Stora Enso Oyj

Ulla Paajanen - Head, IR Karl-Henrik Sundström - CEO Seppo Parvi - CFO

Mikael Jafs - Kepler Cheuvreux Lars Kjellberg - Credit Suisse Harri Taittonen - Nordea Tom Burlton - Bank of America Linus Larsson - SEB Oskar Lindstrom - Danske Ban Mikko Ervasti - DNB Markets

Okay, thank you. Good afternoon, everybody.

It’s Ulla here, and why don’t we start. I will hand over now to Karl.

So, please go ahead, Karl.

Good morning, good afternoon depending on where you are in the world. And I would like to go through a presentation together with Seppo and then open it up for Q&A.

So, another quarter of solid performance. Sales reached almost €2.4 billion in the third quarter of 2016.

Importantly here is that we are continuing to grow and we grew by 1.8 percentage points, excluding structurally declining paper and divested Barcelona Mill. The ramp-up of Varkaus and Beihai is continuing and is going well.

We are reporting an operational EBIT of €219 million and included in that is an additional loss of €35 million due to the Beihai ramp-up. Cash flow of 390, year-to-date we are €70 million ahead of last year in generating cash flow and we are reporting a return on capital employed of slightly more than 10%; and excluding Beihai, we are at 13.5%.

We managed in this quarter actually to reduce the net debt to EBITDA, down from 2.5 times last year to 2.1 times. And I think this is a very important part of our delevering story.

If you take the next slide. So, if you have a look on the operations.

So, we had last year €246 million or 9.8% EBIT margin. In this quarter, because of the additional costs of ramping up Beihai or 35, we actually have minus 13 for the consumer board.

Packaging solution basically due to the better and the breakeven performance of Varkaus improved by 3. You have buy biomaterials being affected slightly by lower volumes but basically by lower hardwood pulp prices.

You have stable wood products and you have a huge improvement in paper. And then, you are having slightly less than last year in other and that is basically because in this quarter and next quarter, we will have a lot of land sales compared to the year ago period.

That ended us up at 9.2%. However, if you put back to understand the underlying profit generation of Stora Enso, you put back the 35 and deduct 7 for the paper asset disposal that was done in quarter, we ended up actually with underlying EBIT margin of 10.4%.

We have now stabilized for the fifth quarter in a row, a return on capital employed above 10% and for the fourth quarter in a row or in a short period, we’re actually above 13%, if you exclude Beihai Mill. Delevering of Stora Enso continues and we’ve been well over 3 in 2013 and we have continuously worked on working capital, and due to the improved profitability been able to reduce the net debt to EBITDA where we are today at 2.1 times versus 2.5 times a year ago.

The transformation steps since 2015, it’s a long list, everything from the newly inaugurated sawmill in Murów, the biorefinery, the Beihai board mill that we started up in May, Virdia demonstration plant, the Ala sawmill, boiler and pellets investments, and now the recently announced restructuring of the corrugated business in the Nordics; it has happened since 2015. We’ve done a number of divestments and closures announcements since then, and the latest one is actually the closure of the box plant in Heinola.

So, the transformation: Beihai board mill is ramping up ahead of plan. So, prime quality reached; we are running customer tests with liquid boards and they are proceeding extremely well.

And the first CKB board test runs are completed. We expect full production in 18 to 24 months from the start-up in late May 2016.

The BCTMP plant is planned to be operational before the end of this year and that will give 220,000 tonnes capacity of BCTMP. And the chemical plant, 130,000 of hardwood we sourced from Veracel and 90,000 tonnes softwood from the market.

The PE coating investment is expected to be completed in mid-2017. Varkaus kraftliner ramp us is proceeding, we reached as expected breakeven in Q3.

Full production is expected during the second half of 2017. We will have maintenance in Q3 -- in Q4 this year and we will do some additional CapEx investments during Q1 where we need to take the mill down.

The new production line for wooden building components, LVL, is ramping up and we are right into the certification process. Full production expected in mid-2018.

Before I handover to Seppo, I just want to make sure that the transformation continues, and this is a slide that I’ve been using for the last couple of quarters or more than that. So, from growing from having less than one-third of growth business, we are now over two thirds of growth business when it comes to sales.

And actually when it comes to being just below 40% of the profit, we are now over three quarters of the profit coming from the growth business. So with that one, I handover to Seppo.

Thank you, Karl. And I start with some key figures.

First of all sales, reported sales was down 4% -- 4.3% but just a note as Karl already mentioned that this quarter our underlying growth in our business excluding divestments and declining paper business that that was going up 1.8% in Q3 year-on-year. Operational EBITDA margin was 13.6%, slightly down compared to a year ago and of course our EBIT margin was 9.2%.

Earnings per share excluding items affecting comparability, was up €0.04 and was €0.17 in total. Operational return on capital employed excluding Beihai project was 13.5%.

So, it was above our strategic target of 13% and also up compared to year ago when it was 13.1%. And debt/last 12 months’ operational EBITDA was 2.1, clearly down from 2.5 a year ago.

Then I’ll move to our divisions and start with consumer board where sales growth was 3.2% excluding the divested Barcelona Mill that we divested earlier. Operational EBIT increased €20 million or 23.3% excluding the Beihai operations and that was, thanks to increased efficiency and improved product mix.

Then moving to packaging solutions, sales were 15% driven by Varkaus kraftliner mill and also higher volumes from our Polish containerboard mill Ostrołęka. Operational EBIT was €3 million up and improved result of Varkaus Mill was partly offset by the challenges we are having still at Stora Enso Inpac in China.

We also reached important milestone in Varkaus, Varkaus kraftliner mill; the ramp-up is proceeding; and we had the first positive EBITDA quarter in Q3. We also announced plans to consolidate corrugated packaging production in Finland to Lahti plant, and negotiations globally are going on as we talk.

Then moving to Biomaterials, their sales decreased due to lower hardwood pulp selling prices and slightly lower volumes, and that was mainly due to maintenance. And the reason is that Veracel had annual maintenance now this year during Q3 while a year ago it was the quarter before meaning Q2 2015.

That also had some effect on the EBIT for the quarter, and also meant that deliveries were slightly slower. The main driver for the EBIT development was significantly lower hardwood pulp prices.

Also good news is that customer trials for lignin are proceeding well at the Sunila Mill and we are also going ahead with R&D ramp-up during the coming quarter. Then wood products, the sales increased; that was mainly due to higher volumes for Murów sawmill in Poland and also Varkaus LVL plant is ramping up since the start in June earlier this year.

Operational EBIT was stable, positively affected by lower log costs and higher sales volumes but negatively by higher fixed costs or lower income from saw dust and wood chips. LVL wooden building components, plant ramp-up is going as planned and we are moving ahead commodity for certifications; and operational return on capital continue stable at 17.5%, only a little bit shorter of target of 18%.

Then moving to paper, the operational EBITDA improved 75% year-on-year for the quarter. Stable prices and stable volumes in declining market; and important to note is that actually sales remained flat excluding the structural changes.

As I said, EBITDA increased 75% that is thanks to tight cost management and good production efficiencies in paper division; lower variable costs, especially in energy, wood, chemicals and pulp; and lower fixed costs. And like Karl was referring to also earlier, there was about €7 million positive included for asset disposals in the result.

Cash flow generation continued at the excellent level there to say, cash flow after investment activities to sales was record high at 11.7% and clearly above the long-term target of 7% that we had set for the division. Divestment of Kabel Mill in Germany was completed and Suzhou Mill divestment is proceeding according to the plan, as announced earlier.

We also continue our internal project in paper, as we have announced earlier, but we are reviewing how to create the best conditions for the paper division to compete under the increasing cost pressures and declining market demand. Then, to summarize the strategic targets, and as you can see, we have quite many green ticks there already.

