Stora Enso Oyj (STERV.HE) Earnings Call Transcript & Summary

Hello, everyone, and warm welcome to Stora Enso's Capital Markets Day 2025 here in London. And to all of you joining us via the webcast as well. My name is Jutta Mikkola, and I'm the Head of Investor Relations here at Stora Enso. And with me today on stage will be our President and CEO, Hans Sohlstrom; our CFO, Niclas Rosenlew; and our business area leaders, Andreas Birmoser, Carolyn Wagner and Johanna Hagelberg. I'm very excited about today and our agenda. And like the high-rise building, we are here today, Stora Enso is also reaching high and looking forward. So first, let's discuss the outcome of the strategic review and outline next steps. Then our focus will be on evolving Stora Enso and our strategic priorities for the coming years. We are also changing our reporting structure, which we will explain as well as our new group financial targets and the way to get there. You will -- then we will -- in the second session, we'll be rolling up our sleeves and taking a deep dive into the business. You will get insights into what drives our operations and sets us apart in the industry. Please be active and ask questions, especially during the Q&A sessions as well as during the breaks and lunch following the event. Our group leadership team is here as well, and they are waiting to have discussion with you. [Operator Instructions] So as I said, I'm super excited for today. We have a lot to share, so let's dive in. [Presentation]

Good morning, ladies and gentlemen. Really great to see you all here, and welcome also everyone joining through the webcast. This is an important day for Stora Enso and hopefully also for all of you. I'm Hans Sohlstrom. I'm the President and CEO of Stora Enso. Today, we are going to talk about the road map for the future, how we are building on strong foundations, how we are strengthening our business focus, sharpening our focus and how we are taking determined actions to build a better performing Stora Enso and maximize shareholder value. But before starting, we know that business success is all about people and it's about leadership. And I'm so proud to have with me here our group leadership team and would like to introduce them one by one so that you can reach out to them during the breaks or during the Q&A sessions and ask questions. It's a great team, hard-working, ambitious, and we are working hard, but we also have great fun together. So let's start here by the introduction. So first of all, our CFO, Niclas Rosenlew. Then we have our Executive Vice President in charge of People, Legal and General Counsel, Micaela Thorstrom. We have our EVP, Strategy and Sustainability, Tobias Baarnman. And now moving to the lower row here with the Executive Vice Presidents with the P&L responsibility being in charge and accountable of their business areas. We have first Cartonboard, Andreas Birmoser. Then we have Food Service and Liquid Board, Markku Luoto; Containerboard, Lars Volkel; Packaging Solution, Carolyn Wagner. We have Biomaterials, Johanna Hagelberg; and Wood and Energy, Pauli Torikka. And last but not least, we also have appointed the President and CEO for the new forest company, and he's also here with us today, Tuomas Hallenberg. Good. Let's move on. We have 2 objectives of today. We are going to share more information about the demerger of our Swedish forest assets as well as then also to affirm Stora Enso's strategic focus and way forward, the road map to achieving the updated financial targets that we have published yesterday. So where are we today? Stora Enso is a leading -- a global leader in renewable materials. Our purpose is to replace fossil products, nonrenewable materials with renewable products. Everything we do is based on wood raw material, renewable raw materials and replacing the fossil alternatives, plastics, cement and other. And our ultimate target is to maximize shareholder value. The most important KPI for me, for our group leadership team is total shareholder return. And the way we are maximizing shareholder return is really through high customer value based on innovation, quality, sustainability and with efficient, integrated cost-competitive operations. Our corporate culture, we call it our positive performance culture is based on 4As. And I bet if you ask any one of our 19,000 employees today, what are the 4As, they can all speak about the 4As of ambition, of agility, analytical approach as well as accountability and what it means for them and their work with their teams. So this is a snapshot of Stora Enso today. And I'm truly proud of the fact that Stora Enso is a part of solving some of the biggest challenges on planet, climate change. Last year, our products helped avoid 14 million tonnes of CO2 emissions through our renewable products, replacing plastics and cement and other fossil materials. Today, packaging is representing about 60% of our total sales, and we have leading market positions in all our businesses, and we'll deep dive into this throughout this day and these presentations. So how have we arrived here? Well, in the beginning of this millennium, actually, 80% of Stora Enso's roughly EUR 10 billion sales, 80% was printing papers. So newsprint, magazine papers, copy papers, and we all know about the declining printing paper business. During the 10 years back, 2015, still printing papers was the biggest business within Stora Enso, representing almost 40% of our turnover. It was bigger than packaging at that time. But since then, we have systematically invested in growing our packaging business. And most recently, we have also made some major investments here through the acquisition of De Jong Packaging as well as also our investment into Europe's most modern and efficient consumer board line in Finland that we are currently ramping up. And thanks to this systematic work on growing in packaging, where there are good growth prospects also for the future. In fact, our packaging business growth throughout the last 10 years has been above [ 4% ] per year. But now we are taking the next step to sharpen our focus even further. We have divested at the end of September 175,000 hectares of Swedish forest with 2 objectives: to strengthen our balance sheet, but also to confirm the value of forest land. We sold exactly at our book value, meaning an enterprise value of EUR 900 million. And we are now taking the next steps with the demerger of our remaining forest in Sweden, 1.2 million hectares valued at close to EUR 6 billion, demerger into a separate stock-listed company with our current owners as the owners of this company. And then also, we have announced that we are starting a strategic review of our Central European wood products businesses, which are non-synergistic with our core Renewable Packaging business. So I'm going to quickly talk through about the demerger, what, why and when. Well, we are creating 2 champions in their field. Stora Enso, the renewable packaging -- renewable materials company with a strong and increasing focus on renewable packaging, where we are maximizing profitability through leading with customers through our products and innovation and sustainability as well as operations that are efficient and cost competitive. The main targets for Stora Enso, the renewable materials company is, as published yesterday, to continue to grow as we have done during the last decade, at least 4% per annum and to generate an adjusted EBIT margin of above 10%. And we have the road map how to get there. We are convinced that we can deliver on these targets. The business is global. We are serving blue chip customers all around the world, some of the most valuable brands who are operating in 60 countries globally. The forest company is about value appreciation and growing the value of the company through constantly developing the assets in a sustainable way and also to develop additional new revenue streams. Looking at historical facts, and I'll deep dive into this later on, the value appreciation during the last 3 decades has been 7% for Swedish forest assets. And the current value of these assets is close to EUR 6 billion. So why are we doing this? Well, these 2 businesses, they have distinctive business dynamics, characteristics, and they also require distinctive business strategies for maximum value creation. And this is also the way how we can unlock not only the full business value by having a full focus on the very distinctive different businesses, but also to unlock the value for our shareholders. So when will this happen? The demerger will take place during the beginning of 2027. We will keep you updated, of course, throughout the whole process with our proceeding in this process. And during this time, we have the possibility and opportunity to carry on and carry out all the necessary preparations, but also to demonstrate the strength and attractiveness of both businesses. And we are organizing a Capital Market Day in a year or so during next year's time, focusing fully on the forest company. The financial targets, the strategy, the business plan for the forest company. So let's deep dive into the forest company. So what makes this an attractive asset for investors and owners? Well, looking at Sweden and forests in Sweden in general. So these are not only about our forests, but all forests in Sweden. Swedish forest assets have yielded a 7% value appreciation since 1990, over 3 decades. So forest is not only a sustainable asset as such, it's really a value engine. And if we break down now the 7% into pieces, we can see that during the last 3 decades, land appreciation represents 4.5% per year value appreciation. And in a way, it's natural because there is no more land produced. So land is a scarce resource. Then there is also more growth in Swedish forests than harvesting. And this means that the standing stock, the biological growth of forests in Sweden has exceeded harvesting and added 1% per year additional value through the growing standing stock. And in fact, this 1% is accelerating, thanks to new sustainable forestry practices. And then we have, of course, the wood harvesting, which has historically, since 1990, given a 1.5% return, about 3% of the standing stock has been harvested. And the margin for this business has been well above 50% historically during the last 3 decades. But there is increasingly new non-harvesting-related revenue streams that becomes more and more important all the time. Renewable energy like wind energy, solar parks as well as also recreational income from recreational use or other gravel and other land development and optimization. So what makes our forest in Sweden especially attractive within this landscape? Well, there is a simple answer, and that is location. Our forests are located optimally in the mid-south part of Sweden. where the productivity and the growth is significantly higher than in other areas in Sweden or North. Stronger and better productivity than, for instance, our main other forest-owning peers. And on top of this, in this region, in that mid-south part of Sweden, where our forest 1.2 million hectares are located, there is also an especially strong concentration of wood consuming forest industry. In fact, the forest industry in this proximity, in this region is consuming 40 million cubic meters of wood annually. Our standing stock on this 1.2 million hectares is 130 million cubic meters, and we are harvesting over 3 million cubic meters per year and meaning that harvesting is still clearly below the growth. So the standing stock is increasing 1% per annum, but this is something that also can be accelerated. And on top of all of this, there are also very strong sustainability features of our forests. Our forests are sequestering, binding 1.5 million tonnes of CO2 every year. And this gives us also opportunities for new revenue streams as we move forward. In addition to this, there will be an 18-year wood supply agreement in place between the forest company and Stora Enso. It will be with reducing commitments, gradually reducing commitments throughout that 18 years period. And this enables to provide to the forest company stability and predictability for the first years, for the first period, but then also flexibility to gradually build up new customer relationships and new businesses. The pricing will be market price based, and it's really important for us that this will be an independent company operating on market practices, so that we can really build an independent leading forest company. But then it's not all about harvesting. It's also about those new incremental revenue streams. And I'll give you some examples here. I'm truly proud of the fact that within Stora Enso forest, we have developed a world-leading digital tool. Nobody else has this. We call it Precision Forestry. And it's a digital model that is using artificial intelligence to all the time get more and more accurate, combining our data on our own forests with satellite data and laser scanning data on other forests. So we have been able to create a very accurate digital model of all forests, not only our forests, but all forests that exists in the Nordic countries and in the Baltics. And what's the benefit of this? Well, we have already with this model that gives really granular and exact data, we have managed to find in our own forests, tens of thousands of hectares more productive land. In addition, we can also protect the environment more effectively by identifying on a very granular level, valuable natural habitats. So it's all about forestry, but being much more data-driven, much more precise. And using this tool, we can improve our productivity, our income, but at the same time, also protect valuable natural habitats much more exact. We can even predict with a high level of accuracy where, for instance, certain species, endangered species are living or -- so we can also see that we are proactively taking this into account when we're, for instance, developing our forestry plants. Then we have renewable energy as another big opportunity for us. Our strategy when it comes to renewable energy is to develop ready-to-build projects because we have the land and we identify the optimal land for wind parks, solar parks. We apply for the permits, which can be very long processes, taking several years. And we also organize the land connections, build the roads, grid connections. So we have like ready-to-build projects. And then we sell these projects with the permits, with the infrastructure to, for instance, energy companies who are specialized in operating wind parks or solar parks. And we have plans in place now to commercialize 10 terawatt hours of wind park projects. But this 10 terawatt hours is only a fraction of the total potential we have on the 1.2 million hectares of land. There is many times bigger potential, but it takes time to develop this. So many of these revenue streams comes then fairly long into the future. Then we have the land value optimization. We constantly already today, we sell land with high set aside areas, and we buy land, which are more fiber-rich and more productive. Also through land planning and zoning for real estate, housing, industrial use, we can significantly increase the value of our land areas. And then last but not least, carbon storage. This is clearly a new emerging market since about 1 year back. With all the carbon sequestration in our land area, with all the carbon credits that we are -- that we have and new ways of actually capturing carbon without affecting forest productivity. For instance, by rewetting dried peatlands, which don't produce any wood in any case, by rewetting peat land, scientists have concluded that we can tie up 250 tonnes per hectare of carbon on these rewetted peatlands. And there are today more and more multinational technology company, leading companies that you have all heard about, who are in contact with us, asking us to sequester to bind carbon for them. They are prepared to pay to us so that we capture carbon on their behalf. And this is an interesting emerging business and new future revenue stream that we are going to build on a new market with new opportunities with all the data centers all around the world and all the energy consumed for data centers. The technology companies are eagerly looking for carbon sequestration, and they are prepared to pay to someone like us who can provide that service and also the evidence of their carbon being captured. So let's now move into Stora Enso, the renewable materials company with a strong focus on packaging. First of all, let's start by acknowledging facts. I mean, our profit, our cash flow is far too low. We know that, and we are working on it every day to improve profitability and cash flow. Since 2023, we have encountered an unusually challenging operating environment with record high wood costs, especially in the Nordics, with geopolitical uncertainty, which has fueled uncertainty among consumers. And what is really driving our demand is consumer spending. So with lower consumer spending, also demand is lower. And at the same time, we have gone through an unusually heavy investment phase. But since 2023, we are taking determined actions to improve our cash flow, to strengthen our margins, expand our margins and improve our profitability. I'll give several examples about this later on during this morning. And we will continue to focus on our 4 strategic priorities, which is to lead in customer value through customer-driven innovation, sustainability and quality to continue growing faster than the market through our cost-efficient assets through our offering and our collaboration, winning with customers. We will continue focusing on expanding our margins through our business and customer focus as well as through our positive performance culture and our systematic way of