Thank you, operator, and good day to everybody. Thanks for joining us.

As always, I'll go through the investor presentation calling out page numbers as I move along. To start just on page 2, just to draw your attention to our our comments around forward-looking statements.

Moving to slide 3, which is a a high-level summary of the quarter and the results. It's fair to say it's it's been a a very challenging quarter.

Perhaps just focus on some of the the the larger items that have influenced the the performance, and it's really two two broad themes. Firstly, it's selling prices were down across all the regions and linked to the the weak market conditions, but more specifically the the DWP price was substantially lower than a year ago market prices, $130 actually lower than a year ago.

That had a substantial impact. We also we've seen packaging prices globally come under pressure, which has had an impact on our on our markets, even where demand has has been pretty good.

Unfortunately, that knock-on effect of the the lower prices has influenced those markets too. The other big theme is the exchange rate.

The the the specifically the the rand-dollar exchange rate, it's we know it's predominantly linked to dollar weakness and and and which is ultimately rand strength. Obviously us being a a South African manufacturer with revenue in dollars and costs in rands, ultimately that squeezes margins significantly.

Even in Europe, when you convert your costs to to to to dollars, that also in- increases your costs on a relative basis. In the quarter, we also had the the Saiccor shut.

That was about a $10 million impact. Then we had a couple of opera- non-operational one-off write- writedowns.

Firstly, on the forestry fair value. We we have to use market prices to value our forests, and we typically benchmark and use the timber export prices out of South Africa in- into global markets.

That they're not our prices. The- they're woodchip prices.

Interestingly enough, their dollar price was unchanged compared to the prior quarter, but unfortunately, when you convert that into rands and the and the and and the the rand strength, that necessitated a writedown of our forests. Then we had impairments.

The main area where we had impairments was on our European business, and and mainly in our European graphic business. As we are going to be selling assets, our graphic assets into the UPM joint venture if that's approved.

A significant proportion of that writedown related to those assets. Then we we also had a a writedown on of our Matane mill in the US.

Anyone following the pulp markets and specifically the the high-yield dissolving pulp has also be have have also been weak, we we wrote that down as well. Moving to slide 4, and we thought it would be important to just focus on a few of the big drivers of our earnings.

I've already touched on these two themes: the the lower DP prices and the rand-dollar exchange rate. We've we we've got data here going back These These are our pulp segment selling prices.

When you go back, we've got going back 10 years or so, and you can see that there was always they always moved in opposite directions. For the first time over the last year or so, unfortunately they've moved in the same direction, which has magnified the impact of of of of those two key variables.

We We We've got some numbers down below which talks to the the their impact on our earnings. You can see it's vast.

Specifically in South Africa, that that that that that impacted on on the profitability of our South African business. Moving to slide 5, which is our the ramp-up of our Somerset 2 volumes and our packaging volumes in in the US.

I'm pleased to say that we we we saw good good volume increase. Particularly towards the end of the quarter, we saw an acceleration.

I I'm actually pleased with the progress that we're making, and we would expect that to continue in the quarters ahead. We're very by the time we got to the end of the quarter, we were very close to the the the startup curves that we that that we put together when we we we we when we approved this project.

Making good progress there, gaining market share, and and I'm confident that that will continue in the quarters ahead. Unfortunately, the SBS market prices, like like all global packaging markets, have has has been under pressure.

If you compare the market prices quarter on quarter, you can see that they were down about $100 a a ton compared to the last quarter. That that that that has a big impact on on on on profitability.

All in all, very pleased with the ramp-up. The volumes are going well, but market prices in the short term under a little bit of pressure.

Slide 6 is our earnings bridge from a year ago to now, and it's the same themes that come through. Big impact on on selling prices, negative.

We've done a lot of great work on taking costs out of the business, which offsets some of that, but clearly not all. Then the currency, when we compared the currency conversion, that was a negative as well, which ultimately led to the $52 million EBITDA that you saw compared to what was there in the prior year.

