The uncertainty resulting from the assassination of his foreign minister Anna Lindh and Sweden’s vote against introducing the euro caused the country’s prime minister Göran Persson to announce measures to re-establish business confidence. He promised that taxes on business, dividends and wealth would be reassessed and invited other political parties and representatives of labour and management organisations to participate in a forum to strengthen the Swedish economy. The result was that the krona rose sharply.
Negative impact
This rise in value does not favour the Swedish forest industry, as Mellanskog timber manager Arvid Svanborg points out: “The Swedish krona’s value in comparison with the euro and the dollar is decisive for our competitiveness. If the krona strengthens against the euro this favours our Finnish and central European competitors while a weakened dollar means increased exports from the US and Canada.”
This increased competition would be particularly unfortunate now that there is an indication of growth in the US market.
“The first half of this year has been very productive for sawmills, as indeed was 2001,” added Mr Svanborg. “There has been good demand for timber on the Swedish home market as well as the British and several of the south European markets.” Figures issued by the Swedish Forest Industries Federation confirm this, showing that Swedish production of sawn coniferous wood, pulp and paper plus board increased by around 4% during the first six months compared with the same period last year.
However, the falling value of the dollar, together with timber prices in the US and Japan being pressed by the recession, has created a surplus, and stocks at sawmills in both Sweden and Finland have begun to rise.
SCA also expressed disappointment over the results of the referendum. “We are naturally disappointed since 60% of our turnover is in euros,” said SCA president Jan Åström. He does not believe it will have much effect in the short term but that the results will be negative in the long run. “We shall have to re-evaluate our investment plans in Sweden.”
Forest industry companies’ results for the first six months of this year in comparison with the same period last year have been positive but vary considerably.
Sveaskog reported operating profits of SKr927m on a turnover of SKr4.7bn, an increase of 22%. Södra reported profits of SKr702m for the first six months on a turnover of SKr6.7bn, a trebling of profits on the same period last year. Billerud also noted an increase in profits for the first six months which, at SKr581m, was 12% up on the same period last year on a turnover of SKr3.5bn.
Holmen noted a decline in profits from SKr1bn to SKr781m on a turnover of SKr8bn (SKr7.9bn) while SCA’s profits dropped from SKr3.9bn to SKr3.5bn on a turnover of SKr43.1bn (SKr43.3bn). This fall also included SCA’s forest products business area despite increased volumes.
Sweden’s largest timber business has now been officially formed under the name of Royal Star Wood Products. Stig Nordin, formerly CEO of Korsnäs and Kinnevik, has been appointed chairman and Anders Nilsson, formerly CEO of AssiDomän Timber, has been appointed CEO. Royal Star Wood products will have an estimated sales turnover of around SKr5bn.
Labour shortage
Figures released by the National Board of Forestry show that total employment in forestry work at 24.4 million working hours was on the whole unchanged in 2002 compared with 2001. However, there is great demand for skilled forestry workers and labour has been imported from Finland, Germany and Iceland, with reports that more temporary labour may be needed from Poland and the Baltic states.