So first of all on the growth, we are growing 1.8%, a bit less than a year ago but thanks to ramp-ups that are in the pipeline, at the moment, very high verticals; we are confident that the positive trend will continue there also. Balance sheet has strengthened, as commented earlier; net debt to operational EBITDA clearly below the targeted level and debt to equity as well as 52%; and operational return on capital excluding Beihai of 13.5%, including Beihai 10.1%.

Fixed costs to sales of 25.5%, so still above our targeted 20% level, but we are still confident that in the longer run, we will be able to reach the targeted 20% level. Going to the divisions, consumer board where the target is 20%, they were at 12.9% in Q3 this year including Beihai and excluding Beihai at excellent level of 42.3%.

Packaging solutions at 9.6%, still suffering from the effects of Beihai -- excuse me, Varkauscots start-up and the Inpac in China; Biomaterials, 6.7%, which is affected by the latest trends with pulp prices; and wood products at 17.5%. And they have been at or around the 18% target level already for some time and stable performance continues.

And paper, I said earlier, at 11.7%, cash flow after investment activities where the target is to be above 7%; so clearly, above that and also a year ago we were at 9.2%, above the targeted 7% level. Then over to you Karl for guidance.

Yes. Thank you, Seppo.

And the guidance for the fourth quarter 2016 is compared to the third quarter of 2016. Sales are estimated to be slightly higher or slightly lower than the amount of €2,393 million recorded in the third quarter of 2016.

Operational EBIT is expected to be in line with or somewhat lower than the €219 million recorded in the third quarter of 2016. These estimates include a possible impact of the scheduled annual maintenance shutdown of approximately €35 million compared to the third quarter of 2016.

It is important to remember that in Q4, we’ll have a normal seasonal slowdown for consumer board which will affect profitability negative as usual. Transformation into customer-focused renewable materials company progressing well.

The Beihai consumer board is ramping up ahead of plan. Customer tests of liquid board ongoing.

Test runs of CKB board completed. Varkaus kraftliner mill reached EBITDA breakeven.

The centre of excellence for corrugated packaging in Lahti under consideration. Wooden building, Australia’s first wooden office building from Stora Enso CLT is being constructed as we speak.

We inaugurated a Murów sawmill in Poland during the quarter. And we launched CKB Nude.

With that, I handover to Ulla.

Thank you, Karl. So, we are now ready for the Q&A session.

So, please give instructions.

I have a couple of questions. As we can see, your balance sheet is strengthening, and as you point out, your net debt to EBITDA is running at 2.1 times, and this cash flow is really strong.

So really, I have sort of two questions around this. What is in your opinion sort of an optimum balance sheet going forward?

And secondly, should we sort of somehow link this good cash flow and debt reduction into our thinking around the dividend? And of course, we all know that it’s the Board that decides upon that.

So that would be my first question. And then, second question on the paper, the project that you launched and you’re saying that it is running on plan.

Could you just give us some more color and flavor around that project on completing better in the paper division? Thank you.

So, first of all, I think having a debt to EBITDA that’s nearly 1, would be probably very good for us. And as you say, it is increased cash generation, which we have been able to do both because we have continuously taken out working capital, as well as we are having lower investment this year than we have the year before; and we have given this that over a longer period, we want to take the investments, the CapEx down toward somewhere around the depreciation rate plus 100 million for the biological assets that you need to replant on the transitions.

So, obviously, this is something that the Board are looking into and that’s a discussion that starts basically now. So, I think I’ll leave [ph] that question there without answering it really.

But I feel very positive about our cash generation capabilities. When it comes to best-in-class paper, I think the performance today is basically -- our benefit to run basically, if you take away the sold or the closed assets; we’ve been running stable volumes and stable prices.

And to be able to keep this up, we are working on this best-in-class paper and probably have a little bit this quarter, but it’s actually all about how we make our paper business more competitive in a challenging market and it’s progressing well.

Thank you. I just want to start with Beihai.

