Stora Enso Oyj (STERV) Earnings Call Transcript & Summary

[Presentation] A very warm welcome to everyone. I'm delighted that you can join our 2022 Digital Capital Markets Day. Stora Enso's purpose, to do good for people and the planet, is more important now than ever before. Every day, we hear about the urgency to break our world's dependency on fossils and move towards renewable and circular solutions. Our people, customers and our partners are all committed to this mission. And we firmly believe that everything that's made of fossil materials today can be made from a tree tomorrow. This is what drives our growth opportunities, value creation and shapes our innovation agenda. Our products and solutions are renewable and circular, and the CO2 they replace and store helps to mitigate climate change for a sustainable and renewable future for all. Before we go deeper into the presentation, let's take a look at today's agenda. I will start by giving you an overview of our overall progress, performance and strategic direction. We will then continue by diving into our growth businesses, Packaging, Wood Products and Biomaterials Innovation. Our focus will be on our key drivers of growth and our opportunities. This part will be presented by my team leading these businesses: Hannu Kasurinen, Lars Völkel and Johanna Hagelberg, respectively. After a short break of about 10 minutes, our CFO, Seppo Parvi, will kick off the second half of this event, giving you a more detailed overview of our financial performance. We will end by inviting you to listen to an exciting panel discussion moderated by Annette Stube, who is driving our sustainability transformation. She will be joined by external collaboration partners and customers from Tetra Pak, Bouygues and Northvolt, who will give their views on key trends and future developments. We will then conclude with a Q&A moderated by Anna-Lena Astrom, heading our Investor Relations, and you can already now submit your questions at the bottom of the webcast page. So with that, let's kick this event off. And when I reflect of my 2.5 years as CEO, quite a lot has happened since we had our last Capital Markets Day roughly 2 years ago. And I believe, as a result of our chosen strategic direction and strong execution, we now have a much more attractive and resilient investor proposition. We have delivered on our promises and taken decisive actions to focus position and accelerate business for higher performance. Our new decentralized operating model allows for fast decision-making close to the market and customers. This empowers our leaders and organization to drive commercial and operational excellence. Our profit protection program is completed, delivering ongoing cost savings of more than EUR 400 million. We've also formed a new Forest division, including the acquired Swedish forests and implemented market-based valuation. And we have really seen the benefit of our flexible wood supply network. It has been crucial in these turbulent times, securing high-quality, cost-competitive and sustainable wood. Another key step has been our decision to step out of the structurally declining paper business. After restructuring and turning around the retained business, it is competitive and ready to be divested. And therefore, I'm now very glad to present the first divestment announced today, and I will shortly provide you with more details on this transaction. As you can see, our exposure is now significantly reduced and represents only a small part of our total sales. This transformation has made us more efficient and less cyclical company. Our focus, resources and investments can now be allocated where we have the best business opportunities for profitable growth, we've leading market position and strong competitiveness. And I'm happy to say that we are also delivering on our strategic road map to accelerate growth organically and through selective M&A. Last time, we introduced our 3 focus areas: Packaging, Building Solutions and Biomaterial Innovations. In Renewable Packaging, we're doing capacity expansions in existing production sites and converting selected paper assets into high-quality, cost-leading packaging production. Last week, we also announced our first acquisition in a long time. And Hannu will share more insights with you later. To grow with the market growth and improve competitiveness in wood and construction market, we have invested in operational efficiency in our sawmills and capacity expansions and service offerings in our Building Solutions business. Lars will describe this more in detail. And lastly, in Biomaterials Innovations, we are making progress with our Lignode products and have recently signed a significant joint development agreement with Northvolt to build the world's greenest battery. Johanna will shed some more light on the progress we are making. Altogether, these actions will generate almost EUR 2.7 billion to our top line. Our decisive execution is also visible in our financial performance. And I'm proud that we have delivered some of the strongest numbers in Stora Enso's history during, I would say, quite extraordinary times of turmoil and disruption. In the last 12 months, we reached a year-on-year growth of 30% versus our 5% target, excluding Paper. For operational return on capital employed, excluding Forest, we reached almost record levels of 22%, significantly above our 13% target. Also, our balance sheet has been strengthened. Net debt to operational EBITDA is, for the first time, at 1, below our target of 2. And our net debt-to-equity ratio has significantly improved to 21%, far below our target of 60%. For the first time in a long time, we have the financial muscles to accelerate both our organic and M&A growth actions. And we have the resilience for more difficult times. Within sustainability, we have set ambitious science-based targets with the focus on the 3 areas most critical to our business. For CO2, we have a target of 50% reduction in absolute emissions in Scope 1, 2 and 3 by 2030. We are well on our way. The last 12 months, we have reached 20% reduction. In circularity, our target for 2030 is to offer products that are 100% recyclable. We will reach this by adopting circular design guidelines for all our products and collaborating in the value chain for recycling of fiber-based packaging in Europe. On biodiversity, we have set a target to have a net positive impact by 2050. Here, we are using science-based indicators to track progress in combination with advanced precision forestry tools. We have a detailed action plan, including biodiversity services we can offer to our forest owners and other partners. If you are more interested, you can follow our work in progress in each of these areas on our website. Sustainability is our business. Accelerating our growth, enabling margin expansions and opening up new business opportunities. Megatrends such as urbanization, climate change and resource scarcity underpin the key drivers for our profitable growing business. Circularity is necessary as resources become scarce to reduce waste and to improve material use efficiency. It is driving consumer behavior and demand for sustainable and recyclable products. Carbon neutrality creates a significant need for both our products and sustainably managed forests, which act as short- and long-term carbon storage. Renewability calls for fiber-based packaging to replace plastics and wood and building solutions replacing concrete and steel. And being by biodiversity positive for us means promoting the health and resilience of our forests and ecosystem for the long term. We are responding with an increase in new end use and customer innovations. As a result, fiber-based packaging is, for the first time, expected to grow faster than plastics and other materials over the next 5 years globally. And the global wood-based building solutions market is expected to expand more than 10% between 2021 and 2030. We are creating the foundation for a renewable future now. Our products store CO2 and replace and displace fossil-based products. And this is the fundament to the growth potential that we see with our products. Looking first at our foundation areas. The Forest is the base for everything that we do. It is the essential basis for our sustainability credentials. The traditional wood products is the base for developing higher margin, value-add building solutions. And pulp is a strong cash generator with high-quality assets. It supports our growth in packaging, generating sales into highly specialized end uses such as tissue or hygiene. And it is also serving as the source of innovative solutions based on lignin. In our 3 strategic growth areas, we see the greatest potential for scalable innovation and commercialization of new products. In packaging, we see high demand for plastic-free and circular solutions. This growth is driven by both brand owners, consumers and regulation. Within wood and building solutions, we are a global industry leader, and the construction market is shifting more and more towards less labor intense and modular way of building. Here, we are in a great position to capture a larger share of the value chain with our products and value-added services. When it comes to biomaterials innovations, we target high-growth, high-margin and product markets. All 3 focus areas are closely interlinked with our innovation agenda. As we have communicated earlier, Paper is not a strategic growth area for us. Four out of our 5 paper production sites will be divested, while 1 site will be retained for a potential conversion. This divestment process is progressing well, and we have several interested buyers. Each site will be divested individually to maximize shareholder value and to find the best match with buyers. The sales process has no immediate effect in our Paper operations. We continue to serve all our Paper customers. I'm happy to say that we have now signed an agreement to divest our site in Maxau in Germany to Schwarz Produktion, part of one of the world's largest retailers, Schwarz Group. The enterprise value of the transaction is EUR 210 million and is expected to be completed in the beginning of 2023. All 440 employees will be part of the transaction, and I'm personally very satisfied to have found a new long-term home for this site with the possibility to thrive under the new ownership. Now over to one of our growth initiatives. A few days ago, we announced our acquisition of De Jong Packaging Group with close to EUR 1 billion in sales. With this step, we more than doubled our Packaging Solutions business, and it is fully in line with our strategy to primarily grow through M&A in this business. De Jong Packaging Group is based in the Netherlands and is one of the largest corrugated packaging producers in the Benelux countries. The team in De Jong has a strong track record in profitable growth, organic and through M&A. And we expect the transaction to be closed at the beginning of 2023, subject, of course, to regulatory approvals. Hannu will share a little bit more information later, but this is a significant step for us that will accelerate revenue growth and build market share in Renewable Packaging in Europe. As you can see in this chart, we have done a tremendous transformation of our product portfolio. You can see on the left that in 2006, 70% of our sales were generated by Paper. Today, 60% comes from growth businesses. And in 2030, our ambition is that 80% of sales comes from high-margin growth businesses. Another ambition by 2030 is to reduce earnings cyclicality by half. I've already elaborated about exiting Paper. And as we grow our Building Solutions, which Lars will talk about later, we reduced the cyclicality impact from our classic sawn business. Since most of the growth will come from the Packaging business, we naturally reduced our long market pulp position. And we can increase integration by using more of our pulp internally, for instance, eucalyptus instead of selling it to the market. Lastly, we are developing more value-add and specialized pulp products in less cyclical segments, as Johanna will explain later on. So all in all, our target is to have a significantly reduced market pulp exposure going forward. There are a few businesses, if any, that can claim that they have a positive climate impact. Well, we can. Our value chain emits just above 10 million tonnes of CO2 yearly, and as I shared earlier, our targets are to reduce that by 50% by 2030 and to be net zero by 2050. When growing, our forests remove and store 1.5 million tonnes of CO2. Our products also store carbon, leading to another 2.5 million tonnes of net removal of CO2. The biggest impact, however, we have when our products substitute fossil-based products or products demanding high energy consumption, every time a steel frame is replaced by a wooden one, every time a paper packaging is chosen instead of a plastic one. In total, these substitution effects are the biggest, more than 17 million tonnes of CO2 per year for our current business. In essence, the more we manage our forests sustainably and the more we grow our renewable business, the better the results are for the climate. This is what motivates us, business and sustainability going hand in hand. So in summary, what will Stora Enso look like in 2030? Through our growth initiatives, we will increase our sales by 30% compared to 2021 with a healthy 15% EBIT margin over the cycle. Our Packaging business will represent more than 60% of our sales. We will increase our share of Building Solutions to 40% of wood products and increase the operational EBITDA of the business by 75% over a cycle and have more than EUR 1 billion business from new lignin-based materials. We also target to reduce our earnings cyclicality by half. And lastly, we want to deliver between 5 and 10 terawatt hours of wind power on our own forest land. And Seppo will share some thoughts on that in his section. We have high ambitions, and we are realizing our renewable future today. And with that, I would like to hand over to Hannu that would take us through the fascinating world of Packaging.