Moving to slide 7, cost inflation, which is a is obviously another big driver. In the quarter that we just reported, we did see a rise in a number of our key cost Even before the Iran war started, we started things were starting to increase, but that was exacerbated when when the war broke out.

It's had an impact on the quarter, but we thought it would be useful just to share with you what it meant for the quarter ahead. You can see that there are some significant rises.

The The The one we're we're most concerned about is the delivery cost, cuz that's a big number. Fuel We all know that fuel prices, oil prices rising, shipping costs of r- rising as well, and and and that's got a a vast impact.

Also a number of our raw materials that we're using in our mills, and we list three there, three big ones: sulfur, caustic, and and and and latex. With the constraints on shipping globally and and what's happening in the Hormuz Strait, a lot of that products, particularly sulfur, is is not freely flowing, and there's a there's a bit of a scramble to to get your hands on on these products.

Things like latex is is obviously linked to the oil price, those have been rising substantially. When we take these all into account, we we estimate quarter on quarter that that's about a $30 million increased cost.

It's for that reason, I I know there's probably some questions about why our our outlook statement would be negative because other things are improving. selling prices, and we're we're doing a lot of great work on mitigating taking the but and selling prices for DWP are going up, graphic prices are going up, but unfortunately, when you when you when you get a a $30 million increased costs, that is why we had to be cautious with our outlook statement.

Moving to slide 8 is our net debt leverage. Obviously with the lower profitability, our our our leverage ratio has increased six times.

It's very important with with that in mind that we proactively negotiated a a suspension of our leverage covenant. I'm very pleased to say that that was achieved.

That emphasizes the the strong relationships with the banks that we have, our partners, and their understanding of our business. I'll touch on that in a little bit more detail.

Pleasingly, despite the lower profitability, our debt, if you look across the last four quarters, our debt has actually been very stable. That emphasizes how the discipline that we're bringing in, despite the low profitability, that we are able to proactively manage our debt and and and keep it at at at these levels.

I I I think that's a that's that's a big achievement despite the low profitability. Moving to slide 9, just has our debt maturity profile.

We don't have any major maturities in the next 18 months or so. The next big one is our 20 28 bonds, and we we're just monitoring the markets, and we'll we'll we'll pick the optimal time to when to refinance those.

Moving to slide 10, which is just has the the the cash generation. Clearly, the lower profitability impacting the cash generation.

As part of our back to basics and and our focus on strengthening the balance sheet, we brought our CapEx down. We're looking at about $250 for this year and a and a slightly a similar number for next year.

Moving to slide 11, and it's a theme that I've touched on already, but really very pleased that we were able to proactively engage with our banks. We got unanimous support from our bankers.

They've been with us for a long time. They understand Sappi.

They understand the markets that we're in, and very supportive. Very pleased with that progress.

In terms of our flexibility, we we we have $800 million of liquidity across cash on hand and our unutilized RCF facilities. The the the we're we're pleased with the liquidity that we have, and and we believe that gives us the flexibility to negotiate through these tough times.

Maybe just one point on the the covenants. That that suspension period is through to March 2027.

Also, we we did talk about this at the end of the last quarter, but it occurred during this this quarter. We we we moved out some of our short-term debt, once again emphasizing the strong relationships with the banks.

As I illustrated earlier, that move that improved our maturity profile. Strong focus on back to basics.

We talked about CapEx. On the cost front, yes, there's a lot of challenges, and I've called out the numbers for you.

We have been able to implement a number of cost-saving initiatives. We've been giving you updates from prior quarters.

A lot of it's in Europe, as you know. We took out some machines and some capacity, some support costs, and but but it's not just that region, the other regions, and we've been able to achieve $71 million savings year to date.

Slide 12 is our Thrive strategy, still very relevant. As I keep emphasizing, back to basics, back to a focus on what we can control, around operational excellence, sustaining our financial health and discipline, trust across all our stakeholders remains important, with our people.

