Good day, and thank you for standing by, and welcome to today's Q3 2021 Stora Enso Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. I must advise you that this call is being recorded today, Tuesday, the 20th of October, 2021. If you require any further assistance, please press star zero. I would now like to hand the conference over to your first speaker today, Ulla Paajanen. Please go ahead. Thank you, Jules, and good afternoon to everyone. As Jules said, this is Stora Enso Q3 2021 Earnings Conference Call. It will be presented by our CEO, Annica Bresky, and our CFO, Seppo Parvi. After that, we will have a Q&A session. Annica, please go ahead. Thank you, Ulla, and good afternoon to everyone. I'm very pleased to be here today and present yet another quarter with robust growth and profitability. Our strategic transformation program is progressing really well. We have a powerful foundation for growth going forward. We have seen that we have been delivering solid results. Many divisions have had record high deliveries and results this quarter. Our top line growth in our key focused areas, packaging materials, wood products, and biomaterials, have been very strong. Also, our forest assets are yielding very well. We also today announced an investment in expansion of the attractive end user segments of packaging to accelerate our growth for sustainable packaging, underpinned by a very healthy demand in that sector. We are in a very strong position to end this year on a high level, and I'm very happy for the strong performance that we have shown this quarter, considering the market conditions. Moving over now to operational EBIT and our results, a few highlights. Our profits are trending up, so we more than doubled our result compared than last year. Our sales have increased by 24% year-on-year, excluding paper, almost 33%. Our operational return on capital employed, excluding forest, is above our long-term target of 13%, reaching 20% level. All in all, we are trending in the right direction. Moving on now to the impact of some of the input costs that we have had in logistics, energy, fixed costs, and other variable costs as well as fiber. You can see here that we have been able to offset that impact very well through the quarter through our increased sales prices and improved product mix. That is all in all building up our result for this quarter. On our strategy execution, we are taking decisive action to grow our packaging position following a very strong demand in sustainable packaging. The long trend here is very favorable. Our pilot production of Lignode is progressing according to plan. We are here evaluating the different options of partners that we have to be able to scale up and industrialize this opportunity. With the restructurings that we have done the latest quarter, we will move towards an impact of totally 10% of total sales after the closing of Veitsiluoto and Kvarnsveden sites is terminated. We did that at the end of this quarter. We also divested our Sachsen paper mill last quarter. All in all, paper business will have a very small impact on our overall sales and results going forward. I'm also happy to say that our remaining business in paper has an improved position on the market. It is competitive, and we can see a turning around. We also see that due to the actions that we have taken, we and other players on the market, the balance in supply-demand is more favorable for paper. We're also implementing a decentralized operating model, which I call back to in a few minutes. Looking now at one of our key areas of growth, sustainable packaging, we today announced that we want to invest close to EUR 100 million at our Skoghall mill in Western Sweden, to enable and accelerate growth in high-margin business. This is supporting the ambitions that our customers have, and Skoghall site in Sweden is a key strategic asset for us with a very competitive position and a global quality leader. The segments that we're aiming for is Liquid packaging and other consumer board grades, which see a long-term strong trend in sustainability that we want to capture. The debottlenecking of the existing production line will be completed by second half 2023, and it would yield about 100,000 tons of additional board grades to the market. If you remember, we initially communicated a total investment level of EUR 800 million-EUR 850 million based on us also doing a pulp investment, but we have decided not to proceed with that at this stage. Our ramp-up in Oulu Mill in Finland has been very successful. We delivered EBITDA breakeven 3 quarters ahead of the plan, and we've already reached the quality demands on the market. We want to capture the strong growth in the packaging board grades. Therefore, we have decided to proceed with a review of the second idle line that we have in Oulu. This is to capture the opportunities we see on the market, and drive market share in packaging board grades. Coming back now to our decentralized operating model, we want to strengthen the execution of the strategy and achieve customer intimacy. Our different businesses have different roles. Some are growth, some are value-creating. To empower them and get a more agile and quick decision-making closer to the market, we are driving an organization where we have focused functions, focusing on scale areas across the company. We drive performance culture through our different businesses, through business-specific processes and closer to customer decision-making. We have also communicated today that we have set ambitious targets for 2030, and the goal that by 2050, we want to be 100% regenerative. As you know, European Commission has a very ambitious climate agenda. We fully support that. This is an opportunity to transition to a low-carbon society. We, as long-term owners of sustainably managed forests and having renewable circular products, we are part of the solution