Good morning, and a warm welcome to Kemira's Capital Markets Day here in London, a hybrid event. My name is Mikko Pohjala, Vice President for IR, and I will be your host today. Today, we're recording the event from the London Stock Exchange here in the City of London, and the majority of you will be actually following online, but we have a good bunch of people here in the audience as well. Before we start, following the death of Queen Elizabeth last week, on behalf of Kemira, our deepest condolences for the people in the UK for the loss of Queen Elizabeth. Coming back to the agenda. Yesterday, we arranged a site visit in Bradford, in northern England, where the participants had the possibility to tour our polyacrylamide dry polymer facility. Today, we're here in the city going through a sort of an update on how we're progressing on our profitable growth strategy. The event will last around three hours. I'd say we have an interesting morning ahead of us, and you will hear an update from various parts of the business, starting from our CEO, Jari Rosendal, going through the segments, R&D, and then finally concluding with our CFO, Petri Castrén. Before we start, a couple of practicalities for the Q&A. I've mentioned that the majority of you are following online, so you can submit your questions through the screen in front of you. Here in London, there will be microphones that can be sort of given to you should you have a question. There's a possibility to ask questions after each presentation, and there will also be a concluding Q&A at the end after Jari's concluding remarks. We plan to end at around 12, depending on the amount of your questions. With this short introduction, I'll hand it over to our President and CEO, Jari Rosendal, to give an update on the big picture. Bit of bright lights, good morning from my side also, and great to be here in London. Great to see, I guess, quite many people behind the screens, not present here. It's really exciting to talk to real people, not a camera lens, for a long time because doing that for two or two point five years is getting a bit tiresome. Giving you update on various areas as you saw the agenda, last three years, we can say has been exceptionally volatile. I don't have to list the issues, things that have gone sideways and following each other, Kemira organization has weathered the situation, in my opinion, quite well. We have a high engagement in our organization, and we get good replies and praises from our customers, so that motivates the people to also keep the customers running and solve the issues that we've been dealing with month-on-month and are still dealing today. Therefore, the numbers speak for themselves. Solid revenue development, as you can see from the left, especially good development on the operative EBITDA in the middle, and then overall EPS that has everything in it, even the historic burdens that we've been cleaning off the table quite successfully over the years. EPS has developed quite nicely over the last years. That's the near history. Let's start looking at what the big picture is going forward, and then my colleagues will go deeper in those topics. We have grown well, and mainly this year, we've grown through sales price management, obviously, behind the higher raw material input costs. We continue to drive profitable growth, and we drive it developing a strong foundation that we have built for ourselves. We have good growth pockets inside our business. APAC is growing strongly, although question marks around China lately. Pulp, growing strongly. Packaging and water, strongly growing. New opportunities come from new offerings of bio-based strategy. You'll hear more about that from Matt today. We will grow in the bio area faster. We have made some moves there that we will speed that up. The sustainability drive that we are all feeling is a big factor for us, but it's a big factor for our customers and our partners and is a mega trend that is working for us. We're also open for M&A and scanning opportunities, especially in the water treatment space. We have been able to demonstrate faster growth than the market has been for us. A bit deeper into what has been there, and I won't go through all of this, but when you look at the work we've done to execute our strategy during the last three years, there's been good progress regardless of the challenging environment. We completed the AKD investment and started that up, and that's a bio-based strategy, by the way, at the same time. We have started to build the bleaching site expansion in Uruguay. We've done some bleaching investments in North America. Here in the UK, we increased our coagulant capacity because of the phosphorus capture regulation has been tightened. We also have then closed a site in France, for example, that didn't meet our financial targets. A number of activities have been done on top of diligently running the business in a challenging environment. Here's a picture that, in our view, shows how we see the five main application areas of pulp, board and tissue, printing and writing, water treatment, and then oil and gas. You can see from the table how we have categorized it into total share of sales, how it serves the sustainability relevance, how CapEx intensity is, M&A opportunities, role in the Kemira portfolio, how we see it, and then how it's growing and growing profits. Pulp chemistry is 25% of our overall revenue, strong business, and we have a strong position in pulp business, and it's based on our own proprietary technology for sodium chlorate manufacturing. It has a rather good growth profile, but it's also CapEx intensive, so each growth case needs to be carefully considered. Board and tissue continue to grow, and we aim to. with it, and it's also 25%. Printing and writing, getting smaller and smaller, but it's still using the same chemistries. We have good know-how in that, so that's a cash-generating business for us. Water is one of our backbones with pulp chemistry. Water is 30% of revenue and continues to grow. We are, as said, also scanning inorganic moves there. Oil and gas, 10%, mostly also water treatment in the oil and gas, although it has that name. When the pumpers pump oil or gas, they pump much more water, and they have to deal with that. Also the tailings treatment in Canada is pure water treatment or impure water treatment to a better water. This table gives you a good picture how we see the role of the five main businesses from our own point of view and think of how you analyze us. Accelerating things and going to the marketplace, we announced in June that we'll form a growth accelerator unit, and Sampo Lahtinen is driving there. You can see his credentials there, and we are forming this unit as we speak. The idea is that if you think of commercial organization being out there doing the daily business 80% and then launching new products 20%, it's not that efficient because the 80% tends to overrule the 20%. This group and this team's focus is to help the segments and agree with the segments how they go at it 110% and not get disturbed with the day-to-day issues and so on. Buildup of that group is ongoing. To our sustainability targets. We had CO2 targets announced already a couple of years ago, and then this SBTi, Science Based Targets initiative, came and started to be bigger and bigger. We didn't wanna jump in immediately and sign a document without knowing and answering how were we going to do it. In June, we committed that we'll take Scope 1 and 2 down by 50% by end of the decade compared to 2018, which was our then previous sort of starting point. Obviously the previous target was 30%, so it's quite an increase in ambition level. The SBTi organization has not yet given instructions and guidance to chemicals industry sector for Scope 3. We are measuring that, but since there are no common ways of doing that, we're working with them and other organizations on how we can also set even better targets for Scope 3. Our ambition to be CO2 neutral by 2045 still stands. When I say we wanted to understand how we will get there, what do we need to do, what does it take, we looked into it, and this is very general, and you can talk to our experts more if interested. You can see up top our Scope 1 and 2 emissions going down nicely since 2018, and mainly it's about energy, electrical energy in our case. There are other factors there, like in some sites we use natural gas for creating steam and these type of things, but mainly it's about electrical energy. Then Scope 3 is about the raw materials, and many of our suppliers are still working on that. What is the math they actually do, how they do it, and that's an SBTi standardization issue too. Logistics is the other one. Those are the areas that we now have a roadmap on how we're going to drive these forward. Clear progress made in both areas. Next steps in our sort of bigger picture, which Antti and Sergej will talk about more and Matt about for the R&D sort of side of it. Clear progress has been made, and operating environment is what it is. Next, we continue to ride the growth pockets. Pulp, packaging, and water treatment are the big ones for us. We accelerate our growth of new offering and applications driven upcoming areas like bio-based areas and also textile industries. Renewable textiles is coming up more and more. It's been there coming, but now it seems to be coming faster. Our chemistries and know-how can be applied there. It's a fiber-based business. As said, scan for M&A opportunities, especially in the water space. Priorities continue to mitigate the disruptions that we're seeing. Our market strategic investments that are ongoing, we need to complete those and get them up and running. We want to also continue to be agile. I think we've been quite agile to react to surprising circumstances and then maintain our operational performance and really drive these new growth areas that you'll hear more today. We... It's missing one there, but we updated our purpose statement some time ago. Chemistry with a purpose, better every day. I don't know if that page is in the deck, Mikko. There's a narrative saying what we've been doing, what is our role in the last hundred years in the society. Please read it. I won't read the text as it's not here. Anyway, it's quite well putting on what is our role here and the world around us and how we will take advantage of that. I will conclude my summary update here and ask the colleagues to go deeper on that. Now we can, Mikko, take some questions. Sure. Thank you, Jari. We have plenty of questions. Mm. from the audience online. If we start from here, if we have any questions from the audience. Go ahead. Go ahead, Antti. Thank you. It's Antti Koskivuori from Danske. I would like to ask about the M&A opportunity in the water treatment side. Could you little bit elaborate on that, what you could be looking after? Well, we've always said they can be a geographical expansion. We're not present everywhere, but you need to have a critical mass as for that. It can be adding technologies to our portfolio and widening it and having more of share of wallet from the same customers where we have excellent access to in water treatment, whether it's industrial and whether it's municipal. Here, even if we count the Pulp & Paper water treatment into Pulp & Paper segment, it still has a need for wider potential technologies to add into our portfolio. It can also be deeper that we consolidate the market in the existing portfolio that we have. I think that gives you a better picture and that much deeper is not very easy to go. If I can continue a little bit on the potential targets, do you see a long list of potential targets or how you would describe that? Well, we've identified quite a few targets. Whether they're available and actionable and so on is yet to be seen. That's what we're now working on. Thank you. In the meantime, there was the same question from online. There are several questions related to sort of more short-term outlook. You have done very nicely this year, mainly due to sales price management. How do we see H2 in terms of price and demand to the extent we can comment on this? Well, we'll probably say more in October when Q3 goes over. This is more of a long term, but the fight continues and we've been doing okay so far. At the same time, I can mention that the short- to medium-term sort of risk levels have risen on availabilities, FMs, what happens this week, this winter in gas and electricity in Europe and so on, which are on everyone's mind, that is there. If there's no availability for raw materials or services that we need, no pricing will help us. Good. There's a question related to 2023, and Petri will talk about sort of the factors to watch out for in 2023. In general, Jari, so how do you see demand going into 2023? As I said, we have a couple of backbones. Water treatment is pretty sort of uncyclical and maybe more cycles come from the raw material price management side. See that that continues as a strong. I don't see very easily big disruptions that would change the legally mandated water treatment, whether it's drinking water or then wastewater, whether it's from industry or municipalities. Also, pulp circumstances for the customers seem to be strong. There are pulp mills that are coming off offline and there are different type of needs like fluff pulp and these types of things. There are no new capacities coming online anytime soon. Maybe UPM springtime next year in Uruguay, but how they then ramp up. As there's less and less printing and writing being used, there's less and less circulated fiber out there. Pulp and water are looking, at least in the big picture today, quite steady as long as availability of energy is there. We'll see how packaging will start to go, because especially industrial packaging. If we stop buying toasters, they don't need to be packed, those toasters. That's something. How big of a drop is that? Because, for instance, the food industry, medicine, the medical industry and so on that uses a lot of packaging will continue to be there like water. Good. If there's a question from the audience, just raise your hand, and then I know to direct the microphone to you. We continue from online questions. Coming back to the M&A that Antti asked. Building on that, so how much fire power can you allocate for M&A, and is there a target size that we would be looking at? I'll leave that question to Petri for answering his talk. Give you a better picture because there's different type of tools that we can use. Good. Continuing from the online questions. Mm. Why are we not seeing any volume growth for Kemira, considering its main markets are growing? We are seeing volume growth in pockets, but then we are seeing volume down in some other pockets. If you have to do the math, then we're on the positive side. There was a big Finnish pulp and paper company that was on strike for four months at the beginning of the year. First of March, the Russian and Ukrainian volumes are out. Balancing those out, we are seeing also slight volume growth in areas. Also, China has now, with the COVID lockdowns, the volumes have been a bit down, also there. I'm not concerned about that when taking these anomalies into account. Good. Good. There are several questions about how we are coping with inflationary pressure. Petri will talk about the business model slightly later. We'll leave those questions for that. Maybe coming back to our supply chain, Jari. Have we seen any production cuts or plant closures by ourselves or by our customers recently? We have had some minor, sort of missing a shift or something like that, which is not even extraordinary in a sense, if a raw material shipment hasn't come in. You could say that has gone as normal. Energy has been there. Gas, we're not very dependent on. Logistics is still an issue. You know, the river levels in central