Svenska Cellulosa SCA AB

STO:SCA B

Q1-2025 Earnings Call

[Anders Edholm, executive]

Good morning, and welcome to this presentation of SCA's 2025 First Quarter Results. With me here today, I have President and CEO, Ulf Larsson; and CFO, Andreas Ewertz, to go through the results and take your questions.

Over to you, Ulf.

[Ulf Larsson, executive]

Thank you, Anders. And also from my side, good morning, and a warm welcome to the presentation of our results for the first quarter 2025.

During the first quarter, SCA again showed that we can deliver good profitability even in a continued challenging environment. SCA's high degree of self-sufficiency in wood raw materials mitigated a big part of the higher cost related to wood supply, and we reached SEK 1.65 billion on EBITDA level and, by that, an EBITDA margin of 32% for the quarter.

During the first quarter, SCA had strong delivery volumes, not the least in the Wood segment due to productivity improvements. In other segments, the volume increase has been supported by the ramp-up of strategic investments, and these investments will contribute to increased productivity and cash flow generation during upcoming years.

Prices in SCA's industrial segments were generally higher in Q1 '25 than in Q1 '24. And I expect these price increases that they will further contribute to earnings in the second quarter. Global uncertainty has increased with the U.S. tariffs. This also affects the global demand and business climate, and I will give some comments on each segment as we go through the presentation.

Turning over to some financial KPIs for the first quarter of '25. As already said, our EBITDA reached SEK 1.65 billion during the first quarter, which corresponds to a 32% EBITDA margin. Our industrial return on capital employed came out at 8% for the first quarter, counted as the average for the last 12 months. The leverage was at 1.5, and we have now finalized our big strategic investments in Obbola, Ortviken and Gothenburg, which will, as already said, contribute positively in coming years.

Then I will make some comments for each segment, starting with Forest. Stable harvesting levels from our own forest have contributed to a stable supply of wood raw materials to our industries during the period. We have seen a continuous long-term trend of increasing prices for both pulpwood and sawlogs, as can be seen in the graph on the bottom left.

When one compare Q1 '25 with Q1 '24, sales were up 15%, and that was mainly due to higher prices for pulpwood and sawlogs as well as higher delivery volumes to our own industries. When excluding the effect of capital gains for Henvålen in Q1 '24, approximately SEK 130 million. EBITDA was up 4%, mainly due to higher prices for pulpwood and sawlogs, but also due to higher delivery volumes to our own industries.

Turning over to business area Wood. In general, we still have a slow underlying market for solid-wood products. Despite the generally low demand, we continue to see some signs of improvement in the repair and remodeling segment where SCA is present. The uncertainties in the general economic development have, however, increased due to the tariff discussion between the U.S. and other countries. So far, no tariffs are added to Swedish export of solid-wood products to U.S.

Stock levels are slightly higher among producers, but mainly on the low side at the customers. As estimated, the price for solid-wood products increased with low single digits in the first quarter of '25 in comparison with the fourth quarter of '24. Our deliveries last quarter were strong, but our production was also at a high level, resulting in for SCA close to unchanged stock level of sawn woods.

As expected, the cost for sawlogs has increased from the fourth to the first quarter, and we also expect them to continue to increase going into the second quarter. Sales were up 37%, and EBITDA was up 113% in the first quarter of '25 in comparison with the same period last year. That has been driven mainly by higher prices, but also by higher delivery volumes. The EBITDA margin consequently increased from 10% to 16%.

Today's stock level of solid-wood products in Sweden and Finland is described at the top left on this slide and is shown in relation to the average for the last 5 years. As mentioned earlier, we note that the inventory is at a slightly higher level than normal among producers, that is mainly related to the pine.

As can be seen in the diagram to the bottom left, the Swedish and Finnish sawmills production has been on normal levels in the start of 2025. In the diagram to the top right, we can see small price increases during the start of the year and with a somewhat stronger development for spruce. Going into the second quarter of '25, I estimate that the price will continue to increase by close to 10%, driven mainly by cost increase for sawlogs, but held back due to the currency development.

In the construction sector, we can conclude that the starts of new building continue to be low, while consumption in repair and remodeling sector will be early to respond in a positive way to lower interest rates.