to reach these ambitious targets. By developing products that not only reduce harm, but also are positive from a biodiversity, circular economy, and CO2 footprint, we are taking the lead in this area. If we look at what that actually means in concrete steps up to 2030, it means that we align our CO2 footprint through science-based targets with the 1.5-degree scenario. We do that by reducing the CO2 emissions, not only in our own operations, but also with our partners and suppliers. We look at our products and design them for circularity, we want to have circular design guidelines by 2025, 100% of our products should be recyclable by 2030. In the biodiversity area, we have a detailed action plan towards 2030 to achieve a restoration in biodiversity. We do that by having 15 indicators on ecosystem, landscape, and species level. We will transparently communicate our indicators to show progress in these different areas and have an outside-in perspective, a science-based approach to this. Through these three major steps, we want to take the lead and be leading in the sustainability area, also going forward. Before I hand over now to Seppo to give you the details of the financials, I guess you're all aware that the European Commission has conducted an unannounced inspection at several member states and premises of several companies acted in the wood pulp sector. Stora Enso was one of these companies, and we had an inspection at our headquarters in Kanavaranta in Finland last week. We are fully cooperating with the authorities and sharing all information enabling this inspection in every possible way. European Commission carry out such inspection, that does not mean that the companies are guilty of anti-competitive behavior or that this is a prejudgment of outcome in any way. We are under strict confidentiality, we can unfortunately not share any more details on the proceedings of this investigation. I just want to stress that as a company, we have 0 tolerance to antitrust and anti-competitive behavior, having processes in our company and making sure that our employees understand what this means through constant education. With that, I would like to hand over to Seppo to take you through the financials. Seppo, over to you. Thank you, Annica. I start with the financial key figures from the report that we have published today. Sales for the quarter were up 24% year-on-year and reached EUR 2,577 million. Operational EBIT more than doubled and was more than EUR 10 million, and earnings per share EUR 0.38. Return on capital employed excluding forest was clearly above targeted 30% level, reaching 20%. We continue to generate good, strong cash flow from operations, and we had in Q3 this year EUR 485 million operative cash flow. This is thanks to good profitability and good working capital management. Our debt has been coming down as well as our EBITDA going up, and thanks to that, our net debt to operational EBITDA is down to 1.4 at the end of Q3 this year. Moving to divisions, I start with packaging materials, where we had excellent quarter. Sales were up 28% year-on-year, reaching all-time high. This was driven by higher deliveries, mainly thanks to ramp-up of production at Oulu and higher prices. As communicated earlier, Oulu ramp-up is moving ahead in good order very well and ahead of the plan as announced earlier. Operational EBIT was up 37% year-on-year, and this is also all-time high at EUR 153 million. This is thanks to very strong Containerboard performance as well as good performance at the Oulu Kraftliner Mill. Higher sales were partly offset by higher variable costs. Operational return on capital was at 19.5%, and this is close to long-term target. Here I want to remind that even though that Oulu is ramping up well and performing financially better than expected, it is still at the ramp-up phase and the full effect is obviously in the balance sheet. Going forward, that improvement should be visible here when it comes to return on capital. Moving to packaging solutions, and there we can see that strong growth continues. Sales were up 24% year-on-year, reaching EUR 180 million. Sales were driven by prices as well as increased sales in innovation and services. These are following steep increases in Containerboard raw material prices earlier during the year, and those are still going up. Operational EBIT was at the same level year-on-year, but we are catching up with the price increases to close the gap between higher Containerboard prices and our own selling prices. This is visible as input margins in corrugated. This is to somewhat offset by increased investments in the new businesses that we are developing and higher fixed costs relating to that. Operating return on capital was at 12.6%. This is still below the long-term target. In biomaterials, we had record third quarter despite some global logistics challenges that we are also facing here. Sales were up 40% year-on-year. This was record high third quarter. We can see clearly higher prices currently. European market has been holding quite well. Partly good sales were offset by slightly lower deliveries due to global logistics disturbances. We saw some volumes moving from third quarter to Q4. Operational EBIT was up EUR 111 million at EUR 118 million. That is second highest third quarter. Positive sales prices were partly offset by higher maintenance costs due to changed maintenance schedule. Operational return on capital was at 19.6%, clearly above long-term target. In wood products, we also had all-time high results. Sales were up 48%, reaching EUR 503 million, and prices were at record-high level. We saw slightly lower classic sawn deliveries during the quarter. Operational EBIT was significantly up year-on-year 228%, which is also all-time high at EUR 123 million. We had extraordinarily high profitability due to record-high prices in that business. These were partly offset