Good morning, ladies and gentlemen, and welcome to the annual results 2025 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 presentation. Let me now turn the floor over to your host, Stephan Sweerts-Sporck. Good morning and welcome on the part of MM Group. I'm Stephan Sweerts-Sporck, heading Investor Relations and Corporate Communication here. It's a great pleasure to have you joining this Q&A conference call on our 25 annual results, which we released this morning. Besides the press release, a video statement from our management board has been published on our website, mm.group. In this call, we want now to provide you with the possibility to ask questions on today's communication to our CEO, Peter Oswald, and CFO, Franz Hiesinger, here with me. Since this call addresses an international audience, we would very much appreciate your questions to be asked in English in the following Q&A session. Before we go for that, Peter, may I ask you to start with a short summary of our key messages? Yeah. Thank you, Stephan. Welcome, everyone, and thank you for your interest in MM Group. I will be fairly brief in my summary to have enough time then for your questions. Despite our divestiture of Tann, we could marginally increase our adjusted operating profit in 2025. If we look what I think is more meaningful at our numbers on a like for like basis, so excluding Tann, and this is on page four of our press release, you can see that we increased our adjusted operating profit by fifteen percent in the last year. This is quite an achievement in this challenging market environment. The key driver was our Fit for Future program, which added around EUR 70 million to our last year result. That's really meaningful. The good news is that we feel confident now to increase our forecast for the effect of Fit for Future by 2027 from what we originally said, more than EUR 150 million to now more than EUR 250 million. The project is well progressing on all fronts, be it operations, SG&A, top line, and procurement, and also supply chain. Now, if we look specifically at our three divisions, Food and Premium Packaging had, I could almost say, like always, a very solid performance. Given our Fit for Future program, I personally and we all feel very positive about its future development. Now, if we look to our pharma business, adjusted operating profit increased by 25%, so by a quarter. The good news is that there is a lot of upside potential going forward. Given the long sales cycle of 2-4 years, one needs a lot of patience in this business until actions show results, but we will get there. We are very strongly positioned in the GLP-1 weight reduction segment, and we could sign here and also in other areas, some long-term contracts, and that will support our growth in this segment going forward over the next years. Now, coming to board and paper, we managed to increase our results and finally show a green zero or Germanic black zero. Everyone following our industry will probably share my view that this was quite an outstanding achievement. Again, Fit for Future gives us the confidence that despite the difficult market environment, and I will come to this, will be positive. Now, probably you are most interested in our outlook, so I won't repeat what we already distributed. Definitely increased energy prices, mainly gas, but also diesel, et cetera, for transport, will negatively impact Q1 and Q2 results. It's then anyone's guess what the impact will be on half year two, depending obviously how long and how severe the war will be and the closure of the Strait of Hormuz. The positive thing or what I hope is positive is that this cost shock may lead some players to rethink whether running mills at high losses or even negative EBITDA makes long-term any sense. At the end, who knows? We are well-booked at this point in time as our customers appreciate our superior products and services. Despite all the headwinds, and they do exist, and the overcapacities do exist, both on the packaging side and also mainly in the Board & Paper area. Despite all that, we do remain confident because our markets continue to offer attractive long-term potential. The underlying trends are the right ones. As a strong team, we are committed to doing whatever it takes to advance the profitability of MM for the years to come. With this, I would like to finish and hand over now for Q&A, and we're looking with interest to your questions. Dear ladies and gentlemen, thank you very much. The Q&A session is now open. Please press nine and the star key to ask a question and to enter the queue. The combination is nine star. If you wish to cancel your question again, if you find it has been answered already, please press three and then the star key. But for now, please press nine star. The questions are already incoming. The first question is from Michael Marschallinger, Erste Group. Please, Mr. Marschallinger, over to you. Yes, good morning. Thanks for taking my questions. I have three and would do them one by one. Firstly on your Fit for Future program. You said you see an additional or more than EUR 100 million versus initial expectations. Could you give us a bit more color where you see these additional savings come from? Walk us through here and what are your expectations in terms of costs in 2025? You booked now EUR 29 million restructuring costs. What would you expect over the next two years in this part? I'm not 100% sure I got it right. Our effect on an adjusted operating profit basis was about EUR 70 million, and we booked quite substantial restructuring costs. Going forward, we think that if we save more than EUR 250 million, 2027 compared to 2025 means obviously that we've to deliver another EUR 180 million to get there. I believe that the restructuring costs per se will be, let's