STERIS plc Price & Performance (STE)

Now let's shift our focus to the key highlights of full year 2024. In the full year 2024, we achieved a robust 75% year on year growth in adjusted EBIT. This success is a result of our focused actions on improved sourcing, advanced challenging market conditions and rising wood costs. We reduced our fixed costs by €110,000,000 And all profit improvement actions more than offset wood cost escalation. I'm also very pleased that we reached an all time low operating capital in the last eighteen months has decreased by more than €700,000,000 meaning a reduction in operating working capital to sales from over 14% to 7%. All in all, it's been a year of significant progress, and it's satisfying that our efforts and improvement actions are starting to bear fruit. In our fourth quarter last year, we announced our plans to sell approximately 12% of our forest assets in Sweden, We are actively engaging in discussions with several potential buyers. In addition to strengthening our balance sheet, it would also under a score the economic value and resilience of our forest holdings. A key focus in 2025 is the successful ramp up of our new packaging board line in all of Inlet.

In connection to that, we signed an agreement to acquire 100% of the Finnish sawmill company, Unikala, to secure cost efficient wood supply to this new packaging board site in Oulu and to support Storansa's Wood Products division with new production assets. Furthermore, reflecting our commitment to shareholder value the Board will propose a dividend of €0.25 up from €0.2 last year. [indiscernible] payments scheduled for Q2 and Q4 of this year. In 2025, we need to continue to enhance efficiency, performance and reduce costs which will be crucial for our success despite the subdued demand forecast. Let's now take a closer look at the detailed financial results. Following a challenging year in 2023, the market began to gradually recover in 2024, although consumer confidence and spending have not yet fully rebound. Market uncertainties and fluctuations in demand and pricing persisted throughout 2024. Full year sales declined by 4% to €9,000,000,000 primarily due to capacity closures and divestments in 2023. However, sales for continuing businesses increased by 1%, mainly driven by higher deliveries. In 2024, as I mentioned earlier, we increased our adjusted EBIT by 75%, reaching €598,000,000 This improvement was supported by higher deliveries across all divisions. We reduced our fixed costs by €110,000,000 and countered the continued escalation of wood costs through efficiency improvements and reductions in other variable cost categories.

Including mill closures, our fixed costs decreased by €155,000,000 The fourth quarter sales increased to €2,300,000,000 and the adjusted EBIT increased to €121,000,000 marking a 139% increase from the same quarter previous year. Which had been seen notably low levels. Although wood fiber costs increased significantly, the improvement was driven by higher sales prices and volumes as well as cost saving actions. Let's dwell deeper into the key factors that influence adjusted EBIT for the full year. Increased in 2024 profitability improved by €256,000,000 to reach EUR $598,000,000. With the adjusted [indiscernible] from 4% the year before. Lower sales prices, primarily in Packaging, were offset by clearly higher volumes despite the political strikes in Finland in the first half of twenty twenty four. Storerins have made significant strides in profit improvement, working capital reduction and value creation actions. This progress was achieved through improved sourcing operational and commercial efficiencies across all divisions. Lower variable costs contributed to increased profitability a rise in pulpwood cost was more than offset by reductions in other variable costs, particularly in energy and chemical expenses. As mentioned earlier, fixed costs were reduced by €110,000,000 on a comparable level thanks to cost saving measures. As a result of these efficiency improvements and cost saving actions across entire company, we were able to deliver significantly higher adjusted [indiscernible] However, we are still far from our long term financial targets and our systematic determined efforts to improve profitability will continue.

Next, we will explore the progress of our capital expenditures as we approach the completion of the heavy investment phase. In 2024, additions to fixed and biological assets amounted to slightly over EUR 1,000,000,000 consistent with the level recorded in 2023. A key focus and a great part of the strategic CapEx has been the build of our new packaging board line in Oulu. The investment is scheduled and production ramp up is expected to commence in the coming months. Production will start with small volumes and lower grades with full capacity anticipated during 2027. Now that the heavy investment phase is concluding, the average range of capital expenditure expected to return to the historical average between €600,000,000 and €800,000,000 per year after as from this year onwards. The remaining CapEx related to the oil investment is approximately €160,000,000 with total CapEx expected to be around €730,000,000 to €790,000,000 in 2025. Having reviewed now our CapEx, let's now explore how these investments strategically position us for robust growth in fiber based packaging sector. We are well positioned for growth in fiber based sustainable renewable packaging. Looking at the growth numbers for fiber based packaging, we see a trajectory 2033 With our strategic investments in Oulu in Finland, and Deleu in Belgium, we will be better positioned in growing packaging segments for the future.