Europe. That's not only for us, but our suppliers where that has been an issue. That's what our supply chain people, our sourcing people have been fighting on how to look at that. Maybe as a downside, we have had to probably increase our inventory volumes a bit to have a bit more caution into that. That has eaten into our cash flow on top of the higher value of the net inventory. We have seen some Pulp & Paper companies curtailing for some time, days or something like that, their production, mainly in Central Europe and in China. Reason has been high energy cost. They use natural gas in their drying end, and it's been sky high. They've been curtailing there. We haven't had to do that. We have had a good solid run, but let's see how this moves. Remember also China is not only COVID and not only. Well, electricity is one, but the river levels are also there exceptionally low. So, hydropower is out, and that's why they are also doing tricks there to save energy. Good. Taking the questions a bit higher level. There are several questions related to gas, but Petri will talk about this later on. We take some higher level strategic questions, Jari, for you. If we start with our target of growing faster than the market. What does this mean? Well, we've been. I mean, it's been no exception. I mean, first half we grew, what, 30%. That comes from the prices. Generally, we could say that our single-digit growth percentage is over sort of longer period of time. We should beat that, and we have been beating that. Good. Coming back to sustainability targets. We're talking about the SBTi target Scope 1 and 2 emission reductions. Do we have an estimate of the cost of that? We actually do, but basically it's an estimate, but it would be maintenance type of and replacement type of investments that we would do probably anyway. Mostly run-out equipment that we don't want to use anymore. For instance, burners for gas, and then switch them to electric or other types or biogas-based feedstocks. I don't have a number, so it's not that significant at the moment. Coming, there's a question related to bio-based strategy, which Matt will discuss in a minute. Briefly, are we protected in terms of intellectual property rights on our bio-based strategy? I think we are taking as good care of that as the surroundings allow. We do less of recipe type of IPR. We do more of a process type of IPR on how to apply the product. We can have. Then we do how to make the product, the process IPR. Matt can answer more there. We're quite active in applying for new patents between 30 and 40 a year. Good. Any questions from the audience here in between? Good, then I'll continue here for a second, we still have time. In terms of CapEx investments, Jari, there are two ongoing CapEx investments. Any other big ones in the pipeline? We're considering some. There are some smaller ones going on top of that. Petri always covers our CapEx outlook in the quarterly. I won't go there, but no big change in that. Some inflationary and time delay, but nothing so significant that will move the needle in the big picture. Yes, there are further questions related to CapEx, but this is something Petri will discuss at the end. What is the CapEx outlook for the coming years? Good. We have time for one more question, maybe then we'll move forward. The question is, you've been very successful in pushing sales prices, so, how much further can we go? It's a painful process. It's not easy to go in a year, two, or third time to the customer to do that. Luckily, our customers are also doing well. They've been able to move it forward. They have had good demand. We met with some customers with Antti yesterday and discussed the general environment. If situation allows, I think there's still more room, but we have to be very careful because now things are maybe in some areas flattening out, some going still up and some coming down. Yeah. As mentioned, there are several questions related to CapEx, gas exposure, and then sort of how we're doing with inflationary pressures. This will be covered by Petri Castrén at the later stage, so no need to take them at this point. Good. I think we conclude with Jari Rosendal, and then we'll give more color with the segments later on. Before we go into that, we hear an update next on our bio-based strategy and R&D in general, and this will be given to you by our Chief Technology Officer, Matthew Pixton. Right. Thank you, Mikko, and good morning to everyone. Again, I'm Matthew Pixton, Head of R&D for Kemira. I've been with the company, I joined in 2016. I've been in my current role since 2018, and I'm based in Atlanta, Georgia, in the United States. Hey, if I look at R&D and I think about what are the key messages today, it's really two that I'd like to get across. Number one is that the current portfolio of projects has been delivering very strongly towards the bottom line, and we'll talk about how we're doing that in just a minute. Second of all, I'd like to highlight some of the things we're doing on our bio-based effort, how those are gonna contribute, I think, in the future, and kind of where we're going with that strategy. With that in mind, let me just remind you that R&D is a global organization within Kemira. We have about 250 scientists located in three different centers, one in each pole, that gives us close access to our customers. Key deliverables for R&D include things like new products, and we introduced 18 new products last year. Somebody asked online, I think, about intellectual property. We have about 1,900 granted patents right now. We typically do, as Jari mentioned, 30-40 per year, sometimes more, sometimes less. I can talk about the bio-based angle on that in a minute. At a high level, if I think about what we do in R&D and what we're delivering, first of all, kind of what goes into it. Kemira invests about EUR 30 million per year into R&D, and that's about a little over 1% of sales. That's sort of the baseline number. That's focused on things like barriers, polymers, sizing, those types of product lines. We also have a lot of inorganic products where we have some activity, but fairly modest. If you look at the plot in the chart there in the middle of the page, this covers our new product sales, where new product sales are defined as products that have been commercialized within the last five years. This is a rolling metric. Things go in and out every quarter. We first exceeded EUR 200 million in new product sales in 2016. We were very, very close to EUR 300 million last year, actually 297. I'm estimating that for 2020, we will be around EUR 325 million in new product sales for the company. Again, I'm very proud of that. I think it speaks to the strength of the portfolio and the delivery that we've had over the past couple of years. Looking forward into our bio-based area, if you go to the right-hand side of the page, we have completed and are in the of midst of lab evaluations, a number of new feedstocks and building blocks that are bio-based. Some of those are by ourselves, but a lot of those are in collaboration with partners. I'm gonna talk about two of those partners today, which are Danimer Scientific and International Flavors & Fragrances, and we'll go into a bit more detail on that in a minute. Finally, I would say that collaboration's important to the overall organization, but especially in R&D, and about half our projects are either in collaboration with industrial or academic partners. Hey, to give you a flavor for the types of projects that are in the portfolio, I thought it'd be good to highlight maybe three of them here. The first one is a project we called ViviMag. This is about phosphorus reduction in wastewaters. As everyone here probably is aware, regulations on phosphorus emissions are getting more and more stringent, and it's becoming more and more difficult for our industrial and municipal customers to meet those regulations. In conjunction with some industrial and academic partners, Kemira's actually introduced this ViviMag technology, which basically takes soluble phosphorus that's in waste streams, precipitates it as insoluble iron phosphate, which is then magnetically removed from the waste stream. That phosphorus can obviously be recycled to the fertilizer industry. This current process is being piloted right now at one of our major customers. We expect significant progress and proliferation of this technology as we move into next year. Hey, a second project I wanted to briefly talk about here is sizing and our novel sizing portfolio. As probably you're aware of it, sizing is a coating placed on the surface of paper that makes it resistant to water and grease. We've introduced a new portfolio of products, both some bio-based, some fossil-based, to give better performance here, that have good recyclability, and which allow our customers to get better performance from their products. Going forward, we're also focused in this portfolio on going to 100% bio-based solutions, and those are currently in the works right now. Finally, Jari mentioned sustainable textiles, and I would just mention here briefly that sustainable textiles is a growth area for a lot of companies. For Kemira, I think there's two major opportunities that we've identified so far. The first one is, recycling at end of life is being mandated in the EU in just a couple of years, and so there has to be a solution here. Kemira expertise in cellulose fibers and in fibers generally is gonna be a big advantage for us to get into this market, and we have some opportunities to do that. The second opportunity for entry is in producing cellulose fibers. Currently, cellulose fibers are typically made by dissolving cellulose in a very harsh chemical process, so it's not very sustainable. Generates a lot of waste, and then it forms a filament. We're working with our partners who are taking finely ground wood fiber, the so-called microfibrillated cellulose, and in a water-based process, spin those into good fibers that can be used in textiles. Kemira is contributing to this by allowing those fibers to have the strength and the durability they need to perform in their applications. I said I'd talk about bio-based, so let's talk about our bio-based effort and what we're doing there. To start off with, we started in 2019 with a baseline of about EUR 100 million in bio-based sales. Now, when we talk about bio-based products and bio-based sales, the way we've defined it internally is products that contain at least 50% or more bio-derived carbon. Those are bio-based products. Again, starting from our baseline in 2019, our target is to get to EUR 500 billion or more in bio-based sales by the end of this decade. That is gonna require, of course, that the inputs and feedstocks coming into our business also become much more bio-based. How are we gonna go about doing that? If you start on the left-hand side of the page here, what you can see is the overall sales last year for Kemira. Really, those can be divided sort of artificially, but into two categories. One is those that contain carbon and those that do not. About a little over half our sales contain carbon, but there is a reasonable percentage of our products that contain no carbon. Those obviously are not a target for our bio-based efforts. However, I would say that a number of the products in that inorganic side of the portfolio are based on recycled or, you know, reclaimed raw materials. There is a good sustainability story even on the inorganic side of the portfolio. Let's talk about the bio-based side and where we are and where we're at, where we're going. You can see on the right-hand side of the page that we started at EUR 100 million in sales. We actually already hit EUR 200 million last year, and this was driven by some major capacity expansions in our bio-based sizing area. Looking forward, we expect that business to continue. However, there's no additional investment for another step change in the overall sizing portfolio. We are gonna need some additional new materials, new products that we don't have today that are gonna contribute, so we can get to EUR 300 million. All right, how do we do that? Really, it's four tracks of activity that I would say can contribute overall to getting to our bio-based target. I'd like to talk just briefly about each one of these here for a second. You can see them labeled there on the left-hand side. The first one is labeled one, Current Portfolio. This is really just taking the current bio-based products we have today and selling more of them. There is some incremental opportunity to do that. We're continuing to work on that. That's mainly commercial with some R&D support- type activities. You know, track number two is what I would call, you know, product conversions. This is taking products that we're currently selling today that are fossil-based and converting those over to some sort of bio-based feedstock. I'll talk about that in a little bit more detail on the next page. The third track, and the one that probably will be the biggest contributor to the overall effort here is new bio-based chemistries. By new bio-based chemistries, I mean materials that are bio-based that are within zero to five years of going commercial and where we can take these materials and apply them in our markets and industries. Typically, this work's done with partners who develop those materials, and I'll give two examples of that in just a minute. Then finally, of course, this is research and development. We're always doing exploratory work. We're always looking at new building blocks, new feedstocks. They give us an opportunity to deliver, you know, exciting new products in the future. I would say that the majority of the activities in this bucket are probably five to 10 years from commercialization and probably won't deliver that much toward the 500 target in this decade, but will be key to continuing our progress beyond that. Okay, with that in mind, let's take a look at track number two and three in a bit more detail. Track number two is the product conversion or the so-called biomass balance type products. Again, these are products which are identical to what we're making today, only they're coming from a bio-based feedstock. For example, you can currently purchase propylene, ethylene, acrylic acid, acrylonitrile, et cetera, on the market that are produced with 100% bio-based carbon. We take those inputs, put them into our business, and can produce a product which is then either partially or 100% bio-based. Kemira was the first company to introduce cationic polyacrylamide that's bio-based for the water treatment market. We're currently selling that product to multiple municipalities, and we're continuing to work in this area to develop products for both the Industry & Water and the Pulp & Paper segments. Obviously, progress here is gonna be driven by, you know, number one, availability of these raw materials, a nd number two, their pricing versus the fossil alternatives. Those are gonna be key. It's also gonna be driven by reputation and regulatory pressure, and I think we've all felt those forces as well. All right, so that's sort of the you know, path or track number two. Let's talk about number three. One thing I'm really excited about in path number three is a product we call PHA, or, for you chemists out there, that's polyhydroxyalkanoate. PHA forms a tough water and grease-resistant coating on paper. PHA also has a very favorable sustainability profile in that it degrades very well in home composting and as well as in marine environments. When people overeat, we put the excess calories on as fat. When certain types of bacteria overeat, they store the excess energy as PHA. Depending on the bacteria, the PHAs can be slightly different, so there's opportunity to optimize the material here. Starting in 2019, R&D formed a partnership with Danimer Scientific, a major PHA supplier and a technical