Good day, and thank you for standing by. Welcome to the Sappi Q3 2025 Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Steve Binnie, CEO. Please go ahead.

Good day, everybody, and thanks for joining. As always, I'll go through the investor presentation, calling out page numbers as I move through. And just starting on Page 2, we've got the comments around forward-looking statements there for you to refer to. Page 3, just putting the quarter in context. Obviously, it's been a challenging quarter marked by ongoing global economic weakness, partially, obviously, driven by the tariffs and the trade tensions, but broader macroeconomic challenges as well. And that's had a significant impact on selling prices, particularly for us, obviously, dissolving pulp, which we saw substantially lower. But not only that, we've seen packaging grades in all our regions, packaging and specialty grades coming under a bit of pressure. And then specifically in Europe and export markets, graphic paper also coming under some selling price pressure. Europe, we've talked about in the past, Europe has never truly recovered from the COVID times, and that region continues to be challenged by broader macroeconomic weakness and at the same time, oversupply in many of the categories of paper. Internally, we obviously had the Somerset PM2 conversion, which was completed. You'll recall from our last investor call, we finished that at the end of May. It was obviously later, and we shared that with you at the time. It was later than we originally expected, which meant that up to the date of completion, which was essentially April, there was obviously no production, and that meant that there was a negative earnings impact of $22 million. Subsequent to that date, you had the natural ramp-up of the new machine. As expected, that starts at low levels and subsequently ramps up. And I'll talk a little bit more about that, but that's all as expected. The fact that there was delays in that early period of the quarter, that had some knock-on effects in terms of operational disruptions on the other assets of the mill, and obviously impacted on people as well. So that's to be expected. But as I say, things are ramping up from there. And we'll talk a little bit more about that as we move forward. So taking that all into account meant that we had EBITDA of about $80 million in the quarter relative to $148 million. Obviously, a little bit lower than the guidance we gave last quarter, but predominantly linked to the lower selling prices that I referred to. Moving to Page 4. Obviously, the lower profitability has caused us to -- combined with the investments that we've made, the strategic investments we've made, for that on -- primarily on Somerset PM2, has meant that our net debt levels have risen, obviously coinciding with the weak economic conditions. Same time, unfortunately, we had a negative translation on our euro debt. As you all know, the euro substantially strengthened against the dollar. And, obviously, that all happened at the same time. That caused our absolute net debt number to rise. You can see that the net debt to adjusted EBITDA ratio rose to 3.2x. From a covenant -- and I know we probably get questions on this. So just from a covenant perspective, the actual covenant net debt to adjusted EBITDA was only 2.9x. The reason for the difference is really that on the balance sheet, as you all know, the operating lease liabilities that gets included -- that's just over $100 million. That does not be accounted for covenant purposes. So with that all in mind, our strong focus on reducing debt now. Our strategic projects are behind us. Pleased to say that we've managed to pull back on the CapEx. Well, firstly, in the current year, we've got it back down to $500 million, which is what the guidance was that we gave you at the beginning of the year. We've eliminated any nonessential CapEx, obviously, primarily focused on maintenance. And we've been going through our budgeting process in the last few weeks. And as we look out to '26 and '27, also pleased to say that the CapEx numbers are going to be substantially less. '26 will be less -- we're aiming for it to be less than $300 million and obviously, similarly into '27. We've also made the decision not to declare a dividend in the current year. So all of those things combined, we believe will help as we focus on bringing our debt down. We want to get it back below $1 billion. Page 5 has the earnings bridge. And much of this I've talked about. This is from last year's Q3 to the current year's. You can see the Somerset impact, the 22 that I've referred to a couple of times. On the pricing front, I've already talked about as well, the lower prices coming through. And then on the variable costs, also a negative. Interestingly, some of the variable costs, the actual raw material costs themselves are less. But with that disruption that I referred to earlier, particularly at Somerset, it meant there was some usage -- negative usage variances, which impacted that and as part of that. So overall, that gives you the $80 million that I referred to. Slide 6 turns to the major categories of variable costs. Interestingly, in certain categories, the domestic amounts were less, but when you translated the euros and the rand back to dollars, you also had a negative impact there. Specifically