Södra - Strong result and innovative initiatives

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Net sales for full-year 2017 rose 11 percent to SEK 20,518 million. Operating profit increased sharply to SEK 1,917 million and the Board has proposed a profit distribution of SEK 868 million. Operating profit for the fourth quarter of 2017 totalled SEK 530 million (164).

Consolidated net sales for the full-year 2017 rose 11 percent to SEK 20,518 million, attributable to both increased volumes and higher prices for paper pulp and sawn timber. The operating margin was 9 percent (5). Return on capital employed was 12 percent (7) and the equity ratio was 56 percent (54).

“2017 was a good year for Södra, with a strong result. With a well-invested industry and continued investments in processing and innovation in selected areas, Södra is well positioned for the future and any challenges it may bring,” said Lars Idermark, President and CEO.

To the Annual General Meeting on 23 May, the Board proposes a profit distribution of SEK 868 million (602) to members, corresponding to 47 percent of profit before tax. The profit distribution rate for the past five years has been 57 percent. The profit distribution comprises a dividend of 6 percent (4) on contributed capital totalling SEK 198 million (124), a dividend of 10 percent (8) on wood deliveries totalling SEK 454 million (343), and a bonus issue of 15 percent (10) totalling SEK 216 million (135).

Activity was high in 2017, with extensive investment in the sawmills, continued restructuring and divestments of the Interiör operations in Sweden, Lithuania and Norway. Efforts to strengthen competitiveness in the sawn timber operations are progressing in line with the adopted multi-year plan.

In the fourth quarter, net sales rose 18 percent to SEK 5,413 million (4,567). The operating margin was 10 percent (4).

The Board decided to make a joint investment of approximately SEK 0.5 billion in a demo facility for the production of liquid biofuels from forest residues, in partnership with Statkraft and technology provider Steeper through the joint Silva Green Fuel project.

“The favourable economic conditions continued during the fourth quarter. Positive market conditions for both sawn timber and paper pulp, combined with a high rate of production in Södra’s industries, led to high demand for saw logs as well as softwood and hardwood pulp,” said Idermark.

Net sales5,413
Operating profit before depreciation, amortisation and impairment, SEK million835
Operating profit, SEK million530
Profit before income tax, SEK million503
Operating margin, %10
Return on capital employed--12
Equity ratio--56

*As of 2017, the accounting policy for Södra Cell’s planned maintenance shutdowns has been changed so that the cost is charged to profit for the current year, rather than being allocated to improvement expense, and subsequently amortised over the period until the next maintenance shutdown. The comparative figures affected have been restated for 2016.