Strong full-year result despite weaker market

Södra posted strong operating profit of SEK 2,582 million (4,508) for 2019. Net sales amounted to SEK 23,183 million (24,230). The Board proposes a profit distribution of SEK 1,068 million and has presented a new Group strategy for the years ahead.

In 2019, consolidated net sales amounted to SEK 23,183 million (24,230), down 4 percent. Operating profit totalled SEK 2,582 million (4,508), representing an operating margin of 11 percent (19). Return on capital employed was 12 percent (24) and the equity ratio was 59 percent (59). For the fourth quarter, net sales amounted to SEK 5,274 million (6,062) and operating profit totalled SEK 62 million (974). The Board proposes that the Annual General Meeting on 3 June approve a profit distribution of SEK 1,068 million (1,795) to members, corresponding to 43 percent of profit before tax.

“The global economy slowed after several years of strong demand and positive price growth. In view of prevailing market conditions, Södra’s operating profit for full-year 2019 was robust from an historical perspective. The forest industry has been, and will continue to be, a cyclical industry,” said Lars Idermark, President and CEO.

In Södra’s well-invested industrial facilities, delivery volumes of the core products market pulp and sawn timber increased during a dramatic price decline.

“Södra’s key financial figures and strong cash flow are signs of good resilience to weaker conditions. The Board’s proposed profit distribution of SEK 1,068 million is also confirmation of the strength and optimism that exists at Södra,” said Lars Idermark.

During the year, handling the effects of the massive spruce bark beetle infestation posed major challenges for Södra. The robust and necessary measures led to higher costs.

“There is every reason to feel optimistic about the future from a long-term perspective. The state of the economy is always changing, but the underlying demand for forest-based products will gradually increase, not least because of increased global prosperity and the rising population. 2020 will be a weaker year financially due to uncertainty surrounding the economic forecast and price trends for market pulp and sawn timber. As a result, Södra will be focused on the areas that we can influence, such as productivity-enhancing measures, product development, innovation and the continued development of our customer relationships,” said Lars Idermark.

In 2019, a new Group strategy was created for the years ahead. The core of the new Group strategy builds on the successful development of recent years with sharp improvements in growth and profitability due to extensive investment and operational restructuring. The goal is for Södra to be a sustainable, profitable, innovative and resource-efficient growth company.

“That will require continued investment and expansion of our core operations: paper pulp and sawn timber. We will also prioritise processing to improve the value of our products, including residual and by-products. Our liquid biofuels initiative will continue,” said Lars Idermark.

The strategy also includes increased and accelerated digitisation of our production and operations to further strengthen our competitiveness. In addition, our efforts to develop family forestry will intensify through, for example, technological advances and improved forest tree breeding for faster growth.

Watch the Year-end report video of 2019

The profit distribution comprises:
Dividend on contributed capital: 8 percent, corresponding to SEK 371 million
Dividend on wood deliveries (Wood supply payments): 10 percent, corresponding to SEK 530 million
Bonus issue: 10 percent, corresponding to SEK 167 million

For questions, please contact:
Södra’s Pressroom,
Tel: +46 (0)470 890 90
E-mail: press@sodra.com

Founded in 1938, Södra is Sweden’s largest forest-owner association, with 52,000 forest owners as its members. We conduct modern and responsible forestry, and operate state-of-the-art mills in which we process our raw material. In 2019, net sales amounted to SEK 23 billion and employees totalled 3,100. Through value-generating relationships and a long-term approach, Södra shows the way for the next generation of forestry.

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