On the previous slide, we discussed the ramp up of our Olu site in Finland during 2027 site is projected to reach full production capacity of 750,000 tons annually. Meaning €800,000,000 in top line growth. This investment targets key segments such as Food, Drink and Chilled Goods, primarily in Europe and North America. Thanks to produced [indiscernible] between our mills the whole investment increases our total consumer board of about 50,000,000 tons per year market, thus representing about 1.5% of global demand when fully ramped up in 2027. Our investment in a new state of the art corrugated packaging site in Delir in Belgium in half our long term competitiveness in Western Europe. The site will increase our corrugated capacity by approximately 20% and will reach full operation during 2026. Products primarily included include boxes and trays for fresh products, industrial applications and e commerce. In October, we terminated the divestment process of our consumer [indiscernible] and forestry business in Beihai in China. Since initiating the divestment in late twenty twenty two, global increases in wood and logistic costs have improved the Bay eyesight's relative cost competitiveness. The potential for further development and enhancement of the site now, Surpass is the value of any possible transaction.

The Beihai site will reinforce Duran's role as a leading global supplier of premium packaging board and food drink and two other segments. Serving both existing and new customers in the vast Asia Pacific region. And primarily in China, which is the world's largest liquid packaging board market. We will now move on to take a look at the performance of the divisions. In 2024, the Packaging division accounted for nearly 60% of our external sales, with biomaterials wood products and forest each contributing about 15%. With the ramp up of the new investment in all of the share of Packaging expected to increase further. One of the challenges during 2024 as been the ongoing volatility in market weakness and rising wood costs. To address these challenges, our targeted actions mentioned earlier have made significant progress across all divisions. Packaging Solutions faced challenges with overcapacity and market volatility in 2024. However, Packaging Materials and Biomaterials show significant adjusted improvement from the 2023 levels. Food Products adjusted EBIT improved as well, but remained negative while Forest continued and even improved its strong operational performance throughout the year, reaching record high result levels. Now we'll take a closer look at the details of the performance per division.

Packaging Materials faced a challenging quarter due to weak market cycle. And planned annual maintenance shutdowns primarily in Consumer Board units which affected profitability. Sales rose by 5% to €1,100,000,000 driven by higher containerboard prices and increased consumerboard volumes. Consumerboard price increases were successfully implemented on renewed contracts. But containerboard prices started to decline towards end of the quarter for both recycle and virgin fiber grades following declining recycled fiber prices. And order inflow remained weak across all segments during the fourth quarter. Adjusted EBIT increased by €37,000,000 from last year, but was still negative at €6,000,000 Now continuing with the Packaging Solutions division, where we continued to navigate through challenging market conditions. Packaging Solutions continues to pace margin pressure due to market overcapacity. Sales remained stable at €247,000,000 with higher volumes but lower prices. Adjusted EBIT fell to a negative €6,000,000 Profitability was adversely impacted by price pressure and higher containerboard costs, while the ramp up of the new corrugated packaging site in The Netherlands continued. Let's take a look at the biomaterials division. Despite a generally soft market, the biomaterials division was able to enhance both sales and profitability. Additionally, the division achieved strong deliveries, which supported its performance despite challenging market conditions.

Volumes increased due to a change sequence of planned annual maintenance shuts compared to last year. Sales prices in Europe increased year on year, however, sequentially, pulp prices decreased across all pulp grades and markets. Adjusted EBIT rose by €32,000,000 to €67,000,000 driven by higher sales prices cost saving actions and increased emission certificate sales. Shifting focus to the Wood Products division, it was impacted by continued [indiscernible] The generally weak markets continued for the Wood Price division. Although demand was stronger year on year, it remained suppressed due to lower construction activity Sales increased by €57,000,000 to €400,000,000 due to higher prices and volumes for Sown Goods. The demand for cross laminated timber and laminated veneer lumber remained suppressed. Adjusted EBIT improved by 50,000,000 but was still negative at EUR 12,000,000. The increase was driven by higher volumes and prices, which offset the increase in raw material costs. Ongoing cost saving measures helped to improve the results. Now let's have a look at the Forest division that continues its strong performance also this quarter. Forest division had a robust result driven by increased food prices, strong demand and good operational performance in all areas. Demand for all wood assortments remained high in the Nordics.