My name is Hannu Kasurinen. I'm responsible for Packaging Materials division. I have a long career in the company. And the last 10 years, I've been working in the Packaging roles. Today, I'm presenting how we drive growth in Packaging, both Packaging Materials and Packaging Solutions. The world is looking for new alternatives to plastics. And fiber is part of the solution. Did you know that 20 million tonnes of plastic packaging is wasted in Europe every year? And globally, the number is 400 million tonnes. This is horrible. 25% of this plastic could be substituted by recyclable and low CO2 fiber-based solutions. This is fantastic opportunity to our industry. Substitution is happening and fiber-based packaging is the fastest-growing packaging format globally. I will go through this journey with you during my presentation. We have the broadest portfolio in the industry. Our business is split into 2 segments: consumer board, containerboard and Packaging Solutions. Consumer board is very stable. It has to do with our daily needs. We need to drink it, take the medication. So we have 5 different businesses: liquid packaging board. It's about fresh and aseptic liquid packages. Then we have a foodservice board. It consists of cup stock, i.e., paper cups, trays and plates. Then we have coated unbleached kraft. I call it the brown consumer board. And this is fit, for example, when eating burgers, and the clamshell is made out of brown board. Solid bleached sulphate. It is SBS and it's actually the most pulp-containing board we have. It has fantastic visual appearance and, therefore, it's often used in luxury end uses. When you walk around at the airport duty-free, you use just a lot of our SBS grades. And then comes last but not least, folding boxboard. It's really the fighter grade. It is fit for the pharma packaging. It can be used in direct food contact and that's actually the fastest-growing packaging grade of our portfolio. Then containerboard. We are dividing into virgin fiber business and recycled business. Kraftliners are virgin fiber. You can have a direct food contact. Typical end users are that we pack, for example, fruits, vegetables into this, and the board performs also in very demanding hot and humid conditions. Whereas testliner is recycled. Typical application is a corrugated box, for example, for the TVs. And then we have semi-chemical fluting which is the curly liner between the 2 test liner layers what you see when you open up a box. Then Packaging Solutions is our converting business. It is a regional business. We mainly produce corrugated packages. E-commerce is a big driver there. And then we have a new business portfolio where we are commercializing our innovations. I will get back to the new businesses in a while. We have a strong market position in Europe, but most of our products also travel globally. We are one of the top 10 players in the world. We have premium products and services for most demand end uses. Our kraftliners and flutings are global premium niche segments. And like I said, corrugated packaging is rather local fragmented market, and we've been growing through organically and also with acquisitions like Annica was already presenting. In our consumer board, we have these leading market positions. In liquid packaging, we are global #1. And in foodservice boards, we are European leader. Here, our strategy is minimum maintain the growth, i.e., grow at the same speed as the market does. Then we have these 2 following grades, folding boxboard and CUK, the brown board. Here, we actually see the best substitution opportunities in short to medium term. Hence, our strategy is to outgrow the market. Then comes SBS, the luxury board. Here, actually, we see a little bit opposite trend. Even though we continue to offer SBS in the luxury end uses. The best quality folding boxboard is actually taking market share from SBS. In containerboards, we are regional leaders. We've been growing the virgin fiber kraftliners through successful conversions, and we have a strong position in Europe, and now we want to then fine-tune our offering to the customers. In semi-chemical fluting, it is the niche curly liner, as I said. And here, our intention is to stay with the current position, i.e., one of the European leaders. And then real growth segment now in containerboard are these recycled liners where we are planning to grow in Western Europe. We already have a strong position in Eastern Europe, Poland. Then in the Packaging Solutions business, we are #1 in the Nordics. We have a strong footprint also in Baltics, Poland. And now through De Jong acquisition, we are becoming one of the leading players in Benelux. Then a few words about integration benefits in our core regions. It's good to understand we have integration benefits creating synergies inside the mills, between the mills and between then our board machines, board mills and corrugated converting units. In Nordics, which is really the home base for our fantastic fiber, we have multiple big mills, obviously, in the remote areas where the trees are growing. We call these big mills megasites. Typically, a megasite is a mill where you have a pulp mill maybe, multiple board machines, you may have a sawmill there and further processing like sheeting, coating and we simply have the size of -- the scale of size creating economical benefits. And this is something that is very much creating the competitive advantage, especially the energy that we can get out of the pulp mills is a major player. We also have smaller sites, which are unintegrated. There, we have been successfully creating niche product concepts where we can get premium prices and then afford a little bit higher cost level. And then we are optimizing the product mix. We can do it inside the mills and between the mills. As an example, we are planning now to make a big conversion in all of Northern Finland. We are converting paper machine into folding boxboard and CUK grades. And by doing that, we can actually transfer some of the CUK production from Skutskär Mill in Sweden up to Oulu. And we can run more liquid packaging board than in Skutskär. This creates less SKUs, more efficiency, more output. And similar action can be done in Imatra Mill in Finland where we are then moving folding boxboard from Imatra to Oulu and running more foodservice board. So this gives you an idea what kind of benefits we have between the mills and in the integrates. Then going Eastern and Western Europe, we have a very strong footprint in Poland. We have a recycled mill in Ostroleka, Poland, and it's actually serving then our converting units in Poland. And this is a winning combination. Our intention is now to take this winning combination to Western Europe through De Jong and the planned Langerbrugge conversion. We also have a beverage carton recycling ongoing in Poland, and we are looking into to repeat this model in connection with Langerbrugge Mill. In China, we have a little bit of a different position. We have state-of-the-art consumer board mill in Guangxi, Southern China, where we also have the plantations. And we have then 4 folding carton converting units roughly 2,000 kilometers northeast. So the physical distance is a little bit too long. Hence, we have less kind of the volume synergies, but we've been working actively with our China Packaging Solutions converting to do the product launches, testing, qualifying. And the ramp-up of Beihai Mill was very much supported by our Packaging Solutions. Let's then review the recent acquisition we announced last Thursday. This is really the growth driver for our Packaging Solutions business. So we are talking about De Jong Packaging. It's a Dutch company. It's founded in 1996. It has 1,300 employees, billion euro sales. So it's a sizable packaging company, and the margins are healthy. EBITDA, roughly EUR 114 million is the estimate. What's very important is the synergies. We are planning to capture synergies of EUR 30 million annually over the business cycle. We can actually start to harvest the synergies when the transaction is closed by starting to supply then board from our existing board mills in Poland and Nordics to De Jong corrugated plus. What makes this really exciting is that there's actually ongoing investment program. EUR 275 million will be invested mainly at the De Lier site in the Netherlands. And then there is an additional investment in the U.K. and we are talking about EUR 275 million, as I said, but this will then increase the EBITDA by EUR 40 million by 2025. And when you now look at the map, our local presence is key. We have started in Nordics. We have come down to Baltics. We are strong in Poland. And now we are stepping into Germany, in Benelux, where we are #3 position and then moving over to U.K. So this sounds really good. But there's even better to come. We have an excellent fit with our potential Langerbrugge conversion. And in Langerbrugge, in the Port of Ghent, Belgium, we are planning to convert a major size newsprint machine into recycled containerboard grades. The decision should be taken during the first half 2023. And if we go forward with that one, we have a mill up and running in 2025. And here, we have actually rather unique combination possibility. We would convert Langerbrugge, the most cost-efficient containerboard site in Europe together with De Lier production site. And this is planned to be the largest and most modern corrugating site in Europe after ongoing expansion. I sincerely believe that this is -- one plus one is more than two in this case, very excited about it. And we have the very close physical distance between these 2 units, 160 kilometers only. So it gives us additional opportunities then for commercial and cost integration benefits over the business cycle. For example, when we would be then ramping up Langerbrugge containerboard, we would have a strong internal customer who would be willing to qualify, give us continuous feedback and this has been successful in our other conversion cases. We have delivered profitable growth. The sales have now exceeded, on combined basis, EUR 5 billion landmark. Packaging Materials has been driving this. We have been quite successfully increasing our production. We have new production records. We've been successful with the pricing, whereas Packaging Solutions has had a little bit of a different road map. They have been restructuring their Nordic operations and then we had to exit from Russia. So that explains a bit why the revenue development is different. However, we are now obviously turning a new page in the case of Packaging Solutions. Operational EBIT, I'm extremely proud. We actually have been able to improve the margins and this is, again, do with the right pricing with the cost control. And then obviously, the Oulu conversion of the first machine has impacted both sales and margins. Now operational ROOC. We have been given a tough target, 20%. And why I say tough, we are heavy asset division, which is on the growth mode. So you have to understand that this 20% ROOC is over the cycle. In our Packaging Solutions division, we have now reset the target from 25% to 15% level. Seppo Parvi, our CFO, will discuss that in his presentation. Like Annica was already referring, we had a trend shift. And for the first time, Board has the highest projected growth rate. I think this is really exciting. And what's behind this interesting trend is that we view the consumers -- I mean, we are effectively preferring fiber-based packaging over plastics. 7 out of 10 consumers think that packaging should be actually based out of fiber. The global packaging market is huge, EUR 1,000 billion, and the best thing is that it's actually growing by 4%, and this is much faster than the overall GDP growth in the economy. And now when we look at the -- how has the value of a package developed during the last years. From 2016 to '21, different plastic grades were growing roughly 4% to 5% and Board was only growing 3%. And now we have seen, for the first time, the trend changing. Actually Board is taking the lead going forward, 5%, and the others are growing between 3% to 4%. I've been waiting this data for a long time and now it's happening. This is simply awesome. We are well positioned to capture EUR 1.5 billion additional sales in consumer board and containerboard. We've been discussing about our Oulu Mill in Finland, where we have had successful containerboard conversion of the first paper machine. Timing was perfect. We were ramping up the asset into very, very tailwind and it's been a major success. Now we are looking into the second machine conversion. We are planning to convert that into virgin fiber consumer board. The products folding boxboard and the brown board CUK are planned to be produced in Oulu. Estimated sales would be roughly EUR 800 million, and we are expecting to make a decision by end of this year, which would allow us then to start the production in 2025. We've already discussed about the Langerbrugge. Yes, we have a feasibility study ongoing. Decision should be made during the first half of '23, and the estimated annual sales around EUR 350 million. How do we plan and implement these massive growth projects? It's very important to remember that we are planning the asset life at least for 30 years. And the capital in question can be EUR 1 billion. So it's very important that we actually spend enough time with the planning. It all starts from feasibilities -- pre-feasibility study, which takes roughly 6 to 9 months. And in this pre-feasibility study, we are assessing all critical parts of the project. A lot of focus into markets, commercials, technology, where do we get the raw material, what kind of energy balance, how do we get the CO2 down and so on and so forth. And then it all boils down to the financial calculation. If the calculation looks feasible, we go into the feasibility study, which takes roughly 12 months. In the feasibility, we are going into details. We are reconfirming all the findings of the pre-feasibility study. We start to apply the environmental permits. Also we make the project public. And then our suppliers are working with their binding offers. And then if feasibility study still shows positive outcome, we go into the construction phase, which normally takes 2 years. And during the construction time -- or let's put this way, construction time can depend what is the order situation by the main suppliers and what is the complexity of the project. Once construction is over, we go to ramp-up phase. The most successful fastest ramp-ups like with this Oulu first machine took only 1 year. But if we are ramping up more kind of a complicated demanding products like liquid packaging board, it easily takes another year because simply the liquid packaging qualification process is very structured, number of [ stage gauges ]. So our converter customers can't really let it happen faster. And then we go to full production. So you can say that the overall project takes somewhere between 6 to 7 years. Capital expenditure happens mainly during the construction time. And it's important to remember that when we put a lot of capital and the payback doesn't happen immediately, this is then putting pressure on our ROOC and, therefore, the ROOC is over the cycle, as I said. Our planned new board assets are among European cost leaders. I think this is impressive picture and is illustrating how the planned cost position of our product delivered from the mill location to Frankfurt in this case, how does it look. The further left you are on this curve, the more cost competitive you are. On the left-hand side, we have Oulu folding boxboard delivered to Frankfurt, and I'm happy to say that we have the lowest cost position and this makes me feel very good. Our existing assets are there with the dark blue in the middle. So I think this Oulu will be a real, real player in the market if we go forward with that one. And in Oulu, we have obviously the benefit of an existing integrate. We have raw material available. We have deep sea port there. And very important factor is to remember that the conversion of the second machine would not only benefit this machine, but also it would be benefiting the rest of the integrates because we will have more revenue to share between the cost in the integrate. So there you have, again, integrate benefits. The Langerbrugge case looks even better. And there we are in the heart of Europe, nearby Ghent. We actually have 80 million consumers consuming corrugated boxes day in, day out. And even more importantly, they are recycling them. So we have access to the customers, but also to raw material. We have, again, strong integrated synergies, but the exceptional benefit in this Langerbrugge case is the energy solution. We are burning local municipal and industrial waste. We actually get paid for that. And imagine now when vast majority of our competitors are using natural gas in their boilers, so the difference is significant. So actually, I think this cost curve would be much steeper. And with the blue one, we have our Ostroleka Mill in Poland, which is also well positioned. So I'm very much looking forward to these 2 growth projects. Value chain collaboration driven by sustainability. Today, we partner throughout the value chain. Sustainability is the common denominator by all the players. Traditionally, Stora Enso was very much focusing to the buying/selling relationship with the converters. Today, we are all over the value chain. We have strong synergies with our group. It starts from the forest ownings wood supply. We have internal pulp supply coming from Johanna's pulp mills. We have significant energy assets. The PVO exposure is very valuable to us. We do have strong sourcing and logistics organization. We actually are one of the biggest customers to European carriers. And then we have the valuable internal converting through Packaging Solutions. So we have a natural access then to the brand owners and retailers through Packaging Solutions. The strategic collaboration with converter customers has developed tremendously during the last few years. We are sharing, learning, trusting to each other. There's a lot of innovation activity. We are working with recycling. We are working with our sustainability communication. With brand owners, we have 2 ways to interact. Normally, we want to at least be specified with the Board. So if Nestle wants to have 3 suppliers for their Nespresso package, we better be one of them. The other alternative is that we have a direct deal with the brand owner, we agreed the commercial terms and then Nestle simply assigns the converting job to a converter. The role of retailers has become very important. They have the data about the consumers, their buying behaviors. Retailers have their own private labels. Hence, if they want to move, they can do it very quickly. And retailers can also then put pressure on brand owners to say that this and that objective actually needs to be substituted from plastic to paper. So the whole value chain collaboration is the key. Plastic substitution opportunity will be captured through innovation. I have 3 examples here to present how we are working with these end users and the customers. On the left-hand side is the food end use. Here, we have an example of formed fiber. This is one of our new business portfolio products. And it's actually kind of a compressed pulp. And here, we have replaced, in the salad application, a plastic package and the lid and there's a lot of demand for this kind of applications. In addition, with the foodservice cases, paper cup is a good example. Traditionally, we have had a rather thick layer of PE on the top, can be also on the other side, on both sides of the cup. And now we've been able to reduce the plastic layer. So we are well in compliance with this 10% maximum ruling that European Commission is introducing. We also have new type of technologies. So if a customer doesn't want to have PE, we have water solvable dispersion coatings. And what's very important thing what we are now starting to activate is to organize the collection and recycling of paper cups. Normally, paper cups are thrown in the waste bins. So recycling is not the problem, but it's the problem to get access to them. So you will hear about this in the near future. In liquid packaging, we have a very good starting position. Did you know that this actually has 47% lower CO2 footprint than PE did? And we will improve. We are going to now reduce the plastic layers. Our long-term plan is to take aluminum away from the aseptic liquid packaging and replace that with fiber-based barrier. It is maybe the most demanding task we have. But there, we are working with our customers. We're also getting active with liquid packaging recycling, as I said. Then in the world of transport packaging. Here, I think the first thing we want to solve, and we're actually selling services to brand owners that how a brand owner can improve their efficiency of the supply chain. And a good example is that often the package is oversized, it's simply taking too much weight on the truck -- space on the truck. It has a too high weight and, therefore, we can tailormade the size of the packaging for the respective product. We also have very interesting new material then to safeguard, protect the valuable item inside the packaging called fiber foam. And this is a fully fiber-based material that is used as a cushion material, and this is actually replacing polymer foam. And guess how much is the CO2 saving? 80% to 90%, pretty impressive. Then a few words about our growth plan until 2030. We are working with both organic and acquisition route. We've been growing roughly 6% per annum from 2016 to 2021. And as you have heard today, we have a lot of actions in the pipeline. We have De Jong acquisition, which is expected to increase the top line by EUR 1 billion. We have these ongoing feasibility studies, another EUR 1.1 billion. And then we have multiple other projects which we haven't announced yet. And then there are certain projects that are ongoing, like we are rebuilding one board machine in Skutskär. It's an EUR 100 million investment and it will increase our top line by EUR 100 million in '23 and '24. So I'm actually convinced that the nice growth will continue. Finally, let's review then our ambitions by 2030. We want to at least grow the sales by 60% versus 2021. We want to at least double our EBIT during the same time period. This leads into highest industry margins. We also want to be fully integrated with our Board capacity towards internal pulp, so this would mean that Johanna's market pulp exposure would be reduced. We want to maintain the leadership position in sustainable packaging design and innovation. We are also committed to reduce our carbon footprint by 50%. We have a lot of actions and investments in the pipeline to do that. In circularity, what we need to do first is to adapt our circular design guidelines, making sure all the products can be recycled and that leads into the fact that we will have 100% recyclable products by 2030. Thank you. And now I hand over to Lars.