working on value creation initiatives, which you will hear more about later on. And we will focus on generating cash with high conversion ratio as well as disciplined capital allocation. Also more about this as we move forward. So these are our 4 strategic priorities. They have been for 2 years, and they are going to be also for the years to come. These 4 strategic priorities are built on 5 strengths or positionings that I want to explain and open up more to you in the next. So first of all, all the markets we are operating in are growing, driven by strong sustainability drivers. We have exited the declining printing paper business and everything we have now in our portfolio, there is long-term growth driven by consumer preferences and sustainability drivers. We also have leading market positions in all the businesses we operate in. And we have a broad, very strong differentiated product portfolio, which is based on customer-driven innovation. And our assets are well invested. We have strong assets and cost competitive asset base. And last but not least, we have now during 2 years, the proof that we can -- through a continuous improvement culture and through this performance culture, we can continuously find ways of reducing our costs and improving our competitiveness. And I'll walk through these 5 areas one by one with you here now. First of all, the global packaging industry is transitioning, driven by new and emerging customer preferences. Today, globally, over half of all consumers, they care about the package. They care about the recyclability of packages. They care about the carbon footprint of packages. They care about the renewability of packages. And just to give an example, today, 1/3 of all food in the world is being wasted, 1/3. This means 1.3 billion tonnes of food goes to waste every year in a world of scarcity where people don't get enough food. We are especially good in food and beverage packaging. We can -- we have solutions to provide safe food packaging solutions and to preserve food also in right-sized packages from production to the end consumer. So we are, in fact, contributing to reducing food waste through our solutions. And we are extremely well positioned actually to gain from these changes in the global packaging market. In fact, all research shows that renewable packaging materials will continue to gain market share from plastics. And if we look at our main 2 markets where we operate in Packaging Materials, so consumer board as well as virgin fiber-based containerboard, this market -- this global market is predicted to grow by 12 million tonnes of annual consumption, annual demand in the next 5 years. And within these segments, especially the food and beverage packaging, which is really our core, is having the fastest growth rates, well above 3%. We have also leading market positions in liquid packaging board, we are clearly the world's largest producer in cross-laminated timber also as well as in unbleached specialty pulps. And we are a European market leader in other virgin fiber-based cartonboards and boards as well as in fluff pulp and sawn wood. And in containerboard, we have regional leading positions. We are serving some of the leading brands in the world. They are our customers, and you will get many examples here as we listen to Andreas', Carolyn's and Johanna's presentation. And why do they choose us as their partner? Well, because we help them to become more attractive on the shelves in the retail stores. They want to have sustainable, recyclable, renewable packaging solutions, which looks attractive, which appeals to consumers and make consumers choose their product over other products. So we can help these customers to differentiate. We can help them also through lightweighting to save costs compared to competing board grades, for instance, or packaging solutions. And we can also help them to significantly reduce the carbon footprint, which is so important for these brand owners. They have carbon commitments also and climate commitments. We have cases where we have helped our customers reduce their carbon footprint by 70% by our -- moving to our choices instead of alternative packaging materials. Customer-centric innovation is really at the heart and in the core of what we are doing. We come up and we launch a new product to the market every month. And if we look at this customer-centric innovation, I'm so happy by the fact that today, 16% of all our packaging material, all our product board sales actually comes from new products that have been launched into the market during the last 5 years. And this is accelerating. We are investing more than ever before in customer-centric innovation when it comes to our packaging business. And I have here 2 examples for your -- just as examples, and you will hear many more examples later on. AvantForte is by far the best-performing brown and white top kraftliner with the best strength weight ratio in the whole world. And this is especially appealing to packaging needs, transport packaging needs where you have especially demanding conditions, like, for instance, fruit and vegetable producers who are operating in humid conditions and who have global supply chains, so logistics spanning over the whole world. We have so many cases where AvantForte is by our customers, actually the only choice and also the most cost-efficient choice, thanks to the strength weight ratio. We have New Tambrite as another example, which has the best stiffness to weight ratio among all cartonboard grades globally, which means that it's a preferred choice. It's something we have developed together with our pharmaceutical customers, and it's their preferred choice. So looking at our product offering and our product range. We also have the most complete, the broadest product offering in the industry. And this is a strength when building partnership with our customers, the brand owners and the converters because we are their one-stop shop. Whatever their renewable packaging needs are, we have it, and we can offer it to them. So this deepens our relationships and strengthens our partnership with customers. But there are also other advantages around customer-centric innovation because we have the experience of producing all these grades. There is also cross-fertilization of ideas and innovation, which makes us even stronger in coming up with new product offerings. And last but not least, this also gives us strength when it comes to our asset utilization. So depending on trends, depending on market and customer needs, we can also optimize the asset utilization over the whole platform. So what about our assets? Well, we have the biggest production lines and also among the youngest production lines, meaning the lowest technical age. So we have well-invested modern technology, and we have big production facilities, which gives economics of scale. And in fact, when you look at our board production mills and units, 75% of our machines production lines are within the first and second quartile in cost efficiency, so on the cost capacity curves. And we are integrated. And that's a big advantage also for -- in the forest industry and in the board production. What you need in order to be cost efficient is that you need those big, modern board machines. And on site, you need to have that integrated pulp production. And we have, in fact, out of our 6 million tonnes of board production capacity, paperboard production capacity, we have 5 million tonnes of on-site integrated pulp capacity. Most of our board mills, almost all of them and most of our capacity is fully integrated backward into pulp production on site. And on top of that, we have sawmilling capacity on-site or close by. And this is extremely important, thinking about wood procurement as well as cost-efficient raw material supply. Because, in fact, about half of the logs going into sawing ends up in chips and saw dust, which is cost-efficient raw material for pulping and board making. So you cannot really be cost efficient without having these 3 components, preferably everything on the same site. In containerboard, we are, of course, in virgin fiber containerboard, backward integrated like in cartonboard into on-site pulp making and sawmilling, but we are also backward integrated in terms of our recycled fiber-based test liner production into recovered fiber or paper -- recovered paper collection as well as recycling facilities. And we are also forward integrated into corrugated box making, because this is a very local business, and it's important to be competitive here that you have testliner production and corrugated box production close by. And Carolyn will open up this later on in her presentation. On top of this, we have 2.5 million tonnes of market pulp capacity. And more than half of this 2.5 million tonnes is among the world's lowest cost, most cost-efficient eucalyptus capacities in South America. And it's a clear trend in Packaging Materials that eucalyptus pulp is more and more gaining share. We are doing that actively. We are using more and more eucalyptus pulp in our recipes, in our mills because it is a cost-efficient solution. And for instance, Veracel, if we look at our capacity in Veracel, with Oulu fully ramped up, Oulu will consume 250,000 tonnes of Veracel eucalyptus pulp as a part of their furnish together with CTMP and some other chemical pulp. And that means that we will consume 75% of Veracel's capacity internally in Oulu, in Beihai, China, in Fors in Sweden and so forth. Enocell, Skutskar, they are very much specialized pulp mills, and Johanna will open up that in her presentation, and they need to be specialized also because they are operating in the Nordics where the raw material wood cost is higher. But through specialization, we can make healthy margins also in these businesses. But also Enocell and Skutskar are partly, to some extent, supplying our board needs for, for instance, unbleached kraft pulp as well as some other pulps. So this vertical integration is a clear advantage. And we are, in fact, the only board producer, paperboard producer in Europe with own cost competitive eucalyptus pulp assets in South America. And that is a strength we want to build on. But now we are coming actually to my favorite theme, and that is about our own actions to continuously improve our margins and our profitability. We are working very systematically since 2 years back in operational efficiency improvements, commercial excellence, sourcing improvements as well as fixed cost reductions. And I'm so happy to see the results we have been able to achieve during the last 2 years, and we are continuing on this path. We have a process in place that we call VCP, value creation programs. And what it really means is that we have a systematic approach to, for instance, in operations. We have mill sprints, which means that we are focusing 2 weeks, 1 mill at a time. We gather all the best experts we have in different fields of operations, energy, board making, pulp making, optimization, wood yard, all of that. We gather those best experts together. We focus on one mill at a time. We generate ideas and plans, how to reduce our costs, improve operational efficiency. And then, of course, we move to the next mill, and we do the mill sprint 2 or 3 weeks at the next mill. We have now already gone through all our mills with the first round of mill sprints, generating lots of ideas, initiatives and also executed on these ideas. And now we are actually -- we have already started the second round. So it's a part of our continuous improvement work. And I'll give you some example to show what kind of VCP initiatives we have identified and executed on. On the commercial excellence side and sourcing side, we have a win room concept where we gathered experts together to focus on a specific question, for instance, a certain chemical that we need to source. And we go through -- and we work together with our suppliers to find ways of reducing our total cost of ownership. And then, of course, we work on cost efficiency measures through fixed cost reductions. During the last 2 years, we have reduced our workforce by over 2,000 FTEs. We are continuing on this path. And as a result of the reorganization we announced and implemented on the 1st of July, we can take the next steps of streamlining our organization by delayering, taking off layers in the organization and even further reduce our fixed costs. We have also a project management organization in place on the group level as well as in all our business areas that is supporting the value creation program work. And we have integrated our VCP work into our daily steering of the business, business planning, forecasting, follow-ups and daily management of our company. And in fact, when we look at what we have achieved during the last 2 years, we have, in fact, and we can prove that EUR 850 million of profit impact through the VCP work has hit our bottom line already. And we have in the pipeline of ideas to be executed and to be developed EUR 500 million to EUR 700 million more. But this is not a project. It will not stop here. This is our new culture, our continuous improvement work where we constantly look for new improvement opportunities. So it wasn't enough that we did a first round of mill sprints, then we start the second round, and there will be a third round and a fourth round. So it's our new way of working, and this is really what we mean with our performance culture. And I'll give you now some examples of these value creation program initiatives and their results. We have so far identified over 4,000 VCP initiatives. I'm truly proud of the work done by everyone in Stora Enso in every mill, every function, every part of our organization. We have 800 initiative leaders who are working on these together with their teams, meaning that we have thousands of people who are every day working on saving costs, improving our margins. And here are 3 examples of these 4,000 initiatives. We have, for instance, in the Imatra Mill, advanced energy optimization management, which has yielded us -- given us more than EUR 6 million of annual cost savings. We have, in Enocell, found ways of increasing the production of tall oil, and there is a market for tall oil, which means that we have a EUR 2 million -- about EUR 2 million annual profit impact through this VCP initiative. Fors is a great example of moving to 100% Veracel eucalyptus pulp. We have been able to replace other pulp grades, Nordic pulp grades and to save over EUR 7 million every year, improving the cost competitiveness of this mill. Here, there are 3 other examples out of these 4,000. In Montes del Plata, we have moved to methanol from our evaporation plant to be used to replace heavy fuel oil, giving us a saving of over EUR 1 million annually. Beihai is another great example. Beihai has been working systematically on improving their efficiency, performance. And in fact, today, Beihai has the best overall equipment efficiency of all board mills, not only our board mills, but all board mills in the world. They are actually the world record in OEE, the best performing board mill among all according to statistics that we receive from board machine suppliers. And then we have Skutskar, another example, improving the digester process and optimization, giving more than EUR 2 million annual savings. These 6 examples are relatively big saving examples. Most of the VCP initiatives, we are speaking about hundreds of thousands of euros or EUR 0.5 million, that magnitude, but these are really good and clear examples. And we share these practices regularly with our whole company through what we call transformation days where we have had so far, they are virtual meetings, teams meetings. And so far, we have had thousands of our employees participating. And we organize these transformation days of 2 reasons. First of all, we want to share best practices, and we want to inspire each other to come up with good ideas. And for instance, the great idea of energy saving in Imatra. I bet that in Skoghall, they all think that actually we can do even better. We need to show them that we can save even more. So that's the kind of a spirit we want to create here, inspiring each other. But there is also another reason, and that is to celebrate success and to really put the true heroes in our organization into the spotlight. The engineers, the experts that are working every day on improving the performance and portfolio and performance of our company, the 800 initiative leaders and the team members. Those are the true heroes that really get this improvement and builds a better and stronger Stora Enso. So now summarizing. We are building on our 5 strengths of growing markets, attractive markets with leading market positions. We have attractive product offering based on our customer-centric innovation. We have cost competitive, well-invested assets, and we have the systematic continuous improvement work, the performance culture and the value creation program work that is accelerating in our organization. And we'll continue -- we are determined to continue focusing on our 4 strategic priorities to lead in customer value to grow faster than the market, continuing on the path we have demonstrated throughout the last decade and also building on the big investments that we have carried out during the recent years. We are determined to expand our margins and our profitability in -- through business focus, through the VCP work and our systematic, diligent and disciplined approach. And we are generating cash with high conversion ratio as well as a very strong and disciplined capital allocation for the years to come. So now I will hand over to our CFO, Niclas. He will explain how these strategic priorities are translating into our financial plans and financial performance. Over to you, Niclas.

