Challenging market conditions weighed heavily on Södra’s financial performance in 2025, pushing the Swedish forest-owner cooperative into an operating loss despite extensive efficiency measures and record industrial output.
Södra reported an operating loss of SEK 1.29 billion for the year, compared with an operating profit of SEK 2.63 billion in 2024. Net sales declined 4% year over year to SEK 28.3 billion, while the operating margin fell to minus 5%, down sharply from a positive 9% the previous year. Return on capital employed ended the year at minus 5%, and the equity ratio stood at 56%.
The deterioration in earnings—amounting to roughly SEK 3.4 billion compared with 2024—was primarily driven by a combination of higher raw material prices, adverse exchange-rate movements, and weaker demand. Together, these factors reduced earnings by an estimated SEK 4 billion. Rising raw material costs accounted for approximately SEK 2.2 billion of the impact, while exchange-rate effects contributed about SEK 1.8 billion.
As a result, Södra’s contribution margin narrowed significantly, dropping to 24% from 33% at the beginning of the year.
Cost reductions and operational gains
In response to the downturn, Södra launched a broad action programme aimed at reducing costs and strengthening competitiveness. While the full financial effects have yet to materialize, the cooperative reported tangible progress on several fronts.
Overhead costs were reduced by SEK 380 million during the year. Pulp production reached a record 1.9 million tonnes, and improved sawing yields within Södra Wood helped mitigate some of the margin pressure. In addition, cost savings of SEK 518 million were achieved under the group’s World-class Efficiency programme, exceeding the original target.
“2025 was a challenging year for Södra,” said President and CEO Lotta Lyrå. “We focused intensely on what we can control—operational improvements, efficiency gains and cost reductions—but the combined impact of external factors on our margins was simply too strong.”
Strategic investments continue
Despite the difficult market environment, Södra continued to invest in long-term competitiveness. Key initiatives included a decision regarding the Kinda sawmill and the start of construction on a kraft lignin plant in Mönsterås, projects aligned with the cooperative’s strategy to extract more value from each tree and expand its portfolio of renewable, low-carbon products.
The group also advanced efforts in digitisation, automation and artificial intelligence as part of its efficiency drive, while streamlining work practices across its industrial operations.
In parallel, Södra decided to divest its forest holdings in the Baltics, sharpening its focus on member-owned forests in Sweden and strengthening its balance sheet. The cooperative also reached its target of placing 3,000 hectares of forest under nature conservation measures, reinforcing its long-term commitment to biodiversity.
Profit distribution proposal
Despite the loss, Södra’s Board of Directors has proposed a profit distribution of SEK 616 million to its members, balancing near-term returns with financial resilience. The proposal includes up to SEK 560 million linked to wood deliveries and a SEK 56 million bonus issue on contributed capital. The matter will be decided at the Annual General Meeting in Jönköping on June 2.
Board Chair Magnus Hall said the proposal reflects a cautious approach. “The aim is to allocate value today while safeguarding Södra’s financial robustness and ability to invest for the future.”
Business area performance
Results varied across Södra’s business areas. Södra Skog reported a modest operating loss of SEK 14 million, as slightly lower volumes—mainly in energy products—offset stable demand for sawlogs and pulpwood. Södra Wood posted an operating loss of SEK 463 million, driven by higher sawlog costs and lower volumes.
Södra Cell recorded an operating loss of SEK 258 million, largely due to unfavorable exchange rates and higher raw material costs, partially offset by increased production volumes. Södra Building Systems reported an operating loss of SEK 168 million, while sales in Södra Bioproducts, reported within other segments, totaled SEK 3.55 billion.
Founded in 1938, Södra is Sweden’s largest forest-owner association, representing more than 50,000 family forest owners. The cooperative employs about 3,400 people and converts forest raw materials into products ranging from pulp and timber to energy, building systems and biochemicals, supplying markets worldwide.
Source: Södra
