Kemira Oyj

Good morning, everyone, and welcome to Kemira's Q3 Earnings Webcast. My name is Kiira Fröberg, and I'm the Head of Investor Relations at Kemira.

We reported our Q3 interim report today and maintained good profitability in the weakened market environment. Here with me today, I have our President and CEO, Antti Salminen; and our CFO, Petri Castren.

Antti will start by covering our group level performance and our progress on the strategy as well as the outlook. After that, Petri will discuss the business unit performance, and will also share some more details on the financials.

In the end of the presentation, before the Q&A, Antti will also give a short introduction to our new CFO, Tuomas Mäkipeska. But now, Antti, please, the stage is yours.

Thank you, Kiira, and good morning, and welcome on my behalf as well. So happy to report here on our strong profitability in the weakened market environment.

And market indeed has been quite subdue for a long time already. We saw that first already in the beginning of the year or at the end of the previous year, hitting the performance of our Packaging & Hygiene Solutions business unit as that is the one that gets most directly the impact from the weakened market as the consumers are not consuming, trade is not flowing globally.

So less packaging material is consumed, thus less Kemira chemicals go into the production of packaging material. Then in the Q2, we mentioned that we clearly see now the impact of the weaker economy trickling up the value chain to the pulp producers, our customers in that area.

And now it's visible in the Q3 clearly. We have seen a lot of prolonged maintenance break and curtailments in that industry.

So that is hitting the Fiber Essentials unit. And we've also now started to see the kind of a prolonged slow global economy impacting the overall industrial activity.

Lower run rates at any industrial segment, especially here in Europe, which is then translated into less water consumption by industry, and thus, less consumption of our water treatment chemicals in the industrial side of our Water business. So all this has led to the situation where basically now the revenues declined 5% year-on-year, 3% in terms of organic development decline.

So you see that there's quite a significant amount of foreign exchange rate impact there as we have significant business in U.S. And this decline, as mentioned now in Q3, was hitting all of three of our business units.

Nevertheless, we keep the outlook unchanged as we changed the outlook in the Q2. But the good news is that profitability is good in Q3.

So we maintained the 20% operative EBITDA performance, which I think kind of comparing to the chemical industry in Europe, comparing to the -- looking at the environment that we operate in and the decline -- top line is a good performance, and I'm really thankful for the whole organization for pulling it together. We maintained high profitability in the backbone of our business, i.e., Water Solutions unit, but we managed to improve also the profitability in the Packaging & Hygiene Solutions.

Impact coming both from favorable product mix, but also from the cost management program or profitability improvement program that we launched in the springtime for the Packaging & Hygiene Solutions. Now even if the markets are soft, we continue to invest into our strategy execution.

So we have a clear growth strategy, and the megatrends that are supporting the strategy stay intact. So longer-term viability and growth potential of the fiber economy and the need for clean water are there.

So thus, we continue to invest into the execution of strategy. We also continue to have a strong balance sheet, which enables that.

And I will talk later a little bit more about a couple of key steps in terms of continuing the strategy execution. But as mentioned, the revenues were weak in Q3.

The U.S. dollar had a significant impact, but overall, the demand also was weaker.

We retained our market position in all the business units. So basically, this is overall a decline in demand that is impacting the top line here.

Year-on-year, we saw decline in volumes, as I mentioned, but prices remain stable. So that is the kind of good news and showing again our pricing power there.

Sequentially, sales volumes actually increased from Q2. That is mainly driven by the Water Solutions unit, and Petri will talk more about it later.

We saw some decline in sales prices from Q2 to Q3. Then looking at the profitability, which I mentioned, it is fair to say is on a good level.

So the 20% operative EBITDA margin, we actually are very close to '24 EBITDA margin levels, which were the all-time high for Kemira. So really good performance in terms of profitability.

Profitability remained strong in Water Solutions, especially the urban air side of the Water Solutions, which is the resilient, steady profitable backbone of our business. But we, as mentioned, managed to improve in Packaging & Hygiene Solutions quite significantly.

The profitability of Fiber Essentials unit declined as a consequence of the clearly declining volumes from the market. This kind of a weakness of the market and the weaker demand, of course, puts a lot of pressure on us.