pulp, actually, that was one of them. Turning to the other costs in Europe. We have seen wood costs and some of the chemical costs increasing, North America energy and South Africa across the board, a number of the categories. But altogether, about 5% up. Turning to Slide 7, which is our net debt evolution. And we shared quite a long history line here, and we felt that was important to -- as our debt levels have risen, we're now at the peak. And we felt it was important to put this in context of the history. Clearly, the jump to $1.9 billion is higher than even we expected. You've got $100-odd million of the currency translation with the stronger euro, which -- that didn't help. A little bit of bad luck there, but it didn't help. And then obviously, the CapEx coming through accounts for much of that increase. And we obviously declared the dividend earlier this year, right? We had to pay that in this year. So that won't be -- is obviously not going to be repeated in the next year. So you can see as you scan across the page, our debt levels have been higher before. And as I say, a strong focus now. Our strategic investments are behind us and now a strong focus to bringing that back down in the next 2 years. Turning to the maturity profile on Page 8. With the lower profitability that's come through and obviously, the CapEx that we've had, it's meant that the short-term debt has risen a little bit. Our focus at the moment is to -- we're in discussions to term some of that short- term debt, and we're confident that we can do it. That's a process that's underway and is being proactively managed. Other than that, nothing -- none of the major bonds are maturing anytime soon. So we are comfortable with our profile. And obviously, our primary focus at the moment is pushing out that short-term debt that I referred to. Slide 9 has the CapEx and cash flow. Obviously, this year, we've got the negative cash generation, which obviously primarily comes from the higher CapEx coming through. The same themes. Obviously, we declared the dividend with the lower profits, it meant that there is a cash utilization in the current year. The CapEx, as I said, reducing the current one to $500 million at the end of last quarter, we had $550 million. We've pulled that back and done a very close focus on our CapEx for the next 2 years. And as I say, we want to get that under $300 million, and we're confident to do that. Slide 10, linked to all this, we're very much focused on our disciplined capital allocation strategy, strong focus on getting the debt under $1 billion again. And clearly, from a profitability perspective, there's going to be -- there's no major projects coming. We need to ramp up on the label investment that we did at Gratkorn and then the SBS packaging conversion and expansion that we did at Somerset. And I'll touch on that a little bit more later as well. But all in all, our primary focus going forward is in the next few years is on cost management, discipline and reducing debt. Turning to the segments. And firstly, on pulp, which is Page 12. The current quarter, obviously, significantly impacted by the lower selling prices coming through. Pleased to say that it does look like it's bottomed and it started rising in the last couple of weeks. You can see the price here dropped to 8 -- actually, I think it dropped to $798, and it's now back at $810. And ultimately, we're confident that prices will recover to where they were previously based on the economic fundamentals. And as I said, already recovered to $810. So feeling better about that. And then we had an 18-month shut at Cloquet, which obviously impacted margins in that segment. We have a dissolving pulp line there as well. Then, turning to Page 13, a tough quarter on packaging, and it's probably best to think about it regionally. I mean, firstly, in Europe, well, I've already talked the fact that you have your broader macroeconomic challenges. And that's also magnified by the oversupply in many of the paper -- or many of the packaging paper categories. Some of the oversupply is obviously linked to the fact that the demand has been less than was expected, but there has been additional capacity coming through from competitors in different product groups. South Africa, actually, a pretty reasonable quarter. However, we were constrained by low inventories going into the quarter. If you recall, 3 months ago, when we talked, we had some downtime at Ngodwana. So we went into the quarter with low quarters -- low inventories. I'm pleased to say that demand has actually picked up nicely in the last -- towards the end of the quarter, and there's a very favorable outlook for citrus exports out of South Africa this year. So hopefully, we'll benefit from that. North America, obviously, the story is the Somerset PM2 [indiscernible] closed and wasn't there in April and then the subsequent commissioning. What it means -- and the one thing that you should all bear in mind, is that you have your fixed costs at the mill. And when the mill is not -- when a machine is not producing at full capacity, you still have to absorb those fixed costs. So that's partially what happens on PM2 in the early days when it's at relatively low production levels. But what it's very important to stress is that the ramp-up curve on PM2 is {indiscernible] as expected. Yes, we started