<a id="bm-comp-942847aa-bff7-47b0-ae5b-2922cc0d9207" name="bm-comp-942847aa-bff7-47b0-ae5b-2922cc0d9207" class="BMCustomAnchor"></a><table><tr><td bm-component-id="942847aa-bff7-47b0-ae5b-2922cc0d9207" style="vertical-align: top; width:100.000000%;"><ul><li><font color="#000000">Q2e: Clean paper EBIT of ~PLN 10m</font></li><li><font color="#000000">Challenging markets</font></li><li><font color="#000000">Fair value range of SEK 25-70</font></li></ul></td></tr></table><a id="bm-comp-69bb0b5d-bcbb-4eff-a1e9-110f889f614c" name="bm-comp-69bb0b5d-bcbb-4eff-a1e9-110f889f614c" class="BMCustomAnchor"></a><table><tr><td bm-component-id="69bb0b5d-bcbb-4eff-a1e9-110f889f614c" style="vertical-align: top; width:100.000000%;"><h3 class="bm-h3" style="text-align:left;">Q2e Paper EBIT of ~PLN 10m</h3><p style="text-align:left;"><font color="#000000">We expect Q2 Paper EBIT of ~PLN 10m, down from PLN 12m in Q1'25. We expect volumes to show a decline, while lower realised prices will likely weigh on earnings. We expect lower Pulp EBIT q-o-q, driven by weaker demand and prices alongside continued high pulpwood costs. Hence, we expect Q2e group EBIT of ~PLN -18m vs. PLN -10m in Q1'25. We lower our FY'25e estimates mainly due to the weaker pulp market, but note that the FY'25e Paper EBIT also is down following softer demand and lower prices recently. Following weak profitability, Rottneros conducted a rights issue in Q2, and Arctic Paper has acquired 10m new shares in the subsidiary. Post-issue, Arctic holds 55% of the share capital in Rottneros.</font></p><h3 class="bm-h3">Challenging markets</h3><p><font color="#000000">The pulp market has its short-term issues, and European prices are down ~10% since March, while Chinese prices are down ~15%. However, note that hardwood prices are already below the marginal producers' cash cost (typically not long-lasting). We see lower wood costs ahead. Prices are down -10% in Norway for H2, which is the first decline since prices more than doubled in the last 3y. Paper markets are helped by 9% supply cuts in '25-'26, but with slow demand, we see the utilisation rate reaching only 75-80% in '25e. We need +3mt more cuts (12%) to reach the historical average of ~88%. Note that paper prices fell 2% m-o-m in July. Price hikes were initially announced for Q2, but we understand that these hikes did not go through, as the market balance is soft</font>.</p><h3 class="bm-h3">Fair value range of SEK 25-70</h3><p><font color="#000000">The company is trading at an EV/CE multiple of ~0.6x and a '26e-'27e EV/EBIT ~15% below core peers. We apply three valuation methodologies, and arrive at a fair value range of SEK 25-70. The fair value range implies an EV/CE range of 0.4x-1.0x.</font></p></td></tr></table>