Good morning, welcome to this presentation of SCA's 2026 half-year and second quarter report. With me here today, I have President and CEO, Ulf Larsson, and CFO, Andreas Ewertz, to go through the results and take your questions.

Over to you, Ulf.

Thank you, Anders. Good morning, also from my side, a warm welcome to the presentation of our results for the second quarter.

During the second quarter, SCA's market conditions were mixed between the segments. Pulp and the solid wood products faced a continued challenging market with weak demand, while Renewable Energy delivered a record result.

During the quarter, we saw improvements in both demand and pricing for the Containerboard segment. Price increases will impact our result for Q3 and Q4.

High fuel prices driven by the conflict in the Middle East affected the result within the Forest and Industry segments negatively, while the liquid biofuels business within segment Renewable Energy benefited in terms of increased margins. SCA reached SEK 1.3 billion on EBITDA level, and by that, an EBITDA margin of 25% for the second quarter.

Turning over to some financial KPIs for the second quarter, as already said, our EBITDA reached SEK 1.3 billion, which corresponds to 25% EBITDA margin. Our industrial Return on Capital Employed came out close to zero, counted for the last 12 months, and the leverage was at 2.1x, while our net-debt-to-equity reached 10.7%.

I will now make some comments for each segment, starting with Forest. During the quarter, SCA continued to process wind-felled volumes for forest owners in the areas affected by the storm at the end of last year.

Harvesting level of our own forest was stable, but at a slightly lower level compared to the same period last year. Harvesting of own forest has contributed to a balanced supply of wood raw materials to our industries during the first and second quarter.

We've seen a continuous long-term trend of increasing prices for both pulpwood and sawlog, as can be seen in the graph on the bottom left. However, during the second quarter, both pulpwood and sawlog prices decreased.

When one compares Q2 2026 with Q2 2025, sales were down 2%, while EBITDA was down 19%, mainly due to increased fuel costs and a lower harvesting volume in our own forest. In general, we still have a slow underlying market for solid wood products.

Demand has remained stable over the last period, and we expect that situation to continue. The production in Sweden, Finland, Germany, and also Canada has decreased, giving support to price increases in local currencies.

Stock levels remain on the high side among producers for pine but are normal for spruce. Stock levels at customers continue to be on the low side.

Delivery volumes were lower in Q2 2026 in comparison with Q2 2025, Q2 2025 was on the other hand, a record quarter in terms of deliveries for SCA. Our stock level of some goods within SCA is at a balanced level.

The price for solid wood products increased by 5% in the second quarter 2026 in comparison with the first quarter this year. The cost for sawlogs in the second quarter continued to be at a high level.

We expect now to see decreases in log costs when moving into second half of this year. Sales were 12% lower in comparison with the same quarter last year.

EBITDA margin decreased from 18% to 6% due to high raw material costs, lower deliveries, and also due to negative currency effect. Today's stock level of solid wood products in Sweden and Finland is described at the top left on this slide and is shown in relation to the average for the last five years.

As mentioned earlier, we note that the general inventory level is on the high side, especially for pine, while I judge the SCA level to be rather balanced. As can be seen in the diagram to the bottom left, the Swedish and Finnish sawmill production has been below the five years average during 2026.

In the diagram to the top right, we can note that the export price index increased in the second quarter. As already mentioned, SCA prices also moved in the same direction.

Going into the next quarter, I estimate that prices in the market will be close to unchanged. Looking forward towards the year-end, we will probably see a stable development with a fairly good balance between supply and demand in solid wood products.

Moving over to pulp. When comparing Q2 2026 with Q2 2025, sales were down 3%, mainly due to lower prices and a negative currency effect, while delivery volumes increased.

EBITDA was down 59%, which was also driven by lower prices and negative currency effects. During the first quarter of 2026, demand was rather weak.

Net prices decreased from previous quarter due to high yearly rebates in Europe and U.S. Net prices on NBSK improved during the first quarter and in the beginning of the second quarter due to earnings being below cash cost for many softwood producers.

In China, demand for NBSK pulp was normal during the second quarter, prices decreased further due to pulp port inventories being higher than normal. The conflict in Iran continued to increase complexity and costs for the pulp industry.

