Operating profit of SEK 891 million in challenging times

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Södra posted operating profit of SEK 891 million (2,582) for 2020, a year challenged by the pandemic, slowing global growth and a widespread spruce bark beetle outbreak.

Net sales amounted to SEK 20,351 million (23,183). The Board proposes a profit distribution of SEK 598 million.

In 2020, consolidated net sales amounted to SEK 20,351 million (23,183) and operating profit totalled SEK 891 million (2,582). The decline in sales was attributable to considerably lower price levels for market pulp and lower prices for sawn timber throughout the year, as well as negative exchange-rate effects. At the same time, delivery volumes for Södra’s core products were higher year-on-year. Return on capital employed was 2 percent (12) and the equity ratio was 57 percent (59). At the Annual General Meeting on 1 June 2021, the Board will propose a profit distribution of SEK 598 million to members, corresponding to 80 percent of profit before tax.

“The year was marked by uncertain and turbulent conditions all over the world, which had a negative effect on the market and led to a lower result. It has been challenging for us and our forest-owning members. Our primary focus has been to safeguard the health of our employees, members, contractors and customers. But despite the tougher financial market situation, Södra stands strong,” said President and CEO Lotta Lyrå.

“Our production level has remained stable throughout the year and demand for our core products is favourable. That is also reflected by the Board’s proposed profit distribution to our members and owners: SEK 598 million. That is well-balanced in light of our result and long-term targets,” said Peter Karlsson, CFO of Södra.

Creating growth in an ever-changing world
In the first half of 2020, the global economy contracted rapidly due to the pandemic. Global growth was also affected by a series of political events, including the US presidential election, the US-China trade war and Brexit. The widespread spruce bark beetle outbreak also created major problems during the year. These are changes that Södra’s Group strategy, which was adopted in 2020, is designed to manage. The overarching objective is to be an even more sustainable, profitable, innovative and resource-efficient growth company.

“The starting point for Södra’s new Group strategy, 2025+, is to create profitable and sustainable growth in an ever-changing world. By continuing to focus on what we can influence, and process wood raw material into climate-smart products and solutions, we will build an even more efficient Södra and strengthen the profitability of family forestry. Demand for forest-based products will gradually increase as the bioeconomy grows,” said Lotta Lyrå.

Increased investment in cross-laminated timber
In 2020, Södra’s investments in the new CLT facility also continued. The facility will have a production capacity of approximately 100,000 m³ and is scheduled to start up in the first half of 2022.

“Södra’s operations are essentially climate-positive due to the growing raw material base and the positive effects derived from using our products to replace fossil-based options. Inauguration of the world’s first fossil-free biomethanol plant at Södra’s pulp mill in Mönsterås and our investments in CLT are just two of the forest industry’s many contributions to the transition towards a bioeconomy,” said Lotta Lyrå.

The profit distribution comprises:

  • Dividend on wood deliveries: SEK 411 million (corresponding to 8 percent)
  • Dividend on contributed capital: SEK 98 million (corresponding to 2 percent)
  • Bonus issue: SEK 89 million (corresponding to 5 percent)

 


Source: Södra