Jul 28, 2009. /Lesprom Network/. Södra’s operating profit for the first six months was SEK 9 million (SEK 554 million in 2008), the company reported. The year’s profit after net financial income and expenses was SEK 21 million (519). Revenue declined to SEK 8,020 million (9,078). The sawn timber market showed an improvement in the second quarter. Inventory reductions are evident across all customer segments and price increases have been implemented in Södra's key markets. Demand shortfalls have been countered with production stoppages. As a result, Södra expects improved supply opportunities during the rest of the year. No further production shutdowns are planned. New construction is generally low but the renovation sector is holding up. Södra made four acquisitions in the interior products segment in the first six months of the year (three in the second quarter), in order to strengthen its geographic coverage in Norway and broaden its product range. The market for interior products was also affected by reduced demand and falling prices, although there was a weak improvement in the second quarter. The market pulp sector was under pressure during the first six months. The second quarter showed a clear strengthening however, particularly in the market for bleached softwood sulphate pulp. The list price was increased in the second quarter from USD 590 to 660 per tonne. Extended market shutdowns were held at production units Tofte and Folla in Norway and the Mönsterås mill also had a two-week maintenance shutdown in May. Total production for the first six months was a record low 860,000 tonnes (1,032,000). Price levels and volumes are expected to improve during the second six months. No further market shutdowns are planned this year. The timber market in Södra’s region has been dominated by weak demand for much of the year. The biofuel market has remained strong however with biofuel production reaching record levels during the six-month period. Processing of storm wood inventories is running to plan and is expected to be complete in the third quarter. This coincides with higher demand for timber and increased harvesting activity. The first six months of 2009 have been dominated by the production cutbacks implemented to align supply with demand. Additional production cutbacks were made at the Tofte and Folla pulp mills in May. Södra’s total production during the first six months was 15 per cent below normal capacity. “Market conditions improved in the second quarter and we anticipate ongoing improvement during the second six months of this year. When times are difficult we pay close attention to our ability to generate an underlying cash flow. We have balanced a strong investment rate with reductions in inventory levels,” says Södra President and CEO Leif Brodén. “Our overall equity ratio has improved three percentage points to 59 per cent during the first six months, during which time we also made four acquisitions,” says Leif Brodén. “What we have been calling ‘the last great sale’ internally is now over. We are anticipating better prices generally in the second six months, even though the end markets for our products are still struggling,” he says. “Our real productivity, when adjusted for economic cycles, improved by 1 per cent in the first six months. An average of 53 improvement proposals were made per week,” he says.