say, roughly at the same level in this year, 2026. Sorry, I didn't understand. Could you please repeat it? The estimate is dependent on our restructuring costs. I understood your question was what the restructuring costs for the FFF program will be. Yes. This will be this year about at the same level than last year. Same. Okay. And also for 2027? For 2026. For 2027, it's a bit too early to tell. Okay. Okay. I would expect or I would hope it's less, but there could be individual bigger restructurings which we can't foresee at this point in time. Mm-hmm. Okay. Understood. Coming back to the market conditions, you acknowledged also in the press release overcapacity still persists. Could you here provide a bit of color on what you saw in the last two quarters since the last call? What are your expectations here now in 2026 also with new capacities from your Nordic competitors coming online? Would you expect this situation to intensify over 2026? If you could give some comments here, please. One major addition in Finland came on stream and is now fully already in the market, so they started up in spring. That obviously creates a lot of pressure for all participants because no one wants to lose any volume. I mean, we know from various investigations that a number of players are EBITDA negative. Of those who are published, you can even look at the numbers. Let's say the hope is that the one or the other just takes the consequence finally, because now we know that this new capacity is here and it will obviously stay. Now someone has to or some capacity, so to say, have to be closed. That's obviously always a difficult decision to make. Finally, if you run your mill at a negative EBITDA, your free cash flow loss is so high that at certain point in time, you have to do it. We have to wait now until this happens. Yeah. It's very clear. Lastly, on the energy cost side. Now, given we see now this Middle East conflict and another wave of inflation is expected, how would you expect to pass on this additional cost in the current environment? Yeah. That will be different for different grades. In some grades, we would be able to pass it on. In some grades where we have the overcapacities and where our judgment is that competition is only driven by volume and not by profits. There probably we have to take the fight. Could you also make a comment on how you are hedged on the energy side for 2026? Yeah. We are hedged between one-third and half of the volume. 1/3 and 1/2. Okay. Thank you very much. Thank you. Thank you very much also from my side. The next question is from Markus Remis, Oddo BHF. Please, the floor is yours. Hey, gents. A few questions from my side. Firstly, coming back to the Fit for Future. First question, between Q3, the EUR 150 million and now the EUR 250 million, can you elaborate where this incremental savings potential was found? Also, I'd be interested to get the sense of the timing of the remaining EUR 180 million. Anything you can share regarding the breakdown 2026, 2027 would be very helpful. Yeah. Of course. I think we made interim in the third quarter already the comment that it will be significantly more than the EUR 150. Yeah. It's a gradual development. You see the way this approach, program works is that a lot of ideas are generated and then they are worked out, and obviously some turn out to be non-feasible. Some cases you find even more potential than what you thought. It's always very difficult to evaluate this pipeline, and definitely we want it to be on the conservative side. As the project progresses, we see that, you know, that many more projects are worked out in greater detail. And obviously we've implemented now already a number of projects well above EUR 100 million, which had this positive effect last year. The timing is a bit difficult always to evaluate, but I would roughly say that the balance will be equally split. EUR 180 million plus between this year and next year. Yeah. Thank you. Again, that's a very rough estimate. Yeah, sure. Because sometimes you have delays for one reason or another. You have setbacks. Customer doesn't sign the contract as quickly as you want. In procurement, your supplier, you have to wait until the old supply period runs out and the new term starts. Okay. Because you're putting the savings kind of conditional, of course, to market conditions, can you give us an idea of how much of the EUR 70 million you were able to actually retain in the P&L in 2025? No. These EUR 70 million so are retained. They are there. Okay. Let's take an example. If a raw material price index decreases by 5% and we can achieve a reduction of 12%, then the 5% is what we don't book into FFF. 7% we take as a credit because we say this is our own achievement. Sometimes that's obviously equation is obviously a judgment call. The important thing is that we have very strict rules here in order to not over-report in any way. The EUR 70 million, you could say if we hadn't started this project, our result would be, I would say, more in line with the industry and would be severely EUR 70 million lower on an adjusted operating profit. Okay. Obviously- Okay. The operating profit effect was less because you have to deduct then the restructuring costs, which are shown in our attachments. Sure. Would you say that kind of a walk down, 2024 EBITDA of EUR 420 million plus EUR 250 million savings less EUR 50 million then equals EUR 620 million EBITDA by 2027? That this is then what you are suggesting. I know that's the right way to calculate it, plus minus changes in the market. For instance, let's say energy costs are sustainably EUR 45-50 million higher. For example, that would come off. Or if our prices are in all cartonboard sorts way lower than they were last year. This needs to be taken off. We can't predict. Sure. It's