Good day. Thank you for standing by, and welcome to the Q2 2021 Stora Enso Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. If you wish to ask a question, please press star one on your telephone keypad. For your information, this conference is being recorded today. I would like to hand the conference over to your speaker, Ulla Paajanen. Please go ahead. Thank you. Good afternoon, everyone, and welcome to Stora Enso's Q2 2021 Earnings Call. I'm Ulla Paajanen, Head of Investor Relations at Stora Enso. With me here today is our CEO, Annica Bresky, and our CFO, Seppo Parvi. We will start with presentation and have a Q&A after that. Annica, please, go ahead. Thank you, Ulla. Good afternoon to you all. I am very satisfied with the strong performance and the solid growth that we delivered this quarter. It is a proof point of our own actions and of very good market conditions for our products. If I now move on to some of the key highlights of this quarter, we see a healthy demand for all our core businesses and also improving market conditions for paper. The outlook for the coming half year looks positive, as well as the result of this quarter. Our result is driven mainly by biomaterials, wood products, and packaging materials. Biomaterials and wood products, they deliver all-time high quarters on the back of very good operational performance, good pricing, and a solid and strong demand. We reached the majority of our financial targets, and some of them we also over exceed, which is very rewarding to see. Last quarter, we said we were back on track, but now we are also providing solid proof points that our strategy is executed and it's delivering. We also have concluded our profit protection program, delivering on our promises, which is very rewarding, especially since last year was a very volatile year. All of the actions that we have done here have really supported our result. Our strategy execution is proceeding at very good speed. Oulu kraftliner investment is ahead of the schedule. We have high speed in new business innovation, and restructuring and investing in our paper division makes me confident that we see a turnaround the coming quarters, and that we will have a much more focused and competitive paper moving forward. All in all, I have a positive outlook for the coming quarters, and we reiterate our expectations of this year to be better than last year. Moving over now to some of the key financials, we can see that our sales increased by 23% and 28% for our core areas excluding paper. This really shows, first of all, the resilience we had last year in our core businesses and now our growth transformation moving in the right direction. Our operational EBIT increased to EUR 364 million, more than doubling, and excluding paper to EUR 413 million. Our operational EBIT margin increased to 14%, which is above our target levels, and excluding paper to 19.1%, so very healthy margins for us. Forest asset value increased further both quarter on quarter by EUR 229 million and compared to a year ago by EUR 2 billion. Now our market valuation is EUR 7.4 billion for our forest assets. We have a strong cash flow from operations, EUR 463 million, and after investments, EUR 339 million. Also here we are delivering a strong performance. I'm also very pleased that we are getting our net debts down and our net debt to operational EBITDA is at 1.8, which is under our target of being less than 2x. We have decreased our net debt by more than EUR 300 million. Last but not least, our returns on operating capital employed, excluding forest division, increased to 18.1%, which is very good levels and above our long-term target. We can see now what is driving the result, that it is own actions, being able to push through sales price increases, having a good product mix, delivering on performance of our operations, so production efficiency, and then also good cost control. We have been able to more than mitigate the impact of variable cost inflation. If I stay on a few highlights on our strategy execution, I'm very pleased of how we have ramped up our kraftliner production at Oulu. We are ahead of schedule, delivering EBITDA breakeven two quarters ahead of plan. The commercialization is proceeding ahead of plan. We have reached design capacity, and technically, we are where we should be. Also, costs are lower than expected. A very good job done here, and supported, of course, by a strong demand on the market. Other areas within packaging supporting our growth is the commercialization of products utilizing new barrier technologies. Here our investment in Forshaga is commercializing new barrier technologies that support the growth of packaging and making sure that we have good recyclability of our products. We are, together with Tetra Pak, one of our key customers, taking the lead in ensuring a circular bioeconomy to support EU ambitions. Together we jointly invest in recycling of used beverage cartons in Eastern Europe, and I'll come back to that in just a few minutes. We are also partnering with the packaging technology company Pulpex to industrialize productions of eco-friendly fiber-based bottles and containers. This is an area where we see very good opportunities to grow into new applications. Our feasibility study at Skoghall is ongoing at good pace, and as I've said before, we will come back with a decision of how we proceed by the end of this year. That has started in our pilot plan at Sunila, and I'll come back with a few details on that as well. In wood products, our new CLT production line at Ždírec is proceeding as planned. Construction is ongoing, so we will meet the targets there of a startup in 2023. I'm also happy to say that after the ongoing restructuring, we