Looking at CTMP, demand and prices remained on a low level during the second quarter. Prices increased, partly driven by increased prices on eucalyptus hardwood pulp.

Inventories of softwood pulp were on a high level during the first and second quarters. Hardwood inventories, on the contrary, were below average level.

Finally, CTMP inventories have been on a rather normal level. Moving over to Containerboard.

Sales were in line with the same period last year, driven by higher delivery volumes, mitigated by lower prices and a negative currency effect. EBITDA decreased by 70%, driven by the planned maintenance stop at Obbola mill, lower prices, negative currency effects, and higher energy costs.

The planned maintenance stop in Obbola had a negative result impact in the second quarter of SEK 147 million. We've seen box demand improving during the second quarter.

The manufacturing industry developed positively during the period, supported not the least by a continuously growing retail business. European demand of kraftliner has improved during Q2, following the box demand, and we forecast positive demand development of Containerboard also in coming quarters.

There is no new Containerboard capacity started up in the first half of 2026. During the last quarters of 2026, we can expect ramp-up of the new capacity started in 2025, as well as some closures to balance some of the increased supply.

Kraftliner inventories have moved down to historical average levels, driven by both improved deliveries and limited supply. During the second quarter, the availability of OCC has been in balance with supply and demand, which in its turn has led to minor upwards price adjustments.

Prices for brown kraftliner in Central Europe increased during the second quarter with EUR 60 per ton and for white kraftliner with EUR 40 per ton. The improved underlying demand in combination with strong cost pressure and lower global supply have supported the second price increase for kraftliner.

With the gradual implementation as mid-June, prices for brown kraftliner in Central Europe will increase with additional EUR 60 per ton and for white kraftliner with another EUR 40 per ton. The price increases will gradually be reflected in the earnings during the second half of the year.

Finally, I will say some words about Renewable Energy. In Renewable Energy, we've had a stronger quarter compared to the same period last year, mainly driven by high margins in our with St1, jointly owned biorefinery in Gothenburg.

Electricity prices were volatile during the quarter, but higher in comparison with Q2 previous year. SCA's land lease business is stable at 10.6 TWh according to plan.

This is equal to 20% of installed capacity of wind power in Sweden. The market for solid biofuels was stable with slightly higher prices together with normal seasonal effects on deliveries.

For liquid biofuels, we have seen continuous higher margins compared to previous quarters, driven by high fossil fuel prices, together with relatively stable renewable feedstock prices. However, in June, refinery margins returned to pre-Middle East conflict levels, mainly due to lower fossil prices and higher feedstock prices.

We expect the market volatility in renewable fuels to remain high as Europe ramps up the blending mandates both in HVO and SAF, implementing RED III. In addition, we see impacts from conflicts in energy markets adding to this volatility.

By that, I hand over to Andreas.

Thank you, Ulf, good morning, everybody. I'll start off with the income statement for the second quarter.

Net sales decreased 4% to SEK 5.15 billion, driven by lower prices and negative currency effects, which are partly offset by higher delivery volumes. EBITDA decreased 36% to SEK 1.3 billion, driven by lower prices, negative currency effects, higher costs for planned maintenance stops, and higher costs for raw materials.

EBIT decreased to SEK 724 million, and financial items totaled SEK -90 million. With an effective tax rate of below 20%, bringing net profit to SEK 523 million or SEK 0.74 per share.

On the next slide, we have the financial development by segment, starting with the forest segment to the left, net sales decreased somewhat to SEK 2.5 billion. EBITDA decreased slightly compared to the previous quarter and totaled SEK 866 million.

Lower prices for wood raw materials, higher fuel costs, and seasonally higher costs for forest management were offset by seasonally higher harvest from SCA's own forest. In wood, prices increased compared to the previous quarter.

Net sales increased to SEK 1.5 billion due to higher delivery volumes and higher prices compared to the previous quarter. EBITDA increased to SEK 89 million, corresponding to a margin of 6%.

Higher prices and lower costs for wood raw materials were partly offset by higher distribution costs. In Pulp, net sales increased to SEK 1.7 billion compared to the previous quarter, while EBITDA increased to SEK 107 million, corresponding to a margin of 6%.

The increase was mainly driven by higher prices, higher delivery volumes, and lower costs for wood raw materials, which was partly offset by higher distribution costs. In Containerboard, kraftliner prices increased during the quarter.

