Earnings Transcript for SPPJY - Q1 Fiscal Year 2021

Steve Binnie: Thank you, operator, and thanks, everyone, for joining us today. I'll go through the investor presentation. And as always, I'll call out page numbers as I move through the deck. And starting on Slide 3, the highlights for the quarter. Well, first and foremost, it's important to point out that COVID still continues to have an impact on our business, and we have comprehensive action plans in place. We have seen significant absenteeism, but we've been able to keep operations going and manage our way through the crisis. The profitability in all segments exceeded our expectations from the last quarter, so I'm pleased to say that. We did say in our previous outlook statement that earnings would be slightly below the prior quarter of $82 million, and they came in much better. We did see progressive improvement as we move through the months of the quarter. We experienced encouraging growth in packaging and specialities relative to last year, in particular, in the North American region and as you know, a couple of years back, we converted the Somerset PM1 machine, and that's been very successful for us, and we continue to grow in that area. Dissolving pulp markets improved considerably, and I'll talk a little bit more about that later. But market prices in that three-month period were up $106 a ton. But obviously, subsequent to that have improved further in today's pricing, as we said in our announcement, is [895]. So a substantial improvement over $250 in the last four months or so. Graphic paper did have a gradual recovery for the quarter, 19% down on the prior year. And as you know, at its worst, it was about 50%, and we've gradually been improving month-on-month. So, I'm pleased to say that; however, there are still areas where we have challenges. And in particular, in Europe, our coated mechanical business, which is the one that's most exposed to digital products under significant pressure. And we saw a slower recovery in some of our export markets. Also during the quarter, we issued the five-year convertible bonds, and that significantly improved our liquidity situation. So, we're pleased that we've got that behind us. The numbers themselves, as I say, EBITDA of $98 million, well up on the prior quarter. And I should point out, and you'll see it from a few slides later, we did have a movement of the Ngodwana Mill shut, which is a big mill, and that did impact profitability in the quarter and then specifically in the packaging space. So overall, we were pleased with the outcome and certainly better than we had expected. Moving to Slide 4. The earnings bridge from last year to this year, Q1, and as you would expect, sales volumes down, mainly, obviously, in the graphics area. And I talked about that already, and we will go into more detail. And then pricing was similarly under pressure. Obviously, initially dissolving pulp, but as things started to improve towards the end of the quarter, we obviously got improvement. But in the quarter as a whole compared to the prior year, it was lower. And then graphics and packaging, the paper businesses were down on a year ago, and that's as a consequence of lower historical pulp prices. And we know that's turned now and as we announced in the price – in the results announcement, we have been announcing selling price increases. So, we hope to reverse that trend, but it did have a negative impact during the quarter. The – some great work done on the costs and savings across all the regions. And you can see the benefits flowing through that – from that, giving us the EBITDA for the quarter of [98 million], which whilst it was better than we expected, we recognized that it's still down on a year ago when it was pre-COVID. And clearly, that shortfall relates to principally the recovery of the graphics, which is still short of prior year volumes and dissolving pulp prices were still low. And we would expect that to grow as we go forward. Slide 5 has the product contribution split. This is an LTM basis. And it really just emphasizes over the course of the last 12 months through COVID, how well our