Mayr-Melnhof Karton Stock

To this video conference call of the Mayr-Melnhof Group on our first half year results 2026. My name is Stephan Sweerts-Sporck. I'm heading Investor Relations and Communications here at MM, and I will be the moderator in this call. Earlier this morning, we already published our press release, half year report and the CEO video statement, which is available from our corporate website, mm.group. Following our brief statement -- trading statement for the first quarter, we want to provide you now in this half year with a more comprehensive update on our performance through this live presentation with our CEO, Peter Oswald, who is sitting next to me; and our CFO, Franz Hiesinger. Subsequent to the presentation, we will enter into a Q&A session. For this, I want to give you some technical information.

[Operator Instructions]

I also want to inform you that this webcast will be recorded. I would now like to hand over to Peter to start the presentation.

Thank you, Stephan. Welcome, everyone, and thanks for your interest in our half year results. We have basically 4 messages. Number one is that our results were mainly broadly in line with last year, slightly down, but broadly in line with last year, but significantly up compared to the second half year. And we will come to the individual items later, but the really positive surprise for us was the strong performance of Pharma, significantly up. Food could again make a very strong results like we are always used to it. And in Board & Paper, the strong headwinds in terms of pricing led despite a very successful FFF project to a decline in our profitability. The second message is that Fit-For-Future is delivering far above our expectations, and it will deliver above expectations.

The third message is that our expansionary CapEx, and we will come to that in more detail, are on track within budget and will contribute to our earnings growth in '27. And last not least, we said Monday morning, we announced that we have signed an agreement to acquire the Arnsberg mill from Reno de Medici, and we see substantial synergies here.

Now if we go to our Fit-For-Future project in greater detail, it strongly delivered in the first quarter (sic) [ first half ] with EUR 105 million, above our expectations. We expect for the second half of this year, a year-on-year contribution of more than EUR 100 million and in the next year above EUR 60 million. So all in all, we believe that by '27 compared to the baseline in '24, excluding TANN, there will be an earnings enhancement of more than EUR 330 million, which is well above the EUR 250 million, which we announced at the beginning of the year with the full year '25 results announcement.

And as already explained, it's a comprehensive program, core of the program is operations, procurement, top line growth, SG&A and supply chain also play a very important role. And with this information, I hand over now to Franz Hiesinger, our CFO, who will explain you our numbers.

Thank you, Peter. I will briefly explain our financial key figures for MM Group on a like-for-like basis, that means basically excluding TANN, which we have sold beginning June 2025.

So, our sales came in with EUR 1.85 billion, which is slightly down to the comparable prior year figure, but basically stable to the second half year of last year, mainly due to lower pricing. Our adjusted EBITDA came in with around EUR 200 million which is quite up compared to the second half of 2025 and shows, as Peter mentioned, a strong -- fairly strong performance. Our adjusted operating profit came in with close to EUR 90 million, also quite up compared to the second half year 2025. And our EBITDA margin came in with 10.8%, which is quite an increase compared to both prior year and second half year 2025.

If we look on the operating cash flow, due to good working capital management we achieved EUR 145 million and obviously significantly better than prior last year. And our capital expenditure with close to EUR 112 million, basically fairly stable to the prior period despite this includes already a lot of capital expenditure into our large Kwidzyn ROI project, which are well on track, as Peter will explain to you later. So, if you look on our balance sheet, we're pretty happy to present a very stable position, very solid picture. Our equity ratio with 47%, basically unchanged to year-end. The net debt amounts to EUR 945 million, also well below EUR 1 billion, which brings us to a net debt adjusted EBITDA ratio of 2.4x, which is quite well in our long-term range what we want to achieve between 2 to 2.5. And finally, our free cash flow positively came in with EUR 37 million, which also is a quite positive achievement for the first half year 2026. With this, I hand back to Peter, who will go more into details of the divisions.

Yes. Thank you, Franz. So let's go now into the operations of our 3 divisions, and let's start with our Food & Premium Packaging division. I could almost say, as always, a strong performance. Profitability was slightly up compared to a year ago. So the main we're very proud that we could also increase our adjusted EBITDA margin by 90 basis points. And they also enjoyed because of the initiatives, a strong contribution from our FFF project by about EUR 27 million. Looking into the future, it was very important that we could sign with a number of customers, multiyear contracts, some of them developing new products together. This is exactly where we are focusing on.

We don't want to compete in all the tenders which are going on for the more commoditized business, but we want to be a partner of development and work many years together with customers to improve their packaging footprint. If you are a bit surprised why Topline did not develop, first of all, it's not fully comparable because we have divested the plants in Bangor and Leeuwarden, which are all adjusted, when we adjusted for the big acquisition. And so it's not 100% comparable. Now going to our Pharma business, we saw a very strong development. The EBITDA margin improved by almost 200 basis points, so a very nice progress. If you think back, we came here from 6%, 7% EBITDA margin number of years ago. Now we are on our way to 18%. Now we have reached 14%, we've surpassed 14%. So we are on a positive trajectory. Also here, we succeeded in signing a number of multi-year contracts with our main customers, developing products together, developing packaging solutions together. And so we can already go to the next page.

Innovation is a very important part of our product offering. And here are just some examples where we have transformed in the first quarter from plastic packaging to, here for example to paper packaging. In this way, so to say, avoiding more plastics. We also use -- we are not just a producer of folding carton, but still a small producer of molded pulp solutions. And also here, we could sign some interesting long-term contracts. The topic in pharma, the big topic is cancer fighting. That's really something which is a very, very important topic for all of us, as consumers that you could buy a medicine, we are sure that it's the original medicine and not just a fake product. And we're very proud about our highly effective micro-optics technology, which gives us a good competitive advantage.

Now moving on to our Board & Paper division. There, we were faced with extremely -- with lower prices. And the price deviation was about EUR 70 million. And thanks to our FFF project where we could achieve EUR 59 million profit improvement, we could almost balance this, but not completely. In terms of variable cost, it was a rather favorable environment, first half year compared to the first half year of last year. Our costs for paper and recycling were somewhat lower. Pulp was a bit lower, wood costs were broadly flat. Energy costs were a bit lower despite the already starting Iran war. The situation has now changed, and I will come to this point then in the outlook. Our fixed costs are down even though we produced somewhat more. Now, talking a bit about the top line. The outstanding thing, was which I already mentioned was that prices were significantly lower compared to the first half of last year because they've been sliding for most grades throughout the year, and there was a drop again at the beginning of this year.

The good news, however, is that we see a positive price momentum in some grades, not in all grades. And we hope that this gathers momentum in the second half of the year. In terms of volumes, we were very pleased because we could gain market share in Europe, both for WLC, for our recycled cartonboard as well as for our fresh folding boxboard.

That is important. We've seen that the overseas markets become less and less attractive also because of the tariffs in North America. And so it is important to sell, so to say, around [indiscernible]. And one reason of that is obviously that we have very good products and we have improved these products. Another reason is our good service. And by good service, we don't mean that we're more friendly sales representative than other companies do, but we are located, especially in FBB on the continent in Europe. So serving out of Frohnleiten and Kolicevo, we are much closer to our customers. We can react much quicker and this is something which is highly appreciated. Now let's make also a deep dive beyond the half year results into our overall competitiveness in Board & Paper because given the disappointing results, this is obviously important.

These results, by the way, are very much in line with other competitors in our industry. So, first of all, it's important where we have to sit on the cost curve? And the good news is that 80% of our capacity is in quartile 1 and 2, so above average. I think that's a very, very important message. Then we have some more detailed charts which show what is the age of our machines compared to the competition. So it is on the right-hand side, then it's newer than the average of the industry. If it's on the left-hand side, it's older. And on the Y-axis, you can see the capacity. And here you see the first -- the right upper chart is on FBB. And here, you can see that with much -- so we have more modern machines with a lower technical age, which is obviously very good news. In terms of size, we are hovering around the average. I'm not worried about that at all because a very big machine is only useful if you can produce very homogenous products.

But if you have many different products and even worse if you do not just produce FBB but CUK liner, all other sorts of products, then actually the big size of the machine is not of any advantage at all -- on the lower chart, you can see that in the right upper section, which is newer machines and bigger machines, all 3 machines are MM machines, so Neuss, Freudenberg, and Gernsbach. Kolicevo is also a relatively modern machine, but a bit smaller than the average. We could expand it, but don't do it in the current market environment. The only one which is in the left lower part is from Frohnleiten PM2. But as this is part of a group with 2 machines -- of a site with 2 machines, we also think it's very good.

So, in summary, we have a very strong cost position from the cost curve. But let's go now to the next slide. It's not just where you sit on the cost curve, which is important. It's also what is your capacity utilization, having a great machine, which is 70% utilized is not what delivers the results. And here, the good news is that we could steadily improve our capacity utilization, and we're now at an average of 87%, specifically for FBB, to preempt here any question, it's 80%. The third aspect which drives your profitability is do you produce products for markets which reward your products or do you have to dump them all over the world? And the very good news is that we could pass now for our folding cartonboard in Europe. So both recycled and virgin together, we can sell more than 90% in Europe. So we've deliberately cut back on overseas markets, as the price competition against Chinese import tariffs in the U.S. is just not very attractive.

And last but not least, it's not just about machinery. It's not just about capacity utilization. It's at the end of the day about people running it. And in terms of operational excellence with the CapEx, which we did in 2023, we were struggling a bit to adopt to this new machine setup, but now we have fully regained our leadership in operational excellence and also Kwidzyn and Kotka have improved very much. So in summary, we have a very strong market position. Yes, we have this extreme market share fight, especially in FBB, and we have to live with it for some time. But finally, we see that we are in a very strong position, and that gives us confidence for the future. And this leads me to the outlook. So there are negatives and positives for next year. First of all, not really a negative, but just to remind you about second half, we always do our annual maintenance stop in Kwidzyn and in Kotka mills.

We did in other mills as well, but they are not so relevant. And that has a negative effect of about EUR 35 million. The real bad news is that due to the Iran war, we are faced with higher transport costs, up about 10%, energy costs, chemicals and not directly related now to the Iran war, slightly higher wood and paper for recycling costs. And there is -- we see at the moment, still a subdued consumer demand.

On the positive side, we have our pockets of growth, be it in our pharma business, our GLP-1 products. We see a nice development in beauty, beverages and pet food. As I already mentioned, we see a positive price trend in some board and paper grades. And last not least, Fit-For-Future will deliver again with a contribution of more than EUR 100 million. So this is the specific outlook for the second half of this year. If we look more to '27, I think there are a number of -- we're not commenting here on the market, that's too far away to predict. But what are the things which we can improve. First of all, as already mentioned, the acquisition of the Reno de Medici's Arnsberg mill has a lot of synergy potentials. Just to remind you, the deal is not closed yet. It's only signed. We're still waiting for the competition clearance. Secondly, very important, we have several CapEx in Kwidzyn amounting to about EUR 100 million and the benefits will flow through, that will start to flow through end of this year, but mainly then in next year.

And it's 3 important investments. One is the new continuous digester, which will significantly reduce our energy and CO2 costs and also material usage. Secondly, we get the new winder, which will enable us to produce more packaging kraft paper. We could sell here more, but we can't deliver it because of this bottleneck in the winding and also more uncoated fine paper in reels. And thirdly, we've invested in a new sheeter, which will help us to service this express service much more, which we've installed for Poland. We will roll it out to Germany, where our customers can ask very short-term deliveries, but we need this sheeting capacity in order to react on very short notice.