They're aligned with what we're we we're doing and what we're focused on. Ultimately in terms of growing the business, I I think, what what one highlight of our our results, despite the weak performance, is our volumes were actually pretty stable.

We've been ramping up in the US as I as I as I as I mentioned. We've taken out a lot of capacity in graphics over the last few years, but our volumes are are are still stable.

I'll I'll I'll I think I've got a graph on this now to to emphasize that to you. Move to slide 13, something you've seen before in terms of our joint venture with UPM.

It's progressing as we would have expected, finalizing the final terms, and still committed to Ultimately, we've got to get shareholder approval, and then targeting to complete the transaction by the end of 2026, as we've talked about before. The the the key the the key deadline or the key influencer of the timeline is the regulatory approval on the competition side.

That moves me into slide 14, the next one. Just to say it's progressing as expected.

We knew it was going to go into Phase 2. With a transaction like this, of this scale and and significance, it was always going to go to a Phase 2 investigation.

We continue to engage with them, and ultimately we we we we we think we've got a strong case and looking at a final decision closer to the end of this calendar year. Turning to the segments, and page 16, firstly on pulp, it it's it's clearly been a a a challenging time, and and it's for the same factors that I've already described.

The The combination of the lower DWP prices and the when you convert that, the the the rand-dollar exchange rate. What I would say is that market conditions for DP have improved in recent times.

Didn't come early enough to influence on this quarter, but we did see an $845 a ton by by the time we got to the end of the quarter. Most of the quarter, I think it was under $810, had very little impact.

Then subsequent to that, you'll see in the outlook statement it's in the last few weeks it's it's gone up to $880 a ton. That is helping us, and we're feeling good about the demand, and we're feeling good about the outlook on pricing.

With taking all that into account, it meant that unfortunately, for the quarter that we've reported, it it it was close to break-even. Then in the packaging segment, I think the big story here is that volumes have been better, ramping up in North America, and I've I've already described that to you.

St- a good progress and certainly accelerating. Europe, actually we we we've seen nice volume improvements, and in South Africa, demand continues to be healthy.

Unfortunately, these global markets are all interlinked, and we know there's excess capacity in Europe, and selling prices across the globe have been under pressure, and that's influenced all of our markets. In South Africa specifically, once again, the rand-dollar exchange rate plays a role because that makes it makes imports cheaper on a relative basis.

All in all, feeling good about demand and feeling good about volumes, but we need to clearly we need to get selling prices back up as we move forward. Then on graphics, page 18, and well, firstly to my point that I was making earlier, if you look at look at look at the three-year volumes for graphics.

Now, they've been relatively stable. Now, that's despite us taking out Stockstadt, despite us taking out Lanaken, closing a machine at Kirkniemi, converting a machine at Somerset, other smaller capacity taking out.

We've been able to keep our volumes and improve our market share. We are very pleased with that.

We are proactively managing it. It's a It's not a great margin, but it's it's a reasonable margin.

Europe slightly lower than than the US in terms of relative margins. One of the tricky aspects, as we know in Europe, is that there is excess capacity, and that has influenced their their margins.

Having said that, we we're pretty proud of what we've done here, and we've we've we've always talked about proactively managing graphics, and I I think this page is illustrates that we've we've done reason- a reasonably good job here. Then page 19 talks about the the the the regions themselves, and all these themes we've touched on.

Volumes, okay. Real Under the circumstances, okay.

North America, obviously last year we had the the graphics before the machine conversion, but we are picking up the volumes now as we ramp up on on Somerset PM2. The big theme is the prices, and you can see that that's coming through.

Then on variable costs, although Europe and South Africa down, when you convert those as we when we consolidate those, when you convert that all back to dollars, it it does it does have an impact. For example, the euro is down 11%, but our costs are down 7%.

The The rand is is is is is 12% stronger, and our costs are down 5%. When you bring that all together, that's why variable costs at the group level, you don't see that same decline.

Slide 20, our ESG, is an important part of who we are and why we do business. A number of awards, we we won best employer in at Forbes once again across a number of categories.

