Monday, July 22, 2024
Koskisen Corporation recently conducted a pre-silent period call for analysts. This press release highlights the main questions and answers discussed during the call. Koskisen’s silent period for Q2 2024 began on July 17, 2024. The half-year financial report for January-June 2024 is scheduled to be released on August 16, 2024, at 8:30 a.m. EEST. A Finnish-language webcast will follow at 10:00 a.m. EEST, with the link to be shared later.
Q&A Highlights
Q: Have there been any challenges in the availability of roundwood?
Koskisen: The availability of wood has been consistently good, ensuring sufficient raw materials for planned production. Raw material reserves are also at good level, supporting a smooth start to operations after the summer shutdown.
Q: The level of raw material reserves compared to normal? Have birch or softwood stocks still been kept higher to avoid a price spike in May, for example?
Koskisen: The stock situation in softwood has been good, and limited purchases have been made during the price peak. The birch reserve has also strengthened towards the summer, and birch-dominated stands are still actively purchased.
Q: Has the upward trend in roundwood prices affected Koskisen’s wood sourcing strategy in terms of timing or purchasing volumes?
Koskisen: Our purchasing strategy has remained largely unchanged, maintaining normal operations. We aim to avoid seasonal price peaks while ensuring a steady supply of raw materials.
Q: How long is the delay in roundwood prices reflected in Koskisen’s result in the current environment?
Koskisen: Our raw material reserves, including vertical, roadside, and factory stocks, typically vary between 3 to 6 months depending on the season and market situation. Consequently, the impact of price changes in a single month is relatively minor. We primarily use reserves based on the First-in, First-out (FiFo) principle.
Q: Have there been any unplanned stoppages or disruptions in production during Q2?
Koskisen: There have been no significant deviations in production. Chipboard production has been slightly restricted by temporary layoffs, primarily caused by delays in the recovery of the construction sector.
Q: Aftermath of strikes in the transport sector: Has the strike that ended in April had a significant impact on logistics costs or transport in general?
Koskisen: In Sawmill Industry, the strike has not affected logistics costs. However, its effects will be long-lasting, as products delivered to long-distance markets are now arriving to customers in large batches. Customers have replaced deliveries from other countries. This creates a certain uncertainty in the market. In the Panel Industry, the strike did not significantly affect Q2 deliveries.
Q: Have the deliveries postponed from Q1 been delivered to customers as expected?
Koskisen: Sawn Timber deliveries have been delivered to customers as planned. The last deliveries were sent to customers in June. Deliveries from Panel Industry have also been delivered as planned.
Q: Has the ramp-up of the new sawmill in Järvelä proceeded as expected? Where are you cumulatively in relation to the targeted production volume?
Koskisen: The ramp-up has progressed, although slightly slower than estimated. By the end of the quarter, we were already more or less in line with our forecast daily production volumes. Although production volumes per shift are still below target, this will be compensated by running the line in three shifts.
Q: What were the price and demand trends for sawn timber in Q2?
Koskisen: Construction activity is globally quiet. Koskisen’s sawn timber order book remained at a normal level relative to production, and the stock situation is normal. The price of sawn timber increased slightly compared to the previous quarter.
Q: What were the price and demand trends for plywood and chipboard in Q2?
Koskisen: The demand and price of plywood have remained stable. While the demand for chipboard has also been stable, it is at a lower level than usual. Chipboard production has been restricted due to temporary layoffs, but the price of chipboard has remained stable. Improved demand for chipboard requires a recovery in construction and renovation. In construction, the recovery in demand will be visible with a delay, while in renovation construction, if potential consumer confidence increases, the recovery of demand may be faster.
Q: Kore business expansion investment: timing of EUR 3 million investment? Full completion date of the production plant? Revenue/EBITDA impact?
Koskisen: The unit began production at the beginning of July. The machine base will be gradually increased, with target capacity expected to be reached by the end of H1 2025. Beyond that, there is potential for further capacity increases. Most of the first-phase investment will be allocated to 2024. We do not provide separate comments on revenue or EBITDA, as the Kore business is part of the Panel Industry segment. The business case supporting this investment is strong: demand for Kore’s products is good, and the investment also enables new customers.
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