Monday, October 27, 2025
Södra has announced a disappointing financial result for the third quarter of 2025, with a notable decline in earnings impacted by ongoing external uncertainties, low demand, and negative currency exchange effects. The Swedish-based forestry giant has stated its determination to strengthen long-term competitiveness despite the ongoing challenges.
Declining Sales and Operating Losses
The third-quarter net sales for Södra amounted to SEK 6,349 million, a 9% decrease from the SEK 6,944 million reported during the same period last year. Operating loss for the quarter stood at SEK 360 million, a sharp decline from the SEK 937 million profit in Q3 2024. This negative shift in financial performance is attributed to several factors, including currency fluctuations, raw material price hikes, and the broader macroeconomic uncertainty.
The company noted that the exchange rate effects alone contributed to an approximately SEK 380 million hit on earnings, while rising raw material costs added SEK 470 million to the pressure. This resulted in an operating margin of -6%, down from the previous year’s 13%. Furthermore, the return on capital employed stood at a modest 2%, with the equity ratio at 57%.
“The third quarter was marked by continued low demand and price pressure in an uncertain environment. Profitability was impacted by the continued effects of currency fluctuations from the spring, together with an imbalance between the market for raw materials and the markets for our products. This reinforces the need for the intensified actions implemented during the quarter,” said Lotta Lyrå, Södra’s President and CEO.
Sector-Specific Challenges and Market Dynamics
Södra’s various business areas were affected by a number of market dynamics during the third quarter. The pulp business, for instance, faced weak demand in Europe, forcing the company to redirect more volumes to Asia at lower margins. This, combined with an oversupply of softwood and hardwood pulp in the market, resulted in sustained price pressure.
In the sawn timber sector, Södra experienced an oversupply in key markets like the US and the UK, which led to a reduction in prices. Conversely, Germany and Central Europe displayed signs of recovery, with the Netherlands remaining stable. The cross-laminated timber (CLT) business, while growing, was temporarily hindered by an unplanned production interruption. However, production has now resumed, and the order book indicates continued growth in this area.
Södra also saw seasonal delivery volumes in the energy products market consistent with the previous year. While the market for biomethanol and turpentine remained strong, tall oil showed a positive trend from previously low levels. Demand for dissolving pulp also remained favourable, although concerns over international tariffs and high supply levels tempered the outlook.
In terms of raw materials, competition for wood raw material remained high. This led to price adjustments for pulpwood and energy ranges, while the demand for spruce logs and softwood pulp remained stable.
Focus on Efficiency and Future Investments
Despite these challenging conditions, Södra has made strides in improving efficiency through its World-class Efficiency programme. This initiative led to improvements with an annual recurring effect of SEK 341 million during the quarter. The company’s focus on continuous improvements has helped mitigate some of the pressures on profitability.
However, to combat the ongoing market challenges and better position itself for the future, Södra launched a comprehensive action programme in the summer of 2025. The programme aims to bolster Södra’s long-term competitiveness by improving profitability and reshaping its operational strategies. As part of these measures, Södra issued redundancy notices to 200 roles in its facilities in Mönsterås, Mörrum, Värö, and Växjö at the beginning of the fourth quarter.
Södra continues to invest in its operations to ensure that prices for forest raw materials from its members remain competitive. This approach also aims to ensure the long-term stability and quality of its products for customers, even during uncertain times.
“The mission is to refine and renew family forestry, and this requires competitiveness across the value chain – regardless of the global situation. To succeed, we need to both accelerate and brake: continue investing for the future, but also adapting our operations to new conditions,” said Lotta Lyrå.
Significant Investment in the Kinda Saw Mill
One of the company’s most significant future-focused investments is a SEK 1.5 billion upgrade at the Kisa sawmill. This investment is part of Södra’s commitment to meet the increasing demand for wood-based products, particularly in the context of the green transition. The upgrade, which will increase capacity by 50% and include a new pellet plant, is one of the largest investments in Södra’s sawmill industry to date.
This investment is expected to strengthen Södra’s position as a reliable supplier both in Sweden and internationally, ensuring the company’s ability to contribute to the sustainable future of the forestry industry.
Business Area Results
Södra’s business areas also faced considerable challenges in the third quarter of 2025.
Sales in the Södra Bioproducts business area, included under other categories, amounted to SEK 674 million, a decrease from SEK 760 million in 2024.
Södra’s Q3 2025 results reflect a challenging market environment and ongoing external pressures, including fluctuating currencies, raw material price increases, and low demand in key sectors. However, with a focus on efficiency, strategic investments, and efforts to improve competitiveness, Södra remains committed to navigating these turbulent times and securing a stable future for its operations and customers.
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Tags: Södra financial report, Södra investment in sawmill, Södra Q3 2025 Results, sustainable forestry Sweden, Wood-based products Sweden, woodworking industry, woodworking UK
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