So we need to continue to focus on profitability improvement, the operational excellence, cost containment so that we can continue to operate on this good healthy profitability level. Those actions we have defined.

We have started as we communicated in spring from the Packaging & Hygiene Solutions. So we have a clear program there which aims to impact both the top line and bottom line items, and we are progressing really well with that program.

And some of the impacts of it are visible in the good result of the Packaging & Hygiene Solutions, which also was helped by the favorable product mix in this quarter. Now we are stepping into next phase in that profitability improvement program.

So we are starting to -- as of today to assess the operating model that we have in Packaging & Hygiene Solutions. And the aim there is to differentiate the service levels so that we can better serve the global and regional key customers that we have, introduce faster new innovations to the marketplace and provide better service for our key customers and at the same time, optimize the cost to serve levels for the more transactional customer base.

So that program will start and the impacts of that will be visible in '27. So no impacts expected for the last quarter of this year.

The earnings per share came out at EUR 0.38 per share. Now as I mentioned, we continue to invest into our strategy execution.

The megatrends are there, and we are in a really good position to also maybe capitalize on a bit weaker market environment because a big part of our strategy is based on M&A-driven inorganic growth. There's a couple of key cornerstones for our strategy, and I will touch three of them here when I talk about the strategy execution.

So first of all, our aim is to grow significantly in the Water business. And there are two subdomains which are really important for this.

Micropollutant removal, PFAS, pharmaceutical residuals and so forth, microplastics. This is a fast-growing subsegment of the water market, which is just developing as we speak.

And we have a clear strategy of how do we enter that part of the market. The other part which we have been relatively weak historically is the industrial water services, and that is also a subsegment of water market that is growing much faster than the base business.

And we have taken now clear steps regarding entering both of these lucrative growth market areas. And then I will talk a little bit about our kind of progress with the renewable chemistry, which is another key area of our strategy execution.

Now during Q3, we announced the investment into our site in Helsingborg, Sweden for reactivation facility for activated carbon. That is the first reactivation facility in Nordics, serving the whole Nordic market and helping us to enter via the activated carbon service into this micropollutant removal, because activated carbon is the kind of a well-tested predominant method for capturing micropollutants and PFAS from wastewaters, but especially from the raw waters for drinking water production.

And that's kind of a key part of our entry to there. But we need to amend that with other more specific innovative technologies.

So there, our partnership with CuspAI, Cambridge U.K.-based AI start-up is of a key importance. So we started in June, a joint development project, to develop new-to-the-world type of absorbent materials, and we are progressing very well with the project.

The aim is to come up with completely new solutions, very specific targeted solutions for PFAS capture. So these both are on the kind of micropollutant removal area of the water strategy.

Then before I go to the industrial water services, our earlier announced joint venture with IFF, the world leader in the area supporting us with development of -- via enzymatic route with development of new-to-the-world bio-based polymers. So we announced this JV.

We are currently working on the project. Engineering phase is ongoing.

We are looking at different engineering options regarding the manufacturing site itself. There is some delay anyhow to the project.

So unlike we earlier informed that the production would be up and running by the end of '27, it's rather on the side of '28 that we now plan to be up and running. That said, we have industrial level volumes available from our toller in Finland, and we are currently running several industrial scale test trials with our customers, both in Water Solutions area and in Packaging & Hygiene Solutions.

And many of these application tests actually look very promising at the moment. So we are confident that when we actually have the new joint venture manufacturing facility up and running, we have a good existing customer base already for those solutions.

And then as mentioned, the second area within the Water Solutions, which is one of our key growth drivers is the entry to the industrial water services. And we announced this morning that we closed the transaction on acquiring Water Engineering in United States of America.

That's our first significant step into that area. Water Engineering is a water service specialist with expertise in boiler and cooling tower water treatment as well as wastewater treatment in industrial facilities.

They're mostly focusing on food and beverage, manufacturing and health care industries. They're based out of Nebraska, and they have built a really strong presence in the middle states in U.S.

grown quite quickly during the past years. And this provides us a good platform for future growth, both organically but also inorganically because their growth method has largely been a kind of programmatic bolt-on M&A path.