would see an improved performance for Paper division. We will end up with Paper sales that will be slightly above 10% of Group sales. Here we are transforming to a more focused and competitive Paper division that will be able to serve our customers in a very good way. One topic that's been highlighted lately is, of course, EU's ambition within climate neutrality and the Green Deal. Here, we are confident that sustainably managed forests and renewable circular products, they are part of the solution in reaching EU's ambitious climate targets, and we are well-positioned as a company. We support the EU's Green Deal as an opportunity to transition to a society that's much less dependent on fossil materials and that is low carbon. This is a absolute necessary transition. We are actively engaging in policy development, in promoting ambitious climate targets. With our renewable products, we can really help achieve the ambitions that EU have. In terms of EU taxonomy, that was published in April. We see that we are well-positioned there to fulfill all the criteria related to sustainable forestry. The Fit for 55 package and EU Forest Strategy for 2030, they were published just a few days ago, last week. Here we are evaluating the initiatives. We are constructively engaging with the EU to make sure that it advocates not only climate but also industrial innovation to support the transition to a circular bioeconomy. I will just showcase now two examples of innovation where we see that we contribute to EU reaching these goals. First of all, it's Lignode, wood-based carbon for batteries. The market for these carbons is growing by more than 30% annually. It is driven, as you know, by electrification of vehicles, consumer electronics, and large-scale energy storage systems. Here we have a leading position to really support the need of more than 450,000 tons of carbon material needed in Europe only by 2025. This is a strategic material, these anode materials, for which Europe today does not have a local supply. 90% is imported from Asia and based on coal mines. Here we have a product which is bio-based, it is renewable, it is fossil-free. We think that we have a good opportunity to see a business of its own in the ranges of EUR 1 billion sales potential already by 2025 for us as a company. We are, as we speak, ramping up production of Lignode in our pilot plant in Sunne. Here we want to replace conventionally used graphite from coal mines with our bio-based material. It has lower carbon footprint, it is cost competitive, and it's also high performing in terms of rechargeability of the batteries. Our ambition now is to explore strategic partners that will help us accelerate this scale-up and commercialization. Another area which is of great importance is to take the lead in circular bioeconomy, and here, together with Tetra Pak, we are jointly investing in the recycling of beverage cartons in Central and Eastern Europe. We want to more than triple the recycling capacity in Poland, being able also to take in material from the surrounding countries. We're investing together in a new repulping line at Ostrołęka mill in Poland, where we, as a company, will recover the carton fibers and use them in our board products. Tetra Pak will recover and recycle polymers and aluminum to produce new products and give a second life to those materials. This is another proof point how we can support EU's transition to more sustainable packaging materials. The annual recycling capacity will increase to 75,000 tons in Poland and contribute very actively in the creation of a circular economy. With that, I would like to turn over to you, Seppo, to give us a little bit more flavor on the financials. Thank you, Annica. I start with the key figures from the report that we published earlier today. Top line grew 23% to about EUR 2.6 billion in the second quarter of this year. That is a significant increase from the previous year. Operational EBIT was doubled and was at EUR 364 million, and EPS basic increased 40% to EUR 0.26 a share. Operational return on capital, excluding forest, was at 18.1% compared to 7.8% a year ago in the second quarter. Cash flow from operations continued strong, and cash flow was EUR 100 million higher than a year ago at EUR 463 million. Like Annica already mentioned, net debt to last 12 months operational EBITDA was reduced to 1.8 from 2.5 a year earlier. That is now coming down below 2.0 ceiling that we had defined as a long-term target, and it had been above that due to the restructuring of Stora Enso Group ownership a couple of years ago, and now we are back on track here as well. Moving to our Profit Protection Program that is now completed two quarters earlier than originally planned. This was a three-year program, as you might remember. Total savings achieved were EUR 510 million, out of which EUR 410 million are continuous savings. This is a great achievement by the organization and our personnel and shows the full commitments for the continuous improvement as well. That will be also in focus going forward. We stop now reporting of the Profit Protection Program as we have reached the EUR 400 million continuous savings. Moving to divisions, I start with Packaging Materials, where profitable growth continues, and we can see healthy demand for all products. Sales increased by 20% to EUR 987 million during the quarter, and that is a reflection of clearly higher prices and deliveries. Our operational EBIT increased by EUR 31 million to EUR 144 million. There we see higher sales partly offset by higher production costs. Operational return on capital improved to 18.4%. We see partly still burdened by Oulu Kraftliner mill ramp-up as we are now reaching the break even