by higher raw material and production costs. Return on capital was at 76.5%, which is significantly over the long-term target that we have set for this business. Moving to forest division, where good and stable financial performance continues. Sales were up 19% year-on-year, also at record-high level for the quarter, and this was driven by higher deliveries, especially in Sweden and Finland, as well as increased wood prices. Operational EBIT was up 21% year-on-year, also at the record-high third quarter level. This is thanks to higher margins in our own forest assets and forest operations. Group's forest assets remained at EUR 7.4 billion level, so no major change there this quarter. Here I want to highlight that in Q2 and Q4 is when we make the bigger revaluation of the assets. That is coming in the next quarter. Operational return on capital was 3.9%, and this is also above the long-term target. Paper division. Their result still impacted by restructuring and high input costs, but we can now see that remaining business is turning around. Sales were down 6% year-on-year at EUR 441 million, and this is mainly due to structural changes in the business portfolio relating mainly to Oulu and Veitsiluoto paper mills. Positive is that sales for remaining business increased by EUR 85 million, mainly due to higher deliveries. Operating EBIT was down and was at EUR 31 million. This is driven by clearly higher input costs related to energy, fiber, logistics, as well as lower prices. We also had some additional operational costs relating to closed paper mills. That's mainly Veitsiluoto and somewhat in Kvarnsveden. Cash flow to sales after investments was negative 7.7%. Let's take a look at the long-term financial targets and their development. First, if you look at the group long-term financial targets, as you can see from the traffic lights, they all are green when it comes to especially our debt metrics, net debt to operating EBITDA, and net debt to equity, we are clearly within the maximum limits set. Operational return on capital excluding forest was at 20%, clearly also about 13% targeted level, and clearly up from 7.8% a year ago. Look at the divisions. They are Biomaterials, Wood Products and Forests, reaching the target and being above the target level, and Packaging Materials only a bit short of the 20% targeted level. Here I want to remind, as said earlier, Oulu is still at the ramp-up phase. Paper at negative 7.7% versus compared to targeted 7% level. Packaging Solutions, where we have a target of 25%, they are still working on price increases to close the gap between higher containerboard prices and our selling prices, and that's why we are still at 12.6% level when it comes to return on capital. With this, over to you, Annica. Thank you, Seppo. Taking now a look at the outlook, we reiterate our outlook. We see that we will end the year on a high note. Global economic activity is continuing to be on a healthy level and favoring our products. We have a strong demand for our key focused areas and our businesses. We have a full order book for Q4. We continue to work with what we can impact to mitigate input costs and make sure that we can continue to deliver to our customers despite the logistics challenges around the world. I think we have proven that with the strong quarter three, that we are able to do that. All in all, I see that the end of the year is finishing on a high note. To close up, I'm very pleased with this quarter. It is actually the best quarter we have had since 2001. We are proceeding with high pace in our strategic transformation program. We continue to see strong underlying demand and good growth for our key focused areas. We are proceeding with investments in high-margin areas to accelerate our growth. I think that we see the end of the year with a strong order book and a healthy demand to end on a high note. With that, I hand back to you, Ulla, and for the Q&A session. Thank you, Annica. We are starting the Q&A session now, and I would like to remind you that please limit your questions to two. We have usually a lot of interest, and therefore we want to give a chance to as many people as possible to ask the questions. Jules, please give the instructions for the Q&A session. Thank you. Once again, to ask a question, you will need to press star one on your telephone and wait for your name to be taken by the operator. Once again, that is star one if you have a question. Our first question comes from the line of Justin Jordan from Exane. Your line is open. Please ask your question. Thank you, and good afternoon, everyone. I've got two questions, if I may. Firstly, on, I suppose, topic du jour of energy costs. I know from the very detailed budget that Ulla updates every quarter that energy was approximately 6% of group operating costs in 2020. Clearly, we're in an inflationary world. Can you give us some help as to how we should think about energy costs going forward, not just in Q4, but 2022, hedging that may be in place? I'm thinking particularly in both the Packaging Materials and Paper divisions. Clearly, it's probably less of an issue in Biomaterials. My second question is on wood prices. Clearly in your bridge, you have EUR 155 million of extra fiber costs year-over-year. Now, we're all familiar with rising OCC costs, but looking at your forest revenues, it would appear like wood prices are up something like 9%-10% year-over-year. Is that the actual fact as it were? Because that would seem to be slightly higher than the previous inflation that you've seen in wood, in recent quarters. Thank you. If I start with the energy costs. I think first of all, I want to remind that our self-sufficiency rate is relatively high. If you look at the total group, it's something like 67%. In Finland alone, it's 90% thanks to our ownership in PVO, where we get the energy at cost. When it comes to our hedging policy, we hedge