Dear all, welcome to UPM's Second Quarter 2022 Result Webcast. My name is Jussi Pesonen. I am the CEO of UPM. Today, I'm here in a sunny Helsinki with our CFO, Tapio Korpeinen. Hello to everybody. We will now focus on three main topics. First, we will discuss, of course, our Q2 results and the full- year outlook. We today reported our best ever second- quarter earnings, which is a great achievement taking into consideration that during the first half of the year, we were only having a one month of normal full production. But also, for the full year 2022, we expect to reach a new record of annual earnings. Markets are tight, and volumes will increase. Secondly, as many of you have noted, our operating cash flow was highly unusually moving in Q2. This is related to unprecedented rise in electricity futures prices during Q2, especially in June and the related short-term cash flow impact of energy hedges. Tapio will actually guide us through that discussion later. If the electricity prices of electricity futures will realize, it is a great earnings potential for UPM's energy business. Thirdly, our main growth projects continue to make good progress, and we will add significant new earnings ramping up as early as next year when it concerns our Paso de los Toros mill and Olkiluoto 3. Let's move on to the next page and let's start with the Q2 results. As already mentioned, we delivered record quarter earnings and quarterly earnings driven by successful margin management, which is absolutely have been in our focus. We have been extremely good at commercial strategy, and also cost control has been good. The markets are tight, as I already said. All of our businesses reported strong results despite the rapid inflation in input costs and challenging supply chain and logistics. In April, we still had a strike impact in our Finnish production units. In May, we ramped up production at our Finnish mills, and it went well. In May, actually, we carried out two large maintenance shutdowns in our two Finnish pulp mills. In June, that was the first month of this year of normal full production. Our Q2 sales grew by 7% from last year, and comparable EBIT grew by 26%, and the margin reached 15%. 20% EBITDA margin, 15% EBIT margin. Ladies and gentlemen, at this point, I will hand over to Tapio for more analysis of the result. Tapio, please. Okay. Thank you, Jussi, and in this usual slide on the left-hand side you can see the second quarter EBIT this year compared to the second quarter last year. There obviously sales price increased in all business areas with the largest impact in Communication Papers. That is obviously the biggest positive overall sales prices increasing. Variable cost increased significantly as well, but as you can see here, the positive impact of sales prices was larger than the negative impact of higher variable costs. Delivery volumes were clearly lower and fixed cost higher than last year. Two clear main reasons for this, first, the strike at our Finnish mill still impacted production in April, and our inventories were at a very low level after the first quarter when we had been running down inventories into deliveries. In the second quarters, our capabilities to deliver were limited. Furthermore, as we have already guided earlier, in May, we carried out two large planned pulp mill maintenance shutdowns in Kaukas and Pietarsaari mills here in Finland. As Jussi mentioned, the total maintenance impact on the bottom line of these two shutdowns was EUR 80 million negative on the EBIT level. Finally, changes in currencies, including hedging, had a small positive impact on EBIT. On the right-hand side, you see the sequential comparison to the first quarter of this year. Again, sales prices increased in all business areas, and this was clearly outweighing the increases in variable costs. Production was obviously higher than in the first quarter as the strike in Finland ended in late April, and the ramp-ups in the mills went smoothly as planned. In first quarter, one must note, we delivered significant volumes from inventories, and at the beginning of the second quarter, these inventories were very low, and obviously there was a kind of a normal need to get the inventories to a level where the supply starts to function smoothly. The increase in delivery volumes in the second quarter from the first quarter was still relatively small. Fixed costs increased from the first quarter due to reasons, let's say seasonal reasons and then the two pulp mill maintenance shutdowns. On this slide you see the EBIT development by business area. In UPM Fibres market, fundamentals were strong in the second quarter and sales prices increased both for pulp and timber. Production at the Finnish pulp mill started well after the business-specific collective labor agreements were signed in April. The two major maintenance shutdowns once again were completed. Nevertheless, the strike in April and the maintenance shutdowns still limited performance in the second quarter. Communication Papers had a strong quarter, second best quarter ever for Communication Papers. Demand for graphic papers was good. Average paper price was 14% higher than in the first quarter. This is enough to more than offset the increase in input costs. Delivery volumes still remained lower than in the first quarter, again, as the starting inventories into the second quarter were so low. Specialty papers improved from the first quarter. Demand and prices of release liner and packaging papers continued to be good. Asian Fine Papers markets were softer in the graphic fine papers impacted by the COVID lockdowns in China. Sales prices increased, but the input costs also still were on the rise. Also here, delivery volumes were lower in the first quarter due to the inventory impacts. Raflatac made last year its all-time record quarterly result in the second quarter. Now, performance returned to that strong level, in fact, a new record for Raflatac. Sales volumes during the quarter were limited by raw material availability and then also the discontinuation of sales to the Russian markets. You may remember that in the first quarter, we wrote down the receivables in Russia for Raflatac, which makes the first quarter EBIT look smaller than the underlying performance actually was. In the second quarter, demand for Raflatac's products was healthy, and the business managed its margins well in the environment of high input cost increases. Energy reported strong quarterly results as energy markets