Ladies and gentlemen, thank you for standing by, and welcome to Sappi Financial Results Announcement Q1 2023. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question- and- answer session. To ask a question, you will need to press star one and one on your telephone. If you wish to withdraw your question, please press star one one again. I will now hand the conference over to CEO, Steve Binnie. Please go ahead, sir. Thank you. Good day, everybody, thanks for joining. As always, I will move through the investor presentation, calling out the page numbers as I move along. I'm going to start on page three, which is the highlights for quarter. Pleased to say that it was our best ever first quarter, EBITDA of $290 million, which is a 21% rise year-over-year. Under the circumstances with the more challenging economic environment, we're very proud of that. The other thing I would call out to you is that the prior year did have a 53rd week. If you equate that to sales volumes, you know, if you're comparing year-over-year, that was about 7.5% of sales volume. In order to get a true comparison, you should back out the you know, 7.5% from the prior year. The higher profitability came from year-over-year pricing gains from our paper products which offset cost inflation and lower sales volumes. During the quarter, we began to see the market softening, and that was as a consequence mainly of rapid downstream inventory accumulation, and that itself was as a consequence of the bounce back and the logistical challenges that occurred after COVID. There was high ordering activities and ultimately it meant a buildup of downstream inventories across the board. At the same time there has been a slowing of the global economy and an anticipation of lower consumer spending, which impacted across all our segments. The net debt to EBITDA under one time, so pleased with that as well. Moving to page four, which has just got the quarterly EBITDA. You can see, this only goes back, the last four years, but you can see relatively speaking, Q1, a good performance year-on-year. You know, obviously, giving us the healthy margins that we delivered. Moving to slide five, the earnings bridge from last year to the current year, it tells all the stories. Firstly, lower sales volume linked to the slowing demand, mainly inventory accumulation as I referred to. Benefiting from higher selling prices across all our segments, which enabled us to offset higher raw material costs. Once again, it's, you know, it's across the board, the higher costs. I think we've got another slide on that just now. Higher fixed costs coming through that wage inflation and salary inflation all contribute towards the $290 that we achieved in the current quarter. Slide six is something that we've been sharing with you in recent times, really just to put things in perspective. Across all our major cost categories, significant rises over the last few years, things are beginning to turn. You can see in the last quarter across most of the categories coming down now. In particular energy, as gas prices and other energy prices have come down as the pressure has reduced. Slide seven has our net debt to EBITDA evolution, you know, a great story to tell. In the current quarter, we did generate more cash. We did get impacted negatively by the movement in exchange rates. You'll know that we've got a significant proportion of our debt in euros. Obviously we know, we all know that the dollar weakened during the quarter against the euro. That roughly accounts for about $100 million additional debt. All in all, good cash generation. As we move through the rest of the financial year, we will, in absolute terms, continue to bring down our debt numbers. On page 8, the maturity profile of our debt. You can see that nothing major. The one dark blue line in 2024 relates to our securitization structure. Pleased to tell you that that's been renegotiated and extended to. That was renegotiated this month or in January, and that's extended to 2026. Really we don't have any material debt refinancing in the next few years. Slide nine has the cash flow on the left-hand side, just confirming the cash generation and the free cash flow. Typically, Q1 is a reasonable quarter. As you know, if you follow Sappi, you know, over the years, as we get to the Q4, that's when we generate the most of our cash on an annual cycle, and we would expect that to continue. CapEx for the year is consistent with what we gave last quarter, $430 million, of which 70 relates to the Somerset conversion. That starts slow, obviously, and then starts to build up as this year unfolds and we get into 2024. Turning to a couple of the major cost categories, firstly on pulp, which is on slide 10. You can see that the Chinese prices of paper pulp have started to come down. The Europe one's still relatively high. North America's not on here, that's the same, it's the same in North America. Those are still at relatively high levels. What we see typically and we've seen in the past as well, is that the US and Europe tends to lag the Chinese. We do think that will be a positive opportunity as we move through the rest of the financial year. On slide 11, the gas