Good afternoon, ladies and gentlemen, and welcome to the Sappi Limited Q3 2021 results. All participants are currently in listen-only mode. There will be an opportunity to ask questions later during the conference. If you should need assistance during the call, please signal an operator by pressing star then zero. Please note that this call is being recorded. I would now like to turn the conference over to Stephen Binnie. Please go ahead, sir. Thank you. Good day, everybody. I'm going to go through the investor presentation, which you all have, and I'll call out the page numbers as we move through the slides. I'm going to start on page three, which includes highlights for the quarter. I'm pleased to say that we did see a return to bottom-line profitability after the significant impact of COVID over the last year. That was a nice milestone. EBITDA overall was up to $145 million. That was up 29% on the prior quarter. Continued progress from the lows of COVID a year ago, and we're pleased with the outcome. In terms of the segments itself, firstly, it was a record EBITDA for our packaging and specialties, and as you know, this is something that we've been strategically redirecting our business towards over the last couple of years, and it really is paying dividends, and very pleased that it could reach a new high. Over and above that, dissolving pulp markets were strong, pricing good, and EBITDA continued to rise. I will remind you that the prices that we, our contracted prices that we have, do run quarterly in arrears, so there will be further upside in the quarter ahead, as the prices from this quarter are realized. The demand for Graphic Papers improved, and actually reached 90% of Q2 2019, which is a pre-COVID level. If you remember back to prior quarters, we talked about what would be the impact of COVID, and in fact, our estimates were about a 20% impact on the market. Market levels have been better than that, and we've been able to gain market share on top of that. Actually, the recovery of the volumes is now faster than we had expected. That volume is no longer the challenge. It's now rising input costs, and it's predominantly driven by higher pulp costs, and then obviously global logistical challenges. I'll talk about that a little bit more as we move through the presentation. Pleased to say that the liquidity is strong. All the challenges that we had during the COVID period are now behind us, and we move forward with a much better profile. Moving to slide four, the earnings bridge, EBITDA bridge. This is from Q3 last year to Q3 this year, obviously, this was at the height of the COVID impact. Naturally, you would expect a significant recovery on volumes across all the segments. That's the big positive block. Pricing, obviously benefiting from significantly higher DP prices predominantly, as I say, more to follow in the quarter ahead. Unfortunately, up against higher costs, we did break this down a little bit for you. Firstly, on pulp, the net impact since last year on our volumes is about $76 million. Delivery costs $15 million. However, offsetting that a little bit was some savings on wood and energy, and chemicals, albeit that chemical costs have turned. This is a year-on-year comparison. There was an initial decline and then a subsequent rise, which is putting some pressure on us. Fixed costs year-on-year look higher, but I remind you all that this time last year, we had staff on furlough, and no one was traveling, and no one was coming into the office. There was a lot of administrative costs that were not being incurred, and that's why it looks higher than a year ago. Turning to slide five, the product contribution split. As the business is normalized, obviously, the EBITDA split will change. Packaging at this point in time is still at a fairly high level, approximately half of our business. DP picking up, and it will obviously rise further. Similarly, as we get higher selling prices for our graphics, we would expect that to normalize. In the short term, packaging and specialties will come down, relatively speaking, but it's only because the other two segments are rising. On the right-hand side, you see the volume split. We continue to look for opportunities to redirect some of our Graphic capacity towards Packaging and Specialties. Slide six has the volumes and EBITDA margin by the product segments. Just taking each one in turn. Firstly, Graphic Paper. You can see volumes picking up and confirming what I said earlier. Unfortunately, the margins went backwards a little bit this quarter, and it's because of the rising costs, which I talked about. We are implementing selling price increases, and we do expect a catch-up, and we'll talk about that a little bit more when we go through the regional discussions. Packaging and Speciality, just a great story. Margins continue to go up, and volumes continue to go up. Dissolving pulp, a little bit up and down, in terms of volume, but I'll remind you that this is often directed or influenced by the timing of shipments. Obviously, in this quarter, we were impacted by the extended shut Saiccor linked to COVID, and I'll talk about that a little bit more. Margins rising, and will continue to do so. Slide seven. The net debt leverage. You can see a significant decline from the last quarter, as you would expect. Earnings starting to rise. We start to drop those weak quarters that were influenced by COVID. You're going to see further significant declines in the next two or three quarters as we drop those remaining weak quarters. By the time our covenants come back, we'll be well inside the leverage levels or the covenant levels. Slide eight is our maturity profile, again, I think tells a great story. All our material debt now pushed out. The next fairly sizable one that you see there is the 2024. That's just a securitization structure that we roll over, we'll do that well in advance. Really, beyond that, your longer term bond is now 2026 and beyond that period. A very clean maturity profile, which confirms all the great work that's been done. Slide nine has our CapEx. It hasn't changed since the last quarter. Our estimate for the year, about $400. A little bit higher than what it was at the beginning of the year, as you know, we did share this with you, the exchange rates and the fact that the rand and euro are stronger