advisor. Following successful lab evaluations of PHA, as well as some piloting work last year in 2021, where we did coated paper, converted that paper into various objects successfully. We signed a long-term commercial agreement with Danimer that was announced this year, I think in May. That provides exclusivity to Kemira for the paper and molded fiber markets. We're very excited about that. We're also working with Danimer not only on the existing product, but we also have agreements with them to develop new products that will have expanded product performance. That's ongoing as we speak. Finally, I would say in this year, in 2022, we've already had multiple paper coating and converting trials, most of which were attended by key customers. There's tremendous pull from brand owners for these products. We're really under pressure, I would say, to get these commercial as soon as possible. All right, let me talk about another building block that's coming in, a new bio-based material called alpha glucan. Alpha glucan is merely long chains of sugar, and those chains can be straight, they can have little branches on them. That can be adjusted based on a specialized enzyme technology that's been developed by International Flavors and Fragrances, who's our partner in this activity. We started working with them in 2020. We've completed a lot of lab evaluations looking at what are the opportunities for this in both our Pulp & Paper and Industry and Water segments. We've piloted this year already opportunities in both segments with good success. Going forward, one thing that will be required here for alpha glucan to go commercial is some investment in manufacturing capacity. All right. I mentioned that we're also working with outside partners, and one thing I would say is, while Kemira has a lot of expertise and experience with our scientists, we gain a lot of speed by working with outside partners. As an example, you just saw two projects that are with partners. We typically are trying to get involved in these in the last five years of commercialization. As you're probably aware, in launching a new product in the chemical business, it's minimum 10 years and can take 25 years. That's a fairly long process. By partnering in the last five years, we essentially saved 5, 10, 15 years of effort. That's something we're working on and will continue to work on as we go forward. Finally, Jari mentioned it, and I would just emphasize here, we're really excited about the Growth Accelerator. The purpose of the Growth Accelerator is to take projects, particularly our bio-based materials, that are currently ready to be commercialized, that have completed a lot of their R&D evaluations, and make those commercial and monetize them over the next couple of years. This is gonna be a dedicated unit focused specifically on just doing that. All right. Well, with that in mind, I said at the beginning, I was happy about our delivery from the overall portfolio, and I'm confident where we're going with the bio-based effort. Again, if I go back to what we've delivered from the current portfolio, we've been growing the total number of new product sales significantly, especially in the last couple of years. We're gonna exceed EUR 300 million this year, I think, almost for sure. On the bio-based side, we've formed strategic partnerships with multiple suppliers. I only mentioned two of them here. We have others as well. But those are progressing very well. We have products that are ready to commercialize. We have products that are finished with technical evaluation and are ready to go to customers, and I feel like the pipeline there is actually in good shape. We're on our way to hitting the EUR 500 million target. Finally, you know, to make sure that happens, the company has just recently organized this growth accelerator to take those bio-based products and deliver them to customers and deliver the sales we want. With that in mind, I would be happy to answer any questions. Thank you very much. Matt, starting with the audience. Mika, go ahead. Then, in the audience, while Mika digests his question, so do remember, you can type your question to the screen in front of you, and they will come to me. Let's start from here, London. Yeah. Thank you. On about your bioproducts, could you talk about what kind of pricing we are looking at in the future, and margin profile. Then secondly, what does this mean to your SG&A. You were saying earlier that on your path towards EUR 500 million in so-called bio sales, you are aiming to grow your sales efforts. If you can just, Sure. I expect significant contributions overall to sales from some of these new bio-based efforts to probably start in 2024. If I look at kind of where we are today, customer evaluations and sort of, you know, closing the sales are gonna be 2023, bigger sales coming in 2024. That would be my expectation there. What was your first question? First question was regarding pricing of these new products and perhaps the margin profile. Well, I mean, in terms of overall sales price, R&D doesn't set that. I would say that we're targeting the premium market here. These types of bio-based materials, they have unique performance characteristics. I'm not trying to go into you know, low-value stores and, you know, coat their paper. We're going after major brand owners who have strategic reasons that they would like to purchase these products and where it gives them a marketing advantage. Yeah, for sure. Maybe building on that, we'll soon hear a video where we talk with MM Kotkamills, and they will talk a bit about the pricing, so how they see their customers. Some of them are willing to pay a premium, not all yet, but they expect that to change in the coming years. This was the question that came from online from many of our participants. Really, are customers willing to pay a premium? This is the question that is coming from many different. Yeah. viewpoints. You know, the other thing I'd say on that is it sort of depends what product we're talking about. With these biomass balance products where, you know, you have a fossil version and a bio-based version, currently the bio versions are typically more expensive. The question is, how much is a customer willing to pay? You know, what kind of premium will they pay? This totally depends on the customer and how much value they can extract from that, you know, sale. But currently, if I was gonna throw out a number, I would say 20%-50%. You know, for the new bio-based products, there's not actually any direct competition. These are unique products, at least in our industry, that nobody else is supplying. It's really gonna be about the performance of the product rather than sort of a cost game. Andrés, go ahead. Andrés Castaños-Mollor from Berenberg. The new technologies, PHA, alpha glucan, they are, they're brand new to you. I wonder if they will require CapEx investment, and what threshold for return are you expecting to get on those? Okay. Yeah, that's a good question. On PHA, Danimer Scientific actually has significant CapEx that they've invested already into PHA production, so they don't need any additional investment from Kemira to produce actually very large quantities. They merged with, I think it was called Live Oak, a couple of years ago, that brought in EUR 400 million in cash. So, they've been spending that as their CapEx source. So that's PHA, I'd say, is probably, you know, no need for CapEx. For the alpha- glucan, it will require CapEx. We've got preliminary estimates on what that might look like. Obviously, it depends on the structure of how we wanna do it. Do we do it ourselves? Do we do it in partnership with somebody else? So, it's hard to comment specifically on profitability. I would say, just generally, we expect bio-based products to be as or more profitable than existing product lines. Otherwise, why would we be doing them? Maybe two additions here. Petri will talk a bit more about the bio-based CapEx going forward and then related to the margin, of course, when we have a scale up period, then of course the margins could be lower, but ultimately we're aiming for higher margins, naturally. If the audience has further questions. There are a couple of questions related to the big picture, Matt, here. About the bio-based target of EUR 500 million. Is the target too ambitious enough given that we have EUR 200 million already? Maybe you can talk a bit about where the growth has come from in recent years. Yeah, that's a great question. You know, if you look at we set the target in 2019 and already hit 200 by 2021, it sounds like, wow, that wasn't too hard. The truth is we already had some capacity investments in place that we're gonna expand that and get that 100. There's really no easy opportunities internally to get another step change in that number. We really need new building blocks, new materials, and new markets that we can go after. It is actually an aggressive target. It means we need EUR 300 million in new sales from now until 2030. Now think about the timeline of these types of products. We're currently sampling some key customers. Again, this is just my experience, but typically, you know, they'll try it out in a few product lines for a year or two, and then it'll start really expanding. I really think that the big growth here is gonna be in the final five years of the decade. Building on that one, so the remaining EUR 300 million that we've aimed to sort of have to reach EUR 500 million, so to clarify, is this about replacing fossil fuel-based products, or is this sort of additional new growth? Yeah, good question. If we talk about, you know, I talked about track two you know, biomass balance products, those are just obviously replacing a fossil-based product, so that's a one-for-one replacement. If I look at that track three, new bio-based materials, these are new, unique products to our company and actually new and unique to the market. Those are gonna be new volume for us. They're not replacing anything we have today. Good. If there are questions from the audience, do raise your hand, but otherwise we continue with the questions from the webcast audience. Taking the next one related to regulation. Can you talk a bit about the regulatory push in Europe and the U.S. to incentivize the use of bio-based polymers? Is there something we can actively do? I hope so. Of course, regulatory is often a bottleneck in terms of speed. I would say that in case of PHA, a lot of the regulatory work has been completed, and a lot more is in progress right now. That one's, I think, on a good track, and I expect that won't be a bottleneck to selling it into our markets. If I think about IFF product and alpha glucan, that one probably is gonna take a bit more work. As to what we can do to speed it up, I think the real key to success there is involving our product stewardship and safety people early on in these projects and getting the work started early. Unfortunately, there's sort of a cadence to this activity that, at least in my experience, I have not been able to speed up by very much. Continuing here with the webcast questions. The question is related to wood-based cellulosic fibers. Do you have cooperation with Lenzing? This is the first question. Then the second one is, how do we then in general share the success from our partnerships without going into the contract details? In terms of specifically who we're working with, I think probably right now I'm not gonna make any comments on that. Our contribution to this is really about making those fibers durable and having the strength they're gonna need to perform in the application. If you look at these sort of water-spun cellulose materials, they're interesting but not very tough. Because they were spun from water, if you put them back in water, they tend to redissolve. Really it's about supplying chemistry that can make that a robust product that can hold up, you know, over the long haul in textile applications. The other thing I'd say on that topic is, I think the current aim of a lot of the companies in this business is not that they're gonna have a 100% cellulose-based, garment, you know, so to speak, that they're making, but it's more of, you know, 50% or 70% of the material going into it would be bio-based, with another 25% being probably something that's fossil-based, like polyester, for example. Good. Continuing. This is related to capital intensity. How do the bio-based products, sort of compare with fossil-based products? Maybe here you can talk about drop-in chemicals or substitute chemicals so that's clear for our audience and listeners on the webcast. Well, obviously for the drop-in chemicals, those are no CapEx requirement from us because we're getting those from external suppliers. In terms of bio-based materials, again, with the Danimer situation, they've invested the CapEx. We're just getting product, so the CapEx intensity there for us is fairly low. For alpha glucan, again, I'm not gonna say the specific numbers here, but we've looked at it and it's, I would say, in line and very similar to the CapEx requirements of our other petrochemical-based processes. Good. Moving forward with the webcast questions. Can you sort of tell a bit more about why have we decided to partner with so many companies? What is the rationale behind here? Yeah, that's a great question. Let's just give an example here. Let's talk about alpha glucan. Let's talk about PHA. Danimer actually didn't start PHA work. They purchased this technology from Procter & Gamble, who had spent about 15 years working on it. Then they took in their technology and have been developing it for the last 10 years. If you think about that, 25 years of work have gone into developing this PHA for the market. Our goal, as I mentioned, is to get in the last, you know, three to five years and partner with people that are going to be successful and then apply their products in our industries. As you can imagine, there's huge cost savings for us in terms of developing that way. I expect IFF is a similar situation. Again, this is a DuPont technology. They spun off IFF or sold it off to IFF a couple of years ago. Again, they've spent almost 15 years working on this enzyme polymerization process, developing these enzymes, developing products, and we joined them in 2020. We've only had two point five years under our belt, and we're already talking about building a commercial facility. I would say, just in general, it's really about speed and getting to the market more quickly rather than, you know, starting a 20-year process. Good. Still a couple of questions. We talked about the pricing, but if we think about sort of input costs, so, how does the sort of pricing compare in terms of bio-based products versus fossil-based products? Any sort of rule of thumb that we could give? Of course, this depends quite a lot from product to product. Yeah. That's a good question. You know, typically in a chemical process, there's a high conversion. In other words, you know, of the raw materials going in, you know, 90%-100% of it kind of ends up in the final product. For bio-based products, that is not always true. In a lot of cases, you know, the amount of input carbon only a fraction of it ends up in the final product. For PHA-based products, that number is 50%-80%. That one actually, for a bio-based product, has pretty good conversion. For the alpha glucan product, it starts with just table sugar. It's 100% conversion to the product we want. Well, I should say 50% conversion because the other half is fructose, which is a side stream that we need to deal with. The conversion in the processes we looked at so far have been actually excellent. Good. As a more general question, so you've talked about the bio-based strategy and how we sort of aim to develop those for our current end markets. The question here is that they are also very much being used in