Sveaskog reported 2Q operating profit of SEK 223 million ($32.8 million)

Jul 20, 2012. /Lesprom Network/. Sveaskog’s net sales for the first half of the year amounted to SEK 3.5 billion ($510 million). The decline compared with the precious year is essentially due to a 6% decrease in average selling prices. The total sales volume is largely unchanged ­compared with last year, as the company said in the press release received by Lesprom Network. Operating profit from continuing operations amounted to SEK 446 million ($65.6 million). The lower price levels had an impact on earnings but were compensated to some extent by a higher volume of timber from our own forests and an increased proportion of sawlogs in deliveries. When comparing with last year insurance compensation for the storm Gudrun, which was recognised as revenue of SEK 62 million ($9.1 million) in the 2Q 2011, should be taken into account. Sales of wood raw material amounted to 5.7 million cubic metres, a marginal increase compared with the same period in the previous year. On the other hand, the volume varies between the main assortment sawlogs, pulpwood and biofuel. Despite the weak economic climate, sawmill production was higher than in the same period last year which was reflected in a 12% increase in sawlog deliveries. Deliveries of pulpwood and chips decreased by 9% while biofuel deliveries rose 3%. Operating profit from continuing operations was affected, as well as by lower selling prices, by higher production costs. These stem from processing after the storm Dagmar which felled more than half a million cubic metres of forest on Sveaskog’s land, primarily in south Norrland. The storm caused disruptions in the market but Sveaskog was able to meet its deliveries to customers by bringing in resources from other parts of the country to process and transport the timber. The strong krona and difficulties with financing are causing concern in the Swedish wood products industry. Demand for sawlogs was balanced, however, and the reductions in sawlog prices have ceased. The market for the wood products industry is difficult to assess. Fibre raw material supplies were plentiful in relation to demand which put pressure on deliveries. The balance between supply and demand for pulpwood will ­probably improve by the autumn. Net sales totalled SEK 1.8 billion ($265 million) in the 2Q 2012, a decrease of 2% compared with the same period in 2011. The change is due to an 8% decrease in average timber prices which was largely compensated by higher delivery volumes and a higher proportion of sawlogs. Operating profit from continuing operations amounted to SEK 223 million ($32.8 million). The change is mainly due to lower timber prices which were partly compensated by a higher volume of timber from the company’s own forests and a larger proportion of sawlogs in deliveries. The difference compared with the previous year is also explained by processing costs after the storm Dagmar and by SEK 62 million ($9.1 million) in insurance compensation after the storm Gudrun received by Sveaskog in 2011. Capital gains from property sales amounted to SEK 29 million ($4.3 million). Share of profits of associates amounted to SEK 8 million ($1.2 million). Operating profit before change in value of forest assets amounted to SEK 260 million ($38.2million). Change in value of forest assets amounted to SEK 114 million ($16.7 million). After change in value of forest assets, operating profit amounted to SEK 374 million ($55 million). Net financial items amounted to SEK –74 million ($10.9 million). The change is due to increased borrowing. Profit for the period was SEK 223 million ($32.8 million). Sveaskog is Sweden’s leading forest company. The company sells sawlogs, pulpwood and biofuel.