Smurfit WestRock PLC (SW) 2017 Q3 法說會逐字稿

Hello, and welcome to the Smurfit Kappa Third Quarter Results. (Operator Instructions) Please note, this call is being recorded.

Today, I am pleased to present CEO, Tony Smurfit. Please begin your meeting.

Yes, thank you, operator, and good morning and thank you for taking the time to join our 2017 Third Quarter Earnings Call. I'm joined on the call today by our Group CFO, Ken Bowles; and our Group Treasurer, Paul Regan.

Before commencing, I would refer you to the note on forward-looking statements set out in our press release and presentation, which also applies to our discussion today.

I expect, at this stage, you will have had the opportunity to review the release. So rather than go through our performance line-by-line, I will provide a brief summary and then go to our Q&A. A third quarter presentation is also available on the Investor Relations section of our website.

For the third quarter, we are pleased to deliver strong sequential progress in group EBITDA margin of over 15%, with good corrugated volume growth of 3% and revenue growth of 4%. On an underlying basis, our third quarter EBITDA was up 4% year-on-year and reflects higher earnings in both Europe and the Americas.

As expected, our third quarter EBITDA margin improved to 15.1%, up from 13% and 13.9% in the first and second quarters, respectively. Our margin progression has been driven by our relentless focus on cost take-out, the benefits of our strong capital programs and box price recovery.

Our Q3 margin should also be viewed against the backdrop of continued high input costs and adverse currency movements. Rising recovered fiber costs resulted in the headwind of over EUR 40 million for the quarter and EUR 111 million for the year-to-date compared to last year. We will continue to offset these cost pressures through our ongoing efficiency investments and further price recovery as we progress towards year-end and into 2018.

During the quarter, we also had some one-offs which had an adverse impact on our results. The group had unplanned downtime in our kraftliner mill in Facture in France, and we were also impacted by natural events with hurricanes in the Caribbean and the Gulf Coast of North America and also earthquakes in Mexico. Thankfully, none of our people was injured.

We nevertheless delivered a solid quarter 3 outcome and an improved margin performance, which is a testament to our team, the strength of our integrated business model and our geographically diverse portfolio of businesses.

Turning to Europe. EBITDA was up 3% year-on-year. This was achieved against a backdrop of increased recovered fiber costs of EUR 26 million or 16% in this region. Together with very strong demand, this has resulted in price increases in both kraftliner and testliner containerboard, which, in turn, has necessitated corrugated price recovery, which is continuing for the remainder of 2017 and into 2018.

During the quarter, we delivered a margin of 15.3%, driven by the continuation of our capital programs, the benefits of our integrated model, the strong demand I've referred to in most markets and corrugated price recovery.

On European product pricing, recycled containerboard prices in our main European markets increased EUR 25 per tonne in August, bringing the cumulative increase from January 2017 to an average of EUR 105 per tonne. Inventory levels of recycled containerboard remain very tight.

Global demand for kraftliner also remains very strong with very tight global markets. A price increase of EUR 50 a tonne was implemented in August, bringing the cumulative increase from January 2017 to EUR 150 per tonne in North Western Europe and a further EUR 20 to EUR 30 a tonne of increases in Southern European markets.

Finally, on our European business, I'm happy to announce we continued to expand our geographic reach in Q3 with the acquisition of a corrugated plant in Central Moscow. We are now the largest international corrugated business in Russia. Just after the end of the quarter, we also agreed to acquire a high-end display and corrugated business in Greece. This acquisition provides us with a platform for future expansion in that region.

We in Smurfit Kappa remain a disciplined acquirer and will continue to deploy capital on acquisitions where we believe they will create long-term value for our shareholders and enhance the overall quality of our business by both expanding our footprint and our production capacity for our customers' benefit.

Turning to the Americas. We delivered corrugated volume growth of 3% and a sequential increase in margin from 14.2% in the second quarter to 15.4% in the third quarter. EBITDA for the third quarter was down 9%, predominantly due to the higher input costs and adverse currency. On an underlying basis, our Q3 EBITDA was 10% higher year-on-year.

As with our European business, our Q3 outcome was impacted by higher recovered fiber costs, together with our net short position in containerboard at a time when U.S. containerboard export prices into Latin America are over 30% higher year-on-year. These input cost pressures were offset in part by corrugated price recovery, which, as in Europe, is continuing through the remainder of the year and into 2018. We continue to see significant opportunities for growth and development in this region, both organically and through acquisition.