Net sales increased to SEK 1.8 billion, while EBITDA increased to SEK 135 million, corresponding to a margin of 7%. Results was positively impacted by higher prices and lower raw material costs, which were offset by higher costs for planned maintenance stop of SEK 147 million and higher distribution costs.

In Renewable Energy, we had another record quarter driven by higher fuel prices. EBITDA increased to SEK 217 million, corresponding to a margin of 42%.

Higher fuel prices and higher delivery volumes of tall oil were offset by seasonally lower demand for solid biofuels. On the next slide, we have the sales bridge between Q2 last year and Q2 this year.

Prices decreased 4%, with lower prices in Pulp and Containerboard. Volumes increased 4%, driven by higher volumes in Pulp and Containerboard, which was offset by lower volumes in wood.

Lastly, currency had a negative impact of 4%, bringing net sales to SEK 5.15 billion. Moving on to the EBITDA bridge starting to the left, price mix had a negative impact of SEK 229 million, higher volumes had a positive impact of SEK 32 million.

Higher cost for raw materials had a negative impact of SEK 154 million, with a positive impact from energy of SEK 21 million, a negative impact from currency of SEK 204 million, lastly, we had a negative impact from planned maintenance stops and high distribution costs. In total, EBITDA decreased to SEK 1.3 billion, corresponding to a margin of 25%.

Looking at the cash flow, operating cash flow decreased to SEK 446 million for the quarter and SEK 1 billion for the first half-year. As you know, other operating cash flow relates mostly to working capital currency hedges and shall therefore be seen together with changes in working capital.

Looking at the balance sheet, the value of the forest asset totaled SEK 104 billion. Working capital decreased to SEK 5.1 billion.

Capital employed totaled SEK 112 billion, and net debt stood at SEK 11 billion. Equity totaled SEK 101 billion, and net debt to equity was 11%.

We have now almost finalized our large ongoing investment projects. Thank you.

With that, I'll hand back to you, Ulf.

Thank you for that, Andreas. To summarize the second quarter, we can state that the market is still, in general, rather weak.

We increased result in the second quarter in comparison with the first quarter, and by that, as we said already in the first quarter, I guess that we have reached the bottom now, and we have also, during the quarter, performed a rather big planned maintenance stop in Obbola. The market is a little bit different in different segments.

Pulp, solid wood products, more sideways. We can expect lower raw material prices in the third and fourth quarter.

Energy, record result. Containerboard, well, we know now that we have done substantial price increases, and we will see the impact from those in the second half of this year.

The main focus for SCA for us just now is really cash flow. By that, I think I open up for questions.

Thank you, sir. Ladies and gentlemen, if you wish to ask a question over the phone, please signal by pressing star one on your telephone keypad.

If you wish to cancel your request, please press star two. Please make sure the mute function on your phone is switched off to allow your signal to reach our equipment.

Again, it is star one to ask a question. Our first question is from Linus Larsson from SEB.

Please go ahead.

Thank you very much, and a very good morning, gents and everyone else on the call. Ulf, you were entirely correct in calling the trough in the first quarter.

Now we're seeing a stronger second quarter. Are you also seeing a sequentially stronger third quarter?

That's my first question. If you could add maybe some color on your order inflow, your order book as of now, what are you seeing?

What kind of tendencies are there in the market? You mentioned some improvements in Containerboard, for instance.

Any more on the order book situation would be very helpful. Thank you.

Yes. Good morning, Linus.

Typically, we don't do forecasts, but yes, I think that Q3 will be a little bit stronger than Q2. That's my thinking.

Why? Well, you talked about order inflow.

We've talked about pulp, and it is a little bit disappointing that we are still going sideways in the pulp business. On the other hand, we now see some closures.

Canfor announced that they will close one mill. The announcement came last week.

We also see that we have curtailments, not the least on the Finnish side and so on. Solid wood products, I guess it's a rather balanced supply-demand situation.

As I said, the inventory level for SCA is on the mid to low side, so we are pretty confident with that. In Containerboard, we feel a rather strong market.

The question is, of course, if it's caused by pre-buying or if it's a real demand. I start to think that we see an okay demand now for coming quarters.

