Södra reported a challenging first quarter for 2026, with an underlying operating loss despite a positive reported result driven by divestment gains.
Net sales fell 19% year-on-year to SEK 6.6 billion, while operating profit reached SEK 895 million, including a capital gain from the sale of forest assets in Latvia and Estonia. Excluding this effect, the group posted an operating loss of SEK 578 million, reflecting continued market pressure.
Weak demand and cost pressure weigh on performance
The quarter was marked by weak demand across key markets, combined with a stronger Swedish krona and elevated raw material costs.
Södra said geopolitical developments, trade barriers and regulatory factors added pressure, while tensions in the Middle East contributed to higher logistics and input costs.
The imbalance between raw material markets and finished product prices continued to weigh on profitability.
Pulp and wood markets remain under pressure
In pulp, demand remained weak in Europe, while global supply levels continued to exceed demand, putting downward pressure on prices despite some increases in Europe and the United States.
The sawn timber market also remained weak, particularly in the UK and the US, although some improvement was noted in parts of Europe. Activity in Sweden’s building materials trade remained low.
In engineered wood, order intake improved toward the end of the quarter, with the order book expanding compared with year-end 2025.
Energy and bioproducts provide stability
The energy products segment showed more stable conditions, with favourable demand for several bioproducts and positive developments in the tall oil market.
Demand for dissolving pulp remained relatively stable but was affected by high supply levels.
Efficiency measures and strategic adjustments
During the quarter, Södra implemented efficiency improvements corresponding to SEK 233 million as part of its World-class Efficiency programme.
The group continues to focus on cost reductions, operational adjustments and revenue measures to address short-term pressures while strengthening long-term competitiveness.
Strategic decisions included the completed divestment of forest holdings in the Baltics and the planned exit from Sunpine, reflecting a shift in capital allocation priorities.
Business areas post mixed results
Performance varied across business areas:
- Södra Skog reported an operating profit of SEK 4 million, down from SEK 33 million
- Södra Wood posted an operating loss of SEK 315 million
- Södra Cell reported an operating loss of SEK 158 million
- Södra Building Systems reduced its loss to SEK 22 million
Södra is a Swedish forest industry group owned by private forest owners, producing pulp, sawn timber, building systems and bioproducts.
Based on information released by Södra.
