<a id="bm-comp-e91bc2de-60f0-4abf-910b-73dd6cc4db2a" name="bm-comp-e91bc2de-60f0-4abf-910b-73dd6cc4db2a" class="BMCustomAnchor"></a><table><tr><td bm-component-id="e91bc2de-60f0-4abf-910b-73dd6cc4db2a" style="vertical-align: top; width:100.000000%;"><ul><li><font color="#1B2634">Q1 challenging, expect the same trends for Q2e</font></li><li>Soft paper demand</li><li>Fair value range of SEK 30-70</li></ul></td></tr></table><a id="bm-comp-2b849f1c-6382-418a-9f5a-ec187e9ee468" name="bm-comp-2b849f1c-6382-418a-9f5a-ec187e9ee468" class="BMCustomAnchor"></a><table><tr><td bm-component-id="2b849f1c-6382-418a-9f5a-ec187e9ee468" style="vertical-align: top; width:100.000000%;"><h3 class="bm-h3" style="text-align:left;"><font color="#1B2634">Q1 challenging, expect the same trends for Q2e</font></h3><p style="text-align:left;"><font color="#212529">Q1 was another challenging quarter, as <font color="#212529">group EBITDA came in at PLN 22.9m (ABGSCe PLN 23m).</font></font> Paper EBITDA was PLN 33m, slightly below ABGSCe of PLN 34m. Paper EBIT was PLN 12m vs. ABGSCe PLN 15m. Group EBIT came in at PLN -10m vs. ABGSCe at PLN -7m. We highlight the unfavourable currency rate development and high Scandinavian wood prices, which pressured pulp profitability, while global trade turbulence contributed to a hesitant paper market. <font color="#212529"><font color="#212529">The CEO expects</font></font> the current situation to persist at least during the first half of 2025, and hence we expect a flattish development in Q2e, with EBIT in the range of PLN 12-18m. Note that on Thursday evening Arctic Paper announced it would scrap the previously announced dividend proposal, as the weak Q1 results and market uncertainty prompt a focus on costs and financial resilience.</p><h3 class="bm-h3">Soft paper demand</h3><p><font color="#212529">Paper prices fell 8.5% in '24 (-20% in '23), and the negative trend continued into '25 as prices fell -1.5% q-o-q in Q1 (-0.7% in Q4 q-o-q). Paper markets are helped by 16% supply cuts in '24-'25, but slow demand leaves the utilisation rate low at 80%. We need 2mt more cuts (10%) to reach the historical average of ~89%. Our paper price model points to prices increasing by ~5-10% in '25e, but we expect demand to stay relatively flat.</font> <font color="#000000"><font style="background-color:#ffffff;">Arctic Paper is well-positioned, as it is a leading premium design/book paper player with a decent overall position on the cash cost curve.</font></font></p><h3 class="bm-h3">Fair value range of SEK 30-70</h3><p>The company is trading at an EV/CE multiple of ~0.7x and a '25e EV/EBITDA of ~5.0x. We apply three valuation methodologies, and arrive at a fair value range of SEK 30-70. The fair value range implies an EV/CE range of 0.5x-1.05x.</p></td></tr></table>