We've won various sustainability awards, and our our forestry certification is good. Our BEE status continues to be at the top level.

A lot of good work being done on ESG. Moving to the outlook statement, and slide 22.

Firstly, and I've already touched on this, DWP prices have picked up, and demand is good. I I I would argue that some of the challenges in with the Iranian war are helping us because there is some concerns about supply chains and getting products.

That that will help us. The volumes in in in North America are benefiting as we ramp up that curve, and and we we we we are confident that we can continue to to do that as we've continued to promise to you.

Pricing is the headache that we have across all our three regions on packaging. Graphics, we've announced price increases in Europe and in in in in the US.

Firstly in in in Europe, the first price increase was effective 1st of April, and we're making good progress. We've announced the second one for mid-May, and we're working on that.

It's It's obviously early early days. In the US, we announced also for early April, coated freesheet and and labels.

Once again making good progress. Unfortunately, and I've touched on it already, is costs.

I've talked about the the $30 million impact from those key variables, which gave us the reason to be cautious. The we have a a big shut in at Ngodwana in the quarter, $23 million.

It's important to call that out. We did have Saiccor in the last one, but this is a this is a bigger one than the Saiccor one.

I think we're getting a lot of benefits from our back to basics, taking out costs elsewhere, and and and the discipline around our balance sheet, and CapEx. Ultimately, when you take that all into account, the most important factor is the is the cost that I talked about.

Because of that, we had to be cautious, and we and and for that reason, we're saying that Q3 would likely be below. We We are getting good traction on selling prices and cost savings elsewhere, but not enough to offset yet the the those higher costs.

For that reason, we we we say it will be below the Q2 number. Chair so operator, the that's me gone through the investor presentation.

I'm now going to hand it to you for questions.

Thank you very much. Thank you very much for the presentation.

I've got let's say two to start with. The first one is you talked about a $30 million increase in costs.

I assume that was in the last quarter. Could you give us some idea about what you're expecting for this quarter in terms of why you're more cautious than you would have been?

Are we looking at a similar sort of number? Then the second one was in terms of price recovery, we are seeing prices going up across the board.

Are you seeing that for SBS cartonboard in the US as well? That's my first couple, if that's okay.

Yeah. On the costs, that number I gave you was Q3 compared to Q2.

The reason I called it out to you was we were getting a lot of questions about our outlook statement, and we wanted to show you why we were being cautious. If it wasn't for that cost rise, we would have been saying our earnings was up.

It was important that I pointed that out to you. These are big jumps.

The logistics, shipping, and fuel costs is a big chunk of that $30 million. It's not unique to Sappi, but it's a vast impact.

Clearly, if there was to be resolution in the Iranian war, maybe that could come down. That's potential, but what we felt was prudent to do was to call out to you what we've included in our assumptions.

Th-

Thank you.

In Sorry, James. Your second question, no, not yet on SBS.

We're getting good traction, as I said, on graphics and labels, but not yet on SBS. We're in a ramp-up phase, so that's our focus.

At this stage, we're not yet seeing price recovery. Okay.

If I could follow up with a couple more. In North America, that was where the surprise was, I guess, in the quarter.

If you look at the sort of details, you sold a lot more, and the prices did go up a little, and the costs overall did come down a little as well. I think, given that we were expecting you to be switching quite a bit of production back to coated fine paper where the demand is, it was surprising that that's still in a loss-making situation.

Look, what I would say to you, a couple of comments on North America. Firstly, remember North America's has pulp as well.

That overall the pulp segment was close to zero. That, relatively speaking, the costs are higher in the US versus South Africa.

That was a contributor to why North America overall profitability would have been less. As we ramped up the volumes, you are still not at full operational efficiencies.

On selling prices, there's a little bit of a mix issue going on there. Specifically in the SBS segment, we gave you a slide on the market.

When you add that to everything else that I've described, that explains the profitability in the North American region in the quarter. Obviously as we move forward, you can hear that we're confident of growing our volumes.