there. Ramp-up of kraftliner production at Oulu is proceeding ahead of plan, both technically as well as commercially. We have now reached operational EBITDA break even during the second quarter, and this is three quarters ahead of the initial target. We originally communicated a target of first quarter next year when it comes to break-even to be reached. We have also launched new products, Trayforma, a new wood fiber-based product which has low-carbon material for microwave-ready meal trays, was introduced during the quarter. Moving to Packaging Solutions, where we can see very strong growth, but profitability is challenged by continued increases in raw material costs. Sales increased by 21% to EUR 170 million, thanks to higher European corrugated prices and deliveries, but there is slower business activity in China and some delays of the launches of our key customers. Operational EBIT decreased by EUR 6 million and was EUR 2 million. This is a reflection of continued sales price increases that we have taken to mitigate higher raw material prices, but the raw material prices continue to increase and have done so since October, November last year. We are confident that we will be able to catch up as we move forward and once the price increases of containerboard stabilize, then we can be able to close the gap. Actually, the new business impacted operational EBIT also negatively by some EUR 4 million, and temporary higher costs in China during the quarter. Operational return on capital was at 3.6%. In Biomaterials, where we had record results in a strong market. Sales increased by 57% to EUR 453 million, thanks to clearly higher pulp prices and deliveries. Operational EBIT also increased by EUR 127 million, and we have reached all-time high quarter of EUR 145 million operational EBIT. Operational return on capital exceeded clearly the long-term target of 15% that we have set for Biomaterials and was 24.4%. We have launched NeoLigno, a fully bio-based binder during the quarter to provide healthier indoor working environments. In the case of Wood Products, their strong sales with record high profitability and operational return on capital has continued. Sales increased by 38% and was EUR 477 million. That is thanks to all-time high prices. Strong global demand, especially in classic sawn, has been helping the development. Operational EBIT increased by EUR 74 million to all-time high of EUR 100 million. That is thanks to higher prices and volumes that were partly offset by higher raw material costs. Return on capital was at record high level at 65.8%, and that exceeds significantly long-term target of 20% for Wood Products division. Forest, their solid financial and operational performance continues. Sales increased by 13% and was EUR 586 million. We had higher wood deliveries in Finland, Sweden, and Baltics. Operational EBIT increased by EUR 6 million and was EUR 60 million. Their higher sawlog prices were partly offset by higher variable and fixed costs. Operational return on capital remained above the long-term target of 3.5% at 3.7%. During the quarter, we also joined new WWF platform, Forests Forward. Paper division, where restructuring has continued as planned, and improving market conditions together with the restructuring are triggering a turnaround during the coming quarters. Sales were flat at EUR 446 million. Clearly lower prices were offset by higher deliveries. Operational EBIT decreased by EUR 10 million to negative EUR 49 million. We can see the global paper market demand is improving. High variable costs, however, are not yet mitigated through price increases and lower fixed costs. Cash flow of investing activities to sales ratio was -2.7%, but the work continues to come back to the targeted levels there as well. We have taken actions to restructure as well as to invest to make our Paper division more competitive. We are working to have more agile and more independent organization to take better into account the challenging market conditions in the paper business. We have finalized restructuring at the Hylte mill. Final steps since end of last year announced capacity closures there. We are planning to close Veitsiluoto Line 1 during the third quarter this year. We have announced the divestment of Sachsen site as well in Germany. We have also decided to make some investments for the competitiveness at Anjala, Inkeroinen, as well as Nymölla Mills, and we are investing EUR 45 million. Looking at the long-term financial targets development, as you see, it's turning more green now when it comes to dividend growth as well as debt ratios and return on capital, as commented earlier. On the divisions, Packaging Materials still slightly below the targeted 20% level, but as mentioned, it is still in the second quarter burdened by the Oulu ramp-up. Packaging Solutions clearly below at 3.6%, and Biomaterials, Wood Products, and Forest above the long-term target level. Paper, there it continues to come back to the targeting levels. Over to you, Annica. Thank you, Seppo. Moving now to the annual outlook, I see a positive momentum continuing also for the second half of this year. We reiterate our positive outlook for this year to be better in performance than last year. Global economy is recovering strongly from the impacts of pandemic, and we have a very healthy demand for most of our products. The market for paper is improving on the back of restructuring efforts that are being delivered, not only by us, but also by other companies. Supply-demand situation will improve for paper products. We're moving into Q3 and Q4, which are more maintenance intensive. Here we have impact on the costs in terms of cost inflation. Also we have some work that we postponed