Recent investments of close to EUR 100 million in our mill system in Colombia and Mexico, just completed, support an improved operating platform into 2018 and beyond.

Turning to our financial metrics. Our balance sheet is in good shape, with net debt-to-EBITDA continuing to trend downwards at 2.3x at the quarter-end against 2.5x at this half year point. Our return on capital employed remains broadly in line with our target of 15%. Our cash flow is also solid, and we delivered EUR 152 million of free cash flow in the quarter and EUR 198 million for the year-to-date. Our strong balance sheet and cash flow provides us with financial flexibility. We intend to articulate our medium-term vision, growth drivers and key performance measures in February 2017.

In conclusion, we are pleased with our Q3 outcome. The demand environment for corrugated remains strong and an increasingly tight global containerboard market, we continue to invest in our asset base to support our customers. As a point of note, many of our customers are viewing security of supply more and more as a key differentiator in our total offering. Our Smart paper portfolio of business applications allows us to provide our customers with the broadest and most innovative range of paper-based packaging products in the market, which ultimately proves significant value to our customers and helps them succeed in their marketplace.

As we head towards the end of 2017 and how the year is turning out, our initial optimism for the year was and continues to be well-founded. Up to this point, we've dealt with over EUR 100 million of additional recovered fiber costs and some currency and operational issues. We've also initiated some substantial projects that will benefit the company and our customers going forward. With this in mind, we look forward to 2018 with optimism.

While there are always likely to be unforeseen business challenges in 2018, as we've seen through the course of 2017, the strength of our company, the strength of our integrated model, the global and the geographically diversified nature of our business, the strong demand across most of our markets, together with the growing and sustainable nature of our product range, gives us good momentum going forward.

Thank you, operator. And now we are happy to take any questions.

(Operator Instructions) And the first question comes from the line of Matthias Pfeifenberger from Deutsche Bank.

The first one is on box prices and the progression you've seen in Q4 and Q1. What's the spread? I mean, you're still confident to achieve the 6% to 8%. We're roughly at, I guess, up 3%. What's the -- is the majority going to accrue in the first quarter only or is there sequential progress in the fourth quarter as well? And that also relates to the -- to my second question in terms of Chinese OCC. What do you see there in terms of the turmoil, in terms of reissuing of input licenses maybe to a lower degree than last year? And then if the rebound in OCC prices on the export side is not so significant, do you see a risk of any customers coming back to any price reversals? And then just a housekeeping on the tax rate; it has been quite low after 9 months. What's the outlook there for the fourth quarter or for the full year, please?

Okay. I'll let Ken take the tax piece. Just quickly on box prices, we saw a progression in Q3 over Q2. And we expect to see progression in Q4 over Q3 and again, progression in Q1 over Q4. We're still guiding 6% to 8%. Roughly, it depends where -- on particular customers and where they are. But basically, 6% to 8% is a number we feel comfortable looking at towards the end of the first quarter. And so that's -- we're comfortable with that. With regard to OCC, I mean, OCC is really a bit of an unknown situation because, as everybody knows, the policy of China to stop imports of OCC has created, what we believe, to be a temporary situation in the marketplace where OCC is -- has fallen from its very high points in August, remembering that it moved up in July and August and then fell a little bit in September and fallen a little bit again in October. So we do believe that China will come back into the market. There isn't enough paper capacity to make up the 30 million tonnes in the world that China needs for -- to replace that 30 million tonnes. So the only solution is for them to open up export licenses. Whether that means they will open them all up is a different question and whether they restrict it somewhat due to environmental concerns that they have in their own country, which may be a realistic possibility, in that scenario, then they will have to import a lot of paper, which, frankly, doesn't exist in the world at the moment. So we'd have to see how that's all going to play out. It's very unlikely that you would see price reversals given the demand environment right now, Matthias, that -- in that we are, as I said, in a sold-out position, as is the industry, and we find it very difficult to get any extra paper if we were so requesting it. And as I say, we are -- we and the industry seem to be sold out on a global basis. So I would say that if anyone were to give price reversals based on a temporary -- potentially temporary shortage of or a lower wastepaper cost, I would think it would be very unlikely, but we will just have to wait and see. And on tax, please, Ken?

Matthias, in terms of tax rate, I think as we get towards the back end of the year, you'll probably see it tick up slightly more towards the kind of 29% we're kind of more used to. In terms of the cash taxes, broadly in that kind of EUR 150 million space.

