<a id="bm-comp-f1b97458-1de5-4ffc-9920-b7f3dde18037" name="bm-comp-f1b97458-1de5-4ffc-9920-b7f3dde18037" class="BMCustomAnchor"></a><table><tr><td bm-component-id="f1b97458-1de5-4ffc-9920-b7f3dde18037" style="vertical-align: top; width:100.000000%;"><ul><li><font color="#000000">Rottneros reports SEK 140m impairment ahead of Q2</font></li><li><font color="#000000">Challenging markets for Rottneros and Arctic Paper</font></li><li><font color="#000000">Far-sighted is better than myopic</font></li></ul></td></tr></table><a id="bm-comp-ea1479ac-92b6-459e-9644-72ddf2b5786a" name="bm-comp-ea1479ac-92b6-459e-9644-72ddf2b5786a" class="BMCustomAnchor"></a><table><tr><td bm-component-id="ea1479ac-92b6-459e-9644-72ddf2b5786a" style="vertical-align: top; width:100.000000%;"><h3 class="bm-h3"><font color="#000000">Rottneros reports SEK 140m impairment ahead of Q2</font></h3><p><font color="#000000">Rottneros has announced an impairment of SEK 140m (~PLN 53m) related to fixed assets at its Rottneros Mill, citing persistently weak market conditions for CTMP that have curtailed the mill’s operational capacity. In our Q2 preview, we highlighted that the weaker pulp market and continued high wood costs will limit the pulp EBIT, and our bridge pointed to a clean Q2e pulp EBIT of PLN -25m. Rottneros has announced SEK 35-40m annual cost savings, with effect from H2. Furthermore, the first signs of lower wood costs have emerged (down 10% in Norway for H2), which could provide some tailwinds for Rottneros from Q4'25/Q1'26.</font></p><h3 class="bm-h3" style="text-align:left;"><font color="#1B2634">Challenging markets for Rottneros and Arctic Paper</font></h3><p style="text-align:left;"><font color="#212529"><font color="#000000">The pulp market has suffered from increased uncertainty and geopolitical tensions, and European softwood and hardwood prices are down ~10% since March, while Chinese prices are down ~15%. Regarding CTMP, Rottneros is positioned at the far right of the global cost curve, i.e margins ar<font color="#000000">e</font></font></font> <font color="#000000">structurally more pressured.</font> <font color="#212529"><font color="#000000">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>.</font></p><h3 class="bm-h3" style="text-align:left;"><font color="#000000">Far-sighted is better than myopic</font></h3><p style="text-align:left;"><font color="#000000">The market will remain challenging for some time, but far-sighted is better than myopic. <font color="#000000">The pulp market has its short term issues, but</font> hardwood prices are already below the marginal producers' cash cost (typically not long-lasting)</font><font color="#000000">. The group will also likely see some tailwinds once lower wood prices takes hold. Rottneros has completed a SEK 300m rights-issue and Arctic has a leverage of 0.7x, i.e there should be headroom for now.</font> <font color="#212529"><font color="#000000">Arctic paper is trading at an EV/CE multiple of ~0.6x and a '26e-'27e EV/EBIT ~15% below core peers. We have applied 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></font></p></td></tr></table>pagebreak <a id="bm-comp-88b9e94b-d237-4841-b2f9-8054dc5aabf2" name="bm-comp-88b9e94b-d237-4841-b2f9-8054dc5aabf2" class="BMCustomAnchor"></a><a id="bm-comp-692d54f2-be6b-4af6-a052-01c8eef1e25e" name="bm-comp-692d54f2-be6b-4af6-a052-01c8eef1e25e" class="BMCustomAnchor"></a><table><tr><td bm-component-id="88b9e94b-d237-4841-b2f9-8054dc5aabf2" style="vertical-align: top; width:50.000000%;"><table id="bm-img-b0b22cbc-2bdc-4ada-ad7e-f249273e72f2" class="bm-img-table xslt-img-empty xslt-img-include"><tr><td class="xslt-img-caption">CTMP prices</td></tr><tr><td><img bm-img-encrypt="b0b22cbc-2bdc-4ada-ad7e-f249273e72f2" bm-img-original-height="419" bm-img-original-width="760" bm-img-svg="image:image_upload/89503_d9545c11-bde6-4681-96d6-4c844be08668.svg" bm-img-width-hint="100%" id="bm-id-b0b22cbc-2bdc-4ada-ad7e-f249273e72f2" src="https://abgsc.bluematrix.com/images/image_upload/89503_d9545c11-bde6-4681-96d6-4c844be08668_733.png" svg="/nas/web/clients/abgsc/images/image_upload/89503_d9545c11-bde6-4681-96d6-4c844be08668.svg" width="363" alt="" title="" /></td></tr><tr><td class="xslt-img-source">Source: ABG Sundal Collier, RISI</td></tr></table></td><td bm-component-id="692d54f2-be6b-4af6-a052-01c8eef1e25e" style="vertical-align: top; width:50.000000%;"><table id="bm-img-63918bea-74ee-49ac-a32c-c8a7b16c4a31" class="bm-img-table xslt-img-empty xslt-img-include"><tr><td class="xslt-img-caption">Global CTMP cash cost curve</td></tr><tr><td><img bm-img-encrypt="63918bea-74ee-49ac-a32c-c8a7b16c4a31" bm-img-original-height="432" bm-img-original-width="760" bm-img-svg="image:image_upload/89503_51e14246-3a27-4417-bb76-ab0dfdc7e284.svg" bm-img-width-hint="100%" id="bm-id-63918bea-74ee-49ac-a32c-c8a7b16c4a31" src="https://abgsc.bluematrix.com/images/image_upload/89503_51e14246-3a27-4417-bb76-ab0dfdc7e284_733.png" svg="/nas/web/clients/abgsc/images/image_upload/89503_51e14246-3a27-4417-bb76-ab0dfdc7e284.svg" width="363" alt="" title="" /></td></tr><tr><td class="xslt-img-source">Source: ABG Sundal Collier, RISI</td></tr></table></td></tr></table>