Swedish timber company Bergs Timber anticipates a continued negative impact on its earnings due to the ongoing deterioration in the construction industry. According to company, the market for lumber is unbalanced, with falling prices for sawmill products during the third quarter.
Company's earnings before interest, taxes, depreciation, and amortization (EBITDA), excluding items affecting comparability, totaled SEK 29 million, down from SEK 46 million in the previous year. Net sales increased to SEK 777 million from SEK 708 million, while cash flow was strong at SEK 137 million.
In the Wood Solutions business area, sales volumes were low for the season, but the impact was mitigated by falling raw material costs, leading to improved earnings compared to previous quarters. However, the overall trend in the construction-related product market remains weak.
The Doors & Windows segment experienced favorable sales volumes, order intake, and earnings. Meanwhile, the Furniture & Components segment made a positive contribution to the group's earnings.
Despite a good financial position, the construction-related product market has further weakened. Windows and doors for renovation and energy savings remain stable, but the DIY sector's weak demand has kept sales volumes low.
The company noted increased interest in refined products, such as linseed oil-treated items, and observed a positive impact on demand and earnings from deliveries to high-profile projects. However, the market for sawn wood products continued to decline, with higher raw material costs and lower sales prices affecting sawmills' profitability.
Bergs Timber has undertaken structural measures, including the closure of its Estonian sawmill, Laesti. In terms of business performance, the Doors & Windows segment remains favorable, with plans for showroom expansion and a new window type launch in 2024. The Furniture & Components segment is experiencing good demand, while Wood Solutions faces challenges with weak demand for wood protection and garden products. The former Byko-Lat in Latvia and Bergs Timber UK have changed their names to Bitus, which was already the name of the Swedish operations.
The Sawn Wood segment has seen a decline in demand in line with the construction industry, leading to squeezed margins. Vika Wood sawmill continues to limit production rates by about 15% and the finished goods inventories are at low levels. The Energy & Logistics segment, dealing with pellets, has adjusted production rates and maintains normal pellet stocks for the upcoming winter season.
Looking ahead, Bergs Timber expects continued positive development for Doors & Windows and Furniture & Components. Wood Solutions anticipates lower deliveries and small margins for the rest of the year. Sawn Wood faces another quarter with squeezed margins, with the possibility of raw material price reductions during the winter.
