Edited Transcript of HOLMb.ST earnings conference call or presentation 29-Apr-20 12:30pm GMT

Yes. It's a beautiful ordinary fraction at Q1, SEK 322 million at operating profit. though Henrik mentioned, prices are lower. And though you saw from the graph, it's around 5% lower selling prices than a year ago. What we howl on this fraction is that we eat an consequence of the new accounting principle though forest, which eat positively contributed ought the arise by SEK 40 million. And that carry out explain the amplify at salary compared ought the foregoing quarter.

Back ought you, Henrik.

--------------------------------------------------------------------------------

Henrik Sjölund, Holmen AB (publ) - President, CEO & Director [3]

--------------------------------------------------------------------------------

Thank you. Then moving above ought Paperboard. if we emerge can the market, we eat a status where really demand is no bad. if you emerge can the just development at Europe, the demand is around above the same even though final year, really a tiny slice better, deliveries from European suppliers ought European customers. And also while it comes ought prices, prices are relatively stable. while it comes ought demand, however, we howl on fairly big differences between different guest segments. if you are at food, drinks, obviously, and pharma, demand is really good. if you are at graphics, it's a slice less good.

Our make rule and our make status is that we had really good deliveries at the first quarter, 147,000 tonnes is really above a record even while it comes ought deliveries at 1 quarter. Also, our bid book is above a well even despite status with the coronavirus we have. And that is owing ought good demand from some segments and a slice less good demand from other segments.

If we emerge then can our financials, are we favourable with what we eat performed, no only the deliveries?

--------------------------------------------------------------------------------

Anders Jernhall, Holmen AB (publ) - Executive VP & CFO [4]

--------------------------------------------------------------------------------

Financially, maybe that's no the sumit rule this quarter, SEK 163 million is improve than a year ago. besides during you to memorize that we had product issues a year ago that dampened the result. This quarter, though Henrik mentioned, saw same healthy deliveries, besides during we also had somewhat higher costs connected ought possess the product running can the tall level, and also, solve some logistic issues. hence the price aspect was a slice above the tall aspect this quarter. while comparing ought Q4, you nation memorize that we had a bonus though renewable nation product that positively impacted the Q4 result.

Looking ahead at Q4, we will eat our annual maintenance cease can Iggesund Bruk, which is expected ought accept SEK 120 million toll above the Q4 result.

--------------------------------------------------------------------------------

Henrik Sjölund, Holmen AB (publ) - President, CEO & Director [5]

--------------------------------------------------------------------------------

Thank you. A little words almost Paper. if you emerge can our Paper business, we were at -- I used to say, we were at a good schedule can the goal of final year ago the corona struck us. The overall market, at general, we know that demand is declining a bit. And the status we eat precise now with falling demand and also with societies really closing down, of course, then it has an shock above demand, which is -- it's no simple ought know exactly where it's going. It's really fairly impossible. There is some price pressure. And we eat -- sorry, there is some price stress at the market. while it comes ought the first quarter, actually, our make rule was no ill can all. We had a good product mix. We delivered a good result. And fairly favourable almost the road we were able ought flow the machines though we were more or less running full.

However, during the latter separate of the first fraction at March, we howl on that the bid book is shrinking. And we will adjust our product capacity ought the demand going deliver at the second quarter. though I said, it's no simple ought predict what's going ought happen. can the goal of the day, we are totally dependent above how markets, especially at Europe, are consuming, and if they are opening up or not.

Anders, financials at Paper.

--------------------------------------------------------------------------------

Anders Jernhall, Holmen AB (publ) - Executive VP & CFO [6]

--------------------------------------------------------------------------------

Yes, the operating entertain was SEK 83 million at Q1, which is can fairly a good even despite prices being lower both compared ought Q4 and Q1 final year. We had good deliveries, though Henrik said, fairly a good mix. And if you compare ought first fraction final year, we really carry out appreciate some lower lumber prices at the Paper division. It has had same limited shock above Paperboard, the lower lumber prices. besides during at Paper, we acknowledge a certain impact. Comparing fraction ought fraction 4, the good product blend and tall delivery volumes were able ought offset, ought a same big extent, the price refuse that we saw at Q1.

Looking ahead, we eat -- which is no the usual, we eat a larger maintenance cease can the Braviken paper mill, where the factory will completely standstill though some foremost maintenance actions, and that is expected ought shock the entertain by SEK 50 million at Q2.

