Svenska Cellulosa SCA AB
STO:SCA B
Svenska Cellulosa SCA AB
STO:SCA B
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Sincerely welcome to SCA's press conference. My name is Bjoern Lyngfelt. I'm Head of Communications. During this press conference, we will present the yearend report for 2018. Our President and CEO, Ulf Larsson; and our CFO, Toby Lawton, will present the report and, after that, take what questions and comment upon what you might be interested in. So Ulf, please take the scene.
So thank you, Bjoern, and good morning, everyone. Happy to give you some views on our 2018 result and also Q4, of course. I can start by saying that 2018 has been a very good year for us. I think it's the strongest result ever, even if we take the situation before the split into consideration, and also Q4 is a stable and strong result.If we start with the demand, we've seen that, in Europe and US, we have a continued strong demand and a stable market in China. We have had a slightly softer situation and also, yes, some price declines starting in China. On the other hand, we see now that Chinese buyers, they are coming back, and they place order for deliveries after the Chinese New Year.So all in all, higher prices Q4 '18 in comparison with Q4 '17. But as I said, some price decline from a very high level in Q4, end of Q4.Strong sales growth up 16% due to price and currency mainly, and also EBITDA was in comparison with Q4 '17 up 38% due to price and currency. On the other side, we've seen higher cost for wood raw material, and we also had some negative impact of maintenance stops, not least in Q4 if we compare with Q3, but I will come back to that later.When it comes to Oestrand, it's progressing according to plan. And we can now see that, since we started the project 2015, we've been able to finance the entire investment from the operating cash flow, which is, of course, a very good thing for us. Otherwise, when it comes to volume, quality, it is absolutely according to plan, which we are happy for.If we then look at some KPIs for Q4 '18, one can see that we've done close to SEK1.5 billion during the fourth quarter, which is, as said, 38% up on what we had Q4 '17. And that relates to an EBITDA margin of 30%. And if you look to the right-hand side, one can see that Q3, already Q3, Oestrand did contribute very well to the result, of course, and has continued also in Q4. Q4 is affected by first maintenance stop, which is -- had a negative impact of approximately SEK100 million when we compare Q4 with Q3. But also in Q3, we had lower personnel cost related to the vacation or holiday period. So all in all, I would say that Q4, if you adjust for that, is SEK100 million stronger than Q3.Industrial return on capital employed 16% when we count on rolling 12 months, and our leverage 1.3. And as said, we've been able to finance the Oestrand project from the operating cash flow.If we then take a look at full year '18 and start with the EBITDA level, SEK5.25 billion, which is 44% higher than 2017 corresponds to an EBITDA margin of 28%. The board has proposed a dividend of SEK1.75 per share, which is up 17% in comparison to 2017. And that is absolutely also in line with the dividend policy that we have. The dividend should be stable and increasing. This level also give us an opportunity to continue our profitable grow. And as you know, we have a rather extensive project portfolio, which we like to go further with. Earnings per share more or less doubled since 2017, so SEK5.21 per share.If we then walk into each segment, starting with the forest, we've seen higher prices during Q4. And if you remember from Q3, we said that prices lagging a little bit, and this quarter, the forest has been able to passing on the price increases for wood to the industry. We've now seen that wood prices has leveled out on a rather high level. And we've also seen that input prices has come down SEK50 to SEK100 per cubic meter.We have increased our wood sourcing in order to meet the higher demand from Oestrand. And last year, we did buy more than 400 cubic meters from private forest owners in the region, which is also that on a record level, but which is exactly what we need in order to supply Oestrand, of course. Sales was up 20% due to increased volumes, but also to higher prices, and EBITDA up 19% from SEK358 million up to SEK427 million for the fourth quarter.If we then talk about wood, here, we have seen a stable demand in Europe and also in U.S., but as already said, we felt in Q4 somewhat softer market in China, but also in some countries in North Africa, Egypt, for example. We've seen that trade has started up rather well in Q1. And also, China started to place orders for deliveries after the Chinese New Year.We had slightly lower prices in Q4 versus Q3, as you can see on the left-hand side in the shot, but rather flat. We know now for the first quarter that we will reduce prices by between 3% and 5%, depending on which market and also what kind of products we sell. The more value added we have, the less we have to lower the price, of course.Sales was up 9% due to price and currency, and EBITDA was also up 23% due to prices. We've seen here that raw material prices cost for log has increased, but that is to some extent mitigated by yield improvement. And as 70% of the cost in the sawmill is related to the raw material, that is a really important factor that you can step by step be more efficient when it comes to raw material use.In pulp, as we've said, we are ramping up according to plan. It will take between 12 and 8 (sic - see Presentation - 18) months. We