In recent years, the forest raw material supply has been unable to keep up with growing demand from the forest industry and the energy sector. Wood prices increased further in the third quarter, but operating profit from Forest, at SEK 482 million, was largely unchanged due to seasonally lower harvesting. Wood prices have risen by more than 50 per cent in the last three years, increasing the return on forest assets. At the same time, it is becoming increasingly clear that forests have an important role to play in the transition to a fossil-free world.
Electricity prices in the Nordics decreased in the third quarter and were at a twenty-year low in central and northern Sweden, partly as a result of restrictions on capacity for transmissions from Sweden to countries with higher electricity prices. Low electricity prices, together with the continued build-up of reservoir levels, meant that revenues did not fully cover depreciation and the operating loss from Renewable Energy was SEK -12 million. We are continuing to manage hydro power production so that it is produced when it is most needed, and offering services aimed at stabilising the electricity grid. We are also focusing on the development of permits for new wind power, targeting projects with good wind conditions and a low cost of connection to the electricity grid.
The wood products market is still marked by the weakness of the construction sector, while supply is limited by global raw material shortages. Prices decreased slightly in the third quarter, which, combined with increased costs for logs, led to a break-even result for Wood Products. There is great interest in building with w oodbecause of its positive climate footprint, and with our well-invested sawmills and increased processing capacity we will be well positioned when the construction sector turns around.
The market for consumer paperboard has improved after last year’s destocking, but consumption in Europe is still lower than it has been historically. As for paper, consumption has so far developed in line with the previous year, but with aslightly downwards trend. Thanks to increased deliveries, better productivity and seasonally lower costs, operating profit from Board and Paper increased to SEK 653 million. Our focus on niches in which fresh fibre comes into its own has worked well. The fourth quarter rebuild of a paper machine to enable it to also produce packaging paper is another step in this direction.
With our large forest holdings as a foundation, we grow houses while also harnessing the energy that blows over the treetops and flows in the rivers. We then make renewable packaging, magazines and books from the residual forestry products. This business model contributes to the transition towards a sustainable society and allows our customers to reduce their fossil carbon footprints already today while maintaining their competitiveness.
Henrik Sjölund, CEO
October, 24 2024