Production and deliveries
Risk
Demand for Holmen’s products is affected by macroeconomic and political factors, among others, and the competitiveness of European producers above all. Changes in demand affect the ability to achieve full production at the Group’s industrial facilities and can lead to lower income. Income may also be impacted if the harvesting of our own forests needs to be limited and by variations in precipitation and wind, which govern the production of hydro and wind power
Risk management
Holmen endeavours to maintain a good cost position through large-scale production at well-invested production facilities, efficient logistics solutions and good control over the supply of wood and energy. Together with longstanding customer relationships and strong product brands, this also increases our ability to maintain a high level of production amid more difficult market conditions. Changes in demand for wood may be catered for by moving the harvesting of our own forests between years, while the production of hydro power during the year can be controlled by regulating water reservoir levels.
Comment
In 2024, demand for wood products was lower than normal, while competition for timber was high. Wood product production was therefore curtailed due to weak construction activity. For information about how changes in deliveries would affect Holmen’s operating profit, given the circumstances on 31 December 2024, see the sensitivity analysis.
Selling prices
Risk
The market balance in each product segment governs the selling price and affects income.
Risk management
Holmen is limited in its ability to make rapid changes to its product range in the event of changes in price, but it adjusts its product focus towards those products and markets deemed to have the best long-term conditions and by having a broad customer base and an offering across a number of product areas. Changes in the price of wood can be managed to some extent by moving harvesting from our own forests between years, and changes in the price of electricity can be partly managed by regulating water reservoir levels in order to move electricity production over the year.
Comment
Market prices for paperboard remained broadly stable in 2024, while prices for paper products fell from a high level. Wood product prices increased in 2024, mainly as a result of supply shortages. In 2024, Swedish electricity prices were lower than the previous year. For information about how changes in prices would affect Holmen’s operating profit, given the circumstances on 31 December 2024, see the sensitivity analysis.
Raw materials
Risk
Wood, electricity and chemicals are the most significant input goods and price changes affect profitability. Holmen’s costs depend on price developments for input goods, as well as on how well the Group succeeds in making its production and administration more efficient. There is a risk that the Group’s costs will increase if there is a shortage of raw materials, or if prices increase for input goods.
Risk management
Around half of the Group’s wood needs are covered by harvesting from the Nearly half of the Group’s wood needs are covered by harvesting from the Group’s own
forests, while the remainder is mainly purchased from private forest owners. The Group’s position when it comes to pulp is largely balanced as a result of the integrated production process. The paperboard business generates almost all the electricity required at its own mills, while electricity for paper manufacturing is supplied from external electricity purchases. The price risk for this consumption is managed through physical fixed price contracts and financial hedging. The
Group also sells electricity from its hydro power and wind power assets to the grid. The need for thermal energy is great and is met locally through recovery and production from residual products. Chemicals are a significant input, particularly in paperboard production, but the need is declining since used chemicals are being recovered at the mills.
Comment
The price of wood continued to increase in 2024, while the price of chemicals slightly decreased. Virtually all electricity consumption for paper production was hedged in 2024. For information about how changes in commodity prices would affect Holmen’s operating profit, given the circumstances on 31 December 2024, see the sensitivity analysis.
Suppliers
Risk
Deficiencies in the input supply chain in terms of security of supply and quality can lead to production disruptions. Suppliers that do not meet Holmen’s requirements can also have a negative effect on operations. There is a further risk of essential raw materials not being delivered because of changes in laws and regulations or other external factors
Risk management
Holmen endeavours to have at least two approved suppliers per area of use. Holmen’s Supplier Code of Conduct is included in all new contracts. The Code contains sustainable development requirements, including respecting internationally recognised principles governing the prevention of corruption, human rights, the work environment and the environment. Since 2017, Holmen has engaged an external party, EcoVadis, to monitor suppliers for their compliance with the Code. Compliance with silviculture contractor agreements is ensured
through site visits to forests. All silviculture contractors are given annual training, through the silviculture training programme, in silviculture, and in labour law, and are informed about where to turn should irregularities occur.