So over to Pulp. When one compare Q1 '25 with the first quarter '24, sales were up 9%, mainly due to higher delivery volumes. EBITDA was flat compared to last year, mainly due to higher cost for wood raw material and lower prices for CTMP, mitigated by higher prices for NBSK. Global demand for pulp was at a healthy level during the first quarter, and we saw increasing prices on all markets. However, the weakening of the U.S. dollar have had a negative impact on the price in local currencies.

NBSK prices reached the bottom in Europe in January at USD 1,480. Today, we are around USD 1,600 per tonne after 3 consecutive months of increasing prices. In the U.S., NBSK prices have had a similar development to Europe. In China, NBSK prices reached the bottom in the summer of '24 at USD 710 per tonne net. We then saw increasing prices up until March this year when the price reached USD 810 per tonne. And so far in April, the market is in, let's say, a wait-and-see mode.

Regarding tariffs, all pulp supplies exporting to U.S., except for Canadian producers, are currently subject to 10% tariffs. Canada and Europe are the main suppliers of NBSK pulp for the U.S. market, and SCA are at risk of losing market shares if having higher tariffs than Canadian suppliers over time.

Looking at CTMP, prices have been unchanged in Asia at low levels, but increasing slowly in Europe during the first quarter. Inventories of softwood and hardwood pulp are on normal levels, as you can see in the diagram. CTMP inventories on the contrary still are on the high side.

Moving over to Containerboard. Sales were up 2% in Q1 in comparison with the same period last year. We can note higher prices on the positive side, while lower volumes had a negative impact. EBITDA was up 70% due to higher prices, which was partly mitigated by higher costs for wood raw material and negative currency effects.

We've seen box demand developing positively during last year and into '25. And by that, we are now almost back to historical growth trend levels. We have seen an improved retail demand supported by increasing consumer confidence, which should support the continued growth in box demand over time.

On the other side, we can -- we continue to see negative growth in the European manufacturing industry, which, for the moment, drives the demand in the segment in a negative direction. The European demand for containerboard has moved sideways in Q1 compared to the same period last year. Due to the current turbulent macro environment, it's difficult to predict the long-term impact on demand.

With regards to tariffs, we expect the direct impact on our business in Containerboard to be relatively small. The potential impact mainly comes from the effect of tariffs on the overall business environment.

Kraftliner inventories are slightly above average level in Q1, but trending downwards. The availability of OCC has in the later part of Q1 tightened, although prices have remained stable. Moving into Q2, we will see the prices of OCC substantially moving upwards, mainly driven by availability.

European prices for brown kraftliner increased in Q1 by EUR 40 per tonne, and white kraftliner has during the same period decreased by EUR 10 per tonne. SCA will increase white kraftliner prices in April by EUR 40 per tonne, and we now feel a more solid underlying demand in combination with strong cost pressure. And due to that, we have recently announced another price increase of EUR 60 per tonne in both brown and white kraftliner from 1st of May.

So finally, Renewable Energy. In business area Renewable Energy, we have had a weaker quarter compared to the same period last year. The market for solid biofuels remained stable. Higher prices for sawdust in our pellet business were met by higher prices.

In line with previous quarters, the green premiums for tall oil and liquid biofuels are substantially lower in comparison with the same period last year. As mentioned before, main reasons are lower blending mandates in Sweden and increased imports from China, creating an imbalance in supply/demand in the renewable fuels market.

We expect market volatility in renewable fuels to remain high as Europe ramps up the blending mandates both in HVO and SAF. Long term, our outlook is positive. But in the short term, we expect continued low refining margins and bio premiums. The small recovery in biofuel prices we saw at the end of Q4 impacted Q1 positively. However, with the current geopolitical landscape and decline in oil prices, we expect the market to be challenging going forward.

Electricity prices were low during the quarter, which impacted our wind business negatively. SCA continues to grow in land lease for wind power and has reached 9.7 terawatt hours of wind power on SCA land by the end of Q1. That is equal to 20% of installed capacity of wind power in Sweden. And finally, I can mention that the execution of our windmill project, Fasikan, is progressing according to plan.

And by that, I hand over to Andreas. Thank you.

[Andreas Ewertz, executive]

Thank you, Ulf, and good morning, everybody. I'll start off with the income statement for the first quarter.

