Dec 17, 2015. /Lesprom Network/. The Board of Södra has adopted a new profit-sharing policy entailing that the total distribution of profits to its owners will be raised from 40% to 50% over a business cycle. At the same time, possible bonus issues will be raised from 30% to 35%, and the equity ratio requirement from 50% to 55%, as the company says in the press release received by Lesprom Network. 

"By increasing our profit sharing, we are strengthening the profitability of members' forest estates while securing long-term financing for their mills," says Lena Ek, Chairman of Södra.

At Södra's Annual General Meeting in May 2015, several motions on the principles for profit sharing and Södra's long-term financing were addressed. Thereafter, a special team was assigned to comprehensively illustrate various perspectives on future profit sharing over a longer period of time. The Board supports the team's proposal for a higher distribution of profits, while also securing access to favourable financing for the Group.

"Södra is performing favourably, and we know that 2015 will be a strong year. At the same time, Södra operates in a global industry that is highly cyclical. However, the Board assesses that Södra's financial position is strong enough to meet our long-term investment needs, while also increasing the distribution of our profits to members," says Lena Ek, Chairman.

Under the current policy, total profit sharing, meaning dividends in the form of interest on contributed capital and wood supply payments, and bonus issues, must be at least 40% of profit before tax over a business cycle. This ambition will now be raised to 50%.

The policy also entails that the dividend will reward both the year's wood deliveries as well as the risk capital, in the form of capital contributed by members. This section of the policy has been complemented with an endeavour to achieve consistency in the total individual value transfer between years.

On account of Södra's strong balance sheet, opportunities to continue issuing bonus shares will increase. There is currently scope to continue with bonus issues if total capital contributed does not exceed 30% of total equity. That level will now be raised to 35%.

The current requirement for profit sharing is an equity ratio of at least 50%. This will now be raised to 55% in order to increase individual shareholdings, while also ensuring stable development of the industry.

"Södra's ownership form affects its ability to raise capital. Safeguarding and taking responsibility for the balance sheet, and thereby protecting Södra's independence, thus remains a top priority, and is the reason why we are raising the equity ratio target," says Lena Ek.