And I think we can capitalize and continue on that path and continue growing that business. Business itself, as I said, the rationale of entering that is that it is faster-growing market than the base water treatment market, plus it is asset-light in terms of business model.

So there's not a consequent significant CapEx going into maintenance and improvement and expansion of the production facilities. We can largely utilize also our existing product portfolio to serve these customers.

So there's good cross-selling opportunities with this acquisition. The expected pro forma revenue of the company is north of USD 60 million.

And the purchase price, as we have communicated, was roughly USD 150 million. So I warmly welcome all the new colleagues from the Water Engineering to the big global Kemira family.

I think we will have a great future together. Now then to close this off, we have introduced a new slide here, which should be providing a bit more transparency and trackability in terms of our long-term financial targets.

Now it is very clear that we are disappointed with the performance in terms of organic growth. So the aim is long term on average to grow more than 4% organically a year.

Now clearly, the markets have proven to be much softer than we anticipated when we set out this target and communicated in the CMD a year ago. So -- but I still believe and we are confident that the long term, this growth potential is there as the megatrends are supporting and as we are entering these faster-growing new domains within the Water.

So it will provide us acceleration. But clearly, the start on that journey has been slower than we anticipated.

In terms of operative EBITDA, we are operating comfortably within the 18% to 21% EBITDA performance range that we communicated as a target. And also in terms of return on capital employed, we are above the 16% target that we set.

That said, of course, the kind of a declining trend on both of these is not satisfactory, and we are having diligent actions and programs in place in terms of improving the profitability and making sure that we hit these long-term targets as we progress with our strategy execution. Now then the outlook for the rest of the year remains unchanged.

So no reason to comment that further. And with this, I will then hand it over to Petri, who will comment in more detail the business units specific performance and some other financial ratios.

Petri, floor is yours.

Thank you, Antti. So I'll do, as Antti said, and I think I'll usually start with the sort of key points.

And I think really our ability to support and defend the profitability as well as the PHS business unit profitability improvement are indeed the key points in this report. And as Antti said, clearly, the Water Engineering acquisition is an important step.

So let's start. Top line is almost an -- development is almost an exact repeat from Q2, EUR 40 million decline, half of which is driven by FX changes.

And again, mostly, it's the U.S. dollar that has continued to weaken year-on-year.

Organic growth also 3%, exactly as it was negative in Q2. We have been able to maintain prices well, again, considering the weak market environment.

Indeed, prices and actually variable costs have pretty much been stable throughout the year. So the change is, in essence, a 0.

Also, what I think is important from the profitability point of view that in essence, we have been able to kill inflation. So the fixed cost change is 0.

And again, we all know that there is a salary inflation ongoing. There's an inflation in many other areas.

So this is part of the way how we have been able to defend profitability, and this is very good. Obviously, we cannot be happy about the top line development or the absolute level of profit generated.

The net impact from the variable cost is really flat. And as you can see, almost last 4 quarters, it has been pretty much, much flat.

So now the focus is really much more driving the volume compared to period between '21 and '23 when really a lot of our profitability was at how can we defend against the inflation, how we are coping with inflation and how we are passing the inflatory raw material costs to our customers. But now it's really about volumes.

Again, I'll start the business unit comments with Water Solutions. So excluding the FX impact, there was a 2% decline against a pretty strong last comparison period.

You noticed that in the comparison period, we had 5% organic growth. So it was a stronger comparison period.

And regarding the water treatment markets, Antti already mentioned that the urban market continues to be really strong. And even in this -- while the business unit is declining, urban market is stable and it continues to grow.

So the growth in Europe, EMEA is more than offsetting the small decline in Americas urban market. Then the weakness was on the industrial side.

And there, like Antti was talking about, it's both the general industrial activity, the weakness in it, but it's also the fact that we have this one large tolling customer and their volumes were reduced compared to a year ago. Sequentially, from Q2 to Q3, both volumes and revenues increased despite a modest FX impact.

Again, operative EBITDA, very strong at 23.1%, very close to last year's level. On Packaging & Hygiene Solutions.

So challenging market continued to impact the unit. Antti already covered the sort of underlying or behind the factors impacting the business unit, but I think the key point is it wasn't actually getting any worse in Q3.

