Tuesday, October 28, 2025
Swedish forest-industry major Holmen AB has reported noteworthy financial headwinds in its wood-products business, attributing the downturn primarily to sluggish global construction demand and elevated raw-material costs. The developments offer important insight for the woodworking, sawmill, and timber supply chain sectors worldwide.
Holmen’s latest interim figures underscore mounting pressure on the timber segment. For the period ending June 2025, the group recorded an operating profit of SEK 1,794 million (down from SEK 1,927 million in the same period in 2024) and an earnings-per-share of SEK 8.6 (versus SEK 9.3 previously).
More strikingly, the Wood Products business area—covering sawn-timber, glulam and structural timber—reported a meagre operating result of just SEK 2 million in 2024 (after earlier reaching only SEK 6 million in 2023).
In its market commentary, Holmen identified that although there remains strong interest in large-scale timber construction, the broader construction market is subdued—particularly due to high interest rates and economic caution.
Key pressures facing the segment
Demand weakness from construction:
The woodworking and timber industry is closely linked to building activity, residential and commercial. Holmen noted that demand from “the rest of the construction market” beyond large-scale wood construction is weak. Furthermore, industry analysts observe that the wood-products segment is “highly cyclical by nature” and has been hit by a weaker economic cycle and elevated interest rates since mid-2022.
High log and raw-material costs:
Holmen’s inland sawmill operations have seen rising saw-log costs and tight margins. As one report noted: “Competition for sawlogs remains high … the wood products segment posted a loss … as construction demand remained weak.” Holmen’s own reporting points out that increased timber costs—as well as raw-material availability constraints—continue to erode profitability in the wood segment.
Energy and miscellaneous headwinds:
In addition to weak timber demand, Holmen highlights that low electricity prices in northern Sweden and maintenance shutdowns in its Board & Paper division also weighed on group results. While not directly part of the woodworking segment, these factors add strain across the business.
For sawmills, timber processors and wood-construction suppliers, Holmen’s results underscore several themes:
Margin squeeze despite stable or elevated prices. Even though timber list prices may remain high, input costs (logs, labour, energy) are eroding margins.
Dependency on construction demand is a liability in a soft cycle. Firms with large exposure to standard construction volumes (rather than niche mass-timber or CLT) face greater vulnerability.
Geographic cost and supply-chain differences matter. Holmen referenced regional price differences for logs and supply pressure.
Diversification helps—but only so far. Holmen’s strategy notes strong vertical integration (forestry + mills + energy) gives some insulation, but the woodworking segment still remains cyclical.
What Holmen is doing
Despite the current pressures, Holmen is maintaining a forward-looking posture. The company sees “good opportunities to develop the wood business as the construction market turns around.”
Some of its strategic initiatives include:
Investing in capacity expansion in engineered wood products: increasing production of glulam and CLT at its sawmills.
Organising business segments around four pillars: forestry, hydro & wind power, woodworking industry (wood products), and process industry operations (board & paper) – allowing sharper focus and resource allocation.
Maintaining forest-asset ownership to secure raw-material supply and partially insulate from input-cost inflation.
While Holmen’s latest figures show the immediate pain in the wood-products segment, the broad structural tailwinds remain: sustainable construction is gaining traction, engineered wood use is rising globally, and timber offers a lower-carbon alternative to steel and concrete. In its reports, Holmen emphasises the “interest in large-scale wood construction” even though the current general construction market is subdued.
For woodworking industry players—especially outside Sweden and the Nordics—the key takeaway is the importance of aligning production, cost-control and market exposure to demand cycles. Firms heavily exposed to standard residential construction may face headwinds if demand stays weak; conversely, those focusing on structural wood, engineered timber or value-added processing may fare better.
In summary, Holmen’s slump in its wood-products arm is a cautionary tale for timber-industry stakeholders worldwide. Weak general construction demand combined with high raw-material input costs is creating margin pressure in sawn-timber and engineered-wood segments—even for vertically integrated, forest-asset-rich players like Holmen. For woodworking mills, suppliers and construction-timber firms globally, the message is clear: cost discipline, market diversification, value-added production and alignment with/timing of construction cycles will be critical to navigate the downturn and be ready for the next up-cycle.
Read more news on: timber industry, supply chain, engineered wood, CLT
Get such updates through woodandpanel.us
Tags: CLT manufacturing, engineered wood products, forestry and sawmills, Holmen financial report, Holmen investors update, Holmen wood products, woodworking industry outlook
Comments: