Morning, ladies and gentlemen, and welcome to the conference call of Mayr-Melnhof Karton AG. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions following the management statement. Let me now turn the floor over to your host, Stephan Sweerts-Sporck. Please go ahead. Good morning and welcome on the part of the MM Group. It's a great pleasure to have you joining this Q&A conference call on our first quarter results, which we released just this morning. Besides the press release and our quarterly report, we have also published a CEO video statement on our website, mm.group. This call is now designed to give you an opportunity to ask direct questions regarding today's communication to our CEO Peter Oswald and our CFO Franz Hiesinger. Since this call addresses an international audience, we would kindly ask you to ask your questions in English during the following Q&A sessions. Before we open the floor for questions, Peter, may I ask you to start with a brief summary of our key messages? Thank you, Stephan. Welcome, everyone, to this presentation, and thanks for your request in MA. As this call is mainly about Q&A, I would like to be pretty short in my introduction, and I think in the documents and in the video statements, all important information has been provided. The real highlight is that our third half year and also the second quarter are up against last year, which is pretty rare in our industry given the markets we are in. The reason is that our self-help program has enabled us to achieve this. We call it Fit for Future. Fit for Future is about sustainable structural improvement, so excluding reflows from the market and one-off cost savings. Unlike many others, we are not benchmarking against inflation. Let's take the example of personnel costs. They have to go down in absolute numbers to be accounted for as saving and not just be lower than inflation. Whilst we do not like to put forecast numbers on these programs, this time we have given a very conservative number to help you in your analysis. We take extras of 2024, obviously excluding time as a basis, and want to reach more than EUR 150 million of EBITDA improvements by 2027, with an emphasis on more than. No run rates, but real 2027 numbers. We will regularly update you in hopes to revise this number upwards over time. Obviously, the real change of the number will be influenced by market fluctuations. As you can see in the report, the sale of TANN provided us with a one-time windfall of preliminary EUR 127 million. To make the analysis for you easier, we give you both on the group level as well as on the level of Food & Premium, the numbers of last year and this year, excluding TANN. We have divested a non-core business at record earnings, giving us more financial flexibility. Just to remind you, we financed a lot of our net debt in 2021 at seven to 18 years, fixed interest rates of around 2%. This keeps our financing costs at the low level and will do so for a long time. On the outlook, we are not counting on any market improvements. If they come, it would be great. We have to improve results in a continuing weak market. That's our baseline we work with. We have a pure product with market-leading positions, with a culture of operational excellence, and an excellent service offering, which our customers really appreciate. The management team feels confident about our future. Franz and I are happy to take your questions. Thank you. Ladies and gentlemen, if you would like to ask a question, please press nine and the star key on your telephone keypad. In case you wish to confer your question, press three and the star key. Please press nine and the star key now to state your question. The first question goes to Michael Marschallinger of Erste Group. Please go ahead. Yes, good morning. Thanks for taking my questions. I have two. Firstly, on the overcapacity issue in the Baden Packaging, we have also in the previous statement that persistently high. Could you give us a bit more color on which development? I think on the last call, you said you see 1 million tons in overcapacity in FPB. If you could give us some thought on this topic. Yeah. I think overcapacity is good news. It's that 1 million in Finland in FPB and 1 million in Spain WLT, which was announced in January, has really closed down in the meantime because you never know if sometimes things are announced and then they are not carried through, as we've seen with the mill in Italy. The good news is that they have gone out. Overall, I think the situation has marginally improved, but not significantly improved. As I've highlighted in my statement, in my video statement, the overcapacity is now somewhat less. Equally, we have the Portugal secondary effects of the Trump import uses. Those who are very exposed to the U.S. will most likely, that is our prediction, try to relocate some of their volumes to Europe. That's why we conclude overall that the market situation will stay as difficult as it is now for the time being until people, the managers, realize that they have to do something and take capacity out. From experience, I know that this thought process always takes an incredibly long time. Yes, thank you, Oswald. On the EUR 150 million cost savings program you talked about, you mentioned personnel costs used to go down in absolute numbers. For the future cost savings, are you expecting any major restructuring costs now in the second half of 2025 and 2026? First of all, just because you said EUR 150 million or more than EUR 150 million, sorry to be so detailed here. I guess it will be a bigger number, but let's wait and see. You only can report on savings and profit improvements if they are really done. We will have ongoing footprints at the stations. We've highlighted, for instance, that in the pharma sector in Southwestern Europe, you see a one-off item of the stumbled about