Thursday, April 23, 2026
Södra reported a positive result for the first quarter of 2026, significantly driven by the divestment of its forest holdings in the Baltics. The quarter was marked by a challenging market environment, characterised by weak demand and a continued imbalance between raw material supply and the markets for Södra’s products.
In the first quarter of 2026, the Södra Group reported net sales of SEK 6,604 million (8,154), a decline of 19% compared with the same period last year. Operating profit reached SEK 895 million, corresponding to a margin of 14%. The result was supported by a capital gain from the divestment of forest assets in Latvia and Estonia. Excluding this effect, the Group recorded an operating loss of SEK 578 million (profit: 439), reflecting ongoing challenging market conditions, a stronger SEK, and higher raw material costs.
“The first quarter of 2026 has confirmed the challenging start to the year, and our underlying profitability for the quarter was negative. We were strongly impacted by geopolitics, currency, trade barriers and regulations, while developments in the Middle East also led to direct cost increases, mainly for logistics and input products. In this situation, we focus every day on what we ourselves can influence – to increase efficiency, adjust work methods and implement measures to address both costs and revenues, and we can see that our actions are yielding results,” said Södra’s President and CEO Lotta Lyrå.
During the first quarter, demand across Södra’s product markets remained persistently weak. At the same time, the strengthening of the SEK against the USD had a noticeable impact compared with the same period last year. Together with continued pressure from the imbalance between raw material costs and finished product prices, this weighed on overall profitability.
The pulp business was mainly affected by weak demand in Europe. Softwood pulp prices rose in Europe and the US, while price levels in Asia were more static. The global market featured a continued imbalance between supply and demand, with a relatively high supply of softwood and hardwood pulp, which contributed to the downward pressure on prices.
The sawn timber market remained weak during the quarter, particularly in the UK (Great Britain and Northern Ireland) and the US. In parallel, slightly higher activity was noted in several European markets, while activity in the building materials trade in Sweden was low. In the CLT business, order intake increased at the end of the quarter and the order book grew compared with year-end 2025.
The energy products market showed greater stability during the period, with favourable demand for several bioproducts and positive momentum in the tall oil segment. While demand for dissolving pulp remained relatively steady, it was tempered by elevated supply levels.
In the first quarter, improvements and efficiency measures equivalent to SEK 233 million were achieved as part of the World-class Efficiency programme, reflecting the company’s ongoing focus on continuous improvement.
Focus on actions, development and long-term competitiveness
In a market environment that remains challenging, their focus is clearly on what Södra can influence in its own operations. Efforts are focused on both overheads and revenues, and aim to address short-term needs while building long-term competitiveness.
The action programme we initiated last year is continuing to bear fruit, and work to increase efficiency, adjust working practices and identify cost savings is ongoing across the business. In parallel, additional measures focused on revenue are being mobilised in response to a more challenging market environment, in the form of clearer market choices and continued development of the product portfolio, both in existing offers and new products.
Meanwhile, Södra is continuing to develop its business towards higher value added. In the near term, tannin will be launched while lignin will become an important part of Södra’s offer in the long term. These ventures help create new revenue streams and strengthen efforts to extract more value from each tree.
“A challenging market environment requires clear priorities and consistent efforts to adapt operations to a new reality. For Södra, this is about making wise decisions, developing the business and making strategic choices that strengthen competitiveness over time. All while creating stability in the business,” said Lotta Lyrå, President and CEO of Södra.
Several key decisions were taken during the quarter to adapt the business to a changing environment. The divestment of the forest holdings in the Baltics has been completed, thereby strengthening Södra’s financial position. Meanwhile, the decision to divest our stake in Sunpine reflects a strategic reprioritisation as the company enters a new phase that requires a different ownership structure. Combined, these decisions support greater clarity in Södra’s long-term direction, strengthening the conditions for continued development.
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