were very volatile, prices high, and therefore, we had opportunities to provide value creation from our hydropower generation. The annual maintenance shutdowns at the Olkiluoto 1 and 2 Power Plants took place during the second quarter. Plywood's earnings stayed at the near record levels. Plywood markets were tight in all end-use categories. Our deliveries were lower than in the first quarter as we no longer had the volumes from our Sudogda mill in Russia. In other operations, the markets for UPM Biofuels Advanced Renewable Fuels are very favorable and strong earnings are to be expected once the business can report a full quarter of production once again. Let's move to cash flow then, and let's start with the unusual cash flow from the energy hedges during the second quarter. In June, prices of energy futures show an unprecedented rise across the forward curve. This is illustrated on this chart, and as you can see, both the sort of absolute change and the short period of time where this took place is something literally unprecedented and the levels reached in terms of euros per megawatt hour also record high. Here we are looking at the Finnish price area for our power generation for the energy business area. This is the relevant market for us. In future contracts, market value changes are settled every day. This then resulted in extraordinarily high cash outflow for our energy hedges totaling EUR 1.032 billion in the second quarter. Here again, this is related to the hedging activity that we have. Now what I want to underline here is that this is only hedging for the upcoming volume of power generated from our existing power assets and from our existing facilities consuming energy. Therefore, this cash flow will later be offset by a similar cash inflow either from the hedges assuming that the futures price would be coming down, or then from the time when actually these volumes go into production, power is generated and sold to the market. The cash flow will be coming in during the coming quarters. I'll give you a couple of examples on this. Again, if the futures prices would for some reason suddenly fall back again, then the same daily margin settlement means that the positive cash flow would come from the futures immediately. If on the other hand, futures prices turned out to be correct or continue to go up, then when we generate the electricity and sell to the market at those prices, we get the positive cash flow in over time. To a large extent next year because of course during this year as well, but to a large extent next year, because of course next year we have the full year's production. Then let's say tailing down during the years further in the future. It is of course also possible that if the futures prices rise further, there would be some more capital tied into the futures until it is released as already explained. I think the other side of the coin here in a sense is that obviously if, as I think Jussi was indicating already in the beginning, if electricity prices are rising then in the future at the levels that we are seeing in the futures market today, this would indicate a significant uplift in the bottom line of our energy business area. You can take a stab at it in your models by putting this sort of sales prices for our energy business area for the coming quarters and years. All in all, one can say that there is exceptional uncertainty and tightness in the European energy markets, and this indicates strong earnings potential for UPM Energy going forward. Furthermore, adding to this, Olkiluoto 3 nuclear power plant will increase UPM Energy's carbon-free electricity generation by nearly 50%, at an opportune time. Perhaps some further comments on cash flow. This slide shows our cash flows during the first half of the year. Operating cash flow was EUR -867 million during the first half. The main reason for this, and actually the only sort of unusual item, is let's say the extent of cash flow or related to the energy hedges. Again, during the first half of the year, the cash outflow of the energy hedges totaled EUR 1.1 billion. As I just discussed, this will later be offset by similar positive cash flow. Otherwise, I can, I would say that the cash flow developed as expected. Working capital increased by about EUR 360 million if we exclude the items related to the energy hedges. This mainly comes from inflation, when prices for our sales, sold products or for our inputs go up. It means that the value of receivables and value of inventories goes up. On the other hand, the turnover times of the various working capital items have not increased. In that sense, let's say business as usual. Below operating cash flow, you can see that the investments are taking place at the expected rate. We have guided for investments a total of EUR 1.5 billion in the full year of 2022. Here we have EUR 710 million into investing cash flow. We expect the Paso de los Toros pulp mill and the Olkiluoto 3 nuclear power plant to start contributing to earnings and cash flows already next year, and the CapEx starts to decrease. Obviously, the dividend payment took place also during the second quarter. Net debt increased to EUR 2.688 billion at the end of the second quarter. Net debt to EBITDA ratio was 1.42. A significant part of the increase in the net debt is temporary due to the cash flow impacts of energy hedges and future energy generation. Our liquidity continues to be robust with EUR 1.5 billion of cash and committed facilities at the end of the second quarter. On top of that, in July, we strengthened the liquidity further by signing two new credit facilities, which total EUR 500 million. Here we have our outlook statement for 2022. We expect our comparable EBIT to increase both in the full year of 2022 and also in the second half of the year compared to last year. It is good to know that there remain significant uncertainties in the outlook for the rest of the year. Nevertheless, like Jussi already mentioned, we expect to reach a new record for UPM full year earnings. During the first half of the year, our production was significantly affected by the strike in Finland. As this no longer limits our production, we expect to increase our delivery volumes into the second half of the year. All in all, in the full year results of 2022, the estimated impact of the strike is not material. In the third quarter, we have no significant scheduled maintenance shutdowns. Sales prices and input costs are expected to be higher in the