Mayr-Melnhof Karton Aktie

Good morning, ladies and gentlemen, and welcome to the Annual Results 2025 Call of Mayr-Melnhof Karton AG. [Operator Instructions]

Let me now turn the floor over to your host, Stephan Sweerts-Sporck.

Good morning, and welcome on the part of MM Group. I'm Stephan Sweerts-Sporck, heading Investor Relations and Corporate Communications here. It's a great pleasure to have you joining this Q&A conference call on our '25 annual results, which we released this morning. Besides the press release, a video statement from our Management Board has been published on our website, mm.group. In this call, we want now to provide you with the possibility to ask questions on today's communication to our CEO, Peter Oswald; and CFO, Franz Hiesinger who are here with me.

Since this call addresses an international audience, we would very much appreciate your questions to be asked in English in the following Q&A session.

Before we go for that, Peter, may I ask you to start with a short summary of our key messages.

Yes. Thank you, Stephan. Welcome, everyone, and thank you for your interest in MM Group. So I will be fairly brief in my summary to have enough time then for your questions. Despite our divestiture of TANN, we could marginally increase our adjusted operating profit in 2025. And if we look what I think is more meaningful at our numbers on a like-for-like basis, so excluding TANN, and this is on Page 4 of our press release, you can see that we increased our adjusted operating profit by 15% in the last year. And this is quite an achievement in this challenging market environment. And the key driver was our Fit-For-Future program, which added around EUR 70 million to our last year result. And so that's really meaningful.

The good news is that we feel confident now to increase our forecast for the effect of Fit-For-Future by 2027 from what originally said more than EUR 150 million to now more than EUR 250 million. The project is well progressing on all fronts, be it operations, SG&A, top line and procurement and also supply chain. Now if we look specifically at our 3 divisions, Food and Premium Packaging had, I could almost say, like always, a very solid performance. And given our Fit-For-Future program, I personally all feel very positive about future development.

Now if we look to our Pharma business, adjusted operating profit increased by 25% by quarter. And the good news is that there is a lot of upside potential going forward. Given the long sales cycle of 2 to 4 years, one needs a lot of patience in this business until actions show results, but we will get there. We are very strongly positioned in the GLP-1 weight reduction segment. And we could sign here and also in other areas, some long-term contracts, and that will support our growth in this segment going forward over the next years.

Now coming to Board and Paper, we managed to increase our results and finally show a green zero or more dramatic black zero. Everyone following our industry will probably share my view that this was quite outstanding and outstanding achievement. And again, Fit-For-Future gives us the confidence that despite the difficult market environment, and I will come to this is -- will be positive. Now probably you are most interested in our outlook. So I won't repeat what we already distributed. Definitely increased energy prices mainly gas but also diesel, et cetera, for transport will negatively impact Q1 and Q2 results. And it's then anyone's guess what the impact will be on half year 2, depending obviously how long and how severe the war will be and the closure of the Strait of Hormuz.

The positive thing or what I hope is positive is that this cost shock may lead some players to rethink whether running mills at high losses or even negative EBITDA makes long term any sense, but again, who knows. We are well booked at this point in time as our customers appreciate our superior products and services. And so despite all the headwinds and they do exist and the overcapacities do exist, both on the converting side and also mainly in the board and paper area. Despite all that, we do remain confident because our markets continue to offer attractive long-term potential. So the underlying trends are the right ones. And as a strong team, we are committed to doing whatever it takes to advance the profitability of MM for the years to come.

And with this, I would like to finish and hand over now for Q&A, and we're looking with interest to your questions.

[Operator Instructions]

The first question is from Michael Marschallinger, Erste Group.

I have 3 and do them one by one. And firstly, on your Fit-For-Future program. So you said you see an additional or more than EUR 100 million versus initial expectations. Could you give us a bit more color where you see these additional savings come from? Walk us through here? And what are your expectations in terms of cost in 2025? You booked now EUR 29 million restructuring costs. What do you expect over the next year 3 years with this.

I'm not 100% sure. I got it right. So our effect on an adjusted operating profit basis was about EUR 70 million, and we booked quite substantial restructuring costs. Going forward, so we think that another -- so if we say more than EUR 250 million 2027 compared to 2025 means obviously that we have to deliver another EUR 180 million to get there. I believe that the restructuring costs per se will be, let's say, roughly in this year, '26.

Sorry, I didn't understand. Can you please repeat it?

Yes. So the estimate is depending that our restructuring costs, I understood your question was what the restructuring costs for the FFF program will be. And this will be this year about at the same level than last year.

Okay. And also for '27.

Also for '26. For '27, it's a bit too early to tell. I would expect or I would hope it's less, but there could be individual bigger restructurings, which we can't foresee at this point in time.

Okay. Understood. Then coming back to the market conditions and you acknowledged in the press release, overcapacity still persist. So could you provide a bit color what you saw in the last 2 quarters since the last call? And what are your expectations here in '26 also with new capacities from your Nordic competitors coming online? Would you expect this situation to intensify over '26, if you could give some comments, please.

Yes. So one major addition in Finland came on stream and is now fully already in the market. So they started up this spring. And that obviously creates a lot of pressure for all participants because no one wants to lose any volume. I mean we know from various investigations that a number of players are EBITDA negative. And of those who are published, you can even look at the numbers. And let's say, the hope is that one or the other just face the consequence finally because now we know that this new capacity is here, and it will obviously stay. And now someone has -- someone or some capacity, so to say, have to be closed, and that's obviously always a difficult decision to make. But finally, if you run your mill at a negative EBITDA, your free cash flow loss is so high that at a certain point in time, you have to do it. And we have to wait now until this happens.

That's very clear. And lastly, on the energy cost side, given we see now this Middle East conflict and another wave of inflation is expected, how would you expect to pass on this additional cost in the current environment?

Yes, that will be different for different grades. So in some grades, we will be able to pass it on and in some grades where we have the overcapacities and where our judgment is that competition is only driven by volume and not by profits, there probably we have to take the fight.

And could you also make a comment on how you're hedged on the energy side for '26?

Yes, we are hedged between 1/3 and half of the volume.

The next question is from Markus Remis, ODDO BHF.

A few questions from my side. Firstly, coming back to the Fit-For-Future first question, between Q3, the EUR 150 million and now the EUR 250 million, can you elaborate where this incremental savings potential was found? And also, I'd be interested to get a sense of the timing of the remaining EUR 180 million. So anything you can share regarding the breakdown '26, '27 would be very helpful.

Yes. Of course. So the good news -- I think we made interim in the third quarter already the comment that it will be significantly more than the EUR 150 million. So it's a gradual development. You see the way this program works is that a lot of ideas are generated and then they are worked out. And obviously, some turn out to be nonfeasible, some cases, you find even more potential than what you thought. So it's always very difficult to evaluate this pipeline. And definitely, we wanted to be on the conservative side. And as the project progresses, we see that many more projects are worked out in greater detail. And obviously, we've implemented now already a number of projects well above EUR 100 million, which had this positive effect last year.

The timing is a bit difficult always to evaluate, but I would roughly say that the balance will be equally split. So the EUR 108 million plus between this year and next year. But again, that's a very rough estimate because you have delays for one reason or another, you have setbacks customer doesn't sign the contract as quickly as you want in procurement, your supplier, you have to wait until the old supply period runs out and the new term starts.

Okay. And can you -- because you're putting the savings kind of conditional, of course, to market conditions. Can you give us an idea of how much of the EUR 70 million you were able to actually retain in the P&L in '25?

These EUR 70 million, so are retained. They are there. But let's take an example. If the raw material price the index decreases by 5%, and we can achieve a reduction of 12%, then the 5% is what we don't book into FFF. The 7% we take as a credit because we say this is our own achievement. And sometimes that's obviously a question is obviously a judgment call. But the important thing is that we have very strict rules here in order to not overreport in any way. So the EUR 70 million, you could say, if we hadn't started this project, our result would be, I would say, more in line with the industry and would be really EUR 70 million on an adjusted operating profit lower. Obviously, the operating profit effect was less because you have to deduct then the restructuring costs, which are shown in our attachments.

Sure. So would you say that kind of a walk down 2024 EBITDA of EUR 420 million plus EUR 250 million savings, less 50 million tonne equals EUR 620 million EBITDA by '27 that this is then what your...

That's the right way to calculate it, plus/minus changes in the market. So for instance, this, let's say, energy costs are sustainably EUR 50 million higher. But by example, that would come off if our prices are in all cartonboard is lower than they were last year. And so this needs to be taken off. We can't predict. So it's mainly about our selling price and about the procurement of our most important raw materials.

Okay, so less cost inflation and less pricing concessions.

Yes. Specific cost inflation. So our savings are different to how many others do it on a nominal basis. So we are not saying costs would have gone up by 3%, and we have avoided any costs that would not count. A reduction needs really to be in nominal terms disregarding the inflation. So if we reduce prices by 5% and have inflation of 3%, only 5% nominal decrease comes and not 8% against an inflated price.

Okay. And coming to Board and Paper, I think you're very clear what kind of market repair would look like. So competition closing capacities. Are you also considering capacity reductions? I mean, when I look at your -- the Board and Paper development of the segment, I mean, it's -- I guess it's fair to assume that not all of your plants are in a breakeven or positive territory now with more pressure coming presumably from the energy side and who knows how long that will stay. But is that something you have in the drawer, so to say, is not short term, but maybe...

I think it should be a good practice amongst management in general to have for all worst cases, some projects. But overall, our mills are very, very competitive. And we know, for instance, I can't give any names. We know, for instance, we have one mill, which is EBITDA breakeven, but competition is minus 10% EBITDA. So to close our mill, which is much more efficient and there's better energy supply, et cetera, et cetera, would just not make sense. We don't understand why this mill still exists from the competition, particularly we are sure nobody can work against the market. So it's as Warren Buffett said, if the tide goes out, you can see who is swimming naked. And I think some people are swimming naked and they will be firmed up.

