Södra delivers stable result and important strategic decisions in the second quarter

In the second quarter of 2024, net sales for the Södra Group amounted to SEK 7,527 million (7,322), up 3 percent year-on-year. Operating profit totalled SEK 398 million (464), representing an operating margin of 5 percent (6). Return on capital employed was 8 percent (13) and the equity ratio was 60 percent.

In the second quarter, Södra delivered a stable result that was just ahead of expectations. The result was positively impacted above all by high pulp prices and good cost control, while it was burdened by higher raw material prices and costs of approximately SEK 275 million for scheduled maintenance shutdowns at Värö and Mörrum” said Lotta Lyrå, President of Södra.

For sawn timber, the weak economy has continued to affect the market, though prices have been maintained due to lower supply. The result for the paper pulp business was impacted by scheduled maintenance shutdowns, although demand remains positive in relation to supply. World-class efficiency – our way of working with continuous improvements – generated improvements during the quarter and efficiencies with a recurring annual effect of SEK 184 million.

New business increases added value from every tree

Södra’s strategy aims to maximise the value of every tree in the members’ forests. In the second quarter, Södra made important decisions to this end through the establishment of two new businesses: kraft lignin and tannin.

“Our assignment is to refine and renew the value of family forestry. Södra is continuing to do more with each tree and delivering products and solutions that facilitate the climate transition and strengthen the profitability of family forest owners. Sustainability and profitability should go hand in hand and this quarter has provided two excellent examples of how Södra is working on these very subjects,” said Lotta Lyrå.
 
The investment of more than SEK 2 billion that Södra is now making in a kraft lignin production facility in Mönsterås, which is expected to be operational in 2027, will make Södra the largest kraft lignin producer in the world. There is substantial interest in kraft lignin and agreements have already been signed with customers for a large share of the future production volume. The investment is financed by own funds, cash flow from operating activities, and with support from the Swedish Energy Agency. The investment in the production of tannin is being made in a production line at Värö and this is scheduled to become operational in 2026.  

Business areas’ results for the second quarter of 2024
In the Södra Skog business area, operating profit totalled SEK 46 million (31) for the period.

• The earnings trend was mainly attributable to a continued increase in prices and higher delivery volumes.

In the Södra Wood business area, operating profit totalled SEK 128 million (8) for the period. 

• The earnings trend was primarily due to higher delivery prices.

In the Södra Cell business area, operating profit totalled SEK 380 million (572) for the period.

• The earnings trend was mainly due to higher pulp prices and price reductions for energy products.
• The result for energy and chemical products was on a par with the year-on-year period. Higher prices for solid fuel products made a positive contribution, while lower prices for electricity and liquid bioproducts had a negative impact. 

In the Södra Innovation business area, the operating loss totalled SEK 54 million (loss: 19) for the period. 

• The year-on-year earnings trend was mainly attributable to depreciation and lower profit from shares in associates.

Read more about Södra’s investment in the production of kraft lignin
Read more about Södra’s investment in the production of tannin