Thank you, Hannu. Wood Products is mainly active in the construction and building market, an industry which I have worked in since 20 years, and never until today have I seen such big changes happening. This industry must become more sustainable, digitized and increased share of prefabrication. These changes create opportunities for Wood Products. And coupled with our plans, this will enable us to increase our operational EBITDA by 75% over the cycle. My main 3 objectives of this presentation are, first, explain why the marketplace for Wood Products becomes increasingly attractive; secondly, present our range offering and our already delivered performance in the marketplace and regarding our financials; and thirdly, share with you our plans for the future in order to reach our ambitious goals for 2030. Let's start with the marketplace, which we are active in and why this market will become more attractive for us. Here, you can see why the industry is under such high pressure to reduce its CO2 emissions. Did you know that building materials account for 11% of the total CO2 emissions worldwide? Today, approximately 85 billion square meters of global building stock is installed already, and this building stock rose by roughly 2 billion square meters every year. If we were only able to build these 2 billion square meters with wood instead of concrete and steel, we could reduce carbon emissions by approximately 500 million tonnes every year. This is equivalent to the total annual CO2 emissions of the countries of France and Spain combined. So material substitution for building materials can make a substantial positive impact on climate change and, therefore, underpins our growth opportunity. I will now show the straightforward logic for the substitution benefit. As mentioned before, climate change can be mitigated with wood construction and the benefit of substituting concrete and steel with wood is rather straightforward and simple to measure. If you replace 1 cubic meter of concrete with 1 cubic meter of wood, 1 tonne of CO2 will be saved. If you replace 1 cubic meter of steel in a building with 1 cubic meter of wood, even up to 2.5 tonnes of CO2 will be saved. These sustainability benefits of buildings with wood are widely accepted by scientists as a solution to make a substantial positive impact on our global CO2 emissions. Thus, they are also more and more supported by legislation. Two examples for legislative support of wooden buildings as part of the EU Green deal are the EU Renovation Wave, which focuses on resource-efficient renovation of 35 million buildings until 2030, specifically promoting the use of wood. And secondly, the European Wood4Bauhaus initiative, which focuses on developing competencies across the entire building sector how to better build with wood, an initiative directly sponsored by the EU Commission President. Many plans to better climate change are rather complex and difficult to implement. Substituting the building materials of concrete and steel with wood is rather simple. Now I'd like to show you that building with wood both for small residential houses, but also for multistory buildings, is a proven technical solution already. We have delivered more than 15,000 wooden buildings already. It is a proven solution. Here are some examples of our beautiful multistory building projects. On the left-hand side, you can see a wooden skyscraper, an 18-story high building built with one of our many partners. Today, the demand for multistory buildings is mainly coming from our European clients, but demand from other markets is on the rise, and successful references are always a key enabler for growth in new markets. One example, in the bottom center of this slide is a beautiful office building in Brisbane, Australia. Another example is an ongoing major project in Singapore where we are in the process of completing the 40,000 square meter big Nanyang Technological University, a true flagship project for the Southeast Asian region. There is a big chance that if you walk past the wooden headquarter from global brand leaders, that -- it's filled with our wood. So in summary, our marketplace of wooden construction looks bright and is becoming increasingly attractive. Now to the second part of the presentation, our range offering, market share performance and financial results. Our range offering is split into 2 strategic pillars, which enables financial stability and resilience. First, traditional wood products, representing approximately 80% of our sales, which is placed in a mature big market with a market size of over EUR 100 billion and an expected annual growth of 3% to 4%. Secondly, Building Solutions, which this year represented approximately 20% of revenues and which is operating in a developing fast-growing market with a market size of over EUR 1 billion and an expected annual growth rate over 10%. A key benefit of having these 2 pillars is that this setup strengthens our resilience in a volatile marketplace. Why? Traditional wood products are placed in a commodity market with rather volatile demand and pricing. Building Solutions, however, is placed in a building project market, which has longer contractual lead times. This helps us to maintain prices and volumes when the commodity market of traditional Wood Products is down. So these 2 strategic pillars strengthen our resilience in growing markets. Now let's talk about how we performed in the market. We have achieved leading market positions, both in traditional Wood Products and in the Building Solutions market. Our market position and the sustainability megatrends will support our profitable growth ambitions. On the left-hand side, you can see that in the mature traditional Wood Products market, our market shares are rather small. This market is highly fragmented. We are the European market leader, even though our market share is only 4% and we hold a global top 5 market position. Our strength is that we have established a strong global sales and distribution network, which helps us to benefit from regional supply-demand opportunities. And in this market, it is all about competitive wood supply and operational efficiency capabilities which we have invested in over many years. On the right-hand side, you can see that we have also achieved a leading market position in the fast-growing Building Solutions market. This market is not as commoditized, allowing for customer relevant differentiation. Our wide range of products and services in Building Solutions is market-leading. This wide range and capacity, coupled with our financial strength, makes us a very competitive supplier, especially for bigger construction projects with international partners such as, for instance, Bouygues, which you will hear about later during the panel. So we have established strong market positions, especially in the growing attractive market of Building Solutions. I will now show how we performed financially so far. As you can see, we have delivered profitable growth over the cycle. We have grown both sales and our operational EBIT. Especially, I'd like to highlight our return on operating capital. So what are the main 3 reasons for this strong performance? First, the COVID crisis led to a peak in demand, and we have been able to increase prices more than variable cost increased; our ability, secondly, to benefit from regional market opportunities via our global sales and distribution network; and last but not least, our continued focus on operational efficiency. But we've not just tried to optimize our short-term results, we have used the last years to also invest into our strategic capabilities for improving our operational efficiency and strengthening our value offerings for the fast-growing Building Solutions market. This will bring benefits to us also in the years to come. So in summary, we have a resilient range and achieved leading market share both in the traditional Wood Products market and in the fast-growing Building Solutions market. And we have delivered strong financial results, while at the same time, strengthening our ability to take advantage of future opportunities. So now let's talk about our plans for the future. Our target for 2030 is to grow sales by 40%, especially with Building Solutions, which we plan to triple in sales whilst delivering strong margins. To achieve this, we will focus on 3 areas: first off, traditional Wood Products by continuously improving the competitiveness of our asset footprint and operational excellence. Secondly, in Building Solutions, by capturing a larger share of the value chain and increasing our capacity further. And thirdly, and as a new attractive growth opportunity, we also focus on the market of special infrastructure, where we are partnering with [ wind tower ] builders to use wood instead of concrete and steel. Let's move to our 3 growth plans, starting with traditional Wood Products. In our traditional Wood Products business, we have improved our competitiveness to achieve profitable growth. So why has it improved? Going forward, we will have a competitive advantage compared to other players in the market. Demand will continue to grow long term, but access to cost competitive and sustainable wood supply will become a key differentiator for us. Supply for many of our competitors will become tighter. For instance, German competitors will increasingly struggle to source wood as the German forests have been overharvested due to climate change effects. Our supply is less affected due to our more sustainably managed and climate-resilient Nordic forest assets and our ability to source wood in Central Europe from higher altitudes. Also, we've just completed our biggest ever operational process efficiency program, which ran for the last 2 years, an area where we expect to outpace competition and add additional capacity to our existing footprint. These improvements will also benefit our Building Solutions and provide integration and synergy benefits for Packaging Materials, too. On the M&A side, we constantly review available targets. Opportunities might arise, but right now, we consider our internal options being stronger. We will now talk about the second and main area of profitable future growth, Building Solutions. As mentioned before, Building Solutions is operating in a fast-growing market, and we will accelerate our profitable growth here. How? We don't just offer cubic meters of wood, but we have developed solutions which provide benefits to our clients across the entire building life cycle. This brings additional revenue and margin opportunities. It also helps us to differentiate ourselves. We have the resources and capabilities to develop, for instance, digital tools to support this growth which smaller competitors do not have. The 4 steps on this slide explain the high-level building life cycle, for which we have put in place specific solutions already. In the plan phase on the left-hand side, we offer, for instance, specific building concepts for architects so that they can plan the building using proven and material-efficient solutions without having to reinvent the wheel every time. The construction process in the build phase is largely inefficient today. It requires manual labor-intensive work with risks of lower quality on the construction side and complex logistics. All of this creates inefficiencies and high costs through the construction process. Prefabrication can add value by industrializing this inefficient construction process, and this is what we offer to our customers. In the living phase, we're also developing solutions for the building owners for digital smart living. Here, we offer, for instance, moisture sensors which can be integrated into the building's smart home applications to ensure efficient, low-cost maintenance of wooden buildings. There is an additional opportunity at the building's end of life. We offer solutions to reuse wooden building materials. Thereby, we do not only extend the carbon storage lifetime, but also increase the residual value of the wooden building materials. We are one of the very few who can offer such solutions across the entire building life cycle. We are moving beyond just offering a price per cubic meter. We support our clients with solutions resulting in bigger cost savings across the entire building life cycle, strengthening our differentiation and competitiveness. Let me give you an example of how we move from commodity to prefabrication. In this prefabrication example, you can see how our product offering changes from being a commodity offering towards being a true solution for fully finished wall and floor elements. We can support the financial attractiveness of prefabrication by industrializing the process of completing walls, floors, roofs, construction beams or stairs. Today, a wall made from concrete is, in most cases, manually built on the construction site, brick-by-brick, one-by-one window and door fittings, electric wirings, linings, paintings and so on. The construction industry has, therefore, not delivered significant productivity improvements in recent decades. We are step-by-step insourcing these manual activities if we can industrialize them. Already today, we offer high precision, efficient, automated cutting of walls and doors, as you can see in the middle picture. In addition, in the third quarter of next year, we will launch the world's biggest automated coating line for approximately 500,000 square meters of walls and floors. With this, we can much more efficiently apply high quality and, by the way, water-based protection against moisture, sunlight, insects and fire and offer colored visual surfaces too. Automated and high precision cutting and coating are just 2 examples how prefabrication can deliver lower construction costs, higher industrialized quality and how we can support our clients to solve their labor scarcity challenges on construction sites at the same time. So by offering building elements, we transform ourselves from offering commoditized cubic meters of wood towards being a true Building Solutions partner with fully finished, tailored building elements to our clients. Let's summarize the main benefits for both our clients and ourselves when building with wood. The construction industry has an opportunity to double the industry's rather low profit pool from 5% to 10% if improvements via mainly digitalization and prefabrication are implemented. Together with our partners, we can jointly benefit from these incremental margins improvements already today. Our Building Solutions range supports our clients with digital tools, which can reduce design, planning and maintenance costs. And as shown before, an increased share of prefabrication improves productivity and quality and specifically for wooden buildings, reduces the time for building erections by 70%, resulting in less time of capital tied up and reduced logistics cost by up to 80% less truck deliveries on site. There's also an opportunity to even increase property prices for wooden buildings as scientific research proves that in office buildings with visible wood, employees have a lower heart rate and less sickness days. This results in an 8% increased productivity of people working in wooden offices, a tangible benefit, which does justify higher prices for wooden buildings. And last but not least, and as already mentioned in the beginning, building with wood reduces carbon emissions by up to 70%. In summary, our Building Solutions offering is unique and can support the industry in making a step change in their own sustainable and financial performance. Now that I've talked about our Building Solutions as our main driver for profitable growth, let's talk about the third growth opportunity for which we can also use our Building Solutions products, building wind turbine towers with wood. Wind energy will grow. Now imagine renewable energy from wind turbine towers made from renewable materials. How great is that? Together with 2 partners, we have embarked on this journey and already realized 130-meter high wooden wind tower. Building wind turbine towers with wood doesn't just bring sustainability benefits by substituting concrete and steel, but also delivers financial benefits. How? Demand for higher wind towers above 100 meters will increase as they produce energy at lower costs than smaller towers. If these higher wind towers are producer of steel and concrete, the transportation of it becomes a real problem because the diameter of the base elements are very wide and heavy and will, in many cases, not fit on the road bridges. With lighter and modular wood elements, which you can see being built on the right-hand side, standard roads can be used for transportation. This does not only result in lower transportation costs, but in many cases, will be the only feasible solution to actually deliver high wind turbine towers to the designated installation site. We have a first mover advantage with a proven technology here, and we will be able to develop and build on this emerging and profitable market opportunity. I will now explain how we'll ramp up our Building Solutions capacity to deliver on these growth plans. In the growing Building Solutions market, we are the leading provider of wood-based Building Solutions. On the right-hand side, you can see our production footprint. Our mills are located close to both our own Forest assets and our main Building Solutions market in North and Central and Western Europe. On the left-hand side, you can see our Building Solutions capacity. In the next month, we will inaugurate our fourth CLT mill in Czech Republic, benefiting from both a close proximity to our biggest Building Solutions market and low-cost labor. With this latest ramp-up, we will achieve close to 500,000 cubic meters of Building Solutions capacity, making us a leader in the Building Solutions market. And we continue to investigate further organic and M&A growth opportunities, too. I've now come to the end of this presentation. I will share with you our ambitions for 2030. To summarize, first, we are positioned in an increasingly attractive market. Second, we have already delivered strong financial and market-related results. And third, we have clear plans for the future how to profitably grow our traditional Wood Products, Building Solutions and Special Infrastructure business. Our 2030 ambitions are to grow our sales by more than 40% and to increase our operational EBITDA by more than 75% over the cycle. Our main growth will come from Building Solutions, which we plan to triple in sales and which will contribute 40% of our revenues in 2030. We will also further explore additional growth opportunities with wind towers and plan to support erection of 25 wind towers by then. And last but not least, we'll improve our own sustainability performance and contribute with 50% Scope 3 carbon footprint reductions by supporting the construction industry to substitute concrete and steel with wood. And we will continue to lead the industry both with a competitive production footprint and with a superior operational performance. During the past 2 years, we have proven that we can deliver strong results. We've also used this time to invest into our future because the future for Wood Products is bright, and we are ready for it. Thank you for your attention. And now I'd like to hand over to Johanna, who is leading the Biomaterials division.