Sales increased by €134,000,000 to €784,000,000 due to higher volumes and prices. Prices increased year on year and slightly quarter on quarter. Adjusted EBIT increased to €81,000,000 reflecting strong operational performance in the group's forest assets and wood supply. Let's move on to take a look at the development of fair valuation of our forest assets. We are pleased to report a continued steady increased forest value of €8,900,000,000 which translates to €11.28 per share. This improvement underscores the strength enduring value and potential of our forest assets. The year on year increase of €163,000,000 was mainly driven by increase in estimated [indiscernible] prices and standing stock in the Swedish assets. Now, I will hand over to Nicolas to go through the details of some key financials. Thank you, Hans, and hello, everyone, and very happy to have joined this great company. And actually look forward to meeting you many of you in person here going forward. As Hans commented, there was a clear improvement in profitability in 2024 This was a result of the efforts across the company to improve sourcing, increase operational efficiency, for instance, in mills, and the ongoing work within commercial activities such as pricing and portfolio.

Also cost reductions as Hans commented, was a focus area throughout 2024. And while we are still far away from our target performance levels, it's good to see that we are moving in the right direction. Our net debt continued to increase somewhat in Q4 to SEK 3,700,000,000.0. This was driven by the near final stages of the old investment. However, our net debt to adjusted EBITDA ratio continued to Our net debt to adjusted EBITDA target remains at 2x and we continue to work our way towards it. Besides performance improvements, we are preparing to sell approximately 12% of our forest asset in Sweden as announced in the fourth quarter and as Hans commented on. And this same This move aims to further reduce our net debt and increase our financial When it comes to our operating working capital, we saw a clear improvement throughout the year. This was thanks to dedicated and focused actions And the working capital ended at the record low €544,000,000 in the fourth quarter. This was actually a reduction of more than EUR 700,000,000 since the peak some one point five years ago. The operating working capital to sales was 7% in Q4, actually a record low down from 14% at the peak If we then move on to cash flow, the full year cash flow from both operations and after investment activities improved compared to last year due to the actions taken to improve profit on the one hand, and lower working capital or reduced working capital As previously mentioned in the presentation, we have had quite high investments in both 2023 and 2024, driven by the strategic consumer board expansion at the old site.

Investments in Oulu are now getting to close to completion. And this means total investments in 2025 will go down. From roughly SEK 1,000,000,000 in 2024 to an estimated below 800,000,000 in 2025. And thus also support an improved cash flow. In the fourth quarter, cash flow from operations was at the reasonably solid and stable level at $325,000,000 and cash flow after investing a activities improved to €88,000,000 due to less cash spent on CapEx, And with that, let's switch from financials to sustainability and back to Stora. Thank you, Nicolas. Our growth is driven by global megatrends and Sas also sharpen our competitive edge. Line with this, we remain committed to our sustainability targets. We are actively focusing on critical areas such as climate change, circularity and biodiversity, I'm particularly pleased to share the significant progress on our path towards climate neutrality and our long term commitment to By the end of twenty twenty four, we achieved a fifth 3% reduction in Scope one and two emissions surpassing our target of that 50% reduction by 02/1930 from the twenty twenty-twenty twenty base year. The decrease is mainly due to efforts in both reduction measures such as fuel switches and the impact from site and production line closures.

