Negative earnings in the second quarter, clear action to strengthen competitiveness

Södra posted negative earnings for the second quarter of 2026. The quarter was characterised by weak market conditions and depressed demand that persisted throughout the period, as well as an ongoing imbalance between the raw materials market and the markets for Södra’s products. 

In the second quarter of 2026, net sales for the Södra Group amounted to SEK 6,947 million (7,193), down 3.4 percent compared with the year-on-year period. Operating loss totalled SEK 424 million, representing a negative operating margin of 6 percent. The year-on-year change in earnings was primarily due to lower delivery volumes in a market environment that remains weak. Earnings were also impacted by delays in the value chain, with raw material price adjustments not yet gaining full effect.

“We are reporting negative earnings amid a market environment that remains challenging, with depressed demand and a weak price scenario. Meanwhile, we are doing our utmost to reverse the trend by strengthening our cost position, as well as enhancing efficiency and our commercial capabilities. We can see that we are heading in the right direction. Our overheads decreased by SEK 200 million, and our contribution margin improved by 5 percent during the quarter. We will continue to focus on everything we can control ourselves and cannot rule out further measures,” said Lotta Lyrå, President and CEO of Södra.

Persistent weak and turbulent market conditions dominated the markets for Södra’s products during the second quarter. Weak demand resulted in a challenging pricing environment and a continued imbalance between the cost of raw materials and the price of finished goods, which had a negative impact on profitability.

The pulp business performed as planned during the quarter, and volumes are reaching the market. Meanwhile, a global imbalance with supply outstripping demand – thereby exerting pressure on prices – continues to characterize the market. Demand for paper and board remains weak.

The sawn timber market was turbulent, even during a period that is normally marked by peak business activity and more stable demand. The market was weak in Sweden, the US, the UK and Northern Ireland, among other countries, while parts of Europe showed slightly higher activity. At the same time, the weak construction market is affecting CLT sales, although moderate recovery is evident in the residential segment.

The market outlook for several bioproducts was more positive during the quarter. Demand and the price scenario were favourable for electricity, biomethanol and turpentine, among other products. Demand for dissolving pulp was also good, while solid biofuels encountered a more mixed market situation.

During the second quarter, we implemented improvements and efficiencies corresponding to SEK 122 million as part of our World-class Efficiency programme – our way of working with continuous improvements.

Focus on decisive action and a stronger cost position

During the quarter, Södra continued to take concrete action to adapt its operations to the current market environment. This endeavour has had a clear focus on reducing overhead costs, increasing efficiency, and strengthening operational delivery across the organisation.

Work under the Södra Leap action programme is proceeding as planned, and previously implemented measures are beginning to yield results in the operations. At the same time, not all measures have yet had their full impact, and we are therefore continuing our efforts with unabated energy to achieve the desired results.

Since the launch of the action programme, operating expenses have decreased by SEK 329 million, of which SEK 202 million in the second quarter. Among other measures, Södra has reduced consulting costs, reconsidered and completed major IT initiatives, and implemented approved workforce adjustments.

At the same time, a concentrated effort is underway to strengthen our commercial capabilities, focusing on creating greater value for customers, growing our business and increasing profitability across the value chain.

“In our current situation, it is a matter of consistently focusing on the things we can control ourselves. We are taking action across our operations, enhancing efficiency, and growing our business to make us stronger both now and in the long term,” said Lotta Lyrå, President and CEO of Södra.

Business areas’ results for the second quarter of 2026

Södra Skog’s operating loss for the quarter totalled SEK 12 million (profit: 7). The earnings trend was primarily due to lower delivery volumes and reduced revenue, mainly relating to spruce logs.

Södra Wood’s operating loss for the quarter totalled SEK 215 million (profit: 3). The earnings trend was mainly due to lower delivery volumes, slightly lower market prices and higher raw material costs.

Södra Cell’s operating loss for the quarter totalled SEK 88 million (loss: 221). The earnings performance was primarily due to higher delivery volumes and lower overheads, due in part to lower maintenance shutdown costs.  

Södra Building Systems’ operating loss for the quarter totalled SEK 45 million (loss: 44). The earnings performance was primarily attributable to a persistently challenging market, with stable sales and good cost control.

Earnings for Södra Bioproducts are reported under “Other business areas.” Sales for the quarter amounted to SEK 888 million (704).

Södra was founded in 1938 on the idea that we are stronger together. We are now the largest forest-owner association in Sweden, with more than 50,000 family forest owners as members. Together, the members of Södra own a world-leading industrial operation that processes forest raw material into renewable products such as pulp, timber, building systems, energy and biochemicals. About 3,200 people are employed in our forest industry and in 2025, Södra generated sales of SEK 28 billion. Our products are exported all over the world and together, we are contributing to a more natural way of living. Rooted in the forest, we grow the future.

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