We feel that the order inflow is quite good. In combination with that, we also know that ourselves, but also other companies, we've started to perform rather big planned maintenance stops now, both in the pulp and the Containerboard business.

I'm cautiously positive for this autumn.

That's great to hear. Maybe if I can pick up on what you said on the Canfor closure.

Are you already seeing some dynamics in customer behavior markets, or is it still too early? The closure hasn't yet taken place.

Is that still to come, or is that already affecting sentiment?

As you say, it's very early, we saw the futures in China, they went up $20 immediately. Of course, if this situation remains, then we will see further closures and curtailments taken.

Sooner or later, we will come to some kind of supply-demand balance, and I think we are closer to that point now.

Right. Then maybe one final from me on the variable cost side, what are you expecting for the third quarter compared to the second quarter?

You mentioned log costs coming down, I think. What about pulpwood?

Did you also mention that? Is that also tailwind, are you also seeing some headwinds from what's going on in oil markets, et cetera?

What is the net of all those variable costs sequentially?

If we start with the wood cost, we saw that the wood cost went down in Q2 compared to Q1 with around 2%-3%, we expect both pulpwood and sawlogs to continue to go down in Q3, maybe roughly speaking, another 3%-5%, then we expect them to go down further in Q4. In terms of chemicals, they went up a bit in Q2 compared to Q1, we expect them to be fairly flat, of course, it depends on the oil prices.

OCC, as Ulf mentioned, they have been slightly increasing, they could increase a bit further. In terms of oil cost, it's hard to say.

It went up, of course, in Q2 compared to Q1 quite a lot, then it went down, now it's gone up again. That we'll have to watch and see.

Net, of course, the wood cost is our biggest cost, that will be a lower cost we expect in Q3 compared to Q2.

That's very helpful. You said 3%-5%, is that for the aggregate of pulpwood and sawlogs, or how should I understand that?

Yes.

Okay. Perfect.

Thanks a lot.

Thank you. Our next question is from Gabriel Simões of Goldman Sachs.

Please go ahead.

Hi. Good morning, all.

Thank you for taking my questions. My first one would be on the Containerboard prices.

Earlier this week, we saw an announcement of a new conversion from newsprint to testliner. Actually, late last week.

Even though costs are up and prices have been following the cost increases, do you think the additional capacity coming online in the coming months could lead to a weakening of the current market momentum? Given the tighter kraftliner market at the moment, would you expect the premium for kraftliner versus testliner to be higher than what it was historically?

That's the first question. The second question will be on the pulp market.

We've been observing lower softwood prices in China, which are only starting to translate into lower prices in Europe as well. Just wanted to understand if you are experiencing some additional weakness in demand in your sales in Europe.

As we have seen other Nordic players announcing curtailments as well, on top of the Canfor closure that you mentioned, is that something you have also considered to try to improve the market balance? Finally, still on this topic, with the ongoing substitution that we see from softwood to hardwood pulp, how much capacity do you estimate would need to be closed to rebalance the softwood market here, because you mentioned the Canfor closure as a step in the right direction, but I wanted to gauge your understanding of how much more would be needed.

Thank you.

Okay. We had three questions, but I try to remember the first one, what will happen in the Containerboard market.

As you said, we are already today at the historical high delta between kraftliner and testliner. We feel a strong demand for kraftliner as it is just now.

We know that you cannot substitute everything, because if that would have been possible, then it would have been done already with the price delta that you have today around EUR 280. That is on a historical high level.

Can it be further? Can it be more?

I am not sure. Let us see.

We feel that a lot of capacity is taken out already in kraftliner, not least in U.S., 3 million tons-4 million tons. That has created some good space for kraftliner.

We also know that you have a substantial oversupply of testliner in the market and we will be surprised, I guess, all of us, to see another conversion from publication paper over to testliner. I guess we will also see some closures.

They will not be announced in forward. Of course, they will come, and sooner or later, we will find some kind of balance.

Now I feel that the Containerboard market, kraftliner market, is strong just now, and I guess that we can look forward to the price increases announced already that they will come through in the second half of this year. If we can get more, it is too early to say.

The second one was pulp. Again, what we have seen just now short-term is maybe substitution from hardwood over to softwood.

We have felt a little bit stronger demand in the softwood business. Nevertheless, now we have seen that hardwood prices, they have come down a bit.