And next question comes from the line of Barry Dixon from Davy.

A couple of questions from me also. Just first of all, Tony, in terms of that sort of 4% underlying demand environment that seems to have accelerated from the first half, you might just give us a bit of color around that in terms of the different sectors or regions that you're seeing particularly decent growth. And secondly, just in terms of the corrugated prices. Just give us maybe some sense as to the competitive environment out there at the moment because there's a big chunk of the industry which is nonintegrated and presumably those nonintegrated corrugators are really suffering at the moment in terms of margins. So you might just maybe just give us a bit of context around how competitive that environment is and whether or not people are looking at the current opportunity as a means of gaining market share? And then finally, just on kraftliner, and you've mentioned again how tight the market is on both recycled and on kraftliner, what do you think are the chances of a further kraftliner price increase either in Q4 or in Q1 of next year?

I'll take the easy one first, Barry, which is the kraftliner situation. With regard to Q4, I mean, effectively, the kraftliner market is done for the year, I would say. You would not see any further increases in kraftliner in Q4. Obviously, Q1, we wait and see. I think a lot will depend on the dynamic on, as I mentioned, wastepaper. If wastepaper were to go up very sharply due to China reentering the market, that would create a condition for recycled paper to have to recover that very quickly. And in that scenario, obviously, kraftliner would be advantaged and would have the potential to increase in that scenario. So -- and remembering that kraftliner also uses some degree of wastepaper in the furnace. So that would be -- we'll just wait and see about how the dynamic plays out. But certainly, the conditions exist that could make it possible. With regard to the accelerated regions and the 4%, I would say that Europe in general has been strong all year. We see very strong growth in our Eastern European markets, Poland and Czech Republic and Slovakia, where we operate. We're quite a relatively small player. Albeit we're #2/#3 in Poland, the other markets, we're relatively small and they're small markets. But we're seeing strong growth in those regions, much more so than Germany and the other areas. We -- it sort of blends in with your next question. We have sort of been a -- recognizing that our business model requires us to recover input costs, and wastepaper being the biggest input cost, we have been, in some markets, losing market share because we have had to go out and recover. But interestingly enough, in many other markets where we had lost market share early on, we seem to be winning those customers back because, as I mentioned in my script, there is some -- many customers who are actually asking us to buy paper for overseas markets, which we're obviously not able to do. There are customers who are recognizing the fact that we offer secure kraftliner, we offer secure supply. And during certain moments, that's very important, and this is one of them. So we feel good the fact that we continue to be a reliable supplier to our customers. And there is -- as you say, there is an absolute need for the rest of the industry to go out and recover. Independents are integrated to recover. You always have the odd pirates out there that try to take volume off you, and then realizes after 6 months of running that volume at prices that are not sustainable over the long term, he has to raise his prices. And as I say, customers tend to see through that over the short -- over the medium term. And that's why our mission is to just stick to our knitting and be sure that we're really good at our applications and our knowledge about the business and have the most innovative tools and to make sure that our customers get to experience those tools and work on what's really important, which is reducing the supply chain costs, ensuring that their own packaging is optimized. And that's something that we are the leaders in with all of our various applications by a long shot. And we just continue to do what we've been doing, which is well-appreciated by the vast majority of our customers. I think there is no real region. I mean, you see September was a little bit weaker. October is looking very strong. Just there's no real region per se. We've seen a little bit of slowdown in Spain due to the uncertainty that -- over the last quarter. I think, since the terrible terrorist attacks, we saw a little bit of muted situation in Spain, but that seems to be a little bit better in the last week or 2. But I wouldn't say there's any region that is -- other than the Eastern European region, which had been much stronger. And surprisingly, I would say on the Western European side, the U.K. has been very strong. But aside from that, it's been just decent and strong.

And next question is from the line of Lars Kjellberg from Crédit Suisse.

Just a couple of questions from me. The European situation for OCC, of course, we've seen them come down a bit. But could you comment a bit on availability of OCC? Has that materially changed as less volumes is exported to China? And also, you are starting to -- obviously, you made a couple of M&A transactions. Can you, in any shape or form, comment the sort of financial impact of that because I may have missed that if you have talked about Russia and Greece, how they can contribute? And also, if you want to comment a bit and give us some color on the 140,000 tonnes of incremental capacity you would now have in Americas, how you would see that -- the margin impact on that in the Americas business?