relative to the dollar, did push it up slightly. That's why we estimate about $400 million for the year. Moving then to geographical segmentals, we start in Europe. Firstly, obviously, volumes we are encouraged, and I've talked about that a couple of times already on the call. During the quarter, as those volumes were recovering, we still had to take about 85,000 tons of downtime. As I say, market volumes and our volumes specifically got better and better. For the quarter overall, you can see Coated woodfree is actually 94%, which is a great recovery, and bodes well for being able to implement selling price increases. Coated mechanical was somewhat worse at 76%. We are seeing continued improvement, but just to emphasize that comes out of our one mill in Finland, Kotka. It's a much, much smaller segment for us. Our challenge, obviously, now has shifted from volumes to costs. We've been able to implement some selling price increases, but we are playing a bit of catch-up. I suspect, looking forward and looking at the next quarter or two, it's likely that there's still gonna be catch-up to come. The margin improvement, we would anticipate probably after Q1. At that point in time, we get to be confident that we've caught up with all the rising costs. Packaging and Specialities, mixed performance. Volumes overall good, driven by paperboard and self-adhesive papers, but some more discretionary categories were still impacted by the weakness of the European economy and the lockdowns associated with COVID. North America had a great quarter across all their categories. We don't say it in the announcement, but I think it was the best Q3 in 20 years for our U.S. business. Really very strong and very pleased. Firing on all cylinders. Strong demand recovery on Graphic Paper, which has enabled us to push through selling price increases. We're at slightly different to Europe. We're playing a little bit of catch-up in Europe because the market was not as tight. In U.S., we were able to keep pace with the selling, the cost increases. Packaging doing very, very well. You can see the volume increases there and demand for our products are good. Our focus going forward is going to be on optimization of our product mix. Pulp side, also strong. Good prices for DP and BCTMP, which I've talked about. Unfortunately, logistics, it's a headache, and it's a headache for all the regions. We did lose about 11,000 tons out of the North American, which spilled into Q4. That's something that's obviously still with us at the moment. The variable costs rose by 5%, but as I said, we were able to put through higher selling prices. In South Africa, nice rise in volumes. Sorry, in terms of profitability. Very strong demand for our containerboard, which goes into fruit exports out of South Africa. Very strong. Unfortunately, on the DP side, we were impacted by the extended shut at Saiccor. That was influenced predominantly by COVID and travel restrictions. Unfortunately, the equipment suppliers, we were not able to bring them into South Africa, and we had to use domestic contractors who were not familiar with the equipment. It meant that the shut took much longer than we had expected, and then the subsequent ramp-up was more complex, and ultimately, we lost the 40,000 tons. Logistics also had a say there as well. Those production challenges that I mentioned are now behind us. The costs were higher. One, because of the mill shut itself and obviously higher freight costs coming through. Turning to product markets. Firstly, dissolving pulp. The average price for the quarter was $1,088, which was very nice. It did come down from the peak of just over $1,100 down to, I think it ended the quarter at about $1,050. At the moment, today, it's about $1,010. We are encouraged by the fact that in recent weeks, fiber prices have started rising once again. Viscose prices are up. Cotton prices have hit new highs. Polyester prices are rising. We are optimistic that this will support DP prices. In the long, long term, we've always said we don't expect DP prices to remain at these elevated levels, but the short-term fundamentals continue to be good. Included in the segment is obviously BCTMP. You can see the tons there, 37,000. Obviously, we lost the 40,000 tons because of the Saiccor shut. The shipping challenges both in the U.S. and in South Africa added up to 21,000. Markets are good. Demand is strong. Biggest headache is logistic challenges. Obviously it's been exacerbated by the civil unrest that we've had in South Africa recently, which caused more backlogs at the Durban port. In the last couple of weeks, Transnet's IT problems. It just meant more backlogs, vessels bypassing the Durban port. Really the port just trying to catch up. That's why it's been a headache for us. Packaging and specialities goes from strength to strength. North America, I talked about focusing on the optimizing the product mix now because the Somerset PM1 machine is full. In Europe, we do have some opportunities on those or those more discretionary-related products. At Maastricht, we can add more volumes there as well. We are positive about the demand. Obviously, from a Sappi perspective, the segment is facing the higher costs as well because we do buy pulp in Europe. Once again, we're executing on selling price increases to offset that. This tends to be more contractual business than the spot that you find in graphic markets. We are confident that we will achieve those selling price increases to offset the costs. Page 16 has the Graphic Paper. I've mentioned a few times, but European overall graphic paper, if you include coated, woodfree, and mechanical, was about 80%. It's subsequently gone higher. U.S. at 88%. You've seen our volumes at 90%. It just emphasizes the market share that we have. Our machines are obviously full in the U.S. and the need to take downtime in Europe will be substantially reduced. The only headache we have from a volume perspective is logistics. The profitability under pressure because of input costs, but we will push through on those selling price increases. Slide 17 talks about cash management, a good story to tell, and I mentioned it earlier, but just some specific issues. The convertible bonds that we issued in South Africa subsequent to the quarter end, about 26% were converted by the bondholders, which will lower