Forestry giants in Northern Europe, Stora Enso, UPM and SCA, have benefited from the rising prices on their financial results for H1/2022, resulting in a significant rise in both sales and profits.
Excellent result from Stora Enso
Stora Enso has increased both its turnover and profit. In the second quarter, there was an increase of 18 percent in turnover (to 3,054 million euros) and 39 percent in operational profit (to 505 million euros).
Cash flow from operations has been positive in the second quarter.
The net sales for the first half of the year totaled 5,852 million euros, while it was 4,868 million in the same period last year.
The most significant events of the second quarter and the beginning of the year have been the feasibility study initiated at the Langerbrugge mill in Belgium on the conversion of the second paper line into a high-volume recycled corrugated board line, and the feasibility study on the conversion of a decommissioned paper machine in Oulu. The expansion of renewable packaging board production by 750,000 tons per year is under investigation.
Stora Enso’s three packaging units in Russia were sold to the local management. The sale of the group’s two sawmills located in Russia to the local management has been completed. Regarding the wood procurement units, there are still small formalities remaining, which should be completed during the second half of 2022. After this, Stora Enso no longer has business in Russia.
Company’s CEO Annica Bresky notes that the historically high demand peak for lumber has been passed. In the construction market, the pace is slowing down due to high inflation and low availability of other construction materials. However, according to Bresky, Stora Enso’s Building Solutions segment benefits from long-term projects and the policies of the authorities, and a strong demand for cross-laminated timber and veneer lumber is visible for a long time.
“We are constantly expanding partnerships and cooperation in the value chain that produces wood-based solutions for efficient and low-carbon construction. Growth and opportunities are greatest in the French market, where they are supported by the government’s ambitious policies promoting wood-based construction. The latest examples of this are our 35 percent ownership in a French wood processing company and a business partnership with a French industrial group,” says Bresky.
UPM reports record result despite the strike, the end of Russian trade and inflation
According to UPM’s half-year review, the exceptional circumstances have not affected the result. In the second quarter of the year, turnover increased by seven percent, to 2,562 million euros. Comparable operating profit increased by 26 percent to approximately EUR 387 million.
In the entire first year, turnover increased by ten percent (to 5,069 million) and operating profit by 13 percent (to 664 million).
UPM decided to suspend deliveries to Russia and the purchase of wood from Russia, and the operation of the Chudovo plywood factory in Russia was also stopped .
UPM’s employees were on strike in Finland at the beginning of the year, which affected production and delivery volumes, especially in pulp, paper and biofuel operations. UPM estimates that the impact on the full-year result will be minor.
In April, UPM and Paperiliitto signed business-specific collective agreements for the first time, and the strike at Finnish factories ended.
Cash flow from operations was -879 million euros and net debt was 2,688 million euros at the end of the quarter. The prices of energy futures rose sharply in June, and because of this, an exceptionally large cash flow went into energy hedges in the quarter.
UPM expects that the same amount of cash flow will later be recovered from hedging or production.
“A significant part of the increase in net debt is temporary. Our financial position is still strong”, says CEO Jussi Pesonen .
UPM predicts good profit prospects for the rest of the year as well. The company believes that the operating profit as a whole will increase from last year and that even in the second half of the year a better result will be achieved than in the same period a year ago.
Swedish SCA achieves the highest profit in its history in the second quarter of 2022
The Swedish forest industry group SCA has published its financial report for the first half and second quarter of 2022. According to the information presented, the profit in April-June was the highest in the history of the company. The improvement compared to the previous quarter and the second quarter of 2021 was mainly due to strong demand for SCA products, higher sales in the main markets (Scandinavia and Central Europe) and higher selling prices.
As for the specific indicators for the first half of 2022 compared to January-June 2021, they look like this:
- Net sales amounted to 1.047 billion euros, 861.8 million euros a year earlier. Growth was mainly driven by strong demand for SCA products, higher selling prices and increased sales in key markets. With its own logistics company, SCA has unique control over logistics from the forest to the customer, which has increased the reliability of delivery.
- EBITDA increased by 58% to 549.7 million euros, from 347.2 million euros a year earlier. Growth was mainly due to higher selling prices for all of the group’s products, while a high degree of self-sufficiency in wood, energy and logistics allowed for good cost control. EBITDA margin increased to 52.5% from 40.3% a year earlier.
- The valuation of SCA’s forest assets increased to 8.43 billion euros from 8.11 billion euros a year earlier.
- Operating profit increased to 475.7 million euros from 280.8 million euros a year earlier.
Financial highlights for the second quarter of 2022:
- Net sales were €566 million, up from €461.5 million a year earlier.
- EBITDA was €299.5 million, up from €216.8 million a year earlier.
- EBITDA margin increased to 52.9% from 47% a year earlier.
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