Comment
The supply chain risks relating to the climate, environment, labour legislation, human rights, business ethics and sustainable purchasing have been mapped. The outcome is monitored through EcoVadis, in discussion with the relevant suppliers. In 2024, 1 (1) breach of the Supplier Code of Conduct was reported. In the event of such breaches of the Code, an active discussion with an action plan is put in place in accordance with Holmen’s procedures. Suppliers representing 90 per cent (90) of the Group’s purchasing volumes comply with the principles of the Supplier Code of Conduct. Reducing fossil fuel emissions is discussed with the largest suppliers of input products.
Customer credits
Risk
The risk of the Group’s customers being unable to fulfil their payment obligations constitutes a credit risk.
Risk management
The risk that the Group’s customers will not fulfil their payment obligations is limited by means of creditworthiness checks, credit limits per customer and, in some cases, by insuring trade receivables against credit losses. Credit limits are continually monitored. Exposure to individual customers is limited.
Comment
At 31 December 2024, the Group’s trade receivables totalled SEK 2 823 million (2 696), of which 39 per cent (41) were insured against credit losses. During the year, credit losses on trade receivables had no impact on earnings, - (SEK -2 million). Sales to the five largest customers accounted for 13 per cent (14) of the Group’s total sales in 2024.
Installations
Risk
Production may be seriously disrupted, for example in the event of a fire, machine breakdown or natural disaster. This can lead to supply problems, unexpected costs and reduced customer confidence. Production facilities require ongoing maintenance and technical upgrades. Major maintenance shutdowns can entail higher costs and a greater loss of production than planned. Investments in non current assets may also be more costly than initially planned.
Risk management
Damage prevention measures, regular maintenance and continual upgrades can minimise the risk of damage to facilities. Training employees promotes participation, knowledge and awareness of these risks and how they can be countered. Holmen’s facilities are covered against damage from unforeseen events by property and business interruption insurance
Comment
In 2024, Holmen revised and restructured the business continuity planning framework to ensure better holistic management. Holmen invests continuously in
fire protection and other damage prevention measures. Planned maintenance shutdowns are carried out each year at the Group’s mills and sawmills to ensure
continued good production and high quality products. In December, the solid fuel boiler at Braviken Paper Mill was damaged. Paper production was stopped for a couple of days but was later restarted, resulting in higher energy costs. The incident is believed to be covered by insurance, except for the deductible.
IT systems
Risk
Efficient IT support is required to be able to manage and plan production, sales and purchasing. Disruptions in IT support and unauthorised access to information can have significant negative effects on the business.
Risk management
Operating disruptions and unauthorised access are prevented by security measures and preventive measures in the form of appropriate physical protection, reliable server operation and secure networks. Measures and procedures are in place to minimise the risk of interruption and to manage situations if interruptions occur. Holmen is continually developing protective measures to address changes in the risk profile..
Comment
To make its systems and procedures secure, Holmen has created a function focused on IT and cyber security. A regularly recurring IT security training course for employees was provided in 2024.
Forestery regulations
Risk
Holmen’s right to manage its own forest is crucial to maintaining its value. There is a risk that the requirements for the forests to be used as carbon sinks may increase in the future. Such a development could affect the ability to manage the forests and therefore access to raw materials. Required changes in forestry methods could lead to reduced harvests and increased costs.
Risk management
Forest and land management are regulated both nationally and at EU level. In order to be able to engage in active and sustainable forestry, it is important that laws and regulations do not restrict the conditions necessary for sustainable operations. Holmen participates in national and international industry organisations to exert an influence on relevant political and regulatory issues
Comment
Last year, the spotlight was on the implementation of a number of EU regulations and Sweden’s competitiveness. If Sweden is too ambitious with its implementation, this risks affecting Sweden’s and Holmen’s ability to contribute to the climate transition. Holmen has continually played an active part in discussions, both on its own and through industry organisations, to influence the EU’s regulations and the Swedish government’s implementation planning, including by highlighting the positive climate effects of a managed forest and the substitution brought about by forest products.