second half than in the first half of the year. We continue to manage margins using all the tools in the toolbox. I would say that one can say which I think Jussi was referring to in the beginning as well, that in the first half of the year or during the second quarter we have had a kind of a speed limit on UPM's performance. The strike, the maintenance activity have impacted our volumes and fixed cost in the second quarter as well. Looking back to the third page, these items on volumes and fixed costs give you an idea of what the impact of that sort of a speed limit on our bottom line has been in the second quarter. Thinking about our performance and sort of development of bottom line going forward, you can sort of remove that and take a view on prices going forward from here. At this point, I think I'll hand it back over to Jussi for an update on our strategic and various projects. Yes. Thank you, Tapio. I might actually comment that what you said about the speed limit, I think that it was well spent, you know, having that speed limit now, we prepared ourselves for the future. With having seven CLAs, which is definitely a fundamentally better position for the cost-competitive operations here in Finland coming in the future. Of course, you know, maintenance shutdowns that we have had in two pulp mills is just that, you know, we are having a solid run for the coming quarters and months. This slide, I want to use it everywhere. I use it internally, I use this externally, especially given the high uncertainty of the business environment. Our focus continues to be very clear. If I put this in two boxes, it is kind of protecting our performance, which is ensuring our performance, where commercial success and cost control are, of course, the fundamental key topics to be handled, i.e., the margin management. But also, on that ensuring performance, we have been taking other actions as I'm going to present that later, which is the sale of the Steyrermühl mill and also the acquisition of the AMC in Raflatac. Plentiful of actions to prepare and, you know, for the full run. The second very clear focus of UPM organization is the transformative growth projects where we have, of course, the Paso de los Toros coming on stream early next year, Leuna on track, and then of course, the Olkiluoto 3 which is not mentioned that many times. Also, like the Leuna mill there means that we are preparing of the next steps, i.e., the biofuels project in Rotterdam. That's why I use this. This is actually very core to how we run the company, how we are focusing our activities. Next page is actually familiar to you and illustrates well our transformation. Through our spearhead of growth, we will grow in businesses where the long-term growth fundamentals are strong and returns are supported by unique competitive advantage of us or entry barriers that are very important for us. This growth is in intensive phase as we know. A lot of our things are happening. I will show you some nice pictures and report what happens in Uruguay and as well as in other big projects. But at the same time, we continue to take care of the competitiveness of the cash flow generation of the UPM Communication Papers business. As you can see from the result that once again, we have been successful on our kind of long-term strategy, proactive actions, taking timely actions to keep the competitiveness there, and of course, the margin management is key core of it. Let's start with the Communication Papers. Obviously, in June, we announced yet another step in proactively securing our competitiveness of the Communication Papers. We will sell Steyrermühl mill with 320,000 tons of newsprint capacity and saw mill to Heinzel Group for conversion to the packaging materials. This once again is a proactive timely action to take care of our future cash flows and long-term development. In May, we also announced an acquisition of AMC AG to accelerate growth in very well-performing Raflatac business. Raflatac as you remember is one of the spearhead of growth businesses for UPM, even if this is EUR 110 million sales, but it's a very important step in our product strategy, but also our regional kind of position in the business. The transaction will strengthen Raflatac's position in filmic labels and in Central Europe. It will also add new attractive self-adhesive label products to Raflatac's product portfolio. Finally, we expect a very good synergies out of the business and when the synergies will be there. I would like to move to our big transformative investments that we have, and Paso de los Toros is the first one. I will talk to you about first the pulp mill itself and then the port or harbor operations. The continuation of the project has gone very well, as you can see from these pictures, but it is something that we are very comfortable with the timetable and cost that we have been guiding you, i.e., the pulp mill will be up and running by the end of first quarter of next year and proceeding well. More than 90% of the construction activity has been done, and a lot of erection and instrumentation is now ongoing on the mill. Some commissioning has already started. We have been commissioning auxiliary boilers and some other parts of the process as well. $3.47 billion is the budget for the mill, and it is actually holding nicely. Port is almost ready. In port, we are a bit ahead of the schedule as well and below the budget. By the end of this quarter, it is actually ready for operations already. That is going to be the lowest cost port harbor operations to deliver pulp from Latin America to the global market. Railway also is proceeding as planned, even if it's not our project, it's the PPP project by the government and it has been lately proceeding and going as the plans has been there. Basically good progress in Paso de los Toros as we speak. As we have been guiding you, that $280 per ton is the cash cost, and we can stick with that number easily. Lot of progress in Leuna and you can see it from these pictures. Construction at the biorefinery site in Leuna in Germany has proceeded well, and the commercial activities in various product and application areas have continued also to advance. The environmental benefit of the biorefinery and the UPM Biochemical Portfolio have been publicly acknowledged with several nominations as we can see. The excellent thing of this mill is that the raw material is not fossil. It is not gas, coal, or oil, but it is solid wood, which is actually giving us a really