Södra invests in the future
The global outbreak of COVID-19 has led to a serious global crisis. The extent of the economic impact is uncertain, since both production and demand for forestry products have declined globally according to Peter Karlsson, Sodra’s Interim President and CEO.
“We are also looking ahead, and the board has decided to make additional investments as part of the plan to increase the annual production capacity of our pulp mill at Värö to 850,000 tonnes so that Södra can continue to grow profitability as we move forward,” he said.
“Given the current market conditions, Södra posted a stable result in line with expectations for the first half of the year,” Karlsson added.
Demand for Södra’s core products was favourable, although prices for paper pulp and sawn timber were considerably lower year-on-year, albeit slightly higher at the end of the six-month period than at the beginning of the year.
“The management of storm-damaged and spruce-bark-beetle infested forests has been a priority, but there will still be challenges to deal with in the coming quarters.”
Mr Karlsson said that a key element of Södra’s strategy for sustainable and profitable growth is the efficient use of wood raw material.
One example is the pilot facility that is now under construction in Tofte, Norway, the facility aims to develop both the process and the technology for liquid biofuel.
A full-scale facility for liquid biofuel production has been planned.
“With this initiative, we are taking further steps towards a fossil-free future by processing forest products. At the same time, it is also important that politicians facilitate the use of the potential of forests in the transition to a sustainable bioeconomy,” Mr Karlsson said.
In the second quarter of 2020, Södra’s consolidated net sales declined 13%. The lower profitability was due to lower price levels for paper pulp and sawn timber compared with the year-earlier period.
During the first six months, sales declined 12% with the operating margin at 4%. Return on capital employed was 4% and the equity ratio was 57%.
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