As I said, the market is more or less sideways in pulp for the moment being. We have seen some announcements of closures and curtailments.

We have not announced anything, and we have a rather stable situation. We have a new mill in Östrand, highly efficient, and a rather strong cash cost position.

We have no plans for curtailments in Östrand. The third question, what was that?

You have to repeat that one.

Of course. Thank you very much.

The third question was basically how much capacity do you think would still need to shut down for the market to actually go to its balanced levels?

It's hard to say. It's more a question of demand, I guess.

Long term, we believe that the softwood pulp will be a scarce resource. I think the problem will be the raw material supply to softwood.

We believe strongly in the softwood pulp market, it's hard to say. I've heard some figures, 300,000 tons or something like that we should take away from inventory levels now to get a balance.

Might be a little bit more, might be a little bit less. Let's see what we'll face now in the coming quarters.

As you can see now, when you have those curtailments taken, that's a clear message that we have reached the bottom. Some producers, they cannot manage this price level.

As Ulf mentioned before, you see also large maintenance stops usually during the autumn, including ourself, we have a large maintenance stop at Östrand pulp in beginning and end of Q3 and in beginning of Q4.

All right. Thank you.

Yes, good morning. Thank you very much for the presentation.

A few questions from my side. I will take them one at a time.

Starting with the pulp business, you just mentioned, Ulf, that you wouldn't consider any capacity changes on your side, especially at Östrand. How do we think about Ortviken given the much more difficult CTMP market, weak pricing, and overcapacity that feels more structurally challenged than Östrand?

Maybe some comments there would be very helpful. Thank you.

Yeah. Again, you're absolutely right.

In CTMP, we have taken curtailments during the spring. We will continue to take curtailments if that's needed.

We have no margin when we produce for Asia, while we have rather good margins when we produce for Europe. Also we have, of course, a high marginal cost for wood raw materials, and we have to also keep an eye on the electricity price and so on.

CTMP is a different story, and we don't run our CTMP facility at full capacity, not at all.

Yeah, we usually try to take curtailment when you have high electricity prices. For a CTMP pulp plant, it's easier to start and stop.

Yeah. Absolutely.

When we have high electricity prices, we stop production for a couple of hours or a day or how long it's needed, then you start up again, then you can close down again.

Understood. Thank you for that.

Maybe just a second question on capital allocation. With strategic CapEx now winding down, what's the current thinking on potentially supporting the shares via buyback?

Is it a certain level of tiering that you would consider as the balance should be in a good shape to support the buyback? Is that not something you are considering at this point in time?

Our main focus just now is cash flow, of course. As it is just now, we still have a little bit to go in Obbola.

Otherwise, we are more or less up running at design capacity in all other new investments. Focus just now is to continue the ramp-up.

Then, of course, that will generate a good cash flow, especially when the market is turning. Then it's more a question for the board and our owners to decide about the capital allocation.

As we've said before, we have no big projects coming up just now. That's the case.

Like to add something, Andreas?

No, as Ulf said, we're focusing on ramping up our investments. Now our additional volumes, they're being placed on marginal markets with fairly low profitability.

Once the market returns, those extra volumes will be placed in better markets. We get effect from that, but we're focusing on ramping up our production.

Thanks for that. The third question on forest, where SCA traditionally has been always looking for opportunities to increase the forest ownership over time, especially when the balance sheet would allow you to do so.

From today's perspective, given that the stock trades at a discount to forest NAV, would you consider selling part of your forest that is potentially not integrated with your own mills to accelerate the deleveraging path and to showcase the true value of your forest? Is that not something that management or the board is considering?

Typically, forest and the forest resource will be a scarce resource going forward. We can be 100% sure on that.

What we are doing just now is that we sell pieces in the West, far away from the industry, and also in some cases, it's harder to run them in a, let's say, efficient way due to different reasons. Then we try to buy the same volume close to our industry.

We try to move our forest holdings closer to the industry. To be a net seller of forest land in Sweden, that is not on the agenda.

Very clear. Thanks very much.

Thanks.

Thank you. Our next question is from Johannes Grunselius from SB1 Markets.

Please go ahead.

Yes. Hi, everyone.

It's Johannes here. I have two question.

