Södra’s second quarter of 2025 delivered lower sales and profits, citing global uncertainty, currency headwinds and weakened demand—reflecting a challenging environment for the Swedish pulp producer.
The group’s net sales reached roughly $752.5 million (7.2 billion Swedish kronor), down 4 percent compared against the year-over-year (YoY) period. Operating loss totaled about $40.3 million, where exchange-rate effects of just over $60 million were charged to earnings compared with the year-earlier period. The result corresponds to an operating margin dip of 5 percent, the forest owner association said. Return on capital employed was 7 percent, rolling 12-month, with an equity ratio of 57 percent.
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“The second quarter was challenging for Södra,” said Lotta Lyrå, president and CEO of Södra. “Increased global uncertainty—combined with rapid currency fluctuations and high raw material prices—has created a triple external effect that puts pressure on our profitability and has had a negative impact on our results.”
Sweden’s largest forest owners’ association faced a tough quarter as recessionary pressure, rising trade tariff concerns and a strengthening Swedish krona weighed on its performance. The sharp rise in the krona— especially against the U.S. dollar, Södra said—hit export-heavy segments like pulp, where currency translation effects were significant. Demand for paper pulp declined, too, driven in part by shifting consumer habits. Scheduled maintenance shutdowns at two facilities also dented earnings due to production losses.
“In addition, two scheduled maintenance shutdowns have burdened the result by approximately 240 million Swedish kronor,” Lyrå said. “Given the assessment that these external conditions will persist, we are facing a decisive joint effort going forward and are therefore initiating an action program to strengthen our competitiveness.”
In sawn timber, high raw material costs continued to pose a challenge, though seasonal factors and price adjustments in key markets helped restore some balance. While the construction sector remained weak, Södra’s cross-laminated timber (CLT) operations were boosted with both sales and production rising during the second quarter. Timber use in construction is on the upswing as well, as reflected in a stronger order outlook heading into the next quarter.
Bioproduct sales were hit by declining demand for solid fuels and district heating, along with unexpected disruptions in electricity generation. That said, Södra’s biomethanol operations remained steady in both output and demand. Raw material demand also stayed strong, though early signs point to a potential slowdown ahead amid global uncertainty.
World-class efficiency—Södra’s “way of working with continuous improvements,” the company said—generated improvements and efficiencies during the quarter with an annual recurring effect of just under $12 million. The total impact since the start in 2021 has been just over $173,000.
Against these challenging conditions, Södra rolled out a focused action program to improve profitability and mitigate downside risks. The initiative should tighten priorities across the business and increase emphasis on operational costs, production volumes, and overall efficiency. While driving performance improvements, Södra will maintain its strong focus on workplace health and safety to reduce occupational injuries. The program includes a revved push into digital tools and AI, intended to reinforce Södra’s commitment to long-term competitiveness and resilient operations.
“Our competitiveness is always high on the agenda; maintaining it even in challenging times is what underpins our actions moving forward. The action program will take us to a new level of competitiveness,” Lyrå said. “It will require leadership and courage in day-to-day operations, without losing sight of the horizon. Because our mission stands firm: to refine and renew family forestry. A competitive Södra has a significant role to play in this.”
Despite a challenging market environment, Södra plans on moving forward with a series of strategic initiatives aimed at strengthening operations, increasing profitability and supporting long-term growth within the group, which represents over 50,000 family forester members and 3,000 employees around the world.
A significant step in Södra’s transformation is now underway in Mönsterås, where construction began in May on a state-of-the-art kraft lignin plant. Once completed in 2027, it will be the first commercial facility of its kind in Sweden—and the largest kraft lignin producer in the world. The investment is designed to enhance profitability and support a fossil-free future, creating new value for both the company and forest owners.
Södra’s CLT business continued to gain ground, per the results. The company recently completed deliveries of 9,100 square meters of CLT for Gothenburg Grand Central, the city’s new central station building. The project showcases how sustainable timber construction can lower a building’s carbon footprint, Södra said, while storing carbon long-term for a clear contribution to the green transition.
Södra will also step up its digital efforts to support forest owners. A new initiative combines deep insights into member needs with AI and automated data, enabling smarter, more tailored forest management. A planning app for forestry advisors will launch this autumn, while an enhanced digital forest management plan is in parallel development as well.
To address ongoing economic pressures and better position itself for the future, Södra launched an action program focused on cost control, production efficiency, and volume optimization. The initiative prioritizes profitability, the group said, by maintaining focus on workplace health and safety to reduce occupational injuries. As part of the program, Södra will accelerate investment in digital tools and artificial intelligence to boost long-term competitiveness across its operations.
Continued currency exchange rate fluctuations had a “substantial translation effect that has a direct impact on Södra’s earnings, since we do not hedge.” This particularly affected the pulp business, the company said. While beneficial for members, this puts pressure on Södra’s production costs, especially for the sawn timber sector.
The Södra Skog business area—focused on forestry services, wood raw material and affiliated forest area—saw the period’s operating profit reach nearly $725,000—a 7 percent dip YoY. The earnings trend was mainly attributed to lower volumes and increased digital investments.
The Södra Wood business area—focused on wood products like sawn timber and CLT as well as production and delivery volumes—saw the operating profit total $310,000 (down nearly 98 percent YoY) for the period. The earnings trend during the quarter was mainly due to significantly higher saw log costs, partly offset by higher delivery prices and some adverse exchange rate effects.
The Södra Cell business area—focused on market pulp (such as softwood, hardwood, dissolving), electricity generation and impact of currency fluctuations and maintenance shutdowns—saw an operating loss of $22.9 million (down 41.9 percent YoY) for the period. The change in earnings during the quarter was mainly due to the Swedish krona and U.S. dollar currency trend and scheduled maintenance shutdowns.
The Södra Building Systems business area—focused on timber building systems (like CLT), market challenges and increasing share of wood in construction—saw an operating loss of $4.5 million for the period. The earnings trend was primarily attributable to persistently low volumes due to a weak construction market.
Operating profit for the Södra Bioproducts—focused on energy products (solid biofuels, electricity, district heating), liquid bioproducts (biomethanol, tall oil) and sales included in other BAs—was included in other business areas, the company said, with the business area’s sales for the period amounted to around $43 million.