This is very well received. It's a unique position which we have, only those who are really close to the customer can offer this. Then we have a number of packaging expansionary CapEx in packaging. One is in Romania, a new machine. We've invested in several machines in the U.S., and that will positively contribute in '27. And last not least, Fit-For-Future is not done. It will not just deliver for the next half year. It will also deliver then in the future for '27. And I'm fairly optimistic that we can upgrade then the expectation again in the next half year results announcement, so for the full year of '26, but let's wait and see. So far, our expectation is above EUR 60 million. And so, all in all, to wrap things up, -- we believe that in comparison to these market circumstances, we have delivered a good result.

We are very well placed for the future, but we have to endure the price situation, especially on the FBB side, just now for some time as the market leaders are not willing to shut down their capacities. And so we have just to be patient until this happens. So -- and with this, I would hand back to Stephan, and we are looking forward to your questions. Thank you.

Thank you, Peter. Thank you, Franz. We will now start our Q&A session. [Operator Instructions]

So first question, we got already one by Markus Remis from ODDO BHF.

I have a couple of questions. I would take them one by one, if you don't mind. So firstly, regarding the savings target. So congrats to the upgrade of your achievements. But can you help us understand a bit better how you calculate the number, specifically talking about the topline effect and then just thinking about procurement. Is that like based on an as if kind of calculation because procurement prices are volatile as well. So anything you can help us to understand this better is appreciated. And then also just to get it straight, are we talking about fixed costs exclusively? So that would be the first one.

Yes. Thank you very much. So I mean, we have valuation guidelines of about 30 pages. So I can't go through all of them. We have -- just to give you comfort, we were supported by a consultant in this exercise who was based a very result-based -- it was incentivized in a result-based situation. So we have no intention also for our own purposes and for the fees we have to pay to inflate our numbers. But just going through briefly, so first of all, it is only recognized any saving or profit improvement is only recognized when it is at least 1 month in our books. In some cases, it's for obvious reasons, 3 or 6 months already in our book because of volatility. The biggest contribution comes from, as I said, from operations.

And in operations, it's typically things like reducing broke, shortening change over time on machines, improving energy efficiency, using the heat, which goes into the air in a new way. And so we -- there must be clearly identified initiatives, then there must be a result. And typically, in operations, we observe it for 3 or 6 months if the reduction of energy, if the reduction of broke, if shortening of change over time, et cetera, has really happened for a number of months to say this is something sustainable. In procurement, we typically work against -- it must be an improvement against an index. In some cases, it's easy to find these indices. So let's say, if pulp prices go down by EUR 50 and the index goes down by EUR 50, then it's not a saving. If the index, the PIX goes down by EUR 50, and we have agreed a contract following the PIX index, but with a higher discount, which was previously X and now it's X plus 3%, then the 3% would be an additional saving.

In sales, it must be -- it's either price increases which go again above typical market. So it would be -- we didn't have a lot of price increase initiatives. It was more on supplement prices. So we ask if the order volume is small, if the run is very short, if it has to be delivered in a very short time, then we have typically agreed surcharges and sometimes our salespeople forget to implement them or haven't agreed on them. And here it was about to make sure that where we have higher costs, we also get been better paid. Volume increases were also counted, but again, only if the overall customer, the overall side, the overall section overall was growing. So there were some successful initiatives getting new customers, but it's not counted because the division as such didn't show or the part of the division didn't show the right growth.

So then I left out the SG&A. There it's pretty simple. It can be about personnel, can be about other costs, services from service providers. And that's, in most cases, pretty easy to determine. So if you make a new contract, you get a 10% discount. To your question, is it fixed costs or variable costs, it is more variable costs actually as fixed costs because many savings like material savings and the production, et cetera, in operations are in more cases, variable costs than fixed costs.

Okay. Okay. Understood. Can you maybe also give an indicative breakdown between the segments? I would assume that a large chunk is attributable to Board & Paper, but...

Yes. So we have it -- sorry, I went over it, but in the presentation, you see per division, we said exactly which divisions saved how much. So if I go back, we had the breakdown of -- what was it now?

So EUR 27 million in Food & Premium, EUR 16 million in Pharma & Healthcare, and EUR 59 million in Board & Paper. So we have given this breakdown. And if you calculate it and you sum it up, you will see a gap of EUR 2 million, which is group costs.

Okay. Secondly, on your remarks regarding pricing in Board & Paper. I mean, we have been talking about the overcapacities in the industry. And I think in the full year call, you also said that you expect your competitors to adjust capacities. You basically now repeated this statement. What makes you so sure that your competitors will do the first step?

And coming to the -- or staying with the capacity topic, maybe you can also explain a bit the rationale behind the acquisition of the Arnsberg plant, which is, as I understand, loss-making at the moment. So you're adding capacity in a business, which is ailing at the moment. How much kind of investments into Arnsberg is needed? And how quickly can this turnaround be achieved?

Yes. So first of all, it's not that nothing has happened. We just don't see it in the numbers yet. So we have seen in FBB 1 market participant, I think, is what you use these days instead of competitor going bankrupt. The question is now if production will be shut down or if there is someone who buys it, there was an announcement. So this was our former company, which we sold a number of years ago for EUR 150 million. So this is now bankrupt. One part, Eerbeek in the Netherlands is reported to have found a buyer. They have announced the start-up on 15th of August, which did not happen.

It was further postponed. So we will see how this works out. I can just say in terms of volumes, we are already benefiting from this. So we will see how this works out, and we will see who the next company will be. And finally, yes, I can't predict if one of the big players will just continue as is or finally take a decision. But as it -- so we don't know when this will happen. On the recycle side, we've seen a change. So also the fact that it was not a formal insolvency, but it was sort of the shareholder lost all shares and the bondholders had to take a big cut.

And I think now that this competitor is owned by hedge funds, they will, I think, be more rational in terms of going forward. But exactly, we don't know it. So why did we buy in an oversupplied industry, another player. It's simply because we have in Germany, the infrastructure, Arnsberg is fairly close to our mill in Neuss. And therefore, we see that in terms of SG&A costs, you can do a lot, but also in production areas like maintenance, for instance, you could install one maintenance center servicing both mills. So we see a number of opportunities. And therefore, we think that at the end, we can create value with this acquisition.

And regarding the investment needs and the kind of prospective turnaround already next year?

Yes. We don't see any significant investment needs. It's really about reducing costs, but also being more rational in terms of pricing, filling the machines, better specializing the machines together with our other machine because a lot of productivity comes at the end of the day that you have a mill where you can specialize on products and not make changeovers over time. And obviously, if you combine several assets, you have more opportunities to do that.

Okay. Then one question regarding further restructuring costs in the second half. Is there anything on the horizon? And also regarding the maintenance cost, EUR 35 million you mentioned for the third quarter. I recall that last year, this was more spread over Q3, Q4 this year pulled forward into Q3? Or is there an additional impact then also in the final quarter?

No, there's no additional. So the EUR 35 million refers to the full second half year. But as we have moved it forward, last year, it was September, October. This year, it is August, September. And so by end of September, it's done. So the third quarter result will be more impacted in the fourth quarter will, compared to last year, not be impacted, whereas last year, we had these costs. Restructurings, we cannot really predict here anything concrete because it has to be discussed with unions, et cetera. But you can assume that we will work on our footprint and without being specific about any mills or our plants, we will do restructurings.

All right. And a final question before I get back into the line, 2 bookkeeping questions. Firstly, I would be interested in the factoring level at the end of the first half. And then you mentioned that in 2027, the CapEx figure or at least my interpretation will go down the reference, the EUR 160 million normalized CapEx. Is that what you're seeing as maintenance level in the current state of the company? And is the kind of the decline to below EUR 200 million, something we should expect for 2027?

So, I first come to the CapEx. So, maybe I was not precise enough. I meant end of '27. So we have a long-term CapEx of EUR 180 million to EUR 200 million, including -- this is not just maintenance CapEx. Maintenance CapEx is more like EUR 110 million, EUR 120 million. But realistically, we want to stay competitive and there are growth opportunities in some areas of the business. So overall, we should think about EUR 180 million to EUR 200 million per annum. Next year, this year and next year are elevated mainly because of the CapEx in Kwidzyn. And that is not all paid this year. Some of this will come next year. So this year and next year are elevated. And without giving a precise number for next year, we should wait for that, but it will be roughly where it is this year, maybe a bit down. And we have another year of elevated CapEx because mainly of Kwidzyn.

Regarding factoring, the figure is -- the net factoring amount was below EUR 340 million, and that is basically the same figure as the year end 2025.

The next question comes from Michael Marschallinger from Erste Group.

Firstly, I would touch on the pricing regards and then comments on Board & Paper you made. So with this overcapacity still persisting, what supports the expectations of improving prices? And could you please quantify which pricing improvement you expect in H2, which specific grades and which regions?

Yes. That's a very difficult question. Obviously, yes, we only know what has happened until today and not what will happen. But we see somewhat -- so let's say, in -- we have to really separate out recycled cartonboard and virgin cartonboard in recycled cartonboard, we have seen now with several closures which have taken place in Spain, in Holland, in Germany over the last years and markets growing that we are much closer to a balanced situation. And therefore, we've seen gradual -- we've seen real price increases. We implemented pricing increases in April through June and some now in July, and we see this trend to continue. So here, we are. I wouldn't say we don't have a balanced market, but we are close to a balanced market.

And there, we have seen during this year, an overall increase in prices, even if it's still somewhat lower than where it was last year. And obviously, yes, so -- and then we have the virgin grade FBB. And here, we see the 2 market leaders, the one market leader, so to say, trying to get market share in order to shift volume from the U.S. to Europe and the other one who has built a new mill, obviously wants to fill their mill. And here, it's difficult to predict when they will act. The only positive news is that, I mean, positive is now inappropriate word. But for us, positive thing is now that with the insolvency of FOLBB, we will, for sure, get some additional volume, but it will not solve the overall pricing issue.

So for this part, I'm not predicting anything. We have to wait patiently until things will happen for virgin cartonboard called FBB. And then we have some other grades. So we have a good price level in saturated kraft paper. We have very weak prices in uncoated fine paper, but they are on the move up now currently, but difficult to see how it will go from here. Yes, and that's more or less it.

And just a follow-up, when would you expect the supply-demand balance to be reached in FBB with this mentioned the solvency?

Now on FBB, I'm not predicting it unless if none of the 2 capacity leaders, I mean, we are -- all 3 have the same size in terms of what we sell into Europe, but the 2 others have much higher capacity, which is used to a certain extent for overseas sales and to a certain extent, it's simply empty. And it's very easy if as long as they don't shut capacity, there is no major improvement in prices. And I can't predict it, and I think nobody can really predict it.

Understood. And just one last question on cost inflation. Could you quantify the cost inflation you saw now in the last half of the year across your major cost positions, energy, wood, recycled fiber and what you expect for the full year?

Yes. So let's start with the more easy thing. So wood is marginally up. It's not so relevant. I mean wood prices in Europe are generally on the move up in Scandinavia, they are more on the way down. So we benefit a bit in Kotka and we suffer a bit in Kwidzyn. Paper for recycling, the indices are gradually moving up. So I just wanted to highlight, they are somewhat higher than they were a few months ago.

The more serious chemicals is a bit a mixed bag, also difficult to quantify. Overall, I don't think it has a major impact. And then we come finally to the 2 main items is transport. So we have typically transport contracts with forwarders, which say it's a fixed price plus an adjustment for the diesel price. So it's a question of if you believe that oil prices will rather be unaffected or come down because Iran is solved, then it's a question of a few months. If you believe in other scenarios, which say the crisis will deepen, then obviously, there is further inflation in transport costs overall. We will be a net beneficiary in Board & Paper because we don't have as high transport costs as our Nordic competitors, but it will affect us.