packaging business has done. It's been resilient, and it's – and it justifies the investments that we've made in that area. The graphics, obviously, less but as the volumes continue to pick up and in time, we realize the selling price increases, the profitability of the contribution will increase. And similarly, dissolving pulp with the substantially higher selling prices, we would expect that contribution to grow as we go forward. Slide 6 has the volumes and margins, EBITDA margins by segment. And the – firstly, graphics, and as you would expect, substantial decline in our Q3 and a gradual recovery thereafter, obviously plateauing a little bit in the first quarter, and that's mainly in Europe, and as a result of the renewed lockdowns associated with COVID and its impact on demand for graphic paper. The packaging and specialties. The reason you can see it's held up very well through the last year. Margin is good. The reason the margin is down on the prior quarter is purely linked to the Ngodwana shut. And obviously, in the prior year, that was in a different quarter. The dissolving pulp once again, Q3 was the worst of 2020. And as demand and as pricing starts to pick up, we've seen an improvement, and we would continue to that – expect that to be the case. The Q1 volumes are lower than Q4 of last year, principally because of shipping challenges. Many of you will know about the global challenges and vessels and being able to book space on vessels, delays in shipping because of the rebound and containers and ships in the wrong locations. And that's had a knock-on effect on many businesses, including ourselves. We see that as a timing thing, and it will continue to affect us in the second quarter. But ultimately, we are confident that we'll sell all the tons. Slide 7 has the evolution of our net debt-to-EBITDA and the leverage ratio. And obviously, as the quarters linked to COVID get included in the calculation, our leverage ratio will go up. I do believe that as we go forward and the EBITDA continues to improve and we drop those weaker quarters, if you look in the top right-hand box, you can see that we're carrying some significantly weaker quarters, Q3 of 2020 at 26 million in Q4, 82 million. Once those profits normalize, which we would expect to do as we progress then the leverage ratio will come down quite significantly. Slide 8 has our maturity profile, and I think I'm pleased with how this is unfolded. Obviously, we've issued the convertible bonds, and that's reflected in the 2026 number, the 123 million that you see there. The other change from last time is in the 2024 period. We have, you see a 267 million that relates to our securitization. Very pleased to say that we've renegotiated that and extended it out to 2024. So, a lot of great work being done in this area, and our profile continues to improve. The next material maturity is our 2023 bonds. That's the 499 million that you see reflected there or is included in that number. And obviously, as we get closer to maturity, we will monitor that and make a decision on what we will do next. Slide 20, sorry, Slide 9 has our CapEx. The current year's CapEx is now estimated at 400 million, it's not a change from the prior quarter. We did talk about 370 million, I think, in the last quarter. The only reason it's gone up is exchange rates because some of our CapEx is denominated in Euros and Rands in South Africa. And when you convert that back to dollars, it affects the numbers. So, it's no change in the underlying currencies. The big discretionary item in the CapEx number, as I've talked about previously, is the Saiccor dissolving pulp expansion. And that is – whilst it has been impacted by COVID, and as you would expect, there's been absenteeism and lockdowns. The project is on track, and we are confident that it can commence production in the fourth quarter. Turning to the regions. And firstly, on Europe, on Slide 11, overall, graphic paper markets were challenging. I've talked about this already. Obviously, Europe was particularly hard hit by the so-called second wave of COVID and fairly harsh lockdowns in a number of key countries for us

