Södra reports Q2 loss as weak markets continue
Södra reported a negative operating result for the second quarter of 2026 as weak demand and an imbalance between raw material costs and product prices continued to weigh on profitability. The company is responding with extensive cost-saving measures and efficiency improvements aimed at strengthening its competitiveness.
Net sales for the second quarter amounted to SEK 6,947 million (7,193), down 3.4% from the corresponding period last year. The Group reported an operating loss of SEK 424 million, equivalent to an operating margin of -6%.
According to President and CEO Lotta Lyrå, the market environment remains challenging, with subdued demand and weak pricing across several business areas.
"We are doing everything we can to reverse the trend by strengthening our cost position, improving efficiency and enhancing our commercial capabilities. We are seeing progress, with overhead costs reduced by SEK 200 million and contribution margin improving by five percent during the quarter," says Lotta Lyrå.
Demand remained weak in the pulp, paper and timber markets throughout the quarter, while the cost of raw materials continued to exceed price developments for finished products. The construction market also remained subdued, affecting demand for cross-laminated timber (CLT). More positive market conditions were seen for several bioproducts, including electricity, biomethanol, turpentine and dissolving pulp.
Cost reductions continue
Södra continued implementing its Södra Leap action programme during the quarter, focusing on lower overhead costs, increased efficiency and improved operational performance.
Since the programme was launched, operating expenses have been reduced by SEK 329 million, including SEK 202 million during the second quarter. The company has reduced consulting costs, completed and reassessed major IT projects and implemented approved workforce reductions.
The company's World-class Efficiency programme also generated efficiency improvements corresponding to SEK 122 million during the quarter.
Business area performance
- Södra Skog: operating loss of SEK 12 million (profit: 7), mainly due to lower delivery volumes and reduced revenue from spruce logs.
- Södra Wood: operating loss of SEK 215 million (profit: 3), affected by lower delivery volumes, weaker market prices and higher raw material costs.
- Södra Cell: operating loss of SEK 88 million (loss: 221), supported by higher delivery volumes and lower overhead costs.
- Södra Building Systems: operating loss of SEK 45 million (loss: 44), reflecting continued weak market conditions despite stable sales and good cost control.
- Other business areas (including Södra Bioproducts): sales totalled SEK 888 million (704).