Okay, just on the availability. Well, obviously, there's a lot more availability than there was, and we are taking advantage of that and putting as much as we can into stock then and I'd say we have to do that in a controlled way because wastepaper doesn't -- you can't really store too much of it. I mean, you can get up to, let's say, 15 days, 20 days of stock, but that tends to be about as much as we'd want to control across our system. But there is more availability. People are storing more than they had in the anticipation of the Chinese markets reopening. We saw a small movement upwards, I think, was it last week, Ken, in the -- we saw a movement upwards in China and a downward movement in local wastepaper prices. So we would expect -- I mean, again, it's a degree of speculation, but we would expect the Chinese to open up and then stocks would rapidly decrease. There is new capacity. Mills are running full. There's 6% more production in Europe this year versus last year, which means that everybody is running full tilt on their mills, and there is no spare capacity. So that means a lot more wastepaper usage. And I think that it is -- it doesn't change our long-term view that wastepaper is going to be an issue for the markets over time. But right now, just since really September, this dramatic shift by the Chinese has created a slight imbalance. And so availability is not a problem today, but obviously, we have to keep that under close scrutiny as we look forward. With regard to M&A?

Lars, with regards to the 2 small deals, I mean, in terms of 2017, they both come in third quarter, and indeed, the Greek deal will only close late October. So any kind of benefit to the overall EBITDA number for this year will be kind of low single digits for the pair of them. In the context of '18, still working through the budgets with them and for them. So I think when we have a bit more clarity on that, as we get towards February, we can help you model that these days. But in terms of '17, low single digits for the pair of them.

And with regard to the 140,000 tonnes, Lars, I mean, that's obviously -- we don't disclose the contribution out of each of those tonnes. But I mean, suffice to say, we'd be very happy to have those tonnes. We're short of paper in the region. We're growing in the region. And we believe that there's going to be an added profit to our business as we move into 2018 and beyond.

Okay. One just follow-up. Could you give us any sense of when do you think about the medium-term growth drivers that you will address in Q4, what sort of potential new drivers, if any, are you thinking about versus what you've had in the past?

I think we're working through that, Lars. I think we're in a world where new channels, e-commerce is on the rise, new ways of distributing and delivering to customers are on the rise, new ways of collecting OCC, as we talked about, in terms of where you get your recovered fibers source from, more domestic than the traditional route. So it's in the context, I think, of an evolving and changing, if you like, input landscape and indeed, a distribution landscape that we're seeing where the value drivers are. And as Tony said, given the suite of applications we enjoy, eSmart, SupplySmart, ShelfSmart, we're kind of best positioned to kind of be able to look at those and figure out how we play forward.

Your next question comes from the line of Gerard Moore from Investec.

I have 2 questions as well, although the first question, I think, you might prefer to answer in Q -- or with the Q4 results, but I'll give it a go anyway. In terms of your e-commerce offering, I think you recently branded that as eSmart. So I was wondering if you could just maybe, at this stage, give us a bit of thinking behind that initiative. Have you any targets now on how large your e-commerce business can become for you or just, I guess, any more details around your e-commerce offering, specifically related to this what I think is a relatively new initiative? The second question then is just over in the Americas. Could you give us a feel for the EBITDA margin range from one country to another? Or to put it in a different perspective, in terms of getting margins back up to 16%, 17%, are there any 1 or 2 specific countries that need to play a greater role? Or is it really all countries need to improve on a sequential basis?

I'll let Ken take the second question, Gerard, because that's much harder. So on the first question, I mean, listen, we're all aware that e-commerce is -- and e-retailing and transportation by mail is becoming much more -- by packaged mail is becoming much more relevant. And I suppose, what we're trying to do is show to you and the outside world that we have a very, very broad range of applications that are able to deal with this. I mean, one of the things that is really apparent out there for our customers is that the whole world of how they interact with their customers has changed dramatically. And there are so many more different ways that they have to think about how they get their product, either through direct to the customer or through e-retailers or through normal discount stores or through regular stores. So there's so many different ways and supply chains that our customers need to think about on packaging lines that exist -- currently exist. And they need to have the expertise of somebody that needs to go and deal with that. And we obviously think -- we obviously know that we have that expertise. And as I say, we've used a couple of examples in the release, but they're just a couple, that -- where we're able to help our customers, whether it's in machine hauling themselves to ensure that they are able to adequately address those issues or to package appropriately for the produce they're -- or the product that they're producing. So it's a suite of things that we are really advertising to the world to let them know that we're able to deal with this very complex world that we have entered into. And corrugated packaging, we would argue, is becoming very much more, not only important on the shelf with regard to your traditional supermarkets or your traditional retailers, where not only do we offer a cost advantage by display, but we also offer a display advantage and help the customers sell more, but it's also in the way of logistics, which is huge. And when you have as many customers and data as we have, and we've collated it all together and are able to demonstrate to customers that -- as to why does customer X package in such a way when you have the same product and you package it X plus for effectively the same distribution chain, and we can save a tremendous amount of money for our customers, then that is something that the forward-thinking customers really buy into. And it's not just about saving EUR 0.001 on a box or -- it's about really examining the supply chain and making sure that that's the most efficient and also dealing with the challenges of the new e-world that we're in. And we're far advanced on that, and that's really what the release is about. But on your second question, Ken?

