Complicated to compare forest companies

July 27, 2010 by timbercommunity

It is difficult to compare forest companies since there are no accounting principles how they value forest. The Swedish business webite E24.se has an article about the unnecessary complexity valuation of forest.

Definitions:
Forest Cubic meters (m3sk) is a unit used to describe a forest timber volume. Measurement includes the entire tree stem volume above the normal cutting height. However is does not include branches, stumps or roots. Forest Cubic meter is a device often used in connection with forest management plans and sales. When forest properties are advertised for sale usually m³sk hectares of productive woodland is used.

SCA
According to E24.se it appears that the fair value of 1.9 million hectares of forest land - with a timber of 207 million cubic meters (wood volume) and where 60 percent are over 80 years - is estimated to SEK 25.9 billion. Thus, it is hardly fair value 13 000 SEK and 123 hectares of forest per cubic meter, m3sk.

In comparison, the entire SCA at the current share price of slightly more than SEK 100 per share, worth a total of 70-75 billion according to Blomberg.

Holmen
Holmen is operating and reporting income and return of one million hectares. Operating profit for the last year of 2.9 million cubic meters of felled amounted to 605 million SEK, which means they get 200 per m³. It is assumed that trade with externally sourced timber; 7 million cubic meters, generates a zero result.

Stora Enso
Indication of the average revenue for the volumes sold in 2009 was 338 per m3f in the company Bergvik Skog. This is a bit puzzling because it is not clear whether it is the volume over bark, m3fub, or on the bark,  m3fpb...