can see that December is the highest month we ever done here in December, or in the first quarter, we've also had 5 days of maintenance stop. So the production all in all was 160,000 tons. Deliveries was 145,000 tons, which is also according to plan, as we -- when we double the capacity need to build up inventory in order to provide good service to our customers.If we compare Q4 '18 with Q4 '17, we've seen higher prices. At the end of Q4, we saw the prices enterprise down from $1,230 per ton to $1,200 in December, $1,170 in January. So we've had some price decline at the end of Q4 and also for the first month now in '18 (sic) [ '19 ].We also know that prices in China has went down a little bit more. So if we compare net prices, I would say that net prices in China now is some 690 approximately, and net prices in Europe is around 830. On the other hand, we see now that some suppliers, they are trying to increase prices in China, and let's see what kind of result that will be, but that's the situation just now.So production exceeds deliveries due to the inventory built up, as I said, so production 160,000, deliveries 145,000. That is exactly what we know in order to be a good service provider to our customers. Sales was up 56% due to prices and also to currency, but not the least due to the expanded or increased volume in the new mill. And EBITDA up 148%.If we then walk into paper, we see -- if we compare '18, Q4 '18 with '17, we've seen increased prices for both Kraftliner and publication papers. And if we look to the left-hand side again, one can see that we had some small Kraftliner price decline at the end of Q4, around 1% I would say. And when we have now started the new year, we've seen that index prices has went down between 2% and 3% for unbleached Kraft and around 1% for white top, so slightly less for white top. So it is, again, a good demand out there with some small price decreases from a very high level.In publication papers, we have been able to increase prices with, let's say, EUR25, EUR30 per ton from 1st of January. And we've sold around 65% now for the first quarter. So we're happy with that.We've had an extended maintenance stop in Obbola. And it was a little bit of a bad surprise for us because, when we stopped the turbine, which we do every 10th year, we had more damages in the turbine than we thought. So that means that we haven't been able to produce any energy from Obbola during the fourth quarter. And at the same time, we had an extended stop in order to provide the service that was needed. Now it's up and running again, but the extended maintenance stop costed us around SEK80 million, which is all related to the paper business, of course. Anyway, sales was up 9% due to prices and currency, and EBITDA was up 11% when we compare Q4 with -- '18 with Q4 '17.So I think by that, Toby, I hand over to you.
Thank you, Ulf. Good morning, everybody. So firstly, if I start with the income statement, and here, you can see basically, on the top line, net sales grew by 13% for the full year. So we now have net sales of just under SEK19 billion for the year. We had a margin increase of 6% for the full year, so from 22% EBITDA margin up to 28%, and a 5% increase in the fourth quarter from 25% last year up to 30% this year. And that means we had an EBITDA then for the fourth quarter of SEK1.5 billion and for the full year of SEK5.25 billion. And EBIT for the full year then was SEK4 billion.Financial items ended the year on SEK29 million. And the tax charge here for the full year you have to remember also includes an impact which came in the second quarter from a change in the tax rates down to 20.6% in Sweden over two steps in the future, which impact our deferred tax. So that had a positive impact on tax of some SEK550 million. But if you take that effect out, then our effective tax rate for the full year and the fourth quarter is very close to 22%, which is the tax rate this year in Sweden.Net profit for the year ended up for the full year almost double that we had last year. So we ended with an earnings per share of SEK5.21 per share.As Ulf mentioned, the proposed dividend from the board is SEK1.75. This is in line with our policy of stable and an increasing dividend with a growth of 17% on last year's dividend and allows us also at the same time to continue to invest in profitable growth going forward. And in the payout ratio, we've adjusted for this tax item, which I think makes sense. And therefore, our adjusted payout ratio of this dividend is 40%.Here, if I take a bit more time and go through the performance per segment, and starting on the left-hand side with the forest division, here, we have net sales have increased this quarter, and they increased last quarter, and our biggest effect here is the growing level of supply to Oestrand. So we are sourcing more wood and growing the supply to Oestrand. So that leads to a growth in the sales of the forest division.The EBITDA has also increased this quarter in the forest division. That's not due to the same effect because we're harvesting around the same amount from our own forest. We're not increasing the level of harvesting from our own forest due to this. But the price -- the wood prices have gone up, and forest division is now passing those prices through to the industry. So we had some time lag. We didn't have that effect last quarter. But that effect is now coming this quarter. And of course, that has an impact then on the industrial side, where they're taking a higher wood cost also.The wood division, here, we have lower sales in the fourth quarter, which is