Södra posted a stable result for the first quarter of 2021. Operating profit totalled SEK 547 million (227), up more than 140 percent year-on-year. The financial result is an effect of the improved price formation for Södra’s core products of pulp and sawn timber.
Consolidated net sales rose 3 percent to SEK 5,733 million (5,576). The operating margin improved to 10 percent (4) and return on capital employed increased to 10 percent (4). The equity ratio strengthened from year-end to 59 percent.
“We have strong markets for Södra’s core products in a time characterised by major global uncertainty. The development is driven forward by strong demand and a favourable price trend. Our mills have also produced high volumes with good quality. We are now continuing to create further conditions for profitable and sustainable growth that increases member value and strengthens Södra’s core,” said Lotta Lyrå, President and CEO.
Initiatives for long-term shareholder value
In the first quarter, Södra made strategic shifts and investments to promote long-term shareholder value. A programme to improve internal efficiency has commenced, where Södra’s digital transition will play a pivotal role in efforts to achieve world-class efficiency.
The Innovation business area was also formed during the quarter. The aim is to strengthen the focus on existing business, while simultaneously developing new business. In addition, new investments in the industrial structure have been finalised, such as the acquisitions of a new sawmill and timber treatment facility. This is a strategic initiative to both increase Södra’s production capacity and create synergies over time. The acquisitions will secure markets for members’ raw material and further strengthen the customer offering in the Swedish building trade.
“The short-term outlook is positive. While the pandemic is making assessments for the full-year difficult, we have also noted strong underlying demand for forest-based products in the ongoing transition to a more sustainable bioeconomy. We will now be focused on what we can influence by improving conditions for family forestry and processing forest raw materials into climate-smart products and solutions,” said Lotta Lyrå.
Södra Wood leading the business areas
In the Södra Skog business area, operating profit totalled SEK 23 million (1) for the period. The result was due to improved margins.
In the Södra Wood business area, operating profit totalled SEK 378 million (27) for the period, reflecting the considerably higher price formation for sawn timber. At the same time, favourable underlying demand for sawn timber continued, while stock levels were historically low for the season.
In the Södra Cell business area, operating profit totalled SEK 376 million (302) for the period. The change in earnings was attributable to an improved price level, while lower volumes and a stronger SEK had a negative effect.
The Södra Innovation business area was formed in March and posted an operating loss of SEK −52 million (−23) for the period. This new business area is leading Södra’s work with commercialisation and business development.