That helps with fixed cost absorption. We're also able to optimize our machines because our PM1 machine in Somerset is a swing machine, if we can make a little bit of higher-margin graphics, as it currently stands, we can also do that as well.

We are more optimistic. Maybe one last comment, and maybe Mike can elaborate further, we're not at optimal operational performance at the mill at the moment, not necessarily linked to PM2, but there's further improvement to come.

Maybe Mike can expand further there.

Thanks, Steve. We have had on the assets other than PM2 some reliability challenges that we put behind us in the last month and a half.

We expect to see improved performance there, which is specifically around graphics volume. In addition to that, you referenced the PM1 ability to swing to graphics, but that's something in the line of 10 10 10%, maybe 15% of the volume max as we're still meeting customer needs for SBS.

PM2 has been running very well and is right on our startup curve. We're expecting to keep that machine full going forward with where things are.

We're pretty optimistic that the trends for manufacturing in Somerset are on track. Now, I just offer one other caution.

The startup curve improves that last give-or-take 15% of machine production over the next full 12 months. That's not a light switch that comes on.

It's optimization of a lot of different processes. We expect to be by the end of this year at 85% of the nameplate and then building from there.

Thank you very much. I'll hand back.

Hi, guys. Thanks very much.

Just if I may, just following on from that last point, you're talking about 85% utilization by the end of this year. At what stage should we expect to start seeing that sort of the headwind from adverse operating leverage becoming a tailwind?

Would you expect that in 2027? Is that something that we'll see this year?

Sorry, I'm not quite sure I get your question, Brian. Are you saying

As you ramp up PM2 Oh,

in terms of the fixed cost absorption. Look, I think broadly the curve is going well.

We've accelerated. We were a little bit behind, and we've accelerated.

As Mike has said, we've done a nice catch-up in recent weeks. I think from a cost and an efficiency perspective, certainly, as we get to the end of this financial year and into early next financial year, those benefits of the higher volumes will come through.

The challenge, Brian, is on the selling price front. You'll appreciate we are growing market share, and we are taking on new customers.

We have to manage that very delicately. We're still a growing player in the market.

There's other players there, and selling prices are what they are. Unfortunately at the moment, they're lower than we would like them to be.

There's been a lot of capacity coming out in recent weeks, as much as over the last couple of months, 300,000 tons of capacity across a couple of competitors. That's going to help things.

As the demand continues to be solid and as we strengthen our position, that may create opportunities. As things currently stand, selling prices, as I said earlier, are lower than where we'd like them to be.

Cool. Thanks, Steve.

Can I move on to Europe? Volumes look pretty good.

You've got some price increases that you've announced on the graphic paper side of things. Is the performance on volumes front-end loading by customers ahead of the price increases, or is this actual demand?

No. We saw order activity good even ahead of the price increase announcements.

Overall market volumes have been better than we expected this year, actually, and we've been gaining market share. We don't think that's front-loading.

Clearly we gave you progress on the first increase, the second one. We're busy implementing.

With any price increase, there's always a trade-off between price and volume, and that's what we need to delicately manage. Marco, I don't know, anything more you want to say?

No, Steve. The market has been developing well since the beginning of this year already.

It's just helped us implementing the price increase, which, of course, was basically cost-driven as well. No, it's a good situation right now from a market perspective.

Okay. Super.

Thank you. Do you have any timing on the Phase 2 on the Phase 2 investigation?

Brian, still the same timeline, right? We're conservatively saying it will be completed by the end of the year.

There was no surprises in the announcement,

and yeah, nothing new. There's no deadline for the EC, right?

No. Yeah.

No.

All on track, and

I think we said in the announcement that we're getting close to signing transaction agreements. Then it's getting through that second phase with the authorities.

Cool. Thanks, Steve.

Then last question, if I may. With the impairments that you've taken, can you give us any guide on depreciation charges going forward?

Brian, the total impairments was over $2-- was $220 million, and we've got an average depreciation lapse time of 15 years, you can work it off from there.

Some of it's goodwill though, yeah.