during the pandemic impacting the total maintenance cost level. If we look at the profit protection program, as Seppo said, it is now completed, so we will not continue to come back to that. Of course, we will continuously work with constant improvements, and that is a key area of our focus, to have good cost control and good sales and price excellence. Oulu kraftliner unit reached operational EBITDA, as we said, three quarters ahead of our initial target. Of course, the cost then for the ramp-up were lower, landed at EUR 20 million-EUR 25 million of total negative impact, below our previous estimate of EUR 40 million-EUR 50 million for the full year. This is also a very positive result of the work that the organization is doing. In terms of any continuous reporting, we will now discontinue that for Oulu. If I would summarize, I'm very satisfied. We have profitable growth. It's driven by our own actions and good market conditions. We have healthy demand for most of our products and improving conditions for paper. We've reached the majority of our financial targets. Our strategy execution is proceeding at good speed, both in terms of innovation, in terms of cost control, and of our key investments. There is a turnaround in sight for paper, which will improve the competitiveness of the division as such. All in all, I'm now open for your questions. Thank you very much. Before we go to the Q&A session, please remember only two questions per person. We have many people wanting to ask questions. Please go ahead and give the instructions now. Thank you. As a reminder, if you wish to ask a question, please press star one and wait for your name to be announced. If you wish to cancel your request, please press the hash key. Once again, it is star one if you wish to ask a question. We are taking our first question from the line of Cole Hathorn at Jefferies. Morning. Thanks for taking my question. If we could just start off with the Wood Products division, which has had a phenomenal performance this quarter. Could you just give us an update of where you see demand and prices have been rising? What is the supply outlook for this division? Are sawmills able to ramp up supply further or will prices be higher for longer in the Wood Products? Is the first question. Moving on to Packaging Materials. We've seen increased announcements for folding boxboard as well as on the containerboard side. When will those higher prices that we're seeing in the market be reflected in your Packaging Materials division? Will folding boxboard only be a 2022 story with containerboard likely being second half of this year and into 2022 if prices remain at good levels? Thank you. Thank you for the questions. In terms of Wood Products, I think we see a continued strong demand both in Europe and overseas. We have many products, construction projects in our pipeline. The renovation spree is continuing. If we look at EU and the long-term ambition for green buildings, building with wood is really supported through the directives. Short-term, if we look at the coming quarters, I see a continued good outlook for Wood Products. The supply/demand situation is somewhat restricted. There are not a lot of inventories out there. I think that even if we would see a normalization in half a year or so, the fundamentals of growth in this area are there. We have to remember that wooden-based buildings, they are only constituting a few percentages of all construction. We see many schools, many offices, many actions in terms of building with wood that are in our pipeline. In terms of classic sawn, we know that market is more volatile, but our building solutions business is more stable. They are balancing each other in a very good way. We have assigned more shifts to our production already in the beginning of the year, so I believe all sawmills are running at their capacity at now. If we move over to Packaging, we are fully booked on all machines. We have a very healthy demand both within consumer board and containerboard. For containerboard, the inventory levels are really low. There is a tight supply/demand situation. Therefore, we have seen continued price increases both in kraftliner and in testliner. Of course, this is reflected in the results of corrugated, where we have been able to pass on some of the inflation in the raw material side, but by far not all. Within corrugated packaging, we will continue to push for price increases, and we will see an improvement in the coming quarters. As I see it, all our areas are supported by growth that our customers have, both liquid packaging board, folding boxboard, and the containerboard. I'm quite optimistic. Great. Thank you very much. We're taking our next question from the line of Robin Santavirta at Carnegie. Thank you very much. First of all, related to the paper business, you talk about the turnaround, and I was wondering if that is more related to the demand and the price outlook you are seeing now for the end of this year and next year, or then to the restructure you have. Also related to the paper division, is this a part of the company that is in any way core, or are you considering some structural measures to get rid of this business in the midterm? That's the first question. If we look at the demand-supply balance, it will improve, and that is because many companies have announced restructuring actions. As they are implemented, you would see a tightening demand-supply situation, where it's adapted to the new baseline that we have seen now after the pandemic. As we said, also, our own restructuring with Kvarnsveden and Veitsiluoto, the mills will be stopped in Q3, and that's when the capacity actually disappears from the market. The same has been