to be sort of a small number in Q2. And then let's see where will commodities prices go and where will we see nickel price, et cetera, and that dynamic also needs to be taken into account. And there, I think with the visibility that we will have early August, we will then give our sort of best current view of that at that point in time.

Okay. That's very clear. Sorry, one final question for me. Just in terms of headcount reductions that you touched on, can you just remind us what the sort of cash out effect will be from the reduced headcount in Q3? And whether there's any additional provisioning or anything that's taken into account?

Yes. There is no additional provisioning of any sort of significant amount because we did the sort of big provisions end of last year. Overall, the cash of this year for those provisions will be north of EUR 50 million -- EUR 50 million, EUR 55 million. We have seen already more than EUR 20 million in the first quarter. I cannot yet confirm the second quarter figure for you, but I think it will still be there pretty significant as a lot of the cash out happens at the point when the person leaves. There are different -- there are different ways of settling this in different countries. So that's why I would say there certainly can still be a tail in both Q3 and in Q4. But we do have a heavy burden of the cash out, particularly early in the year.

Your next question comes from the line of Harri Taittonen from Nordea.

Just a question on the typical relationship between the transaction price and what happens to your average selling price. I mean, I know that it's also very high level thing. But I mean, in Q1, that the relationship was that transaction prices were up by about 22% and your average sales price in Europe was up by a bit less than 10%. And then it's just sort of -- it's understandable that the volatility is lower, of course, for your realized prices. But I mean, in any way -- I mean, is it possible to give color on how -- should there be sort of difference in the dynamics in Q2 because, again, we have seen the transaction prices moving up about the same amount by a bit above 20%, sort of trying to gauge what outcome might look like.

Yes, yes, yes. No, I certainly understand the question, and I'm sort of thinking about a few ways of maybe kind of addressing this question. So first of all, I think the dynamic that we already saw in Q1 is certainly -- there's a fair chance that it's valid also in Q2 for a few reasons. I mean one of them obviously is that we have sort of a base in our orders that are the longer-term contracts. And I don't think we have ever really said exactly how big a share it is. But it is still there. It's sort of a platform that we stand on and it creates sort of a certain base dynamic into the way sort of how we operate. And then you have to also keep in mind that there are annual contracts. Of course, there are also contracts, for example, 6 months, et cetera, but there could be annual contracts even. So some of the pricing will then kind of stay there also as a stable year base for the year. And that's why -- that's one reason why you could see these deviations. And then obviously, another one, at least for me worth mentioning is then simply timing as well because you know that between the long lead times that we have right now, what we see right now in higher prices, in order intake is obviously something that then typically we would now invoice in Q4. So it also means that we are kind of building up in our order stock these kind of gradually increasing prices. But then in realized invoicing, for example, in the second quarter, we probably still have a lot of goods that were priced in early in Q1, maybe kind of even late Q4. So I think that's why it creates this kind of, should I call it a land maybe, but there's also never sort of a one-to-one relationship between the transaction price that you can see and our realized invoicing.

Yes. No, that is good. And just on the contract negotiations. I mean, can you remind typically when they start? And when they are kind of fixed? And is this year going to be different? Everybody's quite concerned about the availability for volumes.

Yes, yes. I think the dynamic is somewhat different this year because I would say a very typical pattern is to go into those really intense negotiations only really sort of towards the end of the year. I mean, they kind of start during the autumn and then get really sort of intense more towards the end of the year. But at this point in time, I think we had a number of customers who really sort of expressed their wish to discuss already '22, and then even the sort of individual cases where we were already saying, okay, let's conclude. So I think the dynamic is different. And I think it's -- some of the reasons at least include that the supply chains were so dried out with the COVID, the inventory levels were so low that they sort of surge the sort of need for volume is now kind of through the chain there. And I think that creates a different dynamic this year.

Okay. That's great. Maybe just one last question on behalf of my colleague in the credit side, if I may, that's on the net debt to EBITDA target. I mean, you have basically comfortably reached the target already. And obviously, you communicated that the focus is still on the balance sheet sort of strengthening, but is there going to be some sort of time or -- any indication like when you might be addressing that target or target level again? Or is it part of the -- it's kind of the strategy time table that time comes later? Or how do you see that?