Operator: Thank you very much sir. [Operator Instructions] The first question comes from Alexander Berglund of Bank of America.

Alexander Berglund: Thank you very much. Hope you're all doing well. Three quick questions, I hope, from my side. First of all, on DWP and thinking about the sustainability of the high prices or the sharp increase in prices we have seen. And specifically, there, if we should expect any kind of swing capacity moving back into DWP because it seems like the spread this has become quite elevated now. Second question is just if you can remind us of your current short position in paper pulp? And then my third and final question is just if you can give a bit more color on the dynamics for the graphic paper price hike. If this is more a function of a tighter market, given capacity closures or is it more just a kind of cost push effort given the increase in paper pulp? Thank you.

Steve Binnie: Thanks, Alexander. On the DP pricing and the sustainability thereof. And clearly, prices have run hard, and consistent with what we've told you in the past, I don't think those prices will be there in the long-term. But I do think there is a short to medium-term opportunity because of all the positive factors. I think the further recovery and the demand for clothing and related tax will further support the prices. And also, we've obviously got the lag impact on our contractual business. So, I do think for the next few quarters, we are going to get benefited from that. I don't think any of us have ever said that we believe that prices will stay at $895 on a longer-term basis. I would expect them to come back down into the low $800s in time. But at the moment, we obviously maximize the opportunity that's there for us. The paper pulp – your second question on paper pulp – oh, sorry, you had a second part to your first question, on swing capacity. I think what's going to help us is that paper pulp prices are now running hard as well. And you're right that at the moment, pricing is starting to favor dissolving pulp, but paper pulp prices are running really, really hard, and you will have seen those numbers. So that will help underpin current pricing levels. On an annual basis, we approximately buy approximately about 1.1 million tons in Europe and about 200,000 tons in the U.S. of paper pulp from external sources.

Alexander Berglund: Yes. And on graphic paper?

Steve Binnie: Well, that's across graphic paper and the packaging segment. That's in total.

Alexander Berglund: No, sorry. I was just – my third question on the graphic paper pricing...

Steve Binnie: Yes, coming to that. Yes. Look, I mean, primarily it's driven obviously by higher costs. We do expect those paper pulp prices to rise. And we feel we need to pass this on to in the form of higher selling prices for our paper. The market balance has improved particularly in North America, but primarily driven by higher costs.

Alexander Berglund: Okay. And if I can just follow-up on the last one there. How much of the graphic paper markets you operate in are integrated into paper pulp? So approximately how much of capacity has to have their own pulp supply because I guess that could also impact kind of the shape of the cost curve given these increased pulp prices now?

Steve Binnie: I don't have that number with me now, Alexander. Mike, if you're on the line, I don't know if you have a feel of the exact numbers in the North American market. What's integrated and what's not?

Mike Haws: Yes. I'm sorry, Steve, I do not have that information. It would be a guess on my part.

Steve Binnie: Yes. Alexander, we can take that offline and we can give you the specific number.

Alexander Berglund: Okay, thank you very much. Appreciate it.

Operator: The next question comes from Brian Morgan of RMB Morgan Stanley.

Brian Morgan: Hi guys. Thanks very much. Can we chat a little bit more about DWP? Specifically, where do you think value chain inventories are at producer level, at customer level, at end customer level? What do you think that picture looks like? Is there a lot more restocking that needs to happen? Is it going to take another 3 months? Is it going to take 6 months? What's your feel for that?

Steve Binnie: I'll let Mohamed elaborate. But at the moment, VSF, despite everything that's happened and the recovery that you've seen, VSF inventories are still at historical lows. I think the last number I saw was 8 days. And traditionally, it's been significantly higher. Mohamed, do you want to comment on further downstream inventory levels?

Mohamed Mansoor: Yes. Steve, just on the VSF inventory, you're quite right in that, it is now at a historically low levels at around 8 days of supply. This is in China. And this is the part of the business where there is a lot of visibility in terms of inventory. What we have also seen is that a long-term trend for VSF industry, just to put that 8 days in perspective, is about 17 days. And if you go back a few months, it was as high as 44, 45 days. So, it's come down significantly. And the good thing about what has happened over the last couple of months is that although the inventory has come down very significantly, operating rates have also managed to stay high at about 82%, 84%. And that's largely because VSF, I think, has got a – did get a big kick in terms of additional demand coming from the ban effectively on imported – or cotton being exported into the U.S., which is now [barred]. In terms of further downstream, what we have seen if you go beyond the VSF producer to the yarn producer, inventory levels have started to increase, but it has come off a relatively low base. But a big part of what we're seeing now is seasonally a normal behavior. We're going into Chinese New Year. People do buy higher levels of stock so that they can operate through the Chinese New Year. So, inventory levels, they are high, but they are one step beyond that the – which is the fabric producer, their inventory levels have now come down. Again, it's more anecdotal, so there's no real absolute data. But that part of the chain has also seen a drop in inventory. So, I think coming out of Chinese New Year, we should see a fairly stable view in terms of viscose pricing and demand for DP.

Brian Morgan: Can we go further up the value chain back to DP? What sense do you get from your customers in terms of their stocking levels? Are they running short? Or are they got just about enough?