EUR 5 million. There will be more to come. Overall, the principle is we will do whatever it takes to improve our profitability. For this year, I don't expect something big. For next year, yeah, everything is possible. Having said that, one could also highlight that our mills are in a very good shape. Therefore, I don't necessarily expect bigger changes, but we really have to see how markets develop. You said you want to bring absolute structural costs down. Are there any social plans then? Maybe a couple of things. Yeah, we shouldn't. I mean, personnel costs, for example, and they are, so there will be a small portion of everything. It's about procurement. It's about a lot of operational efficiencies, which we can drive. We can combine assets. There are a number of issues. It's not about a huge personnel reduction program, but some personnel reduction will be part of it. It was just an example because it's easier to say. I could also take an example that if in procurement, what will only count as savings is which is a saving on top of market development. If raw costs are 3% and we can reduce costs by 8%, then 5% would count as a saving. Okay. Thank you, Oswald. Right. The next question goes to Mr. Cole Hathorn of Jefferies. Please go ahead. Thank you for taking my question. A few from my side. I'd just like to understand a little bit better the performance of the mills division. You know, the U.S. profitability is still low, but we saw waste paper prices rise quite a lot through the second quarter. I'm wondering what Mayr-Melnhof did to kind of protect profitability despite the raw material increases. Just trying to understand how you maintain profit despite your raw material going higher. Sticking with raw materials, I'd just like your views on what you're seeing in the Polish wood markets and cost dynamics. Also, anything you can talk about on your Finnish wood costs, considering we are seeing some form of stabilization of wood costs up in the Nordics. Thank you. Yeah, thank you, Cole. On the first, as you correctly mentioned, price increases in paper for recycling. We started the year with a price increase. Unfortunately, we were the only one in our industry, and therefore, we have corrected or had to correct it, and have taken our learnings from this. At the moment now, we see a more positive development, as you know. The first half of the year was really, we only could keep our margins or try to improve the margins because of cost reductions, which we did with our Fit for Future project. It had already a significant effect on the first half of the year, but only limited to very few plants. On the question of wood costs in Poland, they are pretty stable. In Finland, they have been rising significantly, but for the grades we need now, we see also an easing of the wood costs. It's not an expense which will really drive our profits. It's very marginal. Maybe following up on order books and views in, let's start with the food side of your packaging business. From an expert, any kind of changes in order books or thoughts on customer orders? The reason I ask is, you know, we've seen a lot of the consumer staples companies that are trying to manage their inventory levels. There's been variations in what they've been talking about on underlying demand and consumer strength. I'm just wondering if there's been any stabilization or improvement in your order books or any thoughts you can provide there on the outlook. Thank you. Yeah. With regards to food and also some other trades like care, we see a really flexible market. This is just noise in the data, but no real trends. We haven't seen any slowdown, but equally, we don't see a pickup. In beauty, which is a small segment for us, we've seen definitely a decline. Even weak demand in China, etc., from the big beauty companies. In pharma, we had a very weak second half year last year. There we have seen that things have improved, but it's not a boom. Definitely, the market has, we would consider, it's slightly growing again after there is this decline in last year, especially the second half. Does this answer your question? Yes, thank you. Maybe just one more, which is a difficult question to answer, but I'd love to hear your thoughts. I mean, you've been in the industry for a long period of time, and you've seen multiple cycles. When I look at the various players out there, debt financing is becoming more challenging. The market is oversupplied in a lot of the paperboard grades. What do you think is a trigger for exits? What was the turning point where you saw competitors previously in the past start to close capacity? We do have some, even the listed bonds of some of your competitors are trading at around EUR 0.70 to the euro. You've got some smaller players out there that are family-owned. It's more difficult to understand their financial structure. What do you think will be the turning point to actually see capacity closures in the industry? I'd just love any thoughts you have there. Thank you. Yeah. I think mainly they have to do with change because management. Unfortunately, we have too many managers in our industry who keep to be enthusiastic and optimistic beyond any logic and factual analysis. Most of the time, it's standard when these managers are changed, but the new manager takes the right decision. That's one trigger. Another trigger is, and we have seen with some competitors some changes and I think that gives a new perspective. The other thing is obviously CapEx. If you have to spend money on an asset where you make cash losses, you think twice about it. Time will help. I expect, I mean, logic will dictate that a lot happens the next month. In capacity closures, from experience, I think it will be somewhere mid-next year. People just run out of money in a true sense or see that they can't fill their machines. I mean, there are mills