only at the beginning of May, and that was later than originally planned. We talked about that at the end of last quarter, but very pleased to say that it's progressing as planned after the commencement date or the production date. Graphic papers, broadly, the market declines have been as expected. And in fact, we've -- in Europe, we've been able to grow market share, which is obviously pleasing. A lot of good work done there. The delayed start-up once again on PM2, as I said earlier, did cause some disruptions at the mill. And then you also have the added impact once again of the absorption costing of fixed costs. When PM2 is not operating or at relatively low levels, you do get an allocation of -- higher allocation of mill fixed costs to your remaining graphic assets. And you must always bear that in mind. So as PM2 ramps up further, that machine shares in a greater proportion of the overall mill fixed costs. Slide 15 is the regional numbers, and I don't intend on going through all the numbers on this page, but most of them are self- explanatory. And most of it I've talked about already, but maybe just at a very high level, obviously, Europe, challenged by the macroeconomic conditions, which has impacted on selling prices and volume. North America volumes, Somerset, PM2 linked. Then you've got -- and then in South Africa, on the containerboard side, low inventories to start the quarter, which impacted tonnes and selling prices what we've talked about, the impact on dissolving pulp. So that's at a very high level, what impacted each of the regions. And then moving to Slide 16. It's the same numbers. Obviously, graphically, you can see that. I don't intend repeating everything. You can see that, obviously, there was a lower profitability. But hopefully, you can hear from what I've described that there are reasons to be optimistic with the ramp-up on PM2, dissolving pulp prices recovering. We're looking to take out costs on -- in Europe. So all of those will help. Slide 17 has the THRIVE strategy. It's a slide you will be familiar with. We continue to use our strategy, our THRIVE priorities to guide us. Clearly, in a time like this when profits are a little bit less, our primary focus is going to be on operational excellence and that's maximizing production, maximizing or optimizing efficiencies, looking for cost opportunities. On the growth of the business, there's not going to be investments, but we're going to get extra tonnes coming through from Somerset in the quarters ahead. And then ultimately, all the good work that we're doing, or we're going to be doing, on the sustaining our financial health, which I've talked about already. We're being proactive, and I'm going to talk a little bit more about that. Slide 18 is the immediate priorities for us, and I've touched on some of these. The good news, when you don't have any major projects in a business like ours, a major manufacturing business, you can focus on optimizing production, getting things right and ultimately improving your usage at the mills, improving your costs. So that's going to be a strong focus. The tariffs, obviously, a moving target. We continue to assess. We -- where they do impact us directly, we look for opportunities to mitigate. A major priority is this commercial ramp-up of PM2 at Somerset. It's going well commercially. We're signing up customers. It's going as expected, both from a production side and the commercial side. Europe, it is tough. It is a tough environment, and we're being proactive. We've always been proactive about capacity utilization. We've made an announcement that we are in consultation to potentially close two of the smaller machines at Alfeld, that's an ongoing process, and we will hopefully conclude reasonably soon. And then we still got the ramp-up of Gratkorn, the label investment that we made a year or so ago. And once again, we -- despite the challenging conditions, we are excited about that. So, strong focus on cash generation. Then on the banking side, obviously, our leverage ratio has crept up a little bit. We have great relationships with our bank, long-term relationships. You can see from the debt slides that we've had -- we've had much higher levels of debt in the past. They understand our business. They understand the cyclicality. They know that we've made this investment at Somerset. So we are proactively managing with them to ensure that we've got maximum flexibility with regards to the covenants that we have. And we're confident that, that will be -- there won't be an issue there. The nonessential CapEx has been deferred, and I've touched on that a few times and obviously, no dividend. So turning to outlook and much of the fact I've talked about already, but just to recap on one or two things. DP prices started rising again. PM2 at Somerset ramping up as expected, looking to take up a little bit of capacity in Europe, proactively managing our costs. Turning to Page 21. Obviously, the tariffs, ensuring that we've got maximum flexibility and monitoring the situation. Strong capital allocation, debt reduction, #1 priority and taking all -- everything into account based on everything that we're seeing, we estimate that the adjusted EBITDA for Q4 will be above that of Q3. So operator, I've gone through the presentation. I'm now going to hand it back to you for questions.