No, the goodwill is excluding that. The goodwill is on top of that.

Okay. Okay.

That's super. Thank you so much.

Thanks, Brian.

Afternoon, Steve. Can you hear me?

Yep. Hey, Sean.

Hey.

Excellent. Sorry to harp on the pricing environment, but just taking a step back to specifically SBS in the US.

No price increases sort of expected. Sort of as we stand today, are you still seeing pressure on prices or are they stable?

That's just the first one around SBS.

Stable at the moment. As you say, we're not seeing increases, but neither are we seeing decreases at the moment.

Cool. Thanks.

Then if I just listen to the sort of commentary on the call as well as your other sort of competitors in the US sort of by the end of the year, it sounds pretty optimistic around the sort of supply-demand balance resolving itself, assuming sort of demand keeps at the pace it is, and a couple more closures. I think everyone's talking about gaining market share, yourself included.

Now, is that displacing imports? Are imports that big that everyone's gaining market share?

Is there any sort of insights you can provide on that? Thanks.

Yeah. Look, a couple of comments.

There has been two capacity closures, and you would have seen that in our competitors' results announcements. You've seen our volumes go up, not everybody's volumes is growing.

That means we're taking market share. Secondly, on folding boxboard imports, yes, the tariffs helped a little bit, and we have seen that as an opportunity for us as well.

Great. Thanks, Steve.

Then just going back to pricing around graphics, in terms of gaining traction, was that both in North America and Europe, or mainly North America? Because if I just look at the sort of prices that we have available to us comparing sort of spot in May compared to the Q2 average, coated woodfree in Europe's sort of flat-ish and coated mechanical is up about 2%.

I'm just trying to tie that back.

Yeah. What I'll do is I'll give Mike and Marco an opportunity just to talk broadly in their markets.

As I indicated earlier, all those announcements were effective from April, were not in the quarter that we just announced. Maybe Mike, you just want to talk on your side?

Coated freesheet in North America, April 2nd, we had a price announcement for an increase, and at the same time, we had a slightly smaller increase on C1S or label grades. Those are as of the 2nd of April, and we're in the process of implementing that.

Steve, very similar in Europe where we announced first half of February for an effective increase beginning of April as well, 2nd of April basically, implemented. You will see it in the coming weeks in, I guess, in the industry pricing stats, Sean.

In Europe, there is a second announcement, as Steve alluded to, which we're busy implementing right now. That's both for our graphics, as well as certain packaging and specialty grades.

There is a tendency across the board that prices will increase further.

Great. Thanks.

Then just the last one from myself, Steve. Do you mind giving sort of any update on what's happening with wood costs in SA?

Obviously, you've got the counter to that in terms of the forestry fair value adjustment, but in terms of your sort of wood costs that you're obviously purchasing in at the moment, I'm assuming those are also down.

Yeah. I'll let Glenn talk about it further, but just to re-emphasize what I earlier said, a lot of the valuation that we've done is built off the woodchip prices, the export market, and those are, as we stand, unchanged in dollars.

When you convert that back to rands, that was why we had the knock. Specifically to the wood that we're buying externally in South Africa, Glenn, do you want to talk about it?

Certainly. All our third-party contracts for wood supply into our mills in South Africa, that pricing is set off the woodchip export price effectively.

That price was adjusted downwards in the quarter as a result of effectively the stronger rand. We are seeing lower wood costs offsetting that, certainly into the third quarter.

As part of the additional costs there obviously is the cost of getting timber to the mills has increased with fuel costs. Certainly, third-party purchased wood in South Africa has become cheaper in line with woodchip export prices.

Thanks. Glenn and Steve, that's it from my side.

Cheers.

Hi, guys. Thanks for taking my question.

Maybe my first one would be regarding US SBS. You mentioned that you are taking some market share from everyone else.

At the same time, we are seeing obviously SBS prices quite depressed at the moment. I'm wondering, is that market share gain quality-led, i.e., your quality of product is better than everyone else's?