Mohamed Mansoor: Well, let me answer the question this way that right now, I think, in China, a big part of what's holding back the operating rates, even though the operating rates are very high, is the fact that there's not enough dissolving pulp. As you may recall, because of the challenges from COVID, a lot of capacity was taken out. A lot of it was temporarily taken out. And as a result, many of those suppliers basically reduced their inventory, sold out of inventory. And now as the prices are picking up, there's some of them have started, not all. In China, it's only 1 mill that has restarted producing dissolving pulp. So the pipeline on the dissolving pulp side, I would say, is also very, very low.

Brian Morgan: Thanks very much.

Operator: Thank you. The next question comes from Lars Kjellberg of Crédit Suisse.

Lars Kjellberg: Thank you. I just want to stay with dissolving wood pulp a bit, and maybe if you can talk a bit about the shipping challenges? And I understand, of course, there is a physical shortage of containers itself. What are you seeing in costs? And how much do you believe generally speaking, the commodity prices, specifically then paper pulps and potentially dissolving pulp price increases that are really driven by sort of essentially shipping shortages and inability to get the product to where the demand is? If you have any thoughts about that, that would be interesting.

Steve Binnie: Yes. I mean, obviously, firstly, the shipping challenges are representing a significant challenge, trying to find vessels and getting space on vessels, and because of the higher pricing, that there are ships that are sailing empty and moving to different locations, and it does make it challenging for us particularly down here in South Africa to get space on those ships. So they are representing very significant challenges, but it's not unique to South Africa. As you know, it's across the globe, in U.S., Europe, all over the place. In terms of the cost, they have risen dramatically. And I'm sure you've seen the rise in prices, but in terms of its contribution to the total cost, it's still relatively low. So the selling price increases that you've seen have been less linked specifically to the increased freight costs, but I do believe that the challenges in moving the product has contributed to the shortfall that you have seen in pulp at some of the viscose producers.

Lars Kjellberg: When you're talking about paper pulp, of course, as you mentioned, you are a material buyer, so 1.3 million tons, which makes you one of the bigger buyers out there. How do you view the current super strong rally in the light of pure end products, they're not in great demand, right? So it's a bit of a tough thing to digest, I suppose. But are you – what is your sense? Is this fundamentally driven or is it something else that is driving prices higher? And in your discussions with your suppliers, are they serious about this or do they have a view like yourself on dissolving wood pulp to say, listen, there's a bit of a pop here now and that things will come down again? And how should we – how do you argue when you're looking at your own pulp cost? And, of course, how you go back to your customers with your pulp based discussion for price increases? How should we think about this?

Steve Binnie: Yes. Look, Lars, and you've been in this industry a long time. You know when these pulp prices run, they run hard. And they get legs and they have momentum. And at the moment, the momentum is with pulp producers. And we – in terms of our paper business, we can try to negotiate the pricing, but the momentum is out there. I do think that the shipping challenges that we referred to earlier is contributing to that. And the demand for pulp in China is huge, and that economy is obviously, despite all the challenges of COVID, has rebounded nicely. So the momentum is there. And whilst we – whilst we'll do our best, and with the volumes we buy, the momentum is there. We are – we have announced those selling price increases, and we're serious about them. We do want to implement them. We do know that because of COVID and the kind of shortfall in demand, it does make it more challenging, but we do believe that the demand for graphic paper will recover as we – as lockdowns are eased further. I'd point you – from experience, I'll point you back 2 or 3 years when pulp prices ran hard, that we were able to execute on a series of selling price increases at that time. And in fact, was actually the time when our European business made the maximum profits, highest profits. So, we've done it before, and we're serious about implementing it again. Berry, I don't know anything you want to add because it obviously mainly affects our European business.

