2022 has been characterized by the energy crisis in Europe and the war in Ukraine, while the world’s central banks struggled with high inflation driven by shortages of raw materials. With our own forest and energy production as a foundation, we at Holmen have been able to advance our positions in several segments, despite the uncertain environment, with earnings surging above SEK 7 billion. This is a record result. In light of the solid earnings development and our strong financial position, the Board of Directors proposes that the dividend per share be increased from
SEK 7.5 to SEK 8, and the payment of an extra dividend of SEK 8.

Despite a weak wood products market and a major maintenance shutdown, fourth quarter earnings were high, standing at SEK 1 622 million, largely due to increased earnings from our own production of hydro and wind power.

Competition for pulpwood and wood chips has become tougher and prices increased further following the halting of imports from Russia. Despite a weaker sawmill economy, demand for logs was good and prices remained high. Profit from forests amounted to SEK 402 million in the fourth quarter, which is somewhat higher than normal as a result of compensation for the creation of nature reserves. Interest in owning forests is strong and forest property prices continued to increase, which increased the book value of the Group’s forest assets by SEK 5 billion during 2022, to SEK 52 billion.

After a period of high demand and increasing prices for paperboard for consumer packaging, the market normalised. Fourth-quarter earnings amounted to SEK 152 million and continued to benefit from the strong energy situation in Workington. A planned maintenance shutdown at Iggesund Mill had a negative impact on earnings of SEK 250 million. Backed by a strong wood supply and advantageous energy situation, we intend to double our rate of investment in Iggesund Mill over the next five years, aiming to increase the mill’s paperboard production by 25 per cent.

Although paper demand is declining, prices increased further driven by higher production costs, especially for producers on the continent. Our earnings stayed very high in the fourth quarter, at SEK 716 million, in spite of maintenance shutdowns and increased energy costs. In 2022, we launched a new product for the inner layer in transport packaging, which has been well received by the market and we now evaluate a minor rebuild of one of the paper machines in order to increase volumes.

There is considerable interest in building in wood, but wood product prices decreased in the second half of the year as customers put their orders on hold. Both prices and demand stabilised towards the end of the fourth quarter, but the uncertainty surrounding the development of the construction cycle remains. Lower selling prices, combined with increasing raw material costs, resulted in a SEK 67 million loss in the fourth quarter. The transition to more sustainable building offers us good opportunities to continue developing the wood products business. We are now investing in increasing the production of CLT for large-scale building projects and reinforcing our logistics facilities for glulam. As previously announced, we are also examining, together with SCA, the possibility of building a new large-scale sawmill in Rundvik, close to our forest holdings.

Energy shortages continued to prevail in Europe, although conditions improved slightly compared with the extreme situation during the summer. Prices in northern Sweden, where we have most of our hydro and wind power production, were significantly lower than in Sweden as a whole for large parts of the year because of limitations in the electricity grid. In the fourth quarter, prices climbed, however, to almost the same level as in central Sweden, which increased our earnings to SEK 463 million. In the course of the year, we grew our renewable energy production capacity by 40 per cent and see good opportunities for growing it further, but we are dependent on permit application processes, which continue to be very unpredictable.

With our large forest holdings as a foundation, we grow houses while also harnessing the energy that blows over the treetops and flows in the rivers. We then make renewable packaging, magazines and books from the forestry residues. This business model is a particularly good fit in a world that is striving for a sustainable society while at the same time raw materials and energy are in short supply.

Stockholm, 31 January 2023

Henrik Sjölund
President and CEO