Competition for logs remains high but has eased somewhat for pulpwood due to lower industrial activity and weaker demand from the energy sector. Wood prices further increased, but the harvest was lower than normal, which meant that earnings from Forest decreased slightly to SEK 487 million. We manage the forest actively and responsibly to supply a growing industry with renewable raw material, which also provides the greatest climate benefit over time.
Energy is still expensive in Europe and electricity prices are being upheld by high fossil fuels prices. In Sweden, the cost of energy is significantly lower and, in northern Sweden, the electricity supply has been locked in for much of the time, resulting in historically low prices. The low electricity prices resulted in weak earnings from Renewable Energy in the first quarter, of SEK 29 million. As hydro power can be steered towards times when it is most needed, we still managed to maintain a premium for our hydro and wind power portfolio of around 30 per cent above the market price in northern Sweden.
Wood product consumption has been subdued in recent years. In the first quarter, wood product prices increased, driven by global raw material shortages and hopes of increased construction. The higher prices had a positive impact, but profit amounted to only SEK 1 million, due to rebuild shutdowns and increasing costs for logs. The imposition of tariffs is increasing uncertainty about market developments, while price differences for logs within Sweden are significant. We are therefore reviewing the production rate at Braviken Sawmill. However, with well-invested sawmills and a strong position in the wood market, we are in a good position for when the construction cycle turns.
There was a slight positive development in demand for consumer paperboard during the quarter, but consumption in Europe is still lower than before the pandemic. Demand for paper decreased in most segments. Market prices were largely unchanged. Despite weak market conditions, earnings from Board and
Paper were strong, at SEK 528 million, thanks to good deliveries and unusually low energy costs. Our focus on niches in which fresh fibre comes into its own has enabled high capacity utilisation, but the imposition of tariffs is creating uncertainty about trade flows and consumer behaviour.
With our large forest holdings as a foundation, we grow trees for sustainable construction. From residual products we make renewable packaging, magazines and books, helping our customers to reduce their fossil carbon footprints. At the same time, we harness the energy that blows over the treetops and flows in the rivers. Given our strong financial position, we are well equipped to deal with a world marked by trade barriers and geopolitical tensions.
Henrik Sjölund, CEO
May, 8 2025