Thank you, Lars. I'm Johanna, leading Biomaterials division. My background is foremost commercial, having worked in automotive, construction and utilities. So cars, buildings and energy is my backyard. I look forward to describe how we are driving growth in Biomaterials' innovation. We focus on new applications and markets for renewable materials. I will also touch base on pulp, which forms the foundation of our business. It all starts with a tree. Trees basically consist of 3 materials. Lignin makes up 1/3 and offers a new world of possibilities. As you see in the chart, first, the stems become logs. Lars just talked about some of the beautiful wood products he makes from them. Then the smaller diameters, branches and thinnings go to our pulp mills, tomorrow's Biomaterials production sites. There, the 1/3 cellulose become pulp, which is the basis for our fiber-based products. Today, Hannu makes packaging material from it, and we produce fluff for hygiene products. Tomorrow, we foam it to make inserts in boxes or spin it to sustainable textiles. Broadly speaking, the other 2/3, lignin and hemicellulose, have been used as green energy. This is where our opportunity kicks in. With new technologies, we can extract lignin at scale, similarly, how we have extracted biochemicals like tall oil before. Lignin is the natural binder of a tree. Otherwise, trees wouldn't be able to grow up tall or stand wet weather. With our research and development based on lignin, we can make anodes for batteries in cars or we can reduce building materials carbon footprint with bio-based binders, nature's glue. With our biomaterial innovations, we aim to use the tree for new renewable products. Let's look at our current products and sales mix, providing the foundation. Our products and sales mix today is to majority pulp, and we find our customers in growing segments like packaging, tissue, specialties and hygiene. We are the leading fluff producer in Europe and among the largest pulp producers in the world. Our pulp rates vary from hardwood based like eucalyptus to softwood life spruce. The color ranges from traditional bleached white to natural beige. These less or non-bleached grades are especially interesting for the future being a perfect fit for the eco-aware consumers. Right now, we are improving the fluff production in Skutskär. It's an EUR 40 million investment, reducing the product carbon footprint another 5%. This is possible through process improvements that lower the chemical consumption. We also serve the biochemicals market with green oils such as tall oil and turpentine further refining this and extracting, for example, green methanol has potential. Next, let's take a look at our footprint. With our sales production and distribution footprint, we have a global market presence and reach customers worldwide. Of special interest are the yellow dots, our innovation center in Stockholm, where we have since 2015 gathered the leading edge of biomaterials research. Combined with our pulp competence centers in Karlstad and Imatra, these form the inner circle of our innovations. But also to note, among the green production dots, we already have lignin extraction in Sunila, being the largest kraft lignin producer in the world. And here, we intend to expand further, and I will come back to that later. From our footprint to financial performance. We have a strong financial performance in Biomaterials. We have been able to grow our sales based on well-round production and continuous optimization, but also manage logistics constraints well. Our agility, product mix changes and customer dialogues have been key. First, throughout the pandemic and lately, during the Nordic wood supply challenge caused by Ukraine war. Higher prices have generally been compensating the higher cost. Hence, our financial performance has been very strong over the business cycle. We have an average EBITDA margin of 27% in the timeline shown, and we have been above a return on capital target repeatedly. We are confident that we will continue to perform. Pulp will be the foundation, creating the base for the group. We will further reduce our long pulp position and increase integration as Packaging Material growth that Hannu talked about. Thus, we create stable demand and supply internally. We expect this to further smoothen our performance. Our growth will be driven by new innovative products with even higher margins and less fluctuation. This is what I want to spend the remainder of my time on. As you see, the new biomaterials based on lignin offers significant growth opportunities for us. Since the start of the innovation center in Stockholm, we have accelerated the research and development of lignin-based applications. We have several platforms and patent families in our innovation pipeline. And today, I will cover 2 of them: anode material and bio binders. The growth in anode material for batteries is driven by the demand for electrical vehicles. Only in automotive, more than 200 giga battery factory projects have been announced. Other drivers include renewable energy, requiring battery storage as well as mobile equipment. We expect 25% to 30% average growth rate and margins of potentially 50%. The growth of bio-binders, or simply put glue, is driven by construction industry's ambitions for sustainable building materials, which Lars just talked about. So let's dive into this. Bio-binders offer a much better carbon footprint than traditional fossil-based ones. Based on lignin, nature's glue, as you remember, we offer a range of binders today. They have high bonding strengths and water resistance. The end use very like the binder in the particle board you see here on the picture. Our customer, call it the Zero Board, being 100% renewable. Another application is in insulation for walls or ingredient in dies for clothing. Lignin can also replace bitumen in asphalt. Last week, one of our customers paved roads in [ Hobo ] with good performance. Improving footprint for roads will be important for municipalities to meet their climate agenda and less friction will increase the range of our electrical vehicles. We continue to develop the product portfolio to become first choice of eco-aware customers in the potential EUR 20 billion market. We are at the starting point. With the heavy fragmentation of binder applications, we are growing our market share step by step. Binders will also be our base application for lignin. It is an important product to optimize lignin production and grow lignin as a market. On this, we will then launch the even more advanced end uses, like batteries. Let's then move to the other area, lignin for anode material in batteries. So most of us think electrification is great. However, to run anything mobile on electricity, you need a battery. And today's batteries still rely on nonrenewable or fossil-based materials. For example, the anode in today's lithium-ion batteries is made from graphite. This is about 20% to 30% of the battery weight and 50% of the carbon footprint of an electrical vehicle. If nothing changes, the anode material will come from graphite mines or be made from oil with 95% of supply from China. Hence, OEMs and the battery manufacturers are looking for materials that are clearly better sustainability footprint and regional supply. In Europe alone, the annual demand is expected to be close to 1 million tonnes by 2030. And this is where we come in with our perfect combination of lignin and anode, Lignode. How do we do that? In practice, it is quite advanced. We build on our 10-year research and development with 7 patent families granted. We extract the lignin at our biomaterials production sites currently called pulp mills. Next, we refine it with our patented technologies into powder for anode material. This is the product we call Lignode. The Lignode powder is then processed into foils by cell manufacturers and rolled into cells. The cells are stacked by battery manufacturers to compile the battery packs. These battery packs, depending on specifications, are used in multiple applications, for example, in electrical vehicles, stationary energy storage or electric-driven products like handheld tools. A single electrical car will have 50 to 100 kilos of anode material. With the planned scale up, we target at least 10% of the European market. Sustainability is not enough. You also need superior properties. And with Lignode, battery performance is better. How much better? Well, it offers faster charging and discharging capabilities, often referred to as C rates. This is extremely important as faster charging will reduce the demand for infrastructure, but also get you and me back on the road again with our electrical car or back screwing bolts with our handheld tool. Then you see the better low performance in temperature, where we bring benefits related to electrolyte versatility. I think we all have experienced our mobile phone battery dies in cold conditions, and this can be reduced with Lignode. The increased cycling stability means more charging cycles with the same battery before it degrades. The open less than structural Lignode makes the anode much more stable against swelling. In practice, this means longer battery lifetime. Another important property is energy density or how much energy the battery can store in relation to its size. At lowering charging speeds, Lignode has a disadvantage due to its more open structure. However, at high charging speeds, it exceeds pure graphite. This means you can get a lasting battery with an option to make it smaller or give it a longer range. Finally, Lignode offers an unmatched sustainability performance. It's made from trees, will have low supply risk, and remember what I said about the 50% footprint of electrical vehicles. However, our Lignode is not only good anode for conventional lithium batteries where it can be mixed with graphite. It is also suitable for next-generation batteries, like sodium ion or in combination with silicon. Now you are asking, when will we be on the market? Right now, we are accelerating the development and scale up with customers and partners. Let's start with the upper part illustrating the production scale up, the time line we can control. We are currently industrializing the production process of Lignode, but also taking lignin extraction to the next level. Lately, we, for example, took a larger coater into use for better control of surface treatment, and we will start up lignin granulation now in autumn for improved customer handling. These important experience are fed into the ongoing design of our industrial production. Construction is scheduled to start in 2023 and be in operation by 2025, pending the investment decision. Beyond 2025, we will continue to expand and are already investigating 4 to 5 sites internally and externally. First stage is we need around EUR 200 million to EUR 250 million CapEx per site already included in our strategic investment plan. For this, we are well financed with our cash flow and financing capabilities like green bonds. Then if we move to the lower part of the timeline, the commercialization. We are in active partner dialogues with both cell manufacturers, battery producers and OEMs of the different end uses. The aim with all partnerships is to accelerate the development and scale up as fast as technically and commercially possible. We are after specific complementary technical knowledge and customers wanting to use Lignode in existing or coming products. In July, we proudly announced our first public partnership, joint development with Northvolt to make a sustainable battery. Our role will be to develop and supply Lignode material for the anodes, where Northvolt will do battery development and manufacturing. Given the nature of these relationships covering among other intellectual property and brand new products in development, you understand we have to be restricted with information. With Lignode as a product, we have since spring entered into customer testing phase. A significant number of customers have received samples are running tests and providing feedback. This is highly confidential, interactive and iterative. We refine samples according to their needs, they retest and so forth. There is great interest and we have moved from sample sizes of grams towards several kilos. The next phase for us together with customers will be qualification of products. Qualification is all the tests needed for a product to be proven for use. This is expected to start in 2023 and will pave the way for new product launches later. The period is expected to be 3 to 5 years for automotive, 2 to 4 years for stationary battery applications and 1 to 2 years for other electrical products like handheld tools. We will work with easier and more demanding applications in parallel. These activities together bring in the significant sales potential for Lignode together with the selected partners in the battery supply chain. So to summarize, for 2030, I am very confident we can meet the needs of tomorrow's customers. Coming from the automotive, construction and utility industry, I even dare to say our new innovative materials are essential for them. So we determinedly work towards reaching EUR 1 billion in sales from our portfolio of new biomaterials. Together with our partners and customers, we accelerate the development and scale-up of Lignode. We will also continue to develop the sustainability of our products with special focus on reducing our carbon footprint by 50%, in our case, from good to great. We further reduced our market pulp position through the growth in Packaging Materials for smoother results over the cycle. We also aim to retain our leadership position in Europe for fluff with a natural beige becoming the new white. All this, while maintaining our strong competitiveness, seeing side streams like lignin become mainstreams, serving customers worldwide with new sustainable solutions. Thank you so much for listening, and I look forward to your questions later. [Break][Presentation]