In terms of energy, which is mainly for us, gas price, but also electricity, it's again the guess on what happens in the Middle East and in Iran and what are the long-term consequences. So I think all predictions have proved constantly wrong. Initially, it was when the war started, many said they will skyrocket, then they didn't. They went up but didn't skyrocket. Then at least I thought that the situation will at least calm down. And all of a sudden, it became even worse. So I mean, I'm reading weekly newsletters on energy from experts who have the best knowledge available. But even here, I've seen constantly wrong predictions. I'm just stating, so to say that as we stand here as per today or as per yesterday, when we finished it, we see cost inflation from energy and transport. These are the main issues and in transport, it's about 10% more higher than last year.

Okay. So you would expect further acceleration in H2?

I think H2, I'm pretty sure H2 will be worse than -- or we will have higher cost than in H1 just because, as a matter of fact, they are higher in July and August. And now it's anyone's guess if -- if things accelerate, so to say, throughout this quarter because gas prices go up even more yesterday, they reached a new high. So are these things getting worse? Or are these things getting better? And then the question is, of course, and here we are back to market balance in a more balanced market, we will be able to pass on these prices to our consumers in a market where there are significant overcapacities and unwillingness to cut capacity, no one dares to fully pass them on and then you have to live with them.

[Operator Instructions]

And we have another question coming up from Markus Remis, a follow-up question from ODDO BHF.

Staying with Board & Paper for one more time, please. Now that you're about breakeven on an adjusted level in the first half, given what you said, okay, some price increases are coming through, more savings. On the other hand, this cost inflation. Is it fair to assume that the second half should also kind of be slightly positive on an adjusted basis? Would you consider this as a realistic range?

We don't give precise forecast because we are constantly surprised by how things develop. I would say this way, I would think it's a rather stable development minus the annual maintenance shuts. And this means the answer to your question is, I think on balance, it will be down, but there is a huge variance because it's very difficult to judge whether the -- whatever it will be, EUR 50 million, EUR 60 million. I'm now referring to the division. If the EUR 50 million, EUR 60 million contribution from FFF and some other positive developments outweigh higher energy and transport costs and some other cost inflation in variable costs. And this is still unclear because I simply don't know. I mean, nobody knows whether in October, the gas price will be at EUR 100 or, let's say, moderated back to EUR 40. And in this way, we don't know it, but it will be a rather similar level minus this EUR 35 million.

Okay. Then one question regarding Pharma & Healthcare Packaging. So we're seeing a certain trend in terms of the margin development, now 8% on an adjusted basis in the second quarter, if I did the math right. What would you consider like the target profitability level for that business? Apparently, there's a lot of restructuring has been done in the past. How advanced are we? How much more homework do you see? Is this a business which with kind of looking out '27, maybe more '28 can get to the profitability level of Food & Premium?

Yes. So overall, I mean, first of all, if we talk about EBIT, we have to appreciate that there is also some customer amortization included, which is in the food business because that's a legacy business, whereas this business is a business which we have acquired and we have to capitalize on the customer relationships and write it off over time. So this way, I almost think that [ EBITDA ] would be a better measure than -- so it has to be very clearly above 10% EBIT margin finally. And we know that this is possible. And with a number of operations, which are more in the 15% range for operating profits. But equally, you also have some legacy business, which you have to think how you deal with it. On your question, is there our restructuring done? And there, I can say, yes, it's done. Maybe there is a small plant where we still have a question mark. But otherwise, it's a solid sound business, which we can support with growth.

And the driver to bring up the margin with kind of restructuring done is, I mean, of course, further cost discipline and Fit-For-Future. But how much lever do you see from the top line coming? Because it's a business which at least in the most recent past has undershot like market growth, and I understand there have been some portfolio optimizations. But how should we think about the growth component?

Yes. So, we believe that -- so yes, we were a bit -- let's say, it was a bit frustrating to see that with nice growth in some sectors, and that will gain momentum because it's a very slow-moving industry in terms of it's a long approval process, et cetera, and you don't want to deliver the packaging for products which have been for 30 or 100 years around, and it's just about price, but you want to be with new medical treatment, so to say, and work with the customer, and that takes then always several years. And so we see this pipeline constantly strengthening, which is very good.

And we see that the bottom slicing is not completely finished, but is finally coming to an end. So top line will be an important part of it. Of course, we have still a lot of room for productivity improvement. But the main driver, hopefully, will -- it's not hopefully. We believe we'll definitely shift to top line growth and not just any top line growth, but the top line growth with products which have a good margin because we've developed these products together with the pharmaceutical companies. And so we are in the top position with long-term contracts where our contribution to develop it is also valued.

I hope this answers your question.

The next question comes from Cole Hathorn from Jefferies. [Operator Instructions]

I see no more. Cole is here again.

Apologies for that. I just tried to join in from the webcast. Peter, I wonder if you can help me out. I'd like to follow up on that slide you showed on kind of your relative cost advantage, particularly on the recycled side. When I look at gas prices here, could you remind us how much hedging Mayr-Melnhof has? And the reason I ask this is because you've got FOLBB, which consumes gas that's gone under, and I imagine they wouldn't be able to hedge. You've got Reno de Medici, whose Apollo has given back the equity stake and they just had the bond restructuring. I imagine a lot of your competitors might not have the same level of gas hedges. And if gas stays higher, do you expect some of your competitors to take a lot more economic downtime, you to take a little bit more share? I mean, hopefully, that resolves itself in some capacity closures, but I'm just wondering how are you positioned actually even though higher costs are not great, do you actually have a relative advantage here?

Yes. On the recycling side, I think we do have a bit of an advantage. Obviously, I don't know. And we don't even know from FOLBB because even if you go bankrupt, it's up to the administrator to terminate contracts. So if they had hedges, they still have them today because he hasn't terminated them and someone else -- the part -- the counterparty cannot terminate it. So we simply don't know how much they are hedged, and we are not extremely well hedged. So it's somewhat below 50%. Unfortunately, you should have written your report on the gas price a bit earlier so that we had hedged more.

But, yes, so it is a slight advantage on FBB, I think it's a slight disadvantage because in Gernsbach, Frohnleiten we are producing our own energy to a very high degree. In Kotka, we are only partly integrated with the pulp mill. And therefore, we have somewhat higher energy costs to buy in. And therefore, we are a bit more dependent and it's a difficult game. By investing into the e-boiler from spring next year, we have more options than to use electricity even for the heat. Instead of buying the gas at the moment for heat, we need the gas, but we can play between gas and nuclear power. So that's our situation. So I would say on the margin, maybe we have an advantage in recycle and maybe with a slight disadvantage in virgin.

Perfect. And then maybe just following up on the acquisition from Reno de Medici. You haven't given any valuation or price. Is there anything that you can comment on that? I mean I imagine when you're a forced seller, you get a good price, but I'm just wondering a little bit more on the synergies there. You talked about SG&A, maintenance location of the mills. But is this a WLC mill or kind of a recycled carton mill? Or is it more white top test liner?

No, it is a WLC grade in more of the lighter grammages, so what we then call WLC liner. And I mean, we have agreed in the contract not to name the price. I mean what we can say, it's not material what has been invested there. And yes, we have to work on the costs and see how this works out altogether and also how the overall market develops.

But it is a consolidation of the market because, yes, especially in Germany, we were historically fierce competitors and yes, they were extremely aggressive.

Let's hope there is more economic downtime and other players have less gas hedges for you going forward. But maybe following up on the cost point, you did mention wood costs, and I'd like to follow up on Poland, considering that there has been some restrictions on harvesting levels. Is there anything that you can call out or any kind of lobbying that Mayr-Melnhof can do to kind of maintain reasonable wood supply to your mill, make sure that you don't have a situation where availability becomes an issue and wood costs continue to inflate?

Yes. Of course, we are lobbying on that. And I wouldn't see it as particularly worrying. I think with all over all in the Nordics, you have various interest groups who say we should put more -- and also EU legislation, more and more forest should be put aside to be preserved and be natural and not used for harvesting. So we are working on it. I mean it's a sad story, but Poland has lost, I think, 30,000 jobs in the wood converting industry over the last 3 or 4 years because a number of especially sawmills have gone bankrupt. And so the demand is adjusting to the supply. And we don't see the price increases, let's say, are, of course, in contrast to the Nordics, but they come from a much lower level, and they are less than they are, for instance, in Austria or some other kind of Central European countries.

And then just finally, maybe this is a question for Franz, but your contribution on Fit-For-Future, an extra kind of EUR 60 million into 2027, I mean, it is a big number. What kind of visibility do you have on delivering that? Because that -- I mean, it is a big improvement, a big increase from the original EUR 250 million. So just what gives you the confidence in actually being able to deliver that number?

Yes. There is a number called the run rate. So both projects are what we call L4. So they are executed for at least 1 month, in many cases, several months until we see that it's a sustainable improvement, as I explained it earlier. And so we are currently at above EUR 270 million L4 and L5 to L10 has been there for more than a year. And we have then visibility. So this is already banked. And then we have an L3 number, which is everything has been prepared, everything has been identified. We are already in the testing phase, but we don't know if the full benefits will come through. And in some cases, there is a higher uncertainty like in procurement. So the tender has been done, but we haven't received the offers yet or haven't finalized, haven't signed something. In some cases, there is less like we see, yes, we have good success, but we still want to look 1 or 2 months more in order to do it. And out of -- and this is a very significant number, which gives us confidence that the EUR 330 million is really a very conservative number.

Thank you, Cole. So since we have crossed the hour, I think we will come slowly to an end of this conference call. Thank you for your participation, the questions, the interest in MM, and Peter, perhaps a final sentence before we quit.

Yes. Sorry I talked so much, there is almost nothing to say. So we have this adverse market situation in parts of our Board & Paper business and where we can't logically judge how and when it can be changed. But being in a strong position in terms of cost curve, capacity utilization, sales focused on Europe, sitting in the middle of the continent, we feel that we are in a very good position. And then at the same time, we will develop our 2 packaging businesses, which have delivered a strong result further and they will, going forward, I believe, show also more organic growth.

And in this way, this part of the business will grow and develop. And in this way, I also want to use this opportunity to thank all our employees. They've done a fantastic job. It's not easy if there are so many headwinds you have to face. But finally, I'm confident and we shouldn't forget that comparing ourselves to many peers that a result like first half year was more or less the same as the year before. That doesn't sound very exciting in itself. But if you study a number of annual reports, of other companies, then I think you see that this is quite an achievement. And in this way, we look positive to the future. Thank you.

Thank you again, and we wish you a great day and say goodbye to you all. Bye-bye.

Bye. Have a good day.

Welcome, everyone, and thank you for joining us for the presentation of Mayr-Melnhof's '26 Half Year results. I am pleased to report a strong earnings performance given subdued market conditions. Adjusted operating profit was broadly in line with the prior year on a like-for-like basis, excluding TANN, and showed a clear improvement compared with the second half of '25. A major driver behind this performance was our Fit-For-Future program, which delivered a contribution of EUR 105 million in the first 6 months year-on-year, well above our initial expectations. And this contribution compensated mainly for lower selling prices in our Board & Paper business, and it underlines the increasing effectiveness of our profitability improvement initiatives across the group.

We are particularly pleased with the strong development of our two packaging divisions, and I will come to the details. So let me briefly turn to our financial performance of the group. Adjusted EBITDA reached EUR 200 million and adjusted operating profit around EUR 90 million, marginally down from the previous year on a like-for-like basis, excluding TANN, and clearly ahead of the second half of '25. Our adjusted operating margin slightly improved to 4.9% and adjusted EBITDA to 10.8%. And cash flow from operating activities improved significantly to EUR 145 million due to normalization in working capital.