really the seasonal pattern. The fourth quarter is a seasonally lower quarter for wood. On the bottom line, that has an effect, but we also have some effect of the slightly lower prices from the wood division in the fourth quarter, which -- reason the EBITDA margin goes -- was 16% last quarter, slightly lower at 15% this quarter, but still a good level.In the pulp division, you can see turnover has grown due to, of course, the expansion of the Oestrand pulp mill. We produced 160,000 tons in the quarter in Oestrand, and we sold around 145,000 tons. And we're still selling less than production due to the fact that we're still building finished goods stock. We think we've reached the end pretty much of that process to build the finished goods stock up to a normalized level with the higher capacity. But we did have some effect of that in Q4 and also of course in Q3.Bottom line has grown also due to the higher volumes, of course. The margin is slightly down on Q3, but it's basically the increased efficiency from the higher volumes going through the mill. We had a maintenance stop in the fourth quarter, as Ulf mentioned, which had an impact on cost. And we also have higher wood cost coming through, of course, which Oestrand has to take.And then in the paper division, top line was more or less flat. Bottom line, we were down on the third quarter. And the impact here has been -- the biggest impact is due to the maintenance stop, as Ulf mentioned, in the Obbola mill, where we had both a longer and more expensive stop than we expected. And it was this turbine that affected the stop. And we had, yes, no energy production, so worse energy performance on electricity for the quarter. And we also took more time to get back up to full volumes after the stop as well. So we had a weaker performance there than expected.We also have a small -- there has been some small slightly lower prices, but that's a small effect on bottom line this quarter, but then the wood cost as well impacts the paper division, where they're taking the higher wood cost as well in the fourth quarter.On top of that, we should remember the third quarter had an impact from this -- the lower holiday pay in the holiday season, which we had an impact on the group of some SEK50 million, and the bulk of that comes in the paper division actually. So we don't have that effect then again in the fourth quarter.All right. If I move on then to just show the variation in net sales, of course, the biggest driver driving our 13% growth in net sales is price, and that's been for the full year an average price impact of 13% on our top line.We've had a negative effect from volume. And it's in basically the wood, pulp, and paper. In the wood division, we had a weaker performance, particularly at the start of 2018 with the harsh winter, and we haven't been able to quite recover that during the rest of the year. So we -- volumes for the full year were lower for the wood division.For the pulp, of course, we had the Oestrand project. So we -- particularly on deliveries, we have a lower volume than last year. For production, we're more or less the same. And for paper, we also did not have production volumes the same level as last year. 2017 was a very good year on production. And we've not matched that quite in 2018. So we have minus 5% on volume. And currency, of course, has been positive with both the US dollar and the euro.If I then do the same for our EBITDA, you can see the impact of price mix that you saw in the sales variation is the main impact driving the growth in EBITDA. Volume slightly negative effect, which you also saw in the sales variation. Raw materials, we have some SEK600 million impact, which is mainly driven by the higher cost for wood raw material or wood prices. So that's the main impact. We also do have higher direct costs during the startup of the Oestrand mill as well. So it's those two factors that lie behind the raw material costs that we're now absorbing as well.Electricity balance, we do have higher electricity prices. So that's a -- has a negative impact, but that's offset in the year by an income from selling green electricity certificates, which balances it out.Currency is positive, of course, again, US dollar and euro. And then in the other, the biggest impact here is, again, the extended maintenance stop we had, particularly in the second quarter, for Oestrand. So overall, EBITDA grew by 44%, as I say, up to SEK5.25 million -- billion for the year.Cash flow, we ended the year with an operating cash flow of SEK2.75 billion. And that means that, if you go back to when we started the Oestrand project in Q4 2015, we've actually financed the entire Oestrand investment from operating cash flow.When we look in the cash flow, we have this year an increase in working capital, which is of course mainly driven by increase in prices and the growth coming from the Oestrand project. So overall, the working capital level in relation to sales is constant, but the working capital has grown. We have current capital expenditures of SEK1 billion, which is compared to our depreciation of SEK1.2 billion a normal level of current capital expenditures for the year and, as I say, an operating cash flow of SEK2.75 billion for the year.This slide we've presented before. So it's nothing new. I'll go quickly, but basically, just to remind you what the expectations on the Oestrand project, we began production in June according to plan. The ramp-up period will take 12 to 18 months, which means we expect full capacity at the end of 2019. And therefore, 2020 will be the first year at full