Damage to forests
Risk
Wild game can damage forests when grazing, resulting in both deterioration of the quality of the trees and reduced forest growth. Insect pests are another risk factor; for example, the spruce bark beetle can damage spruce forests. Storm and snow damage, fungal attacks and forest fires are other examples of damage that must be addressed and managed in forestry.
Risk management
The Group’s forest holdings are not insured as they are spread across large parts of Sweden and the risk of extensive damage is not considered to justify the cost of insurance. To reduce the extent of grazing by wild animals, active efforts are undertaken on Holmen’s land to maintain game at the correct population level. Insect pests such as pine weevils are combatted by waxing seedlings and infested forest is harvested as soon as possible to prevent spread.
Comment
Spruce bark beetle infestations in southern Sweden continued to decline in 2024, allowing for more normal planning and harvesting of mature forest. The forest management programme has been evaluated in view of the increased risk of damage to forests in a changing climate. The programme is aimed at creating robust forests, meaning that further variation and risk diversification is being considered. To limit the spread of spruce bark beetle, Holmen is prioritising the felling of infested forest and actively working to maintain the value of the wood and find outlets for damaged logs.
Climate change
Risk
Climate change may affect Holmen’s operations, but there are not currently thought to be any major physical risks. Warmer temperatures and changes in precipitation patterns may benefit pests such as fungi and insects, which may lead to lower timber volumes and quality. Longer droughts and higher temperatures may limit forestry activities due to the ground being frozen for shorter periods or stoppages due to a high risk of forest fires. At the same time, a warmer climate could increase forest growth with longer growth periods, more precipitation and higher levels of carbon dioxide, aiding photosynthesis.
Risk management
Producing climate adaptation plans is an ongoing process at the respective industrial facility and in forest operations. The management of each site participates in the process and must prioritise any activities to be carried out, taking the costs and risks of the actions and the other needs of the business into account. The risk of climate change having an impact on Holmen’s industrial facilities is being managed through each site’s continuity plans.
Comment
The market’s ambitions to combat climate change are increasing demand for Holmen’s products. Holmen’s ability to manage its own forests is thus crucial to the Group’s contribution to limiting climate change. Increased demands to reserve land for purposes other than forestry may lead to reduced harvests and thus reduced opportunities for the forest to contribute with renewable products.
Environment and permits
Risk
Holmen runs operations that require environmental permits. The permits specify conditions regarding permitted production volumes, noise levels and permitted emissions to air and water, among others. Production disruptions can cause breaches of emission conditions set for the business by the environmental authorities. Such breaches could affect the environment. On sites where Holmen has conducted industrial operations, the need for remediation may entail future costs.
Risk management
Environmental measures are organised and carried out in accordance with Holmen’s environmental and energy policy. In the event of process disruptions, the environment takes precedence over production. Risks are prevented and managed through regular own checks, checks by authorities and environmental risk analyses, as well as through the use of certified environmental and energy management systems and chain-of-custody certification. In consultation with the authorities, Holmen is conducting investigations to assess the need form remediation at former industrial sites.
Comment
In 2024, 46 (47) environment-related incidents were reported to the supervisory authorities. In 2024, a new sludge and sedimentation plant was installed at Workington Mill. The plant is being adjusted so that the environmental permit threshold value for suspended solids will not be exceeded. Holmen is maintaining a continuous dialogue with the equipment’s supplier in order to get it working according to plan. The supervisory authority has been notified. Otherwise, there were no incidents that led to long-term consequences for the environment, production or human health in 2024. All matters were addressed through corrective actions, within the organisations’ environmental management systems. Holmen has several wind farm project applications in progress, but the authorisation procedure often takes a long time and its outcome is uncertain.
Work environment
Risk
Incidents and accidents in the workplace have an effect on human life and health. This can also lead to production disruptions and increased costs.