Was that being done through pricing? Then secondly on that, I know there was a period, call it back end of last year where people were pricing below what we could see in RISI.

I'm just curious if you're seeing any of that in the market at the moment. Thanks.

Yeah. Look, the volume increase on our part, and I'll let Mike go into more detail, it's not us that's been driving the price down.

It began to happen before we came to market, and we've been very disciplined. A lot of the increase volumes that have come through is linked to our offering, the quality of our product, and the relationships that we've been building.

We've talked about it many times. We think we've got the best machines in the industry, and I think the customers are supporting that view.

Specifically on pricing below market, Mike, I haven't really heard that now.

I'd offer that technically you look at our assets, our product consistency, uniformity, and the overall SBS that we're making is extremely well-received by our customers, extremely happy, and it's very rare for us to not get follow-up after we've run trials. It's been really well-received, and is performing very well in the field.

Our growth has been very consistent. Now, when the tariffs first came through, that opened a lot of doors.

We did see quite a bit of opportunities there, but that market is a growth market. It's not a market that's in decline like graphics, there's a 1 to 3% growth, and we've been seeing things improve.

As we stated earlier, right now we are on the curve, and our orders are full. We're moving forward, and we've got to continue to grow that as we improve the machine runability or the machine uptime.

It's been consistent, and I don't know how to frame it in any other way.

Yep, thanks, Mike. If I can ask one more.

Regarding pricing in the US, we're seeing SBS prices and CRB prices virtually the same. I would argue after yield, et cetera, you're probably finding SBS is almost cheaper than CRB today, yet a higher quality.

Are we seeing any substitution from customers away from CRB into SBS? Curious, is that actually quite easy to do, or is it quite a decision for customers to do, and there's a cost involved?

Yeah. Look, you are right.

The prices are very close, and it probably does create some opportunities. Mike, you want to

Yes, it has, and we'll leave it at that.

Yeah. We can't go into detail there, Detlef, as but it does create opportunities.

All right. Thanks, guys.

Yes. Hi.

Thanks for taking my question. You mentioned the FX.

You singled out the importance in the numbers. I was wondering whether you could kind of single out the impact in the quarter of the FX move, particularly USD/ZAR.

Yeah. Look, we've got that bridge, which is obviously to a certain period.

I think the best way to think about forex specifically, rand-dollar, and it's something that we've consistently said, and we still think is relevant, and that's for every 10-cent move rand-dollar on an annual basis, that's about $4 million. The rand, Glen, a year ago in Q2 was?

The average rate was 18.50.

In Q2 of last year.

Q2 of last year, yeah.

Yeah.

This one? This one, it's 16.36.

That's, give or take, 2 rand. You multiply that by 20 by 4, and then it's one quarter.

You're talking in this quarter alone a $20 million just on that, just on the rand-dollar exchange rate.

Okay. Okay.

Also, considering your division results and looking at the results for the chemical cellulose, wondering whether the move in the FX is big enough to shift the position of Saiccor on the cost curve. We used to think of Saiccor as a first quartile, but wondering whether that might shift with the FX moving in the wrong direction.

Look, what I would tell you is other currencies have moved as well. The Brazilian real has strengthened substantially.

The Chilean currency has strengthened substantially. In effect, what it does is it moves everybody, right?

Including the Chinese. The Chinese are now sitting with a stronger currency as well.

Everything's relative, but I don't think it's grossly changed the relative positionings, but it certainly squeezed margins across the board. I think that's another factor that's contributing to the higher selling prices that we're seeing over the last few weeks.

Thanks. For your Q3, fiscal Q3 guidance, you you've given a a sequential cost increase, but not a sequential let's say price impact from your from the various actions in terms of increasing price.

What was wondering whether that 30 million that you have provided, it's so is net of those price actions or we should factor in if we have to, have a sense of what where Q3 might land, we should also factor in some some positive coming from from the price increases?

Yeah. Look, you can imagine that's a much more delicate number, and my colleagues and I have talked about our confidence in terms of implementing price increases.