And as a consequence, free cash flow was positive at EUR 37 million despite our above normal CapEx program, which will continue, by the way, until end of '27, and then our CapEx level will significantly come down. At the same time, our balance sheet remains strong with an equity ratio of 47% and net debt to adjusted EBITDA at 2.4x, which is within our long-term target range. The success of the Fit-For-Future program so far attained has given us even more confidence on its overall contribution. And therefore, we've increased our target for cumulative P&L benefits to more than EUR 330 million by '27 compared with the '24 baseline, excluding TANN. And this is much more than the EUR 250 million, which we have communicated earlier this year. So this program is really getting a lot of momentum.

Now, looking at our divisions in more detail. Food & Premium Packaging improved adjusted operating profit by more than 6% on a like-for-like basis, demonstrating the resilience of its business model and the benefits of the Fit-For-Future program. We also strengthened our market position through signing of several long-term customer agreements and continue to drive innovation in sustainable packaging, particularly innovative solutions replacing plastic. Our expansion project in Romania remains on track and will start commercial production by October as planned.

Pharma & Healthcare Packaging delivered another outstanding performance in the first half of '26. It improved adjusted operating profit by 28% year-on-year. Growth in North America, Ireland and selected pharma applications, including GLP-1-related products, supported a strong business development. Continued productivity improvements, selective footprint optimization in France and Spain and close customer partnerships further enhanced our profitability. And now, with an EBITDA margin of 14.3%, the division has now caught up to the level of its sister division, Food & Premium Packaging, significantly up from a few years ago. And in addition, several long-term agreements were signed with key pharma customers, strengthening our strategic relationships and supporting the division's attractive long-term growth prospects.

In Board & Paper, market conditions remained unfavorable. Selling prices were significantly lower than in the first half of '25. However, customers awarded us more volume in Europe, thanks to our superior products and service offering. We gained market share in Europe, both in recycled cartonboard and fresh fiber folding boxboard. And therefore, our capacity utilization improved and operational efficiency reached new levels.

Sustainability remains a core element of our strategy and our daily operations. We are, therefore, particularly pleased that MM's sustainability performance continued to receive international recognition during the first half of '26. Recently, we received the Platinum Award from EcoVadis, up from the Gold Award. So before concluding, I would like to sincerely thank the entire MM team. The achievements of the first half year are the direct result of the commitment, the teamwork and the determination of our people to continuously improve, particularly during demanding market conditions. And our success with the Fit-For-Future program clearly demonstrates what we can achieve together.

Now looking ahead to the second half of '26, we expect market conditions to remain unfavorable, due to the Iran war, consumer demand remains subdued and the number of costs like transport, energy, chemical, wood, paper for recycling have increased. And in addition, annual maintenance standstills at MM Kwidzyn and MM Kotkamills are expected to impact third quarter operating profit by approximately EUR 35 million. However, these headwinds will be partly mitigated by a growing volume and slightly improving price levels across selected Board & Paper grades, continued growth in attractive pharma and consumer packaging applications and a further Fit-For-Future contribution of more than EUR 100 million in the second half of the year.

And at the same time, we continue to invest in the future of MM. So we haven't cut our investments to the bone. Major projects at MM Kwidzyn aim at increasing energy efficiency and reducing costs, and this remains fully on track. And these projects are expected to make an important contribution to earnings from '27 onwards. And the recently announced planned acquisition of the Arnsberg board mill, which is still subject to regulatory approvals, represents another important step in strengthening our core cartonboard business, and it offers attractive synergy potential.

So overall, MM is well placed because of its strong industry expertise and its superior well-invested asset base. And we remain firmly focused on strengthening profitability, investing in sustainable cost competitiveness and creating long-term value through our leadership in consumer packaging. Thank you.

Good morning, ladies and gentlemen, and welcome to the Annual Results 2025 Call of Mayr-Melnhof Karton AG. [Operator Instructions]

Let me now turn the floor over to your host, Stephan Sweerts-Sporck.

Good morning, and welcome on the part of MM Group. I'm Stephan Sweerts-Sporck, heading Investor Relations and Corporate Communications here. It's a great pleasure to have you joining this Q&A conference call on our '25 annual results, which we released this morning. Besides the press release, a video statement from our Management Board has been published on our website, mm.group. In this call, we want now to provide you with the possibility to ask questions on today's communication to our CEO, Peter Oswald; and CFO, Franz Hiesinger who are here with me.

Since this call addresses an international audience, we would very much appreciate your questions to be asked in English in the following Q&A session.

Before we go for that, Peter, may I ask you to start with a short summary of our key messages.

Yes. Thank you, Stephan. Welcome, everyone, and thank you for your interest in MM Group. So I will be fairly brief in my summary to have enough time then for your questions. Despite our divestiture of TANN, we could marginally increase our adjusted operating profit in 2025. And if we look what I think is more meaningful at our numbers on a like-for-like basis, so excluding TANN, and this is on Page 4 of our press release, you can see that we increased our adjusted operating profit by 15% in the last year. And this is quite an achievement in this challenging market environment. And the key driver was our Fit-For-Future program, which added around EUR 70 million to our last year result. And so that's really meaningful.

The good news is that we feel confident now to increase our forecast for the effect of Fit-For-Future by 2027 from what originally said more than EUR 150 million to now more than EUR 250 million. The project is well progressing on all fronts, be it operations, SG&A, top line and procurement and also supply chain. Now if we look specifically at our 3 divisions, Food and Premium Packaging had, I could almost say, like always, a very solid performance. And given our Fit-For-Future program, I personally all feel very positive about future development.

Now if we look to our Pharma business, adjusted operating profit increased by 25% by quarter. And the good news is that there is a lot of upside potential going forward. Given the long sales cycle of 2 to 4 years, one needs a lot of patience in this business until actions show results, but we will get there. We are very strongly positioned in the GLP-1 weight reduction segment. And we could sign here and also in other areas, some long-term contracts, and that will support our growth in this segment going forward over the next years.

Now coming to Board and Paper, we managed to increase our results and finally show a green zero or more dramatic black zero. Everyone following our industry will probably share my view that this was quite outstanding and outstanding achievement. And again, Fit-For-Future gives us the confidence that despite the difficult market environment, and I will come to this is -- will be positive. Now probably you are most interested in our outlook. So I won't repeat what we already distributed. Definitely increased energy prices mainly gas but also diesel, et cetera, for transport will negatively impact Q1 and Q2 results. And it's then anyone's guess what the impact will be on half year 2, depending obviously how long and how severe the war will be and the closure of the Strait of Hormuz.

The positive thing or what I hope is positive is that this cost shock may lead some players to rethink whether running mills at high losses or even negative EBITDA makes long term any sense, but again, who knows. We are well booked at this point in time as our customers appreciate our superior products and services. And so despite all the headwinds and they do exist and the overcapacities do exist, both on the converting side and also mainly in the board and paper area. Despite all that, we do remain confident because our markets continue to offer attractive long-term potential. So the underlying trends are the right ones. And as a strong team, we are committed to doing whatever it takes to advance the profitability of MM for the years to come.

And with this, I would like to finish and hand over now for Q&A, and we're looking with interest to your questions.

[Operator Instructions]

The first question is from Michael Marschallinger, Erste Group.

I have 3 and do them one by one. And firstly, on your Fit-For-Future program. So you said you see an additional or more than EUR 100 million versus initial expectations. Could you give us a bit more color where you see these additional savings come from? Walk us through here? And what are your expectations in terms of cost in 2025? You booked now EUR 29 million restructuring costs. What do you expect over the next year 3 years with this.

I'm not 100% sure. I got it right. So our effect on an adjusted operating profit basis was about EUR 70 million, and we booked quite substantial restructuring costs. Going forward, so we think that another -- so if we say more than EUR 250 million 2027 compared to 2025 means obviously that we have to deliver another EUR 180 million to get there. I believe that the restructuring costs per se will be, let's say, roughly in this year, '26.

Sorry, I didn't understand. Can you please repeat it?

Yes. So the estimate is depending that our restructuring costs, I understood your question was what the restructuring costs for the FFF program will be. And this will be this year about at the same level than last year.

Okay. And also for '27.

Also for '26. For '27, it's a bit too early to tell. I would expect or I would hope it's less, but there could be individual bigger restructurings, which we can't foresee at this point in time.

Okay. Understood. Then coming back to the market conditions and you acknowledged in the press release, overcapacity still persist. So could you provide a bit color what you saw in the last 2 quarters since the last call? And what are your expectations here in '26 also with new capacities from your Nordic competitors coming online? Would you expect this situation to intensify over '26, if you could give some comments, please.

Yes. So one major addition in Finland came on stream and is now fully already in the market. So they started up this spring. And that obviously creates a lot of pressure for all participants because no one wants to lose any volume. I mean we know from various investigations that a number of players are EBITDA negative. And of those who are published, you can even look at the numbers. And let's say, the hope is that one or the other just face the consequence finally because now we know that this new capacity is here, and it will obviously stay. And now someone has -- someone or some capacity, so to say, have to be closed, and that's obviously always a difficult decision to make. But finally, if you run your mill at a negative EBITDA, your free cash flow loss is so high that at a certain point in time, you have to do it. And we have to wait now until this happens.

That's very clear. And lastly, on the energy cost side, given we see now this Middle East conflict and another wave of inflation is expected, how would you expect to pass on this additional cost in the current environment?

Yes, that will be different for different grades. So in some grades, we will be able to pass it on and in some grades where we have the overcapacities and where our judgment is that competition is only driven by volume and not by profits, there probably we have to take the fight.

And could you also make a comment on how you're hedged on the energy side for '26?

Yes, we are hedged between 1/3 and half of the volume.

The next question is from Markus Remis, ODDO BHF.

A few questions from my side. Firstly, coming back to the Fit-For-Future first question, between Q3, the EUR 150 million and now the EUR 250 million, can you elaborate where this incremental savings potential was found? And also, I'd be interested to get a sense of the timing of the remaining EUR 180 million. So anything you can share regarding the breakdown '26, '27 would be very helpful.

Yes. Of course. So the good news -- I think we made interim in the third quarter already the comment that it will be significantly more than the EUR 150 million. So it's a gradual development. You see the way this program works is that a lot of ideas are generated and then they are worked out. And obviously, some turn out to be nonfeasible, some cases, you find even more potential than what you thought. So it's always very difficult to evaluate this pipeline. And definitely, we wanted to be on the conservative side. And as the project progresses, we see that many more projects are worked out in greater detail. And obviously, we've implemented now already a number of projects well above EUR 100 million, which had this positive effect last year.

The timing is a bit difficult always to evaluate, but I would roughly say that the balance will be equally split. So the EUR 108 million plus between this year and next year. But again, that's a very rough estimate because you have delays for one reason or another, you have setbacks customer doesn't sign the contract as quickly as you want in procurement, your supplier, you have to wait until the old supply period runs out and the new term starts.

Okay. And can you -- because you're putting the savings kind of conditional, of course, to market conditions. Can you give us an idea of how much of the EUR 70 million you were able to actually retain in the P&L in '25?

These EUR 70 million, so are retained. They are there. But let's take an example. If the raw material price the index decreases by 5%, and we can achieve a reduction of 12%, then the 5% is what we don't book into FFF. The 7% we take as a credit because we say this is our own achievement. And sometimes that's obviously a question is obviously a judgment call. But the important thing is that we have very strict rules here in order to not overreport in any way. So the EUR 70 million, you could say, if we hadn't started this project, our result would be, I would say, more in line with the industry and would be really EUR 70 million on an adjusted operating profit lower. Obviously, the operating profit effect was less because you have to deduct then the restructuring costs, which are shown in our attachments.

Sure. So would you say that kind of a walk down 2024 EBITDA of EUR 420 million plus EUR 250 million savings, less 50 million tonne equals EUR 620 million EBITDA by '27 that this is then what your...