I think, Gerard, in hindsight, you might have done better on the first one than you might do on the second one. We don't break out the individual countries for various reasons, but the primary one being commercial sensitivity. But if you thought about that region and you think about Mexico, Colombia and the U.S. kind of being approximately 80% of the revenues or earnings there, in reality, those 3 countries are driving well, then the rest of the region kind of tends to be in good shape. And in that, Mexico and Colombia, in terms of volume growth this year, in excellent shape; U.S. has had some issues, not least weather-related in the third quarter. But again, I think positively underlying all those countries, that the progression in box price recovery is very much there in all territories. So all are moving forward and all are kind of restoring those margins that were lost. But fundamentally, the big 3 are Mexico, Colombia and the U.S., where the rest of the region tends to come along.

And the next question is from the line of Chip Dillon from Vertical Research Partners.

We just had a couple of questions. One is, you were just talking about the Americas and the progress there, but if you could just remind us of how short you are in board. I sense that's one thing holding you back a little bit given how tight the board market is and my perception that, at least for the hemisphere, your short board and what you might be able to do about that. And then secondly, any early look in terms of what your CapEx might be next year, and keeping in mind that you'd noted that there's been like EUR 150 million, I think, spent on certain projects that's had a pretty good payback; I think EUR 75 million, you mentioned over the last few years. So like a 2-year payback on those projects?

Yes, thank you, Chip. I'll let Ken take the second question. But I mean, just in relation to your question on board in the Americas, we are short about 300,000 tonnes, 280,000 tonnes to be precise of kraftliner in the Americas, and we need to address that at some point. And obviously, that's part of our thinking in relation to our strat plan. The interesting thing is we continue to see very significant growth in most of our regions. And so we've got to figure out how we add the capacity that's needed. And one of the things that's held us back in Q3 and Q2 has been the fact that when you're buying this paper and it's gone up so quickly and a lot of our business that uses kraftliner in the region is related to agriculture, and those contracts are typically done 3, 6, 9 months at fixed-price contracts because of the nature of those businesses, and so we do have a little bit of a headwind there in relation to that particular grade that we buy. But nonetheless, I think that in the end, we will get the recovery of that kraftliner because it's absolutely necessary with our customers. But it just takes a little bit longer than I'd really like. With regard to the CapEx?

In terms of the CapEx for '18, Chip, really, we're not through our budget process yet, so don't have a firm number on that. But I suppose your broad thesis is correct. We did have the Quick Win program, which delivered EUR 75 million for the EUR 150 million of investment. So certainly, when we exited that program and took a pause for '17, we'd no projects left around, the group to kind of go at that again. So certainly, similar kind of projects will definitely feature in our thinking. But again, in February, we expect to be able to give you much more color on that.

Okay. One last quick follow-up. I know you've noted that box prices will continue to edge up in Europe, I believe up roughly 6% to 8% in the first quarter year-over-year, you might clarify that. To me, that -- given that I believe prices bottomed in the first quarter of '17, that would suggest perhaps you haven't passed through everything on the board side up to now, which, as you mentioned was EUR 150 million to as much as EUR 180 million since January, depending on country. So would we expect to see a little bit more progress sequentially going from the first to the second quarter, assuming, of course, board prices stay where they are?

Yes, that's -- I mean, I would say it's less -- if you were in the middle of the 6% to 8% range at the finish, you'd probably edge up from the middle range upwards towards the upper end in the second quarter. But I wouldn't be wholly -- I would say there's not a massive increase from Q1 to Q2, but there is certainly -- if everything stays the same, there is progress, for sure.