good benefit going to the future, not only the environmental and sustainability factors, but also when it comes to security of raw material and the price of the raw material. Meanwhile, the detailed commercial and basic engineering study for possible next-generation Biofuels Refinery in Rotterdam in Netherlands also continues to make progress as we speak. Moving to the energy business area, as you know, Olkiluoto 3 Nuclear Power Station plant is finally in its testing phase ahead of the schedule, scheduled start of the commercial electricity production in December, heading there in December this year. UPM participates in the project with 31% share, so we are 31% share owner of the Olkiluoto 3. Olkiluoto 3 will grow UPM's energy carbon-free electricity generation by nearly 50% when this unit is up and running. Our CapEx is presented here. There's no change. Total CapEx usage for this year, like Tapio earlier said, is EUR 1.5 billion, which is including EUR 1.3 billion on transformative growth projects in Uruguay and Germany. Operational investments, investment needs are consistently on a low level. Finally, to conclude, our presentation, our UPM's long-term transformation is visible, also in this picture, which I like to highlight here in shareholder value. Rarely have there been so many uncertainties in this world and geopolitics and in the global economy as we are having it today. Happy with that UPM is having a strong balance sheet. We are having the kind of outlook in our own hands in a way or at least, you know, we are having a lot of low cost capacity coming on stream, i.e., the Paso de los Toros and Olkiluoto 3, where the cash cost level is low. I believe that we are well prepared to face all these uncertainties of our businesses and let's have these focus areas, i.e., the performance, protecting our performance and also delivering in our projects. As said, this year, we are expecting our annual earnings to reach a new record height. This is something that, you know, especially today, happy to announce that we are having a forest and underlying energy webcast on twelfth of September, and hopefully, if this cash flow issue didn't highlight how significant the energy business is within UPM, I hope that on that day on September that will be more clear and there will be a lot more information. Then I will, ladies and gentlemen, summarize my presentation by stating that the record earnings in Q2 and happy with that, especially having this exceptional business environment that is around us. UPM expects also, as I have said and Tapio repeated, record annual earnings for the full year of 2022. Our projects are well online. The unprecedented rise of energy futures prices indicate strong earnings potential for UPM Energy, and we might be the only forest industry company to benefit of this energy market in a scale that, you know, nobody else is doing. With these words, I think that it is the end of the prepared part of the presentation. Dear operator, we are ready for the Q&A session. Now, if you find your question is answered before it's your turn to speak, you can dial zero two to cancel. Our first question comes from the line of Justin Jordan at Exane. Please go ahead. Your line is open. Thank you. Good afternoon, everyone. I've got two quick questions. Firstly, just relating to the energy futures and hedging on slides 5 and 6. If we take the gloriously kind of assumption that energy prices stay stable from here, which I know is the least likely thing, but let's just assume that it was the case, can you help us understand just how this EUR 1.1 billion would unwind? What sort of timeline should we be thinking about for this to unwind? Is this over several years or several months? And how that would play out over, let's say, the remainder of 2022, 2023. Secondly, I'll throw to Tapio. Can you just remind us just, you know, on a routine basis, I know clearly UPM Energy has extensive hedging, but can you remind us just for modeling purposes, what proportion of the energy output is routinely hedged over what time period? On a slightly related area, my second question is all about gas and gas supply and gas security of supply over, let's just call it the second six months of 2022. Clearly, there is uncertainty regarding Nord Stream and its potential transmission over several months. How could that impact UPM? I'm thinking particularly about UPM's Communication Papers business in Germany, and what sort of plans and thoughts do you have in place if the situation deteriorates? Thank you. Well, if I take the first couple of questions, Justin, that you had there, and obviously they are related in a sense that maybe starting from the second one, as we have discussed or described earlier, we are as most energy companies or players are doing, we are sort of looking at our production portfolio going forward across several years and start sort of building our hedging position over the time of several years. It means that we have certain volume of our future output sold forward or futures, in a sense, sold against it, and that we sort of to do over time. Typically, the sort of hedging ratio, in a sense, the amount hedged is higher for the closest quarters and sort of tails down. One can say there is. Volume available in the market over three, four years out, but liquidity is lower and again, as we do this over time, then the. Let's say, at any point in time, the further years, the hedging ratio is lower. The other point which I mentioned already, which is important to note here, is that we only when looking at these volumes, we consider the volumes in a sense that are certain as far as the capacity is concerned, meaning the existing portfolio, so we have not been hedging against the future volumes coming from Olkiluoto 3 because those are not certain yet. We never sort of hedge 100% of the existing production because we want to leave room, let's say, for the short-term optimization of our sales and, of course, any sort of normal variation in output depending on hydro conditions and so on and so forth. That's kind of the overall framework and we don't have a kind of a set path, but we take a view of the markets depending on how we think the fundamentals are reflected on the futures prices and so on. What that means, then to your first question is that, just because of the fact that typically then the hedge ratio in a sense is higher for the closer quarters, than, let's say, as you put it, ceteris paribus, let's assume that everything