I can't give you a specific number. You've got the DP number.

Where markets are at, and you can do the mass on that one. We are confident on the graphics side.

All I can say is that if we didn't have the cost increase, we would be sitting here talking about higher EBITDA. We've been cautious because of that $30 million impact that I talked about, but it would have been higher even in spite of the bigger shut at Ngodwana.

We would have still been higher. That gives you a broad feeling of how much additional will come through in selling price increases.

Okay. On this point, do you think that, setting aside Q3, just looking more general, do you think that overall you might be able to offset that cost inflation with the price increases, or it's still TBD?

You still have to get there.

Look, we're trying. Marco announced a second price increase in Europe.

We're working on that, and if costs continue to rise, then I would point to history. If you look at previous runs on costs over the years, many years in this industry and in this business, it can be passed over to higher selling prices.

It takes time, right? Your costs go up, and you have to respond.

The other thing I would say is, yeah, a lot of these costs, in fact, it's all linked to the Iranian war, and if there was to be resolution there, then a lot of the costs will come back. Sulfur prices, Glen, they've tripled, right, since the Iranian war,

basically, right? They

have. You've got to believe that these would normalize, and that will relieve the pressure that we're currently facing.

Okay. Thank you for that.

Last one, if I can squeeze. You mentioned in your prepared remarks the scramble to get your hands on some raw materials, and you talk about sulfur and latex.

Just wondering whether in terms of inventory days for those raw materials, you're getting close to the risk of a supply crunch. It's still far from there.

It's still normal level of inventories, and if you can, yeah, comment on that.

Still normal. Eventually you can get your hands on the product, but a lot of it's trapped in the Middle East, and sellers are taking advantage of that situation.

We don't have, as we currently stand, we don't have a risk yet. We don't have any risks on any specific raw materials, and our inventory levels are normal,

yeah. Certainly.

I think, for example, on sulfur, precisely to avoid that, we're buying from multiple sources in smaller parcels, and timing when their arrivals happen. We planning months in advance, but making sure the deliveries and our purchases are staggered so that we don't hold excessive inventory at high prices.

Okay. Thank you, and good luck for the next quarter.

Thanks.

Thank you for taking my questions. First one, just in terms of the European restructure, it looks like you've spent less than the kind of 40 million you initially earmarked.

You have only spent less there, and how are you tracking in terms of the cost cut benefits, the kind of 60 million annualized you were expecting? Thanks.

No, we've spent most of the plans that we had as far as those closures costs are concerned. There are no large additional restructuring costs coming through in the next two quarters.

We've realized the benefits that we expected in the timelines that we expected. I don't think there's been any surprises here.

No,

not at all. Thank you.

Then just my next question, in terms of volume expectations for the pulp division, last quarter we saw some good growth year-on-year versus this quarter, and I understand it was the shuts. What are you expecting in terms of pulp volumes from here on out?

What kind of annual amount do you think pulp does in a year, including shuts? Thank you.

Look, sometimes you you have shipping timing differences and so forth and so. We're fully sold out, and our inventory levels are low, great demand for the product.

Ultimately, if you go across the the the three mills, you've got Ngodwana around 250, Saiccor we're we're looking at it's about 850 850, 860, and then and then Cloquet, we do make some paper pulp for our paper machines there, but in terms of Glen, have you got the the number for or Mike? 230.

230 for Cloquet. That would be the annual numbers, and we're fully sold out.

Sometimes you get a little timing differences, but nothing to worry about.

Thank you. Last question from my side, in terms of interest expense throughout the year, in terms of the quarters, is there any kind of lumpiness there, expectations from here?

Q2 was up quite a bit from Q1. What do you expect for H2?

Thank you.

For Q2 we had it was 26 million. I expect that to be at similar levels for next two quarters.

Thanks. That's all from my side.

Thank you, operator. Let me just take this opportunity to thank everybody for joining us on the call, and we look forward to discussing the results at the end of the next quarter.

Thank you.