and we've shown this slide before. Lots of volatility. We saw the peak before the European winter. This is the European gas prices. The winter ended up being milder than everybody anticipated. There was high storage levels across Europe and the situation improved quite dramatically, which has brought down gas prices to the current EUR 50- EUR 58. Once again, that will help reduce the pressure on our business. On slide, then moving ahead to the segmentals, and firstly the product segments, slide 13. Year-on-year selling prices up 9%. However, as you know and we reported in the earnings announcement, the actual spot prices for dissolving pulp did come down during the quarter. I think they reached a low in early January of about $880 a ton. And that's linked to high retail inventories downstream and a significant lowering of order activities which came all the way back up through the viscose producers who lowered their operating rates and ultimately that lowered demand for dissolving pulp. What I will say is that subsequent to this, DP prices have now actually started moving upwards again. Activity is picking up in China and across all the viscose producers. There's some very positive signs coming out of that market. We are optimistic about the prospects for pricing, and I'll talk about that a bit more when we get to the outlook statement. All in all, our margins were lower because of the higher cost inflation and lower sales. Impacting on sales was we did have the electrical outage in the KwaZulu-Natal area, which impacted the three mills, and that lowered volumes year-on-year as we compare. Moving to slide 14, the packaging and specialties segment. It's important to point out that underlying demand is still relatively stable. However, as we engage with our customers, they do have high inventory levels, so they're working their way through that. We do expect that to normalize pretty soon. The year-on-year selling price increases supported the EBITDA growth, and you can see it's up 24% year on year to give us an EBITDA margin of 18.4%. In graphics on slide 15, weaker market conditions, obviously coming off the significant highs and the record demand and profitability that we achieved in the prior year. Once again, it's a story of high inventories. We see that at merchants, we see it at printers, and they are once again working through their inventories. What we did is we matched our sales and lowered our production levels. We did take downtime during the quarter, but our focus was on protecting selling prices. That's why we were able to deliver the good margins that you see here, the 15%. Those increases in selling prices or the higher level neutralized the impact of the cost inflation and lower sales volumes that I've talked to. Turning to the Europe, sorry, the geographical segments, starting in Europe. Year-over-year sales down 32%. Once again, I call out that there's an extra trading week in the prior year. You back that out and year-over-year comparative would be closer to 25%. We took significant production downtime, but our drop in demand for the categories that we're in graphic paper, is in line with the market. We have not lost market share. We're in line with the market. The pricing gains that we have experienced offset cost inflation. As I said earlier, the high inventories has meant that there's lower and lower demand. We were able to keep our selling prices stable despite more challenging demand conditions. Turning to North America, another strong performance. Selling ton, sorry, sales tons down 17%. Once again, extra sales week there. Backing that out, there was a little bit of softness compared to recent quarters. Again, it was linked to high inventories. The other thing that I is the bullet at the bottom. We did have a real upgrade project at Cloquet, that took out a little bit of volume. Generally, the North American market was better than the European market, although we did see some slowdown, particularly in December. Then turning to South Africa, significant year-on-year cost inflation impacted profitability. I've talked about DP already, so I'm not gonna repeat that. We did make good progress in terms of alternative shipping through Maputo, and our ultimate goal is to move all our Ngodwana export volumes through Maputo. We're on track to be able to do that. On the paper side of the South African business, containerboard markets were still robust across the board. Interestingly, all our other domestic paper markets, like office paper and newsprint, sales volumes were good. Pricing improved profitability in the graphic paper segment. We do sell some graphic paper in South Africa. Slide 19 is our Thrive25 pillars, and this is a slide you've seen many times. I'm not gonna repeat them, but just to call out a few things. Firstly on operational excellence, obviously, things are a little bit challenging at the moment 'cause you take a little bit of production downtime, and that affects efficiencies and, you know, we've gotta manage our way through that. With costs coming down, we are looking for cost-saving opportunities and also on the supply chain. With supply chain improving and more capacity coming on board there, we