So hello, everyone, and fantastic to see you all. It's great to see a room full of nice and good people and look forward to the questions as well. Just on a personal note, I joined this fantastic team and this fantastic company in January. And before I joined -- by a few people who knew Stora Enso that, okay, what sort of animal is Stora Enso. And very much echoing what Hans was saying. I mean we are highly appreciated by our customers. We are known for innovation. We are known for sustainability. But there were a couple of weaknesses, a couple of improvement areas as well. And those were portfolio. So portfolio a bit complex and then capital allocation. Super happy actually that we are addressing these weaknesses as well as the strengths head on. I'll talk a bit about capital allocation and portfolio Hans explained about. So we are addressing the forest, and we also have the strategic review related to the Central European wood products. So how -- what Hans said, how will that translate into performance and financials? I'll start with 2 things we announced yesterday, communicated yesterday financial targets and then segment reporting, how you will read us, how you will understand how we progress going forward. And then I'll get into profit, CapEx, debt and cash flow. So financial targets. First of all, we have the macro drivers. We have what it takes to grow. We are invested. We have competitive assets. So the macro drivers, we are in a market which is growing and likely growing for a long time to come. So we intend to grow more than the market, and the way we define it is that, that's more than 4%. Secondly, EBIT, very important, especially now, here and now in this environment, but also going forward. We have a clear ambition to get to 10% and actually above 10%, and I'll come back to this. And as Hans mentioned, the good thing with this is that this is in our own hands. We do not rely on the market to get to 10% and above 10% but I'll come back to that. Shareholders, super important. We need to put even more weight on shareholder return. And one sign of this is the dividend, of course, and 50% of net profit over a cycle needs to be dividend or paid out as dividend. And then the fourth one is our net debt and balance sheet strength. And here, we actually take pride in being conservative. We will drive our net debt down to less than 1x EBITDA. And also here, very clear plan in our own hands, so not relying on external factors. So these are our 4 external -- or not just external, but these are our 4 long-term targets, both internal, external, which we relentlessly will work on and will get to. Then how do you follow us? How do we follow ourselves, what progress we are making, where we are doing well, where we need to do more? We're also renewing our segments. So from Q1 onwards, we have Consumer Packaging, we have Integrated Packaging and we have Biomaterials. So let me briefly touch upon the segment reporting before then moving on to profit and capital allocation. To the left here, you'll see the current or the old segment reporting as of first Q1 '26, that's out of the window, and we move to the new one, which you see here to the right. So again, Consumer Packaging, integrated Packaging, Biomaterials and then other. And what makes me excited here. And one thing kind of in addition to what Hans mentioned about VCPs, which we relentlessly push every day is the P&L responsibility. So behind these segments, we have 6 business areas, and every business area is P&L responsible. You have the owners of the 6 business areas here in the room, and we'll hear more from them in a few minutes here. And then as part of the 6 business areas, we have 24 business units, each of the 24 being P&L responsible. And this is something that we set up now 1st of July. So this is up and running. And now we are working through the motions really to get people used to this P&L responsibility. So it's actually a distributed P&L responsibility. It's not just Hans who needs to scream and shout and say, improve, improve, improve. But actually, we have -- we all take responsibility for delivering results day in, day out. One detail here is that within the other segment, we have the new business area, Wood and Energy, big operation for us given where -- what we do as a company. Here, we will also have the Swedish forest. So the to be demerged Swedish forest is part of other as well as the Wood Products Central Europe, which will also be part of other. Then moving on to profit and how will that look like going forward? How will we get to the 10% and above. Let's first start with the history. And we've had a couple of pretty volatile and tough years here behind us. But when we look behind the kind of headline numbers, what's been happening in the last couple of years, if we go to 2024 first. In 2024, we had a significant headwind from higher fiber costs. Fiber costs were actually EUR 300 million higher in '24 compared to the prior year. Despite that, we actually improved the profitability. And that was thanks to the value creation actions. That was thanks to the relentless work every day throughout the organization to improve the performance. So we actually had EUR 450 million of identified actions in 2024, offsetting the market headwinds. And then if we move to this year, 2025, it's actually a similar picture. Yes, we've had market headwinds, consumer demand, weak fiber costs, another EUR 300 million higher than the prior year, offset by EUR 400 million in own actions. On top of that, we've had the headwind from the Oulu ramp-up. As you know, a bit more than EUR 100 million in headwind. But all in all, underlying profitability improving despite the market headwinds and again, thanks to the own actions. So where does that lead us? Today, we actually, give or take, a 7% EBIT company. Assuming then, not just assuming, as we are planning to demerge the Swedish forest, take the Swedish forest out, that will take our EBIT margin down a notch. And from that, a notch down, we are climbing up to 10% and above. And where does that come from? Again, very important point. This is through our own actions. We are not relying on the market. We have identified between EUR 500 million and EUR 700 million of own actions coming on stream and having an EBIT impact, profit impact over the next few years. And again, we heard about this from Hans. What are these? These are operational, these are sourcing, these are cost-down activities, the whole range. They're all logged. We all have them in a system. We have a small central team managing this. And of course, the activities, the actions, they come from the P&L responsible units. So it's a pretty methodical, at least for me, a pretty cool way of doing it. On top of the EUR 500 million to EUR 700 million in own actions, we have the large investments, primarily Oulu here, but also De Lier ramping up coming on stream, which will add another positive measure as these are margin accretive volumes then or sales coming on stream. So with that, 10% or more. And on top of that, one day, the market will come back. That will be on top of this. And also, of course, if there's further headwinds, this will be offset by our own actions. Let's then move to capital allocation and CapEx. If we look at our recent history, we have invested a lot. We now have what it needs to grow. We don't need to invest to capture growth. We need to bring what we have invested in on stream and make that productive. So we have a couple of years behind us with more than EUR 1 billion in CapEx investments per year. This year, we are coming down to somewhere between EUR 730 million and EUR 790 million. And next year, it will actually be lower. It will be below EUR 600 million. And there's 2 reasons for us to be convinced that this is the direction, and this is the right thing to do. One is, again, that we have what's needed. We have made significant investments. We don't need to make significant investments now going forward. The other one is that we have worked quite a lot in the last few months on just the CapEx strategy, how we run CapEx, how we approve investments, how do we categorize our different assets. We've looked at all of our assets. We've looked at all of our sites, all of our mills, and we categorize those into 4 categories, ranging from run for cash to key. They have different investment profiles. From a cultural perspective, we will work on taking pride in running our assets for cash. So it's not just about investing and being proud of a new shiny machine, but it's also about what the return is and being proud of the run for cash mills. We have Matthias Friedrich, a fantastic colleague who is dedicated to looking into this, done a lot of work the last few months just to set up this new framework for being efficient in how we invest in CapEx going forward. So from CapEx to cash flow, and here, you see a similar picture, the inverse of CapEx. We have invested a lot. That has pushed down our cash flows the last few years, and we are now turning the corner when it comes to cash flow. We take CapEx down. That's clearly one factor. The margin through our own actions will pick up. And then we have the Oulu board machine and also De Lier coming on stream, being the kind of revenue uplift part here. So turning the corner when it comes to cash flow. How do we use that cash going forward? Again, pushing the message of disciplined capital allocation. Taking down debt, very important. That's what we are going to work on, and that's what we are going to do to get to the onetime target. Shareholder return, the dividend. And then with -- you can say in simple terms, when there's excess money, yes, we will do strategic investments, but we will scrutinize those strategic investments. And here and now, it's about investing in efficiency and optimization, less than growth, but the point being here that it's in this order and investments will be scrutinized. Then on net debt and balance sheet strength, as said, we are taking down -- determined to take down the net debt to conservative levels. We are well aware of the target being quite conservative, and we're actually proud of that. We are happy about that. That's where we want to take this company to be safe, sailing safely throughout any market environments going forward. So we actually peaked in net debt this year 2025 on the back of the big investments that we made that are now or have come to an end. We took down net debt by roughly EUR 800 million through the 12% sale of Swedish forest. And now we are taking the next steps, the next couple of years and moving down towards that one or preferably even below 1x net debt to EBITDA. But again, very much in our own hands, not relying on market picking up or some external factors. So just to wrap this up, this is in our own hands. We take pride. We have the P&L responsibilities. We have the people who can turn this ship not only around, but towards that 4% or more growth, 10% EBIT margin, dividend distribution and then a conservative balance sheet on net debt level. So we have what it takes. It's in our own hands and we will drive profitable growth. We will work or continue to strengthen the cash conversion. We will be more disciplined than in the past and very disciplined when it comes to capital allocation, safeguarding shareholder returns, dividends and then the healthy balance sheet. So with that, thank you, and Hans, back on stage.

Thank you very much, Niclas, but Hans as well, obviously. And now we're actually open already for the Q&A. And there, we have very eager hands already up. But a couple of instructions first. [Operator Instructions] But with this, I think we can start. And actually, I have one opening question before we open it for the people here. So Hans, this is for you. It's about our culture. So what is the largest cultural shifts that you have worked with internally in a way to implement these efficiency improvements already?