Are you producing any commercially viable products today or is that still something to come? And how do you see your sort of production mix developing in 2017 and if you can provide any color how you do see the progression of earnings?

So, obviously you said, you had about €42 million EBIT loss and then 33. Is that the pace we should expect over the next sort of two, three quarters, a continuation of gradual improvement at that pace?

Another question I guess on consumer board. There is some challenges in Europe in terms of weakfish demand and significant capacity additions well known of course, but how do you see this business going forward in Europe in terms of demand trends and the amount of supply that is available now from European side?

So, first of all, we have been selling some qualities, but it’s basically second grade folding boxboard in China and that’s part of the reason why it’s part of the growth in consumer board. The more important is the qualifications that we are undergoing with the big customers when it comes to liquid packaging and they are going well, better than expected.

And then, we are also, as I said have done the completed tests with very positive results on CKB. And then, we are also doing some specialized noodle boards for noodles.

So in the medium term, we will start with some better folding boxboards than we work with other grades like cigarettes and also some cup boards but towards the Chinese market and gain of this mill is to run it basically on food service board, CKB and liquid packaging. And that will -- we will get some volumes of liquid already next year but that’s towards the end of the year.

And then, the other areas is a little bit more around how fast we can ramp it up and get customer qualification or some of the more advanced boards. And this is -- I am sorry that I can’t give you a longer plan but the mill has been running four months and we have already done a quite a bit, when it comes to the qualifications.

So, I am very proud of the team and they’re ahead of the timeline. And I know, this is complicated and we know that from history and we know that from some of the challenges our competitors been having.

When it comes to as your question was about consumer board in Europe, yes, and I think that we’ll see a slow growth in Europe depending on where in Euro you’re at. Central Europe is probably 1 to 2 percentage points to 1% and then more on the eastern side, we see slightly higher.

And then we see strong growth in China and in Southeast Asia. And over time, we will deliver over 100,000 tonnes that we are selling into the Chinese market right now into new markets.

And that will probably be Middle East; it will be certain parts of Europe, and that’s what we are working on. I think the demand for liquid is quite healthy but it’s stronger in Asia, that’s why we are building Beihai.

In terms of starting up the BCTMP plant, should we expect any cost associated with that and where do you see the benefit for those operations as you ramp that up?

So, I think when it comes to the CTMP that is included in the 33 million that we are giving as a EBIT impact for the Q4. And obviously, it will need some qualification because it’s -- we are now buying external CTMP.

So that would be one of the loops going ahead on certain grades.

Understand; final question for me. Given the significant price spread between European kraftliner today and U.S., would you consider to try to move some volumes from Varkaus into the U.S.

market?

So, a lot of the volumes of the Varkaus, we are already deploying in Latin America and very close to the U.S. in north part of Latin America.

I think we have had some looks on the U.S. market, but we have been taking Latin America, we’re taking Middle East and we’ve been taking Southeast Asia.

Can you give us any quantum about how much you are exporting from Varkaus versus domestic in Europe just to get some color?

I don’t have that in my hand, but it’s significant amount.

A lot of my questions I had in mind have been asked and answered already. But maybe one on the variable costs and a little bit deflation cycle we have seen over the last couple of years.

So I mean, are you seeing any impact of variable cost starting to move up a bit, the sort of oil price, and the cycled fiber prices as for those costs -- the unit prices seem to have been increasing over the past months and how much of that impact have you seen and there is sort of more of that in the coming quarters?

The effect has been very limited of the high energy prices. You have to remember that of course when it comes to electricity points, because we are hedged pretty much and we have our shareholding, we all get it of course anyway.

When it comes to logistics and others, that is some positive effect from it and it’s also from the water and other places. So, I would say that the cost pressures have how remained quite small or non-existence and then we don’t feel any immediate pressures either at the moment going forward.

Maybe just one more on the paper business sort of review and then by the sound of, when you communicated it and looking at the possibly building sort of separate HR, IT structures, is there going to be sort of extra costs related to the separation which then needs to be offset by the benefits you are seeing under review or how do you look at the cost implications from that review?