do think that there are opportunities there to bring down costs and improve our customer service, always focused on safety and striving for zero injuries in the workplace. Enhancing trust, obviously we recently announced our science-based targets. We're on track for that. We are looking for opportunities to lower our carbon footprint, looking for alternative energy sources, particularly in South Africa. And ultimately, and it's a number you've seen previously, we estimate that our sustainability CapEx spend is about $70 million a year and you've seen that, and it's embedded in the $430 that you had, the guidance that we gave you earlier. In terms of growing our business, a number of smaller projects which we've shared with you in the past, that are either just being completed or close to completion, ramping up labeling at Gratkorn. The new coater that was installed at Alfeld in the prior quarter and, you know, that's ramping up and we've got orders there now, coming off that. We had a debottlenecking at Somerset PM1, which gives us an additional 30,000 tons. Longer term, the conversion of the Somerset PM2 machine, which is obviously gonna give us more tons and move us into a higher growth segment. In sustaining our financial health, I talked last quarter about our target of keeping our debt below $1 billion. We're well on track to do that and committed to maintaining it at those low levels. This is a very important strategic priority for us moving forward. We will continue to look for opportunities to optimize our exposure to graphic paper as well. Slide 20, sustainability is at the core of everything we do. It's now part of our capital allocation process. We measure the impact of all the new projects that we do and what it does for the targets that we've set ourselves. It's embedded in across the business. Slide 21, just as some of the ESG things that we're working on, many of these you've seen before. Just a couple of call-outs. The ISS and MSCI ratings both improved during the quarter, pleased with that. We maintained our Level 1 B-BBEE rating at Level 1, very proud of that. Obviously on the right-hand side, you've seen our annual report came out and our new 22 sustainability report has been published. Slide 22 is our science-based targets. As I said earlier, on target to deliver these and it's an important part of our business. Moving forward to the outlook statement, it's fair to say that in the short term, things are likely to be negatively impacted by the combination of the final phase of the downstream inventory destocking that I referred to, and that resulting impact on sales volumes across all our market segments. However, there are positives coming through. I mean, firstly, I've talked about it many times on the call, costs are starting to turn, which is gonna relieve the pressure somewhat. If you look at some of the macro factors that are out there, the Chinese economy is opening up. We're seeing activity picking up specifically in the viscose segment and obviously demand for DP. Things are moving there. Inflation looks like it's peaking globally, that's gonna relieve pressure for consumers. All of that gives us optimism as we move towards the end of this financial year, and then into the next financial year. Just repeating some of the things that we've talked about. Cost inflation is expected to recede, natural gas prices coming down, pulp prices expected to decline, delivery costs are already coming down and even chemical costs. All of that positive. At the end of the last quarter, we announced the divestment of the three European mills. That transaction is expected to close during the second quarter. There's a number of conditions that have to be fulfilled, and we're on track to do that. The cash proceeds are expected to be received, well, the cash proceeds obviously immediately on closing, and then the receivables will be collected in the second and third quarter. We're still on track there. CapEx for the year, $430 million, as I said, $70 million for the Somerset conversion. Taking all of that into account, the macroeconomic uncertainty, we are coming off our best year ever. We do anticipate a return to more normalized earnings in 2023, which Q2 though, expected to be the most challenging with a subsequent recovery. Because of that, Q2 will be lower than Q1. Operator, that's my presentation. I'm gonna hand it back to you now, for questions. Ladies and gentlemen, we now begin the question and answer session. If you wish to ask a question, please press star one and one on your telephone. We are now taking the first question. The first question from James Twyman from Prescient. Please go ahead. Your line is open. Yes. Thank you very much for the presentation. I've got a few questions. The first one was, working capital went up, fairly substantially, especially given the big increase last year. I was just wondering what the causes of that were, whether there was, you know, a surplus of inventory given the weak demand that you've seen. The second one was, is it possible to be able to maintain prices at this very high level, and it's impressive that you've done that so far, given the very weak demand and the