Net sales increased 13% to just below SEK 5.2 billion, driven by higher volumes and higher prices. EBITDA increased 3% to SEK 1.65 billion, driven mainly by higher prices, which was partly offset by higher costs for wood raw materials. The EBITDA margin was 32%. EBIT increased to SEK 1.1 billion, and financial items totaled minus SEK 114 million, with an effective tax rate around 20%, bringing net profit to SEK 800 million or SEK 1.14 per share.

On the next slide, we have the financial development by segment. Starting with the Forest segment to the left, net sales increased to SEK 2.5 billion, driven by higher prices and higher deliveries to SCA's industries. EBITDA decreased to SEK 879 million due to seasonally lower harvest from SCA's own forest compared to the previous quarter. Our prices for wood raw materials continue to increase.

In Wood, prices were slightly higher compared to the previous quarter. Net sales increased to SEK 1.5 billion and positively impacted by higher delivery volumes. EBITDA was in line with the previous quarter and amounted to SEK 236 million, corresponding to a margin of 16%. Higher prices and higher volumes were offset by higher costs for wood raw materials.

In Pulp, net sales decreased to SEK 1.9 billion compared to the previous quarter, while EBITDA increased to SEK 320 million, corresponding to a margin of 17%. Lower costs for planned maintenance stops were offset by lower prices and negative currency effects.

In Containerboard, net sales increased to just below SEK 1.7 billion, and EBITDA was in line with the previous quarter and amounted to SEK 239 million, corresponding to a margin of 14%. Lower prices and negative currency effects were offset by lower costs for planned maintenance stops and higher delivery volumes.

The market for Renewable Energy continued to be weak. EBITDA increased compared to previous quarter, amounted to SEK 134 million, corresponding to a margin of 22%. The increase was driven by seasonally higher deliveries of solid biofuels and higher results in liquid biofuels, while electricity prices continue to be low.

On the next slide, we have the sales bridge between Q1 last year and Q1 this year. Prices increased 6% with higher prices in wood, containerboard and NBSK. Volumes increased by 8%, driven by higher volumes in wood and pulp. And lastly, currency had a negative impact of 1%, bringing net sales to just below SEK 5.2 billion.

Moving on to EBITDA bridge and starting to the left, price/mix had a positive impact of SEK 325 million, and higher volumes had a positive impact of SEK 64 million. Higher costs from mainly wood raw materials had a negative impact of SEK 147 million. We had a marginally positive impact from energy and a marginally negative impact from currency. Last year, we also had a capital gain of SEK 128 million from the sale of Henvålen. In total, EBITDA increased to SEK 1.65 billion, corresponding to a margin of 32%.

Looking at the cash flow, we had an operating cash flow of SEK 485 million in the quarter. And as you know, other operating cash flow relates mostly to working capital currency hedges and should, therefore, be seen together with changes in working capital.

Looking at the balance sheet, the value of the forest assets totaled SEK 107 billion. Working capital increased to SEK 5.6 billion, mainly driven by higher volumes, currency and the VAT receivables. Capital employed increased to SEK 116 billion. Net debt stood at SEK 11 billion and equity totaled SEK 105 billion, corresponding to a net debt to equity of 11%.

Thank you. With that, I'll hand back to you, Ulf.

[Ulf Larsson, executive]

Thank you, Andreas.

And just to summarize, I think that we have done a solid quarter, slightly better than last year and also slightly better than Q4 last year. We have implemented price increases in more or less all product areas from the first quarter, and they will be successfully implemented during the second quarter.

We have seen substantially higher raw material costs. But again, our high degree of self-sufficiency in SCA can mitigate the negative effect of that in a rather strong way. We see higher delivery volumes in more or less all areas and not the least is that due to our ongoing ramp-ups in strategic investments.

So I think by that, Andreas, we open up for questions. Operator, can we please open up for questions?

[Technical Difficulty]

Technical problem, and we try to solve that as fast as possible.

[Operator]

[Operator Instructions] And our current question is from Ioannis Masvoulas from Morgan Stanley.

[Ioannis Masvoulas, analyst]

Can you hear me okay?

[Operator]

Yes, we can.

[Ioannis Masvoulas, analyst]

Perfect. First question from my side. You showed solid European box demand at the start of the year, which has supported your containerboard price hikes. What are you seeing in recent weeks as tariff frictions escalated? Is there any visible slowdown in parts of the market? Or is it still too early to say?