[Operator Instructions] We will now take the first question from the line of Brian Morgan from RMB Morgan Stanley.

Steve, you spoke about you -- in discussions to term some of the short-term debt. Can we read that as basically a done deal? Have you basically done the hard jobs and it's just a matter of dotting the I's and crossing the T's now?

Look, Brian, you know that's an ongoing process. We've got good relationships with the banks. And it has to go through final approvals and all that stuff, but we are confident. Yes.

Okay. And then cash balances, $200 million, it's down to 2020 levels. Is there any potential to raise some cash as part of this as well?

That's part of the process, Brian. So we're looking at overall things. Obviously, I referred to the fact that the covenants, the short-term debt. So we're looking at it holistically and the engagements are good, and we're confident that those will be resolved.

Okay. And then, Steve, is the bond market open to you? Or is this just bank debt?

Brian, that's a hard question. I can't say too much. But theoretically, yes, that is an option as well.

Okay. And then just moving on to an operational question. You did quite a few 18-month shuts now over the last 6 months. Do we have a bit of a maintenance shut tailwind heading into 2026? Or are there still some big ones scheduled for then?

Yes. The good news is you don't have -- and I'm looking at Mike, we don't have a Cloquet shut next year. So that's a positive. We do have the Saiccor shut, which happens in Q1 --

You mean Somerset.

Sorry, what did I say? Sorry, I meant Somerset. And then Saiccor, it wasn't on an 18-month program. Greame, Saiccor is spread across the year, right?

Yeah, starts the second quarter.

And in Ngodwana?

Q3.

Q3 next year.

We will now take the next question from the line of James Twyman from Prescient.

Could I start off by just asking three questions around CapEx. So you cut CapEx by $40 million for this year. Can you just talk around what that was in terms of what was cut and whether that's just projects that are being delayed or things have been canceled? Secondly, would you say $300 million is your expectation? Or is that like a ceiling? It sounded a bit more like a ceiling from the way you were talking. And then thirdly, of that $300 million, how much would you say is environmental spending? It's historically been around $60 million, I think. I'm wondering whether that's -- where that is in that? That's my first load of questions.

Yes. What we cut, you always have kind of smaller projects that give cost-saving opportunities and the likes. We also regularly put in our budgets, and I think you know this, acquisitions of more forestry in South Africa and a little bit of the sustainability as well. So it's partially tied back to your last -- the third part of your question. So sustainability this year -- or going forward, we're estimating at about $20 million to $30 million. The -- what we tried to do, on the first part of your question, is any project that was not giving us paybacks of -- immediate paybacks, projects were giving 3- or 4-year paybacks, we decided to defer those a little bit, and that's why we reduced. And then similarly into next year as well. To your second question, yes, you can interpret the $300 million as a ceiling. So hopefully, less, is what I'm saying.

Yes. Okay. And then my follow-up, if I may, were, firstly, in terms of exporting to the U.S., I think you've decided to put your prices up, calling it a surcharge. Can you talk around that? Because obviously, if you're not really making money in Europe and then you have to sell at 15% lower prices, that's just not acceptable. So could you give us some idea about -- I don't know what you can say about the size of the surcharge and all of that? And then secondly, working capital, $148 million out so far this year. How much of that do you think you can get back in the fourth quarter? Because I know there's always a big move in that in the fourth quarter. And how much of that is the extra working capital that's needed for the PM2?

Yes. Yes. Okay. On the first one, and I'll let Marco elaborate a little bit further, but you're right. You hit the nail on the head. The European business can absorb that. And that's why we made the decision that we did. That's why we've gone out with the announcement. We're not the only ones that have done that. Maybe just from a practical perspective, Marco, you just want to elaborate further there?