That's the right way to calculate it, plus/minus changes in the market. So for instance, this, let's say, energy costs are sustainably EUR 50 million higher. But by example, that would come off if our prices are in all cartonboard is lower than they were last year. And so this needs to be taken off. We can't predict. So it's mainly about our selling price and about the procurement of our most important raw materials.

Okay, so less cost inflation and less pricing concessions.

Yes. Specific cost inflation. So our savings are different to how many others do it on a nominal basis. So we are not saying costs would have gone up by 3%, and we have avoided any costs that would not count. A reduction needs really to be in nominal terms disregarding the inflation. So if we reduce prices by 5% and have inflation of 3%, only 5% nominal decrease comes and not 8% against an inflated price.

Okay. And coming to Board and Paper, I think you're very clear what kind of market repair would look like. So competition closing capacities. Are you also considering capacity reductions? I mean, when I look at your -- the Board and Paper development of the segment, I mean, it's -- I guess it's fair to assume that not all of your plants are in a breakeven or positive territory now with more pressure coming presumably from the energy side and who knows how long that will stay. But is that something you have in the drawer, so to say, is not short term, but maybe...

I think it should be a good practice amongst management in general to have for all worst cases, some projects. But overall, our mills are very, very competitive. And we know, for instance, I can't give any names. We know, for instance, we have one mill, which is EBITDA breakeven, but competition is minus 10% EBITDA. So to close our mill, which is much more efficient and there's better energy supply, et cetera, et cetera, would just not make sense. We don't understand why this mill still exists from the competition, particularly we are sure nobody can work against the market. So it's as Warren Buffett said, if the tide goes out, you can see who is swimming naked. And I think some people are swimming naked and they will be firmed up.

Okay. One more question, please, before I get back into the line related to the energy bill. Can you kind of give the granularity how much energy cost you had in 2025 in absolute terms?

I hand over to Franz Hiesinger.

It's below EUR 270 million.

We are moving on to the next question. The next line is Cole Hathorn from Jefferies.

Peter, I'd just like to follow up on how you think the market might play out with the disruptions that we've got ongoing in the Middle East. I mean the last time we saw disruptions like this, we saw supply chains extend procurement managers wanting safety stock. I'm just wondering, it might be too early, but have you seen any kind of pickup in orders? Or have you seen any kind of change in how your customers are managing their supply chain? -- is the first question.

And then secondly, on how you're thinking about the energy shock. I know you talk about 30% to 50% of your business being hedged from a gas perspective. But I'd like to understand how you think the cost curve develops in the recycled cartonboard or the white line chipboard space. In containerboard, it's much easier for me to say that the cost curve really steepens as some people have made more energy investments than others. But the recycled cartonboard side is -- it looks flatter when you look at the industry provided cost curve. So I'm just wondering how do you think the cost curve steepens with the high energy prices? And how is -- not positioned?

Yes. Thank you. So these are very difficult questions. So the customer reaction, we haven't seen anything which we saw in the Ukraine, but maybe it's too early. But so far, there is neither panic nor anything else. We will see some price increases or even limited surcharges have been announced in the industry, and we will see now how the customers react to that and what it means. But overall, it's very calm, but it's probably also because it's early days. On the cost curve, my guess is that the cost curve would also become steeper because, I mean, I take our WLC mills, we've invested quite a lot in energy. And we would expect that we benefit from that now in terms of we've lowered our specific energy consumption, as you will see in our annual report.

So it was again minus 3% on a like-for-like basis. So less energy and we've changed the mix and with much less 11% less CO2 and this is a consequence of, amongst others, the Fit-For-Future project and very specific CapEx, which we have done over the last years. And that should benefit us and make the cost curve steeper compared to competitors in the WLC market, to my knowledge, have hardly invested anything over the last years.

And then maybe following up on the cost curve. On the virgin cartonboard side, just a little bit of color of how your business is performing there because we do have finished wood costs going down, which should help the old Kotkamills. I'd just like a little bit of color on how costs are developing for your Finnish assets and then in Poland as well.

Yes. So in Poland, wood costs are rather flat. So I mean, they are lower than in the Nordics, but the gap might narrow. In Kotka, so we have, on one hand, wood costs, which have come definitely down, which is positive for us. The other product, so to say, the other product factor is pulp. So we make our own CTMP, and we may have our own pulp mill for the saturating kraft paper, but we buy the pulp for FBB. And there, we expect a rather stable to increasing trend over next months.

And then just the final one is we talked about the cost curve steepening in the recycled side, but there are also some unintegrated virgin cartonboard producers. And with higher energy costs, I imagine that pushes them further into the red. And I'm just wondering where do you see most likely that we see capacity rationalization? Is it on the recycled side or the virgin side?

I would expect it in both areas by around mid of the year autumn. That's already what I said a year ago. It's just a gut feeling. People need -- obviously, some manager need the pressure for some time to go on until they do anything. And I think that's now what the time will come.

[Operator Instructions]

We are moving on to the next question. There is a follow-up from Markus Remis, ODDO BHF.

A few more from my side. Firstly, on -- a few more from my side, if I may. Turning to the packaging side. We saw volume declines both in the food and in the pharma segment, 2% to 3% stripping out. Do you see any scope of a kind of demand stabilization in the current year? So what would be like the most likely scenario from your point of view?

Yes. So first of all, great thanks to get the question also on packaging because it's quite important for us, but everyone obviously focus on the more volatile board and paper. I think there are different aspects to consider. So I start with the pharma packaging. In pharma, as you know, we took over a real turnaround case when we acquired Essentra. And so we are still -- and I hope this year is indeed the last one in the phase. So the pharma has, on the one hand side, a very stable long-term business with developed together with your customer, you are in from day 1, and it takes years until the product is launched and then you get a contract and you deliver whatever 50%, 80%, 100% whatever it is. And that's a very long-term business and a very good business, but requires a lot of upfront investment. And then you have also a highly competitive short-term business, which is with very mature products where we have basically annual tenders and it boils down more or less to the price. And we are consistently phasing out negative business.

So some of it was even contribution margin negative. So we have underlying the numbers, you see overall 2 trends. We have a nicely growing business, and I alluded to GLP-1 business, et cetera, with really good growth rate, even sustainable at 10% or so. And then we have, on the other hand, this legacy business, which is no value-added just price-sensitive business. And this we can either reprice or we get out of it. And this -- I think this process will be mainly finished. It will still go on this year. And therefore, the overall growth is not really visible. But once this restructuring is done and we stay with the businesses which we like going forward, there will always be some commoditization of some businesses. So it's an ongoing process, but the big thing will be ended this year. And then we will -- we are -- we feel very confident that we will see growth.

With regards to food and premium, we have to a certain degree, a similar effect. So overall, the food market is a very flat market. There is nothing to make this sound better. And here, it's really about our product offering. And there, I think, again, our Fit-For-Future project, but also other initiatives we took. We are repositioning ourselves. We are especially focusing -- we focus more on midsized customers in order to generate growth. But the overall market in this segment will show also long-term and moderate growth. And obviously, in this environment, didn't show any growth at all. And you have always pleased also to compare some with the numbers we also divested some smaller businesses, which are also not restated. The restatement goes only for the group. So -- but we had a small decline in volumes in Food and Premium last year. We want to turn that positive, but it requires 2 things. One is our own efforts. And secondly, we needed the tailwinds from the market.

All right. And then a few more kind of bookkeeping questions, maybe more for Mr. Hiesinger. The EUR 70 million impairment in Board and Paper, can you shed some light which assets were impaired and why that was necessary now?

[indiscernible].

You look very hard to understand.

Sorry. It was for our Slovenian mill, Kolicevo for the amount of EUR 70.5 million. [indiscernible] And it was basically a review of our mid and long-term expectation of these assets.

Okay. And then if I may turn to the tax rate. I mean, it was low last year, high this year. What would be like a kind of normalized tax rate in the current shape of the group?

Side of the tax loss carried forward, which we have impaired following this asset impairment, it would have been 27%.

Okay. So that's something for modeling purposes we can imply going forward?

Will be -- it could be estimated about 25% in the long run.

Just maybe to add to this. So the storyline in '24 was that when we acquired the Essentra business, we didn't activate capitalized loss carryforwards because the business was just breakeven. And only when we saw that it's generating profit, we could activate it. And now the opposite happened that especially Kolicevo, but that wasn't the only one where we have lost carryforwards and giving our new cash flow projections. We cannot assume that we can use this loss carryforwards.

To add on this, the full difference of EUR 65 million compared to last year in our tax expense is related to capitalization versus release of loss carryforward.

That's very clear. In the last years, you've quite stepped up the factoring levels. So I'd be interested to get a sense of where you ended 2025. I think last year it was close to EUR 380 million.

Yes, it was EUR 377 million last year and -- sorry, in 2024. And in 2025, net EUR 337 million. If I say net, it means deducted by the incoming customer payments, which have already been factored. EUR 337 million.

Okay. And I guess the last one would be then on your capital allocation. Now with the new dividend policy, and I understand there are a couple of influencing factors. But when you talk about dividend continuity, should we assume that this EUR 2 level for '25 is kind of the base -- and that, yes, like going forward, there should be no declines being expected, but rather kind of this as an anchor dividend, so to say?

No, I mean the most important thing is obviously the net profit, and we can't forecast the net profit, but we wanted just to give a guidance of these 4 principles within this range, 40% or 60% and their continuity is one aspect to consider, but the others 3 are equally important that if we saw a downturn of the business or if we feel very stretched from a leverage point of view, then we might reduce it. But yes, one principle is to keep it as continuous as possible, but your expression was too strong. So it's not like we guarantee now EUR 2. I mean, especially, we also have to keep in mind that our -- with regards to our goodwill in Board and Paper, this is a fairly high amount. And at a certain point in time, it could be that we have to do their impairments for instance and also the dividend.

Okay. Right. And related to that, the buyback has been closed at the end of last year. Any appetite for kind of smaller buybacks going forward?

No, not for the time being. I mean the share price, so we're not commenting where we think it should be, but it is where it is, but it's not as -- so to say, the main driver was simply that the share price was, I would say, ridiculously low at that point in time and we took advantage of it. And -- but generally now, given all the geopolitical uncertainties, we don't think it's the right money to be spent for the time being that can change.

At the moment, there are a few more questions in coming. Another follow-up from Cole Hathorn, Jefferies.

You can ask any questions, but don't overstretch me in my crystal ball.

No, this is -- it's an interesting one because we've seen a lot of supply disruptions globally around the supply chain. And I'm just wondering, have you seen any product categories that are more challenging to get hold of, be it adhesives, inks or anything like that on kind of your supply side. So the one is supply uncertainty on products. And the second is, how do you think about your commercial strategy from here? Because it's very difficult in your position when you don't know what inflation is going to do to logistics, to chemicals, to inks, et cetera, how you price up your packaging? How are you thinking about the commercial kind of pricing side?

Yes. So on supply disruptions, we haven't seen anything yet. I'm not aware about any problems. I hope that there will be some supply disruptions from some Chinese competitors. That's what I would hope for. But joking aside. But so far, we haven't any problems. But we also have to say that with a fairly conservative policy of, let's call it, close sourcing, not that we don't buy also from other continents, but generally, we are more careful on that. And I think this will help us in this environment. On the commercial side for pricing, we've overall, after the experiences in 2022, changed our pricing policy in the sense that especially with regards to long-term contracts, which are fairly common in our packaging business that we typically have inflation clauses or at least speaking clauses or in some cases, also clauses which say that if certain effects have a bigger impact than XYZ that we can adjust prices or at least can talk about them and could terminate the contract.

