Mellanskog analyses its latest negative report for the third quarter of 2025

 Wednesday, November 5, 2025

Mellanskog (also known as The Mellanskog Forest Owners Association) has released its financial report for the third quarter of 2025, revealing a period of short-term economic contraction despite underlying long-term stability. The association recorded a profit before tax of SEK -5 million for the quarter, a significant retreat compared to the SEK 56 million earned during the same period in 2024. This negative quarterly result reflects broader headwinds impacting the Nordic timber market, characterised by lower delivery volumes, plateauing timber prices, and elevated internal investment costs. Crucially, however, the association maintains that its financial reserves are strong, pointing to an accumulated operating profit for the first nine months of 2025 that ranks among its highest historically.

Market realities

The Q3 performance was primarily driven by two convergent factors: tightening market dynamics and internal system transition costs.

1. Market slowdown and price culmination: While timber prices have generally remained high compared to historical norms, the quarter saw a peak and subsequent flattening of price levels. This culmination comes as overall profitability pressure within the wider forest industry—including paper, pulp, and construction materials—has softened demand for raw materials. Mellanskog reported a noticeable dip in raw material deliveries, with volumes falling to 901 thousand cubic meters (Tm³ fub) for Q3 2025, down from 971 Tm³ fub in the corresponding quarter last year.

2. Digital investment and productivity loss: Mellanskog faced increased operational costs tied to strategic digital investments and internal changes. Specifically, the transition to the new planning and logistics system, known as VIOL3, created friction. These parallel internal system changes resulted in temporary productivity loss and logistical inefficiencies, particularly impacting harvesting and transportation schedules. This transition, while essential for future efficiency, temporarily compounded the issue of lower volumes.

Furthermore, the delivered timber mix contained a high proportion of less profitable segments, such as thinnings and small-dimension timber, further squeezing margins during a period of market deceleration.

Despite the immediate challenges, the association focuses on its robust financial preparedness and strategic position. For the nine months spanning January through September 2025, Mellanskog posted an accumulated operating profit of SEK 150 million, comfortably exceeding the SEK 133 million achieved in the same period of 2024.

Fredrik Munter, CEO of Mellanskog, reaffirmed the association’s optimism regarding the future of forestry: “Despite facing a tougher third quarter, our fundamental financial position is unshakeable, and the long-term trends remain decisively in favour of the forest sector. We are witnessing increasing forest growth and a burgeoning interest in wood-based solutions for sustainable construction and the wider bioeconomy. The current times present challenges, but the forest resource will only grow in importance in the future.”

The financial resilience is underpinned by a robust balance sheet. Mellanskog notes that its financial portfolio has performed positively, generating returns during the quarter that are yet to be reflected in the reported results. This strong liquidity profile positions the association well to weather continued market volatility and proceed with essential digitalisation efforts.

A critical demonstration of Mellanskog’s long-term commitment is its record-breaking 2025 reforestation campaign. The forestry season concluded with an unprecedented 24 million seedlings planted, nearly doubling the volume planted in 2024. This intensive reforestation effort highlights the association’s focus on future fibre supply and climate resilience. The species distribution of the newly planted forests was heavily weighted toward valuable commercial species: 57 percent were Scots pine and 41 percent were Norway spruce, aligning with the core requirements of the Swedish forest industry for both structural wood and pulp fibre.

Beyond commercial performance, Mellanskog continues its proactive role in political and legal advocacy for its growing member base, which recently surpassed 29,000 forest owners. The association boasts a high satisfaction rate, with 82 percent of members reporting contentment with their membership in the latest survey.

CEO Fredrik Munter has been particularly vocal regarding the accelerating legal complexities that threaten property rights and management certainty for Swedish forest owners. The core issues revolve around vague regulatory interpretation, specifically concerning the Species Protection Ordinance, and the chaotic process for obtaining fair infringement compensation. “Legal developments are consistently creating uncertainty for forest owners. The current interpretation of the Species Protection Ordinance remains unclear, and navigating compensation rights is an administrative maze. This situation is unacceptable, especially when the state is actively pursuing legal strategies to delay or avoid paying fair infringement compensation,” Munter stated.

This regulatory uncertainty forces individual forest owners to navigate complex case law, increasing operational risk and potentially lowering the collateral value of forestland—a point of concern shared across the Nordic financial sector. Mellanskog is pressing the government for clear, actionable legislation that guarantees legal certainty and prompt, adequate compensation whenever the state imposes restrictions on private ownership rights for conservation purposes.

The Q3 report, therefore, serves as a dual reminder: of the cyclical market pressures that demand operational efficiency, and of the structural, regulatory battles necessary to secure the long-term viability and legal stability for Sweden’s private forest owners.

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Tags: Forest Owner Compensation, Q3 2025, reforestation, Reforestation techniques, Species Protection Ordinance