capacity.We had production volumes this year were in line with the volumes last year, so pretty much the same volume and production this year as we had last year, which is what we talked about. Deliveries did lag behind, particularly in the third quarter and fourth quarter because we built up this finished goods stock. But production-wise, we were very much in line with the volume last year. And then you can see some of the assumptions further down, including on fixed cost and energy balance and so on. Oestrand will also be absorbing the higher wood cost, which is mainly due to price, but coming through now with the wood prices being higher.This one you've also seen before, but we update for the quarter 4 impact. And if I focus on the table on the right-hand side, you can see the impact of the three areas of the Oestrand. On the bottom line, we have the project-related costs, which ended the year on SEK59 million. We had the impact of the maintenance stops, the biggest one in the second quarter, but a smaller one in the fourth quarter, with SEK250 million, and then the ramp-up effect, which is mainly effects on direct costs of SEK150 million. So for the full year, we had then the cost impact here of SEK460 million due to the project. SEK55 million of that came in the fourth quarter. And if we look forward to next year, we will have a maintenance stop next year, which we expect to have an impact in total around SEK120 million. But apart from that, we don't expect these costs to continue into next year.Balance sheet, just briefly, the book value, the accounting value of our forest ended the year on SEK32 billion. After taking account of deferred tax, we come down to SEK25 billion. Working capital, as I said, was the same in relation to net sales, but has grown. So we now have SEK3.7 billion in working capital. Other capital employed grew because of the investment in Oestrand primarily. So we have a capital employed of SEK46 billion at the end of the year and a net debt of SEK7 billion, which is equivalent to a net debt to EBITDA of 1.3x.And if I just take a last slide, just to inform you on the expected impact we have on IFRS16, which is coming in -- the reporting from 2019, so this will impact the first quarter 2019 and forward, but we expect -- on a full year basis, we expect an impact on the key figures, as you can see here on the slide. Firstly, we have net debt, where we expect an impact of around SEK1.2 billion on net debt, which is also the impact on the asset value. So we'll have capital employed of SEK1.2 billion as well.That means the net debt-to-EBITDA ratio will be impacted by about 0.2 turns of EBITDA. EBITDA will increase around SEK200 million. EBIT, very small change, plus SEK20 million because it's a switch between EBITDA and depreciation. And you can see per segment on the right-hand side. So you can see the expected impacts from that. So that's something to look out for from the first quarter and forward.All right. And with that, yes, you get to summarize.
Well, to summarize, '18 has been a good year for us, probably the best year ever if you also take the time before the split in consideration. Demand, stable Europe and US. We have a somewhat softer market in China. And let's see what's going to happen after the Chinese New Year.Higher prices in '18 in comparison with '17. They have flattened out now from a high level in more or less all areas. Strong sales growth due to volume and in Oestrand, but also price and currency. EBITDA up 38% for the fourth quarter, 44% for the full year '18 in comparison with the full year '17, and Oestrand ramp up is according to plan.So by that, I think we can open up for some questions.
We will now begin the question-and-answer session. [Operator Instructions]. Okay. Sir, right now, we have 6 questions coming in.
I think we'll start here in the...
Okay. Your first question comes from the line of Christian Kopfer.
Okay. Thank you very much, operator. Just my first question relates to the cost development in Oestrand. I saw that cost per ton went slightly up in the fourth quarter. Just could you give an update on what you see cost -- how much cost should come down when you reach full volumes? Earlier, you have said around SEK350 per ton, if I remember correctly. With the increased wood cost, is a more reasonable number around SEK300, or --
No, I think, like-for-like, we expect cost to come down, as we talked about before around the fixed cost level, SEK350 per ton. So that's not changed. But then where the wood cost ends up depends on where the wood cost ends up. So I don't want to give any kind of clear guidance on that. But like-for-like, we expect that then to be on a cost benefit of SEK350 per ton. In the fourth quarter, as I said, we had the efficiency gains, but we also had the impact of the maintenance stop, which wasn't there in the third quarter, and we also had this higher wood cost coming through.
But if you assume that the current wood cost will remain, it's possible then, Toby, to mention how much costs are coming down.
No, I think you can say in -- overall, in -- year-on-year, we've had more or less around 10% increase in wood cost. That you can see. But if -- we still have -- we've had some time lag in the passing through of that wood cost from the forest to the industry. There's still a bit of that time lag to go because the prices continued up in the fourth quarter as -- for wood. So that effect, there's still some of that effect to go, but yes, I don't want to quote the figure at you.
And then how much was the excess production of electricity in Q4 in Oestrand?