Welcome back from the break. My name is Seppo Parvi, and I have been CFO of Stora Enso since 2014. My background is from packaging industry, both conversion side and board making. This film we just saw sets the scene for future, and it is future-proofing our business. Millennials make up a quarter of the world's population. The new generation pays more attention to the sustainability issues relating to both environmental and social issues. 84% of them feel that it is their generation's duty to change the world. 31% wants brands to be environmentally friendly and ethical, and 61% of them want to connect to cost or social issues. They drive our sustainable growth now and into the future. I will now give you an overview of our track record and key drivers from a financial perspective. We are protecting our margins by building a less cyclical business as demonstrated on the graph here, which shows our profitable growth path since 2020. We have reshaped our business portfolio to reduce volatility and to make it more resilient to market fluctuations. We are growing in our 3 focus areas in renewable materials, packaging, building solutions and innovative Biomaterials. High sales sufficiency in wood and energy is one of the drivers for the profitability this year and going forward. We will reduce our market position over time and divest our paper business as it is not a strategic segment for us and not to forecast new revenue streams matching millennials' expectations in the future, like Lignode, wind power and carbon credits. We have the balance sheet to grow through both capital expenditure and acquisitions. We have rapidly reduced our net debt and leverage from the peak in 2019. These after the forest ownership restructuring in Sweden and COVID-19 and thanks to our strong cash flow and improved profitability. Our debt ratios are clearly below target levels today. We have acquisition firepower even after the recent De Jong acquisition that increases our net debt to EBITDA ratio to 1.4. We can look for opportunities for further acquisitions in packaging and wood products to meet growth targets that both Hannu and Lars were referring to. When and if cycle turns and company is more vulnerable to the turn of the cycle, then we are for sale. We have released EUR 1 billion in operating working capital since 2018 from a 20% ratio to sales to just slightly over 10% today. We have strong focus on inventory management, payments and receivables. These are key working capital and focus also going forward. High sales sufficiency on energy reduces our exposure to external cost instability, as Hannu mentioned in his part. We have about 80% sales sufficiency in energy, in total, thanks to our own energy production and ownership in Pohjolan Voima in Finland. In fuel, we are 76% self-sufficient, excluding paper. All this has enabled strong performance this year with resiliency to energy price increases, and it gives a good pace for the future also with increasing sales sufficiency after the new nuclear power station Olkiluoto 3 starts up in Finland. Our self-sufficiency in electricity sale increased to 97% after Olkiluoto 3 and the divestment of paper. Our sustainable growth is enabled through a strong financial position. New performance level has been reached and is visible on our long-term financial targets. Strong sales growth well above targeted 5%. Efficient use of capital combined with improving earnings has increased returns on capital to the 20% level and above, clearly above the targeted 13%. We have a solid balance sheet with strong debt ratios. Net debt to operational EBITDA at 1 is clearly below our target level of 2. Net debt to equity is also clearly below the target level. This is a good place to build on to implement our growth strategy. We drive shareholder value through a focused and disciplined capital allocation. While ensuring increasing dividends to our shareholders, we focus our capital allocation to profitable growth on Packaging, Building Solutions and new innovative Biomaterials through both capital expenditure and [ organic ] growth and M&A activities. Good examples are Lignode, CLT and packaging. De Jong acquisition is the latest step on our strategy implementation where we look for long-term value creation and synergies. Our improving profitability has also ensured positive development of the dividend to our shareholders. We allocate capital expenditure to our key strategic growth areas. Capital allocation has been shifted to be more focused on the growth businesses and strategic direction. We expect to keep total capital expenditure at the same level with depreciation over the cycle also in the future. In the past, we have consistently proven that we can bring capital expenditure down after heavy investments, strengthen the balance sheet and allowing us to ramp up investments. On the right-hand side, you see how the share of strategic capital expenditure is expected to grow during the coming years compared to the past to about 50% higher. Increased profitability and cash flow has tripled dividend payout since 2008. Our dividend trend follows our policy to pay 50% of earnings per share, excluding fair valuations over the cycle. And as said, our profitability and cash flow makes it possible. We are committed to long-term divisional targets. Packaging Materials, Biomaterials, Wood Products and Forests are all above or at their targets today. Packaging Solutions' profitability has suffered from the loss of the profitable Russian business and investments in the development of the new businesses. The target for Packaging Solutions has now been reassessed after they announced De Jong acquisition with the new rock target set at 15%. We have an action plan to reduce CO2 emissions towards our 2030 targets. We are well on track to reach our CO2 reduction targets through various actions. CO2 targets are always also important part of the capital expenditure assessment. Worth noticing is that this can be achieved with relatively low additional CapEx. About EUR 70 million has been decided already to be invested over the 3-year period on here. Some examples are investments in changing fuel types and energy efficiency improvements. Our ambition is to be net carbon positive by 2050. We are considering market transaction-based valuation of the Finnish Forest. This would bring it in line with the principles already used in our Swedish forest, which gives a more accurate valuation of the forest assets. Market prices in Finland have increased steadily over the years. This could increase valuation by some 20% or EUR 200 million in our books as demonstrated on the right-hand side. We create value through our forest assets, both through positive valuation development and operational benefits. The value of our forest is over EUR 8 billion or EUR 10.4 per share in our books. We are 30% self-sufficient and can secure tactical flexibility in wood sourcing, harvesting more if the wood market is tight unless the wood availability is better. We also run the largest wood sourcing organization in Baltics region. As we already use the market transaction-based valuation method in Sweden, our sensitivity to interest rate changes is low and will be even lower if the valuation method in Finland is changed. Today, 1 percentage point change in the interest rates would have an impact of approximately EUR 200 million compared to the total valuation of EUR 8 billion today. As we saw in the film, millennials are setting the direction for the future. Long-term growth opportunities are fast emerging in new revenue streams. This can reduce volatility and bring new growth opportunities. Some examples, innovative novel materials like Lignode and carbon fiber, renewable energy solutions such as wind, solar and nuclear power and other revenue streams like carbon credits. Wind power opportunities are emerging. Lars already told us earlier about building windmill towers, but wind power opportunities do not end there. We have a great opportunity to develop wind power production, our forest land and to significant increase our involvement in the sector. This is what the millennials, the new generation also expects. The total theoretical potential for wind power production on our land in Sweden is 75 terawatt hours, and 30% of this potential can be realized in the foreseeable long term as they are on projects. These brought a significant new income stream and a value creation opportunity that we are putting more focus on and effort into going forward. Our ambition is to cover 5% of the Swedish electricity mark by 2030. In conclusion, as Annica already mentioned in her part, we have high ambition levels for the future of Stora Enso, including an ambition of 30% sales growth with reduced earnings cyclicality, the 15% EBIT margin over the cycle and increasing share of packaging in the portfolio and significantly reduced market pulp exposure. Also, by adding Lignode and wind power, we will further drive growth in areas underpinned by global trends. I personally believe that we are in a better position than ever in our company history to implement strategy and to reach our ambition level, thanks to strong cash flow and balance sheet. Thank you. I now hand over to Annette Stube, looking forward to an interesting discussion.