So year-on-year volumes, essence, flat. And sequentially, they even increased modestly, very modestly.

The market looked a bit more positive in Americas, and there was positive development in APAC as well. However, weakness continued in Europe, in EMEA, and you may have seen some of our customers' reports yesterday, which were sort of indicating that.

Year-on-year, we saw some price decline, but sequentially, prices were flat. Profitability improved to 13.6%, which is actually quite a sequential improvement from below 10% in Q2.

This was driven by cost containment topics like Antti was talking about. We also had a very good mix of product in Q3.

So that helped there as well. And also, I'd like to remind that we did have an extended maintenance break in one of our key facilities in China in Q2, which depressed the Q2 results even more.

Regionally, both Americas and EMEA are at 15% EBITDA or above. So it is the APAC that is still diluting the overall business unit margin.

And we'll continue those profitability improvements. Antti talked about the business unit -- business model change that we will be implementing now.

And again, this implementation will take well through to the next year. On Fiber side, market was weak.

And we already -- we updated our business assumptions in Q2, and then we highlighted that we are seeing some additional weakness in the pulp industry. And indeed, this is what happened.

So the market -- the softness was really driven by the Nordics softness here. So a lot of market-related downtime by our customers.

Volumes declined year-on-year and sequentially, whereas prices were up year-on-year. However, on this area, we did see some pressure on variable cost as well.

So that did not help the margin either. We do have some base chemicals in our product portfolio, caustic soda, sulfuric acid and some of the global market prices of these products were also declining during the quarter, and that depressed profitability more.

Now I move to balance sheet. Again, not a whole lot of change in our balance sheet.

Net debt at exactly year-end level and approximately at the same level as in June of '25. During the quarter, which is noteworthy is that we implemented or started our share buyback program, and we were able to buy back almost EUR 40 million worth of our shares during the quarter.

As a reminder, this program, when it was approved and initiated, it's at a maximum of 5 million shares that we will buy back or EUR 100 million. And at the current level, which is, of course, limited by our daily liquidity, we will be hitting the end of the program around the year-end.

So maybe in December, maybe some early days in December. So that's sort of at the current level, what it looks like.

And Antti already showed the trend reports on return on capital and regarding our financial targets. So yes, the lower EBIT, which is the impact -- with the result of the weaker market is impacting our capital efficiency.

Cash flow from operations, EUR 132 million, improvement from the year ago. We did have a net working capital decline.

I think I mentioned in Q2 that we had a little bit of a buildup in net working capital. And this, indeed, we've been able to address that to a large extent during Q3.

I'd like to remind that typically, our cash flow is more weighted towards the second half of the year, particularly towards the Q4, as you can see from the previous 3 years, which we have here on the quarterly breakdown. So I hope to -- expect to see that sort of a seasonal pattern this year as well.

No change to our CapEx guidance. We expect our CapEx to increase over last year.

So again, you do the math, you'll see that the CapEx will increase significantly from the quarterly run rate during Q4. With that, I'll stop my comments, and we'll turn to Antti.

Antti will be able to announce my successor. So Antti, there you go.

I'll stay here for the Q&A.

Okay. So yes, indeed, a happy day for both of us probably that we have now been able to announce Petri's successor.

Tuomas Mäkipeska will start latest some day in May as our CFO. Tuomas has a strong background, both in terms of business unit leadership and of CFO position.

Now last position with YIT, the Finnish construction company. And before that at Lassila & Tikanoja, so brings us plenty of experience and good positive energy as well.

So I warmly welcome Tuomas to Kemira Groups and look forward to working with him in the future.

Thank you, Antti, and thank you, Petri as well. And now I think it's time for the Q&A, and you can ask your questions either through the telco or then you can send them to us through the webcast formula or chat function.

So maybe we can start then to take the questions. So operator, please go ahead.

Three questions, and I would like to ask them one by one to make it easier for you. Antti, the first question is for you, it's about the strategy.

After the acquisition of Water Engineering, will you continue with acquisitions with a similar size in the next couple of months? Reason I'm asking is that you target midsized deals with an enterprise value of EUR 200 million to EUR 250 million, which enables you to finance the deals from your cash flow, but Water Engineering is clearly below that price tag.

