Södra posted a strong result for the third quarter of 2024. During the quarter, important decisions were made to strengthen Södra’s competitiveness and commercial focus.
In the third quarter of 2024, net sales for the Södra Group amounted to SEK 6,944 million (6,545), up 6 percent compared with the year-earlier period. Operating profit totalled SEK 937 million (410), representing an operating margin of 13 percent (6). Return on capital employed was 10 percent (12) and the equity ratio was 61 percent.
“Södra posted a strong result for the third quarter of the year. We are positively impacted, above all, by high pulp prices and continued good cost control, but challenged by high raw material prices and the prevailing global uncertainty, which also affects market demand and logistics,” said Södra’s President and CEO Lotta Lyrå.
For sawn timber, weak construction activity continued to affect the market, but prices were maintained due to lower supply. The strong result for paper pulp was mainly due to stable market prices and demand remained positive in relation to supply. The scheduled maintenance shutdowns at the pulp mill in Mönsterås during the fourth quarter will, however, result in both increased costs and a loss in production.
World-class Efficiency – our way of working with continuous improvements – generated improvements and efficiencies during the quarter with an annual recurring effect of SEK 104 million.
Commercial focus increases the added value from each tree
In the third quarter, important decisions were made to strengthen Södra’s competitiveness and commercial focus by establishing our operations for energy, chemicals and CLT as separate business areas. The changes are taking place as part of the implementation of Södra’s strategy to make more from every tree and to continue refining and renewing the value of family forestry.
“Our energy, chemicals and CLT operations have made considerable progress and it’s now time to give them more scope alongside of our existing core business areas. These are important changes to further increase the added value from every tree, while also strengthening Södra’s competitiveness and our commercial focus,” said Lotta Lyrå.
During the quarter, Södra announced that we have signed agreements with UPM and Stora Enso for large volumes of the kraft lignin that we are expecting to place on the market in 2027.
Business areas’ results for the third quarter of 2024
In the Södra Skog business area, operating loss totalled SEK 9 million (profit: 31) for the period.
The earnings trend was primarily due to lower demand for energy and the fact that price increases for saw logs led to a slightly lower margin.
In the Södra Wood business area, operating loss totalled SEK 16 million (profit: 52) for the period. The earnings trend was mainly attributable to lower margins due to higher saw log costs combined with somewhat higher delivery prices, despite slightly weaker demand in the sawn timber market.
In the Södra Cell business area, operating profit totalled SEK 1,051 million (408) for the period. The earnings trend was mainly due to higher prices for pulp and a continued relatively favourable exchange rate for the USD.
In the Södra Innovation business area, operating loss totalled SEK 32 million (loss: 16) for the period. The earnings trend was mainly due to continued weak construction activity and lower shares in associates. Ongoing innovation initiatives are progressing as planned.