Hello. My name is Annette Stube. I'm heading up sustainability at Stora Enso. I have 25 years of sustainability experience from international pharmaceutical and transport and logistics industries, and I'll bring some external views and perspectives today. So in a few decades, we will know if we, as a global community, have been successful in preserving our ecosystem in such a way that we can continue to live the lives we want. 1.5 degrees or not, biodiversity recovered or lost, it's clear that the pace of action, investments and improvements need to be vastly increased and targeted for long-term solutions. Our perspective is that the only businesses that are going to thrive are the ones that offer products that both meet the need of the planet and deliver positive financial results. Products, not just production processes that essentially make the world better. We live in a world where 90% of materials are used and consumed in a linear fashion. This is bad for climate change, it's bad for biodiversity and it's simply bad for business. This is not our business. For instance, construction-related CO2 emissions can be reduced up to 75% by building with wood. And our direction is clear, not to deliver less bad products, which has been the incremental strategies of some industries, but to deliver 100% regenerative products by 2050. Now what does that mean? For us, this means being carbon positive, biodiversity positive and fully circular offering products that can store carbon or replace fossil materials as my colleagues have shown today. The only way companies can truly create a scalable positive impact is through the products and services they offer, and this is our ambition. We are already designing our innovation pipeline, our operations and supply chain, our CapEx investments that Seppo mentioned, our talent and incentive programs and our growth strategies to drive this ambition, as you have seen today across all presentations. We need the market environment to establish principles for material use, which ensure that raw materials once extracted from nature, should be reused and recycled for as long as possible. The world has capacity limits, and we must use our materials wisely. A shift to secularity will be absolutely critical. But as we all know, we can't do this alone. This is why it's never been more important to work across our value chains and with our business partners, as you'll see from our panel, and for companies and the finance community to come together to provide clear, long-term signals that sustainable change is a business imperative, and there is no such thing as business as usual anymore. So to build on these points, we have invited 3 customers and partners in here to the conversation, and they bring different perspectives on what we've just been talking about from different industries. So we have Patrik Andreasson who is Vice President, Strategy, from Northvolt. Welcome, Patrik. We have Fabrice Denis, Managing Director from Bouygues Construction. Welcome. And finally, Laurence Mott, Executive Vice President for Development and Technology from Tetra Pak. Welcome, Laurence. And I would like to ask the panel here just a few questions that really goes to the heart of the sustainability challenges that we are all facing and what we can do with solution partners. So I'll direct the first question to you, Laurence. What does the societal demand in your market, which is Packaging? What does that look like? And which trends do you see with your end consumers?

Thanks, Annette. Well, I think the drivers in Packaging are fairly clear, right. By 2050, there's going to be 9 billion people on the planet, approximately 60% more food is going to be required. And the challenge is to make sure that, that food is available safely, that it's available broadly. So it can be broadly distributed, of course. And then there comes the added pressure now, of course, of sustainability. Let's not forget that roughly 1/3 of emissions are in some way connected with the food industry overall. So our customers and consumers, they are very, very aware and cognizant of this challenge. And of course, that creates a significant demand and pressure -- demand from customers and consumers and regulatory pressure. The challenge will be pretty clear that we have to design for circularity, and it means using much more sustainable materials than those currently used today from a carbon perspective, namely polymers and aluminum foil. So there will be a huge pressure there to reduce the quantities of plastics and aluminum foils, metals in Packaging overall. And enter, of course, Paper, which has a huge potential and promise for us right here.

Thank you. Very interesting. Fabrice, from the construction perspective, where do you see the market go?

We are in the building sector. We are in the context of extreme urgency and at the same time, contradictory injunctions. On one side, there is this absolute urgency on environment issues, climate carbon, waste scarcity of resources, urgency on biodiversity. But at the same time, we have increasing needs in terms of housing, equipment, health, schools, student accommodation and senior housing. At the same time, we have this increase of costs and stagnation of productivity on the building sector and scarcity of competencies, especially the blue collar. So in fact, we have to build more and better, but with less. That is to say we have really to build differently. And this is also more true that governments and public authorities are pushing in towards more and more stringent regulation. So we have really to work differently, to build differently, and this is where our customers are expecting from us a big change. All the more, and this is the last point, all the more that building low carbon is more expensive. So we have, at the same time, to bring down the costs through industrialization, through offsite construction, through repetitiveness, through digital. And at last, we have to move from a traditional project approach to a product approach that you know well, you industrial players. You know that very well, and we have still a lot of progress to do in the building sector on that side.

Thank you. Thank you. Very interesting. And Patrik, going to your industry, which is batteries, which is playing right into the sustainability agenda directly. But how do you see -- where do you see the market going and the consumers?

I think what's interesting, if you sort of look back, I mean, we've been talking about the second electrical revolution and the shift to electric vehicles and electrification for the better part of at least a decade, if not more. What was fundamentally different now, if you look back sort of at the 18, 24 months that have passed and also during the pandemic, we're really sort of -- we're past the inflection point. And then I could be -- so I mean, there's no discussion if this is happening or when it's happening. It's happening now, and I could go over statistics for the better part of the day, but I'd not bore you to death with that. But just to give you a little bit of sense, I mean, the number of EVs sold worldwide doubled in 2021. If you look at just sort of the last, they reached somewhere around 10% or so. If you look at Sweden, just the past few months, you're starting to see us getting close to 50% of electric car sales with half of that being fully electric cars. You see in the U.S., they're coming out numbers as we speak, but starting to get into sort of 10% territory, up from basically nothing just a few years ago. And this is happening during a massive supply chain crisis, right, that is impacting, I'm sure, everyone around this table. So lead times to receive electric vehicles are incredibly long, right, even so and much longer than combustion field cars. Even so consumers are choosing to go electric. So consumers are really sort of driving the electrification through what they're expecting to see from producers and manufacturers. In addition to that, and I think we're going to be talking a lot in the years to come about stationary energy systems or stationary storage systems. It's not only -- it's definitely not due to the energy crisis that we see now, but it's maybe exacerbated and sort of pushed forward even faster due to the energy crisis. But as we try to introduce more renewables into our grids, as we manage sort of peaks and demand, want to balance demand and supply and as we move towards sort of micro grids and distributed energy source systems, this is going to be a massive topic in the years to come. So all of this is happening now. There's no longer a discussion about that. Back to a few of the points that I think Laurence made here in the beginning. Now the big question is how do we want this transformation to play out? What requirements are we putting on the industry? If we want to meet the demand, there's going to be a lot of batteries having to be produced in the coming years and decades. So how do we want that transformation to happen? What demands do we put in terms of circularity, ethical and sustainable supply chains where this industry is built up and who controls those supply chains? So those are the real questions now. And it's going to be a lot harder to sort of change that footprint once it's defined. So now is the time to focus on that and not be caught napping.

Thanks, Patrik. I think that's very fascinating to look at the enabling environment as well in terms of making these things happen. But focusing in on the materials, Fabrice, what plans do you have in Bouygues to drive innovation in materials that will help mitigate climate change, restore nature and so on?

We have a target because at Bouygues Group, we have the target of reducing by 30% our carbon emission by 2030. This is our -- what we call our Scope 3. So the levers to reach this minus 30% are not so many. We have no choice. We have to reduce the use of concrete. Whatever low carbon is -- has a concrete, we have to reduce the quantity of concrete use. We have to increase the use of bio-sourced materials, especially timber. For example, at Bouygues Group, we are targeting 30%, 1/3 of our projects built with timber by 2030. For the time being, we are at 5%. So we have to multiply by 6, within 6 or 7 days, the quantity of timber construction. At the same time, and you mentioned Patrik, Laurence, the circularity. We are -- we have so much to do in terms of circularity on the building sector. As you know, for the time being, we build a building, a new building, and then it is demolished and then we build a new one. That has to be changed. We have to create the conditions of the circularity, building as a bulk of material. And this is where there is a lot to do. And the timber and other bio-sourced materials are fine to be circularized provided that the design of building is suitable for this circularity. So this is where we have to go: bio-sourced material, circularity, and last point, renovation. Renovation, renovation. Instead of new buildings, using what is existing to create accommodation, schools and so on -- and offices and so on.

And I know circularity, Laurence, is a big topic for Tetra Pak as well. So how do you see this?

Well, I mean, we -- it's used a little bit globally, but I would go back to a little bit of Patrik's comment before. I think circularity means a massive transformation for our industry. By the very definition, of course, packaging is largely single use. And customers really want us, demand that we support their sustainability ambitions. So the consumers are exactly the same. And really, for us, material simplification is the key. Yes? Today, packaging is a very complex structure, with a lot of carbon-intensive material is used within it. We know from our own consumer research, for example, that 40%, perhaps of respondents claim that they would be much more motivated to support circularity in recycling and collection, in particular, if the packages were only made from paperboard. So -- and, of course, if you take away at least the aluminum foil layer in most packaging, it reduces the carbon footprint of the package by, let's say, between 25% to 50%, something like that. So we have a huge job to do in order to be able to reduce the amount of aluminum and fossil-based polymers used in our packaging material. And the paperization is perhaps the key for us. So this will lead us somewhere to our ambition, which is a package which is made from fully renewable material and which is fully recyclable. It's difficult to put kind of global targets on that. The challenge, I think, for us is to look at that as the individual parts of our portfolio. And a huge part of our portfolio contains aluminum foil to date. And as we've been very public about, this is our first big step, which is to get rid of that and to replace that with paper. We do -- we produce roughly 200 billion packs a year. So you can -- you get the size of -- you understand the size of the challenge.

Yes. Absolutely. It's massive. And -- but that also means that if we succeed in doing this, we will have a massive impact, and that's, of course, what we are going for.

Absolutely. And that's exactly...

What's needed, yes. So I think your business, Patrik, is buying right into this as well. So how do you see -- what -- how do you see this innovation part as driving mitigations for climate change? For instance, how do you come at that from Northvolt side?

So material sufficiency in general is absolutely massive in the battery industry. And then to some extent, for obvious reasons, there is no secret that some of the input materials required to produce batteries have been through some pretty hefty price hikes and elevated pricing in the last sort of 24 months or so. And again, as the industry scales, our industry is scaling massively. We expect to continue to see some of those bottlenecks before sort of things stabilize. I think for Northvolt, at someday, I hope to be able to say that I'm as ambitious as Laurence. So we have a target of 50%, so not 100% yet, but 50% of renewable content in our batteries in our long-term targets around 2030. And getting to that, I mean, clearly, recycling is the key thing. And the big upside here is it's one of those areas where we're doing the right thing, if you will, is also a -- meaning sustainability and battling climate change and being very careful with resource extraction, which, again, is something that needs to happen as this industry scales. Those incentives are fully aligned with economic incentives. Because when you see the pricing that you see today in the raw materials market, I mean, the case for driving recycling is absolutely a must for any sort of battery manufacturer at scale. So it's one of these silver linings to some extent where you see the economic and the sustainability incentives fully align. But again, recycling becomes absolutely critical also to make sure that we make the best use of the resources that exist and that we use the most ethical and sort of solid resources that we are taking out. I think the other part that I would add is more on what I'm calling repurposing. So in addition to sort of recycling the end product in a way, also making use of what can be formally seen as waste or residual products in industrial processes and repurposing them into new means. So one example for Northvolt is we have sodium salts as a byproduct in battery manufacturing. We're working then with the fertilizing company, striking a partnership there to make sure we create a new and circular fertilizer product. And then, clearly, also we have a little bit of a partnership going on with Stora Enso on creating a next-generation sustainable anode, anode being a key component for a battery. And again, to my understanding here, using something that could previously have been seen -- lignin in this case, have been seen as a residual product, repurposing that into a new product. Again, economic and sustainability incentives fully aligned. And I think that's the key theme here. And I hear that also in what Fabrice was talking about earlier.

Thanks. I think there's a lot of commonalities across the industries, even though the industries are quite different. But I mean, we all partner to the external pressures that we see. So it just pans out in this way, which is quite interesting, I think. So now, of course, this is Stora Enso's Capital Markets Day. So I'll just finalize the round here by asking you what your expectations on Stora Enso in this context? What do you need from us to drive the innovations that you need? And so let me turn to Patrik first, if you would head off, please.

Sure. High expectations for Stora Enso, of course. No. But I think number one is to clearly continue to see that you're staying on the path that you've now charted. So coming with a long and fantastic history, sort of industrial history and being one of the -- I think, one of the largest forest owners in the world, that puts you at a very much the intersection of what climate change is about and battling climate change, right? So it's been inspiring to see sort of transformation moving into renewable first company. And I think a bit more specific maybe for the battery industry, as I've said a number of times, now the battery industry is growing up right now. We can still decide sort of what that footprint will look like in the future. If we want to have today, most of the industry, both the supply chains and manufacturing is in East Asia. If we want to have a European battery material supply chain and battery manufacturing, one thing we absolutely need, and it goes for Northvolt and beyond is we need partnerships between large industrial players with strong industrial expertise and experience, partnering up with some of the start-ups that you're starting to see grow up because there's a lot to gain there. So I'm very happy about our partnership with Stora Enso. But I think there's much more to come there. So it's partnering and helping to sort of build up this value chain in Europe.