--------------------------------------------------------------------------------

Henrik Sjölund, Holmen AB (publ) - President, CEO & Director [7]

--------------------------------------------------------------------------------

Thanks. lumber products. I used to say the same though at Paper, actually, while it comes ought lumber products. We were at a much improve schedule coming into the year than we were during most of 2019. And we also saw that prices were coming up a bit. And then the corona came. And where we are precise now is, of course, a lot of uncertainty. There is a mixed or a rip cinema while it comes ought the different markets. though example, at Sweden, we howl on that demand though lumber products, especially do-it-yourself, is doing fairly well. Some other segments, furniture, et cetera, is no doing that well. And if we further ought other markets, though England is significant though us, it's totally depending above how they are going ought medication society, such if nation are going ought exist allowed ought eat at a different road than what we eat precise now. You eat some other markets though heart East, near Africa, it's okay. U.S. most perhaps slowing down. We know the status at U.S., which is no easy. hence same difficult ought predict exactly what's going ought happen while it comes ought the lumber products. We are producing can a fairly ordinary level. We did that during the first quarter, besides during we will adjust our product during the summer period, during our make holiday epoch and accept down the product a bit.

It's no only demand that's difficult ought predict, it's also really supply, though precise now, there is fairly a lot of sawmills no running 100%. We're coming into a epoch where we had ought accept brood of the spruce howl beetles down at Continental Europe. We will carry out that at the south of Sweden though well, besides during it eat much less shock than the big latent spruce howl beetle issue that needs ought exist taken brood of down there. final year, you nation memorize that, that led ought a lot of lumber available and a lot of sawmills running complete and discover a lot of lumber products, which had a negative consequence above the prices at that year.

So, hence far, fairly okay though us, besides during same difficult ought predict. Anders, at condition of money?

--------------------------------------------------------------------------------

Anders Jernhall, Holmen AB (publ) - Executive VP & CFO [8]

--------------------------------------------------------------------------------

Yes. no much money left can the goal of the quarter, SEK 4 million at operating profit. It's fairly a significant drop compared ought a year ago, and that's completely owing ought lower selling prices. Compared ought Q4, the entertain bounced uphold slightly. Prices moved more or less sideways between the quarters, besides during we had higher deliveries and somewhat lower lumber costs at this quarter.

During the quarter, we also eat finalized the investment at expansion though the Braviken sawmill, which will enable us ought ramp up the product by 150,000 cubic meters. besides during that's, of course, above hold, the ramp-up, until just conditions improve. at the meantime, we will exist able ought accept down costs slightly based above this investment.

--------------------------------------------------------------------------------

Henrik Sjölund, Holmen AB (publ) - President, CEO & Director [9]

--------------------------------------------------------------------------------

Thank you. And finally, while it comes ought our affair areas, a little words almost renewable energy. I count everybody is aware of the climate situation. We've had a gentle winter, we had a lot of rain. And -- which meant that we produced a lot, besides during prices were fairly low. Still, we came out with SEK 95 million, which is really a fairly good arise while it comes ought our nation segment given the climate situation.

We'd also though ought highlight that our investment at the wind farm, where we eat said that we will invest SEK 1.3 billion, is ongoing, and still, the goal is ought eat this commissioned by the goal of next year.

Then coming uphold ought -- at the beginning, where I said, we eat a same healthy econmic position. Anders, just a little more -- maybe more at detail while it comes ought our debt and our maturity while it comes ought our confidence facilities.

--------------------------------------------------------------------------------

Anders Jernhall, Holmen AB (publ) - Executive VP & CFO [10]

--------------------------------------------------------------------------------

Yes. Of course, while entering into a difficult situation, one bargain you eat ought work with is ought assure that you eat a same firm econmic standing. We carry out eat it. though Henrik mentioned, we eat a good money flow. The gearing is same low. if you compare ought our asset base, it's below 10% compared ought our surplus sheet, which is dominated by forest. And if you criterion it against money flow, we eat a same low debt level.

Nevertheless, we eat chosen ought defer our maturity structure during the first little months of this year can fairly good terms. We were fairly early out at extending the duration. We eat essentially moved entire the short-term maturities and replaced them with long-term bonds. And we eat also extended the tenor of our committed appliance and added new committed facilities. hence now we eat SEK 5 billion at unused long-term confidence facilities, SEK 4 billion is 5-year tenor and the SEK 1 billion is a 3-year tenor. hence we are at a same healthy liquidity position.

--------------------------------------------------------------------------------

Henrik Sjölund, Holmen AB (publ) - President, CEO & Director [11]

--------------------------------------------------------------------------------

True, which is a good bargain ought eat at these days. Finally, a little priorities going forward, and especially while it comes ought how carry out we lead really the COVID-19 effects, et cetera. We have, though I said before, we eat no issue ought adjust our make harvesting levels, if needed, ought abandon a little trees ought convey a slice longer. They only obtain more valuable at next year. That's no a big issue though us. while it comes ought Paperboard, maybe I didn't mention, besides during we -- you eat understood that product -- keeping our product going, that to no exist a issue though we feel today. Our bid books are healthy, besides during we carry out eat -- I wouldn't say we are struggling, besides during it's a challenge sometimes ought obtain logistics precise and sometimes it's also a tiny slice more dear at bid ought invent certain that we really can deliver what we eat promised ought our customers.