with the other actions that other players have done. Year-over-year, what we see now is that the demand is improving since many economies are coming back. There is a 22% demand increase in quarter-over-year. This year, the demand will improve by 3% for the full year. This is the fundamentals that need to be in place in order to be able to push through price increases. Still, we do not see it in the result this quarter. We are not yet fully mitigating the increase of raw material costs, such as PfR, paper for recycling. The prices for paper for recycling will also normalize, and we, in the coming quarters, are pushing through price increases to compensate for that and mitigate this inflation. Our restructuring efforts will create a more focused and streamlined paper division, as we explained, and we will see the impact in Q3, Q4. I'm optimistic for the coming quarters for paper. Paper's position strategically. Yes within the company. Well, I think I've gotten this question many times, and we will continue to work as we have been working. It's going to be a smaller business for us. After this restructuring, it's only going to be 10% of our sales. I've said before that if there are interested parties out there that would like to acquire our paper business, we are interested to have a dialogue like that. Also, in the meantime, we will work with improving the performance, getting back on track, and delivering on our key financials for paper division. With the actions that we are taking, I'm confident that we are creating a much more competitive and good division for the future. This is where we stand at this point. In terms of core businesses, we have our growth businesses, which are Packaging, Wood Products, and Biomaterial Innovations. Then we have our value creation areas, such as forest and biomaterials. In those terms, paper is no longer a significant part of our sales. I understand. The second question I have is related to China. We've seen some weakness in the pulp market and also in the consumer board market now this summer. Is this, in your view, more of a seasonal pattern? What do you expect going into the high season in the autumn related to consumer board in China and pulp? I would agree with what you say. July and August are seasonally weaker months for China. We know that the market picks up ahead of Chinese New Year. The fundamentals for growth in China continue to be there, long term, both pulp and packaging grades are growing significantly in China. I would see this as a temporary thing. We know that the Chinese market is more volatile in both packaging and in pulp. What we see in Europe is as the economies kind of start getting back on track, that we have increases in prices in Europe for pulp and also for our packaging boards, where we are pushing through price increases. I think here it's important to have a balanced portfolio, which we have. Good. Thank you very much. We're taking our next question from the line of Harri Taittonen at Nordea. Yes. Good afternoon. Thanks for taking the questions. Maybe just on the packaging side and on this material increase in delivery volumes, is this the absolute maximum now for the deliveries? At least looking at the shipments against the new level of capacity, it looks like it's fairly fully utilized at the moment. Well, we are fully booked, but there is always. Sure operational equipment efficiency that you can improve. I see here that we are taking actions in debottlenecking existing assets. We have still potential in all our machines, I would say. We are driving both kind of targeted investments where we can take bigger steps, but also this day-to-day constant improvement of production efficiency. We've targeted investments in our pulp mills to improve their performance, in debottlenecking our board machines to support the growth. I think it's both the long-term strategic, but also this day-to-day work that we're doing in better operational efficiency. I would like to say that the last one to two years, we've put a lot of effort in our startups after the annual maintenance shuts. Here we have improved our performance significantly. It will be very interesting to see now this autumn and our ways of working and processes, if we can keep that trend. Okay, thanks. The second question was is about the new products and related, particularly looking at the sort of lignin pilot plant. Just how long does it take to commercial scale? When could there be a decision and what could be the typical investment scale when that time comes? I know that you have some other pilot plant stage, for example, in biofoams. What sort of product area in this sphere of new product would you say that is the closest to getting to commercial scale? If we look at the big kind of footprint, it is lignin that has the potential to be a significant growth engine. With the Sunila investment, we will be able to test and commercialize at the same time, because even though it's a pilot, and it is small scale at the start, it is commercializing the product that is kind of happening with the pilot production in Sunila. As I said, I would say that the coming five years is when we will co-invest with other partners and drive the acceleration here. It's too early to discuss what type of CapEx levels will be needed, but we will work with our customers, and that is the key point of commercialization, that we do this in partnership with the value chain key players to enable this accelerated scaling up. We are now just proving the technology needed, how we will construct the bigger site, and then that will happen during this year, and then we are ready to go for a full scale-up. Okay. That's very good. Thank you. We're now taking our next question