Okay. One more question, please, before I get back into the line related to the energy bill. Can you kind of give the granularity how much energy cost you had in 2025 in absolute terms?

I hand over to Franz Hiesinger.

It's below EUR 270 million.

We are moving on to the next question. The next line is Cole Hathorn from Jefferies.

Peter, I'd just like to follow up on how you think the market might play out with the disruptions that we've got ongoing in the Middle East. I mean the last time we saw disruptions like this, we saw supply chains extend procurement managers wanting safety stock. I'm just wondering, it might be too early, but have you seen any kind of pickup in orders? Or have you seen any kind of change in how your customers are managing their supply chain? -- is the first question.

And then secondly, on how you're thinking about the energy shock. I know you talk about 30% to 50% of your business being hedged from a gas perspective. But I'd like to understand how you think the cost curve develops in the recycled cartonboard or the white line chipboard space. In containerboard, it's much easier for me to say that the cost curve really steepens as some people have made more energy investments than others. But the recycled cartonboard side is -- it looks flatter when you look at the industry provided cost curve. So I'm just wondering how do you think the cost curve steepens with the high energy prices? And how is -- not positioned?

Yes. Thank you. So these are very difficult questions. So the customer reaction, we haven't seen anything which we saw in the Ukraine, but maybe it's too early. But so far, there is neither panic nor anything else. We will see some price increases or even limited surcharges have been announced in the industry, and we will see now how the customers react to that and what it means. But overall, it's very calm, but it's probably also because it's early days. On the cost curve, my guess is that the cost curve would also become steeper because, I mean, I take our WLC mills, we've invested quite a lot in energy. And we would expect that we benefit from that now in terms of we've lowered our specific energy consumption, as you will see in our annual report.

So it was again minus 3% on a like-for-like basis. So less energy and we've changed the mix and with much less 11% less CO2 and this is a consequence of, amongst others, the Fit-For-Future project and very specific CapEx, which we have done over the last years. And that should benefit us and make the cost curve steeper compared to competitors in the WLC market, to my knowledge, have hardly invested anything over the last years.

And then maybe following up on the cost curve. On the virgin cartonboard side, just a little bit of color of how your business is performing there because we do have finished wood costs going down, which should help the old Kotkamills. I'd just like a little bit of color on how costs are developing for your Finnish assets and then in Poland as well.

Yes. So in Poland, wood costs are rather flat. So I mean, they are lower than in the Nordics, but the gap might narrow. In Kotka, so we have, on one hand, wood costs, which have come definitely down, which is positive for us. The other product, so to say, the other product factor is pulp. So we make our own CTMP, and we may have our own pulp mill for the saturating kraft paper, but we buy the pulp for FBB. And there, we expect a rather stable to increasing trend over next months.

And then just the final one is we talked about the cost curve steepening in the recycled side, but there are also some unintegrated virgin cartonboard producers. And with higher energy costs, I imagine that pushes them further into the red. And I'm just wondering where do you see most likely that we see capacity rationalization? Is it on the recycled side or the virgin side?

I would expect it in both areas by around mid of the year autumn. That's already what I said a year ago. It's just a gut feeling. People need -- obviously, some manager need the pressure for some time to go on until they do anything. And I think that's now what the time will come.

[Operator Instructions]

We are moving on to the next question. There is a follow-up from Markus Remis, ODDO BHF.

A few more from my side. Firstly, on -- a few more from my side, if I may. Turning to the packaging side. We saw volume declines both in the food and in the pharma segment, 2% to 3% stripping out. Do you see any scope of a kind of demand stabilization in the current year? So what would be like the most likely scenario from your point of view?

Yes. So first of all, great thanks to get the question also on packaging because it's quite important for us, but everyone obviously focus on the more volatile board and paper. I think there are different aspects to consider. So I start with the pharma packaging. In pharma, as you know, we took over a real turnaround case when we acquired Essentra. And so we are still -- and I hope this year is indeed the last one in the phase. So the pharma has, on the one hand side, a very stable long-term business with developed together with your customer, you are in from day 1, and it takes years until the product is launched and then you get a contract and you deliver whatever 50%, 80%, 100% whatever it is. And that's a very long-term business and a very good business, but requires a lot of upfront investment. And then you have also a highly competitive short-term business, which is with very mature products where we have basically annual tenders and it boils down more or less to the price. And we are consistently phasing out negative business.

So some of it was even contribution margin negative. So we have underlying the numbers, you see overall 2 trends. We have a nicely growing business, and I alluded to GLP-1 business, et cetera, with really good growth rate, even sustainable at 10% or so. And then we have, on the other hand, this legacy business, which is no value-added just price-sensitive business. And this we can either reprice or we get out of it. And this -- I think this process will be mainly finished. It will still go on this year. And therefore, the overall growth is not really visible. But once this restructuring is done and we stay with the businesses which we like going forward, there will always be some commoditization of some businesses. So it's an ongoing process, but the big thing will be ended this year. And then we will -- we are -- we feel very confident that we will see growth.

With regards to food and premium, we have to a certain degree, a similar effect. So overall, the food market is a very flat market. There is nothing to make this sound better. And here, it's really about our product offering. And there, I think, again, our Fit-For-Future project, but also other initiatives we took. We are repositioning ourselves. We are especially focusing -- we focus more on midsized customers in order to generate growth. But the overall market in this segment will show also long-term and moderate growth. And obviously, in this environment, didn't show any growth at all. And you have always pleased also to compare some with the numbers we also divested some smaller businesses, which are also not restated. The restatement goes only for the group. So -- but we had a small decline in volumes in Food and Premium last year. We want to turn that positive, but it requires 2 things. One is our own efforts. And secondly, we needed the tailwinds from the market.

All right. And then a few more kind of bookkeeping questions, maybe more for Mr. Hiesinger. The EUR 70 million impairment in Board and Paper, can you shed some light which assets were impaired and why that was necessary now?

[indiscernible].

You look very hard to understand.

Sorry. It was for our Slovenian mill, Kolicevo for the amount of EUR 70.5 million. [indiscernible] And it was basically a review of our mid and long-term expectation of these assets.

Okay. And then if I may turn to the tax rate. I mean, it was low last year, high this year. What would be like a kind of normalized tax rate in the current shape of the group?

Side of the tax loss carried forward, which we have impaired following this asset impairment, it would have been 27%.

Okay. So that's something for modeling purposes we can imply going forward?

Will be -- it could be estimated about 25% in the long run.

Just maybe to add to this. So the storyline in '24 was that when we acquired the Essentra business, we didn't activate capitalized loss carryforwards because the business was just breakeven. And only when we saw that it's generating profit, we could activate it. And now the opposite happened that especially Kolicevo, but that wasn't the only one where we have lost carryforwards and giving our new cash flow projections. We cannot assume that we can use this loss carryforwards.

To add on this, the full difference of EUR 65 million compared to last year in our tax expense is related to capitalization versus release of loss carryforward.

That's very clear. In the last years, you've quite stepped up the factoring levels. So I'd be interested to get a sense of where you ended 2025. I think last year it was close to EUR 380 million.

Yes, it was EUR 377 million last year and -- sorry, in 2024. And in 2025, net EUR 337 million. If I say net, it means deducted by the incoming customer payments, which have already been factored. EUR 337 million.

Okay. And I guess the last one would be then on your capital allocation. Now with the new dividend policy, and I understand there are a couple of influencing factors. But when you talk about dividend continuity, should we assume that this EUR 2 level for '25 is kind of the base -- and that, yes, like going forward, there should be no declines being expected, but rather kind of this as an anchor dividend, so to say?

No, I mean the most important thing is obviously the net profit, and we can't forecast the net profit, but we wanted just to give a guidance of these 4 principles within this range, 40% or 60% and their continuity is one aspect to consider, but the others 3 are equally important that if we saw a downturn of the business or if we feel very stretched from a leverage point of view, then we might reduce it. But yes, one principle is to keep it as continuous as possible, but your expression was too strong. So it's not like we guarantee now EUR 2. I mean, especially, we also have to keep in mind that our -- with regards to our goodwill in Board and Paper, this is a fairly high amount. And at a certain point in time, it could be that we have to do their impairments for instance and also the dividend.

Okay. Right. And related to that, the buyback has been closed at the end of last year. Any appetite for kind of smaller buybacks going forward?

No, not for the time being. I mean the share price, so we're not commenting where we think it should be, but it is where it is, but it's not as -- so to say, the main driver was simply that the share price was, I would say, ridiculously low at that point in time and we took advantage of it. And -- but generally now, given all the geopolitical uncertainties, we don't think it's the right money to be spent for the time being that can change.

At the moment, there are a few more questions in coming. Another follow-up from Cole Hathorn, Jefferies.

You can ask any questions, but don't overstretch me in my crystal ball.

No, this is -- it's an interesting one because we've seen a lot of supply disruptions globally around the supply chain. And I'm just wondering, have you seen any product categories that are more challenging to get hold of, be it adhesives, inks or anything like that on kind of your supply side. So the one is supply uncertainty on products. And the second is, how do you think about your commercial strategy from here? Because it's very difficult in your position when you don't know what inflation is going to do to logistics, to chemicals, to inks, et cetera, how you price up your packaging? How are you thinking about the commercial kind of pricing side?