our debt. Frankly, will save us interest costs going forward. I actually think it's a good thing for Sappi. The leverage covenants are resuming in December, but we'll be well inside of that. Also pleased to say that we're on track to achieve our savings plan on procurement for the year at $69 million. Moving just to a couple of other slides that we have, just demonstrating the recovery, and some of them you're familiar with. Firstly, on dissolving pulp, on page 19, the top left, you can see that retail apparel sales are, in China and particularly in U.S., have had a major recovery. Europe was on the path to recovery. The second wave obviously slowed that down a bit. I'm encouraged by this because that tells you that Europe still has a way to go, which will help keep markets tight. The graph on the top right just shows you the pricing of viscose versus DP, and obviously they've both risen sharply. You'll see the slight declines. This doesn't take into account the last few weeks, and viscose has actually been upward sloping, which is good for DP prices. Slide 20 has the coated woodfree paper in both in the U.S. and in Europe. The dark bars are the year-on-year, and as you would expect, as you annualize COVID, very big positives. Even if you take into account the two-year comparison, the pre-COVID levels versus 2019, you can see that recovery going less than 20%. In fact, in the June month actually was positive or close to flat. Similarly on Europe, same thing. You can see it's close to zero. A huge recovery. If you take the three months together, that gives you the averages that we reflected on the other slide. The recovery in the market for graphics has been better than we had feared and faster than we could have hoped for six or nine months ago. Slide 21. We could have included many slides here to demonstrate the challenges that not just Sappi, but everyone is facing with global shipping. This just shows, it's from Sea-Intelligence. It shows you the reliability of shipping deliveries, and you can see from about July last year, it was just a steep downward movement. At the moment, reliability is around 40%, which is pretty shocking, to be honest. Obviously, we're managing our way through that. Unfortunately, I'd like to say that it's over, but it looks like it could carry on for another few months yet. I know you've all read stories about the various industries and what's going on there. Clearly, it's a big focus of our attention. Slide 22 just talks to our pillars of our Thrive25 strategy. I'm not going to go through it, but just briefly, driving sales growth, that's gonna be looking for opportunities to redirect more of our capacity from graphics into the packaging space. We'll obviously have the additional volumes from the Saiccor expansion and hopefully, in time, more biotech products coming through as well, to give us additional volumes. The financial health, I think we've come a long way in the last six or nine months, and the business is in a much stronger position. On operational excellence, we will continue to look for opportunities to take costs out and focus on efficiencies. Very pleased that we will make at least that $69 million for the year. Enhancing trust. Obviously, with the recent unrest in South Africa, working with your communities is critical. Although we had lost production at our mills, they were not damaged. One of the reasons we think is because we do maintain very good relationships with the local communities, and that's something that we will expand on, and we will continue to drive. On top of that, we committed to science-based targets. I mentioned that last time. We'll be making those public in the next, fairly soon. On slide 23, just to reiterate, the focus in the short term continues to be on boosting the balance sheet further, getting things back to normal, getting our margins back in Graphic Paper to normal, and overall profitability, and be achieved in the 2022 financial year. Beyond that, we haven't committed to any large projects. We do think there are opportunities out there. We'll continue to evaluate them and in time, make decisions whether those are things that we need to pursue. Just turning to sustainability, I move to slide 25, not to read through all the partners that we've had, but you can see from all the announcements that we've been making, and it's evidenced here, that the sustainability plays an ever-increasing role on our business from all our stakeholders, our customers, the regulators. It's important that we maintain these partnerships and drive our sustainability message forward. Slide 26, just as some of the achievements. Very pleased to say that we got a platinum-level rating by EcoVadis. We've just recently been reconfirmed as a FTSE4Good index on the JSE. We're a level 1 BEE contributor, which is just phenomenal, and a lot of good work being done. Turning to the outlook on slide 28. The dissolving pulp, we are positive. We say here on the slide, a gradual weakening of the market pricing in the third quarter. Yeah, that's true, but it has stabilized subsequent to the end of the quarter, and I've already mentioned that viscose prices are rising once again. We'll get the benefit of those elevated third quarter pricing in Q4. Packaging, good, robust demand in North America and South Africa, and opportunities to grow volumes in Europe further. Graphics, focus on getting those selling price increases through. Volume back to normalized levels. Obviously, we had the impact of the civil unrest, and we did put out a SENS announcement. You've seen these numbers. We lost about 28,000 tons of production of DP and 7,000 of paper. Impact on that is about $16 million. On logistics, I've mentioned it throughout the presentation. It's difficult to give an exact estimate of how much will spill over into Q1. Our best estimate, and which is embedded in these estimates, is about 55,000 tons. Potentially up to 55,000 tons could move forward into Q1. Included in that is about 20,000-25,000 tons of DP, and the rest Graphic Paper, predominantly out of Europe. I think it's important you've got those numbers to put it in context. The Transnet cyber attack over the last couple of weeks just came on top of everything else. They are back and operating at the port, but obviously it's a big backlog. Some ships, vessels have bypassed. We're