Profit growth for Sveaskog

July 23, 2010 by timbercommunity

State forest company Sveaskog reports a profit before tax of 578 million SEK for the second quarter, compared with 495 million SEK during the same period last year. The positive earnings trend continued during the first half of 2010. The improvement in earnings was due to increased net sales generated by higher volumes and higher prices.

During the first half of the year Sveaskog delivered over six million cubic metres (m3sub) of wood raw material which is an increase of 8% compared with the same period previous year. During the first half of 2010 Sveaskog sold approximately 19 800 hectares of woodland. Largely because the Swedish state has given Sveaskog the task of strengthening private forestry. The area is roughly the same as last year, but a greater proportion of land deals took place in northern Sweden.
Interim report Q2 January to June 2010

Six-month period January-June

• Net sales rose to SEK 3,647 million (3,169).
• Operating profit from continuing operations almost doubled to SEK 798 million (406).
• Share of profits of the associate company Setra Group amounted to SEK 40 million (–132).
• Change in value of forest assets amounted to SEK 100 million (473).
• Profit for the period amounted to SEK 731 million (588).

CEO's comments
Demand was good and we were able to increase both sales volumes and prices for our products.  As in the previous year, approximately half of deliveries came from the company's own forests. Sales of sawlogs and pulpwood increased overall by over 6% and biofuel by 15%. The increase in biofuel deliveries was mainly due to higher demand from CHP plants.
Sveaskog’s costs increased proportionally in relation to the higher business volume and as a result of extended silvicultural measures. The cost-cutting programme we initiated in 2009 contributed to lower staff costs and improved efficiency
The associate company Setra Group has a very positive earnings trend compared with the previous year. The improved result is mainly due to a stronger market for wood products. Internal efficiency improvements and cost savings also made a positive contribution. Profit from Sveaskog’s holding in the associate company Setra Group therefore improved substantially. Setra's improved earnings and the positive market scenario provide good conditions for a sale, which is the strategy for Sveaskog and the company's other two principal owners.
During the first half of the year Sveaskog sold approximately 19,800 hectares of forest land, primarily within the assignment from the owner to strengthen private forestry. The area was about the same as last year but a higher proportion of land deals took place in northern Sweden where hectare prices are lower, which explains the lower capital gains with SEK 90 million.
Overall profit for the first half of 2010 amounted to SEK 731 million (588).
SunPine's biodiesel facility in Piteå was inaugurated in May. The facility is the world's first commercial-scale plant for the production of diesel based on tall oil. SunPine AB is owned by Sveaskog, Preem, Södra and the entrepreneurial company Kiram.