Yes. So on supply disruptions, we haven't seen anything yet. I'm not aware about any problems. I hope that there will be some supply disruptions from some Chinese competitors. That's what I would hope for. But joking aside. But so far, we haven't any problems. But we also have to say that with a fairly conservative policy of, let's call it, close sourcing, not that we don't buy also from other continents, but generally, we are more careful on that. And I think this will help us in this environment. On the commercial side for pricing, we've overall, after the experiences in 2022, changed our pricing policy in the sense that especially with regards to long-term contracts, which are fairly common in our packaging business that we typically have inflation clauses or at least speaking clauses or in some cases, also clauses which say that if certain effects have a bigger impact than XYZ that we can adjust prices or at least can talk about them and could terminate the contract.

We also have shortened the adaptation period to mainly every quarter. I mean there are very few exceptions to that. And so it was not unlike in the past where sometimes price clauses only took effect after 1 year or so. So it could, of course, if there were big price shocks, it could impact us for -- in worst case for 3 months.

But not much longer. So we are much better protected today from -- in terms of pass on clause, it works both ways, also if prices go down. But generally speaking, it has reduced the risk.

At the moment, there are no further questions. So that I'm closing the Q&A session and handing the floor back over to the host.

So thank you very much for your questions from the part of MM. I think they were all very interesting and very much to the current developments. And to close, I would once again ask Peter for a final sentence what you should take away from this conference call.

Yes. Thank you very much, Stephan. I think my main message is actually we did quite substantial CapEx in '23 -- '22, '23, '24. And that was disrupting for our business also because at the time you do this CapEx, you can't produce and then the start-ups don't always work as you like them. I see now more and more that we get into -- so we -- while others were eating, we were planting. And now we get into the phase where we can harvest these benefits. We have specific mills, which were really not in a great shape a number of years ago. And in this crisis, I think they would have been prime candidates for closure, and we have turned this -- and thanks to our investments into energy efficiency, et cetera, et cetera, we are in a good place.

So I think we are a company with a market-leading position with a highly experienced management team, very dedicated employees with a strong asset base. And now we have to turn this and FFF is one of the means to turn this into real results. But probably last year, we showed that in a really difficult market environment, we can deliver. And as things will move in our markets, I think we are in a very good place to benefit from any upturn, which will come. We don't know when, but it will come. And so I think the management looks with high confidence into our future. Thank you.

Welcome, everyone, and thank you for joining this announcement of our annual results. In '25, our adjusted operating profit increased by 3%, but practically more relevant on a pro forma basis like-for-like, excluding the divested TANN Group, by 15%, which is quite a strong performance in such a challenging market environment.

Our Food & Premium Packaging division managed to keep the adjusted operating margin at a very good and very solid level, while Pharma & Healthcare Packaging delivered an encouraging 25% increase in adjusted operating profit. And Board & Paper also showed a clear improvement compared to last year, although profitability is still not on a satisfactory level.

And the key driver behind this progress has been our group-wide Fit-For-Future program, which we have successfully accelerated throughout the year across all divisions. And working with our dedicated MM teams and supported by external expertise, we pursue a comprehensive set of initiatives targeting growth, procurement optimization, operational efficiency and structural improvements in sales and administration. So nothing is left undone.

Given the strong performance and the good progress of Fit-For-Future, our confidence has strengthened that by '27, we will achieve an earnings uplift of more than EUR 250 million compared with '24, excluding TANN and market effects. And this is well above our initial expectations of more than EUR 150 million at program launch, which I shared with you in the half year results. And already in '25, Fit-For-Future contributed about EUR 70 million to our adjusted operating result with Board & Paper benefiting the most.

And alongside these operational achievements, which are extremely important, we also have taken important strategic decisions. As I mentioned in the half year results, we executed the sale of the TANN Group, which is a logical step in sharpening our focus on our packaging core business and has strengthened our balance sheet.

In '25, we also carried out share buybacks that provided to be an efficient use of capital and a clear expression of our confidence in MM's long-term development. Furthermore, '25 included several one-off effects beyond the TANN divestiture, including the impairments of our -- in our Board & Paper division and site optimization measures in Pharma & Healthcare, all of that laying a strong foundation and the necessary consolidation for the future.

With regards to our balance sheet, we reduced net debt and net debt-to-EBITDA despite a very volatile environment and despite our continuation of a substantial modernization of our asset base in all our divisions. And Franz Hiesinger will give more details to this.

Reflecting our strengthened financial position and long-term confidence, we've revised our dividend policy. Instead of distributing around 1/3 of earnings over the long term, we now aim to distribute around half, so between 40% and 60% of annual net income, depending on other criterias like net debt, major planned investments, future prospects and our commitment to continuity.

Under this new policy, we will propose an increased dividend of EUR 2 per share to the forthcoming AGM, up from EUR 1.8 per share in the previous year, so an increase of 10% (sic) [ 11% ].

Sustainability has remained a top priority in '25. We have improved workplace safety again, reducing occupational accidents by a further 4%. And very important, we cut absolute CO2 emissions again strongly by 11% this year, and we increased energy efficiency across the group. Our efforts are widely recognized, including a AAA leadership rating from CDP for climate, forest and water, and a gold medal from EcoVadis.

Further progress will come this year from projects such as the new pulp digester in Kwidzyn, which will dramatically reduce energy consumption and CO2 emission. This will start up late this year and the installation of electric boilers at Kotkamills to start up in spring next year.

At this point, I would like to express my sincere thanks to our more than 13,000 employees worldwide. In a demanding environment, their dedication, creativity and teamwork have been essential to our progress and success. And a special recognition goes to everyone involved in managing the high additional demands arising from the implementation of our Fit-For-Future program.

And now I will hand over to our CFO, Franz Hiesinger, who will present the financial results for '25. And afterwards, I will return with the outlook.

Thank you, Peter. In '25, a year marked by persistent market challenges, we succeeded in strengthening our operational and financial performance. Our results reflect strict cost discipline, a sharper portfolio focus and the growing impact of our Fit-For-Future program.

Group sales amounted to EUR 3.9 billion, about 5% below previous year, mainly driven by the divestment of the TANN Group by mid-year. The adjusted operating profit increased about 3% to EUR 195 million, representing an operating margin of 5.0%, up from 4.7% the year before.

Adjusted EBITDA came in at EUR 418 million, corresponding to a margin of about 10.8% compared to 10.3% last year. On a pro forma basis, excluding the divested TANN business, adjusted operating profit increased by 15%, while adjusted EBITDA rose by almost 8%.

The reported operating profit includes one-off items of about EUR 26 million plus. This includes a gain of EUR 125 million from the sale of TANN Group, offset by a noncash impairment of assets of about EUR 70 million in the Board & Paper division as well as EUR 29 million in costs related to Fit-For-Future restructuring. A major part of this is related to the footprint optimization of Pharma & Healthcare in France and Spain.

Earnings before tax increased to EUR 146 million. Net profit amounted to EUR 77 million, influenced by significantly higher tax expense of EUR 65 million due to the reversal of loss carryforwards mainly in Board & Paper of EUR 35 million in '25, while in the previous year, in contrast, we capitalized EUR 30 million of loss carryforwards.

Across the divisions, earnings were mixed, but showed an encouraging overall direction, supported by our Fit-For-Future program. Food & Premium Packaging delivered EUR 1.54 billion in sales and maintained a strong adjusted operating margin of 10.2% with 9.3% pro forma restated for TANN, confirming the resilience of its business model.

Pharma & Healthcare Packaging generated sales of EUR 618 million and improved profitability to an adjusted margin of 6.0%, reflecting continued productivity gains. Board & Paper recorded stable sales of EUR 1.93 billion and achieved a slight positive adjusted operating result, an important improvement of more than EUR 20 million compared to the loss last year, driven by substantial cost savings and enhanced operational performance.

In 2025, we could strengthen our balance sheet substantially. The assets amounted to EUR 4.5 billion, down from EUR 4.9 billion in '24, reflecting a streamlined group structure. Equity remained stable at EUR 2.1 billion with a further improved equity ratio of 47%.

A strong achievement in 2025 was the further reduction of net debt. Net debt declined to EUR 914 million compared to EUR 1.08 billion the year before. As a result, our net debt-to-equity ratio improved to 43% and the net debt-to-EBITDA ratio declined to 2.2x compared to 2.6x in '24. These improvements underlines enhanced financial resilience and solid base of the group.

Cash of EUR 498 million at year-end and EUR 350 million in committed credit lines provides sufficient headroom for strategic flexibility. Operating cash flow was EUR 231 million. This is lower than the exceptional prior year level, which had benefited from a significant working capital release.

CapEx of EUR 233 million remained close to last year and focused on enhancing long-term competitiveness across all divisions. Based on the group's strengthened financial structure, the Management Board will propose an increased dividend of EUR 2.0 per share, in line with our updated dividend policy foreseeing a 40% to 60% payout ratio of net profit.

In summary, we enter 2026 with a stronger balance sheet, a more focused portfolio and a promising Fit-For-Future program, providing a solid base to capture long-term value creation opportunities. Thank you.

Thank you, Franz. Looking into the current year, the overall macroeconomic and industry environment will remain demanding and European consumer sentiment is expected to stay subdued. Overcapacities will continue for the time being. However, our management team and I am strongly convinced that MM will emerge from the current transformation with strengthened competitiveness and improved profitabilities across all 3 divisions.

And why is that? Because of our market leadership, our well-invested, low-cost asset base and the expected substantial contributions from the Fit-For-Future program. For '26, we plan disciplined strategic investments of around EUR 250 million. So we will continue to invest in order to strengthen our competitiveness to enhance our energy efficiency and to expand the share of renewable energy.