mainly about our selling price and about the procurement of our most important raw materials that comes on top. Okay. Less cost inflation, and less pricing concessions. Yes. Yeah. Okay. A specific cost inflation. Our savings are different to how many others do it on a nominal basis. We are not saying costs would have gone up by 3% and we have avoided any costs that would not count. A reduction needs really to be in nominal terms disregarding the inflation. If we reduce prices by 5% and have inflation of 3%, only 5% nominal decrease counts and not 8% against an inflated price. Okay. Thank you. Coming to Board & Paper, I think you're very clear what kind of market repair would look like. Competition closing capacities. Are you also considering capacity reductions? I mean, when I look at the Board & Paper development of the segment, I mean, it's I guess it's fair to assume that not all of your plants are really breakeven or positive territory now with more pressure coming, presumably from the energy side, and who knows how long that will stay. Is that something you have in the drawer, so to say? Is it not short-term, maybe I think it. Mid-term It should be a good practice among management in general to have for all worst cases some projects. Overall, our mills are very competitive. We know, for instance, I can't give any names. We know, for instance, with one mill, which is EBITDA breakeven, but competition is minus 10% EBITDA. To close our mill, which is much more efficient and has better energy supply, et cetera, would just not make sense. We don't understand why this mill still exists from the competition. Equally, we're sure nobody can work against the market. It's as Warren Buffett said, "If tide goes out, you can see who's swimming naked." I think some people are swimming naked, and they will be found out. Okay. One more question, please, before I get back into the line. Related to the energy bill, can you kind of give the granularity, how much of energy costs you had in 2025 in absolute terms? I hand over to Franz Hiesinger, yeah. It's below EUR 270 million. Okay. Thank you very much. Thanks a lot. We are moving on to the next questions. The next in line is Cole Hathorn from Jefferies. Please, over to you. Good morning. Thanks for taking my question. Peter, I'd just like to follow up on how you think the market might play out with the disruptions that we've got ongoing in the Middle East. I mean, the last time we saw disruptions like this, we saw supply chains extend, procurement managers wanting safety stock. I'm just wondering, it might be too early, but have you seen any kind of pickup in orders, or have you seen any kind of change in how your customers are managing their supply chain? That's the first question. Then secondly, on, you know, how are you thinking about the energy shock. I know you talk about 30-50% of your business being hedged from a gas perspective, but I'd like to understand how you think the cost curve develops in the recycled cartonboard or the white-lined chipboard space. In containerboard, it's much easier for me to say that the cost curve really steepens as some people have made more energy investments than others. The recycled cartonboard side is, it looks flatter when you look at the industry-provided cost curve. I'm just wondering, how do you think the cost curve steepens with the high energy prices, and how is Mayr-Melnhof positioned? Thank you. Yeah. Thank you. These are a very difficult question. The customer action, we haven't seen anything which we saw in the Ukraine, but maybe it's too early. So far there is neither panic nor anything else. We will see some price increases or even the limited surcharges have been announced in the industry, and we will see now how the customers react to that and what it means. Overall, it's very calm, but it's probably also because it's early days. On the cost curve, I My guess is that the cost curve would also become steeper because, I mean, I take our WLC mills. We've invested quite a lot in energy, and we would expect that we benefit from that now in terms of we've lowered our specific energy consumption as you will see in our annual report. So it was again minus 3% on a like-for-like basis. So less energy and we've changed the mix, and with much less, 11% less CO2. And this is a consequence of, amongst others, the Fit for Future project and very specific CapEx, which we have done over the last years. That should benefit us and make the cost curves deeper compared to competitors in the WLC market who, to my knowledge, have hardly invested anything over the last years. Maybe following up on the cost curve, you know, on the virgin cartonboard side, just a little bit of color on how your business is performing there 'cause we do have Finnish wood costs going down, which should help the old Kotka mills. I'd just like a little bit of color on how costs are developing for your Finnish assets and then in Poland as well. Thank you. In Poland, wood costs are rather flat. I mean, they are lower than in the Nordics, but the gap might narrow. In Količevo, we have, on one hand, wood costs, which have come definitely down, which is positive for us. The other product, so to say, or the other product factor is pulp. We make our own CTMP, and we may have our own pulp mill for the saturating kraft paper, but we buy in the pulp for FBB. There we expect a rather stable to increasing trend over next months. Thank you. Then just the final one is, you know, we talked about the cost curve steepening in the recycled side, but there are also some unintegrated virgin cartonboard producers. With higher energy costs, I imagine that pushes them further into the red. I'm just wondering, you know, where do you see most likely that we see capacity rationalization? Is it on the recycled side