about 80% of the current calendar year, 70% of the following, and then coming years, 50% and 30%. In that sense, we are in a relatively good position from group level, but obviously that can be a bit different for divisions that as we are then internally pricing electricity at the market price, obviously, when we are moving it forward. Energy cost development through the rest of the year, we don't expect any serious increases anymore during the Q4. Obviously next year is something we come back to later when we give further guidance for the coming year, but that we are not doing today. For the rest of the year, that is not very much higher than what we have seen so far. On the wood costs, they are in Q4 higher compared to a year ago, and we expect them to increase also in the coming quarter compared to previous. Sawlog costs have been clearly higher year-on-year, and that has been the case since the beginning of the year, while output cost development is expected there has been more stable, and that has been balancing the total picture. Great. Thank you, Seppo. Thank you. Our next question comes from the line of Linus Larsson from SEB. Your line is open. Please ask your question. Thank you very much, and a good day to everyone. My first question is on capital allocation and your decision not to go ahead with the big investment in Skoghall and rather focus on Oulu. My question is, if you could talk a bit about the background for that. Is it the market strength that has caused that altered focus away from pulp and increasingly to paper board? Secondly, given that you have done work in a previous feasibility study on the Oulu site, could you talk us through the timeline and how soon would we potentially be in CapEx phase and start up with that second machine at Oulu? Maybe also in connection to that, if you could share some thoughts, what that would imply in terms of CapEx for 2022 potentially. Okay. I can start with the market side and say that we have for a long time seen the sustainability trend in packaging really picking up. This is the chosen growth areas that we have, that we have communicated also earlier that will drive significant growth for the company. The decision to prioritize, to accelerate packaging growth both in Oulu and Skoghall, in the sense that in Skoghall, through the big revision we made, we saw that we wanted to debottleneck one line and grow with our customers within liquid and food packaging. In Oulu, we decided to do the pre-feasibility study earlier than we had expected. If you remember, we have two machine lines in Oulu. We chose to start up one and convert one first. That conversion and the ramp-up has gone better than we expected, both in terms of quality and reaching design capacity of the Oulu line. That gave us the confidence to proceed quicker than expected with that and reprioritize our CapEx allocation from the pulp mill to getting board on the market quicker. In terms of pulp, we are long in pulp already as a company, so this reprioritization made sense from that perspective. If we look then at how quickly we get the board to the market, it is for Skoghall the second half of 2023. For Oulu, provided that the pre-feasibility study is ending beginning of first quarter next year, we will come back with more details on what type of product mix we will be running and also how quickly it can be converted in the beginning of next year. About the capital expenditure figures. I think first of all, in the case of Oulu, like Annica said, we have to remember that this is pre-feasibility study that we are starting now, and we expect to be ready with that early next year. After that phase, we are able to comment more on phasing of the CapEx as well as total CapEx figures. That obviously will depend on end product and once we are also more clear on potential infrastructure related needs, et cetera. That's something we have to come back to. With the Skoghall investment, this EUR 97 million we announced today. Typically, first year when you start the project, the capital expenditure is not so high. You make the down payments, et cetera, as year after, second year is that when the major part of the CapEx takes place. Third year, typically, when you have the last payments then from the project after the testing and acceptance of the machinery equipment has been done. No major effect seen for the 2022 CapEx from that. Typically, as you know, our CapEx has been, say, around EUR 600 million, excluding any major development projects. This year we are guiding, say, around EUR 700 million, as you might remember. That's something we come back to, obviously, when we are coming with Q4 report and new annual guidance on CapEx. Currently we don't have any sort of major things in the pipeline on top of what we have announced already now. That's something we have to come back later. No major effect on Skoghall for next year. Even in a fast-paced process, it's hard to see that there would be much CapEx at Oulu in 2022 and not much at Kvarnsveden either. Is it fair to say that 2022 will have clearly less CapEx than 2021, where you have a midpoint guidance of EUR 700 million? As I said, we will come back with the more clear guidance in Q4 reporting, so that's when we will comment it. Like I said, we don't have any major projects in the pipeline for the coming year as such where we would have cash outflow. Okay, thanks. Maybe just to check, you didn't mention much on the Lignode project in your report. Could you just give us a quick update if there is anything to say, and what's the sequence of events? What's the potential news flow in the next months and quarters, please? What we are doing now is that we have verified the technical parameters of the product in Sunila mill, so that project is proceeding very well. We are looking for the partners and having those discussions, signing up our collaboration partners, and we'll come