The current market conditions had a significant impact on Södra’s operating profit in the 3Q 2020. Despite higher year-on-year delivery volumes for Södra’s core products, the price formation for market pulp was weaker. For the 3Q, Södra’s sales declined 9% to SEK 4,925 million and operating profit to SEK 93 million ($10.7 million).
For the first nine months of the year, operating profit totalled SEK 541 million ($62.2 million). Return on capital employed was 3% and the equity ratio was 57%.
“The global economy is projected to contract this year due to COVID-19, despite a slight and recent recovery. A more stable and sustainable turnaround in the years ahead will require an easing of the uncertainty created by the pandemic. In view of the current market conditions and geopolitical uncertainty, Södra’s operating profit to date this year can be considered stable,” said Peter Karlsson, Interim President and CEO.
“Both the decrease in sales and decline in earnings were due to considerably lower prices for market pulp compared with the year-earlier period. A weak upward trajectory meant that prices were slightly higher at the end of the quarter compared with the beginning of the year. To date this year, the price of sawn timber is lower year-on-year. Demand for Södra’s core products remained favourable, while production was stable at a high level,” said Peter Karlsson.
A mobilisation of Södra’s entire chain – from owners, contractors and employees to the mills – combined with favourable weather conditions minimised the negative effects of the spruce bark beetle outbreaks. Despite a 50% reduction compared with last year, the level of damage is 1 million m³sub on Södra members’ estates, which is still extremely high.
