Södra Returns to Quarterly Operating Profit as Efficiency Measures Advance Amid Challenging Markets

Södra reported higher net sales and a return to operating profit in the third quarter of 2026, supported by increased pulp deliveries, stronger energy-product prices, currency effects and cost-reduction measures. However, profitability remained under pressure from weak demand, high raw-material costs and challenging market conditions across several of its core businesses.

Net sales for July–September rose 2% year on year to SEK 6,492 million, compared with SEK 6,349 million in the same period of 2025. Operating profit totalled SEK 267 million, against an operating loss of SEK 360 million a year earlier. The result included a SEK 288 million capital gain from the divestment of shares in Sunpine AB. Excluding this gain, Södra recorded an operating loss of SEK 21 million.

Operating profit before depreciation, amortisation and impairment reached SEK 681 million, compared with SEK 50 million in the prior-year quarter. The operating margin was 4%, compared with negative 6%.

Cost reductions and efficiency remain priorities

Södra continued its transition programme during the quarter, focusing on reducing overheads, improving efficiency and strengthening competitiveness. The company reported that overheads were reduced by SEK 200 million, or 15%, compared with the corresponding quarter last year. Efficiency improvements under its World-class Efficiency programme contributed SEK 181 million during the quarter.

“Södra posted an operating profit of SEK 267 million for the third quarter. The divestment of shares in Sunpine had a positive impact of SEK 288 million on operating profit. Excluding the divestment, Södra reported an operating loss of SEK 21 million,” said Lotta Lyrå, President and CEO.

The company said the contribution margin improved to 23% from 22% in the preceding quarter, although profitability remains insufficient and further adjustments are needed.

Business areas show diverging performance

Södra Cell returned to quarterly profitability, with sales increasing to SEK 3,817 million from SEK 3,533 million. Operating profit was SEK 380 million, compared with a loss of SEK 80 million a year earlier. Higher pulp delivery volumes, increased energy prices, lower overheads and a weaker Swedish krona against the US dollar supported the improvement.

Södra Wood continued to face difficult conditions. Sales declined to SEK 1,449 million from SEK 1,568 million, while the operating loss widened to SEK 256 million from SEK 103 million. Lower delivery volumes, weaker market prices and higher raw-material costs weighed on performance.

Södra Skog reported sales of SEK 1,158 million, compared with SEK 1,196 million, and an operating loss of SEK 75 million, against a loss of SEK 32 million in the prior-year quarter. Lower delivery volumes and reduced margins affected the result.

Södra Building Systems increased sales by 60% to SEK 68 million, supported by project-based business in Sweden and Denmark. Its operating loss narrowed to SEK 37 million from SEK 51 million, while export activity and customer partnerships continued to develop.

Södra Bioproducts generated sales of SEK 916 million, up from SEK 674 million, primarily reflecting strong performance in tall oil and electricity.

Nine-month sales decline despite improved reported earnings

For January–September 2026, net sales totalled SEK 20,043 million, down from SEK 21,696 million in the same period of 2025. Operating profit was SEK 737 million, compared with an operating loss of SEK 310 million a year earlier.

The nine-month result included capital gains of SEK 1,473 million from the divestment of forest operations in the Baltics and SEK 288 million from the Sunpine share divestment. Excluding these divestments, Södra reported an operating loss of SEK 1,024 million.

Cash flow after investments was positive at SEK 225 million in the third quarter, compared with SEK 444 million a year earlier. For the first nine months, cash flow after investments reached SEK 6,146 million, compared with negative SEK 243 million in the corresponding period of 2025.

At September 30, 2026, Södra’s equity ratio was 56%, while cash and cash equivalents and current investments totalled SEK 16,773 million.

Innovation and sustainability initiatives progress

Södra continued developing new uses for forest-based raw materials. During the quarter, production of tannin began at the Värö facility, while a small-scale pilot production run of lignin was launched. The company sees these initiatives as opportunities to develop bio-based alternatives and create additional value from forest resources.

The company also secured new customer business for cross-laminated timber (CLT) in Latvia through its partnership with Kelmor Group, supporting production and capacity utilisation at Värö.

In sustainability, Södra received an EcoVadis score of 88 out of 100 and a Platinum rating, placing it among the top 1% of assessed companies. Its greenhouse-gas reduction targets have also been validated by the Science Based Targets initiative.

Cautious outlook for the remainder of 2026

Södra expects market conditions for many of its products to remain challenging in the final quarter, with no rapid recovery anticipated. Weak demand in Europe continues to affect pulp and sawn timber markets, while the imbalance between raw-material costs and selling prices remains a key pressure on profitability.

A scheduled maintenance shutdown at the Mönsterås pulp mill is also expected to affect earnings in the fourth quarter.

The company said it would continue to prioritise cost control, operational efficiency, investment discipline and commercial development while adapting to market conditions and strengthening long-term value for its forest-owner members.

About Södra

Södra is a forest-industry group owned by its members, offering forestry services, sawn timber, timber building systems, energy, biochemicals and pulp. Its operations connect members’ forests with industrial processing and markets for renewable, forest-based products.

Source: Södra’s interim report for July 1–September 30, 2026, published October 22, 2026. This is an independently drafted press release based on the report, not an official release issued by Södra. Please verify figures, quotations and publication details before distribution.