back when we have more transparency on that. It is about the setup of the legal structure that we are considering to enable as quick ramp-up as possible to industrialize this. In the coming quarters, we will be able to disclose more information as we proceed with those two key focus areas. Great. Thank you very much. Thank you. Our next question comes from the line of Johannes Grunselius from Kepler. Your line is open. Please ask your question. Yes, hello everyone. This is Johannes. Can you hear me? Yes. Perfect. Yes. If you could help us a little bit to understand the big moving parts in the fourth quarter, because it's such a moving part market or volatile and so forth market. You were successful in mitigating the higher input cost in the third quarter. The picture on page five in the presentation kit is very useful. How should we see this in the fourth quarter? Should we expect less cost inflation quarter-over-quarter? Would you say than in the third quarter, what's your feeling about mitigating or even get more compensation on the sales price? Could you talk about that? Thanks. If I start with the market, of course, we constantly review the contracts that we have with our customers, and depending where we are in the cycle of contract negotiations, we are also able, of course, to mitigate input costs as the contracts are being renewed. Different businesses have different cycles. We are quicker in, for instance, Containerboard in compensating, more stable in Consumer board where we have a longer contract period. You have seen, even though that is the case, Consumer board has delivered really well in quarter three and has a stable outlook also for the coming quarters. If we look at wood products, we have a split between the sawn area where prices typically move up and down quicker. Having Building Solutions as part of our business, we have more stability and long-term contracts with customers. If we look at pulp, here it's about how efficient we can run our production units and supply our customers in the logistics. All in in all, I see that, and I think Q3 is a good testimony that we're able to mitigate costs and work with what we can impact. If you remember, we had our profit protection program that we finished some year ago, making sure that we have a sound cost structure as a fixed cost structure as well. Yeah. Yeah. Maybe just on adding on cost inflation. If you look at the key cost drivers or input costs like energy, wood costs, chemicals, in Q4, additional cost coming from cost inflation there, in the case of each item, we are talking about some single millions effect for the remaining year. Right. Maybe good to remind also that as I mentioned, so we had some transfer of volumes from Q3 to Q4, and that obviously is also positive for the coming quarter. That was because of logistics issues that we and many other companies are facing. That helps also going forward. Yeah. Suppliers, of course, for input materials like chemicals and so on, we also have kind of long contracts that somehow help us in this situation when there are quick moves. Yeah. Okay. Very helpful comments. Thanks for that. Can I just follow up on wood? It's kind of difficult to know for us sitting on the outside to understand how the pricing will develop, short-term, maybe even more complicated for 2022. What's your feeling here? What do you hear in the discussion in terms of price pressure on these extremely favorable pricing? I think one of the things to remember is that through our ownership of Tornator and our own forests, we are able to balance also by using our own forests to drive wood to our operations. This is one of the areas where we can impact, of course, how much we source from other forest owners and how much we choose in our own forests. Yeah. During this year, harvesting conditions have been quite good. We have not had any issues with that. Now, obviously, when autumn and winter is coming, and now it's getting wet, so then the key is that how fast the ground gets frozen so that we can continue to harvest also during the wintertime. That will be, I think, critical for the coming months. Okay How the wood flows will develop. That's helpful. I was actually thinking about the pricing for wood products and sawn goods for the do it yourself markets. Okay The construction builders, et cetera. What do you see there in terms of pricing at the moment? What we have seen in the current quarter is that the prices of U.S. market have gone down. The markets of Europe, Australia, and overseas, Japan, have had a very healthy demand and a quite stable situation so far. As I tried to explain, we have chosen a mix of customers that gives us more stability in the long run. This is favorable when there are big moves of the prices up and down in the sawn goods. Our Building Solutions part of the business is giving that stability long run. We have 600 projects ongoing in the Building Solutions part. Staying with the customers that we have, and not being opportunistic when the prices move on the markets and having a good market mix, that I think is key to deliver good results in wood products. Okay. Thanks. Thank you. Our next question comes from the line of Lars Kjellberg from Credit Suisse. Your line is open. Please ask your question. Thank you. A couple of tidy up questions. When you're looking at Skoghall and Oulu, the two investments, Skoghall, of course, you pulled out of the pulp project. Just thinking about the two mills, will you have sufficient integrated pulp at both sites post these sort of expansionary or potentially at all expansionary investment? I appreciate you didn't call out specifics in terms of the grade you plan to produce at all on the second machine, but would that be back to what you I guess the first pre-feasibility study, which was some sort of CUK grade, is that what you are contemplating? That was my first question, if you can address that