Sawmill profits in North America and Europe increased in H1 2021

Photo: Jonathan Borba/Unsplash

Sawmill profits surged to an all-time high in North America and Europe for H1 2021, with lumber prices increasing and costs for sawlogs moving up relatively less. Profits for sawmills especially reached record highs in Q2 2021.

The strong demand for lumber and high operating costs at lumber manufacturers resulted in increased costs for sawlogs, with some significant increases occurring in western Canada, the Nordic countries, and Central Europe. Wood Resource Quarterly (WRQ) said ever since they started reporting quarterly sawmill profits since 2005, the gross margins this year were by far the highest in most regions.

Despite higher production costs, the gross margins more than doubled in Europe and tripled in North America over the past year. However, the margins fell substantially in July and August 2021 due to plunging lumber prices, while there were smaller price adjustments for sawlogs. Gross margins fell in the US South due to lumber prices crash, but with the low sawlog costs, sawmills were still running at profitable levels into Q3 2021. As a result, the estimated gross margins in August were noticeably higher than the average over the past decade.

In the Nordic countries, profit levels rose, although slower than in Canada and the US. Even then, higher revenues for lumber and byproducts compensated for recent increased sawlog costs in both Finland and Sweden for Q2 2021. This meant higher gross margins in the Nordic countries, hitting their highest levels in over 15 years.

Comparing Swedish lumber companies to their Finnish competitors, the Swedish ones saw faster increase in profits, benefiting from lower sawlog costs than lumber mills in Finland. The Swedish lumber companies also shipped more lumber to high-paying markets, such as the US, Norway, the UK, the Netherlands and Denmark. In contrast, Finland shipped more to low-paying markets in the MENA region and in China.

Source: Lesprom