just trying to get our volumes out as quickly as we can, negotiating with the shipping lines to get more space, trying to persuade them to take more direct routes to our customers. We are a huge exporter out of the Durban port. I think we're the second largest. We do have some influence. We'll try and use that as much as we can. You'll appreciate that there is risks. The logistical challenges that are referred to affect all our regions. It's Europe, it's the U.S., obviously South Africa, exacerbated by the civil unrest and Transnet attack. Turning to the EBITDA guidance. You'll appreciate because the uncertainty on the volumes, obviously the impact of the civil unrest, we had to be cautious in our EBITDA guidance. We are calling it up, we wanted to be careful not to call it up too much because we don't know how much of that 55,000 tons may spill into the next quarter. Okay. Operator, that's the end of the presentation. I'm gonna hand it to you then for questions. Of course, sir. Thank you. Ladies and gentlemen, at this stage, if you would like to ask a question, please press star one now. If you decide to withdraw the question, please press star two. Again, if you would like to ask a question, please press star one. The first question we have is from Brian Morgan from RMB Morgan Stanley. Hi guys. Thanks very much. Can we just chat about DWP volumes over the next couple of quarters? I just want to make sure that we're all on the same page. If I look at the third quarter, 313,000 tons, 40,000 tons lost because of the maintenance shut, 21,000 tons shifted into the fourth quarter. You've got 37,000 tons of BCTMP. That's 337,000 tons that you would have been able to do in the third quarter. Potentially 20,000-25,000 tons lost in the fourth quarter. What sort of numbers should we be thinking about for DWP for the fourth quarter? Obviously for next quarter, you've got the expansion coming through. How can we think about the volume progression over the next couple of quarters? Yeah. I think, look, Brian, there's obviously some risk associated with the shipping that I referred to. In that estimate I gave you of the 55,000 tons, as I said, about 20-25 is dissolving pulp, of which about half is Cloquet in the U.S. and half in South Africa. Looking at the volumes, and to your specific question, in spite of that, we do think that there will be a bounce in volumes out of both regions. We were anticipating higher volumes in the fourth quarter. I clearly can't give you the exact number, but the volumes will be higher in Q4, in spite of the spillage that I referred to. We're probably looking at 40,000 or 50,000 tons more. Okay. That's perfect. For the first fiscal quarter, when you've got the expansion coming through, does it come through in the first quarter or is it a second quarter story? Yeah. Look, obviously, we're planning to start up early in the quarter. It takes a little bit of time to come through. There'll be some tons. Clearly you know the expansion's 110. You're not going to get the 110 divided by four. It's going to be less than that. Yeah. Will it take a year to get up to full run or is it quicker? No. By the time we get to, Alex, end of the second quarter, definitely, huh? Yeah. It's worst case, six months. Yeah. Worst case. Yeah. Perfect. In terms of, I was a bit surprised by the coated paper guidance where you say that you only really expected price increases to come in after the first quarter. How can we think about margins in paper in the fourth quarter and the first quarter? Could they potentially be down on the third quarter? No, Brian, what I was saying is the full impact of the higher pulp cost is still to come through. We do have higher selling prices, but we're still playing catch up. We're talking mainly Europe here, obviously. The U.S. is fine. There will be significant selling price increases in Q4, but there will be higher costs in Q4. Then we expect the pulp cost to plateau and come down, and there will be a further quarter of selling price increases to get us back to, by the time we get to the beginning of our Q2, what we would believe would be normalized margins. In the fourth quarter, would you expect the prices to offset the increased pulp prices, the price increases? Yes. You would. Okay. Approximately. Perfect. That's fine. Thank you very much. Thank you. The next question we have is from James Twyman from Prescient Securities. Yes. Thank you very much. My first question is, we've got 20,000 tons of delayed volumes. I assume that the pricing is going to be the Q3 pricing or do we get a little bit of a benefit from the Q4 pricing? That's probably a little bit hopeful. Secondly, just back to that last comment about coated fine paper. The selling prices are going up in Q4, costs are going up in Q4. Does that mean you think the losses will stay the same, or do you think that you could get to break even in Q4? I wasn't sure quite which one you were meaning there. I'll take the second question first. What we're saying is there will be a further rise in costs in Europe, but a further increase in selling prices, which means approximately similar levels of margins to this quarter. On the first question, James, you'll appreciate we can't get too specific here. Mohamed, do you want to talk briefly to that? Yeah. Stephen, the volumes that are overflowing from From Q3 into Q4, because they belong to Q3, will have the pricing of Q3, even though they are shipped in Q4. Yeah. Equally that will apply to Q4 into Q1. That is correct, yes. Okay. Also, just quickly, Lenzing said yesterday that their new machine starting up mid next year and ramping up surprisingly quickly by the end of next year. I know you're pretty relaxed about that because of your contracts, but could you just chat around that faster ramp up and whether that does change anything from your perspective? James, we're not concerned by that. We are confident that Lenzing will utilize that additional volumes either internally and/or the market will have grown significantly and by enough to absorb the additional volumes. We're not worried about that. Okay. Thank you. Thanks so much. Thank you. Ladies and gentlemen, just a reminder, if you would like to ask a question, please press star and then one now. The next question we have is from Mikael Doepel from UBS. Thank you. Good afternoon everybody. A