Holmen faces tariff uncertainty that hurts wood products

 Tuesday, August 19, 2025

Holmen AB, a leading Swedish forest industry company, published a report which stated that the company started to face headwinds from tariff uncertainty and sluggish construction demand, weighing on its performance, particularly in its wood products segment in the second quarter of 2025.

Overall Q2 performance highlights

• Net sales declined 5.4% year-over-year to SEK 5,573 million, falling short of analysts’ expectations of around SEK 6,034 million.
• Operating profit dropped to SEK 807 million, approximately 18% lower than Q2 2024, and significantly beneath the consensus of SEK 906 million.
• Operating margin shrank to 14.5%, down from 16.7% in the same quarter last year.
• Earnings per share (EPS) fell to SEK 3.80, compared to SEK 4.70 in Q2 2024.
• Profit after tax came in at SEK 602 million, a nearly 20% decline over the previous year.

Challenges

Holmen’s wood products segment was particularly impacted. Although selling prices increased seasonally, lasting demand remained weak due to a slowdown in construction activity. Elevated log costs further squeezed profitability, resulting in a modest SEK 20 million operating profit, unchanged from the same period the previous year. CEO Henrik Sjölund attributed Q2’s challenges to two intertwined factors: tariff-related uncertainty clouding trade flows and persistently weak construction demand. He noted that stiff competition over wood raw materials and limited availability globally further dampened performance.

Other segments’ performance

Forest division posted a notable rebound, contributing SEK 519 million to operating profit—an improvement over Q1—thanks to effective asset management and active harvesting strategies.

The Renewable Energy segment suffered due to exceptionally low electricity prices in northern Sweden, resulting in an operating loss of SEK 33 million in Q2.

The Board and Paper segment, despite facing maintenance shutdowns (notably at Workington), held up reasonably well, delivering SEK 358 million in operating profit, largely owing to the company’s adaptability and efficient energy use.

Market reaction and implications for the woodworking industry

Holmen’s Q2 results triggered a nearly 3% drop in share price, reflecting investor concern. Analysts from Jefferies maintained a Hold rating but lowered the stock’s target price, citing overcapacity in Europe’s paperboard and board market and modest returns relative to peers. JPMorgan echoed similar reservations, noting Holmen’s EBITDA missed estimates across all segments, and the outlook for consumer board prices remains uncertain amid rising supply and tariff-induced demand shifts.

• Sluggish construction demand: Holmen’s Q2 performance underscores the direct link between construction activity and demand for sawn timber used in cabinetry, framing, and joinery. Woodworking suppliers may face continued pressure until construction rebounds.
• Tariff-driven trade volatility: The uncertainty in cross-border trade flows underscores the risk for exporters and manufacturers that depend on imported or exported timber and wood components. Strategic sourcing and local market development may become necessary.
• Input cost pressures: Rising log prices, compounded by supply constraints, are squeezing margins across timber-focused operations. Operational efficiency and cost management will be critical.
• Renewable energy constraints: The weak performance in Holmen’s energy division highlights how volatile energy inputs can affect production cost structures, making energy-efficient woodworking processes all the more valuable.
• Segment resilience: Holmen’s sustained results in its forest and board segments illustrate that diversification across value-added forest products remains a buffer against cyclical downturns in construction.

Holmen’s Q2 2025 results paint a challenging landscape for the woodworking sector: falling sales, tariff ambiguity, and structural weakness in construction propelled declines in operating profit and EPS. However, strategic strengths—such as integrated forestry management and resilience in paperboard operations—provide a foundation for recovery. For woodworking businesses, the quarter affirms the need to monitor construction market trends, diversify sales channels, manage energy and raw material costs effectively, and consider hedging risks associated with tariffs and supply disruptions.

About Holmen

In Sweden, Holmen is one of the biggest forest owners. They actively and sustainably maintain the forest to ensure that it develops as best it can, providing them with the best raw material. They employ a long-term approach, protecting biodiversity and managing the forest ecocycle from seed to replanting. Their staff members purchase wood, look after the forests, and assist private forest owners with harvesting and forest preservation.

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