Strong result for third quarter

Södra reported a sustained strong operating profit of SEK 1,277 million (437) for the third quarter of 2018. All business areas reported strong results and market conditions for forest products remain favourable for the immediate future.

Net sales for the third quarter rose 22 percent to SEK 5,826 million (4,763) compared with the year-earlier period, and the operating margin improved to 22 percent (9).

Net sales amounted to SEK 18,168 million (15,105) for the first nine months of the year. Operating profit totalled SEK 3,533 million (1,388) – a very strong nine-month figure. Return on capital employed rose to 28 percent (12). A strong cash flow and healthy liquidity have significantly strengthened Södra’s financial situation. The equity ratio rose to 59 percent (55).

“In the third quarter, profit was very satisfactory, especially in light of the challenges for timber sourcing and production caused by the summer’s extreme weather conditions,” said Lars Idermark, President and CEO.

“The extensive investment programme and restructuring over the past few years were timely and Södra’s production facilities are now more competitive. Demand for paper pulp remained strong and we see no signs of a weakening in the medium term. Demand for sawn and processed wood products was also favourable and is expected to remain strong for some time yet,” said Lars Idermark.

“Investments at the facility for cross-laminated timber (CLT) production and the construction of the biomethanol plant in Mönsterås are on track. These long-term investments aim to strengthen Södra’s market position in both processed wood products and liquid biofuel. The interest in timber construction, with its positive effects on the environment, has increased and forestry is an important future player when it comes to solving the major climate challenges,” emphasised Lars Idermark.

In the Södra Skog business area, operating profit totalled SEK 14 million (12) for the period. The result was impacted by the summer drought that led to a harvesting ban and made it impossible to conduct site preparation and forest regeneration work.

In the Södra Wood business area, operating profit for the period totalled SEK 162 million (28) and mainly reflects the sustained favourable price level for sawn timber, but also the continuing positive impact from the ongoing restructuring process. Since the second quarter, the result refers solely to the sawmill operations, as the Interior Wood segment has largely been discontinued.

In the Södra Cell business area, operating profit totalled SEK 1,140 million (436) for the third quarter. The increased profit was mainly attributable to the high price level and a favourable USD exchange rate. The result was negatively impacted by planned maintenance shutdowns and certain production disruptions at pulp mills during the quarter.

 

Watch a video interview with Lars Idermark

 

July-September 2018 in brief: 2018 2017 2018 2017
  Jul-Sep Jul-Sep Jan-Sep Jan-Sep
Net sales, SEK million 5,826 4,763 18,168 15,105
Operating profit before depreciation, amortisation and impairment, SEK million 1,558 702 4,389 2,175
Operating profit, SEK million 1,277 437 3,533 1,388
Operating margin, % 22 9 19 9

 

For questions, please contact:
Lars Idermark, President and CEO, Södra
Tel: +46 (0)470 894 36

Anna Belfrage, CFO Södra
Tel: +46 (0)470 890 40

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

 

Södra was founded in 1938 and is the largest forest-owner association in Sweden, with a membership of more than 51,000 forest owners. We engage in modern and responsible forestry, and operate state-of-the-art mills in which we process our raw material. Net sales in 2017 were 20.5 SEK billion and there were 3,400 employees. Through value-generating relationships and a long-term approach, Södra is leading the way for the future of sustainable forestry.

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Södra was founded in 1938 and is the largest forest-owner association in Sweden, with a membership of close to 52,000 forest owners. Södra is also an international forest industry Group, with 3,400 employees around the world. Net sales in 2017 were 20.5 SEK billion. Balancing production efficiency with nature conservation guides everything that we do. We produce timber, interior wood products, pulp for paper and textiles, and green energy. We use every part of the tree, and are always looking to develop new products from this fantastic, renewable raw material. Södra is a world-leading producer of market pulp and also owns one of the largest sawmill operations in Europe. Through value-generating relationships and a long-term approach, Södra is leading the way for the future of sustainable forestry.

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In the third quarter, profit was very satisfactory, especially in light of the challenges for timber sourcing and production caused by the summer’s extreme weather conditions.
Lars Idermark, President and CEO.