In This Article:
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Net Income: SEK980 million for the second quarter.
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Return on Capital Employed: 16% for the first half of the year.
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Net Debt: 6% of equity, or SEK3.3 billion.
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Dividend Paid: SEK1.8 billion in the second quarter.
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Wood Prices: Increased, contributing to higher revenues in the forestry division.
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Electricity Division Profitability: Prices 20% below average, yet profitability doubled due to increased volumes and premium pricing.
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Log Costs: Increased by SEK200 million year-to-date.
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Board and Paper Division: Half of turnover and EBITDA from each; higher board volumes and good product mix offset high log costs.
Release Date: August 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Holmen AB (HLMMF) reported a strong financial position with a net debt of 6% of equity, even after paying SEK1.8 billion in dividends.
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The company achieved a 16% return on capital employed in the first half of the year, aligning with its historical average of 18%.
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Holmen AB (HLMMF) plans to buy back up to 3 million shares, indicating confidence in its financial stability and future prospects.
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The forestry division benefited from higher wood prices, leading to increased cash flow and profitability.
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The board and paper division showed improved order books and stable pricing, with a favorable product mix contributing to rising quarterly profits.
Negative Points
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The wood market in Sweden is experiencing supply shortages, leading to historically high price gaps between northern and southern regions.
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Demand for wood products remains weak globally, with prices moving sideways at best, driven by supply constraints rather than strong demand.
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The electricity division faced reduced profitability due to a 20% drop in Swedish electricity prices compared to the average second quarter.
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Holmen AB (HLMMF) faces challenges in the paper market, with industry operating rates around 75%, below the optimal 90% for profitability.
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The company is exposed to the spot market for energy, which can lead to volatility in profitability, as seen with the unhedged electricity prices.
Q & A Highlights
Q: Is the EBITDA of almost SEK500 million per quarter on the forest side a fair base given current prices for saw logs and pulpwood? A: Q2 is a clean underlying result, slightly higher due to a good mix with a lot of final harvesting. However, wood prices are still increasing, so higher sales prices are expected in the third quarter. - Anders Jernhall, CFO
Q: Can you maintain the favorable product mix in the board and paper division, or was it a one-time occurrence? A: Fluctuations in product mix are normal. While this quarter was favorable, maintaining a high-quality product mix is the goal, but it depends on market developments. - Anders Jernhall, CFO