Well, first of all, what I have communicated when I've indicated the size kind of we target mostly small and midsized targets because that's the kind of, I think, the most credible way to build the growth in M&A. And as you mentioned, so I just indicatively given that they have to be below EUR 250 million to qualify for this.

EUR 150 million is below EUR 250 million, so it's in that range. And we have a strong pipeline of different targets, which we are working on.

And yes, we will, of course, tell about them when the time comes.

Okay. The second question is for Petri, regarding the Packaging & Hygiene Solutions business.

You mentioned the reasons for the strong earnings increase year-over-year, sales mix and cost savings. Can you provide more color on that?

How big were the cost savings in that segment? And where did the mix effect come from?

Well, we don't specifically give out product line and product line profitability. So I think I'll shy away from giving exact guidance on that one.

And I think it's also sort of what you compare against. So please don't compare to Q2 because Q2 top -- bottom was sort of a, I would say, it was arbitrary too low because the maintenance break in China actually impacted it quite a fair amount.

But if we sort of say that last quarters of average is somewhere between 11% and 12% EBITDA, so from that, it's probably equal split between the three areas. So mix and some market recovery, particularly in North America, and then also cost saving actions.

Okay. And the final question is about Fiber Essentials, which was below market expectation.

I wonder, did you have also cost savings here? And related to the comparison to last year, was there any -- did you overearn last year so that we should be aware that last year's high margin in Fiber Essentials, especially for Q4 is not a good proxy for Q4 this year?

I don't think that there was any sort of overearning in '24 in Fiber. There was overearning in particularly in the high electricity cost years and high caustic price years, '21, '22 and '23 but really not throughout the year.

Now memory serves me badly in terms of individual quarters, but there tends to be a little bit of a seasonal pattern that electricity costs are higher during the winter months. And as you can see that there is a link of -- we benefit of this higher electricity costs.

So we tend to have some seasonal pattern of Q4 being stronger in terms of profitability for our pricing of our electricity-dependent products, mostly sodium chlorate. So I think, Martin, I encourage you to rather look at sort of a trend lines and through the year and not individual quarters because each quarter, there can be some minor -- some sort of one-off impacts, whether it's product mix or some cost item came through that may impact the cost of -- margin of a business unit point or this way or that way.

So rather encourage you to look at the trends because that's -- our customers are also, they are the same customers, and particularly in Fiber. So it's a very solid track record of maintaining customers.

And so I encourage you to look over the longer period of time, not individual quarters.

And if I may build on that a bit, so you referred to the kind of a shortfall of Fiber Essentials compared to the expectations. So maybe we were not clear enough in Q2 when we communicated the expectations to be lower because we already saw then the announcements from our key customers, especially in Nordics about taking downtime at their pulp mills.

So that translated now to weaker performance in our Fiber Essentials clearly in Q3 as we expected already in Q2.

Yes.

But the downtimes are now over?

Well, you should not talk to us about that, but rather look at our customers and what they announced. So I'll leave it to that.

Yes. And sometimes we know a little bit more than our customers openly communicate.

So that's why we need to be mindful that we respect and talk about our position only.

Thank you, Martin. Let's now take next question, please.

I continue on the Water Solutions segment. So seasonality there has changed a bit last year.

So how should we think about it now going into the last quarter of the year? And also on Q4 last year as a comparison period, anything to highlight or worth of reminding there?

Thank you. If I start from the seasonality.

So I mean, if you look at the Water Solutions as such, I don't think there's any major change in the typical seasonality over the year. So basically, that remains.

So fundamental phenomena that impact the demand of water chemicals is not changing. And thus, typically, the first and last quarter are the weakest and the mid-quarters are the strongest in that business.

Now then if you remember what we have communicated, so now we have this one big tolling customer within the Water Solutions whose demand -- has quarter-to-quarter comparison quite significant impacts if they take less or more material than we have expected. And that can then distort the kind of reported typical seasonality pattern.

But the underlying base water treatment business, the seasonality is as it is because even if the climate is changing, it has not changed that dramatically in that short period.

Okay. Got it.