other products such as shoes or fast-moving consumer goods. Have we thought about partnering with other types of companies, for example, Neste or Nestlé or PepsiCo, to replace plastics that are used in their products? Yeah. Great question. We're always looking for new opportunities. We actually have partnerships with some of the folks mentioned. We're always looking at replacement of materials, so I think that's gonna continue. You know, these bio-based efforts, everybody's interested, everybody's involved here, and it's really the winners are gonna be people that have good technology and have a way to commercialize it. Again, if I think about PHA, a lot of people are in the PHA business. They've tried to make it commercial, but very, very few have been successful. Danimer's so far been pretty successful. I think that's the thing we need to look at here is, you know, of the many options that are there, how do we pick the ones that are really gonna deliver success to the company? Good. Maybe a final question from the webcast, if there are none here. You mentioned that sort of things in the chemical industry tend to take quite a long time. Are there any concrete actions that we could take as a company to speed up the bio-based strategy and its development? Yeah, great question. I would say internally, to keep this speeded up is we need to complete the internal R&D and pilot evaluations on all of the bio-based materials that we're doing. Externally, that's really around working with our key customers, working with the new growth accelerator to speed commercialization and monetization of the products that we're introducing. Good. I think we've exhausted the questions from the webcast. We thank Matthew. Many thanks for the presentation. We move forward with the segment. Next up, we have Pulp & Paper. This will be presented by Antti Salminen, who is the new segment head as of mid-August. Before I let Antti on the stage, we'll watch a short video. I interviewed Päivi Suutari of MM Kotkamills, one of our customers, a couple of weeks back, and then we will discuss sort of the trends in the packaging market in this video. Do take note of how much they emphasize the sustainability of their operations and their end products in this short- highlighted video. After that, we hand over to Antti for the segment presentation. Ready to play the video. Welcome to Kotka, Finland, and to the short interview where we'll discuss the trends in the packaging market. I'm here with Päivi Suutari, the Managing Director of MM Kotkamills, a Finnish forestry company. How are the consumer requirements changing when it comes to packaging? Sustainability in packaging material impact buying decisions, and environmental awareness has risen sharply. Consumers perceive a carton board as the most environmentally friendly solution and even switch brands and products because they have concerns about the packaging. Thank you. If we move to the second question, this is also related to sustainability. How is that visible in your everyday work here at MM Kotkamills, and how would you expect that to change the market? Sustainability is one of the leading principles in everything we do, MM Kotkamills. Starting from the supplier criteria selection, to our own products and process developments and to the end product delivered to the customers. If you think about from a consumer perspective, do you see sustainable products as a competitive advantage? And are customers actually willing to pay a premium for these products? For sure, sustainability products are competitive advantage nowadays. It seems that consumers are not always that willing to pay extra for sustainability. Mm. Certain end user groups, yes, but not necessarily a big audience yet. How are your expectations for chemical providers expected to change in the coming years? Good and tight cooperation already at the product development phase, low carbon footprint, in chemical manufacturing and logistics, more bio-based alternatives, and on top of my wish list, like always, stable deliveries of sustainable high quality products in time in our mill. We do our best to deliver. Thank you very much, Päivi, for the interview. Thank you. Thank you. All right. Good morning on my behalf as well, and as Mikko said, happy to be here in this new role. For those that don't know, I was leading the I&W segment for the past five years or so, and now for almost a full month, head of Pulp & Paper segment. I'm really excited to be here in this role. When I was studying the Helsinki University of Technology in the early nineties, everybody was saying that pulp and paper is a sunset industry. Well, I can assure you that it's actually a sunrise industry today. We've heard some of those points from Matt's presentation already regarding the new applications. I will focus now on some of the things that I think are the most exciting and provide the most exciting growth opportunities for Kemira in the pulp and paper customer segment. I will first start with a few words about the past and current performance and then really after that, move into the future forward-looking growth opportunities for us. Of course, I cannot take any personal pride on the results, but the segment that I took over has performed very well in terms of bringing in growth in the recent years and especially fighting the highly inflammatory markets in the raw material side. We've been able to increase the prices with the raw material input costs and keep up the good profitability that we have achieved. We have invested into this business, into growth, meaning CapEx investments for the key product lines. I will talk a little bit about that over the next slide. What we have also done very prudently is to work on the customer relationships. Because pulp and paper industry, of course, is about big, major forest industry customers and building that key account relationship to those ones so that we are deep collaborating with them. As you heard from the customer video as well, their expectation is that we are supporting them from their product development phase and being in there with our chemistry. That is actually visible in our net promoter score. The customer satisfaction results, you see in the green bubbles there, which have been increasing over the years. The latest measurement is 48, which is way above any industry benchmark in terms of customer satisfaction. With these customers that are really appreciating, again, as we heard from the video, appreciating our delivery performance and the technical expertise that we have at their mills. This is one of the key ingredients of success in this industry. As mentioned, we have been over the years investing into the growth in Pulp & Paper segment. We completed last year a polymer investment in South Korea, which is supporting our growth mostly in Asia Pacific, but also globally, because these products travel quite well globally. We are now in the process of ramping up the volumes for that plant. We are currently finalizing an investment, an expansion at our chemical island, chlorate manufacturing facility in Uruguay, with our customer UPM-Kymmene. That's in the, again, heart of one of our focus areas, the pulp production and growing with the pulp markets, as Jari mentioned in the beginning. We are expecting that to contribute financially, starting from early next year. The third one is for ASA sizing, which is a product that goes into all packaging applications and paper and board applications. We are already the world leader in ASA capacity, and we've expanded further at our site in Nanjing, in China, and that investment is expected to be completed in 2023. This is just to showcase that we have been, as a company, investing into growth in Pulp & Paper segment, and we'll continue to do so. Really just completing this kind of a historical part. As you see from the recent quarter's results as well, there's been really nice growth driven mostly by the price increases, but also then sustaining the high margin levels that we've achieved over the years. As Jari mentioned in the beginning, if you look at the volume numbers, then yes, it may look like there's not much tonnage growth, but it's the balance. We lost significant volumes as we walked out of Russia. There was this long UPM strike in Finland, so these both contribute. Then on the other side, if you look deeper, there are also volume growth pockets in the existing business. Then, looking into the future, this is the really exciting part. Jari and Matt also already talked about the wood-based fibers, and the future, and the importance of those. We all know that for the global warming climate crisis reasons, we as humanity need to let go, walk away from the fossil carbon-based economy. One of the solutions there is to go into a fiber-based economy. I think this will be a major evolution over the years because what is a more sustainable, renewable, reusable, recyclable material than wood-based fiber? Cellulose and the derivatives, the new applications for wood-based fiber is a major growth area in the economy, and there will be other applications that we even don't know about today there. This means that basically there's a lot of growth opportunities for us in Kemira. As basically any new application for the wood-based fiber will be based on cellulose, pulp manufacturing, and we are really strong in providing the needed chemistry for any new pulp investments in the world. Much of the growth will be coming from further movement into fiber-based packaging in the board-based packaging. That's the current stronghold and focus area for us. We've been growing a lot with the packaging industry. There will be new further growth opportunities there. There are these new application areas, like the textiles, which I will elaborate a little bit more, and Matt already talked about that. Finally, we are planning to grow also on the service area. Not only being the chemical provider, but providing digitalized services for our key customers in optimizing their processes. We're really expecting growth from A, the existing strongholds that we have in pulp and packaging, B, from these new application areas of the wood-based fiber, and then thirdly, from the services. Those are the kind of future growth drivers for pulp and paper. First, these existing markets and our focus areas within the pulp and paper industry. We've been heavily focusing on the pulp and bleaching market, which is expected to grow moderately. We are growing there with market. It's important to understand, of course, that this is very CapEx-intensive growth. Anytime somebody invests EUR 2 billion for a new pulp mill, they need the bleaching chemistry for that, and there's no such capacity available in the world, so somebody needs to invest. It's a major investment for us if we decide to go. We have very selective strategy there. We are evaluating any new pulp project, and we are investing when it makes sense to us with the most sustainable projects in the areas where they are both financially and environmentally sustainable. Selective strategy there, but needing CapEx for the growth. On the board and tissue, again, packaging industry is driving the growth in the board. Tissue growth is driven by the increased standard of living in the world. More tissue consumed as the developing economies prosper. These are both growth markets within Pulp & Paper segment. During the last years, we've been heavily focusing into these. As I mentioned, for instance, the ASA investment in Nanjing is supporting growth on this area. This is growing, driven by the packaging a bit faster than the pulp market. In both of these selected segments, we are global number two. We are among the very few companies that can provide and support the chemistry and support the customers globally, which gives us a really strong position there, also looking at these kind of new novel future growth opportunities. Now then, the really exciting part, as I mentioned, are these new application areas for the wood-based fiber. Matthew talked extensively about the bio-based products. I will not go to the details of those, but there's a lot of synergies there and applications of those chemistries in the pulp and paper industry. I will further elaborate on two points that Matthew also took up. The barriers and the wood-based textiles, and then talk a little bit about the services in the pulp and paper industry. Barriers, as we all know, the first revolution in the pulp and paper industry, kind of moving it from the sunset into the sunrise was this packaging revolution, all the online shopping. Not only that, really what is driving the further growth in the packaging is the moving away from plastic-based packaging. Because we need to replace the fossil carbon in the economy, in our all of our systems. If you today go to a grocery store, you still, a lot of your food stuff is plastic packed. If you think about how big part of that was packed in plastic five years ago compared to today, you already see the change there. That change will accelerate. More and more food stuff, but also of course, other stuff will be packed in fiber-based packages. Be it then packaging board or be it then other forms of wood fiber used as packages. Now, the barriers are, as Matt mentioned, a really important part of that revolution and change because if you pack something which is liquid or grease containing, the board itself will not hold it. You need the barrier that helps to retain the contents in the packaging, and historically these barriers are polyethylene, and that's oil derivative. The world needs to get out of those oil derivative barriers in the packaging if you really want to make the board-based packaging sustainable. That's where we step in with the applications that Matt was talking about. We have already commercialized our first generation partly bio-based barrier solutions, and we are, you know, at the brink of commercializing the next generation, and there's more in the pipeline. The idea is that we will be the leader in the bio-based barrier market, which will be huge in the future. Now, this is about the packaging, then moving into the wood-based textile industry. Again, Matt mentioned about this already, but to put it in the context. Most of the textiles that we use today are either cotton or polyester or a blend of those, and then there's also some other fibers. Neither of these main fibers are anyhow sustainable. Polyester is again oil derivative, and then you've probably read and heard the stories about the global cotton value chains and kind of, you know, how much arable land is used for cotton cultivation, what are the working conditions in the places where the cotton is, the kind of the whole textile industry, it's really not sustainable. You can say that 96% of the global textile market is non-sustainable today. One of the most promising solutions to replace some of those fibers is, again, wood-based fibers. There are different ways to produce textiles from the wood-based fibers, but some of the really promising startups, both in U.S. and Europe, many of them in Nordics here in Europe, are working in different technologies in basically producing a durable textile from basic pulp. The beauty of these projects from our perspective is that, as Matt mentioned, you need chemistry to make the fiber durable and give it the properties that it can be actually used as any other fiber in the textiles. That chemistry happens to be exactly the chemistry that we have in our portfolio already. Basically, the chemistry and applications are pretty similar to what we do in the paper and board industry otherwise. Plus, that all of that is based on pulp, where we are strong, and we need to work on the kind of expansion on that pulp. Now, this, as well as the barrier thing, both are interesting market for us because these are both brand- owner-driven. If you look at some of these