or the virgin side? Yeah. I would expect it in both areas by around mid of the year or autumn. That's already what I said a year ago. It's just a gut feeling. People need, obviously, some managers need the pressure for some time to go on until they do anything. I think that's now what. The time will come. Thank you. Thank you. Thank you very much. Dear ladies and gentlemen, a quick reminder. To ask a question or a follow-up question, please press nine and then the star key. We are moving on to the next question. There is a follow-up from Markus Remis, ODDO BHF. Over to you. Thank you. A few more from my side, if I may, turning to the packaging side. We saw volume declines both in the food and in the pharma segment, 2-3% stripping out Tann. Do you see any scope of a kind of demand stabilization in the current year? What would be like the most likely scenario from your point of view? First of all, great thanks to get a question also on packaging because it's quite important for us, but everyone obviously focus on the more volatile Board & Paper. I think there are different aspects to consider. I start with the pharma packaging. In pharma, as you know, we took over a real turnaround case when we acquired Essentra. We are still, and I hope this year is indeed the last one, in the phase. The pharma has, on the one hand side, a very stable long-term business with developed together with our customer. You are in from day one, and it takes years until the product is launched, and then you get a contract and you deliver whatever 50%, 80%, 100%, or whatever it is. That's a very long-term business and a very good business, but requires a lot of upfront investment. You have also a highly competitive short-term business, which is with very mature products, where you have basically annual tenders, and it boils down more or less to the price. We are consistently phasing out negative business, so some of it was even contribution margin negative. We have, underlying the numbers you see overall, two trends. We have a nicely growing business, and I alluded to GLP-1 business, et cetera, with really good growth rate, even sustainable at 10% or so. Then we have, on the other hand, this legacy business, which is no value added, just price-sensitive business. This we can either reprice or we get out of it. This, I think, this process will be mainly finished. It will still go on this year, and therefore the overall growth is not really visible. Once this restructuring is done, we stay with the businesses which we like, going forward. There will always be some commoditization of some businesses. It's an ongoing process, but the big thing will be ended this year. We feel very confident that we will see growth. With regards to food and premium, we have to a certain degree a similar effect. Overall, the food market is a very flat market. There is nothing to make this sound better. Here it's really about our product offering. There, I think again, our Fit for Future project, but also other initiatives we took. We are repositioning ourselves. We are especially focusing, we focus more on mid-sized customers, in order to generate growth. The overall market in this segment would show also long-term and moderate growth, and obviously this environment didn't show any growth at all. You have always please also to compare some with the numbers we also divested some smaller businesses which are also not restated. Restatement goes only for the Tann Group. We had a small decline in volumes in Food & Premium last year. We want to turn that positive, but it requires two things. One is our own efforts, and secondly, we needed the tailwinds from the market. All right. A few more kind of bookkeeping questions, maybe more from Mr. Hiesinger. The EUR 70 million impairment in Board & Paper. Can you shed some light on which assets were impaired and why that was necessary now? It was for our Slovenian mill, Količevo. Okay. We had 70.5. Sir, you look very hard to understand. Sorry. It was for our Slovenian mill, Količevo. Mm-hmm. Yeah. Full amount of EUR 70.5. Okay. It was basically review of our mid- and long-term cash flow expectation of these assets. If I may turn to the tax rate. I mean, it was low last year, high this year. What would be like a kind of normalized tax rate in the current shape of the group? Tax loss carried forward, which we have impaired following- Burden of this asset impairment, it would have been 7-27%. 27. Okay. That's something for modeling purposes we can apply going forward. Yes. We estimate with about 25% in the long run. Yeah. Just maybe to add to this. The storyline in 2024 was that when we acquired the Essentra business, we- Sure. Didn't activate, capitalize the loss carryforwards because the business was just breakeven. Only when we saw that it's generating profit, we could activate it. Now the opposite happened that especially Količevo, but that wasn't the only one where we have loss carryforwards. In keeping our new cash flow projections, we cannot assume that we can use these loss carryforwards. Okay. Eventually to add on this, the full difference of EUR 65 million compared to last year in our tax expense is related to capitalization versus release of loss carryforward. Thank you. That's very clear. In the last years you've quite stepped up the factoring levels. I'd be interested to get a sense of where you ended 2025. I think last year it was close to EUR 380 million. Yes, it was EUR 377 million last year and, sorry, in 2024. In 2025, net EUR 337 million. If I say net, it means deducted by the incoming customer payments, which have already been factored. EUR 337 million. Okay. Thank you. I guess the last one would be then on your capital allocation. Now with the new dividend policy, and I understand there are a couple of influencing factors. When