sharp fall in gas costs, which was, you know, one of the reasons for prices being pushed up. Those are the questions. Also, do you have the cost, maintenance cost for the Somerset Mill in the quarter? Okay. Just on the first question on working capital, I'll let Glenn go into more detail, but it's not an inventory story. It's still linked to receivables because selling prices were still going up. You know, if you're comparing quarter-on-quarter. We're still getting to the peak impact of selling prices on our receivables number. Glenn, you can elaborate. Yeah. That's basically the reason, and we're anticipating a cash inflow in the second quarter, and it will be recovering about half of that outflow. Just to your question, specifically, James, on the inventory side, we managed that risk. We took our downtime. It's mainly Europe we're talking about here. We took our downtime, we're not sitting with excess inventory, so we've managed that risk very well. Yeah, the selling prices, our focus has been to protect our selling prices. Costs are still high. Yes, we've taken downtime because of lower demand, but we're of the belief that if we had lowered prices it would not have attracted more demand because it's an inventory destocking that's underway. We are striving to keep selling prices, and we've been able to do that and our selling prices are still at those levels. We haven't seen declines yet. On the third, the third point on the cost of Somerset, Mike? Yeah, the Somerset outage was included in the quarter and it was, approximately $18 million. You got that, James? Okay. Thank you very much. Yep, that's perfect. Thanks a lot. Okay. Thanks, operator. Thank you for your question. We'll now take the next question. Please stand by. The next question from Tim Clark for SBG Securities. Please go ahead. Your line is open. Thanks. Good afternoon, everyone. A couple of questions from me, please. Just first of all, I wonder if you could give us just a little bit more on-the-ground color on VSF operating rates and what you're seeing there. A second one. Can you share with us what the sort of EBITDA outcome was for the 3 mills that you're selling? Just to give us some kind of a base upon which to think going forward if the sale's gonna progress in Q2 and into, you know, through into Q3. Just what we should think about in terms of margin change or in terms of EBITDA. Just on Somerset, on the PM2, you know, the 235,000 tons of coated woodfree. Is that off already or is that gonna come off now in this coming quarter in terms of just overall production? Should we sort of strip that out, you know, just to be replaced by the new project in 2025? When should we strip that off? Thanks. All right. On the VSF operating rates, I'll let Mohammed elaborate further. During the quarter that we've just reported on, operating rates went all the way down, and they were across the board at 50% levels. We have seen a subsequent recovery and, I mean, at one point in time, for example, the Chinese producers were not making viscose at any kind of volumes. Let me hand you over to Mohammed. Okay. Thank you, Steve. Just specifically on China because that's where you have public information. What we've seen, just before Chinese New Year, the operating rate as an industry average was around close to the 50-55%. Post-Chinese New Year, it's now up to 63% as of this morning, and there is a lot of market information coming out of buyers of dissolving pulp in China that that rate is likely to go higher. One of the reasons that's driving that also is that the buying activity for viscose staple fiber has started to improve again. We've seen the stock levels that the VSF producers have been holding starting to come up. It peaked just before Chinese New Year at around 30 days. The long-term average is about 20 days, so not too, not too much higher than the long-term average, but it has now started to turn. We've also seen VSF prices starting to lift. Just before Chinese New Year, some of the major VSF producers announced a 200-300 renminbi per ton price increase, and we've started to see that price increase take hold just after Chinese New Year. As of this morning, VSF prices in China is now 13,200-13,300 renminbi per ton and moving towards 13,500. The other thing we are starting to see is, as a result of that, improvement in the VSF operating rate, there's increased activity, in terms of, interest in buying, dissolving pulp. As a result of that, we've started to see, the dissolving pulp prices now move up. It has moved from about $880 mid-January. This morning, the CCF index, is at, $898, and there's been, price increase announcements, which is in the public domain, of, $900 for, hardwood dissolving pulp and, for softwood dissolving pulp, $949, $950. Yep. Thanks. Thanks, Mohammed. Okay. Thank you. The second question, in terms of the 3 mills that we're divesting, well, the first comment I would make is that the drop in sales volumes that those 3 mills experience is broadly in line with the drop that the overall European business has encountered. I think that the best way to think about this, because Q1 is obviously still at elevated levels relative to historical norms, and these 