The first one is on the Containerboard business. I can see here that your implied sales price went up pretty nicely quarter-over-quarter.

Is that a reflection of higher market prices, or is it a combination of higher market prices and you have reduced discount on incremental volumes coming out from Obbola? That's my first question.

I think it's both that we have increased prices, but it's also a question about mix. Andreas said earlier that if we are forced to deliver, so to say, new volumes in overseas market, for a while now, we have had more or less no margin at all.

We see now an increase in demand in Europe, by that, we can also place more volumes in Europe, and that will give us a better mix.

Yeah, sure.

Yeah.

Sure. Do you see a large potential here in the coming quarters, or is this more of a long-term play, something for next year to see the big potential from this?

I think first we will see the impact from price increases. That will come now in Q3 and also in Q4 as price increases, they lag a couple of months.

That will be the main effect we will see next coming months. It depends on, of course, how the demand will develop.

As it is just now, we feel a rather stable demand in Europe, not the least in the retail business, but also that we've also heard from other reports now that the order inflow has been also in the industry, quite good in many areas, and that will, of course, also benefit the kraftliner producers.

Sure. That's helpful.

The other question I have is on your Renewable Energy business. Obviously, very nice print there in the second quarter.

You also talk about high volatility. Did I get you right that June was a good month for you in Renewable Energy, and as things looks now, could we assume that Q3 will also be very high compared to history?

Yeah. If you look at the Renewable Energy, normally you have seasonally weaker quarters in Q2 and Q3 because we deliver less in our bioenergy pellets, things like that, and usually have lower electricity prices.

In Q2, that was compensated with very high liquid biofuel price because of the high fuel prices. It depends on how the fuel prices develop in the third quarter.

It all depends on the fuel prices. If they stay on a high level, of course, that will benefit our Renewable Energy business.

If they go down, it will be more normalized. It depends on that development.

As you say, we had very high prices in both June, but also in May and April.

Okay. It sounds like the lead times are quite shorter between liquid, your sort of energy price and the traditional fuel prices.

Yes. If you compare it to our other segments, Renewable Energy is a lower lag effect compared to Containerboard or Pulp.

It's much quicker.

Okay. Thank you very much.

Thank you. We'll now move to our next question from Martin Melbye from ABG.

Please go ahead.

Good morning. A question on the forest.

You indicate now that saw logs and pulpwood will drop 3%-5% and more for Q4. At the end of all these price declines, where do you see run rate EBIT for the forest going forward?

It depends how much the prices go down, but of course we are 50% self-sufficient, so if prices go down, our industrial base benefits, but our forest, of course, goes down. We net benefit from lower wood prices.

We expect them, as I said, go down 3%-5% in Q3 and then further in Q4.

Okay. This kraftliner price increase, how much is in Q3 and Q4 of the, say, 7% we saw in July?

The main part will be in Q3, but you have a lag effect, so you will see some of it in Q4. It depends a little bit on what kind of structure we have in different business relations.

Some is related to index, some we negotiate. The main part in Q3, and then you will see some also in Q4.

Okay. Thank you.

Our next question is from Francisco Ruiz from BNP Paribas. Please go ahead.

Hi. Good morning.

Most of my question has been already answered, but I have a question on if you could quantify the energy impact in this Q2 and how the delta could be in the coming quarters if there is a normalization of the oil prices at current levels. Thank you.

Yeah. It was a net negative as we still have a net exposure, maybe 130,000 tons of bunker oil and diesel.

At the same time, we have tall oil and a Renewable Energy business, but we saw a net negative. I would say that in the industrial part, maybe net just over SEK 100 million in extra costs.

Something like that, very rough. But benefit Renewable Energy, but higher costs in the forest and in the industrial operations.

Thank you.

Thank you. We will now move to our next question from Cole Hathorn from Jefferies.

Please go ahead.

Good morning. Thanks for taking my question.

Just like to ask on forest valuations, I know you only update the forest valuations at the end of the year, but just any color that you are hearing, initial thoughts on direction of travel, what you are hearing from the markets on the forest valuations. Sticking on the theme, not necessarily forest valuations, but on saw log and pulpwood prices being sold from the forest.

What impact is higher fuel prices as well as the storm having on the market in the third quarter? Just some color there.