from the line of Lars Kjellberg at Credit Suisse. Thank you. Annica, I just want to come back a bit to your outlook. Of course, you're already above last year's level, and you're optimistic for H2, as you called it out. Can you share any more color on what you really think? Because, again, you're already above or met your target of being above last year. I just wanted to come back a bit to wood products. To your point, classic sawn, you mentioned that as a principal driver for the profit improvement, you talked about the stabilization of the more sort of value-add products. Also in the presentation you talk about, or I guess in the results note, you talk about strong growth in the construction business. I just wanted to understand what is really driving this profitability, how big a portion is the construction of that improvement, or are we just looking at volatile classic sawn timber going through the roof, which, to your point, is volatile? Those were my questions. If we look at the outlook, I cannot give more flavor than to say that we see a continued strong demand. I do not see any major drivers that would create a setback for quarter three for the businesses that are growing and that are kind of having a good profitability. In those terms, I cannot quantify more. It is a positive outlook. I've been more conservative before, as you are aware. In this terms, we see that we can deliver on, I think, a good level also for the continuing half year. If I may add, I think that. It's fair to say that assuming that COVID-19 remains sort of under control, vaccinations move forward as they seem to be and are effective, and trusting then that global economy continues to recover and stay strong, there's no reason why our performance would not continue to be strong, like mentioned by Annica. Yes. Then in wood products, if we look at what is driving the performance, there are several areas. One is, of course, that there were very low inventory levels in U.S. last year. The booming renovation and also construction industry, there is a lot of historical, how should I, lagging in projects of construction that U.S. and many other countries, also in Europe, there is a demand for renovations. Of course, pandemic, there was an uptick of do-it-yourself projects in many countries, and the inventory levels going in were low. There have been some logistical supply chain challenges of transporting, which has also impacted pricing. If I look at the construction side with wooden buildings, there, the pipeline of projects that we have is very healthy. It is not as volatile as sawn timber. I do not see for sawn timber anything indicating that quarter three would be different. There is still a restricted supply for sawn goods. For the coming two quarters, I see a continued strong performance for sawn timber. On the construction side, on wooden building solutions, there are a lot of projects in the pipeline. Schools, it is football arenas, it is offices, it is multi-story buildings, and in many countries, in Asia as well as in Europe. If you have noticed in Finland, for instance, there are clear projects of wooden cities and so on. This is a trend that I expect will continue. Having a balanced portfolio where sawn timber is more volatile and then having an area in building solutions also growing with our new project in Ždírec having more capacity and the ramp-up of Gruvön site, that will give a good condition to continue growing within wood products. Here also we see continued positive, even more positive momentum, thanks to, for instance, last week recently announced EU Forest Strategy as well as climate package. Thank you. I have a few more questions, but I'll get back into the queue. Thank you. We're now taking our next question from the line of Johannes Grunselius at Kepler Cheuvreux. Yes. Hello, everyone. I want to come back on the interesting thing, carbons for batteries. You open up a little bit more there or speeding up, I suppose, the ramp-up concept here. Previously you have indicated 35% EBIT margin for these activities. Is this still true, or have you done any changes on this lately? No, we still see a very strong margin business here. Okay. I was also curious about you mentioning partners. Could you say who are they? I suppose industrial partners. Are they battery manufacturers or other industrial partners? Both battery partners, of course, which are the direct customers, but also the automotive industry, and energy storage industry, which are setting the requirements. I think for these types of innovations, it is about true partnership in the value chain, and we are exploring that now to set a partnership collaboration business model here to be able to ramp up a local supply in Europe. I think there are many interesting companies, both in the automotive industry in Europe, and also battery customers, that want these materials. There is a restricted supply for components for batteries in large. Okay. Yeah. If I may ask just a final question, and that's on Oulu. If you could give some flavor how we should think about this for next year. I know what the capacity is here. Will you be able to run this at full capacity for next year, would you say? Could you help us to have perhaps provide an indication of the OpEx per ton or something like that or a ballpark earnings level for Oulu, that we can think about? I will not provide you with any earnings levels for Oulu. I will say that we have only run the mill now for two quarters. Of course, commercialization of the high-end and premium products is still ongoing. This is why I'm so positive with the achievement that already now we see a very solid earnings performance, and that will improve going forward. There is always