Yes. Harri, I think it's a fair question, and I think I guess everyone on the line can kind of safely assume that at least for everyone on the credit side, but I guess many others as well, this question has come up, that will you update the targets now with sort of clearly having kind of safely landed in sort of safe territory on the below 3 on the leverage. And I think that's why we choose in the Capital Markets Day to be so -- try to be very explicit to kind of continue to say we will continue to focus on the balance sheet. We really, really want to reduce the net debt. Obviously, now with sort of improved EBITDA figures also leverage gets as a measurement, then it sort of shifts very sort of rapidly, obviously, with changing EBITDA levels. And I just -- what I want to sort of clearly communicate is that from a management perspective, really the priority to make sure that net debt will continue to be lower is there. And then when we can or if we will update that as sort of an official financial target, we'll need to see -- we are obviously sort of somewhere in the middle of this sort of first strategy phase now. We launched it in November, and we are kind of working through the improvements on the EBITDA side. So we'll have to see.

[Operator Instructions] Your next question comes from the line of Ioannis Masvoulas from Morgan Stanley.

Just a couple left from my side. The first one on the Americas. You've noted the midterm EBITDA potential for that division in the past of around $150 million to $200 million over the medium term. That translates to about EUR 200 per tonne or so of profitability. But you seem to be already at that sort of level at the Q1 results. Can you talk about the potential to stay -- or to overshoot the target for the next several quarters if the current end market conditions persist? And just a second question, we've seen higher electricity prices across Europe. Could you give us a bit of an update on how you're exposed to that? And what sort of incremental cost headwind we should expect in Q2 and possibly in Q3 relative to Q1?

Indeed. Thank you very much. So on the Americas question, I do think it's sort of a -- it's a really good question under these circumstances. So let me phrase it this way. I think that what we want to ensure is that for the Americas business, we have a sustainable sort of underlying business on this very healthy level of EBITDA and also EBITDA per tonne, as you mentioned. So I mean, obviously, with sustainable underlying, I also mean that I wouldn't count them, for example, hedging impacts or metal inventory valuation impact, et cetera. So I would really be watching that sort of underlying EBITDA development. And I think we are still working on many of those important topics there. Obviously, with higher volumes we've -- that's an important factor. We need to have sort of the right -- we need to have the right volumes there. We need to have the right mix. We also need to still work ensuring our yield, cost base, raw material, what we call slab cost optimization, having all of these in really super shape. So I think to your question that is there sort of -- is this cyclical? Is there a point in the cycle where such a midterm target could even be overachieved? I think we'll have to probably look at Q2 figures and look at how much result do we have there, excluding hedging and the sort of raw material impact, I think that's going to be one important sort of key factor to look at. And certainly, I think that we have -- we have a good business in the Americas, and it's now starting to show some of the strength. So I do believe we are on a good track there. Then to your second question on the higher electricity prices. Yes, indeed, I mean, we do have exposure to electricity prices. It is very rare that we would buy sort of pure spot. We have a certain that we call hedging strategy, but it's obviously sort of contractual arrangements and there is other mechanisms to make sure that we are kind of on a solid base. Nevertheless, I would say that obviously, with the sort of trend in electricity prices that we have seen now, it will gradually start to impact us. And you know we do have 10% of our cost base almost in the sort of electricity energy buckets. So we are not immune to it, but I would say that we certainly don't get this sort of direct big hits here either. So it's more of gradual thing.

There seems to be no further questions at this time. Please continue.

Thank you, operator, and thanks, everybody, for really, really good questions. I think it gave an opportunity to sort of further talk about some of the details and particularly also around pricing that I think are important dynamics to watch as we speak. So as said, we will come back with more volume guidance also on Q3 than in our Q2 release as obviously with a lot of other important information. So then talk to you soon again. And with that, Linda, I would hand back to you.

Thank you, Pia. First of all, thank you all for listening our pre-silent conference call today. Before we close the call, I would like to remind you that we will start our silent period tomorrow on July 6 and will continue until our January-June result is published on Thursday, August 5. But now have a great summer, and talk to you in August. Thank you.

This concludes today's conference call. Thank you all for participating. You may now disconnect.