Well, it's absolutely our 4A concept. The day when I was appointed as CEO, I had an all-employee call. I said that, hey, now we will start focusing on profitability, cash flow, deleveraging the company. But more importantly, this is a great company with great foundations. The only thing I see we need here, we need a performance culture. And I knew I will get the question. So Hans, what do you mean by 4As -- performance culture? And therefore, I had -- in order to remember myself, what I mean with it, I had developed this 4A concept. It's an ambition. It's that continuous improvement mindset. It's not enough that we are average or status quo is not an option. Always, we want to be the best in everything we do. Customer satisfaction, quality, operations, efficiencies, cost competitiveness, profitability. That needs to be the high ambition level everywhere throughout our whole organization. Then agility. That's extremely important, especially in a cyclical industry because it's about being proactive, being close to customers, knowing what the competition is doing, making proactive fast decisions, implementing with speed and determination instead of always being late in the cycle. You can win or lose a lot of money in a cyclical industry, depending on the productivity and the speed. Then it's analytical approach. It's all about data-driven decision-making. It's not about who is the CEO and who is not or who has worked for the company for 30 years and someone only 3 months. No, it's facts, figures, analysis, that is the basis for all decisions. And then last but not least, accountability. Clear roles and responsibility, clear measurements, key performance indicators, decentralized P&L responsibility. We have now with the new organization in place since the 1st of July, we have 24 new P&L responsible business units, all the mill integrates, the former mill managers, they are today business unit leaders. They are accountable not only for the costs of their unit, but they are accountable for the EBIT, the bottom line of what they are doing. And that is -- they are being challenged every month. We -- Niclas and myself, we have something that we call monthly performance meetings. Our colleagues, everybody else calls it the monthly barbecue. And they participate there, and we'll go through what was good, where have we proceeded, where are we lacking behind, why, what are the corrective actions and so forth. So improving profitability and performance is not really rocket science, but it's really about culture. That's the key.

Thank you.

Lars Kjellberg, Stifel. Coming back to Niclas, one of your initial comments, you talked about the issues of Stora, one being capital allocation as one of the things that needs to change. So the question is really that capital allocation has also been the driver for growth. So how do we then square up, continue to have that 5% growth with lesser capital? And the one thing that kind of was missing from the new KPIs was actually return. So on the investments you've done thus far, the returns have been pretty dismal and you have, of course, written off a huge amount of assets. So again, the question is really, how do we square up the continuation of that growth bigger than the market with lesser CapEx? And why do we miss the return metric in the KPI?

Yes. If I -- I'll start with the latter one, so the return. And yes, I mean return matters, return on our investment matters. And we went through that internal discussion that, okay, return on capital employed, EBIT, EBITDA, what measure to have. And return on assets, when we make investments, return on the daily business matters also going forward. And roughly speaking, the 10% EBIT is in line with 13% return on capital employed. So that's kind of the rough math there. So we are not forgetting it as such. But EBIT is clearly just an easier measure for everyday management for people to understand day in, day out, again, not forgetting about returns. We will scrutinize returns also for CapEx, for instance, scrutinize returns for every -- all investments we do and similar requirements, hurdles there that it needs to meet the overall company ambition or be higher.

And building on that, the 10% equaling 13% return on capital employed and the growth aspiration. I mean we have invested heavily. We have the largest modern consumer board line now ramping up. We have -- actually the world's largest corrugated manufacturing plant acquired with De Jong, where there is also a ramp-up ongoing. So we still have a lot of capacity to fill. And after that, in fact, if we do the same thing that we have done in Beihai, in all our board mills, we will have another 0.5 million tonne of board capacity. So there is a lot of we can do still through our internal efficiency, organic growth. We are well invested for the next 5 years. Meaning that, of course, there can be some investments we will do in order, for instance, to reduce our costs, improve our competitiveness. But still looking ahead for the next 5 years, we are very well invested to support at least that 4% annual growth.

Yes. Oskar Lindstrom with Danske Bank. I mean the Swedish forest lands are a huge sort of value event for you and for shareholders and investors. I mean the enterprise value or the book value of the forest lands in Sweden is like half of the enterprise value of Stora Enso. Now -- but if we look at forest land companies, both others in the Nordics, but also in North America, they generally trade at a discount and sometimes quite a steep discount to the book value when they're on sort of equity market. What can you do both in terms of structuring the sort of future relationship between the forest lands and your industrial operations and also in terms of boosting yield in your Swedish forest lands between now and I suppose the delisting to ensure that, that discount is as small as possible or perhaps not even a discount at all?

Yes. Maybe I'll start. So as you see here, I mean we are actually super excited about this split that we are working on, and we see a lot of value in it. I mean of course, again, back to shareholder value, that's one part of it. But the other part is then focusing on the business, having its own management, having its own kind of freedom to operate. Hans mentioned about some of those things that the forest company can do, which is on top of what we already do as a company. And of course, exactly as you say, those are the things that we will start working on and over time, will maximize. This is a unique asset. I mean, it's a pure -- really pure-play forest asset. Many of the others or some of the others, there's not too many around in the world and especially not in Europe are not pure play. So it's -- yes, it will be a bit wait and see where the value lands. Of course, that's in your hands. We are true believers that this will be an exciting asset to own and have. And of course, yes, we'll work on it relentlessly now during the year to come.

And we saw it also during the sale of the 175,000 hectares. I mean there was a great interest, especially among institutional investors because they want to have that return profile very predictable, very stable. And also for them, the whole sustainability aspect is important that this 1.2 million hectares ties up 1.5 million tonnes of CO2 was also quite important. So this partial sale of 12% of our Swedish forest land really encouraged us and when we saw the great interest among especially institutional investors. So we feel good about establishing this Europe's leading pure-play listed company around forest, which doesn't exist today. So there is nothing really comparable in Europe. In the U.S., there is some a little bit similar, but not in Europe.

And then on the independence, which is a very important part, I mean these -- we are creating 2 fully independent stand-alone companies. And yes, of course, there's a joint business interest going forward as well, but both need to stand on their own, both need to be strong companies, strong balance sheets, strong businesses and have the independence to do -- I mean yes, ForestCo will have Stora Enso as a big customer. We have the wood supply agreement being developed, but also develop other customer relationships, as Hans mentioned, over time. So independence is very important.

Andy Jones from UBS. I just had a question about the asset base. I mean, clearly, you're trying to maximize the investments that you've made in the past. But in such an oversupplied market, as the consumer board market, in which you're obviously market leaders, I appreciate your cost curve position is pretty low. But as the largest producer in a lot of these grades, given the lack of closures from some of your higher cost peers, is it enough to say we're going to sweat the assets and drive down costs when in an oversupplied market, quite often, everyone is doing the same thing, prices just fall with it. As market leaders, should you not do more to help to address that overcapacity in some of your main markets?

Well, there is -- first of all, if we look at cartonboard, European cartonboard capacity, there is roughly 1 million tonne of cartonboard capacity that is higher cost than our single highest cost production line. But then it's not enough to look at the virgin fiber cartonboard. There is almost as big white top -- white line chipboard market, which is recycled fiber-based. And there are some examples actually we spoke there about, and I showed the pizza boxes there. One of the pizza boxes is produced out of recycled fiber-based white line chipboard. It's a 3 million tonne market in Europe. And then there is the same pizza box or similar pizza box produced out of our folded boxboard. And in fact, the folded boxboard, our old, folded boxboard looks much better. It's whiter, it's cleaner. It has the same stiffness properties, better printing properties, but it is 40% to 50% lighter. So the customer, when moving from white line chipboard to our folded boxboard actually can buy 40% to 50% less tonnes and get the same or better package, lighter package. So we are -- it's not only about the cartonboard segment as such. It's also to look beyond. And we have lots of similar examples, for instance, in the U.S. to replace SBS with this folded boxboard where we produce the board in several layers with different types of fibers and microfibers and so forth to really get that bulk stiffness with significantly lower basis weight. So we are quite optimistic about the strength of our product offering and how we will be able and how we are able to penetrate the market and gain market share. And that is actually what we have been doing throughout this year. Compare us with competition, we have been growing. And most of our competitors are shrinking. And that comes from competitiveness, not only cost competitiveness, but quality competitiveness, customer focus, working closely with customers. I truly believe we have a clear competitive advantage here. We will continue to build on that.

And I will take one question from the webcast in the meantime. So how much of the current market weakness do you think ballpark is due to weak cycle? And how much, call it, structural as the industry has expanded capacity too much?

It's -- I mean we are -- it's a cyclical industry. I've been 35 years in the pulp paper forest industry. And this is -- these kinds of situations are always there. And because it is cyclical, demand is cyclical. And every now and then, there can be in some segments, some overcapacity. Then at some point, it melts around away. And you need to look at the longer term. And we strongly believe that we have the assets, the very cost-competitive, well-invested assets. We have the very attractive product offering. We have what it takes to be a winner and to continue. And it's not about anything new here. It's really about continuing what we have been doing throughout the last 10 years. We have been growing our packaging business more than 5% per year. And now we are saying that we are going to grow 4% per year. Earlier the last decade, we have grown roughly double the growth rates of the market. And now we say, with all the plastic substitution and what is forecasted when it comes to migration from plastics to renewable materials, we are going to grow 4% instead of perhaps a 3% market growth. So we truly believe that we have what it takes to grow this company and to expand our margins at the same time.

[ Johannes Gasilis ] here, SB1 Markets, Stockholm. I'm a bit curious about what you revealed here today regarding own actions, EUR 500 million, EUR 700 million step-up. And you mentioned there are [ more ] sources, variable cost, fixed cost, commercial excellence and so forth. Could you kind of indicate how much of this benefit is fixed cost? And also if you can mention the time frame, are you talking about years? Or is it more 1, 2 years here?

So it's a fairly balanced without going into exact percentages here, but it's fairly balanced between operational, so working in the mills, many of the examples Hans mentioned. Within sourcing, there's a significant potential. This is one area I'm super excited about. We have our new sourcing head actually joining next week, and we will grab this head on. And it's not like we haven't done anything, but there's a lot still to do in sourcing. On the commercial side, mix driving, mix points, that's, of course, pricing. And then, as you say, fixed costs. Fixed costs, we are working on as we speak. We had -- personnel was affected here the last -- has been affected the last couple of weeks. And even if that's not a particularly nice thing, it's a must to-do thing, and that will actually continue also during next year. So I would say, without giving you an exact answer, fairly balanced. And then on how quickly -- I mean we will do this as quickly. We will really push for it. I mean the time frame we gave here now is a couple of years. So call it, 2 years or so, 2 to 3 years.

The previous fixed cost FTE reduction, we could do like through just doing more with less. But one of the drivers for the organizational change as from the 1st of July was that we realized that to take the next step in fixed cost reduction, we need to work in a new way. We need to reorganize the way how we are working our processes and so forth. And that is now what we are carrying on. We haven't made like one big announcement like some other in the marketplace, but you have read throughout the autumn here, you have read news from all our mills about collaboration negotiations, reductions and so forth. And this continues in every part of our organization.

Now you have invested in growth now, as you showed quite a lot of money several years. And now you drive down that CapEx to '26. I think Niclas said less than EUR 600 million. [indiscernible] a company do that, they have one year lower CapEx, and then they go back to the higher CapEx. How should we look at '27, '28? Is this a little bit of a longer sort of pause in growth investments? Or is it just one year sort of breather?

It's not one year only. I mean we are -- again, how we allocate capital, we are renewing that, we are strengthening our scrutiny, making sure that the returns are there. So without giving an exact figure for '27, '28, but you should see this as a bit of a continuation rather than a one-off.

It seems to me that of the new financial targets, probably the net debt-to-EBITDA target is the one with the greatest impact in the immediate near term, however, and I'm a bit curious just to understand, and I think it said on your last slide, Niclas, that you said it's within a 2-year time frame. And I'm curious to hear how much of this leverage reduction is actually the net debt level? And how will that come down? how much of that will be put into the first company? How much is relating to potential divestment and other sources if we assume that the EBITDA level is stable at the current level?