startups in the textile, wood-based textile industry, they typically have investments and ownership or then long-term, financial commitments from the commitments from the brand owners like adidas, Hennes & Mauritz and so forth. All of these big brand owners, or in the case of packaging then, the McDonald's and Starbucks of this world. The brand owners see that the sustainability drive is there, and it will happen. That's why they are investing into these companies that are providing the sustainable barriers or the sustainable textiles from the wood-based fibers. That's why I believe that it's not only empty promises that these startup companies are making, but there's the real economy is behind. It will happen because the brand owners have invested tens and hundreds of millions EUR into this. Now, especially this wood-based textile industry, I see as a great opportunity for us because the growth, if we are to replace globally, even, say, 10% or 20% of the global textile demand by with the wood-based textiles, that growth is huge. We're expecting quite realistically our business opportunity, growth opportunity in this textile space to be hundreds of millions EUR. Not tens, but hundreds or even to the extent of half a billion EUR. That will, of course, then again, need some new capacity from our side and so forth, but it's mostly known chemistry for us. We don't need to go to that 25-year development cycle for the chemical applications. We can, to a very high degree, utilize our current chemical portfolio and just invest into additional capacity in our existing production lines. I see this as a really big growth opportunity for Pulp and Paper. Then finally, the third key growth area are the services. We've been always providing service to our key customers in pulp and paper industry, but what we have been now investing into is that, first of all, we have set up an organization internally within the segment, which is specializing on the service sales. Then we have we collaborate very closely and have invested into some startups in the digi space. Basically, we are providing artificial intelligence-based optimization support for the pulp and paper producers. We have several commercial cases already and the customers are ready to witness that we have achieved energy savings, we have achieved better runnability of their mills, and improved quality of the end product. This is another growth area. A nice growth area in that sense that it doesn't require capital investment. This is really coming from the services and we have set ourself a mid-term target of growing it to EUR 50 million. I personally see that in the longer-term future, something in the range of 10% of the Pulp & Paper segment revenues will come from the services one way or the other. The nice thing about growth in the services is that this is a really sticky business model. If you're that deep in the customer's processes and support them, that gives you a competitive edge compared to the competition there if they are purely a chemical provider. It's more difficult to kind of replace our chemistry with other chemistry if we are that deep, collaborating with the customer there. All in all, as a summary, I think we in Kemira Pulp & Paper are in a really great position to benefit from this fiber-based economy. We have long history in there. We have the broadest product portfolio in the world serving the pulp and paper industry. We have the longest customer relationships, and the customers are appreciating it, as you saw from the net promoter scores. We have global service capabilities organization in every corner of the world to work with the customers there. I think we are in a really good position to benefit from these future growth opportunities there. Going forward, of course, we need to still continue focusing on fighting the inflationary environment and work with the price increases. We need to capitalize on the investments that I talked about here, make them run with the fullest possible utilization. We really need to look into the future and invest our resources into the growth opportunities on these new application areas, as well as in the existing packaging focus market for us. Thank you. Many thanks, Antti. We have a bunch of questions here online, but anything here in the audience? A couple. All right, if we start with Andrés. Thank you. The first question is about the current sales of barrier products. Do they represent about 15% of the total group sales? Less than that, more than that? Can you give us some indication? Again, we don't close this kind of information, but it's relatively small. I mean, majority of our sales come from the bleaching chemistries for the pulp and then the classical sizing and other applications to the board. It's relatively small share of the current portfolio. Thank you. The second is about the size of the opportunity that you can capture in textile. You mentioned the market size is about EUR 6 billion right now. How much chemistry is in those products? Yeah. If you think about the global textile industry, which is the kind of a EUR 6 billion number. You know, some certain portion of that is then converting into the wood-based textiles. Again, nobody knows today. I can say that, let's say that 20% of the global textile market in a few years will be wood-based. Then for that 20% slice of that cake, our chemistry applies. Basically. Then again, it is difficult to say. It depends on an application. On average, these applications are more chemical-intensive than a similar kind of a board and packaging application would be. The only thing that I can say is that it is gonna be a huge opportunity for us. Antti, go ahead. Yeah, thanks, Antti. It It was from Danske. About the service revenues and the profitability of those. Yeah. I mean, how does that compare with the roughly 15% EBITDA for the segment? Of course, the idea is that the profitability is and will need to be higher than the base business. The key thing, though, is that we're not selling the services if we are not the chemical provider. Yes, very profitable, EUR 50 million or EUR 100 million one day, but of course, in the big picture, it's still a small revenue. The real beef is the combination of our chemical sales and the service package with it. Is it also the service business, is it, you know, should we think that's a very scalable in terms of? Yeah. Profitability or? There are more and less scalable elements. There are, of course, some of the traditional services that we have done in the pulp and paper industry require our technical experts to go to the mill, maybe, you know, even be there constantly present. That's, of course, not very scalable business model because it's dependent on the people that you have there. Especially this system analysis collaboration that I mentioned. We have sensors, we have soft sensors, hard sensors, we have remote monitoring, and we have the AI part there. That is very scalable. I mean, it always means that you need to really kind of tailor it to the customer in question and the processes. The startup takes some labor, but after that, it is scalable model. All right, thank you. Heidi, go ahead. Hi, Heidi Tuomola from BNP Paribas. I was wondering about the new barrier applications in food consumption. How lengthy are the regulatory or safety approvals needed if there is a new application introduced? Yeah. As Matt already commented, those are typically very lengthy. We are in a good situation that for you know some of these the hard work has been done already. We're not expecting a kind of a multi-year delays because of the regulatory processes anymore with the applications that we are now commercializing. Yes, in general, those can be very lengthy. Here in between, we can take a couple of questions from the webcast owners. There are a number of questions. If we start from the textile market, Antti, what kind of current products can we use there at high level? You don't have to go into all the details. My understanding is the relative use of chemicals in textiles is higher versus packaging and board. Of course, I mean, again, everything starts from the pulp and then very normal bleaching chemistry goes into there. When you talk about the textile spinning processes themselves, you need basically the same strength and retention chemistries that we are using for the board or paper production. How far in the future do you think this opportunity is? I mean, if we look at the companies working really on this textile opportunity, they have announced or are building their first commercial facilities as we speak. The kind of first volumes will be available and are already. I mean, you can look at, I think adidas has already kind of launched a tracksuit model that is kind of 25% wood-based fiber or whatever. Basically the first commercial textile producers are out there and will be next year and year after. Then, you know, the opportunity is next year for us. It starts small, and then the scaling up will happen depending on, you know, how fast they can scale up their manufacturing technology and how fast the brand owners are actually pulling it. It's really kind of behind the corner. Good. In some way it's more like wet strength to dry strength products like AKD wax. Continuing on this topic, do we have any official partners who we are partnering with to target wood-based textiles? Yeah, we have some partnerships, but again, nothing that I will talk about here. Good. Moving forward, there are a lot of questions. We have five minutes here, and if there is anything here, do raise your hand. We'll leave some of these questions to the concluding Q&A. Let me have a look. We will start from the basic question. Wood supply, what do you expect this to be somehow impacted by sort of global climate change, increase in forest fires and forest pests, then secondly, Russia? Will this have an impact on the wood supply and then on our business? Not claiming to be any kind of an expert on that matter yet. Yes, of course, the climate change in the longer term will have a potential impact on that. The Russia-Ukraine war has had already an immediate impact. There was a lot of wood coming from Russia, which is now completely out of the question. I think it will be out of the game for several years. That has already impacted the wood availability. Of course, if you look at where the kind of big pulp investments are happening, have happened and will be happening, that's really Southeast Asia, Latin America, and then some here in Nordics, because of the different kinds of wood fibers. The big growth is expected from this eucalyptus-driven pulp investments. There, you know, the Russia doesn't really have. So it really impacts the kind of potential future investments here at our home in Nordics. Good. About the competitive pressures. Some companies who operate in different regions might have a feedstock advantage given that oil and gas prices, for example, in the Middle East are low. Is that impacting us? Maybe here you can talk about sort of the importance of local production. Will that have an impact? Can sort of bleaching chemical production be outsourced to other countries? Yeah. Well, first of all, in the bleaching chemistry, it doesn't really play a role. I mean, the key ingredient there is electricity and electricity price. That has the difference. Our strategy has mostly been to kind of select our key customers and support them. We have bleaching capacity in Finland, and then we have built these chemical islands in Latin America, and then we have capacity in South, Southeast U.S. We are kind of there. It all depends. The competitiveness depends on the relative electricity price. If we think about the process and functional chemistries for the paper and board manufacturing, there, of course, these regional differences can be quite big. That's why it is really important for us to be investing in Asia for big growth opportunities in China and Asia, as we already now see in many of the key raw materials. U.S. and Europe are significantly more expensive in terms of raw material cost compared to what the Chinese market is, and it's important for us to be manufacturing in China from the Chinese raw materials to the Chinese customers. That's, again, key thing for us or for everybody to understand that you know, for most part we try to be kind of regionally local in terms of the manufacturing and raw material base because it's not only about the raw material costs, but it's also about the logistics chains and the vulnerability of those. That's why building this local presence is so important. Good. There are a number of questions so we take these later at the end, in the concluding Q&A. Now looking at the schedule, there is time for a short break now. Here in London, there's coffee outside, Tiina, if I'm not mistaken. If you're following online, to keep you entertained, we'll show you two videos. These two customer interviews you will see in full length in the webcast. We will continue at 10:50 A.M. UK time, in 15 minutes. See you soon. All right. Welcome back to Kemira's Capital Markets Day 2022. For the remainder of the day, around an hour and 50 minutes, we will still hear presentations from the other segment, Industry & Water, and then sort of also from our CFO, Petri Castrén. Jari, our CFO, will give you concluding remarks after which we'll still have a concluding Q&A. We aim to finish at noon, UK time. Next up we have Industry & Water by Sergej Toews. Before we go there, let's watch a short video also on this segment. If you followed online, you saw the full-length version already. Here, for the audience's sake, we'll show a highlighted version of the interview that I did a couple of weeks back with Käppalaförbundet, which is one of the largest municipal water treatment companies in Sweden. In this interview, we'll discuss the trends in the water treatment market. Particularly they talk about energy efficiency and tightening regulation. After the video, we will move to Sergej Toews's presentation. With this, we play the video. Welcome to this interview where we'll talk about the trends in the water treatment market. I'm here interviewing. The CEO of Käppalaförbundet, a Swedish municipal water treatment company. If we start by looking back, so what would you say have been the largest changes in the market in the past 10 years? Yeah. A lot of things has happened. Mm. Of course. Let's not talk about the past one or two years because Yes That's been quite dramatic. If you look at the past 10 years, I would say that we see an increasing market. We see a more complex market. We see new technologies that are introduced, and we see much more foreign companies coming in. Of course, this demands new technologies, more energy, more chemicals, more of everything. The market is growing. Yeah, that's what we've seen, I would say. Of course we have a market now with liquefied biogas that is opening up for us. I can imagine. This ties to my next question. If we turn our focus to sort of sustainability, and we all know us, we consumers, are requiring more and more sustainable solutions. How is this visible here in Stockholm and how would you expect that to change? Everything we talk about is sustainability. Yes. The climate crisis, the energy crisis, we no longer talk about a wastewater treatment plant. Mm. We talk about a resource recovery facility. As a company, if you don't care about sustainability, you don't exist in five years. Another topic that we often talk about is microplastics, micropollutants. Mm-hmm. How is this also a bit tied to sustainability? How is that visible here? Well, in Sweden we are all waiting for some kind of national legislation. What specific regulation would you highlight in the coming years? You will have new legislation regarding the sludge, the micropollutants, but also the fact that we're joining NATO. To summarize, put all this into a