now in our industry which run 60%, 70% of their time. If you do this and you have low prices, when you run it, you are in a scenario which cannot last forever. I think some players, especially those who have created a new capacity or who are exposed to the U.S., will sooner or later learn the consequence and give up the optimism that they can win a lot of market share or whatever. Maybe if I could link that to Mayr-Melnhof business. You talked about CapEx being below EUR 250 million this year, but you have made quite a few investments over the years to improve your competitiveness. Would you mind just giving some examples of some of the older investments that you've made and maybe framing it, you know, an investment to reduce energy consumption in one of your mills? How much does it save versus someone else that hasn't done it? I'm just wondering if you're struggling to fill your machines, are you necessarily investing in the maintenance of your mill, or are you becoming less competitive as the years go past if you don't make those investments? How do you stack up versus the competitors? Thank you. Yeah. I mean, it's a different story for every investment. There isn't an underlying theme. Just to give you one example, in COVID LYNA, because of our investments, we had the worst product in the market with its flexible parameters. Now we have the best product in the market. We have reduced our energy consumption by more than 10%. We have technical parameters that are better. Energy consumption is lower because its capacity has increased. Until we couldn't really benefit in the market because we see time and again that these rebuilds just take time until they are fully utilized. There were delays in the CapEx. The machines didn't immediately, people had to relearn it because they are much more sophisticated machines. All these benefits flow through. Basically, we are there now in a situation where customers really want to buy from us. That's just one example. We have also other projects underway, for instance, in Petsense to make the step up in or steps down in our energy consumption where we will save for the whole mill by the end of 2026, roughly 20% of our energy. We also have things still in the pipeline. Perfect. Thank you. Thank you. The next question goes to Markus Remis of ODDO BHF. Please go ahead. Thank you for taking the questions. I would like to follow up on this more than EUR 150 million of cost savings. Can you maybe shed some light on the expected phasing in? Will that be very much back-end loaded, or should we see a meaningful effect also in 2023 fixed and related to this? I mean, you mentioned some footprint adjustment. Okay, so I take this as fast closures. Anything you can tell us already in terms of one-off effects that we should take into the second half? Yeah. Yeah. To start with your last comment, you shouldn't expect too much extraordinary costs or one-off costs for the second half of this year. Take a number similar to the first half here, and you will pretty much be on, yeah, to the point. For next year, obviously, that's difficult to predict because it does depend on market development. On the phasing in, we had the first benefits already in 2024, something above EUR 20 million. We have a quite substantial number already in the first half year. In the second half year, we expect this number to go up. It's gradually coming in. The positive effects are obviously now limited to two businesses where we are in an advanced state of the process and are really harvesting the benefits in with already kicked off the project on a group-by-basis in February. Obviously, it takes time until these things work out. They show every half year, a new chunk comes in, and we will see where we will end then for 2027 overall, but they have really more visibilities. All right. Okay. Just to kind of have a kind of an earnings bridge, how much of this EUR 150 million you would still see as incremental after 2025? This is EUR 20 million already. 2024 is a substantial part in the first half, more in the second half. How much incremental is remaining for the next two years then? Yeah, okay. On this year, we have a pretty good outlook, and the number will be the highest two-digit number for this year. That doesn't mean that there is nothing left for the next year, just that our approaches are not so concrete that we have enough data again. Therefore, in the update, which we will provide in March, we will see what we really have achieved this year, which we pretty much know, but also what the outlook for 2026 is and potentially 2027. It's too early. We are in a concept phase, so people have good ideas about how we can save things, but that is easier to do an analysis and obviously an implementation and implementation bump and take after a year. Okay. I'll pause a second. I mean, you did something here about sustainable profit improvement in the output statement, excluding market fluctuations. The interpretation that it clearly depends on kind of the general trading conditions, how much you will actually be able to retain is the right one, correct? Yeah. In a bridge, we have with foods in 2027 against 2024, we would say, okay, our prices or various products have increased by so much. Markets, major import costs, wood and paper for recycling have increased or decreased so much, or energy. The rest is where our measures, where we could achieve the procurement savings beyond changes in the market prices, where we, whatever, have reduced fixed costs, your compliance plan, whatever it is. Our results for 2027, we don't know what it will be because we don't know yet the changes in the market, but it's just the over and above what the changes in the market is. Hopefully, if, let's call it, my prediction is right that the market will return in the middle of 2026, this will then, if it's in a positive