Sustained strong result for Södra in the second quarter of 2018

Södra reported sustained strong operating profit of SEK 1,318 million (461) or US$148 million for the second quarter, the best quarterly result ever. The market trend was positive for all of Södra’s product categories and completed investments, efficiency improvements and restructuring are reflected in the result.

Lars Idermark, President and CEO. (Photo credit: Södra)

“The strong result is mainly due to the favourable global economy, with high demand and a positive price trend for our products in both market pulp and the sawn timber area. We are also seeing the positive effects of our expansion investments, with higher production volumes at our pulp mills,” said Lars Idermark, President and CEO.

“The efficiency improvements and restructuring we have achieved in our sawn timber production also generated profit effects. In the second quarter, we decided to discontinue our operations in the Interior Wood segment. We are also making aggressive investments in other areas, such as cross-laminated timber (CLT),” said Lars Idermark.

“We are seeing growing demand for liquid biofuels made from woody biomass, and our investments to increase liquid biofuel production will continue. These are key investments for our future and are helping to create new business,” said Lars Idermark

Consolidated net sales for the second quarter rose 26 per cent year-on-year to SEK 6,626 million (5,244), or US$749 million and the operating margin strengthened to 20 per cent (9). For the first half-year, operating profit totalled SEK 2,257 million (951) or US$255 million– the strongest half-year figure in Södra’s history. Return on capital employed rose to 26 per cent (12) and the equity ratio was 57 per cent (55).

In the Södra Skog business area, operating profit totalled SEK 49 million (37), or US$5.5 million for the period. The result was impacted by continued weather challenges. Following a cold and snowy winter that made transportation difficult, the dry conditions of recent months have increased the fire danger and significantly impacted forest operations.

In the Södra Wood business area, operating profit totalled SEK 210 million (76), or US$23.7 million for the period, mainly reflecting the positive price level for sawn timber but also the ongoing restructuring process. The result refers solely to the sawmill operations, since the Interior Wood segment has largely been discontinued and is now reported under Other segments.

In the Södra Cell business area, operating profit totalled SEK 1,196 million (416), or US$135.1 million for the second quarter. The profit trend was mainly attributable to the high price level, a favourable USD exchange rate and the higher volumes enabled by expansion of the pulp mill at Värö.

April-June 2018 in brief:

2018

2017

2018

2017

 

Apr-Jun

Apr-Jun

Jan-Jun

Jan-Jun

Net sales, SEK million

6,626

5,244

12,343

10,342

Operating profit before depreciation, amortisation and impairment, SEK million

1,615

724

2,832

1,474

Operating profit, SEK million

1,318

461

2,257

951

Operating margin, %

20

9

18

9