Welcome, ladies and gentlemen, to this audio webcast interview of MM Group interim results for the first 3 quarters of 2021 with the company's CEO, Peter Oswald.

Peter, having just taken MM into a new dimension with the acquisitions of the Kwidzyn Mill and Kotkamills, What's your summary findings now 3 months after the closing of these transactions.

Now first of all, I'm really happy that we could make this transformational change, and it all happened in one go. With the acquisitions of Kwidzyn and Kotkamills and the simultaneous divestment of the smaller Baiersbronn and the Eerbeek mills, MM has structurally significantly strengthened its competitiveness. We've moved to stay up into the European Champions League of our industry, and we've now created an attractive platform for further growth in sustainable and innovative fiber-based packaging. And especially grids in offers considerable growth and development potential for the next decade. On the results, Q3 has seen a capital gain on the divestment of Eerbeek and Baiersbronn of about €50 million, which was partly offset by one-off acquisition costs, including transaction taxes and post acquisition accounting. And on the other hand, planned annual downtime for maintenance in Kotkamills and Kwidzyn was weighing on Q3 trading. Overall, we see a great market response and demand for our increased offer in virgin fiber cartonboard as well as for the 2 newly acquired core businesses of kraft papers and uncoated fine papers. Ongoing operations are in line with expectations with a very high order book. Integration is moving on smoothly and swiftly with numerous synergies and improvements at hand to benefit MM in the short and long term.

Trading this year has been particularly impacted by a massive unprecedented increase in prices for raw materials and energy. How have you been handling this exceptional situation? And what are your plans going forward?

Now, let's start with the good news. All our efforts to pass on costs have been backed by strong market demand in both divisions since the beginning of the year. So yes, we can pass on these costs. And the main reasons for this demand boost are the replenishment of the supply chain and securing volume in the light of sharply increased delivery times. At the same time, we have, however, been facing sharply increasing cost inflation of all our input factors like fibers, energy, chemicals, packaging and transport. And in the cartonboard business, the price increases implemented in the first 9 months have not yet been able to offset the accelerating rising costs. And that's why MM Board and Paper increased prices for the fourth quarter. And this time, we saw energy pricing storing at an unexpected -- to an unexpected level. And so again, we have to announce further -- or we have announced further price increases for cartonboard as well as for papers for the beginning of 2020. So -- this however, means now looking at our whole group that MM Packaging will face this rising cartonboard prices, especially with the beginning of next year and on top of a number of other cost increases like energy, transport and chemicals. And so we can only pass on these increases with a certain time lag.

Fibers and energy are the most important input factors for your both and paper business. What is your view on the forthcoming development of those costs? And then how far can you hedge against increases?

Yes. With regards to pulp and recovered paper and energy, so mainly gas and also electricity, there was an unparalleled search this year. And we see now that pulp and recovered paper is moving sideways, but also not dropping at this time. And energy is so volatile that basically, I cannot make any predictions where they are going. And so what we try to do is to -- and what we have done historically is to partially hedge our exposure. But short term, there is no other option than to pass on the costs as with this possible to our customers, unfortunately. And obviously, medium term, we have to structurally lower our costs to increase our competitiveness.

Consistency and steadiness in the supply chain has become a major topic for many industries this year. How do you cope with these issues at MM? And do you experience any significant disturbance in Europe supply chain, perhaps even causing a threat to production?

Yes, I mean, as you say, it has become a daily tragic to get all supply and transport capacities we need and partly we don't get them. So we fortunately have long-term partnerships, and they do help us, but prices are rising sharply across the board, and the situation varies from country to country. Overall, we have so far been able to avoid major disruptions in the supply chain and in production, but there were already compromises. So we do the utmost in flexibility to keep it that way, even sometimes to the detriment of efficiency. But occasionally, some delays cannot be avoided.

At the beginning of this year, you guided on intensified investments in growth and efficiency projects for several sites of MM Board and Paper and MM Packaging. Consequentially, annual CapEx should rise to €250 million to €300 million in '21 and '22. After 3 quarters this year, CapEx has been up in line with your forecast. How are these projects proceeding? And will you be able to keep the time frame in costing despite current lags in supplier capacities and price hikes?

All in all, we are well on track. Due to Cowi, we experienced some delays and due to cost inflation, some increases, but in -- both are not really material. So from a cash out perspective, and due to some additional projects, we have the elevated CapEx of €250 million to €300 million is likely to continue in 2022 -- 2023.

Your growth part this year has been also accompanied by the closure of a packaging plant in Germany, resulting in one-off expenses of about €26 million in Q2. What was the strategic rationale behind? And are there any further consolidation measures to be expected?

Yes. The business of this segment, the packaging plant, was in -- was declining. And so -- and on top of it, we service many customers in overseas markets from Germany, which didn't really make sense. So I think this was a very specific situation, but still we are constantly under pressure to become more efficient. That's what our customers want. And therefore, to do the one or the other adjustments will be necessary also going forward.

Joining recently the global business ambition for 1.5-degree sells this initiative and then commit to setting science-based targets for net 0 emissions by 2050. Was this move a paradigm shift for the company?

Yes and no. I mean, one thing is MM has always been strongly rooted in sustainability. So it's nothing new. There was always the policy that both in terms of environmental and social aspects, we have to be sustainable. But on the other hand, since I became CEO, we understand sustainability much more in a scientific and more transparent basis. And in this way, there is a change, and we have put sustainability at the core of our strategy at MM. And so our major contribution to a more sustainable planet earth and to a well-working circular economy is plastic substitution. And in addition, the reduction of greenhouse gas emissions to mitigate climate change is an integrated and integral part of our strategy.

And finally, after 3 quarters of this year, what guidance can you provide for the fourth quarter and perhaps even beyond?

The good news is that we expect demand and the order situation to continue in good shape for both divisions. In our division, MM Board and Paper, profitability in Q4 will be impacted by the extraordinary energy price increases and the delayed pass-through in selling prices. And our objective for the remains of this year and '22 are very clear. So first is to compensate for the continuing cost price through price adjustments and structural cost reductions to reestablish our margins; second, grow our packaging volumes due to investments and finally, realized synergies from our 2 acquisitions.

Peter, thank you very much for this interview.