We also have shortened the adaptation period to mainly every quarter. I mean there are very few exceptions to that. And so it was not unlike in the past where sometimes price clauses only took effect after 1 year or so. So it could, of course, if there were big price shocks, it could impact us for -- in worst case for 3 months.

But not much longer. So we are much better protected today from -- in terms of pass on clause, it works both ways, also if prices go down. But generally speaking, it has reduced the risk.

At the moment, there are no further questions. So that I'm closing the Q&A session and handing the floor back over to the host.

So thank you very much for your questions from the part of MM. I think they were all very interesting and very much to the current developments. And to close, I would once again ask Peter for a final sentence what you should take away from this conference call.

Yes. Thank you very much, Stephan. I think my main message is actually we did quite substantial CapEx in '23 -- '22, '23, '24. And that was disrupting for our business also because at the time you do this CapEx, you can't produce and then the start-ups don't always work as you like them. I see now more and more that we get into -- so we -- while others were eating, we were planting. And now we get into the phase where we can harvest these benefits. We have specific mills, which were really not in a great shape a number of years ago. And in this crisis, I think they would have been prime candidates for closure, and we have turned this -- and thanks to our investments into energy efficiency, et cetera, et cetera, we are in a good place.

So I think we are a company with a market-leading position with a highly experienced management team, very dedicated employees with a strong asset base. And now we have to turn this and FFF is one of the means to turn this into real results. But probably last year, we showed that in a really difficult market environment, we can deliver. And as things will move in our markets, I think we are in a very good place to benefit from any upturn, which will come. We don't know when, but it will come. And so I think the management looks with high confidence into our future. Thank you.

Welcome, everyone, and thank you for joining this announcement of our annual results. In '25, our adjusted operating profit increased by 3%, but practically more relevant on a pro forma basis like-for-like, excluding the divested TANN Group, by 15%, which is quite a strong performance in such a challenging market environment.

Our Food & Premium Packaging division managed to keep the adjusted operating margin at a very good and very solid level, while Pharma & Healthcare Packaging delivered an encouraging 25% increase in adjusted operating profit. And Board & Paper also showed a clear improvement compared to last year, although profitability is still not on a satisfactory level.

And the key driver behind this progress has been our group-wide Fit-For-Future program, which we have successfully accelerated throughout the year across all divisions. And working with our dedicated MM teams and supported by external expertise, we pursue a comprehensive set of initiatives targeting growth, procurement optimization, operational efficiency and structural improvements in sales and administration. So nothing is left undone.

Given the strong performance and the good progress of Fit-For-Future, our confidence has strengthened that by '27, we will achieve an earnings uplift of more than EUR 250 million compared with '24, excluding TANN and market effects. And this is well above our initial expectations of more than EUR 150 million at program launch, which I shared with you in the half year results. And already in '25, Fit-For-Future contributed about EUR 70 million to our adjusted operating result with Board & Paper benefiting the most.

And alongside these operational achievements, which are extremely important, we also have taken important strategic decisions. As I mentioned in the half year results, we executed the sale of the TANN Group, which is a logical step in sharpening our focus on our packaging core business and has strengthened our balance sheet.

In '25, we also carried out share buybacks that provided to be an efficient use of capital and a clear expression of our confidence in MM's long-term development. Furthermore, '25 included several one-off effects beyond the TANN divestiture, including the impairments of our -- in our Board & Paper division and site optimization measures in Pharma & Healthcare, all of that laying a strong foundation and the necessary consolidation for the future.

With regards to our balance sheet, we reduced net debt and net debt-to-EBITDA despite a very volatile environment and despite our continuation of a substantial modernization of our asset base in all our divisions. And Franz Hiesinger will give more details to this.

Reflecting our strengthened financial position and long-term confidence, we've revised our dividend policy. Instead of distributing around 1/3 of earnings over the long term, we now aim to distribute around half, so between 40% and 60% of annual net income, depending on other criterias like net debt, major planned investments, future prospects and our commitment to continuity.

Under this new policy, we will propose an increased dividend of EUR 2 per share to the forthcoming AGM, up from EUR 1.8 per share in the previous year, so an increase of 10% (sic) [ 11% ].

Sustainability has remained a top priority in '25. We have improved workplace safety again, reducing occupational accidents by a further 4%. And very important, we cut absolute CO2 emissions again strongly by 11% this year, and we increased energy efficiency across the group. Our efforts are widely recognized, including a AAA leadership rating from CDP for climate, forest and water, and a gold medal from EcoVadis.

Further progress will come this year from projects such as the new pulp digester in Kwidzyn, which will dramatically reduce energy consumption and CO2 emission. This will start up late this year and the installation of electric boilers at Kotkamills to start up in spring next year.

At this point, I would like to express my sincere thanks to our more than 13,000 employees worldwide. In a demanding environment, their dedication, creativity and teamwork have been essential to our progress and success. And a special recognition goes to everyone involved in managing the high additional demands arising from the implementation of our Fit-For-Future program.

And now I will hand over to our CFO, Franz Hiesinger, who will present the financial results for '25. And afterwards, I will return with the outlook.

Thank you, Peter. In '25, a year marked by persistent market challenges, we succeeded in strengthening our operational and financial performance. Our results reflect strict cost discipline, a sharper portfolio focus and the growing impact of our Fit-For-Future program.

Group sales amounted to EUR 3.9 billion, about 5% below previous year, mainly driven by the divestment of the TANN Group by mid-year. The adjusted operating profit increased about 3% to EUR 195 million, representing an operating margin of 5.0%, up from 4.7% the year before.

Adjusted EBITDA came in at EUR 418 million, corresponding to a margin of about 10.8% compared to 10.3% last year. On a pro forma basis, excluding the divested TANN business, adjusted operating profit increased by 15%, while adjusted EBITDA rose by almost 8%.

The reported operating profit includes one-off items of about EUR 26 million plus. This includes a gain of EUR 125 million from the sale of TANN Group, offset by a noncash impairment of assets of about EUR 70 million in the Board & Paper division as well as EUR 29 million in costs related to Fit-For-Future restructuring. A major part of this is related to the footprint optimization of Pharma & Healthcare in France and Spain.

Earnings before tax increased to EUR 146 million. Net profit amounted to EUR 77 million, influenced by significantly higher tax expense of EUR 65 million due to the reversal of loss carryforwards mainly in Board & Paper of EUR 35 million in '25, while in the previous year, in contrast, we capitalized EUR 30 million of loss carryforwards.

Across the divisions, earnings were mixed, but showed an encouraging overall direction, supported by our Fit-For-Future program. Food & Premium Packaging delivered EUR 1.54 billion in sales and maintained a strong adjusted operating margin of 10.2% with 9.3% pro forma restated for TANN, confirming the resilience of its business model.

Pharma & Healthcare Packaging generated sales of EUR 618 million and improved profitability to an adjusted margin of 6.0%, reflecting continued productivity gains. Board & Paper recorded stable sales of EUR 1.93 billion and achieved a slight positive adjusted operating result, an important improvement of more than EUR 20 million compared to the loss last year, driven by substantial cost savings and enhanced operational performance.

In 2025, we could strengthen our balance sheet substantially. The assets amounted to EUR 4.5 billion, down from EUR 4.9 billion in '24, reflecting a streamlined group structure. Equity remained stable at EUR 2.1 billion with a further improved equity ratio of 47%.

A strong achievement in 2025 was the further reduction of net debt. Net debt declined to EUR 914 million compared to EUR 1.08 billion the year before. As a result, our net debt-to-equity ratio improved to 43% and the net debt-to-EBITDA ratio declined to 2.2x compared to 2.6x in '24. These improvements underlines enhanced financial resilience and solid base of the group.

Cash of EUR 498 million at year-end and EUR 350 million in committed credit lines provides sufficient headroom for strategic flexibility. Operating cash flow was EUR 231 million. This is lower than the exceptional prior year level, which had benefited from a significant working capital release.

CapEx of EUR 233 million remained close to last year and focused on enhancing long-term competitiveness across all divisions. Based on the group's strengthened financial structure, the Management Board will propose an increased dividend of EUR 2.0 per share, in line with our updated dividend policy foreseeing a 40% to 60% payout ratio of net profit.

In summary, we enter 2026 with a stronger balance sheet, a more focused portfolio and a promising Fit-For-Future program, providing a solid base to capture long-term value creation opportunities. Thank you.

Thank you, Franz. Looking into the current year, the overall macroeconomic and industry environment will remain demanding and European consumer sentiment is expected to stay subdued. Overcapacities will continue for the time being. However, our management team and I am strongly convinced that MM will emerge from the current transformation with strengthened competitiveness and improved profitabilities across all 3 divisions.

And why is that? Because of our market leadership, our well-invested, low-cost asset base and the expected substantial contributions from the Fit-For-Future program. For '26, we plan disciplined strategic investments of around EUR 250 million. So we will continue to invest in order to strengthen our competitiveness to enhance our energy efficiency and to expand the share of renewable energy.

We will have, again, maintenance shutdowns in the Board & Paper division, mainly affecting Kwidzyn and Kotkamills, again, to be concentrated in the third and fourth quarter. Sustainability remains a central pillar of our value creation model with key priorities on decarbonization, energy reduction, water efficiency, biodiversity, waste reduction and the continuous enhancement of workplace safety.

Concerning the developments in the Middle East, we are closely monitoring the situation. Our 2 local packaging sites have been limited affected. And as we speak, gas prices have significantly moved up and depending on the length of time, this will affect our results.

Now summing up, despite ongoing headwinds, we remain confident. Our markets continue to offer attractive long-term potential. And as a strong team, we are committed to doing whatever it takes to advance the profitability of MM for the years to come. Thank you.

Welcome, everybody, to this Q&A podcast on the Mayr-Melnhof Group interim results for the first 3 quarters of 2025. I'm delighted to have the company's CEO, Peter Oswald, with me for some first-hand information.

Peter, could you please share with us your initial reflections on the Q3 results?

Yes, I'm pleased that our results for the first 3 quarters were significantly up against last year, which is quite rare in our industry in these days. The adjusted operating profit rose by 20% and pro forma, excluding TANN, even by 32%. And since there was no support from the market, this success is driven by our profit improvement program Fit-For-Future at two major mills. And given its success, we have launched Fit-For-Future in Q1, as we have already reported on a group-wide scale and have intensified the program now in Q3.

The ramp-up of the program has proven highly successful and shows strong potential beyond our original estimate of EUR 150 million, if we compare the [27] with the '24 results. We will report earning effects and progress alongside the '25 annual results in mid-March '26. The divestment of TANN completed in the second quarter significantly boosted this year's group reported profit through a one-off gain of preliminary around EUR 127 million. Having exited the tipping paper business at a time of record profitability, these strategic moves allows us to concentrate on our core business of consumer packaging.

Could you briefly describe the Q3 earnings situation across the divisions?

Yes, with pleasure. Overall, our adjusted operating profit in Q3 was flat compared to Q3 last year, but significantly up on a like-for-like basis, excluding the divested TANN Group. If we look now specifically to our divisions. Food & Premium Packaging profit was down due to the TANN divestment, but flat on a like-for-like basis. And in our two other divisions, Pharma & Healthcare Packaging and Board & Paper, adjusted operating profit was well up compared to Q3 of last year. Board & Paper was obviously impacted by maintenance shutdowns.

Since overcapacities in the European board industry are currently a major topic, how do you assess the situation from today's perspective?

Let's start with the good news. The good news is that closures in cartonboard announced earlier this year have really happened. However, the disappointing news is that companies with high exposure to the U.S. market hesitate to make the necessary capacity adjustment and instead try to shift some of their volumes to Europe, adding further pressure alongside additional capacity within Europe and rising import competition from Asia and South America.