is frozen as far as prices are concerned from, the end of second quarter than, let's say, the, significant part, of, cashflow would be kind of reversing already during this year related to these hedges and, let's say, somewhat larger part, obviously, during next year, given that we have the sort of full year, hours to generate capacity next year, and then a smaller part to the years beyond that. Again, obviously, that's concerning the hedge outflows. On top of that, we will have the cash inflows coming from the part of the volumes that are not hedged. Obviously, if these kinds of prices we will be seeing in the future, the cash flow will be very robust. When it comes to, let's say, gas supplies, of course, and Nord Stream, perhaps Jussi will comment on that. Maybe you can also say something, but you know, first of all, you know, yes, it is actually Germany where the kind of the dependency is high in gas. Of course, we have been taking a lot of actions already to mitigate that dependency on gas supply in Germany. Luckily, we have also even longer term already invested into the bio boilers, like in Schongau mill we actually have been building bio boilers. Then it is not known to us what will be the order, what is the kind of order when there will be lack of gas, you know, how what's our position on it. Of course, we are generating some kind of combined heat and power as well in our mills to the societies as well. Let's just see how it goes, if there will be a kind of. How it goes. But that is just to at least assure that if that happens, it is not concerning only UPM paper business, but it is the whole forest industry and the other paper companies as well. The markets are now tight, and they will be even tighter market, if this realizes. Great. Thank you both. Thank you. Our next question comes from the line of Cole Hathorn at Jefferies. Please go ahead. Your line is open. Good afternoon. Thanks for taking my question. Just to follow up on the Raflatac business. It's been exceptionally strong over the last quarters and particularly into 2Q. Was there any availability problem getting, you know, release liner or any items from your specialty paper? 'Cause the performance is really good when you would imagine that there'd be some raw material availability considering you were restrained on your delivery volumes. So just wondering if any color on volumes in the Raflatac division that you could provide. Then secondly, on the specialty paper division, you know, the packaging materials and your release liner and face paper business has been very strong. You've talked about this as being a growth area for UPM. Do you see future opportunities to expand your portfolio on the capacity side in there? Any outlook on a longer-term basis would be useful. Thank you. Yes, as Tapio already mentioned, that we did have actually restrictions on raw material supply that was actually restricting Raflatac's deliveries in Q2 as well. Yes, that was the case because of the lack of supply of the raw materials. Raflatac is doing well and the basis, the basis is Some years going backwards when we changed the whole way of managing the whole business and therefore, this is the result of quite a huge change in how we operate in Raflatac. It is not just, you know, this COVID and the war related issues that has boosted Raflatac's business. There's plenty of other things that we have been doing in Raflatac. Happy to see that it is continuing on a high level. As Tapio said that we had in first quarter the write-downs, write-offs of the business in Russia, all in all, was it EUR 30 million or so. Basically even if you add that on that number that we reported in Q1, it would have been on the same level, EUR 63 million level. Very good performance and very much related to what we are doing internally. Spec papers, yes, it is a spearhead of growth. We have opportunities to grow the business. Globally, it is a business where the demand growth is more than GDP growth on average. We are talking about 3-4% growth, trend growth on that business. We do have the opportunity to actually make conversions as well ourselves or think about acquisitions or even new machines. When these plans and decisions are made, then we report on that. There's plenty of opportunities. As a global player you have actually opportunities not only in one region or one country, but in many locations within UPM system. If you just allow one follow-up on the Pulp Division. I mean, you've talked about the maintenance and, you know, the delivery impact. I'm just wondering if you could give any color on, you know, your pulp wood costs and any of the variable cost sides, if that has an impact on the performance in the second quarter, or should we be thinking it is predominantly, maintenance and delivery volume impact? Thank you. I would say limited or no impact in the second quarter because, again, let's say, Fray Bentos's performing very well. Their costs are under our control, wood coming from our own plantations, in Finland, obviously. We have had wood available as the mills were not running for the first months of the year. In that sense, no impact from that in the second quarter either. Thank you. Thank you. Our next question comes from the line of Johannes Gunselius of DNB Carnegie. Please go ahead. Your line is open. Hi, everyone. It's Johannes here. I think I have two or possibly three questions. My first one is a bit of a modeling question, how we should look at Olkiluoto 3 when it starts producing here in December. Could you guide us for what kind of Opex per megawatt or something that we should think about going forward here? Well, we have not given figures on the sort of Opex per megawatt, what is the cost. Generally speaking, what we have described earlier is that, of course, given, let's say, this Mankala structure that we have here in Finland, so we are buying electricity from these associated companies at full cost. Of course, say, for the existing portfolio, the part of the full cost that is related to depreciation capital charges is lower. Olkiluoto 3 cost will be somewhat higher. Again, obviously, with these sort of levels that we are seeing in the market today, there will be very good margin also on the Olkiluoto 3 volumes. I got you. You say somewhat higher Opex, but then for the energy business that we have today. Also, what is good to note is that while the commercial full operations start in December, let's say during the test run, Olkiluoto 3 does generate meaningful