I know you have talked about 3%-5% down, but just the operational challenges and how you are managing the higher fuel costs. Thank you.

Start with the forest valuation. As you said, we take the three-year average and we normally update that at the end of the year.

In order to then you have a seasonally low amount of transactions during the first half of the year since the forest is covered in snow, and it takes a few months for the transaction to be registered. What we see in the very limited transactions is that one provider showed slightly down and the other one showed slightly up.

It is hard to say, but fairly stable. In terms of saw log and pulpwood, as I said, expected to go down with around 3%-5% in the third quarter.

Seasonally, we have a bit more forest management costs in the second quarter, but also in the third quarter. On the fuel prices, we had high fuel costs in the second quarter, especially in the forest division.

Depending on how the fuel prices develop, that will of course go down or go up. That I will say on the moving parts.

In terms of harvesting, we harvest seasonally a bit lower in the third quarter compared to the second quarter.

Maybe just following up on the softwood pulp market. We have seen Canfor's closure percent of supply, but the inventory levels are higher than people thought at the start of the year.

It has been challenging, a lot of the market is underwater. What needs to give here in this market?

Where do we see the permanent closure coming from? Do we expect something to come out of Canada again, or does it have to be to Europe?

I am looking at Mercer now, and they are almost 10% of the global softwood market, and their bonds are trading at $0.60-$1.00. I am just wondering, where do we see the closures actually coming from in your view?

What region? I know you cannot talk to specific companies.

We do not like to speculate. We will not close down ourselves, that is for sure.

That is the first thing. We have seen a lot of closures in Canada, and I guess that will continue.

As you say, you have some pressure also in Europe and not the least due to high raw material costs. Again, that is one reason to keep the forest.

That will be even worse going forward. Sooner or later, the market will find its balance.

Also, in the closures, but also demand. If you look at the shipments so far this year in both U.S.

and Europe, they have been fairly low. You need the market also to normalize.

I think that will have the biggest impact.

Yeah.

Last one, if you allow me on kraftliner. You've talked about better mix, kind of bringing back some Obbola export volumes back into Europe.

Can you just talk about how the lower exports from the U.S. have impacted the European market?

Are we seeing that now, and that's one of the reasons why kraftliner is being tighter? Just wondering your thoughts there.

It's hard to say what kind of impact it has had, but of course, it has an impact, definitely. That is one reason for the Containerboard market to be strong, definitely.

Thank you.

Thank you. We'll now take our next question from Detlef Winckelmann from JPMorgan.

Please go ahead.

Morning, everyone. Following on from Cole's question a little bit earlier.

We are seeing, obviously, you mentioned pulpwood and sawlog costs going down 3%-5% Q3 and a bit more in Q4. That obviously is more of the lag effect coming through.

My question is, we're seeing fuel costs now going up. Are we seeing any, and let's assume that they stay at these levels, are we starting to see any sawlog or pulpwood price increases in the spot market that would then impact you going forward into Q1, Q2 2027?

Thank you.

It's hard to say. As it is just now, it is a rather stable market.

Continuously, we buy on stumpage. We buy at a certain lower level today than we did in the past.

Also in the SCA region, we are still very impacted by the storm that we had between Christmas and New Year. It's good availability of wood in mid-north Sweden for the moment being.

It's hard to predict what kind of development we will have in the raw material market. It depends also, of course, on the development for end products.

Like to add something, Andreas?

No, as Ulf mentioned, you had the storm effect. What's going to happen when that eases out?

It's hard to predict.

It's rather easy for us to buy wood on stumpage as it is just now. We cannot buy too much as we are heavily involved in the storm area.

We try to help our suppliers now to clear out the situation in that region.

Okay, thanks very much.

Thank you. Our next question is from Oskar Lindström from Danske Bank.

Please go ahead.

Yes, good morning. I have a couple questions.

I'll take them one by one. The first one is on the harvesting levels.

Your own harvesting was down 7% H1 year-on-year. What kind of development should we expect for H2, and what's a normalized harvesting level that you expect for next year?

That's my first question.

For this year, we expect a slightly lower harvesting level in comparison with last year, and the main reason is that we, as I said, we try to do what we can now to help forest owners in the region impacted by the storm. It's more a resource issue.

I think we will harvest slightly less this year in comparison with last year.