context, how would you expect your changes for your suppliers to change? Much more open discussion with the suppliers on how can we act in a time of crisis. Many thanks for your insight, Andreas, and thank you for taking the time to talk to us. Thank you. Thank you. Thank you. Thank you, Mikko. Now, these were some really good insights into what our Industry & Water business is all about. Good morning. Today is an exciting day for me personally, as we will speak about what is very close to my heart, sustainability, water, and how we will accelerate our growth in water. Now, as long as I have your full attention, I would like you to remember three things. First, our business fundamentals are strong. We are able to drive performance despite challenging raw materials and utility costs. The demand for our products is resilient over the economic cycles. Secondly, the water market is an exciting market with very exciting trends favoring our business. Thirdly, we are accelerating our growth. Sustainable growth in water treatment. Before we go into the future, let's have a quick recap over the recent development. Over the past few years, we have been steadily improving our business, growing revenue, increasing profitability. At the same time, especially increasing customer satisfaction to superior levels, customer satisfaction and customer loyalty. Looking at our business fundamentals, as mentioned, our products are essential for the society. When it comes to clean water, clean and safe water, reliable and efficient energy production, then our products are essential. Therefore, our business fundamentals are strong. Let me spend maybe a bit time on the customer satisfaction and how did it come that customers have been improving the relationship with us. Well, one of the main reasons is the excellent supply reliability. Our customers are operating in areas that are very critical to the society. Their processes are very critical for clean water. Superior supply reliability is key for them. Now, our close proximity to the customer with a local manufacturing network, we are able to ensure that we deliver on the supply reliability, and that is an important factor. Very recently, we have been expanding our capacity in the local markets. In the U.S., where our products, where we are leading supplier of products that are needed for efficient energy production from shale, oil and gas, we have been expanding and introducing a state-of-the-art polymer facility. Here in the U.K., where new regulations being introduced to increase the effluent water treatment quality, we have been expanding our water treatment product capacity in order actually to ensure that there is enough product to comply with the new regulations that is being introduced. Now, both of these expansions are right now in the ramp-up phase, and naturally also contributing to our organic growth that is visible in the quarterly numbers. Let's look into H1 performance in a bit deeper. Let's start with water. Well, typically, water is a very resilient and very stable market, but the numbers I'm showing here are actually demonstrating quite impressive growth figures. Q2, 27% growth, impressive. Of course, we are living at this time in very exceptional time of inflationary raw materials and utilities. Big part of this is coming from increasing prices in order to ensure that we're able to stabilize our profitability. Mitigating the effects from the raw materials and utility, especially at the same time. Now, if you look at oil and gas, then we're operating in three businesses, oil sands tailings treatment, chemical enhanced oil recovery, and shale. Well, by nature, chemical enhanced oil recovery and oil sands tailings treatments are more stable, while shale is more volatile. Shale at this time is in the recovery phase, driven by the energy demand, both from local U.S., but also increasingly from Europe. That is supporting the recovery also and the demand for our products. Now let's look into the future. When it comes to clean water, efficient energy, then our products are essential for the society. In energy production, we are enabling our customers to significantly reduce their carbon footprint and reduce their fresh water consumption in oil and gas production. At the same time, many countries are seeking for energy independence, and especially those with old inefficient reservoirs. Our products are typically then the only way to support them with chemical enhanced oil recovery or, with shale. In water, we're enabling efficient and reliable clean water supply, as mentioned already a couple of times, but I will mention a couple more times just to remember. We help our customers to comply with ever-tightening regulations. Like here in U.K., regulations increasing. If we would not be expanding, the market would even be undersupplied and the regulations could not be met, right? We also help our customers, as mentioned in the video interview today, reduce energy consumption, one of the big important factors today. At the same time, increase actually the biogas production, which today is more important than ever before. All right. Now, on the next two pages, I want to spend a bit more time with you and go really a bit deeper. What are the trends that we are looking at in water, and how do they help to drive our sustainable growth story? If we start with energy efficiency and process optimization of water treatment, both elements that have been mentioned in the interview by our customers, well, here, the most important trend is to optimize the customer water treatment process, and this is what we are able to do with digital advanced water treatment solutions. Basically using the same process but making it a bit smarter is typically providing a good level on energy savings, so less electricity is needed, and at the same time increasing biogas. This is one of the major trends that has been growing over the past years, and we have been developing the first products here. On the next slide, I will cover a bit deeper how we're gonna address this trend. You might ask, what is phosphorus recovery all about and why is that important? Now, we heard also in the video that from it was spoken about wastewater treatment facility to resource recovery facility. Well, this is exactly about this, phosphorus recovery and reuse. Phosphorus is a very important fertilizer and a scarce resource, especially here in Europe. Europe needs to import its entire phosphorus in order to produce crops and food to feed its population. Without imports, there's not enough food and crops to feed the population. At the same time, most of the phosphorus is ending its life cycle in the wastewater stream. Now if we can recover it from there and make it again available as a fertilizer, this would make Europe geopolitically independent, at least on this resource. Now, micropollutants removal is another important trend, was also mentioned in the video. Micropollutants are toxic substances, toxic cancer-causing substances that are coming from different sources. Can be pharmaceutical residuals, can be coming from pesticides used in farming, all of those ending up in our watersheds. With increasing populations, continuously lowering levels of water, this concentration of these toxic pollutants is ever increasing, reaching critical levels where governments around the world as we speak are establishing new regulations. Actually our customers, so the same customers that we serve today, as we speak, are vetting different technologies to understand what will be the technology that they should introduce to their water treatment process in order to be able to remove the substances from the water. We're still on the same slide. APAC is the last important thing that I wanted to mention from these trends that are above our current main markets. Those of you that have been following us for longer will recognize that we have been speaking about water trends in APAC and in particular in China for the last couple years. With every five-year plan in China, water treatment has been becoming more intensely regulated, favoring actually us. If I take a couple of those, it started with sludge dewatering regulations, which is one of our core businesses, helping our customers on sludge dewatering. Wastewater standards, drinking water standards, again, one of our core businesses here in our mature markets. Moving over to water treatment manufacturing standards and also how basically on the manufacturing corporations and what the product should look like, how the product should be qualified. There are also regulations that are helping us in order to, how to say, to introduce more and more a clean playing field for high standard manufacturers in this part of the world. Now, participating in this growth trends, as you can see, will actually increase the underlying growth profile of our markets that we are participating by 2x. Basically doubling underlying growth profile of the markets. Speak a little bit what are we doing in this particular trends, and why is Kemira the best in order to build its growth story on this particular trends in water? All of these trends are close to us, close to our products, applications and expertise. In our current products and applications, we have a very strong customer base. We are market leader. All of these trends are affecting exactly our customer base. Meaning that everything that is happening there is very close to us. Now, we will address these trends in differentiated ways, naturally. Some of these trends we are addressing through corporations and partnerships, like on phosphorus recovery, which is at number two here. Here, as Matthew Pixton has been already introducing to us, we have been teaming up, co-developing the technology called ViviMag, which as we speak, is being piloted together with Veolia. On some other trends, we will focus more on partnerships and acquisitions. For example, if we start with micropollutants, here, some technologies do already exist. There is a market for technologies, but the new regulations will boost the utilization of these technologies. Brand reputation. Basically, this is a very complicated picture for the first. I don't wanna get lost in the complicated process that you see here on the picture. I wanna emphasize that actually our digital application is helping to optimize a very complicated water treatment process. What I want to emphasize here, that with our KemConnect PT application, which is part of our KemConnect platform, which we have been introducing very recently, we are able to reduce the energy, meaning electricity consumption of a water treatment plant of this particular customer by 30%, and at the same time increase the biogas production by 17%. Now, this is exactly what was also mentioned in the interview. Before it was a strong driver, the strong driver here was sustainability, CO2 emissions, reduction. Now, it comes also with a strong driver to reduce costs for the water treatment operation. Reducing carbon footprint is bringing us also to our oil and gas business. The main trends we see here is carbon footprint reduction in the oil and gas production process. Basically, all of the major oil and gas companies over the last one to two years have been introducing very strong carbon footprint reduction targets in their strategies. Another trend is energy security and independence. As mentioned before, it's a very important topic, especially today. Many countries are looking to become energy independent. The method of choice here is shale or chemically enhanced oil recovery. Now, here you see to what degree our products actually enabling to help the customers in oil and gas production to reduce carbon footprint, and at the same time reduce the fresh water consumption, which is an ever-increasing topic. I think the numbers speak for themselves, quite significant. When it comes to tailings water treatment from oil sands operations, our product enabling the restoration of the nature. Basically, the trend here is that after the oil sands operation, the nature needs to be restored to the state as it was before. Our products are enabling this. Now, this is basically coming to the end, summing up. Of course, mitigating further inflationary environment is our everyday job at this point in time. In oil and gas, we are increasing further our profitability. We have a new plant that is ramping up. We're utilizing it further, supported by the global energy demand. We have some prioritized growth areas, and I have been explaining, these are more the M&A type of areas. Now to sum up, the three things that I want you to remember is that we have a resilient business. We have a solid demand over the economic cycle for our products. Water treatment is an exciting trend, and we are investing in water going forward. With this, I hand it over to Q&A. Thank you, Sergej. Good. Number of questions from the audience on the other side. If we start with the question, any questions yet here, you may digest for a while while Sergej catches his breath, and we start with micropollutants. If we start from our current product portfolio, what can be done with them in terms of micropollutants already? Right. If I would separate micropollutants in two major categories, those that I mentioned and microplastics. Pharmaceutical residuals and all sorts of toxic carcinogenic substances and microplastics. In microplastics, we have been conducting some studies which are showing very effective removal of microplastics from the wastewater treatment streams with our existing products. That is already here, we can support. When it comes to micropollutants that I mentioned before, here, more different technologies are already in the market, like ozonation, activated carbon. Here we are looking more into technology access. The follow-up to this question is that the cleaning up of micropollutants would that require complete change in the current water treatment process as we know it? Well, it would typically mean an addition to the current water treatment process. It will be an add-on that is further improving the water quality. One additional step. Good. There are a lot of questions related to this still. What is the challenge currently in sort of micropollutants and does the current process for water treatment fail at this? You partly already answered this one. Exactly. The current water treatment process is not sufficient enough to treat to the detection levels. We are always improving detection levels, basically, and to actually treat to the detection levels that are currently known and possible. The uncertainty here is the current state of regulation. All of the regulation, be it now in the U.S. by the EPA or in Europe, are being defined right now. There's tests underway in order to define what will be the level, what particular substance needs to be removed to what level. I think that is the uncertainty, and that is what needs to be solved. Good. Related to regulation, so how does tightening a water treatment regulation impact Kemira, particularly at the EU water reuse regulation? Do you expect that to have an impact on us? Yeah. Just before you start, so there's a slide in the appendix of the presentations. There's more clarification there if you want to have a look. I hand it over to Sergej. Yeah. Well, generally speaking, in water treatment, our majority of our business is based on regulations. Whatever additional regulation is happening and being introduced is favoring our business. That is a general answer. For reuse regulation, it will also favor our water treatment products business. Moving on to the oil and gas market. Mm-hmm ... and business. Why haven't we seen a more meaningful pickup in the shale market? If it and when it happens, do we have capacity to meet that demand currently? Yeah. For the first part of the question, the shale industry is still relatively young, so maybe 10 years or