We have reduced scope three emissions by 39% from our 2019 levels aiming for a 50% reduction by 02/1930. In terms of circularity, our products are now 94% recyclable with a target of 100% by 02/1930. Now moving on to the sequential market and business outlook for the first quarter. I will now cover the sequential market and business outlook for this quarter. Q1 compared to the previous quarter, Q4 twenty twenty four. Overall, we expect demand to remain subdued and volatile mainly due to macroeconomic confidence and ongoing geopolitical uncertainty. We also anticipate that wood prices will continue to be high. Let's begin with the Packaging Materials division. Tier demand continues to be soft, yet we expect a rise in consumer board volumes following maintenance and the typical low seasonal demand in Q4. However, it's important to note that margin pressures are still present due to the high costs of WoodFiber. Price increases have been achieved in some consumer board segments, and price increases have been announced in containerboard market. The division's average price level is expected to remain stable quarter on quarter. The Packaging Solution division still navigates through market volatility and overcapacity with continuous stream back demand.

Despite these challenges, we see stability in Q1 European volumes with gradual normalization in China. But high costs from containerboard and new site ramp up limit margin expansion. Looking at biomaterials, the pulp market is nearing a cyclical low, which supply curtailments helping balancing the market. Price increases have been announced with effects expected in Q2. Of this year. However, demand continues to be uncertain shaped by economic and factors. For good products, they'll look for plastic sold products remains stable despite low demand. Slight price increases are driven by escalating raw material costs while construction activities anticipated to stay subdued. The Forest division food demand is projected to remain robust. This is despite decreased consumption in pulpwood, which has been driven by cutbacks in the packaging and pulp sectors. Given these market dynamics throughout 2025, we did to keep pushing forward with our actions to cut costs, and strengthen our operational and commercial excellence. Our goal here is to improve our operational performance and competitiveness With this outlook, I will move to the key takes and how we are building a stronger future. To conclude, this presentation, before we open the floor for your questions, I'd like to emphasize that we are truly powering ahead.

Our financial results and strategic initiatives demonstrate our position and commitment to growth, all made possible by the hard work and dedication of our Let's take a moment to reflect on these critical achievements. 2024, we achieved 75% growth in adjusted EBIT. Driven by improved sourcing, commercial and operational efficiencies, alongside a significant reduction in operating working capital by over €700,000,000 and a €110,000,000 cut in fixed costs. And all profit improvement actions more than offset good cost escalation. All in all, it's been a year of significant progress and it's satisfying that our efforts on improvement actions are starting to bear [indiscernible] We remain dedicated to further improving financial performance and cost efficiency in 2025, to ensure continued success. And now we are ready to take your questions.

To ask a question, please use the raise hand function at the bottom of your Zoom screen. Or if you dialed in, please press 9. If you would like to ask more than two questions, please rejoin the queue. We will now pause for a moment to allow questioners to enter the queue. Our first question is from Efrem Ravi at Citigroup. Please unmute your line and ask your question.

Thank you. I'll stick to two questions. Firstly, on the CapEx slide on Page five, The $600,000,000 to $800,000,000 of CapEx from 2026 onwards, implies probably still a $200,000,000 to $500,000,000 of strategic CapEx, just looking at at the different parts of that bar chart. Once Aulu has kind of ramped up, can you indicate what are the main strategic CapEx items you are looking at going forward? And secondly, on the working capital reduction 7% of sales is pretty impressive. And a large part of it looks like reduction in receivables Just wondering, a, do you think this is a sustainable long term level, the 7%? And b, are there any margin implications of this reduction, typically changes in payment terms does come with some changes in prices and discounts in my experience. Thank you. Thank you very much, Ebrahim.

First of all, yes, this projected CapEx levels includes also strategic investments. Correct. We have a pipe of a lot of attractive opportunities, which I will not disclose here. Of course, one strategic opportunity that we have disclosed before is the [indiscernible] Because that actually together with the acquired De Jong facility will form a very competitive entity. The Langabrugate Paper Mill Is Located Close To Our Acquired Beyond facility. And with the ramp up of the new corrugated plant there in De Leer, in De Jong, This site actually will be the world's largest corrugated box facility when fully ramped up. Combined then with a converted new spring line into test liners, located close by. Also, that one will be the most cost efficient unit when they convert it. But there are no decisions about this conversion and no timeline more precisely there. But this is just one example, which just happens to be public information. And then when it comes to the working capital, 7% of sales, we are are working on all levers of operating working capital, meaning receivables, inventories and also payables. And we are continuing our systematic work This is we still have efforts and we are taking actions to improve our working capital efficiency. [indiscernible] over the annual seasonality, of course, Our next question comes from Lars Kielberg at Stifel.