Yes. And you're absolutely right. The assumption, and that's, by the way, for these targets overall, the assumption is that these are Stora Enso long-term targets with ForestCo moving into its own company. So that's the kind of basis for the targets. And thus, of course, there is an assumption that a portion of the debt or the debt is being split in a sensible way and a portion of the debt is carried by the forest company and Stora Enso is left with less debt than if we wouldn't have done the demerger. The exact amount is something that we'll come back to. Of course, we have thoughts. We have plans, but we don't want to give you an exact number now, which then a month or two months later is slightly different. I mean this is actually one important thing with the demerger is the tax efficiency or tax-free demerger kind of typical way how they are done in Sweden and Finland. And this we want to safeguard. And one of the things that are required to do it as a tax-free demerger is a certain split of the balance sheet and so there's certain tax rules governing that how much debt can you put on one side or the other. So it's not completely kind of just up to us to make up a number. But what's important, what we've said all along from the very get-go in the summer when we announced this, is that we are determined to create two strong companies. So -- and this goes for debt as well. So there will be a suitable amount of debt in both companies. So we are not going to kind of favor one part or the other. So two strong companies, investment grade -- strong investment-grade companies.

I will take in between one question from the webcast as well. So this is once again also about the forest. With a new completely independent pure play, how will the forest strategy change as profitability is the main goal or rather than providing cheap and quick [pulpwood] for the mother company?

Yes. I mean it's all about business focus. We're looking for -- we have this asset, how can we maximize the value and how can we accelerate the value appreciation, so there will be much more focus on the new revenue streams through the focus, and we are convinced we have seen it already throughout the process. The work with Tuomas and his team that actually when they look at this as a company to be listed, there are new aspects coming into it, new ways of accelerating value appreciation and income.

I just want to go back to capital allocation again. So I appreciate that for the next few years, your, I suppose, harvesting, deleveraging but to achieve that above market growth rate in the very long run, what are some of the portfolio tweaks and portfolio reinvestment plans that you have sort of on the shelf, so to speak, that you need to look at longer term for the business?

Yes. Well, we don't have any immediate big investment plans. We have some ideas how we can improve the cost competitiveness of some of our mega sites, the key mills as we have them classified. So that's something we are looking into. And then we will continue to invest even more than before in customer-centric innovation, product development. This year, 60% of our paperboard sales comes from new products. We want to accelerate that even further because we see the added value and we see how we can win with customers through new innovative products that are, for instance, offering a 40%, 50% yield advantage or that can help customers to reduce their carbon footprint 70%. So this is a really important part of our winning with the customer strategy.

What is your expectation for the net carbon footprint of the operating company once you have sold the Forest assets?

Yes. So we are reporting our CO2 emissions. And we have a target to be carbon neutral by 2040. And we have said that we want to reach minus 50% CO2 reduction -- emission reduction by 2030 compared to 2019 as the base year. Now as you probably have seen from our Q3 report, we are already at minus 60% in Scope 1 and 2, and we are at minus 39% in Scope 3 so we have basically reached that 2030 target already. This Scope 1 and 2, this CO2 emission reduction is really from our total supply chain so it doesn't include the benefit we have from our forests. It doesn't include the 40 million tonnes by replacing nonrenewable materials with renewable materials. So it's really what is coming from our mills, logistics, food transport to the mills, mills product transported to customers. And we have great examples. For instance, our Oulu mill is nearly carbon-neutral we have managed to take down carbon emissions by 90% in this unit. So the forest divestment, first of all, and then the demerger of forest doesn't affect this. It's only the supply chain CO2 emissions.

Hans, I'd just like your thoughts on why you included the 4% per annum top line growth target? Because if I think about the industry historically, I think companies, analysts, consultants, we all overestimated demand added too much capacity to the industry. And there's a lot of latent capacity in the industry that needs to be utilized and I imagine, near term, your focus has got to be returns and profitability. So how does the top line growth number impact your decision and the divisional management decisions to make sure that they're not incentivized at capacity when they should be utilizing what they've got available to make sure that you're driving returns rather than focusing on a top line rather than value accretive growth rather than just sales growth?

I do agree with you. I mean, our main objective is really to generate profits. That's the key thing. But actually, growing top line also drives improvements in EBIT. And my view on looking at the value of a certain company includes the top line development growth. Growth is important. And as I said, last 10 years, packaging, over 5% growth in Stora Enso. We have demonstrated our strengths and capabilities, and we are going to continue on that path. So if you really want to maximize the value of your company. You need to demonstrate over the market growth rates, which are also driving improved EBIT margins which are also driving a higher EBIT or EBITDA multiple in terms of valuation. And therefore, growth is important. But of course, it's all there in order to improve our bottom line profits. And 10% EBIT margin of a bigger turnover is much more than 10% of a smaller top line. So I think the mathematics works, both in terms of driving EBIT improvement as well as driving the valuation of the company, demonstrating that continued growth and margin expansion at the same time. But just to add to that. So again, repeating what we've said. I mean, we have what it takes to grow is about 4%. I mean, yes, maybe not for the next 20 years. But for here and now and the next number of years, we have what it takes. So this 4% or above 4% target is not driving CapEx, for instance. We have what it takes.

Niclas, you mentioned complexity as one of the challenges you're addressing that with the strategic review of the European sawmills. Could you talk a little bit about that topic? How do you see it? How much you can achieve with these potential actions and whether there's further to go? Is this like a startup a journey? Or are these planned actions already enough?

Well, it's really all about this -- how you drive efficiencies in our company because on the first of July, we reorganized so that the pulp and board mills and the nearby sawmills, which are actually synergistic and supporting the board making, which is the core our activities. So they are reorganized into business units, P&L responsible business units. And that's why the northern sawmills, they are now each part of a business unit, board and pulp business unit. And these Central European sawmills and CLT plants, there are 7 sites. They are not Synergistic with our core business. So as they say, first come strategy, then comes structure, and that's what we have done, basically, this is an attractive totality in any case. So also with international distribution units in U.S.A., Australia and so forth. So we are sure that there will also be a lot of interest getting into this, getting a world-leading position in cross-laminated timber, but it's a very different business. And therefore, also here, we built Stora Enso around the core, which is really renewable packaging. That's where our strengths are, and that's where we have invested. That's where we have grown during the last decade, and that's where we are going to continue to grow. But we don't have any further plans. I think with this, we are quite focused as a renewable materials company with strong and increasing packaging focus.

So a question on your revenue growth target of 4% and the confidence that you will probably continue to outperform the market, which I think you said will grow around 3%. So what gives you that confidence given that you are now going to focus lesser on growth CapEx? Or is it more like substitution from more substitution from plastic, from other paper grades, new customers, new geographies? So can you just elaborate on what gives you that confidence to gain more market share in the near term?

Yes. Well, first of all, we are continuing on what we have done before during the last 10 years, 5% growth. We have extremely well-invested competitive asset base. We have the most compelling to broadest product offering. We see that we can gain new customers, new business through our product development like the example with the pizza boxes getting business from white line chipboard moving to our folded boxboard and the customer saves money because he can buy 40% to 50% less volume and still get better properties to the box. So it's really through innovation and product development to expand the whole addressable market and have to develop new businesses and new relationships. So looking at that 4% growth, looking at how well invested we are, how much capacity we have how much state of the art technology we have, what kind of a product offering we have, global reach, customers operating in 60 countries, I think it's a relatively still conservative target as such.

And we are going to have one of the last questions now and then wrapping up soon, but go ahead.

A question on the Forest demerger, it seems like three questions, but just one question. On the demerger, it's 100% to Stora shareholders that you're envisaging. You're not going to keep any 20%? And if not, why don't you just sell 1 billion or 200 million hectares again and get to your 1x net debt to EBITDA and have one less target, less to worry about, why are you still kind of preempting that? And you also said that it's going to be tax-free for Stora but it will be tax-free to our shareholders as well because if you were to say to Germany, you'll have a dividend tax. Are you thinking about that in terms of structuring the transaction?

Yes. No, good question. And yes, just to be clear, when we talk about a demerger spin-off listing. It is a 100% distribution to our current shareholders or at that time, shareholders. So as a shareholder, instead of owning one Stora Enso share after the demerger has happened. I own two shares, I own a Forest company share and a Stora Enso share. And that distribution when we talk about tax free or tax efficient at least, maybe that's a better term. That's from a shareholder perspective, also a company but shareholder perspective, that's what I was kind of referring to. And of course, you are right that it depends a bit in which jurisdiction you are. So I cannot promise tax free for everyone. It depends on where you are, but looking at past similar transactions, it's tax-free is an important aspect from a shareholder perspective. Then on to kind of the why don't you sell 1 billion or 2 billion or 3 billion or 5 billion. I mean, we are not doing this transaction to delever. We are doing this transaction because we truly believe it will create value, it will create value for the shareholders and it will create value for the two companies. I mean, yes, then the debt will be split and again, we'll come back to the exact kind of amounts. But the driver for this is to create two strong companies, which are actually better than the combined ones from a shareholder perspective. But also from an operational perspective, both from a more focused Stora Enso. I was referring to the complexity. This will be a more focused Stora Enso industrial company. And with all the good things, the Forest company can do, having that independence that public scrutiny all the new opportunities and so on. So that's the main driver rather than just selling 1 billion and deleveraging.

So thank you, first of all, to you guys, but also to the great questions you send both via the webcast and in here. We will now have a break, and we can continue these discussions during the break, and we will continue at 11:15. So with the webcast listeners as well, please, will join us then. But with these words, thank you very much. [Break]

Welcome back, everyone. I hope you had a refreshing break. As we continue on today's agenda, I'm pleased to introduce our next session, our business overviews. Joining us for the session is Andreas Birmoser, Carolyn Wagner, and Johanna Hagelberg who will each share key insights and updates from their respective areas. Please join me in welcoming our business leaders to the stage as we dive into the next part of the program. [Presentation]