It might be some initial extra costs, but it will of course be offset by a bigger saving and how we run it. So, net-net, it’s going to be lower.

Makes sense. Okay.

We want to be very clear about that.

Yes. Thank you very much.

Thank you and good afternoon everyone. First, I just want to return to packaging solutions.

In prior quarters, you’ve given us the actual tonnage volume produced across in Q1 and Q2. Can you provide the similar number for Q3?

Second is staying within packaging solutions, you’ve talked in the past expanding the Ostrołęka Mill in Poland with additional production? Given what is going on in terms of increased OCC prices across Europe, is that decision now on hold or can you give us some timeline as to potentially a decision for that?

Yes. I’ll answer the second and the last question for you and then I’ll ask Seppo for help on the Varkaus.

When it comes to the potential of the PM 6 and Ostrołęka that pre-study is underway. We are well aware of what you are mentioning.

And once that study is ready, we will take a decision. There is no change.

Can you give us some timeline for that study please?

By the end of the year as previously announced.

By the end of the year, okay fine.

I’m still checking the Varkaus volumes. So, if we continue, I’ll come back to that structure.

Okay. And just going back to page 17 of your slide deck where you talk about strategic targets across the various divisions.

Given what’s happened with pulp prices, within biomaterials, you have an operational return on capital target of 15%. Is that now unrealistic given current pulp prices or is there any operational improvements that you can see bring to the store out of portfolio to make that achievable again?

If you look at the pulp prices today, and the performance in the third quarter, you have to remember that Veracel was in maintenance in Q3, which is a huge; so that’s affecting. But to get to 15, with the present pulp prices, it’s a bit of a stretch.

We were around 15 last year when the pulp prices were at a different level, but obviously we need to work on it, but it’s not done overnight. So, the target of 15 which is a longer term target, remains.

And right now we are suffering from especially lower hardwood prices.

And coming back to your question on Varkaus volumes, in Q3, it was 69,000 tonnes which is 65,000 tonnes more than a year ago. And for comparison, Q1 it was 60,000; Q2, 67,000 tonnes, so slightly progressing upwards as it should be.

Just one final question, just even asked about several times, but just on the paper division review. Should we be expecting something with your November 2017 Capital Markets Day or is this something that you might share with us with the review findings with the Q4 results or when should we reflect some conclusions from that?

So, first of all, it’s an ongoing process because we are working with it. And as I said, part of it is included in the quite strong performance versus a year ago.

But this is -- it’s going to take longer time because this is a project actually that we are designing and redesigning as we go because we really need to find a structure that’s very competitive paper business. So, don’t expect too much from the Capital Markets Day to be honest.

It’s more like continuous improvement type of project running.

In this regard, yes.

I had two questions, please. the first is on the paper division and on prices specifically where it looks like your realized prices were actually up year-on-year and the capacity of your as you already mentioned fine and publication prices have been down by 3% and 4% in the quarter.

I was just wondering why are we seeing some of these prices trend down. I was wondering why there was that discrepancy and whether you think that perhaps the [indiscernible] price is not an accurate reflection of what your realized prices will be going forward and also how pricing is shaping out for Q4 for example?

So, if you can take the first part. I look on paper prices into the next quarter and I see them to be fairly stable.

And then when I look upon the demand, it’s probably going to be slightly weaker versus the same period a year ago. But it’s also a period, which is a lot of things is undecided yet for the remaining months of this year.

But when it comes to the -- when we’re going through prices and demand in the paper, we can clearly see that it’s been fairly stable and that you see in the result and so that’s the demand. And we have been having a very good operational performance in the quarter.

Yes, just confirming what Karl said that the refine paper prices, they’re expected to be somewhat lower compared Q2, especially in woodfree uncoated.

Yes.

And publication paper quite expected but they are more stable compared -- to be more stable compared to Q3, so quite -- no drama.