It's -- we had a much better electricity balance in the fourth quarter, but we're not yet at the levels we expect once the project is fully -- the ramp-up is completed. So there's still quite a lot of that effect to come in, in next year. So the fourth quarter, we didn't have a large net surplus of electricity yet.
So it was -- is it fair to assume that it was just a slight...
That had a relatively small impact on the bottom line, yes, yes.
Okay. Okay. Thank you very much.
Linus?
Thank you very much. It's Linus Larsson with SEB. If I maybe may continue on the wood price topic, do I understand it right that, in your industrial operations, you will continue to see rising wood costs sequentially into the first quarter? And will that then be in your expectation the last quarter of rising raw material cost from wood in your industrial activities?
You will see some -- as Toby mentioned, we saw some price increases also during the fourth quarter. And that will be passed through to the industry during the first quarter. But otherwise, I would say that the price level on wood has at least for the moment been leveled out on a high level. And what we can see now is that, for imported wood, we see price decreases between SEK50, SEK100 per cubic meter and around that. But still, in the first quarter, you will see some impact in the industry, yes.
Thanks for that clarification. And then on the Oestrand project, correct me if I'm wrong, but my understanding is that, as from the first quarter, shipments will be more aligned with the production. So that's my first question. Did I understand that right, and also whether, for the full year, do you have a production and/or shipment guidance for the pulp division, please?
The first question then, yes, we've now -- the production in fourth quarter was 160,000 tons, which was according to plan. The deliveries were 145,000 tons, so a delta of 15,000 cubic meters -- tons. But in the first quarter, I think we are now more or less balanced. So that means that the production rate will also be the delivery. So that's for sure. I don't think that we've given any figure for full year '19. But as you see on the slide that we are aiming for full capacity at the end of '19. So --
Great. And then maybe finally, now that Oestrand is pretty much completed as a project, what's the CapEx guidance for 2019, including maintenance and potential expansion?
I think current CapEx is what we guide. We expect basically not a big difference from the level we had in '18. Perhaps this leasing will have a small upward impact because that's more -- that's taken rather than an operating cost is taken or on capital. So that will have a small impact, but not a dramatic change to CapEx -- on current CapEx. Then strategic CapEx, we've got the rest of the Oestrand project, of course, where we have around 5% of the Oestrand project left for 2019. And on top of that, we don't have any decided strategic projects at the moment.
Gustaf Schwerin from Pareto. I have 3 questions. First of all, in paper, can you quantify the volume loss from the longer startup after maintenance? Yes, and one by one.
Yes, we don't -- the deliveries in paper were more or less in line with the third quarter. But the production was weaker from the stop and the longer time taken to get it back up to full production volume. But yes, we don't have a figure for how much volume we lost due to that. It's a bit -- you can't exactly what it is, but it did take us longer to get back up.
The estimated cost was SEK80 million for Obbola.
But no reason to assume any discrepancies in production versus deliveries for Q1 then.
No, now it's up and running and back to normal. So...
We do it every 10th year. So now you have to wait until 2029 for the turbine.
Perfect. Secondly, I can't remember what you said about your pulp production in Q3 because I think you gave a number there. Did you reach the same level as last year? Because you should be more or less at 495 for 2018, right?
Yes, you could say -- so we produced 140 -- I think 7 I think it was in Q3, and we sold 105. So there, we had some, yes, 40, 45,000 tons extra production over sales. And we had 15, again, extra production over sales in the fourth quarter. So you put those two effects back, and that's basically the volume difference that we have in deliveries between -- basically between '17 and '18. So that's what's driving the difference. And that's because we need to hold around one month's finished goods stock. So we're pretty much there now with -- after the fourth quarter. So we don't expect that to continue this year.
Okay. Perfect. Then lastly, on your -- if you want to comment something on your dividend policy, I guess -- you're following it. You're increasing dividends year-over-year. However, given how your balance sheet has strengthened during the year, it's a bit surprising to see, even with this deferred tax asset lowering your payout ratio so much. Any comment on how you're thinking about capital allocation going forward?
Yes -- no, I think we want to have a stable and increasing dividend. It's a 17% increase in dividend, which we think a good increase in dividend. And at the same time, it allows us to have the possibility to continue to invest to grow. And we think we've got an attractive -- I've mentioned an attractive portfolio of investment potential that we think can be a good way for creating shareholder value in the future. So we want to keep that option.
Operator?
Yes, sir. Would you like to take questions through the phone?
Yes, please.
Okay. Your next question comes from the line of Mikael Doepel.