We will have, again, maintenance shutdowns in the Board & Paper division, mainly affecting Kwidzyn and Kotkamills, again, to be concentrated in the third and fourth quarter. Sustainability remains a central pillar of our value creation model with key priorities on decarbonization, energy reduction, water efficiency, biodiversity, waste reduction and the continuous enhancement of workplace safety.

Concerning the developments in the Middle East, we are closely monitoring the situation. Our 2 local packaging sites have been limited affected. And as we speak, gas prices have significantly moved up and depending on the length of time, this will affect our results.

Now summing up, despite ongoing headwinds, we remain confident. Our markets continue to offer attractive long-term potential. And as a strong team, we are committed to doing whatever it takes to advance the profitability of MM for the years to come. Thank you.

Welcome, everybody, to this Q&A podcast on the Mayr-Melnhof Group interim results for the first 3 quarters of 2025. I'm delighted to have the company's CEO, Peter Oswald, with me for some first-hand information.

Peter, could you please share with us your initial reflections on the Q3 results?

Yes, I'm pleased that our results for the first 3 quarters were significantly up against last year, which is quite rare in our industry in these days. The adjusted operating profit rose by 20% and pro forma, excluding TANN, even by 32%. And since there was no support from the market, this success is driven by our profit improvement program Fit-For-Future at two major mills. And given its success, we have launched Fit-For-Future in Q1, as we have already reported on a group-wide scale and have intensified the program now in Q3.

The ramp-up of the program has proven highly successful and shows strong potential beyond our original estimate of EUR 150 million, if we compare the [27] with the '24 results. We will report earning effects and progress alongside the '25 annual results in mid-March '26. The divestment of TANN completed in the second quarter significantly boosted this year's group reported profit through a one-off gain of preliminary around EUR 127 million. Having exited the tipping paper business at a time of record profitability, these strategic moves allows us to concentrate on our core business of consumer packaging.

Could you briefly describe the Q3 earnings situation across the divisions?

Yes, with pleasure. Overall, our adjusted operating profit in Q3 was flat compared to Q3 last year, but significantly up on a like-for-like basis, excluding the divested TANN Group. If we look now specifically to our divisions. Food & Premium Packaging profit was down due to the TANN divestment, but flat on a like-for-like basis. And in our two other divisions, Pharma & Healthcare Packaging and Board & Paper, adjusted operating profit was well up compared to Q3 of last year. Board & Paper was obviously impacted by maintenance shutdowns.

Since overcapacities in the European board industry are currently a major topic, how do you assess the situation from today's perspective?

Let's start with the good news. The good news is that closures in cartonboard announced earlier this year have really happened. However, the disappointing news is that companies with high exposure to the U.S. market hesitate to make the necessary capacity adjustment and instead try to shift some of their volumes to Europe, adding further pressure alongside additional capacity within Europe and rising import competition from Asia and South America.

Obviously, I believe they will not succeed in getting more volume, but will just incur more losses. That's why we believe that the market environment will remain challenging until decision makers recognize the need for more substantial capacity reductions. But based on industry experience or my own personal experience, this process tends to be slow. But operating at just 70% to 90% capacity utilization in a low price environment, that some mills in the industry currently do, is simply not sustainable in the long run. So I expect further announcement of closures in the first half of '26.

How would you describe the current market's environment regarding demand and input costs and what improvements are underway at MM?

Yes. On the demand side, we continue to see no signs of recovery. This affects both large end markets like food and specialties such as beauty. Due to the weak demand situation, many input prices are also showing a rather flat or even declining development. So at the end of the day, it's really about self-help and investing into the future. So if we go division by division, in Food & Premium, we are investing in our packaging site in Romania to enable flexible and highly efficient onboarding of new business.

In Pharma, we will add capacity in the U.S. to meet the growing demand of our customers. Whilst our targeted packaging side optimizations in France and Spain will lower our cost base. In Board & Paper, our big CapEx project for a new digester in Kwidzyn is well underway and is planned to be completed end of '26. It will significantly reduce our energy costs and CO2 emissions. And this will boost Kwidzyn's cost leadership in virgin cartonboard even further and materially improve our cost competitiveness in Uncoated Fine Paper, Packaging Kraft Paper and Market Pulp.

Do you anticipate any restructuring that could still impact this year or next?

No. For this year, no further restructurings are planned. As for next year, we will do whatever it takes to improve our long-term profitability, but no decisions have yet been taken.

And finally, how do you plan to position MM going forward?

Yes. My clear priority, and the clear priority of the Board is to sustainably strengthen MM's competitiveness and earnings power, as a market leader, pursuing cost, technology and innovation leadership. The Fit-For-Future program will help us to get through another difficult year '26 and be the foundation for future profitable growth of MM from '27 onwards. Overall, we have an attractive product portfolio in consumer packaging. This is combined with a very invested low-cost asset base. We enjoy a solid balance sheet and all this will serve as a solid foundation for an attractive long-term growth.

Thank you, Peter, very much for this interview.

Hello, everyone, and a warm welcome to the [ OTRAN Air ] Conference. My name is Sarah, and I will be your host for today's roundtable of the Mayr-Melnhof Karton AG, short say MM Group. And I'm delighted to welcome the Head of Investor Relations and Corporate Communications, Stephan Sweerts-Sporck, who will give us some insights just in a moment.

And with no further ado, Stephan, I hand over to you.

Thank you, Sarah. Hello, and still good morning to everybody. I'm delighted to present the Mayr-Melnhof short MM Group to you in the following half an hour. It's our first time we are joining the Airtime, but in fact, Mayr-Melnhof is a very much grounded business. It's about basic products, which you know very much from your daily life.

The Mayr-Melnhof Group is made of 3 divisions, but basically around the same destination. We are producing consumer goods, and we are organized in 3 divisions. One is doing the printing of consumer goods, which you know from the supermarket. So when you buy your cereals, when you buy sweets, when you buy detergents, all these things could be made by Mayr-Melnhof and hopefully are made by Mayr-Melnhof.

So we are printers of consumer goods. We have a specialization also here since 2022 in Pharma and Healthcare Packaging because this is a dedicated business for this industry. But we are not only printing cartonboard and packaging, we are also producing cartonboard. So we are also focusing on the production of cartonboard and paper and especially, I would say, cartonboard from recycling and virgin fiber cartonboard.

From our geography, the Mayr-Melnhof Group is quite a European business. When you look here on the split of our geographies, about 80% of our business is located in Europe. Why? Basically, transport costs and the proximity to our customers. However, we do have some business in the Americas. This is particularly our pharmaceutical business where we produce in the U.S. for the U.S. and we do have some business even, I would say, emerging markets and outside of Europe, Middle East and even as far as Vietnam.

Just a short word to the U.S. business. We hardly sell products from Europe to the U.S. Most of our business in the U.S. we produce locally. When you look on the map, you see a number of dots. You see that first of all, the red dots, these are our food and premium packaging plants, mainly dominating in Europe. The black dots also in the U.S. and the fair blue dots, these are our big cartonboard mills, which are all operating from Europe.

We service about 4,000 customers and sell our products worldwide in close to 130 countries. When we look on the split of the business, where -- how much sales we do in the different segments, where do we get our results from, perhaps a first figure, the Mayr-Melnhof Group is about EUR 4 billion million business. And this EUR 4 billion is split about 40% in Board and Paper and an equal size in the packaging of Food and Premium and about 15% in the Pharma and Healthcare business.

When it comes to the current state of earnings, we see that the big bread and butter today we earn in the packaging areas in the Food and Premium and the Pharma field and to a lesser extent, in Board and Paper. I will explain to you why is this the reason, but certainly, we have to have the ambition to get the Board and Paper business on equal terms again with the Food and Premium Packaging business.

The company is quoted for more than 30 years on the stock exchange, and we have a core shareholder, roughly 60% by the Mayr-Melnhof family and descendants of this family, the family hasn't been in the management of the company for, I would say, 4 generations. We have 4 CEOs in the past 70 years. That might not be a big number, but ever tell you, well, we are a traditional governed company, some family members are represented on our Supervisory Board and authorize bigger M&A transactions as well as appointment of management and big CapEx projects to put in a nutshell.

When we go to an integration of this business because you see, well, we're producing cartonboard, we are producing the packaging out of cartonboard. It's always of interest, how does that fit together? Do you supply all the cartonboard internally? No, since the cartonboard and paper division is much bigger than our packaging operations, about only 15% of the output, which goes internally to our packaging operation. For those, it's about 40% of their sourcing.

Why not more? Well, it depends often on the final customer who decides from where the raw material should be sourced or even these customers have direct contracts with other cartonboard and paper producers around Mayr-Melnhof. So we are -- don't get always, I would say, both the cartonboard and the packaging. And we also produce quite a lot of packaging in the high-grade area where our cartonboard is -- I would say we have a very good cartonboard, but we are not in the premium segment of cartonboard, and this can be sourced only externally.

So far, this answer, when we give a first summary, Mayr-Melnhof is a global leader in fiber-based consumer packaging. So it's really, I would say, what people consume on an everyday basis when you go to the supermarket, when you go to the drugstore, when you go to a construction market, do-it-yourself market, you find all -- everything which is packed in cartonboard could be a product of Mayr-Melnhof. What we are not doing, we are not in the corrugated area, which is [indiscernible] pulp. This is a separate industry with a different technology and different market as well as suppliers.

We are internationally based with a focus on Europe, consumer goods for food, premium, pharma, trusted by brand name. So a lot of our business is with branded products. However, in the past years, since people -- let's say, consumption has been traded down, inflation, purchasing power has come down, also a lot of private labels, retail brands are serviced and supplied by Mayr-Melnhof. We have the vertical integration, which I explained to you and very much important also the ESG profile not as just to do it.

