Södra third-quarter profits up 600%

Rising prices and higher deliveries in pulp and timber helped boost Södra’s January to September operating profits to SKr1.99bn from SKr311m in the same period in 2009.

Net sales for the three quarters were SKr15bn compared to SKr12bn, while profits after net finanical items were SKr2bn, against SKr350m.

Chief executive Leif Brodén said that business was continuing to build.

“We are continuing to see strong deliveries within Europe and believe that deliveries to Asia will increase,” he said. “[Although] the dollar exchange rate will be crucial for our earning capacity.”

The company's wood product business was boosted by a recovery in the building market, plus rising prices.

“After a dramatic fall in new build construction in the wake of the financial crisis, there are a signs of an upturn from record low levels,” said Mr Brodén. “Södra’s principal markets in the UK, Sweden and Norway are showing positive growth and sales in the US are expected to increase by 50% in 2011. Activity in the renovation sector also continue to be good, especially in Scandinavia, and export volumes to North Africa are stable.”

At the same time, he added, the outlook for the company’s timber arm, like the business overall, depended on exchange rates .

“So far Södra Timber has been able to make up for the strong krona through price increases in local currencies,” he said. “But in the last quarter uncertainty has been growing over this issue. Increased world production and the currency situation will be determining factors [in coming months] and the possibility of an extended production stop over the Christmas /New Year holiday cannot be ruled out.”

Mr Brodén also said that timber supply had improved.

“After the summer’s record high from final felling, supply has fallen, but is still at a high level and despite tough competition for raw materials, the timber market is reaching a balance after the period of rapidly rising prices."