First quarter
- Net sales increased to SEK 1,772 million (1,677). Price levels rose while delivered volumes decreased compared with the first quarter of the previous year.
- Operating profit from continuing operations amounted to SEK 243 million (327).
- Change in value of forest assets amounted to SEK 74 million (45).
- Operating profit amounted to SEK 341 million (448).
- Profit for the quarter was SEK 217 million (295).
CEO’s comments
Sveaskog’s operating profit from continuing operations decreased in the first quarter despite slightly higher sales generated by higher prices. This is mainly due to a lower delivery volume of timber from our own forests. In total, Sveaskog’s sales of wood raw material fell by 2% to 2,972,000 cubic metres (m3sub) during the quarter compared with the same period in the previous year.The main reduction was in sales of sawlogs which are the most valuable products for us as forest owners.
Many sawmills reduced their production during the quarter in response to the uncertain wood products markets. Swedish wood products industry has been affected by continued intense competition, a strong Swedish currency and weaker demand as a result of unrest in North Africa, which is a key market mainly for producers of redwood products. Sveaskog’s sawlog sales decreased by 6% to 1,025,000 m3fub.
Operating profit was also affected by higher production costs. These are a consequence of Sveaskog adjusting production to market demand and directing felling towards a higher proportion of pulpwood and biofuel. These are grades with higher production costs, while the cold and snowy winter led to additional costs. Despite accounting for a higher share of our total sales, delivered volumes of pulpwood decreased by 4% to 1.409.000 m3fub.
Sveaskog’s sales of biofuel rose by 12% to 538.000 cubic metres (m3fub) compared with the first quarter of 2010. The long winter created a substantial need for biofuel throughout Sweden, while the flow of by-products from the sawmills to energy companies was low. This created an increased demand for forest fuels.
Sveaskog’s subsidiary Svenska Skogsplantor is investing in a third facility for the production of seedlings with the effective and environmentally friendly protection against the pine weevil, Conniflex. The investment is part of a long-term plan to protect 40–50 million seedlings with Conniflex by 2014.
Sveaskog and If have reached a settlement on compensation for the damage to Sveaskog’s forests caused by the storm Gudrun in 2005. Under the terms of the settlement, If has settled a total claim of almost SEK 200 million including excess. Part of this compensation was recognised as income by Sveaskog in 2007. The remainder will have a positive impact on earnings in the second quarter of this year.
For further information, please contact
Gunnar Olofsson, President and CEO, tel + 46 8 655 91 74, + 46 703 34 15 16
Per Matses, CFO, tel + 46 8-655 92 90, + 46 70 - 655 98 20