It's really an advantage, I would say, in our -- for our product that it is renewable, and it is recyclable. So there is a good future for this product, replacing plastic gradually, I would say, in the current state where everybody looks at cost. Sometimes plastic is still the cheaper solution. However, I would say the more sustainable and the more we get regulations in supporting sustainability, the more gradual or the more our product is getting induced in packaging consumption.

What is the investment story of Mayr-Melnhof? I think very important when you invest in Mayr-Melnhof, you invest in a market leader. And for us, and I'm almost 30 years with this company, 3 decades, cost leadership, technological leadership and innovation has been a foundation for our development through many years. And this is also, I would say, the way to the future because we are in a market which is continuously consolidating. We have enough supply or even an oversupply currently in Europe since the break of the Russian market, for instance, and since also the consumption levels have come down to some extent. So consolidation is in the hands of those who manage their cost and their technology best.

We have been growing organically and through acquisitions. The last big acquisitions were in 2021 and 2022. And since then, I would say we are looking forward to keep up a solid financial grounding. Sustainability in the operations and in the strategy, important for, I would say, for the development of the business, and it's a very long-term orientated story with the core shareholder base, but also with a very seasoned management team who know the business for, I would say, decades.

If we look shortly in the past, what has happened in the past 5 years because that's important for the current understanding of our, I would say, status currently, we have invested in the growing markets of virgin fiber cartonboard and pharma packaging in '21 and '22. We almost doubled our sales, doubled the size of the group.

We have divested small businesses, which were too small to be, I would say, getting the necessary economies of scales, which required too much CapEx with a too low return. And we have been exiting noncore business, and I would say, prominent business, which we sold this year was TANN. This business was printing on cigarette filters. So it was not producing the paper. It was just doing the graphic works for cigarette filters, and this was sold this year.

We invested, however, also in, I would say, in our asset base in particular '22, '23 with a focused efficiency, quality, sustainability and innovation. So Mayr-Melnhof is currently, I would say, and you will see that when I show you the CapEx graph in a well-invested status, requiring, I would say, a decent and limited ongoing CapEx.

The circular packaging is very much on work, I would say, when we look into the past, but also in the next years. So we are fulfilling everything, I would say, what the packaging waste regulation on the European scale is looking for, which, I would say, renewable and recyclable packaging and particularly all the CapEx went into optimization also in processes and the digitalization and automation of our business.

So these past 5 years grew the business when you look on the bar chart, you see, well, we have been a EUR 2 billion business, now we are about EUR 4 billion sales business. However, profitability has halved in the past 2 years. Why is this the case? It was particularly, I would say, the function of the overcapacity in the Board and Paper business, and we are currently working hard to get back this business. So I think that's the promise, that's the strategy to bring that back on old levels.

The CapEx, I told you, this was somehow a sharp activity in '22 and '23. And now we are back at the level of about 5% to 6% of our sales.

How did we finance our expansion or, let's say, the doubling of sales? It was by taking out Schuldscheindarlehen, it was by loans. We have since then -- since 2021 when we took out the loan, been reducing constantly, our second loan for the next acquisition to '21, '22 were the big acquisitions. And since then, we have been gradually reducing this debt. This debt was raised at a very, I would say, comparatively low interest rate. Our current average interest rate on this debt is below 2% and 80% of the debt is on a fixed interest base.

The equity ratio, I would consider still quite solid with about 40% plus. What is not mentioned here on the slide is the net debt-to-EBITDA ratio, which is currently at 2.5, which we feel, I would say, okay. But at the end of the day, we would like to have an even lower gearing in our company looking forward.

What are the challenges this year and beyond? I think the big challenge is getting back earnings levels, focusing on cash generation. This focus is not a new focus. We have already had that very much emphasized in the past year. So particularly both in paper, you will see that we have come back into a positive earnings range, but this is still not enough. That's why we have launched the Fit for Future program, which comprises projects around, let's say, across the whole group, not just Board and Paper. And this should bring more than EUR 150 million EBITDA as a structural EBITDA increase by 2027. So I think that's the promise. And this would also -- if -- and this is, I would say, the promise without market effects. And if that gets done, I would say we can recover substantially on our earnings situation.

The investment in share of sustainability and renewable energy would be, I would say, a further perspective, where can we get return -- a short-term return, a good return on investment in our industry that's particularly focusing on the energy side of the business.

Where would we be growing? I would say, if you ask me today, not in cartonboard because we have grown that. That's more kind of a consolidating part of the business. But for instance, in Pharma Packaging, there is still good headroom for further expansion.

And last but not least, the company at Mayr-Melnhof, we have been always growing and consolidating. So it's not always 2 steps ahead and 1 step back, but I would say, growth always accompanied by structural optimizations. That's how we create competitiveness and a solid earnings position over the years.

Our highlights from the first half year, well, that's already passed us, and we have, from the calendar already passed the third quarter. The first quarter we released at the beginning of November. But I would say the basic message was that we had a group-wide -- that we had a profit increase compared to the previous year by almost 29%. But on the level, still, I would say, from the Board and Paper division from a negative to a positive operating profit.

So it's improvement, but I would say, not enough and therefore, the cross group or group-wide improvement program. We sold TANN, so for -- with a gain of around EUR 127 billion. So when you look on the net profit, it's very much up compared to last year, but that's why we have the adjusted figures, which give you the real, I would say, operational business development, which also improved.

We see that the market stays soft. Well, look around, I would say, economies in Europe as they are and consumers are saving. But I would say we have a resilient, stable business, however, quite competitive. So it's our first interest to keep market share and look on the profit line as well. And in the second half year, there will be some maintenance work, which will filter into the P&L, as we said.

A short -- very short view on our P&L, just showing you with the red signs, the improvement of operating profit, operating margin, and I would say the terms where we came on our CapEx figure, we guided that CapEx will be below EUR 250 million for this year.

When we have a -- to round up -- in the roundup, look at the development in our 3 divisions. First, MM Food and Premium Packaging. When you see -- look here on the left-hand side, you see sales development throughout the past several quarters. It's quite a stable business to say so. It's stable on the top line, it's stable on the profit line and the margin, I would say it's a superior margin in the overall industry, yielding 8.5%, 9%.

And to keep that, it's already, I would say, a big exercise because who is on the other side on the table of this business, it's big multinational consumer goods producers, it's big retail chain. And in times as they are today, everybody is, I would say, saving. And so cost leadership and cost optimization projects are here on the agenda to keep up this business as solid as it is.

Second, Pharma and Healthcare Packaging. This business, which we acquired in '22 was a breakeven business with a perspective to turn around this business for 4 years. So we are now in year 3. And when you see well with this business is a profitable business. It's a stable business. However, last year was seeing, I would say, an emptying of the supply chain. We are back. We see a recovery in the demand of this business. We see a recovery or had an improvement in the profitability of this business. However, not yet at the levels where we think it should be after, I would say, a full implementation of our productivity increase measures and also, I would say, the sales development of this business. In the long run, this should be equal to our Food and Premium Packaging business with a yield of about 8%, 9% operating margin. So there is much headroom still left here.

And last but not least, I have a look on the Board and Paper division. You see, well, this business has also been stable from the sales point of view. However, we saw, I would say, the situation that cost and it was energy cost, it was utilization, capacity utilization, which was historically high in the 90s has come down to the mid-80 level at Mayr-Melnhof.

Now we are back at the, I would say, higher 80 level, but still the pricing power is quite weak due to the overcapacity. And on the other hand, the demand side in an overcapacity, you see, well, the utilization is important to run this business because cartonboard is a 24/7 business. And in order to run it, I would say, at an operating margin of 7%, 8%, you should be running more than 90% in the operations.

So here, we are, I would say, focusing on cost reductions. We are focusing on market share. And we ourselves have been very, I would say, reluctive in capacity expansion. However, apart from, I would say, the breakoff of the Russian market, the reduction of the consumption in Europe, we see still saw some Scandinavian capacities increasing because their idea was that in the midterm or short term even plastic would be to a much higher degree replaced by cartonboard.

But unfortunately, this did not happen. And so we are in a situation that we have an overcapacity of more than 20% in Europe, which has to be digested. And I would say, here, it's important as at the beginning mentioned to be a cost leader in this business because cost leadership is the decisive factor. And we would say Mayr-Melnhof operations are all in the upper half of cost competitiveness.

When we go to a final slide with the outlook, I would say, we don't see much of a change in the current market situation. It's continuing to be a challenging market environment, I would say, more a flattish development. We don't experience a sudden decline in the market. The inventory levels are on the normal, I would say, normal size. Very much important for us enhance competitiveness by this -- and contributing to the competitiveness and earnings side by our Fit for Future program.

This is not a very short-term program. I would say it's a program over 18 months, which has been kicked off, I would say, in these days, but we recently, and we will further comment on the results and on the progress of this program over the -- I would say, at least a quarter, half, annually. And I would say the first insight, a substantial insight we might give you with the release of our '25 full year results.

For the short term, we just highlighted that we have our annual maintenance in Q3 and Q4, so the Board and Paper figures will be impacted by this annual maintenance, which is more or less done by now.

I think summing up for Mayr-Melnhof, you see that it's a basic business. Mayr-Melnhof is a market leader in this business. We have always strived for cost leadership. We are here to stay in this business and do everything we can in order to improve the profitability of this business as early as possible. However, in the near term, when you think in months, we do not see or foresee a particular change of the overall consumption demand situation.

Thank you for listening. It was a pleasure having you here. And I think Sarah can now enter into our Q&A session, which is open.

Absolutely. Thank you so much, Stephan, for presenting the MM Group to us. I guess we get a really detailed impression of what MM Group is doing.