way, be on top of it. Okay. The market trend meaning for board and paper? Correct. You are mainly for board and paper, but also in packaging. If you analyze also our reports of our competition, you see that it's also a very tough market at the moment. At a certain point in time, people become more reasonable again. Okay. If that then comes to the U.S. aspect that you mentioned, is the import duty at 15%? That is another. Yeah. I mean, to make predictions on the U.S. is impossible, not even for half an hour. If this is the best we calculate, we have to work with it. We are with very little exposure of exports to the U.S., but of course, we had plans to grow these exports. Given the current circumstances, that doesn't look very likely because 15% is a figure which is more than our profit margin. Given the weak dollar, this is unlikely. The problem isn't so much the problem for us, but as I mentioned with the secondary effect, some of our competitors in the virgin parts and board have a very strong exposure to the U.S. We will see if they are realistic and adapt their capacity or whether they try for some time to reallocate this to Europe and then learn when it doesn't work to take any harm what they should have done in the first place without saving a lot of money. How much of your team production flowed into the U.S. or did flow before the tariffs were set? I'm now not sure because there are also different statistics. Unfortunately, it's a bit of an unclear figure for the reason that it's combined with other grades like liquid packaging board. The numbers in the export statistics are sometimes misleading. Let's say there are players who tend to 20% or 25% of their production to the U.S. Okay. I'm specifically now referring to virgin cartonboard. In recycled cartonboard, this is a very small topic. There are hardly any exports, and therefore, the topic is not really relevant. I understand. That's again our advantage of being somewhat diversified. We have our packaging business, which is not affected by that at all. We have our recycled cartonboard business, which is not affected by this effect as well or very little. With virgin cartonboard, where the possible secondary effects can be significant for some time. Okay. Thank you. My final question relates to the factoring. If you could remind us of the figure or the level at the end of the first half. If you could elaborate on the outlook until year end, if you end up last year, it was something like close to EUR 380 million. Is that kind of also the target level for year end? I hand over here to my colleague, Franz. We are about EUR 30 million below this year. EUR 30 million below the EUR 380 million. Okay. Yes, we are around EUR 350. With a scope of an increase to that level by year end? It was likely, but not too significant. Okay. Thank you very much. There's one final question for you. Just to put this EUR 150 million or more than EUR 150 million into perspective, can you indicate how much of the addressable cost space that is? Because we've got currently quite a bit there of the variable costs. How much of the addressable cost 2024 does this represent? Yeah, it's about 5%. GBP 3 billion or more than GBP 150, but GBP 150 is 5%. I would do a benchmarking against our current operating profits, and I think it's quite significant, especially if we can upgrade the number later on. Okay. All right. Thank you very much. Thank you. You're welcome. Ladies and gentlemen, we didn't receive any further questions. In the meantime, we will leave the line open for a couple of moments. If you have another question, please press 9 and the star key on your telephone keypad. We have a follow-up question. It goes to Mr. Hathorn, the graph. Thanks for taking my call out. I just wanted to ask, do you have any views on the direction of travel for the waste paper markets, particularly OTC for your business? Are we seeing a pullback in OTC prices? I'm just wondering if you're starting to see them stabilize or any direction of travel or thoughts you can provide into the back half of the year? Thank you, Cole, for asking this, but actually, I had no view. I think you might have been more educated here than I have listening to more market participants. I have no idea if we go up tomorrow or go down. It's like prediction on the U.S. dollar. Our experts say it's on the way down, but also our experts have a good view over the next four to six weeks and not beyond this. I have no particular view on that. I completely understand. Thank you. Welcome. Okay. We didn't receive any further questions, so let me hand back over to your host. Yeah. I would like to take this opportunity to say a great thanks to all our employees because a program like Fit for Future officially causes also a lot of concern. I can see that to a very high extent, people are very enthusiastic contributing. We've seen in the two mills where we are far advanced that there is a complete cultural mind shift, that people now consistently think about how to do things in a new, more efficient way. This is already spreading now throughout the organization. This is absolutely great because a lot of companies do such projects and the outcomes are very, very different. It can destroy a lot of culture and proceed to frustration, and it can invigorate the teams and bring them to new levels. That's what we see. Therefore, with the management team, we also have a high trust in this project. We also think that we're very well placed for the future. The next 12 months, I think, will still be very challenging until some management concepts fail and are changed. With this, thank you for your interest and stay tuned. Thank you, Peter, for your final words. Thank you all for your participation, questions, and the interest in our company. Our Q3 results will be released on November. We wish you now a great day and stay super.