Thanks, Patrik. And Fabrice, how do you see this?

I think Patrik said a lot. I wanted to say, in fact, with Stora Enso, we have a partner. We have a partner. Of course, Stora Enso is producer of CLT, of gluelam [indiscernible]. And this is, of course, for us, I would say, the security in terms of providing what is needed to go from 5% of timber buildings to 30%. So we need this strong capacity of production, but not only with Stora Enso, we need a strong input on engineering of projects. And we know that Stora Enso is strong at engineering, concepts, solutions, innovation helping us to move to convince our clients. But -- and that was mentioned earlier, to help us moving towards industrialization, considering building as a legal game made of bricks that can be used across several projects and that can be one day dismantled and reused. And maybe last point, we need also from Stora Enso's experience and efficiency on logistics and especially the low carbon transportation. So in one word, we put a lot of hope on Stora Enso to help us progressing toward being more virtuous and carbon efficient.

Thanks, Fabrice. We are ready to help you there, of course, as best as we can. So finally, turning to you, Laurence, how do you see this?

Tetra Pak's ambition is to lead the sustainability transformation. And we know what that means now in terms of the transformation. It means the old partnership of kind of supplier-customer, customer-supplier, which used to be very linear, it's gone. It doesn't work anymore. Now in order to bring products to market quickly and as efficiently as possible, you need to work in all parts of the value chain all at once. So we have a great collaborative relationship. I would say, we have a partnership as well around our development. But this needs to extend now. We need to have very clear views about how we're not only going to develop the technology, but about how we're commonly going to establish supply chains, how we're going to establish common business goals, synced up investment plans and so on and so forth. It's a very collaborative way of working, I would say, which is quite iterative. And we're working towards that. We couldn't be happier with the way that the partnership is progressing. But there will be definitely challenges in front of us that we just can't imagine yet. And perhaps the key here in this transformation is both partners keeping an open mind as to how this is going to develop.

Fantastic. Thank you very much, Laurence. And also for the kind words that you all provided here. Much appreciated. It's my job now to sum up what has been the key points from this presentation. And I think in some ways, it's easy, in some way, it's difficult. It's easy because there are so many commonalities. We're all talking across industries about recyclability and reuse and designing for circularity as well. It's difficult because there are also many complexities, as we all know, when we do this. So it sounds easy, but there's lots of complexities in this. And to lift this, what you're all pointing to is partnerships with your suppliers, not just for strong supply, but also for strong input for innovation towards delivering on those targets that you've all set across your industries. So thank you very much for participating here. It's been very interesting, a good conversation, and quite frankly, also quite encouraging for all of us here. So thank you very much. I'll now hand over to Anna-Lena and the Q&As.

Thank you for joining Stora Enso's Capital Markets Day. We hope that you'll gain more insight into the company's role in today's global bioeconomy. I'm Anna-Lena Astrom, Head of Investor Relations at Stora Enso. This is now your opportunity to ask our management your questions. [Operator Instructions] I can see that we have a lot of questions coming in. So please keep them coming. We have a first question here for Annica. How confident are you that you can reach your full year guidance considering a high inflation and a looming recession?

We are very confident that we will be able to reach our target and our guidance, as reiterated from our June quarter 2 report. We will come in higher than last year's result of 1 -- just above EUR 1.5 billion. And we see still solid demand for our products for most of the segments. As we have said before, we see a normalization within the area of wood products and in containerboard. But all in all, we are able to still pass on price increases and mitigate the inflationary pressures that we see.

Thank you, Annica. Johanna, here is a question for you on Lignode. Do you have -- you mentioned that the European anode material market is expected to be approximately 1 million tonnes in 2030. How much market share are you expecting to take?

Thank you. We are expecting or aiming for 10% market share. And you just heard Patrik from Northvolt talking about the need for sustainable battery materials, and that's where Lignode comes in. So 10% is what we aim for.

Thank you. We can take a follow-up question on that straightaway. Do you have enough lignin internally to meet the EUR 1 billion sales target? Or do you need to start buying from the market at some point?

Yes is the simple answer. We have enough lignin internally. We are already the largest kraft lignin producer in the world with Sunila. And we continue to investigate the other sites, like we have said. Naturally as well, if you look at the total pulp market in the world, there is still also plenty of lignin to extract. So as we grow, I'm sure we will also get to look at that. But simple answer, yes, we have enough for the first stages internally.

Thanks, Johanna. And here is a question for Hannu on the recent actions. You have just made the young acquisition. Can you elaborate on the strategic rationale behind the deal, please?

Sure. Let's start from the market. I mean there is growth. There's growth in Packaging Materials. There's growth in the packaging as such. And we want to now utilize this growth and don't forget the substitution. We have well-tested business models in the Nordics, Baltics, Poland. And now it's time to move on. This is obviously a fantastic platform investment for Packaging Solutions. So we are becoming sizable player in the middle of the Western European market. And for Packaging Materials, we're actually going now in the recycled fiber. I see this is a new growth area. So I think that's really the strategic rationale.

Thank you. Lars, we have a question for you here. What are the main benefits of building with wood compared to steel and concrete? And is it cost competitive?

Thank you for that question. Yes, it is beneficial to customers. Firstly, there are the undisputed sustainability benefits. As mentioned before, if you use wood, when building with wood, you can reduce carbon emissions by up to 70% and you can also store carbon for a longer time. Then there's also an opportunity to increase property prices because it contributes to the health and well-being of the tenants. And then there are clear cost benefits. One is via prefabrication and digitalization, you can reduce the process costs in construction, for instance, in design and planning, which actually makes up for 20% of the total construction costs. But you can also reduce the actual material costs. The material costs are actually a real opportunity for us because we support architects by using less wood for building. So that the actual material costs go down because of volume reduction, not because of a price reduction. And that helps us to be very competitive.

I have a follow-up question on that one. You may be competitive, but the global construction market is slowing down. How will this affect your division?

Yes. So firstly, we have already invested into growing Building Solutions, a part of our division, which is much more resilient because it has longer contractual lead times and is not as volatile as a traditional commoditized market. Secondly, we have a global sales and distribution network. So we can actually use regional opportunities. Already today, we are delivering roughly 40% of our revenues outside of Europe. We are also a relatively light asset division. So we are quite agile in demand reaction. And last but not least, overall, the market may go down in construction, but the share of wooden construction is still very low. So just for Europe, multistorey wooden buildings only make up for 1% of the European market. So whilst the total construction market may go down, the wood share may actually go up. A good example, and if I may just say that as well, is that, for instance, in France, as of 2022 already, legislation has been put through that every new public building has to use at least 50% renewable materials, mainly being timber. And as you've heard from [ Rick ], there's a growth opportunity with our partners even if the construction market should go down.

Thank you, Lars. Hannu, one for you on today's news that we increased the return on operating capital. Why have you changed the target?

I was expecting this question. Packaging Solutions has had a rough ride during the last few years. They have been now successfully restructuring their Nordic platform. Then they have been obviously forced to leave Russia, which has been the high-margin business. Then we run our innovation business in Packaging Solutions. And as we all know, it takes time to ramp up. So you have the cost before revenues. And now last but not least, the operating capital is going up tremendously. We also have then sizable investment program ahead of us. So I think it's more reasonable to have 15% target.

Just to add on that. It has to do, of course, with the investment of De Jong where there is a heavy investment expansion.

Thank you very much. We have a question for Hannu on following up on today's panel. The requirements for products to be circular came across quite clearly from your customers in the panel. What is Stora Enso doing to meet this demand?

Yes. So circularity is obviously one of our top priorities. And starting from the inside, we have a circularity design guidelines that will help our innovation and product development actually make our products more and more circular. And we are already at 93% of all our products that are fully circular at this point in time. But of course, the key thing for all of us is to make sure that the products are actually being recycled in reality. And for Paper, for instance, this is happening. To a large extent, one difficult grade to recycled is used beverage cartons. And here, we have a party -- a partnership with Tetra Pak, that you just met in Poland, where we are now upscaling our facilities there so that we can actually already by next year cover the entire Polish market and some adjacent markets. And what's interesting here is, of course, pointing to the feasibility study in Langerbrugge, where we -- if we are successful with this, we'll actually be able to do the same thing for Benelux.

Thank you very much. Seppo, we have a question for you on recent actions as well. You have just made the acquisition of De Jong. The strategic direct direction seem right. But is the timing right?

That's a very valid question. We still have a very strong balance sheet and acquisition firepower and headroom left in the balance sheet of about EUR 1.5 billion for further access when it comes to M&A or capital expenditure. De Jong was an excellent fit to our growth strategy. It gives us a strong position in Western Europe in addition to strong positions we already had earlier in Eastern Europe and Northern Europe. And having this position now into Europe, we are in excellent position to capture the growth opportunities in future. There are very good -- strong long-term growth opportunities that Hannu was also referring to. And that also means that if there is a recession, we are really in a pole position going forward to capture the growth opportunities.

Thank you, Seppo. And talking about that, growth and competition for Hannu. There is a lot of capacity in containerboard coming in stream in the coming years. How are you going to compete in this market?

It's a good question, a question I get often internally and externally. But it's all about cost competitiveness. And when we were presenting our expected cost position of the Langerbrugge investment, we are the cost leader. Hence, that's really the requirement. And when you have the cost leader, you can go into the market. But it's very important to remember, as I already said, that when you have the growing market with the substitution benefit, we are not afraid of this one.

Thank you. And then a question for Johanna. You mentioned last year that you expect EUR 1 billion sales in Lignode by 2025. Are you still confident that you will be able to deliver on that? And if not, what has changed since then?

Thank you for the question. EUR 1 billion still stands. Then we've had the supply chain disruptions, the pandemic and also geopolitical challenges. So we have revisited the commercialization time line. The industrialization is ongoing right now. And we expect a decision on the first Lignode unit, industrial one next year. With customers, we are in sample testing, moving from grams towards kilos. And as I said, a car includes 50 to 100 kilos of anode material. So we are moving in the right direction, step by step.

Thank you. A question for you, Lars. Could you provide some insight into how you work with Lendlease in your CLT, cross-laminated timber building materials proposition and also how you compare with traditional building methods?

Yes. Firstly, our leading Building Solutions' capacity, our financial strength make us great partners for big international groups such as Lendlease or Bouygues, who you've just seen before. With Lendlease specifically, we have a partnership that is really focusing on a R&D partnership, where, jointly, we're developing standardized building components and elements so that we can improve the competitiveness of the product and that we're also looking into jointly developing projects outside of Europe. As Lendlease is very strong outside of Europe, we've realized a project with them, of course, also in Europe, but for instance, also in Australia. So it's also a great partnership to increase our global share of sales in Building Solutions. And to the second question, building methods. Building methods must change. It has today still in the construction industry too manual and inefficient, all happening on the construction side, with less and less labor available. So the trend to digitize the construction value chain and also to increase prefabrication by industrialized solutions is a really big disruptor and an opportunity for the market.

Thank you, Lars. Hannu, one for you here on the Packaging Materials. Why do you want to grow in Packaging Materials through conversions? What other options do you have when the conversions are done?

We have plenty of options. But conversions are today the fastest and most cost-efficient way to grow. And I'm so happy that we can actually give another life to our Paper assets. We have capable people. We have normally energy solution. We have all integrated benefits being the pulp mill, et cetera. And that gives us the flying start. When we do this analysis, we always make comparison between conversion and green or brownfields. Then the point is that when we are looking at the other conversion -- sorry, other cases where we can then have green or brownfields, they are not at all excluded from our agenda. But now it is time to do the conversions and then move forward. Acquisitions definitely are on our radar, but I would say that in the short-term, conversions are the focus area.