All right. Good morning, everyone. My name is Andreas Birmoser, and I'm heading the business area Cartonboard. Yesterday evening, I got a few questions, where I come from what I've been doing. So a few facts about myself. I've been with the company for over 20 years. I joined back in Brazil, my home country, the first 10 years I spent in various finance roles, greenfield investments, production units, headquarters as well as a business area. And then for the last 10 years, I decided to move away from finance and have been leading business development, innovation, one joint venture in Brazil packaging material sales until I got to the position I am today, which I've been holding for two years now, leading business-era cartonboards. And today, I'm not here to talk only about cartonboards, I want to talk about the whole consumer packaging business. Which includes liquid packaging board and food service board. This is our most important growth engine in the company, as Hans has already introduced before. And I want to show you how we shape our strategies around consumer demands, customer needs and how that will drive our growth moving forward and how that will help our value generation. And I hope that by the end of this presentation, you will see the same thing I see: that we are the best positioned in this industry to succeed and benefit from that growth. So let me get started. Hans mentioned about our strong positions. We are the European leaders in cartonboard production and food service board, and we are the global leader in liquid packaging Board. We are the company with the biggest and widest portfolio in consumer packaging. And that has a lot of benefits. I will highlight a few of them. The first and most important one is probably the insight we get from different customers from beverages and food and how we translate that to innovation. Like barriers, a lot of needs to develop barriers in food service and liquid packaging, but that can also spill over to cartonboards. A good example is dispersion coating. So there is a value in having a wide portfolio. And then we deal with many blue-chip customers, not only converters, but also brands. So we have here Tetra Pak, SIG, Elopak, with whom we have been dealing for over 60 years. But we also have brands like Nestle, ABI, which provides us valuable insight from the market and the consumers. And that helps us. We need those three parties to really develop the products, develop the materials to find the best solutions. And that's very important. So as Hans said, this is a growing market, and let's start by looking to some of the numbers. Here on this chart, on the left-hand side, you will see the global projections of growth. And on the right-hand side, the European projections of growth. You will see that in both cases, virgin materials has a higher growth rate than recycled board. 1%, 1.5% will be driven by plastic substitution. That is a very important growth factor there. You also see on the European side, there is a temporary contraction of demand currently that has been spoken for before. So we have an overcapacity of 800,000 million tons in cartonboards, but you also see that the growth towards 2030 is over 1 million tons. So that is a growing market. But of course, we have now an overcapacity, which we will have to navigate through. And in order to succeed in such an environment, in my opinion, you need three things. You need to have a very strong cost position. You need to have entry barriers and you need to have the best product and services. So those three things are crucial. And I want to talk about those three things in my coming slides. I will start with our cost position. Again, on the left-hand side, you have the cost curve of folding boxboard. And on the right-hand side, you have the cost curve of the liquid packaging board. Here, on FBB, you will see that we have around 70% of our capacity in the first and second quartile of the cross supply curve. While 100% of our capacity in liquid Packaging Board is in those quartiles. No other European producer has that high share of its capacity in that cost position. And that's going to be very important for our value creation. But there are other two things which are important in this slide. One is if you look at how much volume is more costly than our most costly machine, which is our smallest machine in Forest PM2 is over 1 million tons. So you have 1 million tons more expensive than our most costly machine. Market is growing over 1 million tons in the next 4 years. So that is -- how you need to play this out. And Hans spoke about our value creation program. How do we continuously improve with the sprints where we have our experts and operations and sales joining our mills, joining our sales offices for weeks to just lift ideas. And then we have the PMO structure to make sure we execute a weekly cadence where we review the products. I'm personally involved in those weekly meetings. We removed the obstacles, we deep dive where we have to deep dive to make sure we make progress. And with that, we have been shifting our cost position every day, and that is very important. And as I said, we do it based on data. We leave emotions out. As you've heard, I come from finance, so I listened to data. That's what I do. And I think that's the right thing to do in this scenario. So that's going to be very important. So I spoke about cost, then entry barriers. Let me talk about the four most important entry barriers. Hans mentioned the huge issue that is food waste. And therefore, the barriers to protect food are very, very important. We need to help to find the right solutions there. And here, again, benefiting from our wide portfolio. We have been innovating and developing a lot of solutions. We probably have the widest barrier offering in the market. And that is not something you come in and copy very easily. This takes years to develop. Then our customer's trust. Trust is only built by repetitive steps, repetitive successes over a long period of time and that is then translated into two things. With many of our customers, we have long-term contracts, 2 to 4 years. What benefit does this bring? Predictability, certain price stability as well but most importantly, it makes it difficult for others to come and enter. You don't copy that. And then there is the long lead times to really qualify this. The qualification process is very demanding. Sometimes it takes 6 to 12 months to qualify a new product. So again, if you come from the outset in and you want to play in the food and beverage industry, it's not going to happen that easily. And of course, fourth but not -- last but not least, you have the high CapEx. It's not only about building an asset, right? We just invested in a new machine in Oulu, EUR 1 billion year investment. You need to have the whole environment around you with forests, harvesting, transportation. It's not something you copy that easy. So with all those things, it's going to be very difficult to see more capacity coming in Europe in the next years. So we have invested while there was a window to invest and now we can benefit from that growth. So I spoke about cost entry barriers. Let's look into products. Here, you will see on the bottom side of the charts that renewable fibers of fiber-based packaging has a growth rate which is twice as big as plastic packaging. So a lot of the growth will come from plastic replacement, especially in Europe. Europe is driving most of that because here is where the legislation is more advanced and PPWR, SUPD, you name it. And it's going to kick in really strong now in 2030. So that is driving a lot of the growth. So then you need to have the right products. And I spoke about barriers and how we develop them together with our customers. One good example is ultra thin PE. If you think about those drinking cups, we have managed to keep the plastic content all under 5% by having very thin layers of PE. So it's compliant with legislation and it opens a market for us because we will be there with a solution that works. Others probably don't. And that's going to be very important. Then another important topic is lightweighting. Why is lightweighting important? You need to do more with less. If you want to replace plastic, it's not just going to happen because we wanted to be renewable. It needs to be cost competitive. It needs to work in the thinning lines. And for that, lightweighting is a great tool because you can do more of plastic, you can remove costs not only for materials but also from logistics. And here, I will give you now a few examples from our new machine in Oulu. So if you look at our -- what do we do for our folding boxboard in the new machine in Oulu? We have our patented technology called FiberLight Tec, where we introduced microfibrillated cellulose on the mid-ply of the board, and that increases its stiffness and resistance. And that gives us up to 8% yield advantage. It sounds like not much, but it is a lot. It saves a lot of cost in the process. If you compare, for example, our folding boxboard from Oulu to the North American SBS, we are up to 18% more efficient in yield. And not only that, we have a 50% lower CO2 footprint even landed in the U.S. And that's because of the energy metrics we use in our mills and how we transport it to North America. So that resonates a lot with the brands, which are ultimately the ones which are deciding what to use. We actually help them to achieve their targets. And that's why we have been increasing our efforts in talking directly to brands and retailers and not only the converters. We need those three parties involved in that change. Then another interesting aspect, and Hans has this good habit of stealing many of my lines. He does it over and over again. But he talked about pizza boxes, right? And he mentioned that the white lined chipboard market is a EUR 3 million tonne market. If you take Oulu and our products in Oulu and you convert it instead of looking at cost per ton and look at cost per square meter or cost per box, the products from Oulu will be positioned in the first quartile of the cost supply curve of white lined chipboard. Why is that? We can achieve up to 40% to 50% yield advantage compared to white lined chipboard. So I'll ask my colleagues to circulate now some of those samples, so you can see it with your own eyes. That one specifically. This one is -- you all have seen that frozen pizza boxes, white lined chipboard material. This one developed based on our own products, 37% lighter, wide insight. This one is gray insight, better printing surface, better printability, better runability in the machines. White lined chip material, you stopped at converting in the printing line every x hours, hours once for a full day. So you bring a lot of efficiency to the process. So that is a market which now with our investments and our cost position in Oulu, which is now addressable for us. So we don't only compare virgin to virgin, but we will also replace white lined chipboard. And back to the U.S., I mean, yes, tariffs are there. We haven't seen the end game. But again, with our yield advantage and with our value proposition on CO2. We have seen that our customers, they are willing to talk and willing to share that with us. And why is that? If you think about it, put yourself in the roles of a converter in the U.S. or a brand in the U.S. and you say, that's all the Europeans get out of the U.S. because of the tariffs, what happens, you shift all the power through the hands of the [indiscernible] that you have the two big players, which have 80%, 90%. I guess you all know what happens to price in that scenario. So that understanding is there, and we see that the customers are willing to talk to us. But -- so with that solution with those boards, we will be able to compete not only with white lined chipboard, but also with plastics. You all travel, you all go to supermarkets, right? So think about how much plastic you see where plastic is not needed. A few examples. Here, you have the 6 cans or 12 kinds of beverages, beer, soda, drinks. In the past, all wrapped in shrink films. Now you start seeing them in boxes or with handles made out of cardboard. But think about tomatoes or vegetables, how much of the trades are plastic and you ask you say why plastic. There's no good reason or the trades on biscuits. These are just a few examples. And those changes are silently happening, and it will continues to happen especially now towards 2030 when legislation is kicking in. So hopefully, that gives you a bit of a glimpse that we have the right products and the right solutions and the strong cost position to fight this environment we are in right now. So then talking about the machine in Oulu, EUR 1 billion investment, 750,000 tonnes of capacity. It's a swing mill. It will produce folding boxboard, but will also produce CUK or CKD, as we call it. And that is a beauty in itself. Why is that? Two main things. We have designed and developed Oulu based on the existing SKUs we have in Skutskar in Sweden or Fors in Sweden. That gives us a security supply increase for our customers. And they are really, really looking after that, especially of everything that has happened over the last years, strikes, shutdowns, you name it. So they wanted increased security supply, we can provide it now. But it also has another interesting aspect, which is this interchangeability means we will not grow 750,000 tonnes in cartonboard. We will be moving products from our existing mills like Skutskar to Oulu or Fors to Oulu and that is roughly 150,000 to 200,000 tonnes in the coming years. So Oulu allows us to debottleneck the whole portfolio. You can grow in liquid packaging by removing products from Skutskar. You can grow in food service board by moving folding boxboard from Imatra. And that allows us to play and reduce the risk of being exposed only to one grade. And that is another important aspect to keep in mind. So to finalize or not to finalize, but to talk about value creation first, we want to achieve over 10% EBIT, and we are confident we can do that. 30% or 40% of that growth will be coming from structural changes, meaning the ramp-up of Oulu and the other 60% of own actions. Hans mentioned a few of them. We have replaced the outer price in Fors with eucalyptus pulp generating EUR 6 million in savings. Imatra, where we are running more efficiently our energy setup, another EUR 6 million. We have changed the recipes with blue chip customers, and that will have an uplift of 1% EBIT margin. And then we have, in this lower volume scenario, this overcapacity scenario, we can allocate the products to the lowest cost asset for time being, which is another great value creation visibility. So what I'm trying to say is there is no silver bullet. It's this new ways of working, it's this new mentality that we have and that we continue to push. We listen to data, we lift ideas and we make sure we execute them. I have one machine and 1 million hour in my business area where we have got over 10% of cost in the last 18 months. So it's possible. We have done it. We have proven that we can do it. Good. Then to finalize. This is a growing market. It's growing organically. It's growing from plastic substitution, and now we are capable of also replacing the recycled board. So it's a growing market. We have the right products. We have the right services we have the right cost position to navigate through those times, but most importantly, we have the trust of our customers. As the examples I've given some of them have been dealing with us for over 60 years. So with that and our new mindset of new ways of working to continuously look for improvement of never being satisfied of always looking to be more ambitious. We are convinced that we will be achieving those targets in the next 2 to 3 years. And with that, I pause here, and I invite my colleague, Carolyn on stage. [Presentation]

