Good day, and welcome to Suominen's Q3 2022 result publication. My name is Emilia Peltola, and I'm heading Suominen's Communications and Investor Relations. Today, our President and CEO, Petri Helsky, and CFO, Toni Tamminen, will present the result. After the presentation, there is time for questions. Please, Petri. Thank you. Good morning, everyone, and welcome. If we look at the third quarter for Suominen, our net sales increased significantly, so by 34% and reached a record quarterly level of almost EUR 132 million. The comparable EBITDA improved to EUR 5 million and cash flow from operations was -EUR 10.8 million. Toni will comment more in detail about the third quarter and perhaps this turn that we are seeing. It's interesting to hear what Toni will say about it. Very good. Thanks, Petri, and good morning also on my behalf. Q3 sales actually the highest quarterly sales in the history of Suominen at EUR 131.9 million, and a very nice increase from the comparison period, over EUR 30 million. You could say in rough terms that of this increase, one third came from volumes, one third from prices, and one third from currencies. Happy with the sales performance as such. Share of new products continued on a high level, clearly over 25% of sales, so very good achievement also there. If we go into the result and, specifically EBITDA, we stood at EUR 5.1 million and, positive things that impacted the result were higher sales and production volumes compared to the comparison period. However, margins were still under pressure, so while sales price increased, the input costs increased even more. Raw material and also energy costs. We did implement an energy surcharge in late March, but the energy costs increased even more and hence we have published now another round of energy surcharges in Europe. Of course, good to see that the result has at least now turned for the positive. It was impacted by certain one-time tax credits and incentives from Brazil and Italy. Even excluding those, we were above the previous quarter, i.e., Q2. Perhaps good to mention that this turn in the result performance, it happened during the quarter. Early part of the quarter was still very difficult results-wise. Let's say August, September were clearly better months. Of course that in practice means that the demand improved at that stage because of course prices and raw material costs don't actually change typically during the quarter. We saw really the demand now, which has been one of the anchors pulling us downwards. Now it's, it really picked up during the quarter, as Toni said. Yes. To be more specific, this was especially in the United States where we have been suffering from lower volumes. If you look at the whole profit and loss statement, so again, not that much to comment. Of course, nice to have positive operating profit after a couple of negative quarters. Other than that, nothing special. Costs are higher. That is driven solely by the stronger USD. As you know, we are now at or even below parity when it comes to the USD exchange rate. The underlying costs in local currencies are very much under control. There you can see on the other operating income this impact from these one-time tax incentives. Cash flow unfortunately negative, and the main driver was higher net working capital. As the sales increased towards the second half or the latter part of the quarter, obviously receivables also increase. Inventories increased mainly due to raw material build for higher production. There are still some, as we have reported previously, availability issues with regards to raw materials, and that also drove us in building a bit more safety stocks on raw materials. Perhaps a bit more minor item that in these receivables, they were also impacted to a lesser extent than from the sales, but these tax incentives, they are receivables. Obviously, we did not get cash refunds, but rather credits that we can use for few various future payments. I think that's it quickly for the results. Thanks, Toni. If we then again look at how we are proceeding with our strategy implementation, here is the summary slide of Suominen's strategy. If we look at then some of the examples. For the first time, we were assessed by EcoVadis, and we reached a pretty good level of silver level rating in this first assessment, and that bodes well going forward. We now started our solar panels in Spain, which came, of course, into use at a very good moment since we all know that the energy costs have been significantly higher than what they used to be. The timing of this was very good. Of course, from sustainability point of view, it's very nice as well. We have had a very good year what comes to safety. In the first nine months, we are on target what comes to lost time accidents. We haven't had a single one so far. Perhaps worth mentioning that we have internally also celebrated our Brazilian plant who reached 10 years without LTAs now in late summer. What comes to outlook, there are no changes in that. I think now would be good time for your questions. Yes. Thank you, Petri and Toni. Now it is time for questions. Operator, do we have any questions? If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Harri Taittonen from Nordea. Please go ahead. Yeah. Hi, Petri, Toni, and Emily. Thanks for taking the question. Yeah, just you said quite interestingly that there was a turnaround during the quarter, and I don't know. Looking at, for example, the U.S. growth in the quarter, it looks like the organic growth has been something like 25%. If it's right what you're saying, half of that would be price and half of that would be volume, so something over 10% volume growth. If one thinks of the run rate, like, you know, at the end of the quarter compared to the beginning of the quarter, I mean, can you give some sort of feel how I mean on this turnaround, the scale and, you know, to give a feel of how. What the run rate will be when we are entering the, you know, the last quarter. Yeah, I think. Second question also. Yeah. Okay. Well, I'll let you sort of attack. Otherwise, we forget what. Yeah What your questions might have been. Yeah. So. Sure. No, it's rather significant because we've been struggling since summer of last year with the very high inventory levels of especially these hard surface disinfection products which our customers created. Therefore, the demand for our material has been then very