Dear shareholders,

As we close the books on 2021, we can clearly see that our business model − creating value based on our forest assets − is a successful one. We have managed to keep up production and seize on opportunities to increase prices, which has generated superb results, helped in no small part by sales of wood products. We can also report that interest in owning forest remains high, as reflected in the 9 per cent increase in the value of our forest assets to SEK 47 billion. In light of the solid earnings development and our strong financial position, the proposal is to increase the ordinary dividend to SEK 7.50 and to pay an extra dividend of SEK 4.00.

The transition to a sustainable world

The transition to a sustainable world continues, with politicians, businesses and consumers jointly pushing towards sustainable use of the planet’s resources. The greatest challenge lies in halting global warming, in which context it is worth noting that energy production accounts for three-quarters of carbon emissions. Although we are seeing rapid advances in renewable energy, only a small proportion of the world’s energy comes from sustainable sources. Looking back over the past 50 years, the world’s energy consumption has tripled, and this increase in demand has almost exclusively been met using fossil fuels. Moving forward, we have to be able to supply a growing population with more energy, while at the same time transitioning existing energy production to sustainable sources. This means not only that we need to produce more renewable electricity, but that we must also electrify substantial elements of industrial production, heating and transport.

Renewable electricity production

With a fossil-free energy system and opportunities to increase renewable electricity generation, Sweden is well placed to lead the development of next-generation, fossilfree industrial processes. Recent initiatives concerning everything from green steel to batteries are concrete examples of companies beginning to turn words into
action. With our controllable hydro power, we can help to provide the growing industries with green electricity when needed. When Blåbergsliden Wind Farm becomes fully operational in early 2022, we will be increasing our provision of renewable energy by 30 per cent. We see good potential to develop a significant wind power business.

Sustainable building

The real estate sector accounts for over a third of Europe’s carbon emissions, something that the major construction companies have begun to acknowledge as they set targets to become fossil-free along the whole value chain. The main challenge is that making cement manufacture sustainable is both costly and difficult. Wood offers an alternative that not only is fossil-free, but also stores carbon dioxide in the buildings. This makes the market prospects for wood very promising, not least if fossil construction materials are made to carry their true cost to the climate. Through the acquisitions and investments of recent years, we have expanded our wood products business while at the same time shifting ourselves forward in the value chain, most recently with the acquisition of Martinsons. We are now taking the next step in developing Iggesund Sawmill by adding construction timber as a complement to our strong joinery products portfolio, while at the same time increasing capacity. With a strong position in the wood market and well-invested sawmills, we have created a platform for continued growth for many years to come.

Fossil-free paper and paperboard

We grow forest with a view to building houses. When we saw the wood, whatever is left over is used in our paper and paperboard mills, where wood chips and shavings are topped up with the trees that are too narrow to become construction material. With a practically fossil-free energy supply, we provide the market with climate friendly products – a fact that our customers are increasingly beginning to appreciate. With control over the wood raw material and a sustainable energy supply, we are continuing to develop our position by making the most of the unique properties that fresh fibre provides.

Managed forest generates climate benefits

The world’s forests capture and store as much carbon dioxide as there is in the atmosphere, and this sequestration is increasing year on year. This increase is seen exclusively in the forests that are actively managed. We have long combined active forestry with preservation of good biodiversity, and we are seeing this bear fruit with a steadily increasing volume of standing timber and larger harvests from healthy ecosystems. Regular independent measurements show that the conditions for biodiversity in Sweden and Finland are good, while the majority of other countries both in and outside Europe need to do much, much more. We are focused on gradually increasing the carbon storage in our standing forest, while at the same time stepping up production of wood products, paperboard and paper as part of the transition to a sustainable world. In 2021, our combined operations contributed towards a climate benefit of 7 million tonnes CO2e, equivalent to 15 per cent of emissions in Sweden. We grow houses and then make renewable packaging, magazines and books from what is left over, while also harnessing the energy that blows through the treetops and flows down the rivers. Backed by a strong financial position, we are well equipped to benefit from the opportunities that will open up as Europe converts to a fossil-free society.

Stockholm, 18 February 2022

Henrik Sjölund
President and CEO