couple of questions on my side. First of all, on the DWP market. You mentioned that the VSF pricing is now up in July. That's an encouraging sign, I guess, for DP pricing as well. Could you talk a bit about what's happening in the VSF markets right now? I mean, why are the pricing moving up? What's happening in August? If you look at the downstream inventories, they're actually quite high yet. I struggle to see what is supporting the higher pricing of VSF currently. That would be my first question. The other question on DWP markets would be on the capacity side of things. We do have a bunch of swing mills out there. What are they doing now? What are you seeing in the market? Are they swinging back from paper grade to DWP or not? Also if you could talk a bit about other capacity changes and demand growth trends in the market, that would be helpful. Okay. Thanks. Mohamed, I'm going to come back to you on the first question. I'll say something briefly, and I'll come back to you. On the second question on capacity, quite a significant proportion of the swing capacity has already come. You can't name competitors, but there's one or two of our competitors that have had major production challenges, which in the short term, has offset that additional capacity that swung back. As we stand here today, a major proportion of the swing capacity has already come back. We don't think that's a major threat in the short term. We think the market will continue to be tight. In terms of viscose, I mean, obviously, pricing, I'll let Mohamed elaborate further, but markets have tightened. Demand is picking up seasonally, and inventory levels have started coming down again, which is supporting pricing. Mohamed, I'll let you expand a little further. Yes, Stephen. I think the first one, just to reemphasize that, we are going into the seasonally strong time, usually from about middle of August. You historically see VSF prices starting to move up. That's what I think is starting to happen again. Certainly as the yarn guys start to replenish VSF, which was already at a relatively low price, so they took advantage of that. The markets have tightened and prices have moved. The other big contributing factor is the interfiber position of viscose relative to cotton specifically. What we have seen is that the cotton prices over the last couple of weeks have moved up quite nicely. Specifically, if you look at the grade that we track, the benchmark grade in China, which is the Cotton 3128. That so far through July is up about 10%. The main drivers around that is, there's this expectation of increased demand, whilst at the same time some reduction of cotton in terms of the output for the new cotton year. Also, this issue around the whole cotton from the Xinjiang province continues to gain momentum. There's new legislation that's going to come out in the United States, which is going to put additional pressures for retailers sourcing cotton from that part of the world. I think that's encouraging an import of cotton from the U.S. by China and other countries. Then, polyester prices also, if you look at that, through July is up about 5%, largely on the back of higher oil prices, even though oil tends to be very volatile. Two, I think more the expectation that demand for oil for second half of 2021 is going to be a lot better than the first half of 2021. That I think is what we see as the main drivers for this improved VSF pricing. I suppose the other thing I could add to that is the viscose industry in China also is a lot more consolidated, than what it has been in the past. If you look at the top three producers today, it's probably about 65%, and I think that also does create an environment for managing prices. Okay. That's very helpful. Thank you. Then on another topic, if I may, on the European coated fine paper market. What were the trends that you saw in your financial year, Q3, in terms of volumes growth year-over-year in Europe for coated fine paper specifically? Also, what are you seeing in terms of growth trends now when we are well already past July and into August? How is that demand recovery trending in Europe right now and where do you see operating rates in that market? Okay. I'll just give you a brief comment, and once again, I'll let Marco expand further. I spent quite a bit of time talking about the recovery in the Graphic Paper market. During the quarter, coated woodfree market volumes were, I think it was 83%, up on pre-COVID levels 2019. Our volumes were actually 94%. We are encouraged and that trend we are continuing to see in July. The impact of COVID has been much less than we had feared. Marco, I'll let you elaborate a little bit more if you want. Yeah. Thank you, Steve. I think we have been encouraged, as you say, with the general trend. The levels that we see the market ultimately get to might be even closer to 90% than the initial 85% that we have estimated. As you say, the market share development will most likely continue. We have the capacity still to do somewhat better than the market trends. Therefore, there's no reason to believe that there will be any change on that. The summary is that the recovery is taking place somewhat faster and to levels higher than what we initially anticipated. Okay. In terms of operating rates in the market or for yourself in July, August, anything you can say about that? Yeah. The operating rates have recovered to the high 80s, and if that continues, that demand recovery that Marco referred to, then we should move back above the magical 90s, and that's when the market's in balance. Why that's very important is it makes executing selling price increases easier to do. Okay. Well, that's clear. Thank you very much. Thank you. Next question we have is from Sean from Chronux Research. Good afternoon, guys. Thanks for the time. A couple of questions. I will start off with the first one. Just in terms of, I guess, net debt evolution, I think obviously the covenants are under control. Just sort of looking at Q4, CapEx seems to be quite weighted to the second or to the last quarter of the year, at least about $150 million. Also, with the Saiccor expansion delayed, I thought maybe that number would have come in a bit lower. If you could just expand on that, and if there is any sort of knock in CapEx into Q1 next year. Then just sort of linking that