In Paper, though I said, same difficult ought predict exactly where demand is going. We eat a well stock level, and we will prioritize ought eat that level, possess it around where it is, which mode we will adjust capacity going forward.

And while it comes ought lumber products, it's a rip picture, though I said, with different situations at different countries. What we can carry out is ought redistribute a slice of the volumes, no also much, besides during some of it can least ought exist able ought flow a slice more complete than our competitors, hopefully.

And that concludes our presentation. Thank you same much though listening, and we are favourable ought accept above any questions you nation have.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) Our first issue is from Christian Kopfer from Nordea.

--------------------------------------------------------------------------------

Christian Kopfer, Nordea Markets, inquiry segment - Senior Analyst of Metals, Mining & grease and Sector Coordinator [2]

--------------------------------------------------------------------------------

It's Christian Kopfer though Nordea. A little questions from my side. Firstly, above Paperboard, I think, Anders, you said that you had a slice higher price than expected, perhaps. Is it possible ought quantify how much costs were ought -- higher though you?

--------------------------------------------------------------------------------

Henrik Sjölund, Holmen AB (publ) - President, CEO & Director [3]

--------------------------------------------------------------------------------

No, we don't quantify it, just that it was a slice higher than ordinary ought assure complete product and assure that our customers got the deliveries that we had promised them.

--------------------------------------------------------------------------------

Anders Jernhall, Holmen AB (publ) - Executive VP & CFO [4]

--------------------------------------------------------------------------------

You saw that I mentioned, during the priorities, also logistics, which is something we eat spent a slice more on.

--------------------------------------------------------------------------------

Christian Kopfer, Nordea Markets, inquiry segment - Senior Analyst of Metals, Mining & grease and Sector Coordinator [5]

--------------------------------------------------------------------------------

Okay. besides during though conceive this road instead, carry out you desire price ought modify down again?

--------------------------------------------------------------------------------

Henrik Sjölund, Holmen AB (publ) - President, CEO & Director [6]

--------------------------------------------------------------------------------

Sometime, besides during it's classify of -- the first priority is ought possess product running and ought exist able ought do our guest commitments. And if that costs extra, we will accept those additional costs during Q2.

--------------------------------------------------------------------------------

Christian Kopfer, Nordea Markets, inquiry segment - Senior Analyst of Metals, Mining & grease and Sector Coordinator [7]

--------------------------------------------------------------------------------

Okay. above the forest side, though example, above SCA, they had a fairly big revision above the standing volumes. Are you having a though revision above your standing volumes?

--------------------------------------------------------------------------------

Henrik Sjölund, Holmen AB (publ) - President, CEO & Director [8]

--------------------------------------------------------------------------------

We eat a -- we are ought stock taking our forest and doing -- we are at the heart of that exercise. And we don't eat anything that points into a bid that we -- that there will exist any modify owing ought how much lumber we eat at our forests or that there is a debate ought invent a significant modify of our harvesting plan. besides during we're at the heart of those calculations, and we'll modify uphold ought you while they are finalized.

--------------------------------------------------------------------------------

Anders Jernhall, Holmen AB (publ) - Executive VP & CFO [9]

--------------------------------------------------------------------------------

It's a immense surpass bit we eat ought further through.

--------------------------------------------------------------------------------

Christian Kopfer, Nordea Markets, inquiry segment - Senior Analyst of Metals, Mining & grease and Sector Coordinator [10]

--------------------------------------------------------------------------------

Okay. carry out you desire ought eat that arise ago the second fraction results?

--------------------------------------------------------------------------------

Henrik Sjölund, Holmen AB (publ) - President, CEO & Director [11]

--------------------------------------------------------------------------------

No, it will exist during the second half of this year. besides during -- and you nation -- can least from -- our plans are same long-term at nature. And that it's no -- we don't desire any significant modify ought the plans themselves.

--------------------------------------------------------------------------------

Christian Kopfer, Nordea Markets, inquiry segment - Senior Analyst of Metals, Mining & grease and Sector Coordinator [12]

--------------------------------------------------------------------------------

Right. above the Paper side, did you howl on good price effects at Q1? Or carry out you desire farther price declines realized at Q2?

--------------------------------------------------------------------------------

Henrik Sjölund, Holmen AB (publ) - President, CEO & Director [13]

--------------------------------------------------------------------------------

No. It's really, really difficult ought tell. I count precise now, we, of course, carry out whatever we can at bid ought fill our bid books. though I said, we howl on that while markets are closing down, more or less, it has an effect. What it will intend though prices, we don't really know. precise now, prices eat been fairly stable.

--------------------------------------------------------------------------------

Anders Jernhall, Holmen AB (publ) - Executive VP & CFO [14]

--------------------------------------------------------------------------------

Yes, besides during of course, no entire contracts eat been renewed during Q1. hence from a -- it did no eat full, complete shock at Q1. No.

--------------------------------------------------------------------------------

Christian Kopfer, Nordea Markets, inquiry segment - Senior Analyst of M