you talk about dividend continuity, should we assume that this EUR 2 level for 2025 is kind of the base, and that, yeah, like going forward, we there should be no declines being expected, but rather kind of this as an anchor dividend, so to say. No. I mean, the most important thing is obviously the net profit. We can't forecast the net profit, but we want to just give a guidance of these four principles within this range, 40% or 60%. Their continuity is one aspect to consider. The other three are equally important, that if we saw a downturn of the business or if we feel very stretched from a leverage point of view, then we might reduce it. Yes, one principle is to keep it as continuous as possible. Your expression was too strong, so it's not like we. Okay. We guarantee now EUR 2. I mean, especially we also have to keep in mind that with regards to our goodwill in Board & Paper, this is a fairly high amount. Yeah. At a certain point in time, it could be that we have to do their impairments, for instance. Yeah. That would also extend the dividend. Okay. Right. Related to that, the buyback has been closed at the end of last year. Any appetite for kind of smaller buybacks going forward? No, not. Will it? Not for the time being. I mean, the share price. We're not commenting where we think it should be, but it is where it is. It's not as so to say the main drive was simply that the share price was, I would say, ridiculously low at that point in time. took advantage of it. Generally now, given all the geopolitical uncertainties, we don't think it's the right money to be spent for the time being. Okay. That can change again. Okay. Very clear. Thank you very much. Thank you. Thanks a lot. At the moment, there are a few more questions incoming. Another follow-up from Cole Hathorn in Jefferies. Please, over to you. Thanks for taking my follow-up. Cole, you can ask any questions, but don't overstretch me in my crystal ball. Okay. Sorry to interrupt. I was just joking. It's an interesting one because, you know, we've seen a lot of supply disruptions globally around the supply chain. I'm just wondering, have you seen any product categories that are more challenging to get hold of, be it adhesives, inks or anything like that on kind of your supply side? The one is supply uncertainty on products. The second is, you know, how do you think about your commercial strategy from here? Because it's very difficult in your position when you don't know what inflation is gonna do to logistics, to chemicals, to inks, et cetera, you know, how you price up your packaging. You know, how are you thinking about the commercial kind of pricing side? Yeah. On supply disruptions, we haven't seen anything yet. I'm not aware about any problems. I hope that there will be some supply disruptions from some Chinese competitors. That's what I would hope for. No, joking aside, so far, we haven't any problems. We also have to say that we have a fairly conservative policy of local sourcing. Not that we don't buy also from other continents, but generally we're more careful on that. I think this will help us in this environment. On the commercial side for pricing, we've overall, after the experiences in 2022, changed our pricing policy in the sense that especially with regards to long-term contracts, which are fairly common in our packaging business, that we typically have inflation clauses or at least escalation clauses or in some cases also clauses which say that if certain effects have a bigger impact than X, Y, Z, that we can adjust prices or at least can talk about them and could terminate the contract. We also have shortened the adaptation period to mainly every quarter. Very few exceptions to that. It was unlike in the past, where sometimes such clauses only took effect after one year or so. It could, of course, if there were big price shocks, it could impact us for worst case, for three months, but not much longer. We are much better protected today from in terms of pass-on clause. It works both ways. Also if prices go down, but generally speaking, it has reduced the risk. Very clear. Thank you very much. Thank you very much also from my side. At the moment, there are no further questions. With that, I'm closing the Q&A session and handing the floor back over to the host. Thank you very much for your questions from the part of MM. I think they were all very interesting and very much to the current developments. To close, I would once again ask Peter for a final sentence, what you should take away from this conference call. Yeah. Thank you very much, Stephan. I think my main message is actually we did quite substantial CapEx in 2023, 2022, 2023, 2024. That was disrupting for our business also because at the time you do this CapEx, you can't produce, and then the startups don't always work as you like them. I see now more and more that we get into. While others were eating, we were planting. Now we get into the phase where we can harvest these benefits. We have specific mills which were really not in a great shape a number of years ago. In this crisis, I think they would have been prime candidates for closure. We have turned this and thanks to our investments into energy efficiency, et cetera, we are in a good place. I think we are a company with a market-leading position with a highly experienced management team, very dedicated employees with a strong asset base. Now we have to turn this, and FFF is one of the means to turn this into real results. Probably last year, we showed that in a really difficult market environment, we can deliver. As things will move in our markets, I think we are in a very good place to benefit from any upturn which will come. We don't know when, but it will come. I think the management looks with high confidence into our future. Thank you.