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Södra achieves stable performance amidst various challenges

 Friday, February 16, 2024

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Södra achieves stable performance amidst all challenges

Fighting all odds and challenges, Södra recently posted a stable result for 2023. Operating profit totalled SEK 2,226 million and Södra’s Board proposes a profit distribution of SEK 1,474 million to members. All through the year, the company implemented its strategy with strong focus and dedication. It left no stone unturned to maintain the competitiveness while adding value to the family forestry.

In 2023, the Södra Group’s net sales amounted to SEK 28,896 million (33,367). Operating profit totalled SEK 2,226 million (7,805). At year-end, return on capital employed was 9 percent (35) and the equity ratio was 64 percent (65). During the year, efforts to strengthen the Group’s competitiveness led to efficiency gains of SEK 866 million and contributed to the result, while also generating a long-term effect. The result for 2023 is in line with the plan for the year.

Södra’s Board proposes a higher dividend in relation to profit and that approximately two-thirds of profit for the year be distributed to members. This would entail a total profit distribution of SEK 1,474 million, corresponding to an average amount of SEK 28,478 per member and 65 percent of profit before tax. The distribution proposal will be presented to the AGM for adoption in Kalmar on 28 May 2024.

“I can confirm that Södra has delivered a stable result in challenging times. This demonstrates the cooperative’s ability to work both long and short term with its mission to strengthen the value of family forestry. Södra’s industries are the means for creating this value and our mission is to always do this in the best and most sustainable way in all of our business dealings. Our main focus is to strengthen competitiveness by enhancing efficiency, increasing the added value of our products and making more of the raw material that we have. The external situation has made it even clearer that our strategic direction is necessary and right,” said Lotta Lyrå, President and CEO of Södra.

Strategic initiatives and decisions for the profitability of forest estates

Södra plans to be a market player that promoted the interests of forestry and develops industry in line with the times. By this the company aims to strengthen the value and profitability of family forestry. In recent years, major macroeconomic changes have affected the market for Södra’s products as well as forests, leading to the increasing importance for sustainable investment. This also demands changes in the industry structure to maintain Södra’s position amidst the developing competition in the market.

CLT facility
In mid-March, Södra’s new facility for cross-laminated timber (CLT) at Värö was inaugurated. The facility is one of the largest in Sweden with a capacity to supply framing materials for more than 4,000 homes annually, representing a tenfold increase in our CLT production capacity.

The new evaporation plant at the pulp mill in Mönsterås was commissioned – an investment of SEK 700 million in April. This will reduce the mill’s consumption of heat in the form of steam and, in turn, increase the production of renewable electricity.

New cold storage facility for seedlings
Södra’s new cold storage facility for seedlings was inaugurated in October. The facility, which lies adjacent to the Falkenberg nursery, is Södra’s first and has capacity for handling 40 million seedlings.

Investment in paper pulp from agricultural products
Södra launched an investment in paper pulp made from pulpwood mixed with agricultural residues. The new blend will mean that more paper pulp can be produced from each tree, which will strengthen the profitability of family forestry and enable an even more resource-efficient and circular flow.

Industrial consolidation in Södra Wood
To strengthen and future-proof Södra Wood’s competitiveness, the industrial structure will be changed in 2024. The aim is to achieve economies of scale by relocating production volumes to Södra Wood’s larger production units.

The profit distribution comprises:

Dividend on wood deliveries: SEK 844 million (corresponding to 12 percent)
Dividend on contributed capital (paid-up and issued capital): SEK 492 million (corresponding to 8 percent)
Bonus issue: SEK 138 million (corresponding to 6 percent)

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