so in the market, it is quite volatile, dependent on the oil pricing, and it has been fluctuating more severely than recently. What has happened there? We have some good, healthy oil prices right now, but the shale industry has been also attracting more and more major players, so big players like Chevron and Shell and so forth. These larger players are operating; and behaving in a different way. They are also looking more for longer- term cash returns from the shale business. Therefore, this volatility is with every cycle getting more and more, kind of slower, maybe it's the right word. We see a pickup, but we see a more steady pickup, different from the previous cycles. Maybe coming to the capacity question. We have this new facility in Mobile, Alabama, and that we expect that to be sufficient for the current market needs for the time being. Right. No additional investments in the pipeline at this point. Let me have a look, Sergej, what is the following question? This is more of a general question. What is your main competitive advantage in water treatment, and how do you compare with competitors? Maybe a summary of what you said at the start. Yeah. I think if I bring it really to the key points, we are a global player with local proximity to our customers. I think that is the key advantage, and that is also what our customers favor at most. We have best ability to move products around, make sure customers get product and also benefit from developments in different regions. I think that's the main thing. Any questions here in the audience? There are a couple of questions from the webcast audience related to electricity costs. This will be covered by Petri in a second, and also related to the M&A strategy and capital allocation more general. This will also be covered by Petri in just a matter of minutes. Maybe we take the final question from here before we let Petri take over. More sort of general, this is more on the margin. Petri can also expand on this a bit later on. The margin has fallen in the segment since 2020. What are we doing to improve that? Yeah. Of course, I mean, we are in exceptionally inflationary environment, and we are shortening our checkpoints on pricing with our customers. I so must give credentials to all of our sales people. They have really the most tough job right now being outside in the field. Who asked this question, for your consideration between the segments, the formula-based contracts, Petri will talk about this. That share is higher in pulp and paper. If you compare those margins, that also has an impact. With this, it is 20 past. We thank Sergej, and then we move on to the final presentation by our CFO, Petri. Petri, go ahead. Well, good morning. You've heard exciting presentations about mid- to longer-term growth that Antti was talking about and Sergej was talking about, also some of the longer-term prospects that Matt was talking about. In turn, I know that some of you are worried about what if Europe and the world is going through a global recession, so what will happen to that. I will actually spend some time actually explaining why our business model is quite resistant, recession-proof, and we have some historical evidence on that too. Basically, it boils down to two facts. One is that the end user demand is quite predictable. Most of our products are used in consumables. Whether they are water treatment, like Sergej was talking about, very steady and predictable, or even Pulp & Paper, the processes used in the Pulp & Paper, the volumes produced are actually quite steady. It's very important to remember that the driver for our revenue is the volumes produced by Pulp & Paper producers, not the price of their end products. There's a very relatively narrow band how the volumes are actually changing. We'd already talked about this lag that we have in customer contracts. Indeed, it is a higher share of this annual and longer term contracts that is in I&W, so that's why that has been putting pressure on I&W margins as it takes some time before we get to the next pricing point. Should we go into a recessionary environment, typically with declining raw material prices, then that headwind actually turns to some short-term benefit. Finally, I will spend some time talking about energy, our gas dependency or relatively modest amount of that, and then also explain a bit more about the electricity producing assets and the competitive value that's there. Let's recapture. We've gone through two years of unprecedented cost pressures. The key thing here is that we are now starting to see signs of moderation for those cost pressures. Oil price is already well down from its peaks. The futures, when you look at oil prices, as volatile as they are, seem to be clearly indicating downward pressure versus some of the historical peaks. Some of the oil derivatives like acrylonitrile, propylene prices are coming down. We have seen some recent evidence of even logistics costs, the supply chain problems easing off and reduction on the pricing pressure there. Now, energy costs will certainly be a question mark, particularly near term this winter, possibly a bit longer. Again, I'll come back to that, and we have a relatively good story there, for us. In that sense, what we are seeing, we are seeing signs of moderation on the variable cost side. Fixed costs, certainly we're going into a higher inflationary environment, so we will see salary increases. The share of our... On our cost burden, the variable costs are significantly higher share than the fixed cost. People are worried about 9-10% inflation. We've been living with 30-40% annual inflation in variable costs for the last two years. I welcome the 10% inflation environment from that perspective. All joking aside, but nevertheless, we've been experiencing significantly higher inflationary pressures, and we have been quite resilient in agility in terms of operating in this. You'll see the slide here indicating the dramatic unprecedented cost pressure that we have been on. The equally, I think, good performance of our sales team that Sergej was applauding for a reason is that we've been actually been able to sort of shorten the lag. There is a natural lag of 1-2 quarters when sales prices lag variable cost increases. First, you need to validate that it's there. You need to go to your customers, negotiate and implement new increases. It's. There's naturally always a lag. On top of that, we have number of customers who have annual contracts. Absent of a real hardship, you have to wait for the next pricing checkpoint. We have been also utilizing our sort of global manufacturing footprints to in a way of to our benefit. We were talking about the regional differences in some of the raw material costs. There can be a way how we can lane optimize and use that. Mostly, we've been able to shorten some of the pricing cycles by entering into these new formula-based contracts. We have increased the share of formula-based pricing to something like 35% through the group. Let's spend a bit more time here on the energy slide. Two takeaways here. One, our gas reliance is relatively modest. Seven of our plants in Europe use natural gas as drying or in a significant way. Pre this energy crisis, I didn't even follow the price of natural gas. For the first time, maybe a year and a half ago, when the gas prices started to elevate, I was actually surprised when this sort of came up. This was a EUR 20 million cost in 2021. Now it was more than about EUR 20 million in first half of the year, and second half of the year, it will be probably higher. In the scheme of things, when we have seen EUR hundreds of millions of increase in raw material costs, the energy cost is relatively small for us. It is more relevant for some of our customers and some of our suppliers, and I think there have been some questions about whether we've seen some curtailments. Yes, we've seen some curtailments, but they've been isolated short-term or local in nature. So far, knock on wood, we see that these have not had a material impact for us, and let's hope that will stay this way through the winter, which is likely to become more challenging. I think the electricity assets which we have we own are perhaps not fully quite understood. Currently, we have owned these shares of electricity producing assets in Finland, hydro and nuclear energy. The assets that we have in our books currently are valued at EUR 400 million. We actually increased the value of those in Q2 reporting or half-year reporting. We are actually also waiting quite eagerly Olkiluoto 3, where we own 4% of the production capacity to come online. As people who are following it have noticed that it's after some difficulties, that trial period is going quite well. But again here, just to put numbers a bit more perspective, we list here that it's roughly 60 MW of power that is our share. But if you actually turn that into megawatt-hours, which are then priced, that's more than 400,000 MWh per year. So when you consider that we are getting that at production cost, you can use your own guesstimates of forward prices, what's the gap? But clearly it's a quite significant asset that we have. Similarly, the existing nuclear and hydro assets are existing very valuable assets that we have and we believe are providing us a clearly competitive advantage. On top of that, on the sustainability topic, we're now in Finland 80%, or after Olkiluoto 3 will be 80% backward integrated into a fully fossil-free, CO2-free energy source. That will help our Scope 1 and 2 emissions as well. Consumables. Our products are consumables. Here we took a long-term view. Maybe the point about here is that we have gone through two major recessions during this, is it 13- or 14-year history that is here. After 2009 financial crisis, and then 2020 COVID year, when both EU and U.S. went clearly into downturns. What happened to our results? Both years, our absolute and relative profitability improved. Again, it comes from the fact that we do have this benefit. Typically, we get. I always have to be mindful. Typically, we get this benefit when the raw materials are coming down, and we have this inherent lag in our pricing. There is a good prognosis that should we go into a downturn, this will actually help us. On the financial targets, nothing really new. We are committing to those. You heard about these growth opportunities that we have. Antti Salminen talked about textiles, clearly, you paid some attention to that. Clearly that's a huge and exciting opportunity for us. For the other targets, we maintain the 15%-18% profitability target. I'll talk about that next. Financial profile, we're sort of defining a gearing below 75% for some of you others, maybe more comfortable with the leverage ratios. Probably around 2.5, less than 3x is the line where we're comfortable. If we were to see something really good strategic opportunities, this is not a covenant, so we can go above that. Then we would expect that there's a line of sight how we come back to this sort of range where we also have some further and forward opportunities. We don't want to use all of the ammunition all at once. Talking about the profitability margin. We'll continue to focus on customer profitability. As we have done well, we are perhaps a little behind overall in Industry & Water in that. Clearly, we will need to continue with some of these pricing actions. Again, evidence of that is that just last week, we sent out a press release impacting all of Europe, EMEA, about general price increase, where we are reflecting our prices because of the recent energy spike impacting our operations. Efficiency of operations obviously very important that we get capacity utilized. We have some room to, for example, there was a question to Sergej about our EMEA capacity for sale. There's still capacity in Nordics. We are well-positioned for growth, but we are actually also needing to fill assets. Also we're looking at our product and business portfolio with sort of a very critical eye and where do we need to be and where we want to be. Just yesterday, I don't know if you noticed, we announced that we are selling our Colorants business. Colorants is a relatively small part of sort of standalone business almost within Pulp & Paper. It is profitable, but it's not really growing business. Also because you need to sort of store and have inventory, lots of different color grades, it's quite complex to manage. Therefore, we made a decision to look for a divestiture of that business. Just yesterday announced that we are divesting that business. I believe that this business will be in a better home with a smaller company that is clearly focused on that business. It's better for our customers, better for our employees, for everyone. It's just an example of how we are looking at our portfolio. Again, there shouldn't be any drama if there's something else like that. Looking at our balance sheet, we do have a strong balance sheet, well-diversified debt portfolio, which is putting us in a good place to look at growth, whether it's the organic growth or whether it's some of the inorganic opportunities that Sergej and Jari were talking about. Debt maturities, like I mentioned, are well diversified by amortization profile as well. We are looking at some refinancing activities within the next 12 months. Even in this rate environment where we are seeing increasing rates, it's not gonna be dramatic in any way. Our current interest rates are, I think, the average is 1.6%. This will likely increase a little bit, but as the share of fixed rate loans is two-thirds, and without leases, roughly half or slightly more than half, this will be a very gradual and a sort of non-dramatic change as we look to the future. Clearly, our investments will need to be significantly, and we're looking at investments that are significantly higher return than any anticipated rates would be. Talking about capital allocation. I think here the message is that we are clearly much better positioned for M&A. Our profitability is there, it's improving. We're also guiding improved profitability for this year. Our balance sheet is in good place. We have a good strategy and good ideas of where do we want to grow. Sergej was talking about water, whether it's product or technology. It can be regional expansion as well. It doesn't have to be an acquisition per se, it could be partnership or JV or something else. Let's not look at M&A solely as a purchase of a company. It could, it should be looked at in a broader context. We are looking at inorganic opportunities. We are going into a bit environment that is a bit more difficult that may give us a better valuation opportunity. Some of the recent or past valuations from a strategic acquirer have been quite, let's call it, robust in our view, and we have. We will be prudent in terms of how we are using our financial resources. Bio-based CapEx. There was a question to Matt on bio-based CapEx. There's a bit of uncertainty about the timing and the structure as Matt was talking about. In the big picture, this will be not a step change to our recent sort of CapEx frame. Let's call that CapEx frame EUR 200 million or slightly more per year. That is the way how we are looking at our long-term capital. Clearly, as those bio-based investments will increase, they will increase first in single millions and then some low tens. They will need to fit into this, so it's not an addition to that. Dividend policy remains intact, so paying competitive and over time increasing dividend. Finally, I'll talk about a bit near term. What is there to watch for 2023 as and people are angling. We are looking at or starting planning for 2023. Again, I mentioned that there are some assets or Antti was talking about some assets that are coming online. Fray Bentos expansion increasing our business in Uruguay. We do expect that the market demand is solid for our end