And maybe continuing on this Packaging & Hygiene segment and this change in product mix. So how would you describe the current mix in Q3, like you mentioned that it improved, but is it like normal now or maybe a bit too positive for your EBITDA?

Or how should we think about that one?

Yes. Well, again, and as Petri said earlier, so you should not really look at one individual quarter in isolation because there will always be fluctuation in terms of demand, but in terms of product mix as well.

So certain product lines are more profitable than others for us, and there might be this fluctuation between the quarters. Now the third quarter happened to be very positive in terms of mix for us.

And as order patterns kind of level out week by week, even if we would want to be, could not comment on what to expect for the Q4.

Yes. So Anssi, maybe addressing your question a bit differently.

So the profit improvement need is not over in PHS business unit at all. That's why we are doing the business model change there now.

And this will actually take, like I said, well into next year as we are implementing it. So actually, it's a fairly fundamental change.

So yes, we'll continue to drive that to get the business unit profitability sustainably to the level where it actually ought to be. So don't take that Q2 to Q3 improvement and put a linear stick on it and expect that to continue.

Maybe that's another way of saying it bluntly.

Thank you, Anssi. Let's now then take the next question, please.

I was thinking, do you expect lower raw materials to have a positive effect in Q4 in your -- in the cost side for you? And I was wondering if you had seen already something in Q3, maybe potentially affecting being a positive factor in your Packaging & Hygiene Solutions result in Q3.

Well, I showed the raw material development year-on-year, and it was sort of a boring flat line, so I didn't even talk about it all that much. So as a group, it looks pretty flat, but there are individual areas where we have cost pressures, and we have some cost pressures in some areas of our water services business, we have some areas in our fiber.

I mentioned some -- and that was already visible in their sort of profit bridge as we talk about it. So consequently, there was perhaps a slight improvement on the variable cost environment in PHS.

But again, these are fairly small changes. So I can't really -- I think really the focus is much more on what can we do and how can we drive more volume.

A follow-up, a different question, if I may. On Water Engineering, I wanted to ask about the rate of acquisitions they have been doing in the past.

Can you comment on that? Can you kind of give us an idea of how much capital this platform could deploy going forward?

We will not comment on how much capital, but just that you get the idea. So typically, they have done several a year of this kind of small acquisitions, and that's kind of what we plan to do.

Of course, with our bigger muscle, we can also then look at bigger targets to add on to that platform, not only the small ones that they have been thus far doing.

I think it's very logical to say when Antti described Water Engineering as a platform. So it is a platform to continue on this sort of smallish type of deals and maybe increase the size, which they have been really doing like EUR 10 million revenue type of deals or even smaller, some smaller.

So maybe increase that a little bit so that for the same effort, you can get a bit more meaningful impact. But this platform wouldn't be something hugely bigger on top of this.

That's not the idea.

Thank you, Andres. Let's now take the next question, please.

A couple of questions also from my side. You mentioned the uncertainty in the industrial side of the solutions.

So could you give any more color? Has this intensified during the Q3?

Which sectors are most affected? And does this have any impact on your mix?

Well, first of all, like if you look at the industrial side of the Water Solutions, so we are basically serving all the possible industries that you can think of that use water, which is basically all the industries. So in that sense, kind of pinpointing which industry is exactly more kind of in decline than some other, it's impossible.

It's really, as I started my presentation with, it's the kind of overall kind of slowness of the global economy and then the less global trade that happens, which both are kind of not only now impacting then the Packaging & Hygiene Solutions, but really all the industries. Especially here in EMEA, we all see it all around us every day.

And then when the industries run with lower utilization rates, they consume less water and that is impacted. And that impact typically is gradual because you have some industries doing a bit better than others, and they are offsetting each other.

So typically, we don't see it in industrial water treatment if there's some short-term nods in the economy. But when it's this kind of a longer kind of degrade of the industrial activity, it then starts to be visible for the water treatment chemicals demand as well.

And there's no particular step from Q2 to Q3. So you should really look at it kind of a longer-term continuum of what happens to the economy, especially here in Europe.

Maybe it helps if I remind you that a lot of these industrial customers, we actually don't address direct, so we go through distributors. So these are, for us, smallish or the end customers would be so small for us that it don't make sense for us to cover them direct.