electricity, like, in the month of April when the test runs were able to proceed at 60% level. The output of the Olkiluoto 3 plant was at the scale of the whole Loviisa Power Plant with two reactors. Even during the test run, there will be some meaningful volumes coming. Okay. Good to know. That goes into my second question, how one should look at this sort of ramp-up phase for Olkiluoto 3, but I should assume it's kind of full volumes as of December. That's the planning, right? Yes, in principle. You can look at TVO's website. They actually have quite a good sort of disclosure in terms of what is to be expected from the test runs. Obviously, when the full operation comes nearer, they have to communicate on that. Right. My second then question is on Paso de los Toros. If you could help us a little bit on the ramp up phase on sort of, you know, in 2023 when you will be up and running, how we should look at that. Also a question on Paso de los Toros because I think you said that you see that you're comfortable about your OpEx per ton guidance that you have had for a long time here. We know it's huge cost inflation, most areas in the world. How come you can still stick to this guidance? No, that is, you know, if I start that with that, you know, and let's talk about this $280 per ton. You know, obviously when the whole project was done, we were fixing the parts of the costs, i.e., how to generate electricity to the grid, you know, what is the cost of wood because, you know, it is, like Tapio already mentioned in Uruguay, the cost is the wood is coming from our own forests. We know it, so it's fixed. Then the transportation when it comes to railroad, it is pretty much, you know, kind of fixed and low cost. Harbor operations is in our own hands, you know, will be the lowest fixed kind of level of costs. Of course you do have still salary inflation there. You have the ocean shipping, you know, when it comes to fuels and this and that. That is the reason why we are so comfortable with the number of $280 per ton. It's different too, you know, if you compare that to pulp mill here in Finland where the pulpwood prices are something that you don't know what will be the pulpwood prices in the coming years, which is a significant variable cost item in the pulp mill. A lot of chemicals is produced locally there in the mill site. that is the reason why we have the kind of high confidence on the cost level. Okay. Finally on how one should look at the volumes, sort of any indications or color on the operating rates or so, for the first quarters. Not actually guided that, but of course it is proven technology. I would expect that it is actually starting quickly. You know, this is the experience that we have had in the pulp mills towards the nominal capacity, but we have not put any number on it. Obviously, which is great in UPM Paso de los Toros case is that the similar mill is only 150-200 kilometers away from Paso de los Toros, so we are having an excellent opportunity to utilize the knowledge and people to actually get the mill quickly up and running to the full speed. We have not guided, you know, exact numbers, but it is a bit, pulp mills are today like, you know, that when it's not as Olkiluoto 3, but you know, kind of pretty quickly we are reaching quite good level of production. Of course, you are then having this kind of maintenance shutdowns more often than that of what we in UPM have 18 months kind of time span of big maintenance shutdowns. You know, during the startup period, you are having more this kind of project related shutdowns to fix some of the issues and change. We'll see, and most probably closer do we get to the startup, we might actually have some more information about the kind of actual startup. Okay. Thanks for very useful answers. Thank you. Our next question comes from the line of Robin Santavirta of Carnegie. Please go ahead. Your line is open. Yes. Thank you very much. Related to natural gas, I was wondering if you have, and especially if we go into allocation mode in continental Europe, I was wondering if you have any major risk when it comes to suppliers and supplies and when it comes to customers. I think the obvious thing that we discussed before is your sort of direct exposure to the European paper production, but what about sort of clients, for example, in pulp tissue producers? What about chemicals et cetera? Any sort of major risk there that you identify? Pulp is definitely not there. You know, pulp is typically pulp doesn't need any of this, whether it's gas or any other fossil raw materials, only little. Of course then chemicals is one of the topic that you know there might be some kind of restrictions as well. I don't know. That is something that we don't know. Obviously, but as UPM, we are having a global sourcing, and we do source a lot of materials also elsewhere than only in Central Europe. How is it with pulp customers, the tissue producers, the sort of paperboard, paper producers in Europe? Would that then be sort of at risk or is it too early to say? No, that is something that we don't know. Of course it is something very impossible to say exactly how it goes, but of course, it doesn't take the demand out anyway. Where if there will be hiccups, you know, the markets will be tighter and there is a need for delivery anyway. Not that I have at least anything more on this topic. I understand. Two other questions. One quick one maybe for Tapio. Inventories now in Finland, are they normal? Second question, maybe, Jussi, energy business, obviously now in Finland a great support for you. But long-term strategically, is this really a business that you want to have given that you sort of. Is it then even an offset when you produce paper in Europe and not so much in Finland? So could we see any strategic moves when it comes to the energy business in the medium term? If I start with that energy, you know, of course, the energy business is something that I have been asked tens of times over the last 10 years, is it a part of UPM? Of course it is, it is something that, you know, is coming from the history that we have the energy business. We have been taking care of the energy business. We have been really running it efficiently, and we have been building a huge good business out of it, which I think that now starts to be highlighted by these markets that, you know, the energy is not cheap, energy is scarce. Also what we need to consider when going forward is that, you know, can energy be a vehicle