low. In the US, there typically is a back-to-school campaign which you know boosts this HSD demand because all the pupils the school kids will have to have a number of these kind of wipes with them when the school starts. Right. And- Right ... that took place then, of course, the supply chain needs to prepare for that, and our customers, really, they were a bit uncertain of how it would go. This demand in this back-to-school campaign really surprised them very positively. We have, of course, been then following, asking our customers that how do they see their inventory levels? Of course, it is not exactly every customer which has exactly the same situation. They are, of course, somewhat individual. Of course. We have been now hearing and thereafter also then seeing the demand for our products that some customers really started to report that their inventory levels have normalized and others are now saying that they are normalizing. So I think- Okay Successively we will really be back to you know where we used to be what comes to the demand supply balance also in that product. We have really then seen that when it happened basically during the third quarter. Now we of course see our order books for Q4. The change for us is significant. Those production lines which were struggling have a much better utilization rate. It's also part of this whole story is that one of those HSD lines that we have we have been transforming to produce a completely other type of product, and that has proceeded well. Mm. That will also give them more business and more product to be run on that line. Q4 and going forward looks significantly brighter than what still the early part of Q3 did. Yes, I remember you talked about this, the transformation of the line to other type, also already half year ago or something. I would imagine it has now gathered pace and got acceptance in the customer base as well. Exactly. We have now Yeah Several customer qualifications and are now running, you know, continuous commercial runs for that moist toilet tissue product that we transformed that line partly to. Okay. Now, I mean, just if one continues there, I mean, how much are roughly the volumes now in the U.S. and Europe if you compare the current, well, or sort of say the Q3 volumes compared to the pre-COVID levels, just to get that perspective more or less right? Yeah. If you look at yeah, it seems it was an eternity ago. Yeah for COVID volumes and of course, there have been other changes as well. If you think about Yeah What is perhaps more interesting is what does the demand look like and going forward. We have been saying that. Mm We expect the demand, the end consumer demand to be above the pre-COVID levels, and that is indeed the case. We have seen reports from our customers and reviews that we are above the pre-COVID. It went up significantly. Yeah For example HSD product. It went up significantly in 2020, then it came down from the peak in 2021 and now it has stabilized above the COVID levels. Mm. That now includes the very weak first part of the year and the expectation in the customer base is that this is not, let's say, still the new normal after the pandemic. Mm. We would still a bit recovery on a higher level before we get back to the regular growth track. Okay. How about from the capacity utilization point of view? I don't know, I mean, like how there, you know, how much there would be sort of upside potential for or as much as you can say about it, but I mean rough to get a feel that, how much there is like, available capacity that you could produce more, compared to normal or I mean, you're not running flat out yet, so. Mm just to get a feel of the volume kind of potential. Yeah. We see. We are mainly or we have spoken about HSD and MTT as product groups. Yeah. We see the demand picking up also for other grades. If we compare now Yeah how we were running in the latter part of Q3, we were already on a higher level overall in our North American operations. Q4 then starts to look. We still have some open capacity on this. As I mentioned, this HSD inventory melting is somewhat, you know, customer-specific. Mm. Not for all customers will it yet mean in Q4 that they are back to such demand levels as they used to be. Other lines than that have a very good utilization rate in Q4. All right. Okay. Excellent. Finally just on the color on the cost side. I mean, you mentioned that sort of, it's not cost deflation yet, but I mean some of the cost burden easing. I mean, just like where do you see the kind of declines or where do you see the kind of the you know kind of the main kind of developments in the main raw material components of the basket, so to say? It's really across the board. Yeah. That is. Yeah When we have, of course, anxiously been waiting for the turn for Suominen. Yeah. Yeah. couple of the main building blocks have of course been firstly this demand that we just spoke about. The other, of course, has been the raw materials, which have been increasing since beginning of 2021. Now that is the other aspect which is causing the turn, which is the fact that the raw materials in Q4 now no longer really go upwards. Therefore, that turn didn't really impact our Q3 yet, but will be something that we look forward now in Q4 and going forward. I can perhaps tell an anecdote on this that we of course follow up the price development in the various raw material categories. when this started these challenges for us in late 2020, early 2021, and we looked at this review reports, there is the raw materials by grade and then the following quarter and outlook for the rest of the year. First we had a color coding that everything above 5% is red, 5% increase. Then we had to change- Quarter-over-quarter. Quarter-over-quarter. Yeah. We had to change it. Right that only anything above 10% is red. Still this dashboard was orange. And, and still- All red. Still quarter-on-quarter basis as well. Quarter-on-quarter. Now for the first time. Yeah When we look at the dashboard, it's all green. There is not a single- Right category which would have an increase. No, there are some- Yeah which are black. There are some which are black wh ich is in our color coding, it's... Yeah It's then black. Yeah. There was no red on the ground. Yeah. First time in. Right has said since late 2020. Really, it is... It's significant of course for us. Yeah. It's really significant for us. Because as