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Thank you for taking my questions. Coming back a bit to a couple of comments that you made. You talked about a strong focus on growth. But also the need, of course, to improve profit look at where you stand today, you're about 40% below ten year average and 2024 as much as you improve costs, It's the second lowest profitability since 2013. So of course, there's quite a lot to do. So when it comes to real structure, profit improvements, because taking out costs tends to be diluted over time through cost inflation You're now about to start up order, which course, should be a lower cost mill in your system. But in an environment with high or sorry, slow demand, and low operating rates wouldn't this be a time to take some structural actions to make way for that machine to ease into the market? That's my first question. The second one is more related to your performance in Packaging Solution, which is way below most of your peers and going in the wrong directions. The the re questionnaire is what are you doing wrong? You shouldn't be losing money in a converting business And all those costs really relate to them to the significant cost around the delay or Stora up and when should we expect this business to turn?

Thank you very much, Lars. So first of all, we are working in a very systematic and determined way on improving our cost efficiency across the whole company. We have, in fact, thanks to this systematic work where we have been going through every mill, every operation, every part of our company we have identified 3,600 improvement actions. They relate, for instance, to improved energy efficiency, improved utilization of of our raw materials, including wood, chemicals, recipe development changes, as well as also fixed cost reductions across the board. Efficiencies in sourcing, and also commercial aspects of pricing and product mix optimization. So these 3,600 initiatives are being worked on. And we have in total seven seventy projects owners in the whole company working on these actions. And in fact, last year, despite €300,000,000 increase in our fiber costs, mainly wood costs, we managed to improve our operational EBIT by 75%. So our actions clearly surpassed the negative impact of wood cost increases. Then so we have and we have seen the beginning. We have seen only the beginning of we can do in improving the efficiency of our company. When it comes to our O seven fifty investments, the new consumer board line you could see also in our presentation material, the whole consumer board market globally is, in total, 50,000,000 tonne demand per year.

And in fact, this consumer board line, even if it is focusing into folded boxboard, it actually, through product transfers is increasing our capacity also in liquid packaging board [indiscernible] Thanks to the product transfers between the mills. So in total, we are bringing, when fully ramped up, in 2027, we are bringing 750,000 tons additional capacity to a 50,000,000 tonne market, meaning 1.5% capacity addition, so less than one year of demand growth when you look at the trend growth figures. So of course, the ramp up of Oulu seven fifty will be gradual. And we hope to start soon. And then as said, fully ramped up in 2027. And when fully ramped up, this will give us €800,000,000 of additional growth Naturally, we are very analyzing critically the cash flow and the forecasted net values of all our assets. And if needed, we'll take action [indiscernible] of any capacity closures to make it very clear. When it comes to our packaging solution, division, First of all, I want to highlight that when you compare with with key competitors such as Smurfit Westrop, IPDS Smith, they actually don't disclose separately the profitability of their converting part. They actually report the profitability of the total value chain from containerboard, including box making.

So containerboard and corrugated plants together. So therefore, of course, the comparison is not quite comparable. However, having said that, we are absolutely unsatisfied with the performance of our packaging solution. And we are doing a lot of actions and taking measures to turn this business around to improve the profitability levels We have a new divisional leader in place since November of last year, [indiscernible] Who comes from this industry. She has thirty years of experience in operations, sales, general management, P and L leadership in corrugated business And she has a very clear plan in place with her team to turn this business around and to improve the profitability. Our next question comes from James Perry at Citi.

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Good morning. Thanks for the presentation. I'd like to ask about the forest. You obviously recognized a forest asset fair value gain due to the high transaction prices. Some peers though have recognized lower forest trend pricing in Sweden Might you be able to comment on how you see the transaction volume dynamics from here and the pricing? Should we expect any slowing or you think we are past the worst? Secondly, on wood costs, similar we've heard peers talk about Nordic wood cost inflation as stabilizing would you say you're seeing a similar plateau emerge? Thanks.