to net debt. If you look at working capital unwind over the last two years in Q4, there has been a nice inflow north of $130 million. How do you guys sort of see that playing out? I'll touch base after that. Thanks. All right. I'll talk briefly. Glen can talk about the closing net debt. Just on the Saiccor expansion, the estimated overrun linked to COVID and the delays that we've had is about $30 million. When would that occur? Some may be Q4, some of it, as we've indicated with the timing, might shift into Q1. The big driver for the higher CapEx relative to earlier in the year, a lot of it was exchange rates actually, because the project was in rand, and also even our European CapEx. Obviously, when they got stronger relative to the dollar, in dollar terms, your cost went up, but the actual rand cost didn't go up. That's what's contributing to why we get to the 400. Glen, you want to talk about the net debt closing? Right. Just to get back to your comment with regards to the working capital. Usually, historically, our working capital in the current quarter, the quarter three. Was Was minus to slightly positive. You see that we've reduced our working capital by about $37 million for the quarter. You're not going to get that large inflow in terms of the working capital in our fourth quarter, because we've managed to get some of it already in the third quarter. It will be above the $37 million, it's not going to be the $130s that we had historically. With that as a background and the additional CapEx coming through in the final quarter, we're going to be more or less break even from a net cash flow point of view. Our debt will remain relatively stable. Okay, awesome. That's perfect. Thanks, guys. Just in terms of the conversion of the convertible that was flagged in the results today. I think sort of looking forward, do you guys have any further visibility on potential conversions, or how do you sort of see that playing out over the next three years, financial years? No, we don't have visibility on that, and that's really dependent on the decisions made by the bond holders. They have the option to exercise the conversion above the conversion price, which is ZAR 33. They have that option available to them till November 2025. Sappi has the option to convert after December 2023 if the share price exceeds 30% of the conversion price. Your ZAR 33, if the share price is above 30% premium on the ZAR 33, which is about ZAR 43. After December 2023, we have the option to convert. Okay, excellent. Thanks, Glen. Just going to Europe quickly, just to make sure I understood clearly. In terms of Q4, the expectation is to sort of remain margin neutral quarter-on-quarter, in other words, keep it at a positive. Is that correct? Yeah, approximately, yes. Okay. Excellent. Just moving on. Sean, if I may. Yeah. Just to emphasize the point. If you look at the pulp costs and some of the other chemical costs and even freight costs. If you look at all of those, we believe we're getting close to peaks now. In fact, you've seen paper pulp prices starting to decline in China. Which tends to lead European paper pulp prices. That's why we're getting a degree of confidence that hopefully we're getting close to a ceiling or a peak in those costs. We need to obviously catch up with selling price increases. Cool. Thanks, Steve. Just turning to DWP. If you strip out the timing issues from logistic delays as well as the impact from the shut, what did you sort of say has been your expectation of cycle versus what is delivered year to date? Yeah, I think all in, across the mills, as I said earlier, we're probably looking at about 50,000 tons more than this quarter. Okay. Steve, I was actually just referring to sort of year to date. If you sort of take away the expectation of the shut and the delayed deliveries. Right. I guess for the actual sort of operations from a volume perspective, how is that sort of performing in line with your, I guess your original expectations? Yeah, it's obviously less, right? Alex, we lost the $40,000. Maybe over to you. Yeah. For the rest of the production, we're actually fairly well on track. Maybe there was 10,000 tons in it, but nothing more than that. Yeah. Okay, great. obviously earlier in the year, we lost the tons. Yeah Ngodwana because of the oxygen. Yeah, exactly. No, 100%. If you sort of look at these lost tons, the 40,000 tons in the quarter, as well as the sort of knock on in Q4. Is there any way to make up this tonnage, or is it sort of in the base of the year now, and it's done, that's it? Yeah, the 40's gone. All the other tons that we're talking about related to logistics, Sean, will sell. Yeah. It's just a case of, is it gonna be in Q4 or Q1? Obviously- Okay. There's tons we've also lost. Oh, yeah. Sorry. The other thing we haven't mentioned is the 28,000 tons related to the KZN riots. Okay. Perfect. Then just last question from my side. Just in terms of the Saiccor expansion ramp up, I mean, my understanding is most of those volumes you've contracted. I guess from your customer end, are they gonna delay their ramp up, or are they just gonna buy volumes in the market? Yeah. We're obviously working closely with them, and we're trying to get volumes to them as quickly as we can. You'll appreciate, I can't comment specifically on that customer. Okay, cool. Thanks, guys. Thank you. The next question we have is from Ross Krige from JP Morgan. Afternoon. Thanks, everyone. Sorry for laboring these points. I'm just making sure I'm understanding correctly. Maybe if I just start on Graphic Paper margins in Europe. I can't quite square the comments, I think it was to Brian's question on Graphic Paper margins. It sounds like those are expected to improve, albeit remain well below normalized levels. It sounds like you're expecting margins to be at similar levels in Q4 in Europe overall to Q3. Is that correct? Yeah. We're not saying graphic in Europe will improve. What we're saying is that there are further cost increases that have to come through, but there are also further selling prices that are coming through. The net impact approximately means that the European margins, including graphics, will be approximately the same. Okay. Thanks, Steve. When you talk about margins being more normal from Q2 2022, are we talking what, like pre-COVID type of Graphic Paper margins