Yes. I think, James, you're right. We have decided that this is just too big to absorb. That's not what the European business currently can afford. We are right now in the process of seeing how -- what the practicalities around these -- about the passing on of the tariffs and also what exactly the level should be. There's quite some intricacies that need to be covered. But ultimately, it is like a price increase. You need to see where you ultimately end, but the direction is very clear. We want to at least partially pass on some of the tariffs to the market.

Yes. Yes. And we can't absorb that, James. So we're not going to do it. So Marco and the team will work through this. But ultimately, we're not going to absorb it and ultimately pass it on. There may be a little bit of impact on volume, but that's a sensible decision to take. On the working capital, you're right, there has been an investment in the current year. PM2 is obviously ramping up. So we need to build up inventories. And that's obviously raw materials and ultimately finished goods that you're making. So there is a higher investment with that. But maybe, Glen, just if you want to just talk in broad terms? We can't give you a specific number.

I won't talk in specifics, but there will be a reversal of that outflow and it's going to be determined on the level of operations in September, the latter part of August into September. I can't give you more than that, James, but there will be a reduction.

Yes. I think what we're saying is there will be a reversal, but it's not going to be all of it, James, for the reasons that we described.

Okay. But on the surcharge, you haven't set into the market the size of that surcharge as yet. That's what you said, I think. Is that correct?

That's correct. Yes. It's very, very early days, James. But we set the direction and the concrete steps will be decided upon in the next couple of weeks.

And James, we're not the only ones, right? It's -- our competitors are doing it as well.

Well, some have got bigger problems in terms of exports to U.S. than you. So, yes, understood.

Indeed.

We will now take the next question from the line of Sean Ungerer from Chronux Research.

Just to follow on, on Europe, I guess just operationally, can you give us sort of any insights into the sort of current quarter, how order book is looking? Are we going to see any further tailwinds from lower pulp costs? Have you seen any step change in underlying demand? I mean just at face value, it seems like operating conditions are pretty tough, especially with a lot of sort of exports now being dumped into Europe. So I'm just trying to get a bit of a feel for what we should expect there.

Yes. I don't think you're going to see any material change in the short term from a trading perspective. It's kind of continuing as is. It's tough conditions. There's obviously excess capacity out there. The macro situation is not improving anytime soon. Obviously, we are taking action to take out fixed costs, but that you have to go through a process, as you know. So that wouldn't be felt immediately. So I don't think -- it's not getting markedly worse, but it's not getting markedly better either.

We will now take the next question from the line of James Perry from Citi.

Just on dissolving pulp, you referenced obviously the $10 price increase after reducing by about $100 this quarter. What makes you confident that we really have seen the bottom? Are you able to share any insights as to what you're been doing on the ground in China? Are you expecting momentum to actually pick up? Or is this just some restocking after the industry disruption, do you think?

Look, I don't think it's going to recover to $900 immediately. But if you look at what happened when the initial tariffs were announced and the consequential impact, things significantly quieted down. Subsequent to that, there was more activity. And ultimately, the sellers in the marketplace have been able to realize a higher price. When we make these comments that we think the price is going to recover further, at the end of the day, it's based on economic fundamentals. And the marginal cost per tonne in this business across the industry is over $900 a tonne. There are many suppliers out there that cannot operate or make losses in the low $800's. So we are seeing demand from our customers in that environment. And there's more activity than there was, say, a month or two ago, and that's helped. Mohammed, maybe if you want to add to what I'm saying. But -- so I think we're cautiously optimistic. Ultimately, in the medium term, we think it's going to get -- it is going to recover back above the $900. It's just a case of when. But maybe Mohammed, you can talk about some of the things you're encountering in the market at the moment.

Sure, Steve. Well, if I look at the drivers of demand for dissolving pulp, what we are seeing is an improvement. As you say, the activity levels have started to increase. And that's reflected by one higher VSF operating rates, that's gone up the last couple of weeks. We have seen a reduction in the VSF inventory held by the VSF producers as well as their customers. The yarn inventory levels are also improving. What we've also -- we are also going into a seasonally strong time. So that also is supporting increased activity. And also in China, what we have seen an increase in the exports of viscose fiber, which have hit a 30-month high. And that is just supporting the higher operating rates and that should support increased demand for dissolving wood pulp.