Berry Wiersum: Yes. I think that there is a driver from two sides. The cost drive is very high, but it's also true that the wood free assets are pretty well filled. So the order intake is very strong as well. It's stronger than the invoicing. So there is some momentum now getting into the moves for price rise. And we noticed that customers are taking it very seriously. So we're pretty optimistic it's going to work.

Lars Kjellberg: Final question for me. The oxygen deficit, as you talked about in Ngodwana, did I get this right that you talked about a production loss of around 25,000 tons? Is that what you put out in your prepared remarks?

Steve Binnie: Yes, that's correct. Yes, we've been out for, Alex, about 4 weeks now. And we – you want to talk to?

Alexander van Coller Thiel: Yes. And Yes, I mean it's more of a transport – oxygen transport capacity issue. We, as Steve said, we've been out for about 4 weeks. So, it's going to be around about 20,000, 25,000 tons. And we're optimistic that we'll be restarting within a week or so. We actually are securing oxygen volumes, but we obviously have to restock levels before we can start.

Lars Kjellberg: And this relates to what product? Again, was that specifically packaging or...?

Alexander van Coller Thiel: It's dissolving…

Lars Kjellberg: Dissolving wood pulp. Okay. Got it. All right. Thank you.

Operator: The next question comes from Wade Napier of Avior Capital Markets.

Wade Napier: Hi guys. Thanks for the call. Couple of questions from my side. During the pandemic, we obviously had some viscose producers taking downtime. Do you have a sense of how much downtime was taken? And what sort of – how much of that – those producers who took downtime are now coming back online to capitalize on higher viscose prices? And then a second question for me is regarding how you sort of acknowledged that DWP prices may revert back to low $800s and how you want to sort of capitalize on sort of current – the current pop in prices. But like how do you go about that? Because, I mean, you guys are sort of – your DWP operating rates are fairly low. I mean, you're sort of running on an annualized rates of like 1 million tons to 1.2 million tons off of a nameplate capacity of closer to 1.5 million tons. Do you have a path to sort of really capitalize on these current higher prices? Or that just push the whole market out of balance? And then maybe a final question on the graphic paper side. I mean, I see the demand recovery has been quite encouraging in Europe. Have you sort of fully benefited from the capacity closures from the likes of Stora Enso or do you think that there's still a little bit of those volumes to come through in the next quarter or so? Those are my questions.

Steve Binnie: Yes. Okay. On the first one, and I'll let Mohamed expand a little bit further. But obviously, we look at the operating rates and specifically in China. And you heard earlier, Mohamed referred to viscose rates running operating rates of about 80%, 82%. I think Mohamed, at its lows, it was down at 50%, 60%, wasn't that?

Mohamed Mansoor: That is correct, Steve, yes, closer to 60%.

Steve Binnie: Yes. So you can see that, that gives an indication of how much capacity did come out temporarily. And you see the recovery happening there. Specifically on dissolving pulp, when you refer to the capacities, I mean, first and foremost, let's say, take South Africa. We are fully sold out, and we can't make enough tons. So there is no problem with selling those volumes. And obviously, we were temporarily impacted because we shut the calcium line at Saiccor. And obviously, that was all linked to COVID. But as we look forward, we are confident to sell all those tons. In North America, which is the biggest part of your shortfall in the numbers that you shared with us, it's to do with the swing capacity at Cloquet. And when pulp prices – when dissolving pulp prices were as low as they were, it made more sense for us to make paper pulp. Obviously, the situation is improving, but we have certain commitments. And – but the benefit we have from a swing mill is that we can move between the two grades. Pricing at the moment is starting to favor dissolving pulp much more. But you can't just move in and out because you have certain commitments to buy pulp and sell volumes and so on. That's the main reason for the shortfall. To your question, you said, how can we capitalize on dissolving pulp pricing? Obviously, we're producing full out. We'll complete the Saiccor expansion, and that will give us extra tons as well. And then if we see opportunities in – at Cloquet to make more tons, we will do that as well. But we are fully sold out in South Africa. The – in terms of the graphic paper demand, Berry, do you want to – and you talked about capacity coming out, we are benefiting, and the market is more in balance, and Berry talked about the fact that coated woodfree is – within Europe itself is actually improving and continues to be improved. But Berry, you maybe want to talk specifically about those opportunities that's being created.

