Weak global market for forestry industry
The market for timber products started to decline in the second half of 2022, and remained very weak throughout 2023. This has significantly affected the profitability of woodworking industries. The recession has also affected the demand for cardboard material, which in turn has affected the price of paper pulp. This decline, however, has not been as severe as it has been for the timber products market.
“The market for products from the forest industry is highly volatile, but we take a long-term view and have continued to strengthen our offer to our members throughout the year - most noticeably regarding premiums and profit-sharing. Our goal is to create financial value for our members not only with a competitive timber pricing list, but also through premiums and profit-sharing”, says Norra Skog’s CEO, Pär Lärkeryd.
Norra Skog increases market share
Norra Skog's felling contracts set a new record in 2023, above all regarding thinning activities. An increasing number of forest owners appreciate the advantages of Norra Skog's forestry model, which focuses on long-term forest ownership. For example, it is important to thin a forest not just for financial gain but to also ensure the remaining forest grows quickly and healthily and can withstand any future challenges caused by climate change.
“As a forest owners' association, long-term strategies and a holistic view are key concepts for us. For example, we offer a significant timber premium to forest owners whose forest roads have a load-bearing capacity that can handle traffic when autumn is at its wettest. At the same time we also provide services to reinforce roads and stop them from deteriorating”, says Pär Lärkeryd.
65 SEK per cubic meter in profit-sharing
This year's results have not prevented Norra Skog’s board from proposing the association's general assembly an enhanced profit-sharing of 231 MSEK among its. The proposal, which elected representatives will decide on in May, includes profit-sharing of 65 SEK per cubic meter for rounded-up and recorded timber deliveries made in 2023, as well as 7 percent interest on its members' investment capital. The proposed 65 SEK is made up of 35 SEK as a capital contribution and 30 SEK as a dividend on timber deliveries.
Norra Skog operates in a sector that can experience rapid and significant economic fluctuations, where some years can be extremely profitable while others can be the exact opposite. The association recognizes its members' forest businesses are long-term concerns and that it is difficult to manage them based on unpredictable global fluctuations in demand for timber products. This is why Norra Skog’s profit-sharing model does not reflect the results of individual years but rather bridges economic cycles in order to slowly increase profitability year on year and therefore avoid dramatic swings in results.
“Our long-term profit-sharing model, in which our members do not have to speculate on how their dividend is affected by the association's results in any given year, has proven to be a success. By slowly but surely developing our model it has now reached a value where it corresponds to 20 percent of the net cost for an average felling activity”, concludes Norra Skog’s Chairman, Stig Högberg.
For further information please contact:
Stig Högberg, Chairman, Norra Skog, 070- 207 56 93
Pär Lärkeryd, CEO, Norra Skog, 070-234 85 64
For media enquiries please visit norraskog.se
Norra Skog is committed to making the businesses of forestry owners in Norrland as profitable as possible. We are owned by our 27,000 members and always work in their best interests. By offering knowledge and specialized services, we aim to increase the value of our members' forests today, tomorrow and for generations to come. Together we strive to develop the value of working in the forests of Norrland, as well as the raw materials they produce.