Yes. A couple of questions here. In terms of what you said about the pricing in the wood products, also on timber business, I think you mentioned lowering prices by 3% to 5%. Was that already including what we saw in Q4, or was that what you expect to do in Q1? And is this an average for the division, just to get some clarification on that, please?
Yes, that was for Q1 I would say. For the fourth quarter, we saw some small decline, but 3% to 5% would be for Q1. Depends on what kind of products you have, of course. In some -- for some products and in some areas, we have increasing prices. For some products, mainly lower qualities, then we have a higher decrease in prices. So but that was for Q1.
Okay. That would basically be on average I would assume then.
Yes, actually, yes.
Okay. And then in terms of the pulp market and pulp pricing, based on the comments that you made around that and seeing the net price difference between China and Europe, that would suggest quite a significant pressure on prices still on European prices. Is that the way you see the pulp market right now? How would you describe it?
I didn't say anything about that. We know what difference we have now between Europe and China. We've seen in China that some -- maybe the biggest producer has stopped deliveries to China in order to put positive pressure on price. We'll have to wait and see what kind of impact that will have. Of course, we've also seen that suppliers now have started to ask for more money in China. On the other hand, you have, of course, a pressure on pulp prices in Europe, so that we will have -- at least for February -- we don't really speculate and do forecasts. Just now, we have 1170 for deliveries in January. That is what we know.
I could just add on top of that the RMB is a big factor for the Chinese buyers. And so the weakness of the renminbi has had a big impact on Chinese buyers as well. And that strengthened a little bit in the last month. So it's helped the Chinese buyers absorb some increase. But I think that that has a factor as well on how easily Chinese buyers can accept higher US dollar-based prices or not.
Still would be more. The underlying demand for pulp in China should be good as...
Stable, yes.
The tissue business stable. The tissue business is stable. And they need, of course, raw material.
Sure, sure, yes. A final question also around pricing in terms of the Kraftliner, you mentioned some price slippage for unbleached and quite small still for white top. Would you expect to see more downward corrections going into Q1? And also, another question, what is the price difference now between the local European prices and the import prices in, for example, percentage terms?
Again, we don't forecast. But we've seen the peak prices has went down for unbleached Kraft with 2% to 3% and for -- as you said, for white top, we have more or less -- I think we had 1% or something like that. So we feel a stable demand. We are based in Europe, and that is our main market in Kraftliner. And we feel that there is a good demand for Kraftliner. And still, you have a momentum for e-commerce, increasing e-commerce, and replacing plastics with paper, and all that kind of things that will continue, of course. So yes, now we have a stable demand. That is what I can say.
But if demand is good and the markets relatively balanced in Europe, why is pricing coming down?
I think we are on -- as you know, we are on a record high level for -- also for Kraftliner.
Okay. So we're going to take our next question. And your next question comes from the line of Robin Santavirta.
Just regarding the impact of the turbine damage and the prolonged maintenance in Obbola in Q4, just a clarification, is sort of all of that, the impact is SEK80 million compared to the guided SEK60 million, or is the SEK80 million on top of sort of the maintenance, the guided maintenance stop cost?
We -- so we guided -- I think it was SEK60 million we guided before the fourth quarter. We ended up on SEK80 million. So that we had -- it cost SEK20 million. And that was the -- basically the longer and more expensive stop than we had guided and expected. And you could say I think the SEK80 million is the cost directly related to the stop, but the fact of taking longer to get back to full volume and having a worse energy performance had a higher impact than the SEK80 million. Yes, so it had -- yes, so say some SEK10 million, SEK20 million extra impact from a weaker performance due -- yes, due to those factors on top of the direct maintenance stop impact you could say.
Okay. That's clear. Then in terms of...
Just to -- sorry, Robin. Just to -- I think there was also a question Gustav had earlier, but I think we feel fairly confident about the level of finished goods stock we have in Kraftliner. So we don't expect this to feed through to -- have a big impact on volumes, which would feed through to a difference between deliveries and production going forward. So that's not really a worry.
Okay. Good. Then in terms of pulp now, second quarter in a row, you produce clearly more than you sell. And I guess, is this now just to sort of make sure that the stock, the inventory levels are normal, or is it sort of a commercial problem? I would assume -- prices have been very good. You would assume that you would sort of sell on these prices and perhaps gather stock later on early in this year. So is this only normalization of inventory, or is it a commercial sort of issue as well?
No, it's just normalization of inventory. I think if you talk to the people selling pulp, they need to have a month of finished goods stock to have a stable supply relationship with key customers. You can't have the relationship unless you have the stock in the system. So it's getting to that level with the higher volume. There's nothing more than that.