Risk management
Holmen has a vision of zero work-related accidents and its work environment policy states how work-related injuries and illness are to be prevented. Certified management systems, Group-wide targets relating to industrial accidents, continual training of employees to increase risk awareness, risk observation and incident and accident reporting procedures, and risk assessments of tasks and work by contractors, are examples of activities to achieve a high level of safety in the workplace.
Comment
In 2024, the rate of industrial accidents was 5.3 per 1 million hours worked (5.2). The most common accidents were slips, trips and crush injuries. The most significant areas of risk involve work with overhead cranes and vehicles with people in movement. Last year, work was focused on launching a long-term initiative to reinforce and promote safe behaviour in the work environment.
Talent management
Risk
Skilled and motivated employees are key to being able to conduct business operations with good profitability over the long term. There is a structural shortfall in many industrial positions. Skilled labour shortages can delay work and disrupt production.
Risk management
Holmen is working continuously to enhance its employer brand. Each business area prepares a long-term talent management plan each year that identifies recruitment needs. Targeted digital marketing combined with in-person events, such as career days and sponsorship collaborations, increase awareness of Holmen and allow it to attract and retain competent employees.
Comment
Annual questionnaires for new recruits and employee surveys show that employees appreciate Holmen as an employer. The percentage of employees who would recommend Holmen as an employer is at a persistently high level. In 2024,
Holmen received the accolades Karriärföretag (career company) 2024, and came 13th in Universum’s ranking of Sweden’s Best Employers (Sveriges Bästa Arbetsgivare).
Business ethics risks
Risk
Nationally and internationally, customers and partners make demands of Holmen as a stable and reliable supplier that has good business ethics and clear sustainability principles. Deviations from principles and policies could have a negative impact on the Group’s reputation and business relationships.
Risk management
Holmen’s Code of Conduct, business ethics policy and associated guidelines provide clear guidance on how to maintain good business ethics when dealing with external contacts in various markets. Holmen’s Code of Conduct also provides guidance on human rights, workers’ rights and the environment. These areas are clarified in Holmen’s policies and related guidelines. Office-based employees and managers at Holmen are trained in the Code of Conduct every three years, and such training was provided in 2023.
Comment
In 2024, no corruption-related adverse judgments were delivered against Holmen or its employees. There are also no such cases ongoing in court. Six cases were reported through Holmen’s whistleblowing service in 2024 that were deemed to constitute whistleblowing as defined by law. As at 31 December 2024, one case was open and under investigation. Other cases were closed after appropriate investigation. No cases of corruption or bribery were identified. Labour law issues were handled by following standard HR procedures
External risks
Risk
Holmen operates in a global market and sells products to many countries around the world. Because of this geographical spread, Holmen is exposed to political risks, conflicts, natural disasters and pandemics. Moreover, Holmen is obligated to comply with laws and regulations wherever it conducts business, including in areas such as the environment, real estate, labour law and taxation. Changes in laws and regulations may affect conditions for Holmen’s operations and lead to increased costs for regulatory compliance.
Risk management
Holmen participates in national and international industry organisations whose role is monitoring social trends and advocacy work, and that put forward Holmen’s position and view on relevant political and regulatory issues.
Contact is established with local representatives and the general public in areas where the Group has operations. This takes place, for example, through consultation and information meetings, visits to sites and meetings with decision-makers. More unforeseeable risks that may arise, for example as a result of disease outbreaks, war or political unrest, are managed through ongoing external monitoring. To maintain optimum preparedness and active crisis management, Holmen is engaged in close dialogue and coordination with industry organisations, customers and suppliers
Comment
Following the war in Ukraine, Holmen has taken a number of measures to safeguard its raw material supply, logistics and IT security. Holmen complies with any sanctions adopted. Global trade barriers in the form of tariffs may affect our sales, both directly and indirectly through altered trade flows. Holmen has been active in promoting the growth of sustainable energy production and bio-based
activities, through dialogue, consultation responses, preparedness and advocacy work, on its own and together with industry organisations.