and how we should be thinking about it? Yes. We've obviously had these pulp increases. We've had freight increases, other chemicals. Maybe it's best illustrated with a number. Approximately, our cost per ton, by the time we get to Q4, is gonna be up about EUR 100 a ton from pre the rise that we've experienced. We need to offset that by a similar rise in selling prices of €100. We've got some already, there's some to flow in Q4, there'll be some to flow in Q1. Once we get that and we can get our selling prices up by the same rise in costs, our margins will be back to pre-COVID levels. Okay. Understood. Thanks, Steve. Just one last one on dissolving pulp volumes. I think you detailed a lot of the issues you guys are facing. Just maybe, if even regarding all those or taking account all those issues, it sounds like you're still expecting pretty material volume growth sequentially for the next 2 or 3 quarters. You've already quantified Q4, then as Saiccor expansion comes on stream and some of those delayed volumes come through, we should see continued growth there. Is that a reasonable conclusion? Yeah. Maybe just said in a different way, to summarize. Saiccor, after the expansion project, is sized to make 890,000 tons. We are gonna start production on the new line early in Q1. It takes a little bit of time to ramp up. Alex said earlier, in the second half of the year, we're confident that we can be operating at full volumes. There's gonna be a period in Q1 and a little bit in Q2, where you don't have that full volume. It's 110,000 for the full year, the additional capacity. In the first half of the year, there'll be a gradual ramp up. You're gonna lose a bit in Q1 and a lesser amount in Q2. Ultimately, the goal will be to get it up, by the second half of the year to the run rate to achieve the 890. Obviously, if you think about the current year and you take into account the lost production because of the unrest, we lost 28,000, we lost 40,000 because of the extended shut. That's gonna be volumes that we'll get next year over and above the additional capacity. Okay. Thanks, Steve. Thank you. The next question we have is from Wade Napier from Avior Capital Markets. Good afternoon, everyone. Thanks for the time on the call today. Just two questions from me on this business as I was sort of under the impression that their prices are sort of largely fixed to contracts and they would sort of see a bit of margin pressure into the sort of third quarter. Is the South African business, which is sort of aligned to rising containerboard prices, really driving that margin uplift in the specialities business in Q3? Just a bit of color there. My second question is on the Graphic Paper market. Is there any risk that the strong recovery that we've seen over the last two months, is there sort of any pent-up demand in this market that is potentially sort of making this recovery look better than it is? With that in mind, do you sort of see any risk that price increases in the first half of next year that you're sort of flagging maybe don't quite materialize like you think they could do? Yep. Okay. Thanks, Wade. On the two questions, I'll speak briefly and I'm gonna hand to Mike and Alex respectively to just talk about the respective markets. The margin improvement is actually coming from both regions. We have seen a buoyant demand in South Africa for containerboard, Alex will talk about that some more. Then in the U.S., although our machines are now full, we do have the ability to optimize the mix on the machines. That's helping boost our profitability. Yes, we've got rising costs, but we have been able to execute on higher selling prices as well. Mike, maybe just at a high level, to talk about the packaging markets in the U.S. Thanks, Steve. In the U.S., the start of this year, we were able to fully load the machines, have not had to take any curtailment as a result of lack of demand. With that, we've been able to continue to put through price increases in the specialties in packaging. We've been able to be ahead of our inflationary costs, if you will, in North America. In addition to that, we've continued to work on mix optimization. This was our plan all along. Initially, we loaded up one PM1, the packaging machine in Somerset, with available orders. From this point on, we've been optimizing that mix to what fits the machine and is most profitable for the region. Thanks, Mike. Alex, just packaging. Thanks, Stephen. Local agricultural crops have been very, very good, which means our customers have displayed a very strong demand for containerboard, and obviously on the back of fruit exports. Secondly, if you look at worldwide containerboard prices, they've actually increased rapidly. Those are the two drivers, and we actually see this to continue going forward. Thanks, Alex. On the second question about the graphic recovery. Look, there's no doubt there's a catch-up that's underway. The demand fell off so hard and you see it was at 50% down at its worst. There has been a recovery linked to COVID restrictions being eased and the like. We're encouraged by a few things. Firstly, our base case, I've said it many times on these calls. Our base case, we thought demand was only ever gonna get back to 80%, maybe 85%. Marco mentioned it earlier. Clearly we've gone above those levels. We're at 90%+ now. What is pretty amazing is that we're doing a two-year comparison here, right back to 2019. I'm encouraged because not all segments of the economy are back up and running, and the travel industry is a big customer of ours. The entertainment industry is a big customer of ours. Yeah, retail's picked up, but financial services has not been using the same levels as they had been doing pre-COVID. There's still further opportunities. Even if demand were to fall back a little bit, because of all the capacity that's come out, and just to remind you. In the U.S., 25% of capacity came out. In Europe, 18% of capacity come out. Operating rates in the U.S. are 100%. They're theoretically above 100%, actually. Europe, I've already mentioned, in the high 80s. With the pickup that we're seeing now in June, July, August, because those operating rates I gave you was for the quarter. It's actually higher than that now. That market's also gonna be back in balance. There is scope for some pullback at these operating