<a id="bm-comp-1680b05c-94cc-4fc1-894b-258588b15a7f" name="bm-comp-1680b05c-94cc-4fc1-894b-258588b15a7f" class="BMCustomAnchor"></a><table><tr><td bm-component-id="1680b05c-94cc-4fc1-894b-258588b15a7f" style="vertical-align: top; width:100.000000%;"><ul><li>Q4e: clean EBIT of ~SEK -90m, Q1 should be better</li><li>Pulp prices down, but hikes announced</li><li>Fair value range: SEK 9-16/sh</li></ul></td></tr></table><a id="bm-comp-7d1cd7de-08be-442b-8635-ebcc8ee2fd78" name="bm-comp-7d1cd7de-08be-442b-8635-ebcc8ee2fd78" class="BMCustomAnchor"></a><table><tr><td bm-component-id="7d1cd7de-08be-442b-8635-ebcc8ee2fd78" style="vertical-align: top; width:100.000000%;"><h3 class="bm-h3" style="text-align:left;">This is our earnings bridge</h3><p style="text-align:left;"><font color="#212529">We expect Q4 clean EBIT of ~SEK -90m, down from SEK 29m in Q3'24 (Q4'23 SEK -100m). The main effects q-o-q are likely: SEK -30m from lower pulp prices, SEK +11m from FX, SEK -10m from wood costs, and SEK -90m from the annual maintenance. We arrive at a Q4 clean EBIT of ~SEK -90m. Note that Rottneros will book SEK +65m-70m in one-off gains related to the sale of emission quotas, i.e. reported EBIT will likely be SEK -20m-25m. Q1 will likely be better than Q4, driven by a reversal of the annual maintenance stop and somewhat better volumes. We expect Q4 clean EBIT of SEK 5m-20m.</font></p><h3 class="bm-h3">Pulp prices down, but hikes announced</h3><p>Pulp prices overachieved in H1 and fell in H2, as some H1 extraordinary events were hard to replicate and Chinese demand was lower alongside more supply. <font color="#212529"><font color="#000000">European softwood and hardwood prices have dropped 9% and 31% from ATHs in May, respectively (Chinese softwood and hardwood -9% and -27%, but now up ~4%). Note that many of the largest players have announced 3-10% price hikes from January '25 (e.g. Suzano).</font></font> The pulp market balance was more challenging in '24. Although net supply growth landed at only 2%, demand growth of -0.4% was weak, and the utilisation rate fell to 87% (89% in '23). We expect it to improve in '25/'26, reaching ~90%. <font color="#000000">Rottneros is striving to broaden its revenue base, and management has achieved its target of raising the percentage of earnings derived from less cyclical sectors to ~10% (vs. 3% in '19).</font></p><h3 class="bm-h3">Fair value range of SEK 9-16/share</h3><p>Rottneros is trading at an EV/CE of ~0.9x, which compares to the 10Y historical average of ~0.9x. ATRoCE averaged ~12% from ’18-’23, and we forecast ~3% for ’24e-’26e, suggesting a value of SEK ~2-14/sh. Note that a mid-cycle valuation approach points to SEK ~13/sh. We stick to our fair value range of SEK 9-16.</p></td></tr></table>