We cover the urban customers, the municipal customers, we cover them all direct. But this is sort of an indirect channel.

And like Antti said, that's why it gets a little bit diluted the impact of what happens at sort of in the economy.

Okay, that's clear. Maybe still digging into Packaging & Hygiene Solutions and the improvement, let's say, potential for '26.

You mentioned that Americas and EMEA are in the -- at 15% or above level. So should we expect in '26 about to reach mid-teens levels on, let's say, run rate on profitability?

Well, we are working as hard as we can to improve it as much as we can as quickly as we can.

Yes. So clearly, we're not happy with and satisfied with the run rate of profitability in PHS through 2025.

So yes, we want to improve that, and there are efforts ongoing towards that. So yes, I think it's going towards the mid-teens range.

And when we will get there, let's -- we're not giving an exact quarterly guidance. It also depends what happens in the market, is there any recovery in '26?

And if yes, when it will happen?

Yes. Okay.

That's clear. Last question from me.

Given the weak pulp and paper market that we are currently in, have you seen any increase on pressure on pricing from the companies?

Well, it's obvious that this kind of a situation leads to more pressure. But our customers are quite really professional and well educated.

And regardless of the cycle, they are tough negotiators. So we have all the time pressure on our prices.

Of course, it is a bit more harsh in this kind of environment when you have seen all the savings programs of our customers. But as I mentioned, I think, in Q2 webcast as well, our approach has been to try to turn it around to kind of collaboration efforts where we look together how can we help them to save more so that it's not about the per tonne price of the chemicals, but our application and solution, which is helping them to consume less virgin raw materials, less energy and so forth.

So it's also an opportunity, even if there is some more pressure on the pricing, but it's also an opportunity because we have some of these solutions. For instance, some of our digital services are exactly aimed for these kind of improvements in the customers' processes.

And thus, I see it kind of both, of course, a pressure, but also a really good opportunity to help our customers.

Thank you, Joni. Let's now then take the next question, please.

This is Tomi from DNB Carnegie. First question, Fiber.

Do you expect or are you initiating any actions on the Fiber side now that you see the impacts of weaker demand there, something similar as in PH?

We're, of course, all the time looking at the profitability of each of the business units. It's good to remember with the Fiber that it is slower turning both than for example, PHS, where basically we have relatively lean organization.

It's not that easy to look at the kind of organizational model, and cost to serve is very low because we have this kind of a typically, tightly connected supply to our customers. So it's a slower turning ship, and you need to be more careful in analyzing what are the potential actions.

And you need really kind of a prolonged downturn from the customer side in order to start some kind of a more radical actions on that business unit. But obviously, we are all the time looking at how can we manage in this environment with a good profitability.

Just a follow-up. If it's slower, can it also be deeper?

How do you see that kind of if it's slower, but does it kind of then also decline more relative to PH? Or how does it work if we were to assume longer, prolonged weakness?

Yes, that's a really complex question. And of course, I mean, that you should, again, predominantly ask from our customers to understand kind of what is happening at the global pulp markets.

But the global word is here actually very important. So the pulp markets are global and our customers are not only kind of playing on the geographies where they produce, but there's global trade flows.

A lot depends on how China economy will develop and so forth. So it's kind of a complex question to answer and difficult to say whether it would be any deeper.

Pulp and the packaging materials are in the same value chain ultimately. So basically, you can't really separate.

The timing effect is different, but the value chain is the same. So really, I think it's an impossible question to answer as such.

But in a sense, it's easier in PH side to do your self-help actions than it is at the Fiber side?

Tomi, the cost structures are quite different, so because we have a few small number of customers on Fiber Essentials. So each customer buys a lot.

So there's a very small sort of sales and application team, whereas in the Packaging & Hygiene Solutions, we have lot more customers. There's a lot more applications.

There's a lot of application and salespeople. So the mix -- when you -- total fixed cost, sorry, the mix between manufacturing and what we call business overhead, where we lump both the sales and application and technical support people, it's totally different.

So there's a fairly little of this business overhead in Fiber, whereas there's a lot more in PHS. And with that, of course, you can play with.

