Södra posts strong result – bolstered by market conditions

The Södra Group’s net sales for the first half of 2021 rose 18 percent to SEK 13,019 million (10,993). Operating profit totalled SEK 1,873 million (449) and return on capital employed was 18 percent (4). The equity ratio was 59 percent.

Operating profit for the second quarter totalled SEK 1,326 million (221). Sales for the quarter amounted to SEK 7,287 million (5,416).

“We are experiencing very unusual market conditions. Prices for Södra’s core products, pulp and sawn timber, are record high, while our mills are producing large volumes. This has led to a strong result. But we can also see how the trend is affected by major global uncertainty due to the pandemic. We will therefore continue to focus on what we can control and work hard every day to strengthen our long-term competitiveness,” said Lotta Lyrå, President and CEO.

Several investments during the quarter
In the second quarter, Södra made several major investments in line with the Group strategy to continue creating sustainable and profitable growth.

In May, Södra acquired Ture Johanssons Trävaru AB and AB Tenhults Impregneringsverk and thereby strengthened the Group’s industrial structure. The new sawmill and timber treatment facility are geographically located along the E4 corridor, where Södra has stable raw material supplies. The acquisition will improve wood sales in a high-priority area and increase Södra’s capacity, while also strengthening Södra’s customer offering to the Swedish building trade. During the period, Södra also established new partnerships for the development of initiatives in textile recycling and the production of aviation biofuels from forestry residues.

Södra’s programme to improve internal efficiency – World-class efficiency – continued, and is planned to improve the Group’s performance by SEK 1 billion by 2024. The entire value chain will be reviewed as part of the programme.

Responsive to changing market signals
“The short-term market outlook is favourable, but there is considerable uncertainty about future price trends for our core products. We are making a number of strategic shifts and investments to increase value generation for our 53,000 members. At the same time, there is an underlying demand for forest-based products in the ongoing climate transition, which means that long-term outlooks are considered favourable,” said Lotta Lyrå.

“The Södra Model shows its strength in times of uncertainty. It gives our members a share of the profits created in our industry and we can secure long-term markets for our members’ raw material year after year. A market-based value for wood is a key pre-requisite for this. We therefore need to keep an ear to the ground and respond to signs of changes in our market.”

Business areas’ results for the second quarter of 2021
In the Södra Skog business area, operating profit totalled SEK 61 million (51) for the period. The earnings improvement was due to strengthened margins.

In the Södra Wood business area, operating profit totalled SEK 827 million (69) for the period, reflecting the positive price formation for sawn timber.

In the Södra Cell business area, operating profit totalled SEK 662 million (250) for the period. The earnings improvement was due to a considerably stronger price level, while the USD exchange rate had a negative impact.

In the Södra Innovation business area, operating loss totalled SEK −43 million (−73) for the period. The improved performance was due to a positive trend for SunPine.