3 mills, on a normalized basis, are making about Sorry, $50 million EBITDA per annum. Then on Somerset PM2, I'll let Mike go into more detail, but the mill will only... Sorry, the conversion will only be completed in late 2025 financial year. Although we're taking a little bit of downtime in the U.S. at the moment, we would expect to be able to fill our mills once again. Mike, maybe you can elaborate further on that. Steve, we plan to run the machine full to Q2, Q3 of 2025. There might be a minor downtime before that, but the machine will run coated freesheet or C1S grades until that time. The conversion will go completely to packaging, you know, after the outage in Q2, Q3 in 2025. Thanks, Mike. Okay. That's very helpful. Thank you. Okay. Operator? Thank you for your question. We will now take the next question. The next question from Brian Morgan for Morgan Stanley. Please go ahead. Your line is open. Hi, guys. Thanks very much. In the outlook statement, you talk about a normalized level of earnings. Could you elaborate on that a little bit? Yeah. Look, what we do is we look back at the last few years and obviously there's been a lot of volatility through COVID, right? Historically the average is, has been close to the 800 mark. Obviously, we've made positive changes to the business in terms of shifting volume from lower margin products to higher margins. You know, we would expect a positive contribution for that. I'm not gonna give you a definitive number, but that gives you a rough indication of where we're thinking. It's the $800 plus business improvements minus the $50 that you're selling. well, the outlook statement did take into account the sale. Okay. So- Um- Uh. That. The math is right. Yes. Okay. Yeah. On just graphic paper volumes and just you're thinking, you know, following on the previous question about strategy, et cetera. Once, you know, once you've sold these mills, you'll obviously get to have better quality coated woodfree mills in Europe. You know, would you be looking to keep those mills full, even when you're in when the industry's in periods of, you know, more or higher decline rates than normal? Yeah. I mean, at the moment, let's talk coated woodfree because it's predominantly coated woodfree in Europe. The market demand for coated woodfree in the quarter was down in the high 30s%. It's... and that's in line with what we experienced. That is very clearly an inventory adjustment. That's not where the market demand is gonna be. Now, it's difficult to pinpoint exactly when that inventory adjustment is complete. It won't be in Q2. We're anticipating that it will be sometime in Q3, and then we would expect a bounce back in volumes. From that point onwards, that would enable us to get back to fuller machines and more optimized levels of production. We always talk about a decline of a longer term decline of 6%, and we stick to that. We do anticipate a bounce back in the second half of the year. you don't think that there's been demand destruction as a result of high prices? Well, interestingly, you know, if you look at, you know, the journey through the last few years, and the bounce back in recovery, I think it's fair to say that the demand last year was better than everybody had anticipated and had eliminated a lot of the natural drop in demand. There will be a higher decline in the current year because you're coming off the elevated levels. We think there's one year, and we estimate it that for this year, it will be somewhere between 10% and 15%. Marco, I don't know if you want to elaborate further. Yeah, that is correct, Steve. To the point Brian was making, we don't necessarily see a further structural elimination of the market, and we're counting on a rebound that will get us on track exactly as Steve said, for a structural decline of 5%-6% in graphics. In summary, Brian, there's one year here where you're gonna get between 10% and 15%, and then thereafter, a resumption in the 5% to 6%. Okay. Last question from my side is on dissolving pulp against paper pulp. Obviously, dissolving pulp is back in the trend there in terms of pricing. How long do you think that can last? Do you think it's that you could see a big spread, a larger spread than normal opening up between dissolving pulp and paper pulp? Yeah, it's interesting. Clearly the industry has gone through a big destocking. With the Chinese economy opening up once again and Mohammed talked about it earlier, we're seeing lots of movement. We've come... It's happened over the course of a few weeks. From a situation in the middle of November where there was nothing happening to now everybody's looking for tons again. I think that's a very positive sign and is indicative of a high opportunity for momentum in dissolving pulp prices. Bear in mind, you know, paper pulp prices in places like the U.S. and Europe are still... Well, hardwood pulp prices are still, what? $900, just under, Net. Net, yes. Net, net prices are still at $900 a ton. Paper pulp prices are still high. The DP price and the paper pulp price is the same. You know that the break-even point is $300. Mm-hmm. Yeah. Okay, cool. Thank you. I know China's a bit different. China's prices have come