Okay. Good, good. And then where are you selling now the new volumes? I guess you have been almost 100% selling pulp in Europe. But now obviously, with the bigger volumes, can you fit all of that into Europe, or is it in China or North America that will be the destination for some of that volumes in 2019?
The main part of the increase is in Europe. And then I would say the rest is in US up until now. And then we haven't really started any big volumes for Asia, but that might come, depending on pricing. But as it is just now, we have good prices in Europe and US, and we have a good demand. So we have no need to go to Asia cities just now.
Okay. Okay. Thanks. And then finally, just you mentioned your portfolio of growth projects. Could you just update us where we stand on those? And I guess the Obbola Kraftliner expansion is one of the biggest ones you mentioned. When are you -- when should we expect you to make a decision on this investment, and also on the biofuels investment? And are there any other sort of projects that you have now sort of been working on?
Those we mentioned is Obbola and the biofuel project. And as we've said, we will finalize the pre-project in Q1 probably. And then when we have a decision, that's a question for the board. But the pre-project will be I think finalized Q1, Q2 maybe, but so we are on plan there. But we have no hurry. It's better to do it carefully and to present a good pre-project than to hurry.
Sure. Definitely. And wasn't it from 450 to 800,000 the...
We haven't said. We have said that we are looking into different alternatives in Obbola. One could be us to reinvest. Another one could be to increase up until -- we haven't mentioned 800, but to increase more substantially. And then you, of course, have some different option in between. So that's why we are doing the pre-project. We're looking into different opportunities here.
Okay. Thanks. And finally, for me, any M&A opportunities out there with this sort of growth projects portfolio you're mentioning? Is it only internal projects?
I don't know if I catch it, but we will not comment on M&A projects, if that was the question.
Okay. We'll now take our next question. The next question comes from the line of Oskar Lindstrom.
Yes. I have 3 questions. And the first one's coming back to this of the Obbola stop and what the net impact was compared to the guidance that you gave us of SEK60 million. So it was -- the stop in itself cost more, direct cost, another SEK20 million, and then we had another SEK20 million cost for a delayed startup, so total increased cost of SEK40 million? Is that how we should think around it?
That's just the guidance. So yes, just to repeat what I -- so we guided SEK60 million. It ended up on SEK80 million for the stop costs, and then we estimate SEK10 million to SEK20 million is what I said roughly for -- you could say an effect on top of that from a worse -- from -- take more time to get back up to full volume and a weaker energy balance. So yes, some -- in round terms, yes.
But you're now back on track. So none of this should spill over into the first quarter.
No, no, that's done now. So it's now -- it's all fixed and up and running.
Great. Super. Second question is around your wood products division, where you mentioned now prices coming down a bit for the first quarter. And it's still wintertime. So maybe it's difficult. But I thought you mentioned before -- earlier in the presentation that orders were looking quite good for North Africa and China sort of for delivery into February, or did I misinterpret you? What is the sort of market feel if we look a little bit beyond Q1?
But maybe that was not really correct. We -- China and North Africa is rather soft still. We've seen some orders now being placed for deliveries in -- at the end of Q1, but still soft markets. China was substantially down in Q4. And seasonally, it will never start up before after Chinese New Year. So that is -- we're used to that. In North Africa, it's a little bit more of a mixed picture. We are big in Morocco. Morocco is working really well. We have substantial deliveries to Morocco and also stable price level. So that is good for us. Algeria, more soft, and Egypt is, of course, not good at all, but on the other hand, Egypt is a market for lower grades. And as we are -- we have a lot of value-added projects. So we are not too exposed to Egypt. But it is a -- you have to look to the total picture. So that might put some pressure in some areas. Otherwise, Europe is otherwise stable. Scandinavia, where we are present pretty much and have big deliveries to Scandinavia is stable to strong. And the same goes for US. So but still soft situation in China and also in parts of North Africa.
All right. So the price decline that you mentioned for the first quarter, that's more reflecting this weakness that we've seen in those markets rather than a weakness in European and Swedish and Nordic core markets, so to speak.
Yes, but China is so big in all areas now. So of course, if China is slowing down, that have a direct or indirect effect on also other markets typically. So of course, China is an important part of the picture. But so far, US, Europe, still stable, strong, and we also now feel that we have some signs of improvements in China, which is positive, of course.
All right. My final question is around this wood inventory that you do I think it's every fourth or fifth year that's going on I believe now. When do you expect to have that ready and that you can announce sort of the results of that wood inventory? And can you give us already any kind of guidance or indication of what kind of harvesting level you see for this year and coming years at present?