Thank you, James. So starting with the latter part of your question, Wood costs outlook The short answer is yes. I mean, we see wood cost stabilizing. Then when it comes to the fair value of our forest assets, first of all, I think it's important to recognize that the forest companies also calculate the fair value different ways. We are basing out our fair value on the, let's say, done deals during the last three years. So we take a longer perspective. For the our fair value valuation of our forest assets, whereas some of our competitors are perhaps looking into other ways of valuing their forests. And we saw an increase, if in fair value in Q4 of last year following base for many, many years in the Nordic forests. And I don't want to take any perspective on the the future development there, but that's where we are today.

Okay. Thank you. Our next question comes from Andrew Jones at UBS. Hi, Hansad. [indiscernible] quick question on Hulu. I mean, I guess, obviously, you flagged it with minus $100,000,000 this year.

When do you expect it to reach EBIT breakeven? And just on the sales plan, I mean, you talk about a 50,000,000 tonne global market, but obviously, in Asia, we have massive overcapacity on the consumer board side. In The U. S, there's a lot of potential risk that tariffs might be imposed. I guess The U. S. Was originally in the sales plan for this new mill. Where were you planning to place those volumes? Is The U. S. Still at major part of it. And just as a follow on to that, can you just remind us about your sales into The U. S. In various grades? In recent times? Thank you.

Yes. Thank you very much, Andrew. Yes. First of all, what comes to our overall consumer board line, we are not yet guiding any EV breakeven. We might come back to that later during the year, let's Let's first start up the machine and the mill. And as we have mentioned in our report, we estimate that there will be roughly at approximately €100,000,000 negative EBIT impact, primarily during the first half of the year. This comes both from the Stora and startup ramp up but also from increased depreciations, of course. Then yes, you are absolutely right that the 50,000,000 tons of consumer board also includes Asia as a major market. So that's the global market. We are privately looking to the majority of the new consumer board line sales will go to Europe, but then also a significant significant part is planned for The USA. We have been ramping up and preparing for that business development already since a long time.

Today, actually, U. S. Represents less than 5% of our group sales. So we have a position in certain board grades and consumer board grades in The U. S. Today, but it is it's not a very strong position or it's not a significant sales today. But I said, we have now for more than a year been preparing to ramp up sales in The U. S. We have invested in our sales force, technical customer service and in our customer relationships. [indiscernible] And if tariffs were imposed, I mean, how would that change your plan? I mean, what's plan B in that in that context?

Well, we don't want to speculate with the tariffs. As such, 10% tariff would not have a significant impact But of course, there are if there are more major and more important tariffs, there are both direct and indirect impacts. I want to underline that today, The U. S. Market represents less than 5% of our group turnover. And I have to also underline that there is so much uncertainty around the tariffs And depending on what tariffs will be imposed, there can be positive impacts, but there can also be negative impacts. So I think we need to Keep both in mind.

Okay.

I'll jump back in the queue.

Our next question is from Charlie Nulsans at VPN. Please unmute yourself and ask your question. Thank you for taking my questions. It's Charlie Miros Sands from BNP Paribas.

Firstly, just on the Packaging Materials division. A couple of your competitors have announced attempted containerboard price hikes. Recently. I just wonder whether you had yourselves tempted to do that as well or whether you'd seen that what kind of likelihood of success you thought was realistic for that given it's only just come to that back down again. And then secondly, on the cost savings, Can you say how much of the fixed cost savings that were due to come through in 2025 are already reflected in Q4 performance and how much is left to come through in the year ahead on the fixed cost side. On the other work streams like procurement and operational excellence, Are you Are you now a position where you perhaps could put some quantification around the potential scale of cost savings you might be able to deliver over the next couple of years.

Thank you very much, Charlie. Well, first of all, containerboard prices we normally don't disclose through a press release or similar our price increases. We We have informed our container board customers already several weeks ago. They have received price increase letters from us As said already several weeks ago, and we see that equal to last year, this is a relatively similar type of a situation where there is clearly cost driven cost push reasons for the containerboard industry to increase prices. So So we are, of course, also very keen to increase our prices. That's for sure. And then when it comes to our cost saving measures, we decreased our fee costs by total €110,000,000 last year. We announced in the beginning of last year that we are starting a new cost reduction, fixed cost reduction program aiming at €120,000,000 in total. [indiscernible] fully with full impact in this year. A part of that was visible during the second half of last year, but the majority is to come. During this year. You saw also in our report that during last year, our number of FTEs decreased by more than 1,300 So we are continuing on focusing on on streamlining the company and making us more cost efficient, both through variable cost and reductions and fixed cost reductions.