down. In the US and Europe, net prices of hardwood paper pulp are still close to $900. Okay, cool. Thanks. Thank you for your question. We are now taking the next question. The next is from Andrew Jones from UBS. Please go ahead. Your line is open. Hello, hi. Thanks for taking the questions. Just have a couple on the market in general. I mean, we did a recent call where a trader was sort of arguing that DP was probably the type of pulp that was going to be most positively disposed to a China reopening scenario. I mean, could you talk to us just to co-contextualize those operating rates? If you go from a, you know, circa 50% operating rate up to, I don't know, whatever the long run average is, what sort of quantum of additional dissolving pulp demand do you see that actually adding? You know, how does that compare with your outlook for supply in the next year? I have a second one, I'll let you answer that first, if that's okay. Yeah. Look, we don't disagree with what you mentioned earlier. I'm not sure who you were talking to, but that's similar to our conclusions on this. We think that there's very favorable market conditions coming. There is no additional capacity coming on board that we're aware of. All the capacity that was added for dissolving pulp came on board in the last couple of years. And like you say, with operating rates picking up, with order activity picking up downstream, the prospects for DP, not only in the very short term, but certainly for the next couple of years, is very favorable. Mm-hmm. Okay. Just in terms of the, you know, sort of... What does an increase in 10% on VSF operating rates in China on the... What does that mean in terms of tons? Just to contextualize it. This is Mohammed. China's installed VSF capacity, active VSF capacity when the malls are running full, is about 5 million tons. You know, if you took 10% of that's roughly 500,000 tons of dissolving pulp. I think just the other point I would add to Steve's comment about the supply side, you know, as a result of the low prices and the issues that happened during October, November, December quarter, you know, there's a mill in the United States that has shut down and had a change in ownership. There's a mill in Brazil that shut down in August last year. There's lots of rumors about them trying to get financing to restart, they haven't restarted as yet. Certainly a lot of the active, swing capacity in China, you know, moved back to paper pulp. There's a mill in Chile that has to take downtime, and for the next few months. Correct. They have some repair work that they have to fix as a result of a fire that they had last year. Okay. No, that's very interesting. Just a second question, just on the outlook for coated woodfree. You're talking about 10%-15% reduction in demand this year, followed by 6% thereafter. Where do you see the, you know, the capacity coming out to sort of balance that market? Like, who's... I mean, although maybe not specific producers, but in terms of announcements we've seen so far, or, you know, a lot, you know, those producers are likely to set the top of the cost curve in terms of maybe region, if you don't wanna comment on specific competitors. How do you see the market balancing itself in that scenario? Yeah. Look, it's a good question, and I can't mention any specific competitors. Let's talk US first 'cause that's easier. In the US, obviously we have that conversion that we talked about, and that's gonna take out, you know, a couple of 100,000 tons out of that market and keep it very tight. In Europe, we have one machine at Gratkorn, which we are ramping up onWill be predominantly off coated woodfree. That's taking out another couple of 100,000 tons. On top of that, and not mentioning any specific competitors, but some of our competitors are in a weaker cost position than Sappi is, and they would be under tremendous pressure to take capacity out as well. I, you know, you'll appreciate I can't name them, but. Mm-hmm. They would have to do something as well. Mm-hmm. Okay. Thank you. Thank you for your question. We are now taking the next question. The next question from Cole Hathorn from Jefferies. Please go ahead. Your line is open. Afternoon, thanks for taking my question. Just following up on the destocking, I'd like to get a little bit more color maybe by end market, maybe focus on the packaging and specialty. A lot of your competitors across kind of labels have called out quite a big destocking, you know, positively saying there's a bit of recovery into Jan, Feb. I'm just wondering how far are we through this destocking cycle in the packaging and specialty, and are you seeing kind of a an uptick in normalization of those inventories with customers on the packaging side? Then on the U.S. kind of graphic paper market, last year we saw an uptick in imports into the U.S., it's exceptionally high price environment in the U.S., there's not the cost support that we saw in Europe. How do you see the dynamics playing out in the U.S. kind of graphic paper market with, you know, tight domestic supply and demand, but imports coming in? Thank you. All right. Thank you. On the destocking I'll make an initial comment and then I'll