Södra posts negative HY1 2012 results


Pulp and wood products manufacturer Södra reported a SEK215m loss after net financial items for the first half of 2012. Overall performance impacted by weak economic development in the company’s main markets and lower production volumes due to market-related stoppages.

Swedish forest products group Södra has posted negative results for the first half of 2012. The company reported half-year losses after net financial items of SEK215m, compared with earnings after net financial items of SEK573m in the same period last year. Operating losses for the period stood at SEK203m versus operating earnings of SEK577m in HY 2011. Net sales decreased 9.6% to SEK8,987m.

According to Södra, the pulp segment recovered slightly in the first half of 2012 with bleached softwood kraft pulp pricing rising in the first quarter before dipping again in the second quarter of the year. The economic crisis in Europe had a dampening impact on European paper demand, thus reducing pulp demand from the paper industry, Södra said.

Södra produced a total of 856,000 t of pulp at five mills, compared with 1 million t in the same period of 2011. The reduction in pulp volumes was due to commercial downtime implemented at Södra Cell’s Tofte and Folla mills in the first quarter of the year, the company explained.

Performance in wood products and interior products segments in the first half of the year was also impacted by the economic recession. Consumption of wood products in Europe remained at low levels and a weak market combined with high raw material costs were weighing down on the profitability of Södra’s mill in Southern Sweden, the company reported. Decline in volumes and pressure on prices have been registered in the interior products markets due to economic uncertainty. Södra Interiors, however, defended its market share, the company explained.

In the forestry segment, timber volumes were 10% down compared with the same period 2011, mainly as a result of market-related stoppages at the company’s saw and pulp mills at the beginning of the year, Södra reported. The spring seedling sales were excellent and the company was working on a project to increase the volumes at its nurseries to 45m per year.

"Despite the negative result and global economic uncertainty, Södra is in a strong financial position,"said Gunilla Saltin, President and CEO of Södra Cell. She expected to see Södra's markets gradually growing stronger in the second half of the year, but forecasted the company’s full-year financial results for 2012 to be "significantly lower than in the last few years."

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