When it comes to your question about our our work, our systematic and determined work, in improving sourcing, operational efficiency and improving and reducing our variable costs. Here, I would refer to the bridge that we have in the material you can basically see that despite €300,000,000 for the full year, despite €300,000,000 of increased wood fiber costs We managed to save actually much more in variable cost than wood costs went up. So that contributed to to improve adjusted EBIT for the full year of 75% in total.

Many thanks.

Our next question comes from Patrick Mann at Bank of America.

Thanks very much.

Maybe just a follow-up from Charlie's question there on the fixed cost savings. So if I look at hundred and $10,000,000 cost savings, the fixed costs which to me kind of implies there's only $10,000,000 to go into 2025.

But then you're also saying there's the majority of the in 2025 only. So maybe if we think about the bridge in 2025, what what would we see there? Is it only €10,000,000 or is there more to come?

And then my second question is, if you could just give us an idea on the progress for the forest sale and how we should think about the potential timing for that? Is there any steer you can give on when you think might be in a position to conclude a sale? Thank you.

Thank you, Patrick. First of all, there is definitely more to come on the fixed cost reduction. EUR 110,000,000 of fixed cost reduction In fact, when you look at the total fixed cost reduction, we reduced fixed cost by 100 and about €150,000,000 including capacity closures by the end of twenty twenty three. But the comparable, excluding capacity closures, the reduction was €110,000,000 Part of this was from earlier agreed fixed cost reduction programs. And that's why I'm saying that a major part is still to come then during this year. Out of the €120,000,000 which we announced at the beginning of twenty twenty four, When it comes to our forest sale, we are in negotiations with several potential buyers. And therefore, I don't want to comment on on value or timing. It is clear that for us, a good deal and a valuable deal is the most important, more important than timing. So we will do a diligent good work also here in this process.

Thanks very much. Is there any chance you can give us an indication of how much of the $120,000,000 is still to come?

No, we don't disclose close. I mean, we will see the full €120,000,000 impact of the program that we have that we have started in January. But as said within the €110,000,000 there is a part from this program and there is a part from earlier Stora programs. [indiscernible] Bye. Our next question is from Palaf Matel at Barclays.

I'm going to take the next question from Paul Hathorn at Jefferies. Could you please unmute your line and ask your question?

Morning. Thanks for taking my question. Hans, you've spoken a lot about the variable cost and efficiency program, but it's very difficult from the outside in to put a number on that. Is there any quantification or any numbers that you can provide to help us for the relief that you might see into 2025? I know it's difficult question, but any help there would be [indiscernible] And then following up on on CapEx, Given there is strategic CapEx in the future years, I'm just wondering what the focus is for Stora and for that CapEx? Is this more cost take out efficiency CapEx? Given that most of the markets that you're exposed to are are in oversupply, particularly in packaging materials. So just wondering if that CapEx is more cost focused or there are growth projects? And if there are growth projects you know, how can they be justified in a in an oversupplied market? Thank you. Yes. Thank you very much, Paul.

First around the strategic CapEx. I mean, we have in the pipeline both cost competitiveness and efficiency improvement CapEx as well as also growth investments But I absolutely agree with you that the timing needs to be right. From a market demand perspective, from a supply and demand perspective, and also why additional strategic investments to announce or move forward with. We are now determined to make the new consumer board line which is a significant investment, state of the art, cost efficient and large modern consumer board line. We are now focusing on ramping that up and making it a success And then when it comes to our value creation programs focusing on sourcing and operational efficiency as well as commercial excellence. We prefer to look into the results. And as you could see in the bridge from last year, clearly, we have yielded results. So despite the 300,000,000 wood cost increase during last year, we managed to increase our adjusted EBIT 70 more than offsetting that significant good cost increase. And we will continue our determined work to improve the cost competitiveness and efficiency of Stora lines. So in order to improve our profitability. And then Hans, maybe just as a follow-up so that we understand the progress of the Olu ramp up this year.