Thank you, Hannu. Annica, here is one for you on biodiversity. How can you harvest to your production needs and at the same time safeguard biodiversity in the Nordic forest?

That's a good question. I think it's important to say that Stora Enso has for many, many years been committed to sustainable forestry. And biodiversity has been part of how we have managed our forests through many, many years. We plant more trees than we harvest. We have a sustainability certification covering 99% of our forest and leased lands. And actually, it's not technically possible to get to 100% because there's always some land being traded. So 99% is sort of the real number for that. And in the later years, we ramped up further on the biodiversity efforts that we are doing and doing a host of different things to improve biodiversity and to find out what the right things are to do. And just one of the things that I want to point out here that we feel is particularly promising is using the precision forestry tools in the service of biodiversity as well because that will enable us to learn where is the biggest impact so that we can focus our efforts. And this is really the key thing for us. And we have developed a systematic framework around this so that we can measure not only our interventions, but also the impacts of the interventions. And we've laid this out on our website. So anyone is invited to go in and take a look and be inspired by what we do.

Thank you, Annica. Seppo, here is a very hot topic for you. You've already mentioned the high self-sufficiency in energy and wood. Can you continue to increase prices to fully mitigate higher energy and wood costs considering the strong inflationary environment?

Yes. This is a question we get quite often nowadays. First of all, I want to highlight our new operating model. It means that our divisions are more independent and more agile. And I think we have seen a proof point of that new organization model working well, where, if you think about COVID-19 crisis in the past as well as what happened with energy and wood supply earlier this year. If you look at our energy position, we have very high self-efficiency when it comes to energy in total, about 80%. After Olkiluoto 3 starts and paper is excluded, our self-sufficiency on electricity is about 97%. We are also working on operational efficiency improvements to lower the unit costs as well as on recipes, changing and adopting recipes to the changes in the cost structure, looking for new opportunities. And then obviously, I'm very confident that our sales force is on top of the things. And they will be able to pass on cost pressures to our customers also when it comes to input costs.

Annica, thank you. You want to add?

Yes. I would just want to add that, in addition to what Seppo was saying, that comparing kind of our position on energy and the control that we have of our wood supply, which are the major cost drivers for businesses in general and especially today, we are much more competitive compared to other players that do not have these assets in their control. So yes, we are able to pass on prices. We have high-margin type of products that are resistant. For instance, your area, Hannu, you're delivering to food and kind of products that we use in our everyday life, but then also kind of the structural footprint of our company.

Thank you. Another question on energy for you, Hannu. How will higher energy costs in Europe versus Asia and other packaging suppliers affect the business? And what is your long-term competitive position?

In China, we have a competitive position. So I think we are definitely in line with the main competitors or even better. So I'd say that's under control. In Europe, like Seppo was just saying, the situation with our energy sufficiency is good and it's getting better. So in that respect, I'm very comfortable. And the vast majority, obviously, of our operations is integrated. And then we know that there is vast majority was Central European competitors that don't often have pulp mills. They have totally different situations. So I think on the relative terms, we are actually getting stronger.

Thank you, Hannu. Johanna, you have some?

Yes. Yes, I would love to add because one of our products today is also green energy. So we have pulp mills like Hannu said on Montes del Plata that have surplus energy that we sell regionally. And they form, of course, especially in these conditions, a very important part for the energy supply of the local communities around them.

Thank you. Lars, one for you on your ambitions here. You're targeting 75% increase in EBITDA and more than 40% sales from Building Solutions. This implies strong margin expansion. What is driving that?

Yes. So the good news is we are in an increasingly attractive marketplace. So that's already helping. The second thing is within this marketplace, which is increasingly attractive, we have strengthened our competitive position already, both in traditional wood products, for instance, also with superior access to wood supply compared to some of our competitors, but also with an operational efficiency program. But also by growing the Building Solutions market, which is really growing by more than 10% and taking within this growing market, a larger value share by offering solutions, and not just cubic meters, we have a real opportunity not just to grow sales, but also to improve margins. So I'm confident we will reach it.

Thank you. Hannu, on liquid packaging board, how much of your liquid packaging board production is recycled today? And how is it possible to increase that share?

This is again excellent question. And short answer is that we have no recycled fiber in the liquid packaging. However, there's a lot of discussion that should all packaging materials have minimum recycling content. We don't actually think that it makes too much sense to blend recycled fiber into those grades where you have the highest food safety requirements. But we can't really rely on the fact that there wouldn't be new needs. Hence, we are now working with our pulping technology how we can really purify, make recycled fiber fit for the liquid packaging. But this day is not yet here. Let's see when it will be.

And Annica, please?

Yes. I think you can also elaborate a little bit on how much is recycled, because that, I think, was the question. How much liquid packaging board is actually recycled today?

Today, liquid packaging board in Europe has a recycling rate of 50%. And it's actually on the low side, because, on average, fiber-based packaging is recycled at the level of 80%, which is already above the European Union standards. This Ostroleka recycling case Annette was presenting, it's increasing the recycling rate from 50% to 55%. So it's a big step. And then if we go forward with Langerbrugge, we'll maybe have a 10%. And then we are not the only ones who will do it. I think there will be also other companies who will go for it. And we have to remember that this used beverage card on the fibers are fantastic raw materials for our recycled grades. So there will be activity.

Thank you. Johanna, I have 2 questions for you. Let's take one first. Can you elaborate the growth possibilities for your Lignode product? And how it currently competes with traditional batteries?

Thank you. Back to the properties again. You might remember -- or I think you do remember actually when talking about the fee rates, how fast you can charge, the low temperature performance and the sustainability footprint. So with traditional batteries, we actually believe we have -- we are excelling in performance. And of course, depending on how you blend it and also for the future battery generations, we intend to continue in the same direction. So not only offering sustainability, but also higher performance.

Thank you. And the second question is for you, Johanna. How much more expensive is Lignode -- anode material versus pure graphite?

That I could expect as a question. We intend to be competitive with graphite long-term or sodium ion or silicon. However, of course, we also intend to price Lignode for the value it's worth.

Thank you. A question for Seppo. On the divestment of today's announcement of Maxau, what was the pro forma EBITDA in 2021 of paper, excluding Maxau?

Well, when it comes to Maxau mill divestments, the sale of the mill was EUR 250 million last year. When it comes to more financials and deep analysis our figures, I suppose we don't go more into details when it comes to our separate deals.

Thank you. Annica, here is one for you on wood. You seem to currently source wood for 30% of your business out of your own wood lands. How would you see this going forward?

Well, excellent question. I think, first of all, there are very few companies that have such a big portion of the wood supply in their own control. So this is clearly a competitive advantage for us. And then secondly, we have a very strong supply network. We are the biggest buyers, for instance, in Baltics, having the biggest and most developed supply network in that region, also in Finland. And then if we look at kind of our forest, we constantly evaluate where we own our forest. So we try to optimize the footprint so that we have our own wood and our own forest closest to our operations and mills where we have kind of the best growth opportunities and so on. If you look then how we choose to use harvesting in our own forest contra buying externally on the market, we optimize that to make sure that we have the most cost competitive kind of wood going to Lars' and Hannu's operations and Johanna's operations. So this is kind of the strength of both owning and then having a very well-developed supply network like we do.

Thank you. Hannu, the next one is for you. You called out 60% sales growth and doubling 2021 EBIT by 2030. How will you achieve this?

It's a question I was expecting. Needless to say, it's a tough target. But our ambition and targets, they need to be tough. If we think that, yes, we have well kind of a defined road map with those 2 big growth cases we've been discussing today, Langerbrugge, Oulu, then we have actually quite a few other investment projects in the pipeline. Then Packaging Solutions, definitely, they've been now obviously having a rather modest profitability. Now we expect them to get on the right track. And then comes the very interesting piece of information that we were already touching, operational efficiency. In our division, we actually have quite a lot of room for improvement, get the operational efficiency up. And those tonnes, they are already fixed cost-free because they've already been paid. So when you start to put these bits and pieces together, I'm actually convinced that the 60% EBIT is not unreachable target.

Thank you. Lars, here's one for you. Wood Products have a history of volatile and weak profitability. Do you see a structural change in profitability? If so, what is behind that structural change?

Yes. So firstly, we have been developing our Building Solutions business as an increasing business to also reduce the volatility of our business. Secondly, we have invested into our 16 sawmills to become more competitive. And as I've said, last but not least, the market overall becomes more and more attractive. So I'm quite confident that with those actions and the huge growth opportunity we have, especially in Building Solutions, we will be continuing to deliver good margins.

And I would add here that if you look past, say, 10 years, performance of wood processing looked more stable than in the past if you go further back in the history, which I think is already visible in the performance.

Yes.

Thank you. And one for you, Johanna. On the EUR 1 billion sales in Innovative Biomaterials, how much would be Lignode out of that? And what other products make up the difference? And what margins do you see for this versus the 50% EBITDA margin you expect for Lignode?

Yes. Thank you. Well, let's start from the binders perspective. Binders is already out there on the market. The nature is grew -- glue, which forms the basis of our product portfolio based on lignin. That we are now growing step by step, as I said. On that, we expect them to launch the Lignode products. And then -- well, while that grow, we further then at the same time have further lignin applications in our innovation portfolio that I foresee also being launched further into the future. So there is solid base next step set, and then we'll continue.

Thank you. Hannu, here is one for you on recent actions. What is the level of virtual integration at De Jong? The presentation mentioned 380 kiloton containerboard capacity to feed the 560 cubic meters -- square meters, sorry, converting. How many tonnes of third-party liners of containerboard are you expecting to displace through internally board from Stora Enso mills?

It's a good question. And what we haven't mentioned today is that De Jong Packaging, it's not only 17 corrugated converter sites in the Western Europe, but it's actually one recycled fiber-based containerboard mill. And this mill was acquired by De Jong Packaging only a year ago. So it's actually still today selling quite a lot to other containerboard companies. So in theory, there's a possibility to start to then supply the corrugated units. And then once we get access to the company, we will then try to see what is the kind of sweet spot for the portfolio. But definitely, there is a significant integration possibility through this one containerboard mill and then our other mills in the Nordics and Poland.

Thank you. And Hannu, another one while we are in the area. Can you elaborate on the energy supply for Langerbrugge, please?

Yes. It is my favorite energy concept. As I said, we are -- actually, let's start from the use of natural gas. And we do use maximum up to 2%, and it's mainly to heat up our boilers and use as a backup fuel. So you can say it's nonexisting. And the rest is this residential fuels industrial waste. And then we burn quite a lot of industrial slots from our processes. So it is very strong, as I was already explaining.

Thank you very much. I think we have time for one more question. Lars, is wind turbine towers are possible to build at sea?

Yes. Short answer, yes. The good news is the technology is basically the same, whether they're on or offshore. It could be a hybrid solution, so that in this salty underwater area, it could be done with concrete, and above, it could be using wood. So yes.

Interesting. This now concludes the Q&A session. And I hand over to Annica for closing remarks.

Thank you, Anna-Lena. I'm very satisfied with our performance and the execution of our strategic road map. We have taken decisive actions to focus our company, prioritizing our efforts in driving growth, and delivering strong financial and sustainable performance. Our high energy sales efficiency and strong wood sourcing capabilities that we've discussed makes us even more competitive and resilient to cyclicality and other market fluctuations. And our decentralized operating model has allowed quick decision-making close to markets and customers. All of this is visible in our financial performance. We have consistently shown improvement. And this year, we exceed all our group long-term financial targets. We are well-positioned to capture growth, driven by the sustainability megatrends in renewability and circularity. We have the financial muscles to capture these opportunities. In our selected growth businesses, Packaging and Building Solutions, we have leading market positions and competitive industrial footprint as well as strong partnerships in the value chains, as you have heard of today. In Biomaterials Innovations, we are building a new high-margin, sustainable business. In terms of our climate, circularity and biodiversity agenda, we have ambitious targets and we are delivering ahead of schedule. In Stora Enso, sustainability is our business, and we are delivering the renewable future now. Thank you all for listening and for your engagement.