allow Mike and Marco to talk about their respective regions. Yeah, you're right. Us alongside everybody else, we have seen high inventory levels at specific customers, and once again, we can't name who they are, but some of our larger customers are working their way through high inventory levels. We do think it's short-lived, and that there will be a bounce back, you know, as we move into Q3. I'll let Mike talk North America, and then Marco on European specific. Specifically in North America, we see the con-converter finished goods inventories high, but they're starting to come back in line. It's mainly sheets. If you recall, the majority of the machines in North America for Sappi, we run web products. We do have sheet products out of Cloquet, but inventories are- Even on the label side, Mike. Yeah, yeah. Yeah. The label, yeah. Yeah, even on the label side, you know, think we're expecting to see things come back in line going into Q3, is probably the best way I can put it at this time. Yeah. Marco? There is destocking taking place on both sides, the graphics and the packaging specialties. What I would like to call out that on the graphics side, you have the effect of paper merchants who have, in general, slightly bigger swings in their inventory. They probably will have, they will need a little bit more time to work out their overstocked positions. On the specialty side, it's very much related to brand owners who usually have less of this volatility. We're seeing particularly on the label side, flexible packaging side, probably somewhat faster recovery, although Also there, it will not happen in quarter two. Where we really have seen a step back in activity in Europe as being on the packaging and containerboard side, and that had to do not only with destocking, but also with the general lower economic activity when you think about online purchases and general packaging. Thanks, Marco. On your second question about the North American graphic paper market, I'll make a couple of points and then again, I'll allow Mike to elaborate further. There's essentially two large domestic producers left, and we are, you know, we're both taking out capacity or planning to take out in the next few years. That's gonna contribute to keeping that market very tight. The second point I'll make is that we are also an importer into North America. When you see those import numbers, it includes our European imports into North America. As we convert that capacity that we've, Mike and I have been talking about, you know, we're gonna be looking for opportunities to sell more of our European volumes. We are one of the players that will benefit from that. Mike, I, yeah, I don't know if there's anything you want to add to that. Probably the only comment, Steve, is the inventory bubble that kinda came through with the middle of last year, you know, coated freesheet was in short supply. A number of companies went out and ordered additional volume from abroad. That came into North America in a bunch as, you know, the logistics issues straightened out. So that bubble's working its way through. They missed some of the dates. We had several customers that missed, for example, the printing for the elections because the paper just didn't arrive in time. So that bubble is working its way through, you know, specifically, but, you know, that's a short-term issue. I think, you know, Steve's comments on the longer term issues is, you know, our confidence is pretty high, especially with the conversion of PM2 in the long term and the opportunity for imports from Europe. Thanks for the color. Thank you. Thank you for your question. Operator? We are now taking the next question. The next question from Oliver Toth from Pleshanke. Please go ahead. Your line is on. Thank you. Just 2 questions from my side. With regards to the Durban port, would you say that the situation there is getting better or worse? That's the first question and the second one. You speak of Maputo and the volumes going through there. What type of quantum are we speaking of here and what do you expect going forward over time? Thanks. Yeah. I'll let Alex go into more detail, but just on the Maputo question, ultimately our goal is to push through all our export from Ngodwana, which is about 250,000 tons. At the moment, for the quarter, I think it was 20%, Alex, right? In terms of the Durban port, it has its ups and downs and I'll let Alex comment on that. Thanks. Yeah, I think since the strike and there's been a lot of cooperation with the port authorities, with Transnet. We've actually seen a steady improvement in terms of that, to the extent that we're taking the majority of our volumes into the port by rail now, and that obviously is much more easy and easy flowing than doing it by truck. I'm cautiously optimistic that this will continue to improve. Okay. No, thanks guys. Thank you. Thank you for your question. There are no further question at the moment, sir. Great. Thanks, operator. Let me just take this opportunity to thank everybody once again for joining us and we look to forward to discussing our Q2 results with them in three months time. Thank you. That conclude the conference for today. Thank you.