And that's why we are implementing this business model change. So how we are supporting our customers with this team of not only the technical support people, the application people, the salespeople, but also the support organization that is managing the whole supply chain.

Yes. Okay.

Second question, just starting the fourth quarter, have you seen any kind of a change? Do we continue on a similar kind of situation as in the third quarter kind of up or down or any positives, any negatives, any further negatives or?

Tomi, you know our practices. We never comment on the ongoing quarters, and you almost always try.

Thank you, Tomi. Let's now then take the next question, please.

I've got two. I wanted to ask about PFAS and how you see that market developing.

When I talk to some people, they seem to think that when it comes properly, it will come quickly and big, if you see what I mean. So I'm wondering about your investment plans.

Say, Helsingborg is sort of EUR 10 million. Are you going to sort of invest heavily ahead of this?

Or how do you see that PFAS market growing in terms of timing and whether you're going to sort of scale up, whether you can scale up? And what -- have you done a forecast on what perhaps you may need to invest to stay ahead of the market when it does sort of gather a bit more momentum?

That's the first question. And just the second one on valuations in M&A.

In some other -- not particularly in water perhaps, but some chemical distributors are talking about valuations coming down. And I just wondered, as owners are a bit worried about the outlook and so on, I just wondered what you are seeing in your particular sector.

Thanks. So I will take the first question and let Petri comment on the second one.

So the PFAS removal market indeed is a really interesting market, which is developing as we speak. And as it's a kind of a new market, there's a lot of unknowns.

We have clearly stated that we will be playing in that market and are developing our approach there. It's also interesting from the perspective that there is not one dominant solution that will be used by our customers for removing of PFAS.

So it will always be a combination of the good old warhorse, the activated carbon, which is not enough and which will not solve the problem. So other technologies are needed.

Some of them are chemicals, some of them are nonchemical. And it's this combination within which we need to find our playing field, so which parts of that we play.

And we have clearly started our approach by entering the activated carbon market. So we purchased a small facility in U.K.

That's actually kind of we have filled it up very nicely, and it's working well as a first step. We have announced now the investment project in Helsingborg, Sweden for the reactivation.

So those are all the small steps that we are taking into the market as it continues to develop. And we are also looking at bigger steps, but that all depends on how the market develops and what we can do there.

But we are really kind of determined about that. But then also, as I said, I mean, this will not be enough.

So we are working with different external partners and our own research and innovation area to develop new, more specific solutions, which will be complementing then the activated carbon on this fight. So we are serious about the market.

Market will grow. And as you said, some are expecting it to explode, some are expecting it to have a kind of a more linear type of growth.

Nobody knows today. We are taking our steps according to our strategy.

We have, I think, a very clear plan, how do we enter it. And our benefit on that area will be that we are serving already all of these customers with our coagulant and polymer solutions.

So basically, we have the supply chains ready and we are there with these customers. So whatever the new prevailing technologies will be, we are in a really good position to globalize them and capitalize on that market presence that we have.

Andrew, that was a good question to ask Antti. And I think the valuation question is also a fair and good question.

I think very few sellers would actually acknowledge that their expectations of multiples are coming down. But when you look at what's going on in the market, there is a number of private equity funds that own assets that they have -- they are holding towards their maturity.

So clearly, there is still a discrepancy on valuations and maybe the seller expectations at times are still higher. I think in generally, at least I wouldn't say that they are going up anymore.

So clearly, we've sort of maybe moderated from the zero cost financing that was available some couple of years ago in that sense. So perhaps you're right that there is an expectation and realization of some moderation on the valuations.

And of course, this would be a development that we would welcome very much because some of the actions -- some of the things we've been sitting on the sidelines because we could not make the ends meet.

Thank you. I think we start to actually run out of time here with our webcast.

So we had a couple of questions through the webcast question formula. They were related to the Packaging & Hygiene Solutions profitability improvement program, and I think that they were covered in the other questions.

So we don't need to take them now here. But I would like to thank all the participants for the active participation and good questions.

And as a reminder, we will report our financial statements bulletin on February 12, and that's already next year, so '26. And I hope to see as many investors as possible on meetings during the next quarter.

We will be actively on the road. And of course, have a great day, everyone, as well as a great weekend.

Thank you so much.

Thank you.