Obviously, I believe they will not succeed in getting more volume, but will just incur more losses. That's why we believe that the market environment will remain challenging until decision makers recognize the need for more substantial capacity reductions. But based on industry experience or my own personal experience, this process tends to be slow. But operating at just 70% to 90% capacity utilization in a low price environment, that some mills in the industry currently do, is simply not sustainable in the long run. So I expect further announcement of closures in the first half of '26.

How would you describe the current market's environment regarding demand and input costs and what improvements are underway at MM?

Yes. On the demand side, we continue to see no signs of recovery. This affects both large end markets like food and specialties such as beauty. Due to the weak demand situation, many input prices are also showing a rather flat or even declining development. So at the end of the day, it's really about self-help and investing into the future. So if we go division by division, in Food & Premium, we are investing in our packaging site in Romania to enable flexible and highly efficient onboarding of new business.

In Pharma, we will add capacity in the U.S. to meet the growing demand of our customers. Whilst our targeted packaging side optimizations in France and Spain will lower our cost base. In Board & Paper, our big CapEx project for a new digester in Kwidzyn is well underway and is planned to be completed end of '26. It will significantly reduce our energy costs and CO2 emissions. And this will boost Kwidzyn's cost leadership in virgin cartonboard even further and materially improve our cost competitiveness in Uncoated Fine Paper, Packaging Kraft Paper and Market Pulp.

Do you anticipate any restructuring that could still impact this year or next?

No. For this year, no further restructurings are planned. As for next year, we will do whatever it takes to improve our long-term profitability, but no decisions have yet been taken.

And finally, how do you plan to position MM going forward?

Yes. My clear priority, and the clear priority of the Board is to sustainably strengthen MM's competitiveness and earnings power, as a market leader, pursuing cost, technology and innovation leadership. The Fit-For-Future program will help us to get through another difficult year '26 and be the foundation for future profitable growth of MM from '27 onwards. Overall, we have an attractive product portfolio in consumer packaging. This is combined with a very invested low-cost asset base. We enjoy a solid balance sheet and all this will serve as a solid foundation for an attractive long-term growth.

Thank you, Peter, very much for this interview.

Hello, everyone, and a warm welcome to the [ OTRAN Air ] Conference. My name is Sarah, and I will be your host for today's roundtable of the Mayr-Melnhof Karton AG, short say MM Group. And I'm delighted to welcome the Head of Investor Relations and Corporate Communications, Stephan Sweerts-Sporck, who will give us some insights just in a moment.

And with no further ado, Stephan, I hand over to you.

Thank you, Sarah. Hello, and still good morning to everybody. I'm delighted to present the Mayr-Melnhof short MM Group to you in the following half an hour. It's our first time we are joining the Airtime, but in fact, Mayr-Melnhof is a very much grounded business. It's about basic products, which you know very much from your daily life.

The Mayr-Melnhof Group is made of 3 divisions, but basically around the same destination. We are producing consumer goods, and we are organized in 3 divisions. One is doing the printing of consumer goods, which you know from the supermarket. So when you buy your cereals, when you buy sweets, when you buy detergents, all these things could be made by Mayr-Melnhof and hopefully are made by Mayr-Melnhof.

So we are printers of consumer goods. We have a specialization also here since 2022 in Pharma and Healthcare Packaging because this is a dedicated business for this industry. But we are not only printing cartonboard and packaging, we are also producing cartonboard. So we are also focusing on the production of cartonboard and paper and especially, I would say, cartonboard from recycling and virgin fiber cartonboard.

From our geography, the Mayr-Melnhof Group is quite a European business. When you look here on the split of our geographies, about 80% of our business is located in Europe. Why? Basically, transport costs and the proximity to our customers. However, we do have some business in the Americas. This is particularly our pharmaceutical business where we produce in the U.S. for the U.S. and we do have some business even, I would say, emerging markets and outside of Europe, Middle East and even as far as Vietnam.

Just a short word to the U.S. business. We hardly sell products from Europe to the U.S. Most of our business in the U.S. we produce locally. When you look on the map, you see a number of dots. You see that first of all, the red dots, these are our food and premium packaging plants, mainly dominating in Europe. The black dots also in the U.S. and the fair blue dots, these are our big cartonboard mills, which are all operating from Europe.

We service about 4,000 customers and sell our products worldwide in close to 130 countries. When we look on the split of the business, where -- how much sales we do in the different segments, where do we get our results from, perhaps a first figure, the Mayr-Melnhof Group is about EUR 4 billion million business. And this EUR 4 billion is split about 40% in Board and Paper and an equal size in the packaging of Food and Premium and about 15% in the Pharma and Healthcare business.

When it comes to the current state of earnings, we see that the big bread and butter today we earn in the packaging areas in the Food and Premium and the Pharma field and to a lesser extent, in Board and Paper. I will explain to you why is this the reason, but certainly, we have to have the ambition to get the Board and Paper business on equal terms again with the Food and Premium Packaging business.

The company is quoted for more than 30 years on the stock exchange, and we have a core shareholder, roughly 60% by the Mayr-Melnhof family and descendants of this family, the family hasn't been in the management of the company for, I would say, 4 generations. We have 4 CEOs in the past 70 years. That might not be a big number, but ever tell you, well, we are a traditional governed company, some family members are represented on our Supervisory Board and authorize bigger M&A transactions as well as appointment of management and big CapEx projects to put in a nutshell.

When we go to an integration of this business because you see, well, we're producing cartonboard, we are producing the packaging out of cartonboard. It's always of interest, how does that fit together? Do you supply all the cartonboard internally? No, since the cartonboard and paper division is much bigger than our packaging operations, about only 15% of the output, which goes internally to our packaging operation. For those, it's about 40% of their sourcing.

Why not more? Well, it depends often on the final customer who decides from where the raw material should be sourced or even these customers have direct contracts with other cartonboard and paper producers around Mayr-Melnhof. So we are -- don't get always, I would say, both the cartonboard and the packaging. And we also produce quite a lot of packaging in the high-grade area where our cartonboard is -- I would say we have a very good cartonboard, but we are not in the premium segment of cartonboard, and this can be sourced only externally.

So far, this answer, when we give a first summary, Mayr-Melnhof is a global leader in fiber-based consumer packaging. So it's really, I would say, what people consume on an everyday basis when you go to the supermarket, when you go to the drugstore, when you go to a construction market, do-it-yourself market, you find all -- everything which is packed in cartonboard could be a product of Mayr-Melnhof. What we are not doing, we are not in the corrugated area, which is [indiscernible] pulp. This is a separate industry with a different technology and different market as well as suppliers.

We are internationally based with a focus on Europe, consumer goods for food, premium, pharma, trusted by brand name. So a lot of our business is with branded products. However, in the past years, since people -- let's say, consumption has been traded down, inflation, purchasing power has come down, also a lot of private labels, retail brands are serviced and supplied by Mayr-Melnhof. We have the vertical integration, which I explained to you and very much important also the ESG profile not as just to do it.

It's really an advantage, I would say, in our -- for our product that it is renewable, and it is recyclable. So there is a good future for this product, replacing plastic gradually, I would say, in the current state where everybody looks at cost. Sometimes plastic is still the cheaper solution. However, I would say the more sustainable and the more we get regulations in supporting sustainability, the more gradual or the more our product is getting induced in packaging consumption.

What is the investment story of Mayr-Melnhof? I think very important when you invest in Mayr-Melnhof, you invest in a market leader. And for us, and I'm almost 30 years with this company, 3 decades, cost leadership, technological leadership and innovation has been a foundation for our development through many years. And this is also, I would say, the way to the future because we are in a market which is continuously consolidating. We have enough supply or even an oversupply currently in Europe since the break of the Russian market, for instance, and since also the consumption levels have come down to some extent. So consolidation is in the hands of those who manage their cost and their technology best.

We have been growing organically and through acquisitions. The last big acquisitions were in 2021 and 2022. And since then, I would say we are looking forward to keep up a solid financial grounding. Sustainability in the operations and in the strategy, important for, I would say, for the development of the business, and it's a very long-term orientated story with the core shareholder base, but also with a very seasoned management team who know the business for, I would say, decades.

If we look shortly in the past, what has happened in the past 5 years because that's important for the current understanding of our, I would say, status currently, we have invested in the growing markets of virgin fiber cartonboard and pharma packaging in '21 and '22. We almost doubled our sales, doubled the size of the group.

We have divested small businesses, which were too small to be, I would say, getting the necessary economies of scales, which required too much CapEx with a too low return. And we have been exiting noncore business, and I would say, prominent business, which we sold this year was TANN. This business was printing on cigarette filters. So it was not producing the paper. It was just doing the graphic works for cigarette filters, and this was sold this year.

We invested, however, also in, I would say, in our asset base in particular '22, '23 with a focused efficiency, quality, sustainability and innovation. So Mayr-Melnhof is currently, I would say, and you will see that when I show you the CapEx graph in a well-invested status, requiring, I would say, a decent and limited ongoing CapEx.

The circular packaging is very much on work, I would say, when we look into the past, but also in the next years. So we are fulfilling everything, I would say, what the packaging waste regulation on the European scale is looking for, which, I would say, renewable and recyclable packaging and particularly all the CapEx went into optimization also in processes and the digitalization and automation of our business.

So these past 5 years grew the business when you look on the bar chart, you see, well, we have been a EUR 2 billion business, now we are about EUR 4 billion sales business. However, profitability has halved in the past 2 years. Why is this the case? It was particularly, I would say, the function of the overcapacity in the Board and Paper business, and we are currently working hard to get back this business. So I think that's the promise, that's the strategy to bring that back on old levels.

The CapEx, I told you, this was somehow a sharp activity in '22 and '23. And now we are back at the level of about 5% to 6% of our sales.

How did we finance our expansion or, let's say, the doubling of sales? It was by taking out Schuldscheindarlehen, it was by loans. We have since then -- since 2021 when we took out the loan, been reducing constantly, our second loan for the next acquisition to '21, '22 were the big acquisitions. And since then, we have been gradually reducing this debt. This debt was raised at a very, I would say, comparatively low interest rate. Our current average interest rate on this debt is below 2% and 80% of the debt is on a fixed interest base.

The equity ratio, I would consider still quite solid with about 40% plus. What is not mentioned here on the slide is the net debt-to-EBITDA ratio, which is currently at 2.5, which we feel, I would say, okay. But at the end of the day, we would like to have an even lower gearing in our company looking forward.

What are the challenges this year and beyond? I think the big challenge is getting back earnings levels, focusing on cash generation. This focus is not a new focus. We have already had that very much emphasized in the past year. So particularly both in paper, you will see that we have come back into a positive earnings range, but this is still not enough. That's why we have launched the Fit for Future program, which comprises projects around, let's say, across the whole group, not just Board and Paper. And this should bring more than EUR 150 million EBITDA as a structural EBITDA increase by 2027. So I think that's the promise. And this would also -- if -- and this is, I would say, the promise without market effects. And if that gets done, I would say we can recover substantially on our earnings situation.

The investment in share of sustainability and renewable energy would be, I would say, a further perspective, where can we get return -- a short-term return, a good return on investment in our industry that's particularly focusing on the energy side of the business.

Where would we be growing? I would say, if you ask me today, not in cartonboard because we have grown that. That's more kind of a consolidating part of the business. But for instance, in Pharma Packaging, there is still good headroom for further expansion.

And last but not least, the company at Mayr-Melnhof, we have been always growing and consolidating. So it's not always 2 steps ahead and 1 step back, but I would say, growth always accompanied by structural optimizations. That's how we create competitiveness and a solid earnings position over the years.