more capacity to get out after design capacity. If you're good at what you're doing, you will be able to get excess production out of the site. At this point, we stabilize, we have a stable production level, which is the best precondition to make sure that we can drive the quality improvement now that we have for the highest grades, and fully getting the product mix that we want on the machine. That is the focus for the coming half year. Okay, got you. Thank you very much. Thank you. We are now taking our next question from the line of Linus Larsson at SEB. Yes, thanks a lot, and good day to everyone. It's pretty clear from what you're saying that you're seeing very strong markets in your various areas of operations. How do you see input costs developing in the third and fourth quarters, variable costs in general, but maybe wood costs in particular? We do not see any significant kind of impact here. We have been able to mitigate already in Q2, and we will continue to do so. We have very good sourcing processes. Our major input costs are fiber costs, and here we have been able to push through price increases to our customers and not only maintain margins, but actually improve margins. Of course, we constantly monitor what is happening on the logistic market and so on. There, we have had to take cost increases, but then we have been able to reduce costs in other sides. Good cost management is what we are doing here, and we will continue to do that. I don't see anything alarming going forward. I agree with Annica's comment, I would add that the biggest pressures are, as you said, Linus, on wood side, especially log prices, but that is balanced by pulpwood prices. Energy costs are somewhat up as well. Logistics have been stable now in Q2, There were increases during the first months of the year because of the increased volumes globally and shortage of especially containers and some small pressures on chemical side, I think they are very manageable, like Annica already mentioned. Great. That's helpful. Maybe something completely different on the EU policy that you touched upon, and I appreciate this is to large degree work in progress, and a lot still has to be said about it. Could you maybe discuss with us a bit already today what the practical implications may be for Stora Enso from this set of different EU policies now being proposed? With the EU taxonomy to start with, you say that you're very confident that you comply with it on the forestry side. Do you also see other areas where you comply? When it comes to the Fit for 55 and the Forest Strategy, how do you see that impacting harvesting levels, wood availability, and potential cost pressures and your possibilities to operate? Again, I understand it's still early days, but what's your thinking at this stage? If we look at EU taxonomy as such, I think it's tougher for smaller private forest owners. There is increased reporting of climate impacts and so on. We as a large company, we have the processes that are in place so we can manage on those levels. In terms of being a green business, we are kind of fully in line with our sustainable forest management. In terms of Fit for 55 and EU Forest Strategy, it is very early days. This is a directive, so we have to remember it's not legislation. We are looking at the areas where we do have concern, and it is making sure that a sustainable forest management is acknowledged in EU as a driver for climate benefit. Here we are driving a lot of advocacy in making sure that our position as an industry and a solution provider for achieving positive climate impact in EU is fully acknowledged. I think it is early days, and we would need to come back to this topic once we have analyzed a little bit more what possible implications it may be. Wise of own experience, we have seen many changes in these directives over the years. This is just a first starting document. I will need to come back on this a little bit further ahead. Sure. I appreciate that answer. Thank you very much. We're taking our next question from the line of Justin Jordan at Exane. Good afternoon, Annica and Seppo, and well done on a strong Q2. I've got two separate questions. Firstly, on Packaging Materials, where you describe the outlook as healthy demand for all products. In the 13.4% growth in deliveries in Q2. Can you help us understand, clearly that's benefiting from the successful ramp-up of Oulu, which clearly ahead of schedule, but in the sort of more consumable type areas, can you just give us some sort of quantification of what the organic volume growth you've seen in, whether it's first half or Q2 specifically has been? In North America in particular, we've seen price increases announced in areas like the U.K. and folding boxboard. Is there scope for that, secondly, in Europe, in your view? Secondly, I guess coming back to your Slide 7, EU climate change and forestry policies. There's an interview on Bloomberg today from Seppo talking about the essentially Fit for 55 when it comes to board and paper-based product, the substitution effect is not fully recognized. Can you just help us understand what exactly you're referring to by that comment, please? Thank you. If I start with Packaging Materials and the demand there, it is clearly very strong and in folding boxboard, and in liquid packaging board, we are growing with our customers. Here, as you know, the contract structure is a little bit more stable. Pushing through price increases and compensating for increased variable cost takes a little bit longer. We see that our major customers, such as Tetra Pak, SIG, Liquid Packaging, they have very healthy growth outlooks. I'm quite confident that we will be able to continue with that. If we look at