Sweden’s largest forest-owner association Södra reported a sustained strong operating profit of SEK 1,277 million for the third quarter of 2018 with all business areas reporting good results.
Net sales for the third quarter rose 22% to SEK 5,826 million compared with the year-earlier period, and the operating margin improved to 22% with market conditions for forest products remaining favourable for the immediate future.
For the first nine months of the year net sales amounted to SEK 18,168 million and operating profit totalled SEK 3,533 million. Return on capital employed rose to 28% and a strong cash flow and healthy liquidity have significantly strengthened Södra’s financial situation with the equity ratio rising to 59 %.
“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.
“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.”
In the Södra Wood business area, operating profit for the period totalled SEK 162 million and reflects the sustained favourable price level for sawn timber, as well as the continuing positive impact from the ongoing restructuring process.
The interior wood segment has largely been discontinued and the results since the second quarter refer solely to the sawmill operations.
Pictured – Lars Idermark, President and CEO