Our highlights from the first half year, well, that's already passed us, and we have, from the calendar already passed the third quarter. The first quarter we released at the beginning of November. But I would say the basic message was that we had a group-wide -- that we had a profit increase compared to the previous year by almost 29%. But on the level, still, I would say, from the Board and Paper division from a negative to a positive operating profit.

So it's improvement, but I would say, not enough and therefore, the cross group or group-wide improvement program. We sold TANN, so for -- with a gain of around EUR 127 billion. So when you look on the net profit, it's very much up compared to last year, but that's why we have the adjusted figures, which give you the real, I would say, operational business development, which also improved.

We see that the market stays soft. Well, look around, I would say, economies in Europe as they are and consumers are saving. But I would say we have a resilient, stable business, however, quite competitive. So it's our first interest to keep market share and look on the profit line as well. And in the second half year, there will be some maintenance work, which will filter into the P&L, as we said.

A short -- very short view on our P&L, just showing you with the red signs, the improvement of operating profit, operating margin, and I would say the terms where we came on our CapEx figure, we guided that CapEx will be below EUR 250 million for this year.

When we have a -- to round up -- in the roundup, look at the development in our 3 divisions. First, MM Food and Premium Packaging. When you see -- look here on the left-hand side, you see sales development throughout the past several quarters. It's quite a stable business to say so. It's stable on the top line, it's stable on the profit line and the margin, I would say it's a superior margin in the overall industry, yielding 8.5%, 9%.

And to keep that, it's already, I would say, a big exercise because who is on the other side on the table of this business, it's big multinational consumer goods producers, it's big retail chain. And in times as they are today, everybody is, I would say, saving. And so cost leadership and cost optimization projects are here on the agenda to keep up this business as solid as it is.

Second, Pharma and Healthcare Packaging. This business, which we acquired in '22 was a breakeven business with a perspective to turn around this business for 4 years. So we are now in year 3. And when you see well with this business is a profitable business. It's a stable business. However, last year was seeing, I would say, an emptying of the supply chain. We are back. We see a recovery in the demand of this business. We see a recovery or had an improvement in the profitability of this business. However, not yet at the levels where we think it should be after, I would say, a full implementation of our productivity increase measures and also, I would say, the sales development of this business. In the long run, this should be equal to our Food and Premium Packaging business with a yield of about 8%, 9% operating margin. So there is much headroom still left here.

And last but not least, I have a look on the Board and Paper division. You see, well, this business has also been stable from the sales point of view. However, we saw, I would say, the situation that cost and it was energy cost, it was utilization, capacity utilization, which was historically high in the 90s has come down to the mid-80 level at Mayr-Melnhof.

Now we are back at the, I would say, higher 80 level, but still the pricing power is quite weak due to the overcapacity. And on the other hand, the demand side in an overcapacity, you see, well, the utilization is important to run this business because cartonboard is a 24/7 business. And in order to run it, I would say, at an operating margin of 7%, 8%, you should be running more than 90% in the operations.

So here, we are, I would say, focusing on cost reductions. We are focusing on market share. And we ourselves have been very, I would say, reluctive in capacity expansion. However, apart from, I would say, the breakoff of the Russian market, the reduction of the consumption in Europe, we see still saw some Scandinavian capacities increasing because their idea was that in the midterm or short term even plastic would be to a much higher degree replaced by cartonboard.

But unfortunately, this did not happen. And so we are in a situation that we have an overcapacity of more than 20% in Europe, which has to be digested. And I would say, here, it's important as at the beginning mentioned to be a cost leader in this business because cost leadership is the decisive factor. And we would say Mayr-Melnhof operations are all in the upper half of cost competitiveness.

When we go to a final slide with the outlook, I would say, we don't see much of a change in the current market situation. It's continuing to be a challenging market environment, I would say, more a flattish development. We don't experience a sudden decline in the market. The inventory levels are on the normal, I would say, normal size. Very much important for us enhance competitiveness by this -- and contributing to the competitiveness and earnings side by our Fit for Future program.

This is not a very short-term program. I would say it's a program over 18 months, which has been kicked off, I would say, in these days, but we recently, and we will further comment on the results and on the progress of this program over the -- I would say, at least a quarter, half, annually. And I would say the first insight, a substantial insight we might give you with the release of our '25 full year results.

For the short term, we just highlighted that we have our annual maintenance in Q3 and Q4, so the Board and Paper figures will be impacted by this annual maintenance, which is more or less done by now.

I think summing up for Mayr-Melnhof, you see that it's a basic business. Mayr-Melnhof is a market leader in this business. We have always strived for cost leadership. We are here to stay in this business and do everything we can in order to improve the profitability of this business as early as possible. However, in the near term, when you think in months, we do not see or foresee a particular change of the overall consumption demand situation.

Thank you for listening. It was a pleasure having you here. And I think Sarah can now enter into our Q&A session, which is open.

Absolutely. Thank you so much, Stephan, for presenting the MM Group to us. I guess we get a really detailed impression of what MM Group is doing.

So ladies and gentlemen, we're now open for your questions, if you may have. So if you would like to speak directly to Stephan, just raise up your hand. And if you prefer to submit your question in our Q&A session, you're more than welcome to do that as well. And we will read the questions up for you. So let me take a briefly look. By now, we have no virtual hand, but received a question in the chat.

So Stephan, from which resources do you intend to generate the more than EUR 150 million profit improvement within your Fit for Future program?

Well, that's a key question we get in these days because EUR 150 million, it's not doubling our operating profit, but it's quite a substantial step up. I think we have -- it's not the first project, I would say, centering on improvement in a scale because we did, I would say, 3 projects with our sites in newer sites, newly and recently acquired sites in Poland and in Finland.

And I would say, practically speaking, most of the savings or improvement we get from operations; second, from the purchasing, procurement; third, from SG&A. So it's more the administrative part. And last but not least, from sales. So I think these are the 4 resources and in the ranking of the resources. And that's what we can say from the current experience and also from the current stage of the project. But the more we proceed, I would say, the more precise we can be explaining what's behind and where -- from which resources we draw this improvement.

All right. So let's have a quiet look in the queue. But everybody seems to be a more interested listener than asking questions. So...

No problem.

But we have another written question. So is there any major reconstructuring to be expected?

Restructuring, as I told you, is a constant -- a constant activity at Mayr-Melnhof with a constant duty to consolidate and restructure where necessary because we are a business in which you have to always concentrate on scaling up your business. And even from the past acquisitions, I would say, we acquired more than 20 plants producing Pharma and Healthcare Packaging. We have closed, I think, now 2 of them and another one is now in discussion. So I would say the ongoing restructuring is also on the agenda now, but not, I would say, in a massive or highly recognizable level.

And from the current perspective, any major restructuring is also not foreseeable. But I would say we are still in our projects, also the FFF project. We might see something like that, but I would say it's too early. We think that our competitive position is good enough to sustain the current weather situation in the markets. And I would say, closing a business currently would just benefit perhaps the less competitive competitor. And therefore, we stay with our business, but I would say, in an industry as ours, you never can rule out more pronounced restructurings to be seen in the future time.

Thank you. And in the meantime, we received another question. So how do ESG guidelines influence investment decisions or the product portfolio?

I think ESG guidelines, yes, because we made commitments in ESG. I did not show them in the presentation. But when you go through our annual report, you see that we have hard commitments on CO2 emissions. We have water consumption. We have, I would say, renewables from in our sourcing, biodiversity, et cetera. So these are criteria to which we committed ourselves.

And when I -- when you just remind -- recapture what I said, well, what is our perspective in investment? Well, it's a reduction of energy consumption. It's an increase of the efficiency of our energy. And we have, I would say, that's the main focus of -- in our CapEx pipeline currently.

So I would say ESG is influencing our business when it comes to CapEx, but also on a day-to-day basis because our customers who are branded products producers who have to see what they are sourcing responsibly produced products. Well, here, our -- let's say, the evidence that we have to show is a bit of a high, high importance. So sustainability is part of our everyday business.

Thank you so much. Another written question. Which specific milestones and levers will contribute the most to the bigger EUR 150 million Fit for Future program by 2027, e.g. cost blocks, plans, procurements, network optimization?

I would say it's the plants. It's the operations and the procurement. These are the 2 major contributors from today's perspective.

All right. And the next question is concerning the CapEx 2025. You mentioned around EUR 300 million initially, but recently guided below [ EUR 20 million, EUR 150 million ]. Which projects are being reduced or postponed without harming your market position?

Okay. Well, I think we have not postponed any project, which will harm our -- I would say, market position or I would say it's more, I would say, those projects, which were perhaps looking for more positive market development and had an expansionary effect. These were postponed or reduced.

We have now a strong focus on all those projects supporting us on the cost side. And as you have seen, we invested a lot, I would say, in the past years. So the company is well invested. We have a good asset base. And with these reductions, we do not -- I would say, we do not inhibit any potential of development for the company.

All right. And now the investors are hot. So we received another question.

That's good. Keep on asking.

Here. So following the TANN proceeds or TANN, what is your target leverage, net debt-to-EBITDA? And how will you prioritize between deleveraging dividends recently plus 20% to 1.80 and selective M&A?

Okay. I think it's all about the cash situation and the cash flow situation. I think from the leverage or net debt-to-EBITDA, 2.5 is good if we can go below, we will -- we can do. We have, I would say, generated funds from the divestment of TANN and prioritize here the reduction of debt. On the other hand, we are a family, I would say, have a family key shareholder in our company and families usually like dividends.

So the dividend will also be of a prime importance looking forward, but also, I would say, in line with the profit development. Mayr-Melnhof has always, I would say, followed a payout policy to pay out about 1/3 of our net income and I would say, be more on the dynamic side, if possible. The dividend will always be decided when we've got the final figures. So it's a bit too early to speak now about dividends, but the principle is to pay out the dividend and to pay out 1/3 of the net income.

When we look forward to M&As or further growth, I told you we are positive about it in principle. But I think, first of all, we have a priority in getting the profit situation in a direction, which is, I would say, back to normal or at least a feasible size. On the other hand, if something comes by, let's say, small and medium transaction, we would look at it.

And from the focus, I told you, particularly in the pharma area, we see space for more, I would say, for more market concentration, some spots which geographically, which we have not filled so far. So there is also a yes for, I would say, medium -- small and medium-sized M&A activity in the time forward, perhaps not in the next quarters, but I would say, looking into the next 1, 2 years.

All right. Thank you so much. The next question has North America bought Essentra Pharma, developed independent growth targets? And how do you secure raw materials, energy and talent in that region?

That's a good question because -- and I can say, yes, we have growth targets not just for the whole Pharma and Healthcare division, but also for its regional presence and I can say that the U.S. is the fastest-growing and best-performing part of our Pharma and Healthcare division so far. So that's good news.

We are positive about it and allocate, I would say, resources to the development of this area independently and the sourcing works mostly locally there. So we are not depending, I would say, from -- on imports, and that's important that, I would say, we have an independent situation in North America.

Thank you so much. So with a view to the queue and the chat, it seems by now there are no further questions. So dear participants, if there's still anything you would like to know or ask Stephan, just give us a short sign. Otherwise, I guess we're good in time.

So with this, we will come to the end of today's roundtable. So thank you, everyone, for joining and your shown interest in the MM Group. And also a big thank you to you, Stephan. It was a pleasure to hosting this roundtable together with you. So from my side, thank you very much. And some final remarks, Stephan, from your side.

Yes, I would say this was just a brief introduction or summary of the current state of our company. You're always invited to drop me a mail or call me if you have a particular interest, if you have a suggestion, if you want to engage more. So I'm here to help you to guide you through the company, to answer your questions. And so it's just a hello and it would be a pleasure to continue to stay in contact with you.

Thank you very much.