And the other question was just relating to your guidance, if you could perhaps give a bit more sort of flash around that, exactly what you mean by in line to somewhat lower; I mean what sort of corridor that implies; is sort of flat to minus 5 or minus 10 plus 5? And then just relating to that also, what should we use as the base.

So, is it 219 EBIT, because you’ve pointed out, obviously you had 7 million gain from asset disposal, so should we be thinking about 212 as a base?

Yes. First of all, you have to remember, if you look at EBIT guidance that we are -- it’s a ramp up phase of Beihai Mill and also Varkaus is still ramping up, and that’s why you won’t to be careful.

And anchored to Q3 €219 million EBIT level. Like always we guide based on the previous quarter.

The range is from plus 10% to minus 25% based on our rate of guide, so in line with or somewhat lower than Q3.

Coming back to the Beihai project and the path we’ve talked about the potential Phase 2 involving a chemical pulp plant. Could you update us around thought process around a potential pulp mill against the backdrop of lower pulp prices in the market?

So, we have no Board decision on it. And if I remember right, I said in Q1 of this year that we need to ramp up the Beihai.

So in general, it’s basically two years out from end of quarter -- when we published quarter one until we’ll start to think about and preparing this for the Board, so we will prepare it.

And then on Varkaus and the ramp up of the kraftline machine, it seems it’s delayed, and you say that you expect full production in the second half of 2017 rather than the first half of 2017. Could you talk a bit about what’s happening and what you are doing to improve the situation?

So, first of all, we may as we said EBITDA breakeven in the third quarter. In the fourth quarter, we are having maintenance because now it’s been up for a year.

Then, in the first quarter, we actually are having additional CapEx put in, in a small section which means that we’re going to take it down to actually be able to do improved products as well slightly different products. That means that we will have it down.

Unfortunately because of lead times, we could not combine that with the maintenance shutdown that you need to do after a year, which means that it is really running full in the second quarter 2017.

And what kind of products are you planning to make that you haven’t been planning to make so far?

It has to be certain qualities that we need to fix and that we need to upgrade some of the hardware.

Okay, alright. Thank you.

We started running it full but in the second half. So there is ramp up starting in Q2 2017.

Couple of questions. If I just could start off with the liquid packaging board market.

Other than your own investment and the potential capacity addition of general coarseness, has there been any other major significant changes to capacity in the global liquid packaging board market or do you know of any planned major changes?

Of the announcements that I am aware of is this feasibility study that is ongoing in a different portion. That’s the only one I am aware of.

So, my second question is also on liquid packaging board. And how much capacity if any of liquid packaging board do you expect to -- or production rather do you expect to move from Skoghall to Beihai in 2017 and 2018 respectively?

And probably a bit into 2019 as well. That is, today we are selling these kind of products from both Imatran Skoghall -- and that’s over 100,000 tonnes.

That you would be moving from Imatran Skoghall to Beihai?

Eventually yes.

Alright. But already by 2017 some of that 100,000?

Not all of it; probably could stay some of special grades and special packaging solution would continue, but the bulk will move during 2017, 2018 and 2019.

Like we have said, it takes 3.5 to 2 years to qualify in packaging board volumes.

All right. And that’s actually my final question.

I mean as you said, 3.5, 2 years for the Beihai ramp up starting from May 2016. Is that also when you expect to sort of reach, how can I say, sort of run rate in terms of costs and quality or is that even further out?

That’s going to continue for a while. When we have ramped it up and got it qualified, then we start to get the profitability at the right time.

We have not commented yet when we expect breakeven given all volumes from Beihai, because it’s still early stage of the ramp up. So, we compacted that subject in new costs.

But what this background noise, I don’t know where it’s coming from, but if you can mute if you are not talking.

Thank you. I realize, it’s early days and I appreciate your answers on this question.

We’ve been running it four months.

Yes.

It’s been in our agenda for many years, that is four months now since we started it up.

Yes, Hello. Good afternoon.

A couple of questions, if I may. First, on the consumer board side.