Okay. We do this survey every 8 to 10 years. And -- but you're right. We will do a -- we will start up this summer. And typically, it goes for two summers in a row, and then you need some time for analyzing things like that. So and up until we know anything else, we will remain on the level where we are just now, which is 4.3 million cubic meter counted under bark. So that is more or less the sustainable level that we have just now.
So 4.3 million cubic meters. I think you've been above that level last year and this year.
Yes, but if some -- it can be, of course, volatile to some extent. If you have a year with big rainfalls and things like that, then you have to take care of the wood. And that you have to adapt for the year after or the coming years. And so it's not exactly every year. But we try to keep over a period the average, so to say. So but of course, you can go up and down, if that suits you.
I think this year, Oskar, we are very close to the average. Last year, we were above the average. The year before, we were below. So...
But the average I would say is 4.3 million.
Is still 4.3 million, yes, yes.
Martin?
Okay. We're going to take our next question. And your next question comes from the line of Mr. Martin.
Yes. You gave some good questions on -- or us some good hints on prices for Q1. And I guess, if you sum up those, you get to like SEK150 million negative effect. But then you also have the price increase on wood for the forest segment. You saw some of that in Q4. How much would you guess is applicable for the forest segment of a price increase?
Yes, we don't give forecasts, again. But there is some effects still to go from this time lag effect. So we've not fully reflected in the fourth quarter -- basically, the prices invoiced in the fourth quarter from the forest division don't fully reflect the -- where the prices ended up at the end of the fourth quarter. There's still an effect of that coming into the first quarter. So I think you will see an upward trend in the forest division into the first quarter.
Yes, and where are we wrong if we do the average wood price increase in Sweden times the sales numbers you have? That is probably overshooting, but what kind of percent should we be looking for?
I think you -- we were stable for quite a level. So if you look at the average price increase in our area -- it's important to make sure you get the right area -- then from before the increase to after the increase should be around the same impact. But we have a time lag effect. So we expect most of it to be in quarter 1. There might still be a little time lag, depending, into quarter 2, but yes, mostly into quarter 1. I don't know if that answers your question, but...
Maybe. Okay. Good.
We apply the same wood prices internally that we source from externally. So it's the same wood prices we're subject to and that the wood division invoices out that you see as the external wood prices. And it's important you get the right market level because there are different levels in different -- and Mid-Sweden and North Sweden have different levels then. So you need to make sure you have the right level. So yes, take the levels for Northern Sweden, for example. You shouldn't be too far away.
Okay. And then this kind of special effect that we have for Q1 compared to Q4, is maintenance gone and more on volumes, and that's it? And you have the pricing -- price drop, right?
Yes, there's nothing else we're guiding for in Q1. Of course, we're only on January. So there's still two months to go. But we have this IFRS16 impact, which you need to think about. But that shouldn't be any surprises there.
[Operator Instructions]. Okay. The next question comes from the line of Alexander Berglund.
Most of my questions have already been answered. But I just wanted to ask on -- if there's any impact on these harbor strikes we're hearing on the Swedish news, if that impacts any of the harbors that you are shipping from, and if there's some additional cost there.
Yes. So far, we've just been hit to a very small extent. We have about 50% of the workers in Sundsvall, for example. They are in the [indiscernible]. So they've had I think one or two small strikes for -- to us. And then the employers replayed with a lookout. And -- but up until now, we've been able to manage this in a good way I would say. We have the same situation in Holmsund and also up in [indiscernible], where we're not running the operations, but still, we have a lot of goods that should be carried out from [indiscernible]. So far, we managed quite well.
Operator?
[Operator Instructions]. Okay. Your next question comes from the line of [ Marco Harviden ].
Yes. I had a couple of questions just on publication paper prices. You announced an increase of EUR40 per ton from January 1st. Did you get all of that increase, and is that applicable to all of your volume for H1?
We didn't get all of that. We did get approximately EUR25 per ton, slightly more in uncoated and slightly less in coated grades.
And that's now valid for H1 or...
I think we've done 65% of the volume or something like that. But I guess that will be valid for H1.
Okay. Good. And then another question on depreciation in pulp, was now SEK121 million in Q4. Is that the sort of level we should look at going forward, or how should we think?
Yes, that's -- so Q4, we had the depreciation is then up to the level post-project that we expect, yes.
[Operator Instructions].
Okay. If there aren't any more questions, thank you for the interest you have demonstrated in our year 2018. We're working with the next year now and hope to hear and see you again on the 29th of April, when we present the first quarter. Thank you.