products in a big picture. There may be some weakening and some areas of softness, but in the big picture, the end markets are quite solid for our water treatment and pulp and paper business. On the short term, there was again question about shale. Why hasn't the... The shale industry has been actually quite restrained, and they're looking at increasing investment into next year. Obviously, some of the fundamentals are clearly supporting that. We're seeing growth opportunities in oil and gas. As I talked about, the energy assets, we believe, are a competitive asset for us next year. Uncertainties, yes, of course, energy, global economy. What is the type of environment that we are going to? The normal ones, effects and raw material. We will be facing some negative factors, so the fixed cost inflation is here for sure. We're already planning for higher inflation, fixed cost pressures for next year. As I mentioned, it's a relatively smaller manageable problem compared to the variable costs that we have seen. Of course, the war in Ukraine is a negative factor, and let's all hope that it is rather going to the right direction than wrong direction. I'll stop here. I think I'll have some time to take questions and then, before handing over to Jari for concluding remarks. Mikko, you- Good. Managing that process. Yes. Bunch of questions online. Anything here, same procedure, just raise your hand. If we start from online, Petri, relating to yesterday's announcement. What is the size of this business? What is the timeline? Will there be a sort of gain related to the sale of this business? Okay. Well, it was announced as a press release, not as a stock exchange release, so it wasn't material. We didn't disclose the values. I talked about it's a relatively small business. Let's call it tens of millions EUR in revenues and the purchase price associated with that. No major gain on the books for that. Okay. I recall in the press release you said around EUR 50 million in terms of revenue. In that ballpark, yes. M&A, a lot of questions. Mm. Capital allocation. Is your M&A strategy, will that be at the expense of gearing and dividend payout? Maybe a bit of background. What is the firepower we have and what's the priority? I think this is the question. All right. I can give my take, and then maybe Jari may want to give his take at the end, because I think the CEO has a role there and the board has a role. Nevertheless, we are roughly 2x leverage, around 2x leverage. I mentioned that 2.5-3x is where we're comfortable. Depending on what we acquire, let's round up, we are EUR 450 or whatever types of run rate on EBITDA. So that would give us EUR 500 million+, and depending on what we acquire in terms of profitability, types of firepower. Let's call it EUR 500 million to less than EUR 1 billion. EUR 1 billion would be at the high end, I think. This same question has been posed some years ago. I think then the guidance or the range I would have given was EUR 300-EUR 400 million, EUR 300-EUR 500 million. I think that's why we are saying that we are in a better position. The firepower, the tool that we have, I believe is greater than what we had some years ago. In terms of the prioritization of capital allocation, that's really, I think the board will need to give it some thoughts in terms of the measuring against what is the strategic attractiveness of the given opportunity versus touching these. But everybody can do the math. Cutting by a tiny bit doesn't do anything. You need to do more significant. We understand that we have both growth and investors as our shareholder mix, but we also do have our dividend income-focused investors as our shareholders. Good. Continuing on to sort of, divestment part. Would you potentially have more businesses to be divested? Well, we're not actively looking to divest businesses per se. Again, I think I said pretty explicitly that we are continuously looking at our business portfolio and see that if there is rationalization opportunities. I'll leave it at that. Good. A lot of questions previously also about gas. Petri covered this mostly, but just to clarify, do you see risk for your production from gas rationing in Europe this winter? Just to clarify this for everyone. There are some sites, and those sites can be quite important, if not even critical for water treatment, sort of infrastructure locally, that are using natural gas. I would rather say that I think the officials who would be rationing understand the criticality there as well. That's why I feel relatively comfortable that even individual sites will not be badly impacted for rationing. Secondly, in the scheme of things, I mentioned that it's only seven sites or seven plants in Europe and a relatively modest financial burden on us. In the big picture, I believe we are much better positioned than many of our peers in the chemical industry, which is using natural gas, obviously tremendously. Good. If any questions here, just raise your hand. Otherwise, I'll continue with the webcast questions. A lot of questions surprisingly related to energy and electricity. First of all, the electricity assets that we own. Are you getting electricity for a product at cost? Maybe here you can clarify the Mankala principle. Yes. Thank you. A bit more. That was a part from my script that I forgot to cover. Yes, we own this so-called Mankala concept. It's a Finnish term that I can't translate. But it basically means that you are getting the electricity at production cost. The Mankala entity as such is not a profit making company. They actually target zero profitability. And that's the benefit. We do get electricity from these assets at the production cost, whatever their own production costs are, and it varies. Then perhaps another point which I forgot to mention is that we also have a short-term hedging program where we hedge the open positions. 80% of the electricity is now backward integrated, the 20% is hedged. We have a sort of scaling down hedging program that covers the next five years. For example, 2023 is mostly protected. Building on this one, in which segment are the electricity costs more relevant? Percentage of sale we can talk about in general terms. It's clearly the Pulp & Paper segment. The sodium chlorate manufacturing process, like Antti was talking about, is a very electricity-intensive process. It's basically, I forgot now the term, but it's basically very electricity-intensive process. 60%-70% of the costs are electricity. Still continuing on this one. What are your long-term plans for your share in these electricity assets? Would this be a good time to sell and finance your M&A? That's a good question. We have been owning these assets, and clearly, it has been a tremendous benefit for us in times like these. If you actually think about few history, we maybe five or six years ago, we did actually sell down some of the electricity- producing assets at that time. It's not to say that we will never touch them, for example. Right now is probably not the right time. Nobody is. I don't think it would be very difficult to see a consensus between the buyers and sellers. What's the forecast for the next five years or 10 years of electricity prices? If you are missing that, how can you come up with a value? Okay, we have around a couple of minutes. One question from SEB. If you stop doing price increases now, volumes were to remain stable, so how long would it take before we saw the full impact of price hikes? You talked previously about a couple of quarters. Anything to add here? I don't think I have nothing to add, no. Good. Final question, if there's nothing, no more questions here. How do you follow capital efficiency? ROCE or return on capital employed is the key measure, how we measure on an ongoing basis. Obviously, when we are looking at new investments, particularly those type of greenfield investments. That's really critical and we are looking at whether it's from the return on capital employed basis or whether we're looking at from the payback period ratio point of view. These are the key ways of how we are looking at. The simple math is, the simple way is simply add capacity, add utilization rates. The chlorate business has been operating at near full practical or feasible operating rates. That's a good example why high capital intensive investment or high CapEx investments can actually return very nicely. You need to be able to make sure that these high CapEx investments are operating at high capacity utilization. Good. I think we conclude this Q&A here. Okay. Some concluding remarks from Jari, and then we still have a final concluding Q&A after Jari's couple of remarks from Jari, and then we aim to end by noon. Okay. A lot of information today and excellent questions. As I spoke with some people before we started the capital markets day morning, that we can only give you a picture that we think you want to know and then you need to ask the specific ones, and you've done a good job. We have, as Kemira demonstrated, that we are fundamentally stronger as we claimed two years ago in our capital markets day. That's proven that we've been able to cope in these unprecedented situations and even take opportunities from that. We have proven we have that capability. In R&D and launching new products, you heard from all the three presenters, we have ambitious plans. When we announced the EUR 500 million target, it was sort of like this. Now we're there where we start to be somewhere, and we can talk about already concrete progress. We have that capability. We have about 5,000 people in our organization. Two hundred and fifty of those, give or take, a few are PhDs. 5%. We have that capability from a science point of view. By the way, out of eight people in the management board, two people are PhDs. Our base business is in good shape. Yeah, there are pockets that we need to improve, but there are areas that are doing very well. We have a good market position. Water, pulp, board are our strongholds, and there, we want to grow and strengthen ourselves, but obviously, we need to take care of the base business. The new markets and applications that were discussed, bio-based textiles, you name it, micropollutants, are a new opportunity, and we're in a good position to go after those. We have the credibility from the market that we are a player. Petri went through that we are financially solid, well-financed, strong balance sheet. You can see we have a strong team, the management team that I have, but also all the 5,000 people that can react and drive the business the way we want it to be driven. I very much feel that we're well positioned, and we're fit for fight, going forward. Thank you. Thank you, Jari. I've still time for some questions. We don't have time to take all the questions from online, but I said, so do ask. Raise your hand if you have questions, and then I'll take a couple from here, from the webcast audience. Andrés, you had a question. Maybe one thing that I missed today, about the US, your presence in the US, which is very relevant. So can we have some words about it? Well, how do you think about deploying capital there, and how you think about your water business in there? Yeah, I would like to know more about the US presence. We're strong there in water treatment, especially municipal water treatment in the U.S. and Canada. It is doing really good EBITDA percentages even now. Yeah, it's down a bit, but still, it's well above the corporate average. We also have a strong pulp business there, where we are electricity-wise hedged in a sense through formula pricing, which over time works to sodium chlorate plants there that are in good shape. We are in the process of functional business, not only in North America, but also in South America. In South America, we have two other backward- integrated sodium chlorate and one peroxide plant, which we are expanding. It is an important area for us in water, in pulp and paper, and obviously, then shale and oil sands is there. Not treated differently, but we always have more sort of investment opportunities that we need to look at strategically, but we need to also have them compete from a return point of view. If there are further questions, do let us know. Well, sort of a high-level question, Jari. Given the geopolitical risks of this year, are you worried about expanding in China, and then having to deal with potential sanctions if the situation intensifies in the South China Sea, and what this will mean for your future investments in that region? Well, certainly, during the last 6-9 months, we have put in a lot more attention on what's happening in Asia-Pacific and what's happening with China, with the relations with Europe and U.S. Clearly in our mind, no conclusions yet. If I would be saying that I am not more careful, I would be lying. You need to be more careful at the moment. There's the dryness, the heat, the COVID behavior, and then this potential Taiwan situation. We need to be more careful. Good. This is more of a question and perhaps for Petri related to the margin target. Can you comment or rank profitability of sub-segments, pulp, board, and tissue, printing and writing, water treatment, and oil and gas? Maybe directionally because we don't give exact numbers. Where do you see the biggest room to improve margins? Well, it's very much directional comments only because this is the type of information we are not really disclosing. I guess at least those who have been following our webcasts and quarterly results know that while the oil and gas has been on the recovery, revenues are increasing dramatically and in a very good way. The pressure from the raw material side has been quite significant. We're not quite there where we want to be. Within oil and gas, it's clearly an area which we acknowledged. That is, if something is above target, something has to be below average. Traditionally, process and functional business has been more competitive than the bleaching business or the balance. In the bleaching business, there's like Antti was talking about, there's a good balance between supply and demand, which results in relatively good returns. On process and functional chemicals, it's even that this balance is mixed or more on the supply side. Therefore, perhaps it's directionally a comment on that one. I think that's probably all I can say. Yes. Yes. We can be happy with the water treatment business. That's well, yeah, it's a bit cyclical from the raw material side, but strong position and doing well. Actually, maybe one more point. In bleaching chemicals, it's not the margin which is the only target. I think because of the capital intensity, you actually need to look at the return on capital. So that's perhaps, and the business model even change. Sometimes you buy the electricity, sometimes you get the electricity from the pulp mill at a very low cost, but you actually need to look at, really, the return on the capital employed. We tend to talk about sodium chlorate and simplify things, but we have four hydrogen peroxide plants, two in Europe and now a second one being built or expanded in Uruguay. We deal with a lot of bulk chemicals like caustic soda. We import it and distribute it here in the Nordics, but we're the only manufacturer of caustic soda also here. Good. Nothing here in the audience, so maybe a concluding question from the webcast. To the extent we can comment, so how confident are we on H2 and next year? We increased our outlook for the year in May, June, so I think that gives a direction. Next year we'll talk about later. Good. I think with this we're exactly on time. Thank you here in London for participating, also if you're following online. Many thanks for participating and your questions. For us here in London, there will be lunch outside, and for you on the other side of the screen. Thank you for participating and have a nice week. Thank you. Thank you. You're welcome.