And then the second question is on the currency where we've seen the Swedish krona having strengthened quite materially. Can you provide us a quantum of net exposure you have to USD and euro to get a sense on overall sensitivities? And also, are you looking to continue hedging the FX grosses at these levels?

[Ulf Larsson, executive]

Thanks. And if I start with tariffs, I mean, it is too early to say. And I think the driver behind the price increase that will come now is the cost increase that we see, not the least now in OCC, and we know that testliner producers, they are all ready in the market, and they have been there since a while and asking for compensation for OCC prices. And I mean, also on containerboard side, we have seen an increased cost pressure due to increasing cost for not the least for wood raw materials. So I mean that's the main reason behind.

The demand has been okay during the start of this year, and it is far too early to say what kind of impact tariffs and other things will have on the demand. But as I said earlier, I mean, generally, it's not good with unsecurity, and that is -- and that we see in all markets just now due to -- for different reasons.

So -- and I think, Andreas, you can say some words about currency.

[Andreas Ewertz, executive]

Yes. If you look at our net exposure, and that is our sales minus our purchases in different currency, we have a table in our annual report which shows the exact net exposure from last year, but it's around USD 600 million and EUR 400 million and GBP 100 million. And in Pulp, it's mostly dollar exposure since the prices are set in dollars; while in Wood and Containerboard, it's mostly euro, SEK and some British pounds.

[Ioannis Masvoulas, analyst]

So just to clarify on the hedging strategy, are you looking to continue hedging at the current levels?

[Andreas Ewertz, executive]

We have a statistical model that we follow. So we lie within a range for the next couple of quarters, then it decreases. And that depends on how much the currency goes down or goes up, then we are either a bit higher in that range or a bit lower in that range, but we follow that model.

[Operator]

We will now move to our next question from Robin Santavirta from Carnegie.

[Robin Santavirta, analyst]

First of all, 2 questions. First one related to pulpwood and log availability in the area you operate on. What is the current status there? And how do you expect the pulpwood and log prices to develop now in Q2?

And then the second question I have, if you can answer this, is regarding the U.S. tariffs and related to what are you seeing at the moment in terms of your exports of pulp into the U.S.? What is the demand? What is the pricing strategy you have taken? And also, how has the current trade tensions impacted overall business sentiment for you guys in Europe so far?

[Andreas Ewertz, executive]

I can start with -- and then take the rest on the prices. So we had on pulpwood and sawlogs prices from Q4 to Q1 increased around 5% to 6%. And then going forward to the second quarter, we expect our industry will pay around 3% more for pulpwood and around 5% more for sawlogs.

[Ulf Larsson, executive]

Yes. And that is -- I must say I feel that the market is much more balanced for the moment being in pulpwood nowadays in our region. And as mentioned before, we have a lagging effect, and Andreas described that part. But I feel that it is a more balanced market for at least pulpwood supply just now.

When it comes to sawlogs, I guess, still, we will see increasing prices also in the market. They are on a very, very high historical level just now. We will have the lagging effect. And -- but still, it seems to be a rather good demand for sawlogs. And as mentioned also in the earlier, we will see during the second quarter a price increase of 10% in SCA and, I guess, other players, they will see somewhat similar. So that will, of course, also give some extra base to pay more for the sawlogs.

And the second...

[Robin Santavirta, analyst]

Can I -- Ulf, sorry to interrupt. Can I ask you, is that 10% in Swedish krona? Or is it in euro, USD and so forth?

[Ulf Larsson, executive]

That is the average for -- included all currencies. As it is just now, I mean, it can be something completely different at the end of this quarter, but as it is just now.

When it comes to the export to U.S., I mean, as I said, we have a different situation in different areas when it comes to our solid-wood products. I mean we have no tariffs at all as it is just now. And you know that Canadian solid-wood products, they face, I guess, it's 14% tariff level. So I mean in that perspective, we are favored still in U.S.

In pulp, I mean the tariff today is 10%; and from Canada over to U.S., it's 0. So I mean that business has changed. Of course, it hasn't really yet had any impact on our flow. And I guess we are in a little bit of a wait-and-see mode just now. But if this situation, if that remains, then, of course, we have to reposition some of the volumes from U.S. to other markets and then mainly Asia, I guess. In containerboard, we are not really impacted by -- we don't do too much business in U.S. in containerboard.