Good morning, ladies and gentlemen, and I've spotted some ladies in the audience. Welcome I'm Carolyn Wagner, and I'm heading up the business area, packaging solutions for Stora Enso. To begin with, I want to share a personal secret with you. I love packaging. As a packaging engineer, I should. And hopefully, today, I can transmit my enthusiasm also to you as we go through the segment containerboard and packaging solutions. Now we have a lot to gain from where we stand today. I am convinced that we can drive growth and a meaningful EBIT margin uplift through our own actions. We will shift our portfolio to higher margin products. We will integrate containerboard and packaging solutions for growth. And we will scale up our automation and service offering. These actions will make a significant impact to our performance over the next 2 to 4 years. When you think about packaging, have you ever wondered what is so special about a box? Today, I want to show you how Stora Enso can turn a box into tangible shareholder value through technology insight and customer intimacy. Let us start from our strength. Stora Enso is a leading producer of virgin fiber containerboard, complemented by a very competitive recycled offering. We are also a top-tier integrated company, but mainly across Northern and Central Europe, and we serve demanding customers, brand owners who value our quality, our reliability and also our innovation. 80% of our sales is in Europe, but we are really a global supplier. So we expand specifically in virgin containerboard also into North and Latin America. This gives us both resilience and profitable growth opportunities beyond Europe. What are the markets in which we operate? The structural demand in our markets is intact. We expect the global virgin containerboard markets to grow by about 1% year-on-year through to 2035. And soon to exceed capacity, and that is good news for Stora Enso. With recent mill closures in North America, we European suppliers have a golden opportunity to gain global market share. And also European box shipments are steadily increasing, especially in Eastern Europe. And this is a very strong fit with our integrated footprint. At this point, I would like to share our three strategic levers which will help us win in this competitive market environment. Firstly, our low-weight kraftliner; Secondly, our footprint advantage; and thirdly, the expansion of the value chain. Let us start with our superior innovative lightweight, kraftliner. It's a unique product from Stora Enso. Now packaging sits at an intersection of two mega trends. Firstly, it is the shift from plastic to paper and secondly, the push for lighter, lower carbon materials. This also drives corrugated demand in our target segments. This is where our superior lightweight kraftliner comes into play. It offers better strength values and lower specific [gavage]. For our customers, this actually means 10% to 15% less material up to 20% lower CO2 footprint and a better box performance. And this is important for our customers. Because most international brand owners, they have made a promise to you, to us, to the consumers. They have made a sustainability promise to us, and now they have to deliver on it. Now Stora Enso can help them reach their targets. And if we were to follow Andreas to the supermarket, we would also see that the boxes perform on shelf. Now what does perform mean? They are strong and they just look good. And with this, they also enhance brand perception which is also very important for our brand owner customers. Let's move on to the second lever, our integrated footprint. Now our footprint is a real differentiator. By co-locating containerboard mills and corrugated plants, we have integrated an efficient vertically integrated system. This actually minimizes transport, thus also reducing logistics costs and again, lowers the carbon footprint. Now our containerboard mill in Ostroleka. It's a recycled containerboard mill and it operates in the lowest cost quartile. And it's ideally situated to our own corrugated plants. Actually, it sits on the same premises as our biggest corrugated plant in Poland, but also very close to our Baltics operations. With this, it's obvious to all of you that this creates a cost advantage if we compare to competitors. A cost advantage per tonne at the same time, giving us higher service flexibility. This allows us to grow and at the same time, it allows us also to protect our margins. What else does the integrated model do for us? Well, it is actually a natural hedge against market volatility. Because we have easy access to paper, we can optimize the capacity usage in the paper mill, and we can balance demand and supply across the cycle. Our third strategic lever, the expansion of the value chain. Now we don't sell paper. We don't sell boxes. We provide packaging solutions. This end-to-end system, this is actually what we're targeting. We want to be a packaging solutions provider for our customers where design, data and automation connect seamlessly. And the success of our award-winning packaging solutions that's also a very good selling argument for external containerboard customers. So again, we see and we can underline the importance of integration for the success in our business. So if we recap, what are the three strategic levers which will help us win. It's our low weight Kraftliner with higher strength property at lower CO2 emissions. It is our footprint advantage, which gives us a lower cost position and better proximity to our markets, and it is the value chain expansion, which creates value for our customers. Those three together allow us to grow even in stagnant markets. Let's move on to something that really excites me as an engineer, automation. Look at this great case from Lumene. Lumene is a high-quality finished cosmetics producers. And if you were to ask Lumene what packaging is for them. They would actually say it is nothing short of a growth engine. With our wraparound packaging machine, we have actually replaced manual packing processes for 40 different products. And this has increased efficiency. It has increased reliability and it has also increased sustainability. You don't believe the success they have with this packaging line, really. It's great. Because they have now been able to expand their e-commerce business internationally that even deliver as far as China. And that is what automation did for them. And for us, the customers who actually buy automation lines from us, they're typically 30% to 40% more profitable than ordinary packaging customers. How can that be possible? It is possible because every installation actually deepens the customer relationship. It anchors both paper and box sales and it also gives us the opportunity to continue with further products with further lines and also with aftersales turnover. So this is really the story, I believe in. So -- and if you really want to see expansion of the value chain, in practice, I would like to invite you to go to IKEA. Maybe not on a Saturday afternoon like I did. But in the IKEA, you will see a lot of Stora Enso products. You will see Stora Enso containerboard and you will also see Stora Enso corrugated boxes. And then if at the end, just before the exit, you can't resist those Swedish cookies, you will again meet Stora Enso packaging material packed probably in Stora Enso corrugated cases by a Stora Enso automation line. I have to admit we don't make the cookies. So what are all these endeavors leading to? Of course, our goal is to grow EBIT margins significantly and become a more profitable business also in integrated packaging. For one thing, we will do this through structural changes. Our major packaging site in De Lier will be ramped up to its optimal capacity. And secondly, we will do this through our own actions. We heard about our own actions also from the other presenters. So these are things that we control ourselves. Of course, again, we go from the technology, which means we will improve wood yield, fiber yield in our containerboard production, but also, we will improve our performance, our productivity in the corrugated plants. And of course, we will take commercial actions. We have now discussed in the questions, how are you going to grow above the market? Well, I believe that actually we can grow above the market because it's all about performance and customer trust, as you've also heard from my colleagues. And this is also very, very true. So we will also be much more customer-driven, customer oriented in our corrugated plants and thus, we will be able to grow above the market. And we're not waiting for the market to recover. We're not waiting for the markets to turn. We will turn it ourselves. To conclude, I believe that integrated packaging can be a real growth platform for Stora Enso. We unlock this potential by technology, circularity and customer trust. We have leading assets also in containerboard and packaging solutions. We have really unique products, and we have a partner relationship with our customers, which is unrivaled. So I believe that we will actually also play a winning game because I believe that with every box, and with every customer, with every consumer, we make life a little bit better and a little bit more sustainable each and every day. I believe from Chinese New Year, beautiful box from China through to Christmas Eve, every box is special. Thank you. [Presentation]

So we are the renewable materials company with a strong focus on packaging, but to make excellent packaging, you need pulp. And that's where we come in. We are serving demanding customers with specialized pulp as well as new biomaterials. And I'm Johanna Hagelberg leading the biomaterials business area. I will talk about three things: our portfolio, both in pulp business, as well as in the new biomaterials. I will talk about the market, and I will talk about our clear actions to improve margins. Let's start with pulp. We produce pulp for everyday life. You wake up with pulp, you live with pulp throughout the day, and you go to bed with pulp, from cradle to grave. The eucalyptus pulp is going into packaging, with our packaging business area sisters. It also goes into specialty applications and to tissue and growing into hygiene. Then we have the fluff pulp, which naturally goes into hygiene, all sorts of grades in hygiene, and both of these two have clear -- offering clear competitiveness and sustainability to our customers. And then thirdly, unbleached kraft pulp, where we actually are the largest in the world, and I will come back both to the fluff and to the unbleached. This is serving our packaging business with natural-looking grades, natural-looking packaging appearance, but also new areas like electrotechnical underpinning the electrification that we are going through. Also water purification with filtration and supporting the construction sector with fiber cement. So that is our portfolio. And this portfolio is already today at the low of the market, delivering 10% EBIT margin. Moving to the market then. We believe that the pulp market is healthy growing over time. In the core of the market, we have eucalyptus in the base, we have softwood. And then we have two very attractive growing segments, specialized pulp, which is the fluff pulp going into hygiene and demand driven by urbanization, driven by aging population across all nations, as well as the higher penetration of fem care, as well as baby in developing markets. Now we have the unbleached specialized area as well, which is growing based on packaging and the wish for more natural looking packaging, but also, as I said, the electrification with needs for more cables, more transformers across the globe. So we believe that this market then can offer another $10 billion roughly in additional revenue possibility, as well as then an increased demand of pulp. So diving into eucalyptus, and you heard Marcio talk about the actions we've been doing at Veracel to improve our plantations and our genetic material, the trees. Our eucalyptus is significant contributor to Stora Enso and to our packaging sisters profitability. They are underpinning the packaging BAs. Why? Because Veracel and MDP are two of the most competitive modern production facilities in the world in producing eucalyptus pulp. They offer $150 to $180 competitive advantage versus the average cost curve landed in Europe. Not only is the operation of producing pulp very efficient and continuously aiming for even lower cash costs maintaining our position, it's also based on highly sustainable plantations where we are owning around 400,000 hectares divided between Brazil and Uruguay. And these plantations are based on nurseries where we are aiming to improve every tree, new tree we plant are a little bit better than the previous one. And I'm just back from the Climate Conference in Belem. And there, we have showcased thirdly, on this bullet here, the third bullet. Our strong license operate in Veracel and MDP. We have had panels around resilient communities because it's fundamental for us that the communities around the sites, which are, of course, consisting of employees, providing income but also developing the communities in terms of resilience, increased income on average, education, land to live on has been fundamental. So climate -- resilient communities and climate resilient communities have been one of the showcases. Second showcase we've had at the Climate Conference have been around reforestation. And in both Veracel and MDP, we have set aside almost half of our area to continue to preserve nature and reforestate. And then thirdly, last but not least, biodiversity to enable better fauna and flora and both maintain but also increase fauna and flora, where that's needed. And these very unique eucalyptus producing companies that we have are then really helping with integration benefits. So we are the only EU peer in packaging, like you heard Hans talk about that have this possibility with own integration. And why is that better than just buying euca on the market? The reason is that we can supply consistent, sustainable eucalyptus to our very important customers in packaging which means that this gives a perfect optimized fiber mix. The perfect optimized fiber mix gives process stability. Process stability gives stability of the quality of the Board for our high-end brand customers. So this is not only though advantageous for our packaging sisters. This is also super good for biomaterials business area because the integration offers us base demand regardless of the pulp cycle, meaning that we are less dependent on volatile spot markets as a business area and company. Now I talked a lot about eucalyptus, and I promised to come back to the specialized rates. Here, we have two grades that we are absolutely uniquely positioned in. Fluff, we are the largest producer in Europe. And we are basically the only significant producer in Europe. The rest of the pulp -- fluff pulp in Europe is imported. And we are long term in this business. We've been here for over 50 years. And that is important in fluff because this is a highly technical grade with very narrow spec and it's next to skin. So it needs to be super safe and clean. And as a curiosity, could you guess what the first grade was called because we started in 1969 with fluff. Revolutionary name, Stora 69. Here, our customers are today appreciating us for high sustainability, the high quality, but also our possibility to innovate and develop the fluff pulp according to their needs. Moving from fluff then over to our unbleached grade, where the latest addition is the UKP Nova as we call it. Here, the Nova or unbleached as such offers 30% less carbon footprint, simply due to less need for bleaching chemicals. And my dream would be that all pulp would be less bleached. This is helpful in our packaging business, so we're already supplying Oulu, Beihai and Skoghall with UKP to support their sustainably looking packaging. And in addition to that, we have a growing new customer base within electrotechnical and electrification. And here, I have some product samples because when I heard about this, I said, God on earth, what are you using that pulp for in the electrotechnical space? And I'm an engineer, so I'm somehow familiar to electrotechnical stuff. So we are pressing around here two pieces of board. Are they coming on that side as well? Yes, perfectly. There they are. One of them, the thinner one, that is what is a pulp sheet looks like out of production. So that is a base UKP pulp sheet. The other one that when you take a look at it, I believe you will go to the construction store to buy. That is actually high dense UKP. And when you open up a transformer, you see more of that than the rest because everything needs to be insulated, isolated when it comes to electrotechnical applications. So this is a fantastic application supporting then the electrification and the reason why our UKP, so unique is due to its high cleanliness and then the very good quality. So we are working here with new brand owners that are then supporting the growing electrification across the globe. But it's not only good for electrification. It's also good for water filtration, simplest application. I'm not sure we think it's simplest, but the simplest application, coffee filter. But then much more advanced purification of air in carts, water purification, of course, large scale as we need clean water every day -- for everyday life across the globe. Okay. I've talked now a lot about pulp portfolio, and I talked about the market for pulp. What about the new bio materials? With the new biomaterials, we have concentrated our portfolio to three areas: all of these are strategically fitting being wood-based and they offer significant value creation into the future. The first one is the biochemicals. The biochemicals is already an established business with the crude tile oil and turpentine replacing fossil-based chemicals and fuel. Here, we have also added the lignin business where we are offering nature's glue as that is what lignin does in a tree. It makes sure that the tree can grow higher than 20 centimeters. Without lignin no plant would be higher than roughly 20 centimeters. So it's the lignin that lose the fiber together. And we are offering nature's glue but also binders -- sorry, in binders for dye, so color clothing of clothes, colors of clothes. Without binders in the dyes, your all colors will be washed out and we would not look as nice as proper as we do. This is an established business, like I said, it's already giving around 80-plus revenue per year for Stora Enso and steadily growing into new applications. The middle portfolio on the chart is the fiber business, and that is new applications for the fiber. Here, we have both papira and fibrease, which are bio phones that are replacing fossil-based cautioning or insulation with completely not only recyclable but renewable material, you can even compost papira at home, growing new trees or vegetables in your garden. I have heard that Santa Claus are coming a little bit early this year. So maybe when you leave, he will be there with a small papira gift for you. So you can get a feel and touch of the material itself. Here, we are selling commercially already from the pilot, we have letters of intent to fill the first commercial facility. And we are just right now discussing with partners to have a good partnership set up where we both can have the production, but also the offtake as part of the company or spin-off or joint venture depending on the setup that we will decide upon. Moving from the fiber business. Last but not least, maybe the coolest part of the company or our portfolio, lignode and carbon scape, so offering renewable materials into the battery itself. Lignode and carbon scape are replacing fossil-based or mined materials in anodes. This is an area where we are step-by-step and steadily moving forward. Right now, we have 500 kilos or half a tonne of lignode being trialed with our customers and into sodium ion applications. And on the picture here, you have the first sodium-ion pack we made together with Altris, our -- one of our partners within this space. And here, we will continue to steadily expand this. We have moved the pilot from producing grams to producing tonnes and in value chain partnering setup, we will make sure to be able to take steady speed to market while ensuring we have all the right competencies and share risk and reward. I had the third area that I was supposed to talk about. Do you remember? Maybe most interesting for you, that's our clear path for margin expansion. Shall I still cover that? I see some nodding faces. Let's go to that then. So as I said in the beginning, we are around 10% now at the bottom of the cycle, proud of that. But we believe with own actions we can take that higher. In Han's presentation, three out of the six examples were examples from biomaterials and actions that we have in motion already delivering value to our bottom line. You heard Marcio talk about the plantations in Veracel with not only improving differentiation and silver culture in the plantation, but also making every tree a little bit better than the previous one. We have right now have Montes del Plata in overhaul that we used to call annual overhaul. We are now first time into 18 months pit stop, and that is now implemented into foreseeable future, meaning that we can run more quantities between the overhauls, but we can also optimize the overhauls better because we have more time to plan between them. And that's also true now for Veracel coming in, in Q1 as well as for Enocell, just out of the last 12 months pit stop, next one is in 18 months. We also have sourcing actions, making sure we leverage the volumes of Stora Enso with buying power when it comes to chemicals, and for our JVs with our joint venture partners. And then for our new businesses, we believe the partnering is a very good way to share costs of continued development that will be needed at the same time as expanding the margins for the revenues. So to summarize, we are uniquely positioned to serve demanding customers with specialized pulp and new biomaterials. We have the fantastic eucalyptus, sustainable, underpinning packaging performance, as well as offering significant cash flow for the company. And last but not least, we have a very clear path of own actions to improve our margins. And as you heard me say, they are already in motion. Thank you very much for listening. And I look forward to your questions and welcome Jutta on stage.