What is the initial focus of the ramp up as it starts? Do you initially start with some kraftliner grades and then improve the mix through the year. So ultimately, we'll be seeing mix improvements as you ramp the volumes back half of 25% and into 26% to hopefully improve profitability on that Yes. Correct, Cole. So we are starting with lower grades and then gradually moving into, let's say, the prime focus grades, mainly folded boxboard. But it will be a gradual development throughout this year. And as said, the mill will be fully ramped up as from the beginning of twenty twenty seven.

Thank you.

Our next question, we're going to go back to Pallav Mittal. Please unmute your line by pressing star six and ask your question. Thank you.

Good morning. Can you hear me fine now?

Yes, Palla. We hear you fine.

Apologies for the line earlier.

So firstly on 2025, I know you're not providing any guidance range. But you have done EBIT of approximately $600,000,000 in 2024 and you are highlighting $120,000,000 worth of fixed cost savings largely in 2025 So with some recovery in the market and prices broadly improving on containerboard you are highlighting, on consumerboard also it seems that there are price increases if you look at what the peers are saying. So is it fair to assume that your EBIT in 2025 is at least €100,000,000 above what you have done in 2024 just accounting for these fixed cost savings, So that's the first one. And secondly, if you could for the Packaging Materials division, you are highlighting stable pricing. In Q1 twenty twenty five versus the last quarter. Can you just talk about the increases or the price movements in consumer board specifically?

Hey, it's Nicolas here. Just briefly on the 2025 EBIT. As we commented here earlier, of course, goes without saying. We are still at the improvement phase We see significant upside potential here. Going forward. But we'll leave it with that We will continue to work with our costs And as commented here earlier, look forward to improved performance overall. But we don't provide an exact [indiscernible] And when it comes to the Packaging Material price outlook, we have achieved price increases in several consumer board segments, at the turn of the year. And we have made those containerboard. We have sent our containerboard price increase letters to customers. So our intention is to to also there get the containerboard price increase is true. But then, of course, there is the impact of mix and so forth. In this outlook statement from from Q4 of last year into Q1 of of this year.

Sure. If I can just ask a very quick one as well. If you could just quantify your CO2 sales, the emission certificate in Q4 and for the full year 2024, [indiscernible] So our annual report will be out here in a couple of days' time with the details about our CO2 emission rights [indiscernible] But what we can say at this point is that in 2023, our emission rights sale was about the magnitude of about €60,000,000,000 and during last year was roughly the same magnitude.

Thank you.

Our next question is from Joni Sandoval at Nordea. Please unmute your line and ask your question.

Yes, thanks. A couple of questions. Firstly, on Beihai transformation.

Towards more liquid packaging port, can you give any any timeline on this and how this is processing? [indiscernible] we can significantly improve the profitability of the mill with products mix changes, more towards the higher margin liquid packaging board. Where Bei is clearly representing state of the art, the highest quality asset in the world's largest liquid packaging board market, which is China. And we are actively working on on promoting liquid packaging both there and that's a work we will continue with in order to improve the performance and profitability of the mill.

Okay. Okay.

And secondly, maybe on the depreciation, levels now going forward following the write downs now in Q4 and the upcoming all ramp up. So could you give any indications for this year and when when all depreciations are coming visible?

Well, what we in connection with our right write downs that we announced end of last year, we said that the impact will be roughly the level of €40,000,000 decreased depreciations per year. So and that's so that's what we can say at this point. Yes. And the depreciation obviously comes with the commercial start [indiscernible] There are no further questions. I shall now hand back to Hans Solstrom and Nicholas Rosenlube for closing remarks. Thank you.

Thank you very much, and thank you for joining our Q4 results review. All in all, the key takeaway is that during last year, we have made significant steps forward to improve our profitability However, we are still far away where we want to do be. We are still below our long term and we can see a significant improvement potential in the company. And we will continue our determined systematic work to improve the competitiveness and the result and profitability of Stora Enso Stora order to deliver shareholder value. Thank you very much, and have a good day.