After showing good results for 2000, based on steady growth in the world economy, Swedish forest owning companies have continued to prosper in the first months of 2001. This is despite a slackening off in the growth rate of the international economy that started at the end of last year and has continued. In addition, over-production has resulted from high production in Finland and most of the major importing countries, as well as higher volumes from Russia.
AssiDomän, Holmen and Stora Enso all showed increased profits for the first quarter of 2001 in comparison with the same quarter last year, while Södra’s profits were slightly down despite increased sales.
However, as Lars Sköld, president of the state-owned Sveaskog points out: ‘The real price trend for forest raw materials is negative. The pulp and paper industry can see falling prices for its products and the weak profitability for sawmills is expected to continue. But despite this we see a certain stability during the current year for wood prices even though the real negative price trend is expected to continue.’
The major test of profit stability will come later this year with demand expected to grow more slowly than in 2000. For example, Stora Enso foresees its financial results for the full year being very much dependent on the industry’s ability to maintain prices and on internal efficiency and cost awareness, while Södra Timber foresees the ongoing strengthening of its sales organisation as being crucial to achieve improved marketing.
Södra has formed a new company, Södra Building Systems AB, to develop, manufacture and market timber-based building components and building systems. Södra has developed several components – SödraSinus (dimensionally stable timber studs), SödraSemi (floor slab separating flats) and SödraSolid (wall and floor slab units). Södra Building Systems’ task is to establish these and other timber components and building systems as competitive alternatives on the European market. Denmark and the UK will be among the priority markets.
As part of a campaign organised by the Nordic Timber Council, SKr180m is being spent on Nordic First, a marketing campaign for Nordic timber in the UK. The objective is to raise per capita timber consumption from 0.17m³ to 0.25m³. This would give sales from Nordic mills – which already have 50% of the British market – a substantial boost.
Anders Wahrolén, president and CEO of Södra, points out that the slowdown in the international economy is affecting the forest industry and adds: ‘Consumption of pulp and paper has stagnated while for the sawmill industry we do not currently believe there will be any rapid improvement in market conditions.’
In fact, the difficulty of profitability in the sawmill industry continues. Increased competition has meant that the supply of timber products has clearly exceeded demand. Further-more, the sawn timber market weakened during the first part of this year with excess supply, decreased prices and hardening competition from Russia. And this difficult situation applies right across the board, with both large company sawmills and independent sawmills showing the same tendency. A number of sawmill managers consider that the sector is in its most difficult period ever and foresee considerable changes in the organisation of the business.
‘The price of roundwood needs to be adjusted to the market price if sawmills are to reach profitability, and they have not done this in recent years,’ says Sture Karlsson, president of the Swedish Sawmill Association. ‘A discussion will have to be held about how this can be achieved.’
The Swedish forest industry has been making the most of Sweden’s six-month presidency of the EU. The Swedish Forest Industries Federation arranged a week of activities at the European parliament in January, while a high point of the presidency will be a forum to be held in Stockholm on June 21, on the initiative of the European Commission. This will bring together 100 representatives of the European forest industry and the same number of politicians and officials from the EU and its member states.
A conference on wood architecture and construction was held at the end of May under the auspices of the Swedish Wood Association (Swedish Wood) – a new organisation which focuses on creating better market conditions for the Swedish wood processing industry. The idea behind the conference was to show examples of finished projects and give ideas for the future for an audience of builders and architects. The conference was linked to Timber Housing 2001, a four-storey permanent residential quarter built from timber, which is part of a housing exhibition in the city of Malmö.
Also, Swedish Wood is to invest SKr12m in an R&D project that will concentrate mainly on durability, visible timber and the environment. This investment is a part of the timber industry’s efforts to increase the rate of development in the knowledge of how wood can be used.
Related Files
Swedish production and export of sawn and planed softwood