Yeah, H1, H2, it was fairly similar H2 as H1.

All right. Next year, then we should see an increase in harvesting levels?

Yeah, we will be around 5.5 million cubic meters. That is the level we have.

Yeah. All right.

My second question is on gas prices in continental Europe. They moved up, or they're fairly high for this time of the year.

You noted that the kraftliner, testliner price delta is at a historical high. I think it's around EUR 280 you mentioned.

Are the sort of elevated energy costs starting to pressure testliner producers enough to slow capacity additions and force them to increase prices or not yet?

I think you have major curtailments taken now in testliner. We are not in testliner, so we cannot be sure, but substantial volumes are curtailed now in testliner.

I guess it's a chicken race. We have seen many conversions, and we have the latest one announced yesterday in U.K., which is maybe a little bit surprising, at least for me.

Maybe the judgment is, of course, that it's better to be in testliner in comparison with publication paper long term. That's the reason for it.

With the OCC price level you have just now, with gas prices being where they are just now, substantial curtailments must be taken, and I guess also we will see substantial closures going forward. Definitely they should need a price increase also for testliner.

I guess they are afraid of leaving customers in Europe because the alternative is even worse. That's the situation just now.

Thank you. Then my third and final question is on log supply to sawmills.

Germany and Central Europe have historically had surplus log supply from bark beetle and storm damage. I guess that is now over or at least winding down.

Are you seeing any shift in that dynamic heading into H2? That continental log availability has a sort of a read-through to Swedish pricing for your sawn timber?

Is it impacting the sawn timber market, and should we expect that to be a factor in H2 or in next year? Your thoughts on that, please.

As I said before, I think we will see the solid wood products market, that one will go sideways. At the same time, we will reduce, decrease the log prices and by that little bit higher margin in coming quarters.

Long term, I guess you will have, again, it will be a scarce resource coming to raw material supply, not the least in Central Europe, not the least due to the spruce beetle disease that we have seen. That will of course impact log prices and also pulpwood prices in that region.

I guess as it is just now, you see a big price delta today between spruce and pine, which has not been seen before. If I remember right, I think we have SEK 300 higher prices for spruce as an average in comparison with pine.

The reason for that is, of course, that it's not easy to get access to, not the least to high-quality spruce products as it is just now. We have definitely a stronger market for spruce products in comparison with pine products as it is just now.

Long term, I think it will be a problem to get access to raw material, and that goes for both sawlogs and also for pulpwood. That's the reason also why we stick to the forest.

We believe that will be a really important asset to have going forward.

All right. Thank you.

Those were my questions.

Yeah. Thanks.

Thank you. Our next question is from Pallav Mittal from Barclays.

Please go ahead.

Hi, good morning. All my questions have been answered.

There's one remaining on wood. In your comments, you did mention that the European wood demand is normal as you see, and customer inventories are now low, but clearly the EBITDA for the wood segment is down meaningfully.

What do you think needs to change for the earnings to recover in the wood segment? Are you seeing anything different in your repair and remodel exposure versus new construction?

As I said, it is a sideways market, and I think it will be so both Q3, Q4, and typically, you also have a sideways market in Q1. To see some substantial changes will, I guess, second quarter next year, typically.

Again, as sawlog prices will come down, the margin for this business will increase during the second half of this year. Underlying demand is, you must find a good balance.

That is, of course, the key. Depends on many different things, of course.

I don't know if that was the answer.

Sure. Just to follow up on that, I think you earlier said that selling prices probably will remain unchanged in Q3.

Given that you're talking of a very stable demand and raw material costs coming down, should we expect selling prices probably declining in Q4 and start of next year?

We don't do forecasts. It's hard to say.

As we believe just now, it will be a stable market and prices will be on a stable level and raw material prices will come down, and by that, the margin will increase. The best guess we can do just now is that we will have the same situation now for Q3, Q4, at least.

Okay. Thank you.

Thank you. As a final reminder to ask a question, please signal by pressing star one.

We'll pause for just a moment to allow you to signal. It appears there are currently no further questions at this time.

For this, I'd like to hand it all back to the management team for any additional or closing remarks.

That concludes our presentation of the half year and second quarter report. Welcome back in October for our third quarter report.

Thank you for dialing in.