So ladies and gentlemen, we're now open for your questions, if you may have. So if you would like to speak directly to Stephan, just raise up your hand. And if you prefer to submit your question in our Q&A session, you're more than welcome to do that as well. And we will read the questions up for you. So let me take a briefly look. By now, we have no virtual hand, but received a question in the chat.

So Stephan, from which resources do you intend to generate the more than EUR 150 million profit improvement within your Fit for Future program?

Well, that's a key question we get in these days because EUR 150 million, it's not doubling our operating profit, but it's quite a substantial step up. I think we have -- it's not the first project, I would say, centering on improvement in a scale because we did, I would say, 3 projects with our sites in newer sites, newly and recently acquired sites in Poland and in Finland.

And I would say, practically speaking, most of the savings or improvement we get from operations; second, from the purchasing, procurement; third, from SG&A. So it's more the administrative part. And last but not least, from sales. So I think these are the 4 resources and in the ranking of the resources. And that's what we can say from the current experience and also from the current stage of the project. But the more we proceed, I would say, the more precise we can be explaining what's behind and where -- from which resources we draw this improvement.

All right. So let's have a quiet look in the queue. But everybody seems to be a more interested listener than asking questions. So...

No problem.

But we have another written question. So is there any major reconstructuring to be expected?

Restructuring, as I told you, is a constant -- a constant activity at Mayr-Melnhof with a constant duty to consolidate and restructure where necessary because we are a business in which you have to always concentrate on scaling up your business. And even from the past acquisitions, I would say, we acquired more than 20 plants producing Pharma and Healthcare Packaging. We have closed, I think, now 2 of them and another one is now in discussion. So I would say the ongoing restructuring is also on the agenda now, but not, I would say, in a massive or highly recognizable level.

And from the current perspective, any major restructuring is also not foreseeable. But I would say we are still in our projects, also the FFF project. We might see something like that, but I would say it's too early. We think that our competitive position is good enough to sustain the current weather situation in the markets. And I would say, closing a business currently would just benefit perhaps the less competitive competitor. And therefore, we stay with our business, but I would say, in an industry as ours, you never can rule out more pronounced restructurings to be seen in the future time.

Thank you. And in the meantime, we received another question. So how do ESG guidelines influence investment decisions or the product portfolio?

I think ESG guidelines, yes, because we made commitments in ESG. I did not show them in the presentation. But when you go through our annual report, you see that we have hard commitments on CO2 emissions. We have water consumption. We have, I would say, renewables from in our sourcing, biodiversity, et cetera. So these are criteria to which we committed ourselves.

And when I -- when you just remind -- recapture what I said, well, what is our perspective in investment? Well, it's a reduction of energy consumption. It's an increase of the efficiency of our energy. And we have, I would say, that's the main focus of -- in our CapEx pipeline currently.

So I would say ESG is influencing our business when it comes to CapEx, but also on a day-to-day basis because our customers who are branded products producers who have to see what they are sourcing responsibly produced products. Well, here, our -- let's say, the evidence that we have to show is a bit of a high, high importance. So sustainability is part of our everyday business.

Thank you so much. Another written question. Which specific milestones and levers will contribute the most to the bigger EUR 150 million Fit for Future program by 2027, e.g. cost blocks, plans, procurements, network optimization?

I would say it's the plants. It's the operations and the procurement. These are the 2 major contributors from today's perspective.

All right. And the next question is concerning the CapEx 2025. You mentioned around EUR 300 million initially, but recently guided below [ EUR 20 million, EUR 150 million ]. Which projects are being reduced or postponed without harming your market position?

Okay. Well, I think we have not postponed any project, which will harm our -- I would say, market position or I would say it's more, I would say, those projects, which were perhaps looking for more positive market development and had an expansionary effect. These were postponed or reduced.

We have now a strong focus on all those projects supporting us on the cost side. And as you have seen, we invested a lot, I would say, in the past years. So the company is well invested. We have a good asset base. And with these reductions, we do not -- I would say, we do not inhibit any potential of development for the company.

All right. And now the investors are hot. So we received another question.

That's good. Keep on asking.

Here. So following the TANN proceeds or TANN, what is your target leverage, net debt-to-EBITDA? And how will you prioritize between deleveraging dividends recently plus 20% to 1.80 and selective M&A?

Okay. I think it's all about the cash situation and the cash flow situation. I think from the leverage or net debt-to-EBITDA, 2.5 is good if we can go below, we will -- we can do. We have, I would say, generated funds from the divestment of TANN and prioritize here the reduction of debt. On the other hand, we are a family, I would say, have a family key shareholder in our company and families usually like dividends.

So the dividend will also be of a prime importance looking forward, but also, I would say, in line with the profit development. Mayr-Melnhof has always, I would say, followed a payout policy to pay out about 1/3 of our net income and I would say, be more on the dynamic side, if possible. The dividend will always be decided when we've got the final figures. So it's a bit too early to speak now about dividends, but the principle is to pay out the dividend and to pay out 1/3 of the net income.

When we look forward to M&As or further growth, I told you we are positive about it in principle. But I think, first of all, we have a priority in getting the profit situation in a direction, which is, I would say, back to normal or at least a feasible size. On the other hand, if something comes by, let's say, small and medium transaction, we would look at it.

And from the focus, I told you, particularly in the pharma area, we see space for more, I would say, for more market concentration, some spots which geographically, which we have not filled so far. So there is also a yes for, I would say, medium -- small and medium-sized M&A activity in the time forward, perhaps not in the next quarters, but I would say, looking into the next 1, 2 years.

All right. Thank you so much. The next question has North America bought Essentra Pharma, developed independent growth targets? And how do you secure raw materials, energy and talent in that region?

That's a good question because -- and I can say, yes, we have growth targets not just for the whole Pharma and Healthcare division, but also for its regional presence and I can say that the U.S. is the fastest-growing and best-performing part of our Pharma and Healthcare division so far. So that's good news.

We are positive about it and allocate, I would say, resources to the development of this area independently and the sourcing works mostly locally there. So we are not depending, I would say, from -- on imports, and that's important that, I would say, we have an independent situation in North America.

Thank you so much. So with a view to the queue and the chat, it seems by now there are no further questions. So dear participants, if there's still anything you would like to know or ask Stephan, just give us a short sign. Otherwise, I guess we're good in time.

So with this, we will come to the end of today's roundtable. So thank you, everyone, for joining and your shown interest in the MM Group. And also a big thank you to you, Stephan. It was a pleasure to hosting this roundtable together with you. So from my side, thank you very much. And some final remarks, Stephan, from your side.

Yes, I would say this was just a brief introduction or summary of the current state of our company. You're always invited to drop me a mail or call me if you have a particular interest, if you have a suggestion, if you want to engage more. So I'm here to help you to guide you through the company, to answer your questions. And so it's just a hello and it would be a pleasure to continue to stay in contact with you.

Thank you very much.

Good morning, ladies and gentlemen, and welcome to the conference call of Mayr-Melnhof Karton AG. [Operator Instructions] Let me now turn the floor over to your host, Stephan Sweerts-Sporck. Please go ahead.

Good morning, and welcome on the part of MM Group. It's a great pleasure to have you joining this Q&A conference call on our first half year results, which we released just this morning. Besides the press release and our half year report, we have also published a CEO video statement on our website, mm.group. This call is now designed to give you an opportunity to ask direct questions regarding today's communication to our CEO, Peter Oswald, and our CFO, Franz Hiesinger.

Since this call addresses an international audience, we would kindly ask you to ask your questions in English during following Q&A session. And before we open the floor for questions, Peter, may I ask you to start with a brief summary of our key messages?

Yes. Thank you, Stephan. Welcome, everyone, to this presentation, and thanks for the interest in MM. As this call is mainly about Q&A, I would like to be pretty short in my introduction. And I think in the documents and in the video statement, all informed -- information has been provided.

The real highlight is that our first half year and also the second quarter are up against last year, which is pretty rare in our industry given the markets we are in. And the reason is that our self-help program has enabled us to achieve this. We call it Fit for Future. Fit for Future is about sustainable structural improvement, so excluding windfalls from the market, and one-off cost savings. And unlike many others, we are not benchmarking against inflation. So let's take the example of personnel costs, they have to go down in absolute numbers to be accounted for as saving and not just be lower than inflation.

Whilst we do not like to put forecast numbers on these programs, this time, we have given a very conservative number to help you in your analysis. We take actuals of '24, obviously excluding TANN as a basis, and want to reach more than EUR 150 million sustainable improvements by 2027, with an emphasis on more than. So no run rate, but real '27 numbers. We will regularly update you and hope to revise this number upward over time. Obviously, the real change of the number will be influenced by market fluctuations.

So as you could see in the report, the sale of TANN provided us with a onetime windfall of preliminary EUR 127 million, and to make the analysis for you easier, we'll give you both on a group level as well as on the level of Food and Premium, the numbers of last year and this year, excluding TANN. So we have divested a noncore business at record earnings, giving us more financial flexibility.

Just to remind you, we financed a lot of our net debt in '21 at 7 to 18 years fixed interest rates of around 2%, and this keeps our financing costs at a low level and will do so for some time.

On the outlook, we are not counting on any market improvements. If they come, it would be great, but we have to improve results in a continuing weak market. That's our baseline we work with. We have superior products with market-leading positions with a culture of operational excellence and an excellent service offering, which our customers really appreciate. And so the management team feels confident about our future.

And yes, now Franz and I are happy to take your questions. Thank you.

[Operator Instructions] And the first question goes to Michael Marschallinger of Erste Group.

I have two. Firstly, on the overcapacity issue in the Board and Paper division. You said also in your video statement, the persistently higher, could you give us a bit more color on recent developments. I think on the last call, you said you see 1 million tons in overcapacity in FPP. If you could give us some more color on this topic.