And the next question is from David O'Brien from Goodbody.

Just a couple from me. Firstly, look, you spoke about e-commerce and very much Q4 at the moment. Can you give us some context on the size of e-commerce within the Smurfit Kappa business, like has it reached double digits in terms of your overall volumes? And given the apparent structural growth that we're seeing there, should we now be thinking about the business, in volume growth context, of GDP plus 2% rather than the GDP, GDP plus 1% over the medium term? Secondly, on M&A, can you just give a sense of how vendor expectations have evolved over the last 6 to 9 months and where you see value, be it in Europe or the Americas? And finally, just to circle back on OCC. You often talk about having an 80% grip. Given the risk that China comes back to the market, you've a whole bunch of mills starting up in Europe in 2018, do you see any need to close that 20% that you're buying at spot market down a little bit and maybe entering into contracts for security of supply?

Okay, I'll take the last one first, and then I'll ask Ken to deal with the M&A, and then I'll take the e-commerce piece. On grip, I think you're right. I mean, we are around 80%. We are actually starting a new depot in one of our countries in Spain. And we intend to start a couple more new depots as part of our plan to continue to ensure that we have more grip. We won't have a problem, David, getting the raw material. It's only going to be a question of price. So therefore, I would say that we are not going to -- Smurfit Kappa is not going to run out of OCC. And if they do -- if we do, then I will be very annoyed with a particular person in our company. So I don't think that that's going to happen. So we have the grip and we have these contracts, and obviously, we continue to make sure that we have the team, we have a stable team in our wastepaper organization. And I think we feel pretty comfortable with where we sit. And as I say, we have a plan to open up a few more depots in various countries over the coming couple of years, with one starting actually this month. Ken, on M&A?

On M&A, David, I think vendor expectations are still quite choppy. I think we've seen that in deals over the last 3 to 6 months. I think the key for us and certainly, in the deals we've done since the half year, is to kind of maintain that discipline that you kind of have come to know us for and expect. So we're not going to pay multiples where we don't believe we can ultimately deliver value for the Smurfit Kappa shareholder or indeed, bring assets into the group that we don't believe we can improve on and don't kind of fit in with our strategic profile, either geographically or from a product range perspective. But I suppose in the environment where interest rates are where they are, you can expect multiples to kind of remain choppy. And the trick for us is to kind of, as we always have done, is to maintain that kind of active pipeline and kind of work at it. And the deals that come off, we tend to be happy with them; some, we leave behind because we just don't believe they're going to work for us.

And on -- with regard to e-commerce, I mean, yes, of course, David, if you listen to some other commentators in the business who talk at the conference and talk about e-commerce, it's -- and then this includes across the pond, this is the seventh heaven, and we have nirvana because of e-commerce. But the reality is there's no question that e-commerce is a very nice part of our business and a growing part of our business. So I mean, it's very hard to put a number on it. It's not 10% of our business. But if you took how much of our DHL, our FedEx and our UPS and our TNT has been shipped because of the evolution of us as a consumer towards using the convenience of home delivery versus picking it up in the shop, I mean, that's pretty difficult to quantify. So I think you just have to look at these packaging -- these companies and sort of say, most of it is going in a box, and they continue to grow, all of them, together with the real traditional e-tailers, such as the Amazon or such as the Zalandos or the Bonprix, there's all of these people who are traditionally and come out of the e-world. So they are all driving -- I mean, 95% of them, they all use corrugated. I mean, there's some that use plastic, but most of them use corrugated. And I think it's very difficult for me to put a particular number on it. But certainly, when you look at fourth quarter numbers and you sort of see how the growth evolves in Q4 each year, you would have to say that e-commerce has a large influence on that due to the changing patterns of shopping.

And that now ends the Q&A session, so I will hand the call back to the speakers. Please go ahead.

Well, thank you, operator, and thank you, all, for taking the time to participate in today's call.

As I said, we are pleased with our Q3 performance, and we expect to deliver full year EBITDA in line with current market expectations. We will enter 2018 with momentum built upon our market-leading product offering, geographic diversification and integrated business models. These attributes will enable Smurfit Kappa to continue to deliver strong operating performance, the quality earnings that we continue to deliver, and we'll build our balance sheet strength going forward.

Again, I appreciate you all being on the call, and thank you again, and I hope you all have a good day.

This now concludes the conference call. Thank you all for attending. You may now disconnect your lines.