first, please. Yes. What we see is that both sites are highly competitive. From that perspective, we will be able to have a very competitive production even though Skoghall is not fully integrated or Oulu is not fully integrated. We have taken that, of course, into account. We have internal pulp in our business, as you are aware, since we are long in pulp. That helps us. Both of the sites are positioned in areas where we have good wood availability. The closure of Veitsiluoto in Northern Finland enables us to direct the wood to this region that would support the project. The second question, if you don't mind. Which grades in Oulu? Oh, which grades. Yes. Of course, we want to have a machine that is flexible, but the exact product mix we will need to come back to, and this is what we are contemplating now, looking at kind of the full product portfolio that we have in Consumer board and Containerboard, what makes most sense. Bear with us one quarter more. We'll come back in beginning of next year with a more precise plan. Okay. My second question comes back to what you talked about sustainable packaging is seeing strong demand. Could you help us understand what that means in your portfolio and how that contributes to your growth? In what areas? If we look at the strategy, packaging as a whole, both packaging solutions and packaging materials is what's going to drive the significant growth agenda that we have. 25% of our growth is expected to come from that area. This is just the steps that we're taking now in a very structured way to make sure that we can grow with our customers. Liquid is growing well. Containerboard is growing well, driven by e-commerce, for instance, and long-term sustainability drivers, where a lot of products in plastics are being replaced by paper packaging. We are taking advantage of that. All right. Thank you very much. Thank you. Our next question comes from the line of Cole Hathorn from Jefferies. Your line is open. Please ask your question. Afternoon. Thanks for taking my question. The first one's following up on the capital allocation point that was asked earlier. If I look into next year with not doing Skoghall, your CapEx is likely going to be lower. If I look at where consensus is and the implication for your net debt to EBITDA next year, if consensus is right, then you'll be approaching one times net debt to EBITDA. It brings up the question, what are you going to do with the higher free cash flow? How are you thinking about that? Is that going to be your dividend policy? Is it going to be potentially some M&A or other capital returns to shareholders? If you could just talk about how you think about that before you go into further CapEx into 2023, 2024, 2025 if you approve Oulu and your Lignode projects. That was the first question. The second question is around demand. Annica, you made the comment that your order books into the fourth quarter are good. Are you referring to the packaging materials or the wood products? Just a little bit more color around the near-term order book and demand environment. Thank you. Yes, I can start with the market side. We are fully booked, actually, on all our products, so it's a very good situation that we see on the market. As I said, also, the paper business has a much better balance. Also there, the competitive remaining mills that we have left are full. I think that it's a healthy market environment for us generally. If we look at the CapEx allocation, of course, the ramp-up of Lignode is something that we are doing the coming years, and we are looking for partners to share that investment with us. It is part of our growth agenda. In packaging, we have these 2 steps that we are looking at today, and we have announced today. Of course, as you very correctly said, we have taken down our net debt. This opens up opportunities for acquisitions in wood products and in packaging solutions. There are targets that we are looking at long term. This is part now of our transformation, as we have communicated before, that we are moving from a phase of restructuring into a growth phase. Of course, M&A is a part of that. If there are attractive opportunities out there, we will be in a position to utilize that opportunity. Would buybacks fall under the capital allocation agenda or not so much at this stage if there were no attractive M&A opportunities that you execute on next year? Well, Seppo here. It's true, like you said, that our balance sheet is getting stronger and our net debt to EBITDA ratio has clearly improved, and we believe that we can continue to improve it going forward, thanks to good cash flow and improved profitability. When it comes to, I think you refer to potentially higher dividends or share buyback programs, et cetera, but I think those kind of things are up to the board and shareholders to decide and not something that we as management comment. Great. Thank you. Thank you. Our next question comes from the line of Harri Taittonen of Nordea. Your line is open. Please ask your question. I remember when you talked about it first, I think there was one motive was that would be kind of renewing the pulp line, and that there was a little bit of maintenance nature in that way. Do you see that that will come relevant at some stage now in any case, if you now decide not to address the pulp line? That was my first question, please. Yes. Of course, pulp mills are maintained every year. The annual shuts that we have is to maintain the pulp mills. From that perspective, it's not something that we see in the immediate future. We take care of our pulp mills to make sure that they are in good shape. What we do want to do now is because of the quicker ramp-up of Oulu, we could push forward a conversion that was further ahead in our plan. We wouldn't have done the second line of Oulu until much later. We take advantage of that opportunity now. Okay. There's no kind of