Södra posted an operating profit for the third quarter of 2026. While the market remains challenging, earnings are steadily moving in the right direction. Earnings improved compared with the year-earlier period and were positively impacted by the divestment of the holding in Sunpine.
In the third quarter of 2026, net sales for the Södra Group amounted to SEK 6,492 million (6,349), up 2 percent year-on-year. Operating profit totalled SEK 267 million (loss: 360), representing an operating margin of 4 percent. The year-on-year earnings improvement was mainly due to higher delivery volumes for paper pulp, higher prices for energy products and lower overheads.
Operating profit was also positively impacted by the capital gain of SEK 288 million resulting from the divestment of shares in Sunpine. Excluding this effect, Södra reported an operating loss of SEK 21 million, which reflects the continued challenging market environment with depressed demand and an imbalance between raw material costs and product prices.
“Earnings are moving in the right direction, and we can see that our intensive efforts in areas that we ourselves can control are yielding results. The performance of the pulp business is improving, the contribution margin is stronger and our overheads decreased by SEK 200 million compared with the same period last year. This means that we are standing on firmer ground today than we were one year ago. Meanwhile, profitability is still not where it needs to be, not least because of the very challenging situation facing the sawn timber business. We are therefore continuing our transition with undiminished vigour and focusing fully on strengthening our competitiveness,” said Lotta Lyrå, President and CEO.
Persistent uncertainty and fluctuating demand was noted in the markets for Södra’s products during the third quarter. Even though the situation gradually improved during the year, the underlying imbalance between raw material costs and product prices remained. Geopolitical tensions, higher energy prices and uncertainty about economic developments continued to impact market conditions.
The pulp business followed its production plan, increasing its delivery volumes compared with the year-earlier period. However, a global imbalance with supply outstripping demand continued to characterise the market, contributing to a downward pressure on paper pulp prices. Demand for paper and board remained weak in several markets.
The market for sawn timber performed poorly again during the third quarter. Demand remained low in several of Södra’s major markets, including the UK and the US, while markets such as the Netherlands, Poland and Sweden demonstrated a more stable trend. The market for cross-laminated timber (CLT) was also challenging due to weak construction activity. The export business grew, resulting in a year-on-year increase in delivery volumes.
Developments for several bioproducts were more positive. High energy prices contributed to favourable demand for electricity and energy-related products, while the markets for tall oil, turpentine and biomethanol performed well. Demand for dissolving pulp remained healthy, underpinned by low customer stock levels.
Clear measures to increase competitiveness
During the quarter, Södra continued its efforts to strengthen competitiveness with its clear focus on cost control, efficiency improvements and commercial development. Within the scope of the Group’s action programme (the Södra Leap), overheads have decreased by SEK 200 million compared with the same period last year, corresponding to a reduction of approximately
15 percent. Activities under the framework of the World-class Efficiency initiative are also continuing to support increased operational efficiency, and a total of SEK 181 million in efficiency measures and improvements were implemented during the quarter.
In parallel, Södra continues to strengthen its business by developing new products, markets and customer offers. During the quarter, the small-scale pilot production of lignin began. This is an important step in the development of new bio-based businesses with the potential to create additional value from members’ raw material. The new tannin facility at Värö has entered the commissioning phase and production has commenced, expanding our potential to create more value from each tree and develop new forest-based products.
At the same time, Enriched by Södra was launched, a new offer that enables customers to draw attention to the value and origin of the forest-based products they use. Varberg Energi became the first customer, demonstrating how this offer can strengthen the link between renewable raw materials, production and the end customer.
“Södra is to provide good conditions for current and future forest owners. Accordingly, we must combine initiatives that strengthen profitability here and now with measures that will make us stronger over time. While we are improving our efficiency and cost position, we are also developing new business opportunities, strengthening our commercial capabilities across the value chain and creating more value from every tree. With Enriched by Södra, we are moving one step closer to the market and the end customer, while initiatives such as lignin are opening up new business opportunities for the future,” said Lotta Lyrå, President and CEO.
Business areas’ results for the third quarter of 2026
Södra Skog’s operating loss for the quarter totalled SEK 75 million (loss: 32). The earnings trend was primarily due to lower margins and lower delivery volumes, which resulted in lower revenue.
Södra Wood’s operating loss for the quarter totalled SEK 256 million (loss: 103). The earnings trend was mainly due to lower delivery volumes, lower market prices and higher raw material costs.
Södra Cell’s operating profit for the quarter totalled SEK 380 million (loss: 80). The earnings trend was primarily due to higher delivery volumes and lower overheads as well as the weaker SEK against the USD.
Södra Building Systems’ operating loss for the quarter totalled SEK 37 million (loss: 51). The improvement was mainly driven by growth and increased delivery volumes, but was partly offset by higher raw material costs. Activity in the export business increased during the quarter.
Earnings for Södra Bioproducts are reported under “Other business areas.” Sales for the quarter amounted to SEK 916 million (674). This trend was mainly driven by strong demand for tall oil and electricity.