Yes. And that last point that Mohammed makes is quite an interesting one because obviously, most of the viscose that was manufactured in China would have been sold to domestic -- ultimately domestic manufacturers of clothing. Obviously, with all the -- everything that's been going on, what you're seeing now is the viscose producers in China are now exporting the raw viscose products to be manufactured in other countries into clothing.

Okay. That's really helpful. And on graphic paper, you said that Sappi has been increasing its market share. Would you be able to shed any light on the approximate size of those gains? And do you think it's one-off or you expecting consistent share gains in the coming quarters?

Hey, it's been progressive. We can't get too specific, you'll appreciate. But certainly, both on coated woodfree and coated mechanical, we've actually gained market share. And that's been progressively over the last 2 or 3 quarters, right?

Correct.

Marco, I don't know if there's anything you want to add?

No. And it's certainly not by big steps. It's a progressive development, but certainly pleasing to see over the last couple of quarters, yes.

Without giving you specific numbers, to put it in context, we're talking a few percentage points. We're not talking -- we're not talking double-digit type increases.

And maybe if I can, just -- yes, there is, on the mechanical coated side, we have seen some of the players checking out. In Germany, particularly. So yes, there's always a plan to capture some of that volume, which would be a one-off. But otherwise, it's very progressive and a steady development.

We will now take the next question from the line of Reinhardt van der Walt from Bank of America.

I just want to circle back to the conversation about the DWP market. So I appreciate the point that there are some sort of -- some signs of improving. But just looking on the capacity side, it sounds like [indiscernible] is looking to do some more dissolving pulp runs into the end of this year. Is there any signs that maybe the cost curve is flattening a little bit here and that we should be maybe thinking less about the $900 per tonne level and maybe thinking about something slightly lower than that as the marginal cost?

Yes. Look, when we look at the cost curve, we do take that into account. The [indiscernible] stuff that you referred to has already been in the market, right, in recent quarters.

If I can just add, Steve, the swing from [indiscernible] to dissolving wood pulp is required because their fiber plants in China are also starting at new capacity. So it's designed to feed the new [indiscernible] capacity that's starting up in China.

So it's being absorbed. So saying it a different way -- maybe said a different way, we don't come up against them in the market.

Yes, got it. Appreciate it. Maybe just on the operations side, can you just remind us what the fixed cost recovery of Somerset is going to look like over the next couple of quarters? And I mean, if possible, can you give us a sense of where EBITDA breakeven sits in terms of number of volumes?

Yes. What I would say to you is, the best way to think about it is in terms of volume. And we've said in the past that we always knew that Q3 was obviously the initial ramp-up. Obviously, it started later than we thought, but we knew that was the case. As we go into Q4 and we look at our production, we're still confident that production for the quarter will be at the levels where that machine was previously. Clearly, there are different dynamics at play with regards to selling prices. One with the graphic paper and the likes and now you've got packaging. But from a volume perspective, you are back at that volume. And then as we look into the next financial year, each quarter -- and again, this is consistent with what I've said previously, each quarter, the volumes progressively get better. And that's a natural ramp-up curve, both technically and commercially. So the Somerset mill will progressively get better. We're going to have the shut in Q1, which you have to take into account. The paper machine is still producing, but the pulp mill and the likes will be done. Mike, I don't know if there's anything more you wanted to add there.

I think you're spot on. I think the thing I would just remind everybody, we have a brand-new paper machine in a brand-new market. Now we're experienced in the market. Our commercial match for the grades matched our very first sheets that we brought to the market. So we're extremely pleased with the quality, and we're right on the ramp-up curve we intended to be on. And the ramp-up goes through '26, but it's steepest right now. So we'll see improvements through this quarter, and then it will gradually work up to the full rates over the course of '26.

Got it. That's very helpful. And can you maybe just give us a comment on export market conditions in the U.S. at the moment? It looks like pricing is relatively robust compared to containerboard.

