Södra posted a negative result for the third quarter of 2025. The result was impacted by the continued uncertain external environment combined with low demand and negative exchange rate effects.

In the third quarter of 2025, net sales for the Södra Group amounted to SEK 6,349 million (6,944), down 9 percent compared with the year-on-year period. Operating loss totalled SEK 360 million (profit: 937), the change in earnings compared with the year-earlier period was partly due to exchange rate effects of approximately SEK 380 million together with the price trend for Södra's core products as well as higher raw material costs of approximately SEK 470 million. The result corresponds to an operating margin of -6 percent (13). Return on capital employed was 2 percent, rolling 12-month, and the equity ratio was 57 percent.

"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 Södra's President and CEO Lotta Lyrå.

The markets for Södra's products continue to be affected by the rapid currency fluctuations, the turbulence surrounding international tariffs and a long-term unsustainable relationship between raw material prices and the sales prices of our products. During the quarter, the pulp business was mainly affected by weak demand in Europe, which resulted in increased volumes to Asia at lower margins. In parallel, there is a surplus of both softwood and hardwood pulp in the market, contributing to continued price pressure.

During the quarter, sawn timber was characterised by oversupply in the US and the UK, which has pushed prices down. At the same time, Germany and Central Europe are showing signs of recovery, and the Netherlands remains stable. The CLT business has grown but was temporarily impeded by an unplanned production interruption - production is now restored and the order book is indicating continued growth.

During the quarter, the market for energy products reported seasonal delivery volumes in line with last year. Concurrently, the market for biomethanol and turpentine is strong, and tall oil is showing a rising trend from low levels. Demand for dissolving pulp remains favourable, but has been affected by tariff concerns and high supply levels. In relation to raw materials, competition for wood raw material remains high and the imbalance between the ranges has led to price adjustments for pulpwood and energy ranges, while demand for spruce logs and softwood pulp has been stable.

World-class Efficiency - our way of working with continuous improvements - generated improvements and efficiencies during the quarter with an annual recurring effect of SEK 341 million.

Cost initiatives combined with continued investment

The effects of rapid currency fluctuations, geopolitical turbulence and an unsustainable relationship between raw material prices and the sales prices of our products continued to have a negative impact on profitability. As part of efforts to address a challenging global environment and to stand better equipped for the future, Södra launched an action programme during the summer. The aim is to strengthen Södra's long-term competitiveness by increasing profitability and changing ways of working. Activities within the scope of the action programme were intensified during the autumn and this resulted in the issue of redundancy notices to 200 roles in Mönsterås, Mörrum, Värö and Växjö at the beginning of the fourth quarter.

In parallel with ongoing robust measures and adjustments to and development of operations, investments are continuing for the future. Operations are being developed to enable prices to remain competitive for forest raw material from members of Södra. For customers, this entails continued focus on stability, quality and long-term relationships - even in times of change.

"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, President and CEO of Södra.

One important future initiative is the investment in Kinda. During the third quarter, Södra decided to invest just over SEK 1.5 billion in the sawmill in Kisa - one of the largest investments ever made in Södra's sawmill industry. Increasing capacity by 50 percent and building a new pellet plant will create conditions to meet growing demand for wood-based products in the green transition. The investment will strengthen Södra's position as a long-term and reliable supplier, in Sweden and internationally.

Business areas' results for the third quarter of 2025

In the Södra Skog business area, operating loss totalled SEK 32 million (loss: 9) for the period.
The earnings trend was mainly due to declining sales in the energy area. Increased IT and digitisation investments impacted earnings more than in the year-earlier period.

In the Södra Wood business area, operating loss totalled SEK 103 million (loss: 16) for the period. The earnings trend during the quarter was mainly due to significantly higher saw log costs, partly offset by higher delivery prices.

In the Södra Cell business area, operating loss totalled SEK 80 million (profit: 1,051) for the period. The change in earnings during the quarter was mainly due to negative exchange rate effects, higher raw material costs as well as an unfavourable geographic mix that has impacted margins.

In the Södra Building Systems business area, operating loss for the period totalled SEK 51 million (loss: 27). The earnings trend for the quarter was mainly due to an unplanned production interruption in addition to increased depreciation, which were partly offset by a higher gross margin (mix) and good cost control.

Sales for the Södra Bioproducts business area are included in other business areas. The business area's sales for the period amounted to SEK 674 million (760).