The operating profit decline was mainly due to a weaker price and currency trend.

纸浆

Södra reports operating profit for Jan-Apr 2016 decreased 64% to SEK 334 million

Södra reported operating profit for the first four months of the year decreased 64% year-on-year to SEK 334 million ($40.3 million). Sales amounted to SEK 6,239 million ($753.2 million) and the operating margin was 5%.

"During the first four-month period, the forest economy was slightly weaker year-on-year, particularly in the sawn timber market. While sales and production volumes remained stable, exchange rates and price trends - which contributed to Södra's historically high operating profit in 2015 - were less favourable. 2016 is a year of transition for Södra, since the effects of the investment programme at the Värö pulp mill will not be fully realised until 2017," said Lars Idermark, President and CEO.

The operating profit decline was mainly due to a weaker price and currency trend. The preceding year's result included a nonrecurring item of SEK 133 million ($16.1 million) related to divestment of the shares in Södra Cell Tofte AS.

Operating profit for the Södra Skog business area totalled SEK 33 million ($3.9 million). The lower result was mainly due to a lower rate of harvesting in Södra's own forests, both in Sweden and the Baltic countries.

Operating loss for Södra Wood totalled SEK -107 million (-$12.9 million). The negative result was due to weaker prices for sawn timber, and less favourable exchange rates. Steps are being taken to improve profitability. Operating profit for Södra Cell totalled SEK 466 million ($56.3 million). The lower result was mainly due to unfavourable price and currency trends.

During the first four-month period, the strength of  the global economy remained uncertain, company said in the report. Despite considerable monetary policy stimulus, the economic environment in Europe did not really gain momentum. Both the European Central Bank (ECB) and the Swedish Riksbank lowered their key interest rate during the period. The threat of a British withdrawal from the EU (Brexit) raised many concerns about the political future of Europe. Despite a positive economic trend, the US central bank, the Federal Reserve, chose to leave the key interest rate on hold due to fears for the global outlook and stock market volatility. Economic uncertainty was strengthened by falling oil prices at the beginning of the four-month period. However, oil prices turned slightly upward from a low level towards the end of the period, despite  continued high inventory levels, mainly due to a lower level of oil production in the US.

The wood market in Sweden was characterised by favourable supply. During the first quarter of the year, production at the sawmills was 4% lower in Södra’s area, and 5% lower in Sweden as a whole, compared with the year-earlier period. During the four-month period, the area covered by prior felling notifications in Götaland was slightly lower year-on-year. The trend for Swedish sawn timber was mainly impacted by economic development in general and by new construction activity in Europe, the US and China.

Market conditions improved during the first four-month period and the recovery was mainly a result of increased demand due to record low interest  rates and effects of the refugee surge in 2015. However, the weakening of the GBP had a negative impact  on profitability. A weaker USD also affected the profitability of non-European exports. Sawmill inventories remained high, but the inventory increase that  normally takes place at the beginning of the year did not materialise due to improved demand, mainly for spruce. At the end of four-month period, prices also  increased, particularly for spruce.

The sales growth for sawn timber in Sweden was mainly attributable to increased new construction activity and continued growth of residential investment at double digit rates. Despite a reduction in the  government’s repair, renovation and extension (ROT)  subsidy, the ROT sector performed favourably.  Low energy prices and low interest rates had a positive impact on demand in a market characterised by  intense competition and price pressure.

Producer inventories of market pulp normally  increase during December and January due to low  paper production, and subsequently fall during the spring months. At the end of four-month period,  inventories of softwood sulphate pulp declined to an  average normal level, while inventory levels for hard  pulpwood were higher than average. The difference  in inventory levels is clearly reflected in the increased  price difference between softwood and hardwood  pulp. Södra customers’ inventories of purchased pulp  remained at an historically low level.  Global demand for market pulp, both softwood  and hardwood sulphate pulp, rose during the four- month period compared with the year-earlier period.  Growth in the tissue and specialty paper segments  will become increasingly significant for raising the  consumption of market pulp, while demand for publishing paper continues to decline. These trends  started in the US and Western Europe, but are now  affecting all geographic markets.