Mike, do you want to go for it? Generally, yes?

So the prices on containerboard are more or less holding flat. We've seen some challenges as we've been bringing the market on, bringing the volume on with PM2, but yes, they're where we expected.

Yes. I think if you go back a step, we -- the markets that we're looking at on -- specifically in the SBS, the trend line has continued. The overall market growth. We're looking at about 1.5% to 2%. Pricing, obviously, there was a little bit of pressure that came prior to us completing PM2. And obviously, as we come to market, the competitors see that. and we can't say too much about that on a call like this. But broadly speaking, the markets -- we're confident of filling the machine as we ramp up. And the economics are holding up as we would expect.

{Operator Instructions] We will now take the next question from the line of Ephrem Ravi from Citigroup.

Most of my questions have been answered. So just one fairly high-level hypothetical question, if I may. So if the rate of debt reduction is lower than expected, $1 billion is half of your current sort of net debt and you need to generate at least probably $500 million of EBITDA per year to kind of basically be cash breakeven, I suppose. Given that kind of a scenario, how long would you wait before you get to that $1 billion? Would options like an equity raise or asset sales be on the cards if the net debt is not below $1 billion by, let's say, 2 or 3 years, by 2028?

Yes, we're not going to do an equity raise. You don't have to worry about that. Look, what I would say to you is we're going to focus on what we can control. We're going to have the extra volumes coming through on Somerset, which is going to -- and we're not going to have a repeat of obviously, the downtime that we had on the machine this year, which if you add the 2 quarters together, you're over $40 million. So based on what you know now, the lower CapEx, you are right in terms of your math. But we are confident that the EBITDA can be higher than that, and there will be a reduction in debt progressively. And ultimately, it may take longer to get there. We're obviously focused on getting there within the next 3 years. But it takes a little bit longer, we will maintain our discipline, and we're not going to go after any new projects. Our immediate priority is to reduce debt and maintain maximum flexibility. So I think the answer to your question is it may take a bit longer. But at some stage, we're confident that DP prices will recover. You'll have the higher profitability from Somerset, from the higher volumes and the EBITDA will be higher.

We will now take the last question. from the line of James Twyman from Prescient.

Just a few follow-ups from me. Just in terms of PM2, please, the $22 million cost that you referred to, what does that really mean? Does that mean that that's like the EBIT loss that the machine is making or the EBITDA loss? Or -- just trying to understand whether in Q4, that should mean that there should be an improvement of at least $22 million or might it be not quite that much? And then related to that, at the moment, your issue with PM2 is production. There will come a point where it's more about getting the customers to engage. Otherwise, you're just sort of making cuts and plates, which isn't obviously the plan. How are you feeling about the customer interest at the moment?

Yes. I'll talk about the numbers on the EBITDA, and I'll let Mike just share at a high level the -- how it's going with the customers. The -- yes, the $22 million is essentially the EBITDA.

EBITDA on the lost production indeed.

And obviously, as you ramp up, James, and this is normal, right? On a big machine like that, you have -- you're testing different grades, there's a little bit of start and stop and that kind of thing. So I think as you think about Q4, it's difficult to be too definitive that you would get all of that profit back, but certain -- because bear in mind, you're comparing it to what -- because the machine was down, what you lost. So I think it will take time. It may not be all the $22 million. And then, Mike, on the customer side of the. . .

The customers -- so our ramp-up, as I mentioned earlier, the qualification process has gone extremely well. Everything we've taken to the field as we've worked through the whole grade structure, our commercial match between PM1 and PM2 has been spot on. So everything that we planned in this paper machine has worked just the way we had on PM1. We've had several of the new customers and existing customers in to see the machine. And there is a huge amount of interest. I believe they see a brand-new state-of-the-art asset with state-of-the-art technology putting out very high-quality products. And our confidence is high that we're going to be able to work our way into more than just the food service board business. And I'd offer that we already have much of that qualified on confident that it will be well accepted in the field.

I would now like to turn the conference back to Steve Binnie for closing remarks.

Thank you. I just want to take the opportunity to thank everybody for joining us on the call today.