the EU Forest Strategy, I think there is a recognition of Packaging Materials as being a solution to replacing other materials, such as plastic components or plastic packaging in the society. What is not fully recognized is the forest's role as a driver of climate mitigation that forest management and the products that come from forest are part of replacing fossil-based materials. We need to make sure that we do not just look upon the forest as a carbon sink, but rather make sure that it is fully recognized in Europe and in many countries where reforestation needs to happen. That is one of the initiatives that's very good in EU, that it's now also targeting reforestation. That you can see that forests, if they are sustainably managed, they can both mitigate climate change, but also provide products that replace less eco-friendly products on the market. Here we are just in the beginning of that transformation, I believe, in both packaging, in construction, where a lot of the materials used today, like concrete or steel or plastic, have enormous CO2 footprints. This is what I mean when I say that it is not fully recognized that there is a big potential for our industry to really enable EU to reach their targets. At the same time, protect biodiversity and have growth in forest. This is not a contradiction per se, and we have proven that in the Nordics, where we have had our practices for sustainable forestry for quite some time. As I said, this is a continuous discussion with EU where we are engaging and have a lot of good dialogue. I'm confident that we will see the impact coming forward in a positive manner. Yeah. Best wishes for continued success in the discussions and lobbying. I appreciate it's a marathon, not a sprint. Sorry, I didn't catch what you said. Sorry. All I was just going to say is best of luck with the lobbying. I appreciate you have material forest assets in Sweden and Finland and extremely well-placed to benefit from any EU climate change and forestry policy. Best wishes on that in coming years. Yeah. We're now taking our next question from the line of Mikael Doepel at UBS. Thank you. First off, on the graphic paper side, just to clarify the numbers you, Annica, mentioned there in the beginning. You talked about 22% demand increase in Q2 year-over-year, and that the full year demand should improve by 3%. If you could just clarify, is this on a global level? This is a European level? Is this for graphic papers overall? Who's doing the estimation for the full year and so on? Just a bit of a clarification there, but also on paper, I was wondering if you could give some indication of what kind of a price hikes you have been able to achieve, for mechanical papers in particular, going into the second half of this year. That would be my first question. Well, the demand is overall, so it's not a European demand. It is a global demand improvement. It is for all of the segments within graphical paper in general. That is kind of the foundation for that data. If we look at commenting kind of price increases looking forward, unfortunately, I cannot do that, as you know. We have had several price hikes during the end of Q2, and we are pushing through that to mitigate the raw material cost increase. That is unfortunately all I can comment at this point. Okay. My second question would be on the pulp markets and maybe on Europe in particular, and if you could just talk a bit about what you see in the European markets right now in terms of demand for pulp, in terms of customer inventories, producer inventories, and in particular, price trends, what you see in Europe now. We've seen, as you pointed to yourself, price volatility or declines actually in China. Europe seems to still hold up fairly well. I was wondering what you see in the European pulp markets right now, please. We have seen a continued demand increase through the quarter, and price increases there. The supply, if I look on a global level, because it is like China and Europe, it's all interlinked, so it's very difficult to separate the one area from the other. The supply is tight for pulp on the market, and it's driven by a few factors. One is that quarter two was quite maintenance-heavy. There were many companies that had postponed maintenance activities during the first year of the pandemic, and now they took a chance to prolong their maintenance shuts during quarter two. There have been logistical challenges in supplying pulp to the many corners of the world, as you are well aware, with everything going on in logistics side. If we look at inventory levels, the global inventory levels, they are for hardwood, for instance, they are eight days below the five-year average. And for softwood, they are in line, the global inventories, with the five-year average. Moving then forward to quarter three, which is usually a maintenance intensive quarter, supply is going to be restricted again. I see that for Europe, there is a continued healthy, balanced supply-demand situation also going forward the coming two quarters. Okay. Thank you very much. Thank you. There are no more questions on the line. Ulla, please go ahead. Okay. Thank you, Andrea. Thank you for everyone participating our Q2 earnings call and the lively discussions and good questions. I will now hand it over for Annica for final words. Please, Annica. Thank you, everyone. As I said in the beginning, this was a quarter that we are proud of, and I'm satisfied with our performance. We have strong performance and solid growth both year-on-year and quarter-on-quarter. I see we have a positive outlook going forward, and I'm excited to talk to you again in quarter three report. Thank you very much, and I wish you all a nice summer. Thank you.