[Robin Santavirta, analyst]

I understand. And just on Europe, I mean there's a lot of uncertainty that you also said. Has that already now impacted the order intake in any of your segments, the European business?

[Ulf Larsson, executive]

No, that is too early. I guess we have a rather strong order book for the second quarter. So I mean, so far, so good. But I mean, again, I mean this discussion we have just now, that is, of course, not good for the general development and the general growth. I mean it will, in one way or another, have some kind of impact on the global business environment, and that will also hit, of course, the forest industry.

[Operator]

[Operator Instructions] And our next question is from Oskar Lindstrom from Danske Bank.

[Oskar Lindström, analyst]

Three sets of questions from me. The first one is on pulp. What kind of potential do you see to raise prices for NBSK in Europe given U.S. tariffs and potential need to retake some volumes out of that market? And I think you also described the mood in China as sort of wait and see at the moment. So that's my first question.

[Ulf Larsson, executive]

We'll take them one by one. I think that's easier for me at least. Yes, again, I think it's too early to say. I mean we know that we now will see around $1,600 -- the index price in Europe for NBSK will be around $1,600. And as far as I know, I think the index price in U.S. went up USD 30 per tonne, something like that. And again, as we said, I mean, in Asia, it is a wait-and-see mode, of course, as it is just now. So -- and I don't like to speculate in further price development in Europe or U.S. at this point at least.

[Oskar Lindström, analyst]

Yes. All right. Fair enough. My second question is on containerboard. So I think your volumes were down 7% year-on-year. Does this reflect sort of a weaker market mix change or volatile ramp-up of the Obbola machine?

[Ulf Larsson, executive]

I think we had -- it's more a seasonal effect, and we had a rather -- we have a rather low stock level in containerboard. And I mean the ramp-up just now is going well, I would say, according to plan. And we had a production record in March, and we are doing slightly better now in April. So we are pretty happy with the ramp-up.

[Oskar Lindström, analyst]

All right. Good. And then finally, on FX, I know the question has been asked before, but -- so given the hedging, I mean you should be facing the full impact of the stronger SEK that we've seen so far towards the end of the year. And that is, I mean, going to impact your competitive position vis-à-vis competitors based outside of Sweden. Do you see a need or a potential to cut costs or make structural changes to mitigate this? Or is it all just going to have to come down on your bottom line in the end?

[Ulf Larsson, executive]

I think we always have a need to cut cost and be more productive and efficient. And I guess...

[Technical Difficulty]

Sorry. Someone is disturbing the line here. So okay, Oskar, are you still with us?

[Oskar Lindström, analyst]

Yes.

[Ulf Larsson, executive]

Yes. Okay. We have someone else here on the line. So I think we always have a need to work with our...

[Operator]

[Operator Instructions]

[Ulf Larsson, executive]

We always have a need to work with our cost efficiency and do what we can in order to control the cost level. And we -- I cannot really see that we have a -- we always try to focus on what we can have an impact on. I mean we cannot do too much about tariffs and currencies and other things, but we can be as efficient as we can, of course. And so we are 100% focused on productivity, cost efficiency and so on. We have no special programs that will be announced the coming quarters here.

[Andreas Ewertz, executive]

And also the continued ramp-up of our big strategic investment that will help to improve our cost positions as we gradually ramp up and trim those operations.

[Operator]

And we have a question from Lewis Merrick from BNP Paribas.

[Lewis Merrick, analyst]

Would just go back to the currency movements in the year on SEK. In terms of phasing and timing as to when that should come through in the P&L, should we expect that to come through quite immediately? Or should there be a bit of a lag?

[Andreas Ewertz, executive]

Yes. If we look at the FX, we have a table in our quarterly report on how much we have hedged for each quarter. But for the dollar, it's -- we have hedged around 70% of the net exposure in both Q2 and Q3 then 50% in Q4. I think it's 20% in Q1 2026. For euros, it's around 70% in Q2, around 50% in Q3 and then around 20% in Q4, but you have the exact figures in our report, but around those.

[Lewis Merrick, analyst]

Appreciate that. Also on the elimination EBIT level, it's quite a big jump this quarter. Just wondering what drove that and how that might evolve moving forward?