for the hydrogen economy? This is something that we have said already earlier this year that, you know, the hydrogen economy is very much dependent on energy and CO2-free energy, which UPM is having a lot of hydro and nuclear power. We do have a lot of CO2 coming out of the pipes of our pulp mills. Basically, suddenly we are having a very lucrative idea of long-term considering of the hydrogen economy. Before just, you know, taking any steps on the energy business, you know, we need to actually think about also the future opportunities of different new businesses. Maybe I'll comment on the inventory question. I think inventories, of course, in a sense we are working to normalize to the extent that we can get the supply chain oiled up, in a sense, working more normally. The fact of the matter, of course, is that we have been now in the spring summertime selling into an empty pipeline. The customers, whether it's paper, graphic paper, whether it's specialty papers, whether it's Raflatac materials, whether it's pulp, the customers have been looking to get material to their inventories. The pipeline has been very empty and basically sucking everything that it can. In that sense, the inventory levels are relatively low still. Let's say, as said, we are sort of oiling up the pipeline going to the customers. I understand. Thank you very much. Thank you. Our next question comes from the line of Linus Larsson of SEB. Please go ahead, your line is open. Thank you very much, and a good day to everyone. My first question is on Communication Papers, and if you could help us with an update on pricing going into the third quarter and maybe also in general on pricing dynamics, which have been somewhat more complex than usually with different kinds of surcharges in the industry, et cetera. Are we now starting from a clean slate at mid-year? Maybe most importantly, if you could give some kind of guidance as to what kind of price change we should expect for the division Q3 and Q2, please. No, Linus, I guess that, you know, I have never, ever, made any guidance for the prices for the future. You know, if you just look at the curves that are published of the, you know, the past, you have seen a huge price increases in the business. I would actually say that to us, it is clearly the focus is in margin management. Whether the costs are going up, then of course we are managing the margin, or whether the costs are going down, you know, we are managing the margin. It is purely margin management to us, you know, and price is one factor on it. We will see how the kind of world economy will develop. How could you in any way talk us through how you've negotiated with your customers? Like, in terms of validities, for instance, should we expect that the majority of your publication paper contracts are on, say, one quarter contracts? Or what's the typical contract that you've closed? Roll to that actually, one quarter or less. I don't know if it's possible to talk a bit more about fibers. You've already very clearly said and explained how the Fibers Division was negatively impacted by the strike at the beginning of the quarter and the two big maintenance shuts in May. If you were to comment specifically on June performance, what could you say then? Also just coming back to the previous question on the inventory situation. If you talk about pulp mill inventories, what's the situation there? Is that the constraint still into the third quarter, please? Well, I would say, let's say overall when it comes to the mill operations, of course, as said, Fray Bentos was running very well in June also. Pulp mills were operating well, I would say overall. Then let's say, of course we have been then already from the Finnish mills during the month of May, but particularly then given the maintenance shutdowns during the month of June, so just starting to fill up the pipeline. Inventory levels are mill inventories and let's say our part of the inventories are still low, but let's say from a kind of again, efficiency of delivery's point of view, it's improving. That's obviously what we have been working here. Okay. Linus, you have seen other kind of troublesome events also in other companies as well when it comes to production. Our production in June was actually already back on track. Yeah. Okay. Good. Good to hear. Then just and again follow up on the wood cost situation. It sounds like you haven't seen much in the second quarter, but in the Fibres division you do have quite the significant Nordic hardwood pulpwood exposure. Are you seeing that sort of cost inflation coming through in the third quarter? Or is it rather even later than that? Well, let's say, of course, what we are now doing with the Finnish mills overall is basically sort of adjusting to the new mix of wood available from Finland. In that sense, the mix of output from the Finnish mills will change somewhat as well, more softwood which is sourced here locally, as there are natural restrictions in terms of how much birch there is growing in the Finnish forests. So that way we are sort of managing to sort of let's say mitigate the sort of pressures on the cost side. There is, let's say you can see from the market figures there is some movement on the sort of market prices in Finland. Again, also looking at the pulp prices, the margins for the pulp business are very good. It fits to our strategy anyway. We are building a you know 2 million ton, 2.1 million ton hardwood pulp mill in Uruguay. Basically going more towards softwood in Finland suits us well. Yes. That makes sense. Just a final, if I may, what mix are you aiming for then in the Finnish pulp production in terms of softwood vis-a-vis hardwood? That we do not actually. We have not guided that. Okay. Great. Many thanks. Thank you. Thank you. Our next question comes from the line of Harri Taittonen of Nordea. Please go ahead. Your line is open. Yes. Hello. Good afternoon. Maybe to continue on Linus's questions on Communication Papers. I mean there's usually this sort of demand sensitivity to prices, and we have discussed this before that is there a risk of high prices starting to have an impact on demand going forward? Related to this, I mean, just if you have some color to give on the customer patterns. I mean, how is paper, printed media used together with digital advertising? What sort of trends or kind of developments are you seeing there from kind of customer behavior point of view? Harri, there's a lot of, you know, kind of new studies