Continued weak market for wood products

The first quarter of the year was negatively affected by the deteriorating economic situation with reduced construction and lower activity in the do-it-yourself sector. The market for sawn and wood protection products has developed weakly both in terms of volume and price. The prices are about 25 percent lower compared to the corresponding period last year. We have continued good development for windows, doors, pellets and our more specially adapted wood protection products. These product areas are increasing as a share of the Group’s turnover, but at the same time are not large enough to currently com- pensate for the weak development of the wood product market.

The first quarter is seasonally weak, yet the result is disappointing where EBITDA amounted to SEK 6 million compared to SEK 82 million the previous year. Net sales were 715 compared to 910 the previous year.

MARKET
Deliveries of sawn and value-added wood products have generally increased during the beginning of the spring, and the statistics show that wood product stocks are in a downward trend. Some price increases have been implemented for the spring and summer. Likewise, we continue to see a good development of our project market, where not least the sales of linseed oil-impregnated products have increased. At the same time, there is still uncertainty about how the market will develop. We see a better development for our windows and doors, which are positively affected not least by energy-saving investments. Order intake and order backlog are still good.

PERFORMANCE BY PRODUCT AREA
As recently communicated, we have changed our segment reporting where windows and doors are now reported as a separate segment and where processed wood products are reported in the Wood Solutions segment. We are doing this to highlight the change we are now making within Wood Solutions towards a higher degree of processing and project focus. We also want to clarify our window and door business, where we have the ambition to grow further.

WOOD SOLUTIONS
Demand and prices for wood protection products have remained weak during the quarter with continued negative margins as a result. During March, we had an improved activity, which indicates that our customers’ stocks in the building material trade and the DIY chains are starting to become more normal. Our rebalancing of the product mix, which was pre- viously based on a large raw material import from Russia, is likely to gradually improve the margin. We see some improvement in the market for our garden products. A number of organizational changes have been implemented and competence has been strengthened to increase the pace of our transformation within Wood Solutions. The launch of a joint brand will take place in the autumn.

DOORS & WINDOWS
The market for our doors and windows continues to be good and our three manufacturing units are producing at full capacity. The order backlog is currently 4–6 months. Growth in net sales during the first quarter was 25 percent and profitability was good with an EBITDA margin of 11.1 percent. The plan to open five new showrooms during the year is agreed and we are evaluating various possibilities for future expansion.

SAWN WOOD
The market for sawn wood products has continued to be weak during the quarter. On a positive note, the delivery volumes have increased and stock levels are on a downward trend. In general, the availability of raw materials is limited, which holds back the level of production. Despite the improved situation with some positive price adjustments, there is still uncertainty about how the market will develop during the autumn.

Our two sawmills have reduced the production volume and our finished goods stock level is as a result low. Our raw material stocks are satisfactory. However, the price of raw materials remains at relatively high levels. Order intake has improved and we are planning for increased production volumes during the second quarter.

ENERGY & LOGISTICS
Demand for pellets has remained good and we are exiting the season with low stocks. The price for pellets has decreased in line with lower energy prices. Likewise, the mild winter had an impact and the profitability during the quarter was at more normal levels compared to autumn’s exceptionally high margin.

FUTURE PROSPECTS
We expect a certain improvement for sawn and value-added wood products during the summer, but the market development remains uncertain. We are careful to increase our stocks and will regulate production volumes and costs depending on demand. Our door and window business are expected to continue to develop well. In addition, we are fully focused on the work with the transformation of Wood Solutions, where in the coming quarters we will invest in competence, coordination and brand building.

Stockholm, 4 May 2023

Peter Nilsson
President and CEO

FIRST QUARTER (1 JANUARY–31 MARCH)

• Net sales amounted to SEK 715 million (910), a decrease of 21%. The decrease was related to lower sales prices and sales volumes in Wood Solutions and Sawn Wood. Higher sales volumes in Doors & Windows contributed positively.

• EBITDA amounted to SEK 6 million (82), a decrease mainly attributable to lower sales prices and lower sales- and production volumes in Sawn Wood. The results for Doors & Windows and the pellet business were on good levels. The EBITDA margin was 0.8% (9.0).

• Operating profit amounted to SEK –18 million (61), corresponding to an operating margin of –2.5% (6.7).

• Profit for the period amounted to SEK –18 million (63).

• Earnings per share, before and after dilution, were SEK –0.52 (1.82).

• Cash flow from operating activities amounted to SEK –12 million (124), negatively affected by seasonally higher working capital.

• Financial net debt totalled SEK 17 million (130) as of 31 March, corresponding to a net debt/equity ratio of 0.01 (0.08)

• The reporting structure was changed from 1 January 2023 to clarify the Group’s strategic direction. Comparative periods for 2022 has been restated.