Södra reported net sales of SEK 6,604 million, down from SEK 8,154 million year-on-year, reflecting weaker market demand and lower delivery volumes. Operating profit increased to SEK 895 million (439), supported by a one-off capital gain of SEK 1,473 million from the divestment of Baltic forest assets.

Excluding this divestment, the company recorded an operating loss of SEK 578 million, highlighting continued pressure from high raw material costs and weak product pricing.

Operating margin improved to 14% (5%), while cash flow after investments surged to SEK 6.9 billion, primarily due to the divestment proceeds.

Key Financial Highlights

• Net Sales: SEK 6,604 million (↓19% YoY)

• Operating Profit: SEK 895 million

• Underlying Operating Loss: SEK 578 million

• Operating Margin: 14%

• Cash Flow After Investments: SEK 6.9 billion

• Equity Ratio: 57%

Major Business Updates

1. Divestments & Portfolio Optimization

• Completed sale of forest assets in Latvia and Estonia to Ingka Investments for EUR 720 million, strengthening the balance sheet.

• Agreement to divest 25% stake in Sunpine (pending approvals), reflecting shift in ownership strategy.

2. Investments & Capex

• Total investments: SEK 687 million, mainly in:

  • New technologies

  • Productivity improvements

• Feasibility study launched for e-NG (electro-methane) production at Värö in partnership with OX2 and TES.

• Continued investment in carbon capture and renewable gas solutions.

3. Projects & Innovation Pipeline

• Development of new products:

  • Tannin (near-term launch)

  • Lignin (future growth driver)

• Transition to talc-free pulp production across all mills.

• Implementation of VIOL 3 digital system for raw material measurement.

4. Operations & Shutdowns

• One scheduled maintenance shutdown in pulp production during the quarter.

• No major unplanned shutdowns reported.

5. Market & Pricing Environment

• Weak demand in:

  • Sawn timber (UK, US)

  • Paper pulp (Europe)

• Price pressures due to:

  • High raw material supply

  • Lower demand → led to two price cuts in wood raw material during Q1.

6. Cost Measures & Efficiency

• Ongoing efficiency program delivered SEK 233 million savings in Q1.

• Focus on:

  • Cost reduction

  • Operational efficiency

  • Digitisation and AI

7. Employees / Layoffs

• No layoffs announced

• Workforce reduced slightly to 3,345 employees (vs 3,513 YoY).

8. Dividend

• No dividend announcement in this quarter.

• No dividend payout recorded in Q1 cash flow.

9. Strategy & Future Outlook

• Strategic review underway to:

  • Improve margins

  • Strengthen long-term competitiveness

• Focus areas:

  • Higher value from forest resources

  • Expansion in bioproducts

  • Sustainability-driven growth

Outlook:

• Demand expected to gradually stabilize, but below historical levels

• Pulp prices showing early signs of recovery

• Long-term outlook remains positive due to demand for sustainable materials

Conclusion

Södra delivered a headline profit boost driven by asset divestment, but underlying operations remain under pressure due to weak markets and cost imbalances. The company is actively restructuring, investing in future bio-based products, and focusing on efficiency to navigate a challenging environment.