urgent need or near-term need for modernization there at Skoghall. That's how I should understand it. That's great. If I have another question left, let's see which one I choose. Maybe on the packaging board, the deliveries were just a little bit down in the quarter compared to Q2, practically unchanged. You wrote that there was sort of slightly demand was weaker in, I think, recycled fiber-based grades. What was behind that comment there? Was there genuine kind of weakness, or was it sort of seasonality, or how would you characterize that comment in the report? In the recycled side, we see a strong demand. I don't recognize that there was a weak demand. If we look at the Consumer board, if you compare quarter-on-quarter, you have to remember that Q3 is a maintenance quarter. Also, Q4 is generally a maintenance quarter for many of our pulp mills and seasonally weaker quarter. I think it said... Okay ...weaker to strong containerboard performance actually in the report. Yeah checked it. Kraftliner. You have to- Testliner, we see a strong demand for both kraftliner and testliner on all our markets. Okay. Yeah, I just wanted to double confirm that because I was just looking at the result from demand Q3 versus Q2. That's why you said that the recycled fiber-based container board demand was a bit weaker. That should be purely understood as seasonal factors. Yeah. Seasonality effect. Yeah Right about that. Okay. Very good. Thank you. Thank you. Our next question comes from the line of Lars Kjellberg from Credit Suisse. Your line is open. Please ask your question. Logistical challenges and some of the volumes. Now you are breaking up, Lars. We cannot hear you. Apologies, sir. His line disconnected. I'll connect to the next party. The next question comes from the line of Oskar Lindström. Your line is open. Please ask your question. Hi, good afternoon. I have two questions from my side. The first one, both of them are on the outlook for your business. The first one is on sawn timber operations, you mentioned weaker pricing and demand in North America, but pretty good in Europe and Asia. I was wondering if you could comment also on some of the key export markets, such as the U.K. and North Africa. What are you seeing in terms of momentum for prices there? That was my first question, my second question is on market pulp. We've had some news of paper and tissue producers reducing or closing production due to high energy prices or lack of electricity in some regions. Are you seeing any impact of this on demand for your pulp? Two questions. Yes. If I can start with the pulp. In China, there have been operations that have been curtailed. Our own operations have not been curtailed anywhere, neither in pulp nor in other products in China. If we look at our own kind of portfolio, we have transformed ourself out of the graphical pulp demand. We are in the areas of packaging and hygiene and specialties. There we see a strong demand. As I said, we are fully booked for the coming quarter. If we then come back to sawn timber, North Africa is not a big market for us. We are focusing on Asian markets, Australia and Japan, because that's where we see Building Solutions, for instance, driving a lot of projects. I can mention Singapore, for instance, wanting to be the world's most sustainable city and building their whole university area with CLT wood, for instance. We also see in Europe that EU is taking very decisive action in promoting building with wood as part of the solution for the construction industry's climate footprint. Construction is today 40% on CO2 footprint globally, comes from construction. Here replacing other products or other materials with wood to the extent that is something that is favored in the EU strategies that are being promoted. From that perspective, Europe has stayed strong. We also know that globally there is a backlog of renovation and infrastructure projects that need to be done. Building on wood is such a small part of the total construction market. It's only about 10% totally of the construction market. Therefore, even though the construction market might move, we are still able to capture market share. Yes. Okay, you're not seeing any signs of price weakness outside of North America? Well, I think we have seen peak prices this. As we said, it's been an exceptional quarter this quarter three. Probably there are going to be spillover effects. As said, our pipeline is strong, and we think we will end the rest of the year on a high note, also on wood products. Then we will need to come back with guidance for next year at next quarterly report. I think our business remember that we have a significant share coming from Building Solutions, and that is obviously balancing our portfolio compared to some other participants in the market. Sorry, what share is that roughly in terms of operating profit? We don't comment a share of different business of the operating profit, but Building Solutions roughly one-third of the total sales. All right. Thank you. That's good. Thank you. Those were all my questions. Thank you. Our next question comes from the line of Lars Kjellberg from Credit Suisse. Your line is open. Please ask your question. Thank you. Hopefully you can hear me now. Yes. Yes. Good. Very good. Thank you. Just my question was about the logistical challenges that you called out in the pulp business. Is that the only area you're seeing this, or is it wider spread? I was thinking more on the board side where you do have some material exports, I would assume. Also if you can call out the quantity we're talking about in volumes that may have been pushed into Q4. I can comment on logistics in general, and I think we are all aware that the last year has been a difficult year from many perspectives globally for the supply chains. We have proven that we can deliver, as Q3 shows, even though there are challenges there. If we look at