Berry Wiersum: Yes, Steve. In terms of the capacity going out of the business, in the coated woodfree side, it has gone out now the capacity that was announced. And we would say that the effects, the sort of aftereffects of stock sales are probably almost done. So, we think that's kind of more or less finished. And what we see is an increase in the operating rate of the industry, our own with it. So from that perspective, operating rates of coated woodfree are in the area of sub 90%. So, this is really quite encouraging and gives some momentum into a price rise. For mechanical coating, there's still some capacity to come out. The [SCA] plant is still running. We don't know when exactly that's coming out. But that will also have some impact on the capacity utilization there, we believe those – the capacity utilization there is somewhat lower.

Wade Napier: Great. Thanks a lot guys.

Operator: Thank you. The next question comes from Ross Krige of JPMorgan.

Ross Krige: Hi everyone. It's Ross speaking. Just one follow-up on that last question, firstly, on the European coated woodfree market, sorry, just to clarify, you're saying that operating rates are now in the 90s. So, if we see further sequential demand recovery, you actually expect the operating rates to shift kind of towards the mid-90s. Is that correct? And maybe linked to that, it sounds like you guys are extremely confident of the European price hikes going through. I mean is this, as far as you're concerned, a done deal? Or is there still some risk if the demand decline that you saw in January sequentially gets worse? I'll maybe pause there first and then ask my second after that.

Steve Binnie: Okay. Berry, I'll let you talk about the price hikes and the confidence. I mean, obviously, it's a process that we're going through. Operating rates, and I'll – once again, I'll allow Berry to elaborate further. But they're not in the 90% yet, but what Berry referred to is that they are improving. Obviously, you saw coated woodfree in the quarter, down about 20%. And January has been a little bit weaker than that. So that has impacted on operating rates. But Berry, in terms of potential improvements, I'll hand over to you.

Berry Wiersum: Yes, Steve, the operating rates in the October, November period of time, they were around about 90% in coated woodfree. They did drop in January, but we do expect them to come back. And the January 1 is, I think, to do with two things

Ross Krige: Perfect. Thanks Berry, thanks Steve. Just one more question for me, if that's okay. Just on the Saiccor project, if you can just give some thoughts on what you think – what sort of returns do you think that project will ultimately generate? So, maybe just remind me of the actual expansion CapEx spent there? And then based on whatever, I guess, pricing and cost assumptions you have in your own expectations or budget, what ultimate return on capital you expect from that, including the impact of, I guess, better fixed cost absorption throughout the rest of the mill?

Steve Binnie: Yes. Look, at the time we did the project, we assumed a dissolving pulp price in the low $800s. The IRRs specifically on that project were in the teens, and that's based on all the fundamentals that are out there. We continue to believe that we can make those returns. Costs have been a little bit more, and we did talk about that on the last quarter. But Alex, I think we're about – in dollar terms, we're about what's that about [20]...?

Alexander van Coller Thiel: Yes, $20 million to $30 million.

Steve Binnie: $20 million to $30 million more than the original cost.

Alexander van Coller Thiel: And from a variable cost perspective, the project should drop the cost base of the total mill by $20 to $30.

Ross Krige : Perfect. Thanks guys.

Operator: Thank you. The next question comes from Mikael Doepel of UBS.

Mikael Doepel: Thank you. So, coming back firstly on the DWP markets and just to get a bit of a clarification there, I mean given the pricing that we see now, I'm a bit puzzled not to see more of the closed Chinese capacity coming back and not to see more of the swing capacity, moving back from paper grade pulp. But would you say that in both cases here, it's more a question about timing? Or are there any other dynamics at play, which you think might lead to this capacity not really coming back to the extent that you would assume?

