The Swedish forest products industry had the highest profitability in Europe last year, according to a survey by PwC Consulting. It measured the return on capital employed for the 100 top forest products companies in the world and the average figure for Swedish companies was 11.6%, compared with 9.1% for Europe as a whole.
Södra was shown as the world’s second most profitable forest industry company (after the Spanish company ENCE) with a 19.2% return. Among companies showing good profits for 2001 were: SCA with record profits of SKr8,090m on SKr82,380m turnover; and the Holmen Group with profits of SKr2,914m on SKr16,655m turnover.
Commenting on the ability of the Swedish forest industry to attract export money, Ingemar Croon, a well-respected forest industry consultant, said: ‘Sweden has done incredibly well during the recession, which is primarily due to the weak Swedish Krona in relation to the US dollar and this has favoured the forest industry.’
Record levels
Even sawmilling production is at record levels, despite 100 sawmills having disappeared in Sweden in the last five years. Bertil Stener, of the Swedish Forest Industries Federation, said: ‘Restructuring can be painful, but it is necessary and will continue.’ He believes more large and modern mills are needed to meet demand, and requirements for specialised products for the building industry, for example.
Interest in Swedish timber has been shown by representatives of two of the largest Chinese timber importers – China Resources Enterprise and Hong Yip Trading Company, who visited Swedish sawmills and wood industries in March.
Felling forbidden
Felling is forbidden in large parts of China so imports of forest raw materials and sawn timber has increased from 15 million m3 annually to more than 60 million m3 in two years. John Luk, of China Resources Enterprise, said: ‘We have an enormous need for imports and Sweden could be a very interesting market for us. Raw materials, sawn timber and processed products are of very high quality and the price is competitive. What we are doing now is studying the range of products and delivery options.’
The Irish company Smurfitt Holdings AB, a wholly owned subsidiary of Jefferson Smurfitt Group, has made an offer for the Swedish Munksjö Group, which has been recommended to shareholders by the Munksjö board. Smurfitt had owned a third of Munksjö and this rose to 63% at the end of March.
The IKEA industrial group is making investments totalling SKr600m this year. In Nybro, a new centre for technical development of solid woods is being built and in Hultsfred IKEA is planning to double production of particleboard. IKEA is also expanding existing operations and new sawmills, and production units in eastern Europe.
An agreement on the voluntary phasing-out of nuclear power in Sweden reached by the government has been cautiously welcomed by the nuclear power industry. However, the forest, chemical, mining and steel industries, which consume 75% of the electrical power used by Swedish industry, believe this agreement will raise prices and lead to worsened conditions for growth and development.
Power consumption
The forest industry accounts for 40% of the Swedish industry’s consumption of electrical power and Björn Hägglund, chairman of the Swedish Forest Industries Federation, said the agreement will mean additional uncertainty when making decisions about long-term investments.