that we do in UPM. We are maybe the company that still makes those quite in detail. Of course, there are trends that are supporting also printed version of communication as well. Of course, you know, that's a question that, you know, if the prices are high, you know, how does it affect on demand? I have to say that nowadays, you know, I don't anymore think about it anyway. I will only manage the margin. This business in UPM is a cash flow business, and it needs to generate good free cash flow in all circumstances. If the demand will go 1% downwards from a trend level from what it has been in the past, you know, for the reason that, you know, prices are on that level, that it generates cash flow, then it goes that way. It is not a growth business anymore. If this would be a growth business for UPM or for the business, you know, then you would kind of take care of that. You know, in this situation, the margins and the free cash flow generation is really crucial to us. Yep. Sounds fair. Well, two quick questions. I mean, one is about the Asian paper market now after the lockdowns. I mean, what are you seeing there? The other sort of question was still going back to the energy derivatives and just wondering why the item was so concentrated for the second quarter, because electricity prices did rise already earlier and we did not sort of have smaller numbers, but so this came a bit sort of a surprisingly sort of a big number at one go. Just wondering what the background for that is. I can take the question first and say that. Yeah Look at the curve that Tapio was presenting in the meanwhile. You know? You know, Asian market, of course, the specialty paper market and release liner market for us is strong. It is tight, you know. It is. It has been during the lockdown tight, and it is still tight. Good business in Asian markets. Of course, then the fine paper business that we have in Asia has been having somewhat more challenges. On the other hand, you know, our share of the total Asian fine paper business is 1% or 2% market share. Therefore, we definitely feel that we can make good returns and good profits on that business as well. That has been more kind of soft, due to situation in China. Yeah. Maybe looking at this slide here, of course, I would sort of point out a couple of things here. As a kind of a point of reference, the average actual price of electricity across the whole year last year in the Finnish market, in the wholesale market, was 72 EUR per MWh, which was all-time record. Previous record was, I think in 2010, somewhat more than 60 EUR. Last year's all-time record was 72. Here perhaps the scale is a little bit confusing, looking at the very short-term curves, but if you look at where next year's annual product, 2023, is, that would indicate higher annual price than what we had last year, 150. Well, 50 here. Actually, it's been going up since the end of June further. Let's say not only the change, but also the level is something that we have not seen before, and what did not happen during the first quarter either. That's obviously why this is not something that has been seen before. The other point here is that when prices, of course we have had these cash flow topics in a sense on a smaller scale inflows and outflows in the past, whether prices are going up or down. When it's happening in a kind of a longer period of time, the sort of cash flow impacts are not as significant because on the other hand, when you go to the generation, you'll get the inflows as well. Now when it happens in 30 days to this extent, then you get these sort of issues, and you will see it in the figures when the energy companies, the bigger players as well, report on this. Yeah. Okay. That explains it well. I mean, going forward, I mean, if there is, say, an item of say EUR 200-300 million or so, would you be kind of reporting or commenting those separately in the coming quarters? I mean, just so that we can know a little bit like what happens to that position or what will be the kind of policy on communicating this item. Well, let's say perhaps there is no kind of a rule as such for this specifically, but of course always we will report what is relevant. To understand what is happening on the cash flows then, we'll give you the needed disclosure. Okay. Very good. Many thanks. Thank you. Our last question comes from the line of Saul Casadio of M&G. Please go ahead, your line is open. Hi. Thanks for taking my question. It's just a clarification on again on the same point, the energy hedges. I just wanted to clarify better understand the nature of the outflow in Q2. Was that a sort of a cash call on the hedge, or did you decide to reset the strike? To try to better understand the nature of that and how it will be recouped in the coming quarters. Thank you. Well, let's say our kind of approach here is straightforward. Again, this is very simple hedging through the clearing houses in the Nordic area through Nasdaq. We are buying for our consumption and selling for our power generation futures and again, hedging against expected power volumes from our existing capacity. What happens when you are, let's say, selling futures through the exchange is that there's an initial margin that is posted and then there is the daily settlement of the variation margin. We have sort of given some color in our report on that. Part of this is coming from the initial margin, but the larger part is coming from that daily settlement. Again, either through movement of the futures markets, then we will see the sort of cash inflows and outflows during the coming quarters from the existing portfolio of futures that have been sold. Let's say at the latest when we go to production, then at that point in time we do get the cash inflow from the power sold to the market. Okay. Just to clarify, basically it's just a margin call and there's no resetting of any strikes, so the contracts are running as they have been, underwritten initially. Yes. We have sold futures to the exchange, and then there have been margin calls against that. Okay. Thank you. Thank you for clarifying. Very good. Ladies and gentlemen, thank you for being with us, and maybe one topic that has been highlighted is that UPM is having a kind of one of the main business is energy business, which is totally different to any other forest industry company. Therefore we are having a huge benefit ahead of us, you know, and opportunity in that business as well. Thank you for joining us, and have a nice day.