Yes. I think overcapacity, the good news is that one mill in Finland, in FPP and one mill in Spain [indiscernible], which was announced in January have really closed down. In the meantime because you never know if sometimes things are announced and then they are not carried through as we've seen with the mill in Italy. So the good news is that they have gone out. But overall, I think the situation, so it has marginally improved but not significantly improved. And as we have highlighted -- as I've highlighted in my statement, in my video statement, so the overcapacity is now somewhat less.

But equally, we have the possible secondary effects of the Trump import duties. So some -- those who are very exposed to the U.S. will most likely that our prediction try to relocate some of their volumes to Europe. And so that's why we conclude overall with the market situation will stay as difficult as it is now for the time being until people -- the managers realize that they have to do something and take capacity out. But from experience, I know that this thought process takes always an incredibly long time.

Okay. understood. And secondly, on the EUR 150 million cost savings program you talked about. You mentioned personnel, of course, need to go down in absolute numbers. So to achieve these cost savings, are you expecting any major restructuring costs now in the second half of '25 and '26?

So first of all, just because you said EUR 150 million or more than EUR 150 million. Sorry to be so detailed here. So I guess it will be a bigger number, but let's wait and see. You only can report on savings and profit improvement if they are really done. So we'll have ongoing, let's say, footprint adaptations. And we've highlighted, for instance, that in the Pharma sector in Southwestern Europe, you see a one-off item of somewhat about EUR 5 million, and there will be more to come.

Overall, the principle is we will do whatever it takes to improve our profitability. So for this year, I don't expect something big. For next year, yes, everything is possible. Having said that, one should also highlight that our mills are in a very good shape. And therefore, I don't necessarily expect bigger changes, but we really have to see how markets develop.

And -- but you said you want to bring absolute personnel costs down. So any social plans then maybe?

Yes, we shouldn't -- I mean, personnel costs was an example and they are -- so there will be a small portion of everything. So it's about procurement. It's about a lot of operational efficiencies which we can drive. We can combine assets. So there are a number of issues. It's not about a big personnel reduction program, but some personnel reduction will be part of it. So it was just an example because it's easier to say, I could also have taken an example that we -- in procurement, we -- the only -- what will only count as savings is, which is a saving on top of market development. So if wood costs fell 3% and we can reduce costs by 8%, then 5% would count as a saving.

And the next question goes to Mr. Cole Hathorn of Jefferies.

A few from my side. I'd just like to understand a little bit better the performance of the Mills division. Yes, profitability is still low, but we saw waste paper prices rise quite a lot through the second quarter. And I was wondering what Mayr-Melnhof did to kind of protect profitability despite the raw material increases. So just trying to understand how you maintain profit despite your raw materials going higher? And then sticking with raw materials, just like your views on what you're seeing in kind of the Polish wood markets and cost dynamics and also anything you can talk about on your finished wood costs considering we are seeing some form of stabilization of wood costs up in the Nordics.

Yes. Thank you, Cole. On the first, it's -- we had, as you correctly mentioned, price increases in paper for recycling. We started the year with a price increase. Unfortunately, we were the only one in our industry. And therefore, we have corrected or had to correct it and have taken our learnings from this. At the moment now, we see a more positive development as you know. But the first half year was really -- we only could keep our margins or slightly improve the margins because of cost reductions, which we did with our Fit for Future project.

So it had already a significant effect on the first half year but only limited to very few plants. On the question of wood costs in Poland, they are pretty stable. In Finland, they have been rising a significant clip, but for the grades we need now, we see also an easing of the wood costs. But it's not to an extent which will really drive our profit. So it's very marginal.

And then maybe following up on order books and views in -- let's start with the food side of your Packaging business and then Pharma next, but any kind of changes in order books or thoughts on customer orders. And the reason I ask is we've seen a lot of the consumer staples companies that are trying to manage their inventory levels, there's been variations in what they've been talking about on underlying demand and consumer strength. So I'm just wondering if there's been any stabilization or improvement in your order books or any thoughts you can provide there on the outlook.

Yes. With regards to food and also some other grades like personal care, we see a really flattish market. So statistics are just -- there's just noise in the data, but no real trend. So we haven't seen any slowdown, but equally, we don't see a pickup. In beauty, which is a small segment for us, we've seen definitely a decline given weak demand in China, et cetera, from the big beauty companies.

And in Pharma, we had a very weak second half year last year. And there, we have seen that things have improved, but it's not a boom. But definitely, the market has -- we would consider it slightly growing again after a very disappointing last year, especially in the second half. Does this answer your question?

Yes. And then maybe just one more, which is -- it's a difficult question to answer, but I'd love to hear your thoughts. I mean you've been in the industry for a long period of time, and you've seen multiple cycles. When I look at the various players out there, debt financing is becoming more challenging. The markets are oversupplied in a lot of the paperboard grades. What do you think is a trigger for exits? What was the turning point where you saw competitors previously in the past start to close capacity because we do have some -- even the listed bonds of some of your competitors trading at kind of $0.70 to the euro, you've got some smaller players out there that are family owned. It's more difficult to understand their financial structure. But what do you think will be the turning point to actually see capacity closures in the industry? I would just love any thoughts you have there.

I think mainly they happen with changes of management. Unfortunately, with too many managers in our industry who keep to be enthusiastic and optimistic beyond any logic and factual analysis. Most of the time, it's time when these managers are changed that the new manager takes the right decision. That's one trigger. Another trigger is -- and we have seen with some competitors, some changes, and I think that keeps a new perspective.

The other thing is obviously CapEx. If you have to spend money on an asset where you make cash losses, it's -- you think twice about it and time will help. So I expect -- I mean, logic will dictate that low [indiscernible] the next month in capacity from the experience, I think it will be somewhere mid next year. that people just run out of money in a true sense or see that they can't fill their machines. I mean we have -- there are mills now in our industry, which run 60%, 70% of their time. And if you do this and you have low prices, when you run it, you are in a scenario which cannot last forever.

So I think some players, especially those who have created a new capacity or who are exposed to the U.S. will sooner or later take -- learn the consequence and give up the optimism that they can win lots of market share or whatever.

And then maybe if I just link that to Mayr-Melnhof business, I mean, you talked about CapEx being below EUR 250 million this year, but you have made quite a few investments over the years to improve your cost competitiveness. Would you mind just giving some examples of some of the older investments that you've made and maybe framing it? An investment to reduce energy consumption in one of your mills, how much does it save versus someone else that hasn't done it? Because I'm just wondering if you're if you're struggling to fill your machines, are you necessarily investing in the maintenance of your mills? Or are you becoming less competitive as the[years] go past if you don't make those investments? And how do you stack up versus the competitors?

Yes, I mean it's a different story for every investment. There isn't an underlying theme. But just to give you one example in coated liner, we have because of our investment, we had the worst product in the market with its technical parameters. And now we have the best product in the market. We have reduced -- we reduced our energy consumption by more than 10%. We have -- so technical parameters are better, energy consumption is lower because it's -- capacity has increased. So -- and still, we couldn't really benefit in the market because we see time and again that these rebuilds just take time until they are fully utilized.

There were the delays in the CapEx, the machines didn't -- immediately people have to relearn it because they are much more sophisticated, the machines. And these -- all these benefits flow through. And basically, we are there now in a situation where customers really want to buy from us. And that's just one example. But we have also other projects underway, for instance, in increasing to make a step up in -- or a step down in our energy consumption, where we will save for the whole mill by end of '26 roughly 20% of our energy. So we also have things still in the pipeline.

And the next question goes to Markus Remis of ODDO BHF.

I would like to follow up on this more than EUR 150 million of cost savings. Can you maybe shed some light on the expected phasing in? Will that be very much back-end loaded? Or should we see kind of a meaningful effect also in 2026? And related to that, I mean, you mentioned some footprint adjustments. Okay, so I take this as plant closures. Anything you can tell us already in terms of one-off effects that we should bake in into the second half?

Yes. Yes, to start with your last comment. So you shouldn't expect too much extraordinary costs or one-off costs for the second half of this year. So taken a number similar to the first half year, and you will pretty much be on -- to the point. For next year, obviously, that's difficult to predict because it does depend on market development. So on the phasing in, we had the first benefits already in '24, something about EUR 20 million. We had quite substantial number already in the first half year. In the second half year, we expect this number to go up.

So it's gradually coming in. It comes -- the positive effects are obviously now limited to two big mills where we are in an advanced stage of the process and are really harvesting the benefits in -- we've already kicked off the project on a group-wide basis in February, but obviously, it takes time until these things work out. But they -- so every half year, a new chunk comes in, and we will see where we will end then for '27 overall, but there we'll need more visibility.

All right. Okay. So just to kind of have -- a kind of an earnings bridge, how much of this EUR 100 million or more than EUR 150 million, you would still see as incremental after 2025, and you see EUR 20 million already '24, a substantial part in the first half, more in the second half, so how much incremental is remaining for the next two years then?

Yes, that's big, so on this year, we have a pretty good outlook and the number will be a high 2-digit number for this year. That doesn't mean that there is nothing left for the next year, but just that our projects are not so concrete that we have enough data at hand. And therefore, in the update, which we will provide in March, then we will see what we really have achieved this year, which we pretty much know, but also what the outlook for '26 is and potentially '27. But it's too early. We are in a concept phase. So people have good ideas about how we can save things, but then it needs a detailed analysis and obviously, an implementation and the implementation sometimes takes up to a year.

Okay. That's a fair statement. And I mean you talked here about sustainable profit improvement in the outlook statement, excluding market fluctuations. So the interpretation that it clearly depends on kind of the general trading conditions, how much you will actually be able to retain is the right one, right?