we understand the mechanisms that we have in our pricing, they of course, as we all know, they have always this lag. They are now- Yeah Again, going to Q4, they are based on the raw material costs from previous months. Exactly. Yeah. But yeah- Yeah It's really Yeah For us, it's that also is turning and working in our favor. Okay. No, that's yeah. That's very helpful. Many, many thanks. Do we have any other questions from the lines? The next question comes from Joonas Ilvonen from Evli. Please go ahead. Hi, it's Joonas from Evli. If I may also touch on this, demand capacity utilization issue more from the European perspective. I mean, I guess it's still, there have been no changes in that respect that Europe has developed relatively stable. You have had no such major issues there. Could you remind us about, you have made these small investments in Italy, but I think they have been more like minor line upgrades, no major capacity additions and so forth. Could you discuss that dynamic in Europe? Was your question concerning our investments or Suominen investments? Yeah. I mean, Yeah. Yeah. Your Italian plant investments mainly. Yeah. Yeah. There we had two investment projects in Italy, and one of them was linked to creating flexibility on a production line and actually to enable production of sustainable nonwovens while the previous layout of the machine was such that it could not. That was sort of a product grade change investment, and that has worked out very well for us because the new product that we can and are producing on that line, we call it CPC, so carded, pulp carded, which is one could say a bit sort of second generation sustainable nonwoven for which the demand is very healthy. The other investment that we had in Italy, that was we had an idle production line in Cressa which we modernized and revamped and took into use. That for us was additional capacity that we brought into the market. Okay. Are you willing to give any more? I mean, you said that in the US you basically still have more room to add production. I mean, you're still not really all that high in capacity utilization, but I guess in Europe it's a bit different than. Yeah. We have had a pretty good utilization rate in Europe, and less so in the US as you said. Okay. Maybe final question related to, I mean, this energy cost situation. I guess it's especially bad in Italy. Maybe somewhat better in Finland. How would you say it's in, say, in Spain, and what about the US, like, energy situation? Yeah. We've seen some energy cost increases also in the U.S. of course. The energy market is not, of course, completely global, but there have been some impacts also in the U.S. but much less so than here. As you said, it has been the worst hit place for us has been Italy. Yeah. Spain and Finland definitely less than Italy. Italy has been, for us, the most difficult country. In Italy of course we have. The authorities have been granting some energy tax credits then, but they come somewhat retroactively. They come retroactively, and they do not cover nearly. They have been on the level of 20%. Yeah. They cover some of the increase, but it's difficult to count on them because the industry gets only to know about them somewhat. Yeah in later stage. Okay. That's all from my part. Thanks. Thank you. Thank you. There are no more questions at this time, so I hand the conference back to the speakers. Thank you. We have few more questions here. First, two questions from Rauli Juva. First one: Do you have any covenants in your RCF? And if yes, were you in compliance with those in Q3? Yes, we do have covenants. We have communicated what the covenants are when publishing the RCF. Yes, we were in compliance. The second question from Rauli Juva. How are your energy surcharges working? For example, if energy prices increase further or decrease, is the price adjustment automatic or do you need to announce new prices, surcharges? Yeah. As Toni already mentioned, we've now implemented a second round in Europe. When the energy costs continue to increase, we then announced a next surcharge. We also, in the US, we announced a surcharge during this autumn for energy and other cost increases that we have been facing. We have two questions from Markku Moilanen. The first one: Working capital tied up cash during the quarter and drove operating cash flow in the negative territory despite improved profitability. Can we expect to see release in working capital already during Q4 which could give positive boost to cash flow? Yeah, that is an interesting question. Of course our two main items that tied up capital were the receivables and inventories. Receivables, they're of course not necessarily releasing, but at least there should not be further increase. There might be some. As Petri has commented, we expect the sales to continue on a good level in Q4, but not necessarily releasing from the receivables. Inventory is a very interesting topic. As said, we have built raw material inventories now end of Q3 and we are now end of October. It might be that we could even release some, specifically from the raw material inventories. But it depends a bit how the logistics situation develops. Of course, in general, when the raw material prices are going down, you would like to keep t he inventory is as low as possible since tomorrow the price is going to be cheaper. As very often, I think the answer is it depends. Especially on the inventory side, there might be possibilities to do release some. Of course, especially with the raw material prices going down, naturally the value of the inventory will decrease. Another question from Markku Moilanen: Can you give some color on your capital allocation over the coming 12 to 18 month period? Any major investment on the horizon? We have this one larger project ongoing which we have published, the Nakkila Line development. We have plenty of ideas. Coming a bit back to the cash flow thing, so we need to be conscious also of the liquidity situation of the company. We are of course now at this stage in the process of budgeting next year, so that will then give clarity on next year once that is completed. Thank you. These were all the questions. Before ending this session, I use the opportunity to advertise that our Q4 and full year result will be published on February 3rd next year. Thank you all for participating. Have a good day. Thank you everyone. Thank you. Bye bye.