Thank you so much, Johanna. And I ask also Carolyn and Andreas to join us to the stage as well. So we are open for the Q&A session, and you guys know the drill by now. [Operator Instructions]

It's Lars Kjellberg at Stifel again. Andreas, you spoke to a couple of things. when it comes to BM6 and the cost curve, and Hans already spoke to agility. I guess in terms of that agility, given that you're still low cost from BM6 relative to some of those third and fourth quartile, would you have an agility to shift production away from those given the excess supply that we currently have to reduce the overall cost base and really ramp up BM6 quicker? The second point on agility when it comes to sort of the long-term contracts that you have, it's obviously proven to be a bit of a headache considering the wood cost increases and the inability then to move pricing quick enough to compensate for that much higher cost if you can give us some thought on that? And the final question is just -- so I understand exactly what you spoke to at Fors the sort of EUR 6 million, EUR 7 million benefit from buying Eucalyptus now, where does that actually come from? What is delivering that cost benefit for that particular site?

I'll start with the last one. So when you -- we were using other sources of pulp, birch pulp and other pulps, and eucalyptus is more affordable than those other pulp grades. So just by managing to keep the same specs of our packages with the eucalyptus pulps instead of the other grades, you get from that price difference that you get from our outlets. So we managed to keep the specs, don't change our product, don't change our offering to the customers, but work with the recipes by replacing other pulp grades. So that's where it comes from. Then you asked about our contracts. And I think, yes, in the past, we have had some headaches as you referred to, we have also learned from them. And then just to address that specific topic, in most of our contracts which are multiyear contracts. We have no clauses when there is a cost disruption that this allows us to open a contract to renegotiate it. But what we have also experienced in the recent past, even when the few cases when this was not in, that the customers were understanding of the situation, and there was a possibility for some upcharge. But we have now, in most of our contracts, if not all of them by now, which are over a year, inserted certain clauses that if there is a certain percentage disruption on costs, both sides agreed to renegotiate. So that minimizes the risk that we have faced in the past. Then when it comes to the cost position in Oulu, yes, it's the market leader. And yes, it will allow us to grow our market share as we have already been doing, if you look at our relative performance in the market statistics. So -- and we have seen some of high-cost machines of other players already being shut down in Finland, for example. So I think that is something that is a possibility that this will continue to happen. What we are doing is we're focusing on what we can control, and we go for the market share, we go for those bigger volumes, all allows us to be cost competitive in those bigger volumes. And then our -- let's take Fors for example. Fors has this incredible ability of serving especially smaller wheels, those niche products and that you cannot replicate in a big machine, you just lose too much efficiency. So it has its value there in the portfolio as well. And then again, there's so much more capacity at higher cost than our smallest machine in Fors.

It's Linus Larsson in SEB. And it's a question to all of you. It's pretty clear to me that you're very passionate about what you're doing. But I wonder what makes you tick on the -- when it comes to your private economy, which are your KPIs? And how are you incentivized? And how is that like aligned with the group targets that we previously talked about. And as part of that, how are your KPIs aligned with capacity rationalization? Is that -- are your KPIs preventing you from potential capacity rationalization or is there an alignment on that? I don't know who wants to ask -- who wants to talk and respond, but it's basically a question to all of you, I guess.

Thank you, Linus. Well, if I start, and let's put it pretty simple. We have short-term targets, we have long-term targets. Long-term targets are aiming for us to make sure to increase shareholder value over time. Short-term targets are geared towards delivering the short-term financial commitments. So in our short-term financial targets or short-term targets, they are around safety because, of course, nothing can be more important to make sure that you can come home from work, all safe and sound. But after that, it's profitability and its operating working capital. So all the rest is falling out of that. So would we run uncompetitive assets? No, because that would eat EBIT. Would we build stock instead of making sure we could sell as much as possible? No, because that will increase working capital just to put it simply. So I think the Board have done excellent in cooking this down to long-term measures supporting shareholder value long term, but at the same time, short-term measures being very crisp and clear and geared to what's needed within the coming quarters and years.

And if I just maybe build on that. There are also shared targets coming back to your capacity asset optimization. Like me and Marko over there under his responsible foodservice and liquor, we share some assets that also means we have shared targets. So I have order incentive to maximize value regardless of where. So as I said during the presentation, I'm data-driven. I have not particularly -- not a lot of any of my machines. I just wanted to generate as much value as I can. And that will be done by optimizing their product allocation to the lowest cost assets wherever they are.

It's Charlie Muir-Sands from BNP Paribas. I just had a question. Firstly, a follow-up. You mentioned a clause to kind of revisit pricing where you see cost movements. I mean, it looks like wood costs are maybe starting to come back down now. So does that cut both ways? Do customers have the right to kind of come back and say, "Well, hang on, your wood costs are coming down. So can we have a lower price on our consumer board, please?" And secondly, there was a comment earlier about flexibility of the machines. I understand the new Oulu Machine 6 can obviously produce a couple of different grades. But can you talk a bit more about the flexibility you have within the rest of the asset base and what you've got now and maybe what you can add to that flexibility in the base over the next couple of years?

If I would start more broader and then you can fill in maybe. In a performance culture like Hans talked about the forays, it's not you know that you work very hard when the market is tough, and then you sit lean back when the market is good. So we are working -- we are in a continuous improvement culture. If I take Montes del Plata, we are now in our eighth year of the journey of improving cash cost. So regardless whether the market goes up or the market goes down, we continue to strive for higher efficiency, better yield as well as higher quality. So that is kind of the fundamental in this because we cannot steer the market. We shouldn't steer the market even, right? So we have to work on the things we can control, and one of them is, for example, cash cost. And all the business areas have similar efficiency KPIs that are in the spot simply. Andreas, maybe you want to add something from specifically?

So back to the contract question first. It's not like a couple of percentage points, 2 or 3, 4 percentage points that triggers these clauses. There needs to be a major shift in the cost structure, like the war that happened 3 years ago. So that created a big disruption. So those are the kind of events that this contract -- this clause aims at. And of course, it goes both ways. It would not be fair with our customers that we only look to what is important for us. I think it needs to be a fair, win-win situation, and that is what is reflected. But again, it needs to be a major disruption. So the smaller up hikes, down hikes, those we will have to manage ourselves. Then on the interchangeability, so we have two main -- or three main grades, if you will, in BM6 in Oulu. CKB, which we also produce in Skoghall, and that is exactly the same recipes. And then we have also Performa Nova, our GC2 and Performa Lumi, our GC1. Those have been based on the recipes from Fors. We are working and we continuously work with our development. So there is now some interchangeability also among other assets, for example, Imatra and Fors.

Andrew Jones from UBS again. I just want to talk about a future capital investments. I mean, clearly, you're talking about getting the debt down and reducing the CapEx in the nearer term. I'm wondering under what circumstances you'd be talking about going ahead with, say, the Langerbrugge conversion. That's obviously something you've talked about being an attractive project in the long term. Under what circumstances would you commit to that? And also on the Lignode side, I mean that was obviously talked about more actively, I think, a few years ago. What sort of capital requirements would that business need to scale that? And could you maybe give us some idea about the sort of longer-term market opportunity in that business? And again, what circumstances would be required to move that forward?

Should we start on the capital allocation or capital needs. So I think Langerbrugge, of course, I mean, we have talked about it in the past, and I think it makes a lot of sense in a market where integration actually is the key to win in corrugated and container world. The market is oversupplied as we have discussed today also. So this is probably not the best moment to bring new capacity to the market, but I'm absolutely sure that the market consolidation will also continue as we've seen and as we've spoken. So the market consolidation will continue in containerboard and also in corrugated. And I think this is then maybe a couple of years down the line. And then this investment makes total sense because we have a very, very good footprint in Western Europe right next door, basically. So we could replicate the situation we discussed in Poland, also then to Western Europe. So this actually makes a lot of sense. Not at this moment in time in the market. But going down the line 2, 3 years, this will actually be a very, very meaningful future potential investment.

And if you kind of boil that down, I think what will make us consider future investments. First of all, we are well invested. Even take fluff that I talked about, we have spent already EUR 100 million to modernize and make sure to have a fluff production that is top-notch. To invest more in fluff, it would be a need to have a very good business case. And that I think is true for anything. It needs to be good shareholder value and there needs to be customers out there that want to buy this and need this, right? And that's true for, I think, any business looking forward. So shareholder value, customer commitment.

And with those words, it is very good to conclude the Q&A session for this one. Please let's continue the discussions during the lunch break. But before that, let's hand over still to Hans for concluding remarks. Thank you.

Thank you very much, team. Thank you to all. It's now time to conclude. And there are three key takeaways I would like you to take with you from this Capital Market Day. First of all, we are sharpening our focus. We are creating two leading champions in their fields to maximize business value but also to maximize shareholder value. Then number two, we are executing on our margin expansion, profit improvement actions with speed and determination, building on our performance culture throughout the whole company. And number three, we are generating cash. We're really focusing now on cash generation, disciplined capital allocation. We have strong world-leading asset base. We can capitalize on the heavy investments on our leading assets, our leading product portfolio. Now it's really the time to harvest. With this word, we thank you all for your active participation, and we end the webcast by now. So thank you, and bye-bye.