Steve Binnie: Yes. I think on swing capacity, as we've referred to earlier, paper pulp prices are now starting to run hard as well. And I do think some of the existing producers on paper pulp have certain contractual commitments. So, there could be a time lag, but we do believe that paper pulp prices, the gap between paper and dissolving pulp will get back to where they were in balance. Mohamed, in terms of the Chinese, we've – obviously, we've got the 1 producer back in dissolving pulp, your thoughts on the others?

Mohamed Mansoor: Steve, yes, what I would add to what you've said is that a lot of the Chinese dissolving pulp production relies very heavily on imported wood chips. And a lot of the wood chips historically has come from Australia. So one, there is definitely a timing issue in order to get the chips. And two, right now, there's been – or there's a lot of tension between China and Australia. And I don't think a lot of the Chinese producers want to import stuff from Australia if they can avoid it. The other thing is that you've got this waste ban in China, which went into effect from January 1 of this year. And that is also, I think, having an influence and that it's giving a lot of the Chinese pulp producers or swing mills more options. For example, we know that some producers are making now unbleached crop pulp to try and supplement the waste shortage. And also the softwood bleached pulp, at the moment, pricing is at a very good level. And I think there's also more interest to make that because they can make that softwood from chips outside of Australia.

Mikael Doepel: That's really helpful. Thank you very much for that clarification there. And then in terms – on a different topic, I was thinking about your overall cost outlook for the year. I mean, considering what we're seeing on pulp now, then you have your procurement savings. And I guess, a lot of other moving parts, I would assume. So it's hard to do an exact estimate there. But how should we think about your overall cost trending 2021, compared to 2020, up or down or flattish on aggregate?

Steve Binnie: Yes. I think the big – I mean there's a lot of great initiatives being done, and that's why we talk about those procurement savings. And I think a lot of that will offset other factors. But the big story I come back to is on paper pulp. And if we are buying 1.3 million tons for the year, obviously, we're now one quarter behind us. We've still got the three quarters to go. You are – the big story will be around that rise in paper pulp. And prices have increased quite significantly over the course of the last two months. So, based on that, that is likely to drive up the costs overall for the year. In other product – in other raw materials, all the regions are achieving savings. But it's clearly not going to be enough to offset pulp when you're buying over a million tons.

Mikael Doepel: That's understandable. That's clear. Thank you. And then just a final question. Again, on a separate topic I was thinking about your – sorry, about your specialty paper business. So, I was wondering if you could talk a bit about the dynamics there across the various segments, excluding containerboard and paperboard? What are the demand trends that you see there? Are there any supply additions? And what you expect in terms of pricing within this sub-segment, within the segment, if you will?

Steve Binnie: Yes. Yes. Obviously, you don't want me to talk about containerboard and paperboard, but those are doing well for us. In South Africa, the containerboard volumes are good and paperboard in North America continues to pick up and we see opportunities, and we're growing nicely in Europe as well. The more specialty segments linked to barrier, papers and the likes. I'll point you once again to the impact from COVID. There's certain categories that are doing extremely well, mainly in the food segment, but there are other categories that have been under pressure because they're more exposed to discretionary spend in terms of luxury goods and the likes. So a mixed performance, but overall, if you look at the segment, it's holding up pretty well. And as – once again, as the impact of COVID moves behind us, then we are confident that those categories that were under pressure due to COVID will bounce back. And we've got a lot of great work being done on barrier paper and technology and flex packaging. And all of those categories, we're confident that we can continue to grow.

Mikael Doepel: Great. That’s really clear. Thank you very much.

Operator: Thank you. Ladies and gentlemen, we have come to the end of the conference call. I'd now like to hand over back to Mr. Steve Binnie for some closing comments.

Steve Binnie: Thanks, operator. I just want to thank everybody for joining us on the call today, and we look forward to discussing our Q2 results in 3 months' time. Thank you very much.