the outlook, the expectation is that the bottlenecks that we see in logistics will continue also next year. We have proven that we can supply our customers. In the pulp side, for instance, we see that inventories have gone up. One of the reasons for that is that there is a lot of in transit. The lead times might be a little bit longer. The material are on the boat before they can be offloaded. Many harbors have been congested or closed, so there are a lot of queues before boats can be loaded. That was what happened actually for one boat that missed the quarterly day and ended up in Q4 for biomaterials this time. It will impact positively the result in Q4. We have shown that we are able to handle this situation, and we will continue handling it. What are you hearing from your customers about their capabilities to move product and such, which could impact your business indirectly? Yeah. In packaging, for instance, we are used of working with inventory management. I think contingency and robustness, having several sites, being able to supply materials such as we have, interchangeability, and having this active dialogue with our customers, we have proven that we can deliver and have high results in packaging, for instance, despite these challenges in the supply chain. I don't see that being a problem going forward. We sort it out. Very good. Thank you. Thank you. Our next question comes from the line of Robin Santavirta from Carnegie. Your line is open. Please ask your question. Yes. Thank you very much. If I look at your Q3 and listen to you now in this call, obviously, your performance seems to be quite good, and you are also calling out a quite good outlook. Now, still, if I read the outlook statement that you have, you have changed that since Q3, stating now that you see resilient demand. I think you said very healthy demand in the last quarter. Where can you see sort of a change or a weak demand or outlook now compared to last quarter? Well, we see a continued healthy demand for next quarter, and we have annual guidance. I understand that we are performing better than last year and trying, through going through the businesses like we're doing now, to comment and give more flavor to this. As I've said, our order books are full. The demand looks healthy for our products. Managing that is about choosing the right markets, the right products, the right customers, and making sure that you have a very active dialogue. That is what is bringing the results at this point for us. All right. Thank you. Then related to China, seems to be a bit of a tricky situation ongoing there. What are you seeing when it comes to paperboard sales and your pricing in that market? What is the competitive environment when it comes to production inventories, et cetera, in paperboards? Also related to pulp, what are your customers saying at the moment in China? We know that there have been paperboard and paper producers that have been curtailed due to the energy situation. We have not been curtailed. Our board mill in Beihai has been producing. We know that China, of course, has a big impact on macroeconomic levels. A slowdown of China means impacts in the rest of the economy. For pulp side, of course, if board machines or paper machines are closed down in China, that means that pulp consumption is lower. As said, quarter four is also tight from the perspective that many of the pulp producers have their annual maintenance shuts during both Q3 and Q4. As the logistics make predictability of when you're going to get your material more difficult, that means also that customers are managing their inventory better and making sure that they have inventory enough to be able to produce when they want to produce. It is a tricky situation. I agree to that. Thank you. Then a final one. Looking at paper, you have done a great job driving down capacity and increasing capacity utilization in that business. As you say, it seems to be turning around now with likely higher prices and lower fixed costs for you guys. Are you considering strategic options now when it seems to profitability outlook is improving? What could those strategic options be if you do consider any of those? We have our 3 strategic options, and it's becoming now a very small part of our total business. When we are finished with the restructuring total, it's going to be close to 10% of our sales. It doesn't become significant anymore. Our options are still that if we have attractive opportunities to convert, we will do that. Oulu is an example of that, Varkaus is an example of that, and there might be others. The business that is remaining, we make sure that it is competitive and has good products for the customers in paper. If there is a better owner for some of the sites, we will divest like we did with Sachsen, and that is considered an option also going forward. Of course, with improved profitability, those opportunities become better for those choices. If we cannot find a better owner or we cannot convert, then we will take action if the market balance is not in our favor, like we have been doing. I think we are moving to a much better position for paper going forward. Thank you. Thank you. That does conclude the question and answer side of the call today. I would now like to hand back to the speaker, Ulla Paajanen. Please go ahead. Thank you, Jules. I just want to thank everyone for my past almost 20 years and 12 years as head of investor relations at Stora Enso. It has been a great journey. I have enjoyed it thoroughly. This is a great company, and I hope all the best to it and its owners. Some of you I might see in the future, but otherwise I say goodbye and thanks for all these years. Now we conclude the phone conversation. Thank you. That does conclude today's conference. Thank you to everyone who's participated in today's call. You may now all disconnect. Thank you, speakers. Thank you. Thank you.