Signals point to potential market improvement in the spring, says Sweden’s Bergs

8 February 2023


Swedish wood products manufacturer Bergs says 2022 was a decent year despite the weak timber market in the final six months of the period.

For the full year, Bergs posted EBITDA of SEK331m compared to SEK503m in the previous year. Net sales amounted to SEK3.26bn (2021:SEK3.05m)

The last quarter of the year was affected by the deteriorating wood product market, with net sales decreasing to SEK640m compared to SEK790m in the previous year, mainly because of lower sales prices and sales volumes within the Wood Protection and Sawn Wood divisions. 

Q4 EBITDA amounted to SEK30m compared to SEK106m in the previous year. 

The development for wood pellets and the growing window and door business within the Joinery product area “continued to be good”.

The Wood Protection division recorded EBITDA of SEK-42m for the full year (2021: SEK249m), while net sales were down to SEK981m (2021: SEK1.39bn)

Demand for wood protection products remained weak during Q4. Stocks continued to decrease during the quarter and are now at a more normal level for the season, which is a signal of an improved situation. At the same time, divisional cost-saving measures have been taken and the Latvian workforce has been reduced by approximately 100 employees.

The transition towards more highly refined products is following plan and, among other things, the production and sale of heat-treated wood has started at the facility in Nybro.

The Sawn Timber division’s full year EBITDA reduced slightly to SEK238m (2021: SEK259m), but Q4 saw a sharp drop to SEK6m from SEK64m a year before. 

Bergs said the market for sawn wood products continued to develop weakly during Q4. At the same time buyers have carried out stock reductions and will need to increase purchases during the spring. 

“Inventories at our own sawmills are still low and production is basically only made to order,” Bergs added. 

“The price for timber raw material is now decreasing in the Baltics. This, in combination with increased prices for by-products, is expected to gradually strengthen margins during the spring.

“At our Estonian sawmill, production curtailments and cost saving measures were implemented in the fourth quarter due to the weaker market. Our Latvian sawmill produced at normal levels.”

The Joinery division saw its full year EBITDA grow to SEK77m from SEK42m a year earlier.

“Our market for windows and doors is still good with normal order intake and order backlog. The target of continued volume growth in 2023 remains. As part of this, during the year we will increase the number of showrooms in our Timber Windows dealer network by five to 50 in total.”

The garden products segment of the Joinery division contributed negatively, but Bergs sees signs of improved demand ahead of the upcoming spring season.

“The economic situation remains uncertain, which will further reduce construction activity in Europe. 

“At the same time, there are indications that the important American construction market has bottomed out. We expect the market for energy-saving measures, such as window and door replacement, to continue to be favourable.

“As inventory levels for sawn timber products decrease at customers, the impact of the lack of Russian exports will now be fully felt. The timber market remains difficult to assess, but some signals point in the direction of an improvement during the spring.”