So, on folding box board you commented mainly on the demand, if I got that right, but there’s plenty of these supply additions coming in quite a short term. Any comments regarding your European capacities, Swedish and Finnish capacities where would you be -- how would you prepare for these major additions; what will you do in this situation?

And then, on the biomaterials. So, you said that this 15%, the ROOC holds, and it’s long-term, so probably not downgrading that at the CMD.

So, can you please give some comments about if you have some kind of a positive pulp price expectation now for the short or medium-term? And in general, given the new capacity additions that are coming on line, what kind of pricing dynamics you see in the chemical pulp market in this short, medium and long-term scenario?

Thank you.

So just to be very clear, we are a very niche player in folding books board because foodservice board, CKB and liquid, these are the main grades. Where we’re strong in folding books board is either through the area of Performa Brilliance, which is a FBB, which is going after the SBS market with the superb quality.

That’s basically what we’re doing. And the other area where we’re quiet is in being [indiscernible] Tambrite, which is also very specialized.

We are also having an SBS which is coming out of the Stora Enso. So, we are not really completing with this average folding books board quantities, we are very niche in our folding books board and then we are big in liquid CKB and full service board.

Thanks. Yes.

And on pulp, so if I look on pulp prices, I think if we look sequentially now from third quarter to the fourth quarter, I think softwood pulp slightly -- Europe slightly lower, hardwood and fluff stable. And in China we think softwood pulp stable, hardwood pulp slightly higher and dissolving pulp slightly higher.

That’s the prices. And if you look on the demand, compare that to a year ago, I would say Europe softwood pulp stable, hardwood pulp stable, fluff pulp slightly stronger; and then in China softwood pulp stronger, hardwood pulp stronger, dissolving pulps stronger.

Yes. And regarding these balances going forward, because a lot of the additions there as well -- so how would you comment on the short to medium-term?

I think this is coming additions but it’s also disappearing quite a number of pulp business, especially in China. So, it’s probably being added somewhere around 1.5 million per year of capacity.

And the problem is if it’s coming too much in a very short period and you got volatility.

And we expect that the pulp continues to grow that’s been doing also already for some time, a bit over 2% to 2.5% per year, which is equal 1.5 billion tonnes. [ph] So, one new pulp mill a year; so there is no change in the trend.

Of course when you get the bigger volume and one closes, the market can cause short-term discrepancies. But in longer term, we still believe that it will be moving in the right direction.

Just a follow-up, you have of course talked about medium term CapEx around the depreciation of plus 100. Can you give any guidance how you think about 2017 at this moment or is that too early.

We have not given any guidance for 2017 yet, we will come back to that topic later. But like we have said, and Karl I think mentioned earlier in the call that we are seeing that capital expenditure levels are coming down to a level of depreciation plus about 100 million for biological assets.

So that would be say 550 plus 100 roughly. And about 200 to 250 million of that is maintenance CapEx and then remaining for development and growth projects.

And finally in terms of working capital, you’ve done well there of course. How much further runway do you have on working capital?

I think what we have said earlier and that is still valid that we are sort of targeting about 10% of next year’s as a level which means that about 100 million or so more that we could knock out.

Okay, thank you. IT’s Ulla here again, I just want to remind everybody that we are hosting a Capital Markets Day in London on 17th of November and there we have an opportunity to discuss in more detail about the pulp market because we have our divisional head Juan Bueno presenting there and also the head of wood products will be highlighted during the day and Karl and Seppo will give their presentation.

And in the end, we will have a breakout session. So, hope to see you all there and get more insight to Stora Enso.

So, please, Karla, the word is yours.

Thank you. So, this was another solid quarter of performance.

I’m very pleased on that the underlying profitability is going from strength to strength. I’m very happy with the strengthening of the balance sheet.

I am extremely proud of the team in China ramping up Beihai Mill after four months well ahead of our plan. And I wish to see you all on the Capital Markets Day.

Thank you very much once again.