[Andreas Ewertz, executive]

You mean in others? Yes, in others, first, we usually have a seasonal a bit higher costs in the first quarter. Then we also had some higher eliminations of profit in stock in the first quarter because of higher wood raw material costs. So that's a onetime effect when the prices of wood raw material goes up.

[Lewis Merrick, analyst]

And just one last one for me. Just given the current environment, the recent experience of lower pulp prices, what's your appetite for the wind projects going forward?

[Andreas Ewertz, executive]

I mean, if you look at wind, we are -- with the current Fasikan we're building now, we will be self-sufficient in the wind power, and we never want to become a net seller of electricity. So we won't do any further purchases or construction of wind power because we just want to be self-sufficient or almost self-sufficient, but never become a net exposure.

[Ulf Larsson, executive]

But we can develop projects and then we can sell them, and that's a part of our business.

[Operator]

[Operator Instructions] We will now take the question from Victoria Adesina from Barclays.

[Morayo Adesina, analyst]

Victoria on for Gaurav Jain. Just 3 questions from me. So on the price increases, you've given the drivers behind those. I'm just wondering if you could share some insights on how customers have been reacting to this just given that the current geopolitical backdrop is sort of risk in consumer slowdown. So that's the question.

[Ulf Larsson, executive]

I couldn't hear.

[Andreas Ewertz, executive]

Customer reaction from the price increases.

[Ulf Larsson, executive]

Well, customers, they always like low prices. So that is natural. But I guess everyone see that we will -- I mean the main driver behind price increases just now is not a fantastic demand, maybe with an exception in solid-wood products as we have a seasonal effect just now during Q2 and maybe also during Q3. But otherwise, I mean it is the cost pressure that force us to go for further price increases as it is just now.

[Morayo Adesina, analyst]

Okay. That's clear. And a question on the segments and tariffs. Does that say that pulp is mostly exposed or will be most impacted?

[Andreas Ewertz, executive]

Tariffs on pulp.

[Ulf Larsson, executive]

Tariffs on pulp. Yes, as I said before, I mean, as it is just now, we face 10% tariffs from Europe over to U.S. And at the same time, Canadians, they face 0% tariffs. So I mean that, of course, changed the competition a bit. And then we have to wait and see. But as it is just now, I mean that is, of course, not positive for us. We haven't really seen an impact up until today. But if this continues, I mean then we have to, as I said, reposition our sales of pulp. And I guess, if Canadian volumes over to U.S., if they increase, that will create space in other markets.

[Morayo Adesina, analyst]

Okay. And then final question, is it possible to give any sort of backdrop when we could see a turnaround in the Renewable Energy segment?

[Andreas Ewertz, executive]

Turnaround in the Renewable Energy.

[Ulf Larsson, executive]

Yes, I don't know if -- I mean, as it is just now, I mean we have what we have. Electricity prices in the northern part of Sweden, they are quite low. I think the hydrologic balance is plus 15 terawatt hours in the Nordics just now. And I mean that is not beneficial for an energy producer. So I mean that give conditions for our production or profitability in wind.

On liquid biofuels, I mean we've been talking about that before, but still, we have the decreased mandate, and that will still -- and also, of course, reduced oil prices due to the, yes, to the geopolitical situation, I mean that also will have a negative impact on the market for liquid biofuels. But on the pellet business, I guess we have a -- it's a solid business...

[Andreas Ewertz, executive]

And then you just have to remember the self-sufficiency. I mean, last year, around 80% self-sufficiency on electricity as an example. So we still benefit from a low electricity price there. Energy impact negative -- our Renewable Energy business will be impacted negatively, but we will have lower energy costs in our Wood business and our CTMP business and our Containerboard business.

And also with liquid biofuels with low oil prices, I mean, we make less money in Renewable Energy, but we have lower cost for our logistics operations and our forestry operations. So we still, as a group as a whole, we benefit from lower electricity prices.

[Ulf Larsson, executive]

So again, I mean, we fall back on our strategic position. We like to have a high degree of self-sufficiency in wood, energy and logistics. And over time, we believe that is exactly the right position we shall have. So I mean -- and that's also, I guess, why we can deliver a rather solid result also this quarter.

[Operator]

That are all questions that we have today. With this, I'd like to hand the call back over to our speakers for any additional or closing remarks.

[Ulf Larsson, executive]

And that concludes our first quarter report presentation. We'll come back in July for our half year report. Thank you for dialing in.