Yes. Let's say, in a bridge, we had -- which would be '27 against '24, we would say, okay, prices in our various products have increased by so much. So market, major input costs, wood and paper for recycling have increased or decreased so much or energy. And the rest is where our measures where we could achieve the procurement savings beyond changes in the market prices, where we together have reduced fixed costs, your combined plants, whatever it is. So our result '27, we don't know what it will be because we don't know yet the changes in the market, but it's just over and above what the changes in the market. So hopefully, if, let's call it my prediction is right, that the market will turn in mid of '26, This would then, if it's in a positive way, be on top of it.

Okay. The market turn you mean for Board and Paper?

Correct. Mainly for Board and Paper, but also in Packaging, if you analyze also our reports of our competition, you see that it's also a very tough market at the moment and at certain point in time, then people become more reasonable again.

And because then they come to the U.S. aspect that you mentioned the import duty is it set at this 15% that is now the...

Yes. I mean, to make predictions on the U.S. is impossible, not even for half an hour. But it is the fact we calculate we have to work with. So we are -- we have very little exposure of exports to the U.S. But of course, we had plans to grow these exports. And given the current circumstances, that doesn't look very likely because 15% is a figure which is more than our profit margin. And given the weak dollar, this is unlikely.

The problem -- this isn't so much a problem for us. But as I mentioned with the secondary effects, some of our competitors in virgin cartonboard have a very strong exposure to the U.S. And we will see if they are realistic in their capacity or whether they try for some time to reallocate this to Europe and then learn when it doesn't work to take, anyhow what they should have done in the first place without burning a lot of money.

Okay. And how much of European production flows into the U.S. or did flow before the tariff was set?

I'm now not sure because there are also different statistics. Unfortunately, it's a bit an unclear figure for the reasons that it's combined with other grades like liquid packaging board. So the numbers in the export statistics are sometimes misleading. But let's say, there are players who sell 10% to 20% or 25% of their production to the U.S.

Okay.

This is -- so I'm specifically now referring to virgin cartonboard. In recycled cartonboard, this is a very small topic. So there are hardly any exports. And therefore, the topic is not really relevant. That's again our advantage of being somewhat diversified. So with our packaging business, which is not affected of that at all. We have our recycled cartonboard business, which is not affected by this effect as well or very little. And with virgin cartonboard where the possible secondary effect can be significant for some time.

Okay. My final question relates to the factoring. If you could remind us of the figure or the level at the end of the first half, and although if you could elaborate on the outlook until year-end? At the end of last year, it was like close to EUR 380 million. Is that kind of also the target level for year-end?

I hand over here to my colleague, Franz.

We are about EUR 30 million below this figure.

30 million below the EUR 380 million, okay.

Yes, so we are around EUR 350 million.

With the scope of an increase to that level by year-end?

Slightly, but not in a big extent.

Yes, there's one final question, sorry. This -- just to put this EUR 150 million or more than EUR 150 million into perspective. Can you indicate how much of the addressable cost base that is because you've got currently quite a big share of variable costs, so how much of the addressable cost 2024, does this represent?

Yes, it's about 5%. So EUR 3 billion, more than EUR 150 million, but EUR 150 million is 5%. I would go benchmarking it against our current operating profit, and there, I think it's quite significant, especially if we can upgrade the numbers later on.

Ladies and gentlemen, we didn't receive any further questions. In the meantime, we will leave the line open for a couple of moments. [Operator Instructions] We have a follow-up question. It goes to Mr. Hathorn. Please go ahead.

I just wanted to ask, do you have any views on the direction of travel for the waste paper markets, effectively OCC for your business? I know we've seen a pullback in OCC prices. And I'm just wondering if you're starting to see them stabilize or any direction or travel or thoughts you can provide into the back half of the year?

Yes. Thank you, Cole, for asking it. But actually, I have no view. I think you might have a more educated view than I have listening to more market participants. So I have no idea, they may go up tomorrow or go down. It's like prediction on the U.S. dollar. Our experts say it's on the way down, but also our experts have a good view over the next 4 to 6 weeks and not beyond it, so yes, sorry I have no particular view on that.

Okay. We didn't receive any further questions, so let me hand back over to your host.

Yes. So I would like to take this opportunity to say a great thanks to all our employees because such a program like Fit for Future, obviously, of course, there's also a lot of concerns. And I can see that to a very high extent, people are very enthusiastic contributing. We have seen in the two mills where we are far advanced that there is a completely -- a complete cultural mind shift that people now consistently think about how to do things in a new more efficient way. And this is already spreading now throughout the organization.

So this is absolutely great because a lot of companies do such projects and the outcomes are very, very different. It can destroy a lot of culture and just lead to frustration, and it can evaporate the teams and bring them to new levels. And that's what we see. And therefore, with the management team also have a high trust in this project. And we also think that we are very well placed for the future, but the next 12 months, I think, will still be very challenging until some management concept failed or changed. And with this, yes, thank you for your interest and Stephan, please.

Thank you, Peter, for your final words. Thank you all for your participation, questions and the interest in our company. Our Q3 results will be released on the fourth of November. So we wish you now a great day and say goodbye.

Welcome, everyone, to the announcement of our 2025 half year results. I am really pleased to report a 29% increase in adjusted operating profit in the first half. And this strong performance was primarily driven by our Board and Paper division, which delivered a significant earnings uplift due to our profit improvement program, Fit-for-Future at 2 major mills in a difficult market. And in light of this success, we have now launched the Fit-for-Future program on a group-wide scale to deliver a structural and sustainable improvement in earnings quality. And we are confident that this program will enable us to achieve structural sustainable profit improvements of over EUR 150 million by '27 compared to the '24, excluding TANN baseline and excluding market-related fluctuations.

The sale of TANN Group was completed on schedule in the second quarter, resulting in a preliminary one-off income of EUR 127 million. And strategically, this move allows us to concentrate on our core business of consumer packaging, having divested the Tipping Paper business at a time of record profitability.

Now let's come to the performance of our divisions. Food and Premium Packaging continued to deliver solid returns, driven by service excellence and innovation. And following the deconsolidation of TANN in early June, we also report figures, excluding TANN for your analytics. A main goal is now to sharpen our competitive edge for more organic growth and higher profitability.

Pharma and Healthcare Packaging experienced mixed market dynamics. The U.S. market showed growth. However, Europe showed a slight decline. Nevertheless, the division successfully offset the lack of volume growth through productivity gains as reflected by the margin improvement in Q2. And in addition, a footprint optimization in Southwestern Europe is underway to enhance competitiveness and efficiency.

Finally, MM Board & Paper operated in a sideways moving European carton board market, while the uncoated fine paper market experienced a sharp downturn since the beginning of the year. Overall, we could slightly increase sales and production volumes. Input cost developments had a largely neutral effect so far this year. But thanks to the early contributions from the Fit-for-Future program, so our self-help, adjusted operating profit for Board and Paper improved despite this more difficult trading environment. At this point, I would like to thank all my colleagues for their excellent work. Well done, keep on the good work.

Now looking at our group balance sheet, it stayed solid with an equity ratio of 47% and a gearing at 50%. Net debt to adjusted EBITDA stood at 2.5, nearly unchanged from year-end '24. The reason why net debt did not reduce following the divestment of TANN was mainly a reduction -- a sharp reduction in trade liabilities driven by a maximum usage of cash discounts. Half year CapEx amounted to approximately EUR 105 million, below both last year's level and depreciation. For the full year, we expect CapEx to stay below EUR 250 million, which is less than originally anticipated.

We continue to benefit from long-term financing at low interest rates, which we fixed in '21. Earlier this year, we launched a share buyback program for up to 1 million shares to take advantage of our undervalued share price. And as of August 18, we have repurchased around 436,000 shares, representing 2.2% of all outstanding shares. Now sustainability remains a top priority for MM, and we are proud to report a further reduction in our carbon footprint with a 5% decline in the first half of the year. So our continuous investments really yielded benefit now. And this is also recognized by the outside world. MM received an A rating from CDP in the climate category and maintained leadership positions in the forests and water security categories. And furthermore, our inclusion in CDP's Supplier Engagement Leadership Board highlights our commitment to responsible sourcing.

And finally, EcoVadis awarded MM a gold rating, placing us amongst the top 5% of companies assessed. So let's now look at the crystal ball of the future. We expect markets to remain soft. We don't see any upward movement and there will be persisting overcapacities, especially in virgin carton board. Whilst our exports to the U.S. are less than 1% of our sales, U.S. import duties will have significant negative secondary effects, especially on the European virgin carton board market.

Order intake in both Packaging divisions are currently flat. In the second half of this year, our Board and Paper division will be impacted by annual maintenance standstills. And in Poland, we will even have a cold outage done every 5 years, and therefore, the financial impact will be higher than usual at a level of approximately EUR 40 million. Two-thirds of the profit impact will be in Q3 and 1/3 will be in Q4.

As a result of the standstills and due to the absence of TANN's contribution, earnings in the second half of this year are expected to be lower than in the first half. That said, we remain fully committed to enhancing long-term profitability. And as emphasized earlier this year, we will do whatever it takes to strengthen our earnings base.

We -- the whole management team of MM are confident that the Fit-for-Future program will play a vital role in MM's long-term success, contributing over EUR 150 million in structural sustainable profit improvements by '27 compared to the '24, excluding TANN baseline and excluding market fluctuations. So this program is not about some short-term savings. It's about structural cost improvements for the long term. And we will continue to inform you regularly on the progress of this important program.

Now in summary, MM is well positioned to create sustainable value, backed by a solid financial foundation, but most importantly, a cost and market leadership position in our core consumer packaging business.

Thank you for your attention, and I wish you a good day.