rate levels. Now, the selling price increases that we're talking about are ones that either we've already implemented or we've announced. We have a series of selling price increases that are coming out in October. We are already talking to our customers. We are confident that we can execute on those selling price increases. We're under no illusions. We know that longer term Graphic Paper will continue to decline. Our strategy to combat that is to redirect more of our capacity away from graphics towards packaging. That will be done in a phased manner. In the short term, the volume fundamentals are good. Our challenge is rising raw material costs, and we need to combat that. That's what we're executing at the moment. If operating rates are in the 90s, then we're able to do that. Thanks, Steve. I appreciate the color. Thank you. Ladies and gentlemen, just a final reminder. If you would like to ask a question, please press star and then one now. We have a follow-up question from James Twyman. Yes. Hi there. Sorry, I know everyone's got somewhere to go, but I've just got two quick follow-ups. The first one is, did you say that the Saiccor expansion is gonna cost an extra $30 million? If so, is that therefore gonna be that $30 million likely to be increased CapEx for next year? Secondly, I'm a little, not really quite understanding this 55,000 tons of volume, which it sounds like you're talking about being delayed into Q1. Could you talk around that in terms of whether that means that, we're gonna see a big pickup in volume in Q4 for dissolving pulp, but we should actually see another substantial pickup in Q1 as well? Okay. On the CapEx, the additional $30 million, yes, is likely to move into next year. Yes. You know I've talked about this, James, that we haven't committed to any large projects, but there's a strong probability that will be in next year's CapEx, yes. The 55,000 tonnes I referred to at the beginning was not all dissolving pulp. It was about 25,000 tonnes of dissolving pulp and then the balance mainly is out of Europe, which relates to Graphic Paper. I've talked very strongly about how volumes have recovered, but the logistical challenges out of Europe are also very tough. As you know, we export out of Europe about 25% of our volumes. That goes to South America, the U.S., Asia, Australia. That is at risk between the quarters. The guidance that I've given you, we've assumed that that is gonna spill into Q1 and is one of the reasons we are conservative about our earnings guidance. Does that make sense? Yes. You're effectively saying that you know now already that when you get to the end of September, there's going to be additional delays because of logistics. You can tell that already. Look, James, you know what it is. You guys want us to put an earnings outlook. We have to do our best estimates. We have to be realistic about the challenges that are out there. We deliberately are conservative. If I can add, if we look at the Durban port, things are getting back to normal, but there are significant backlogs and the ramp-up is fairly slow. We can see that it'd be unrealistic to estimate higher volumes being shipped out of there. To say it another way, our best case, our best estimate is that that 55 will spill into Q1. That's what we've considered when we gave you our earnings guidance. Steve, thank you very much. Thanks. Thank you. The final question we have is a follow-up from Sean from Chronux Research. Thanks, guys. Just two more. In terms of maintenance for DP in FY 2022, could you just outline what your expectations are, in terms of timing? Just secondly, Steve, you made a comment earlier, sorry, maybe I misheard you, but did you say incremental 50,000 tonnes of DP in Q4? If so, how does that tie in into the 55,000 guidance with 25,000 related to DWP? Thanks. Yeah. The 50,000 in Q4 is taking into account that 55. I don't wanna confuse anyone. The 55 is the whole business. It's not just DP. Yeah. 25 is DP. The 50,000 tonnes extra from Q4 takes that into account, yes. Sorry, Stephen Binnie, just to confirm, sorry to interject there. Of the 55, 25 relates to DWP, correct? Are you saying that, incrementally, there will be 50,000 tonnes of DWP in Q4. If for whatever reason the shipments are actually on time, we could then expect an extra 75,000 tonnes in Q4? Yeah. I doubt you'll get that 25. Alex has said it's not all South Africa, by the way. Yes. It's already early August. We kinda know when the ships are likely to sail and how much tons we're gonna get. Similarly, in the U.S., we know that there's some delays there. It's our best estimate. I would be surprised if we got that 25. Okay. Worst case, it's Yeah. You're saying worst case scenario, we're looking at $50 extra. Look you're boxing me in here, but the logistics challenges are all out there and Durban port is coming. This is our best estimate. Okay. If things had to really work out well for you guys, it would be 50,000 tons extra DP plus the 25 if the stars aligned. Yeah. I don't think we'll get the 25. Okay. Cool. Perfect. Okay. The timing of the shuts. Mike, Cloquet shut. No major change, Steve, next year. It's the same time. It'll be in Q3, roughly the same length. Yeah. Alex, the Saiccor and obviously the Ngodwana one, which is the bigger one. Yeah. We obviously need to take a shut at Saiccor. It's not only the third recovery boiler and the other two recovery boilers. Then there's some work being done to try and move the Ngodwana shut out a little bit longer. We've not finalized that, but there's an opportunity there. Okay. Thanks, Alex. The Ngodwana shut will occur during the year, but we're hopeful that we can push it out a little bit later in the year, and that's consistent with what we did last time. Okay, thanks. Ngodwana is like the Q3, Q4 story for FY 2022 and then Saiccor. I am not sure if I missed that. The Saiccor shut, I think is in the third quarter. Yeah of next year, fiscal year. Awesome, guys. Thanks very much. Thank you. Sir, that was our final question. Do you have any closing comments? Nothing more to add. I just wanna thank everybody for joining us today and look forward to discussing the final quarter results in three months time. Thank you. Thank you, sir. Ladies and gentlemen, that then concludes today's conference. Thank you for joining us. You may now disconnect your lines.