European Forestry Pulse #105 🌲

Hello,

Nordic earnings season just opened. The first result is a loss. But the number that matters is the one Södra almost buried.

One forest sale made the half-year look softer than it was. Let me show you.

Here's what's moving European forestry this week:

Södra reported its second-quarter results on 20 July. Södra is Europe's largest forest-owner cooperative. It has 52,092 member owners.

The quarter was a loss. Operating result came in at SEK −424 million. That is slightly worse than the same quarter last year (SEK −389 million).

Net sales fell to SEK 6,947 million, from SEK 7,193 million a year earlier. The operating margin was about −6%.

All four business areas lost money. The sawmill arm alone lost SEK 215 million in the quarter.

Now look closer, and read carefully.

In the first quarter, Södra sold a Baltic forest holding. The buyer was Ingka Investments, the IKEA owner. The price was €720 million. The sale booked a one-off gain of SEK 1,473 million.

That gain flattered the reported half-year. Strip it out, and the two quarters together show an underlying operating loss of about SEK 1 billion. That is a Q1 loss near SEK 580 million, plus the Q2 loss of SEK 424 million.

This is the ForestryBrief point of the week. The bottom line is not always the business. Read past the one-offs.

The cause is simple. Demand for sawn timber, pulp and CLT stayed weak. The cost of the wood feeding the mills stayed high. That gap is a margin squeeze.

We saw it building. Södra cut the wood prices it pays members in June (EFP #99). Central European mills were told to cut deeper (EFP #102). This result is the same story, now in one company's accounts.

But note what did not break. Södra sold a forest holding for a large gain. Forest land held its value. The co-op is managing the cycle, not sinking in it. The land is still worth a lot. The processing margin is the problem.

And the timing matters. Three more majors report within 48 hours. SCA reports on 22 July. Stora Enso and UPM both report on 23 July. By Thursday we will have four reads on the same squeeze.

If you sell logs: The June price cut and these mill losses tell you one thing. Buyers have no margin to pay up right now. Time your sales with that in mind.

If you invest in forest companies: Read past the headline. A one-off land sale can mask an operating loss. Check the underlying operating result, not just the bottom line.

If you process wood: You already feel it. Discipline beats volume this summer. Sources: Wood Central — Södra loss hits 424 million kronor as wood costs outpace prices | Södra — Financial information

Canfor will permanently close its Northwood pulp mill in Prince George, British Columbia. It announced the decision on 14 July.

The closure removes about 300,000 tonnes of NBSK a year. NBSK is northern bleached softwood kraft, a benchmark pulp grade. About 300 employees are affected. The wind-down runs to late Q4 2026. Canfor pointed to global pulp oversupply and falling prices.

Why it matters: NBSK is priced on a global market. Capacity leaving anywhere tightens that market — and European buyers and sellers price off it too.

The takeaway: If you sell pulpwood or buy market pulp, watch global NBSK supply. Closures are how an oversupplied market clears. Source: Canfor announces closure of Northwood pulp mill

The EU has extended its CITES Annex D to cover three more tropical hardwood groups. They are Shorea, Anthoshorea and Entandrophragma species. Entandrophragma covers Sapele, Sipo and Utile.

Annex D is an EU watch list. Importers must file an import notification with customs when these woods enter the EU. It applies to logs, sawn wood, veneer and plywood.

Why it matters: This adds a paperwork step for anyone importing these popular hardwoods. Miss it, and shipments can stall at the border.

The takeaway: If you import Sapele, Sipo or Utile, add the Annex D notification to your customs process now. Sources: ATIBT — EU extends Annex D to Entandrophragma, Shorea and Anthoshorea | Council of the EU — amendment to the Annex of Regulation (EC) No 338/97

A new EU limit on formaldehyde from wood panels takes effect on 6 August. The cap drops from 0.124 to 0.062 mg/m³ — a halving.

The rule sits inside REACH, as Commission Regulation (EU) 2023/1464. After 6 August, non-compliant panels cannot be placed on the EU market.

Why it matters: Panel makers and importers must clear old, non-compliant stock before the date. Product sitting in a warehouse still counts.

The takeaway: If you make or buy wood panels for the EU, check your stock against the new 0.062 mg/m³ limit this week. Source: Fraunhofer WKI — EU-wide regulation of formaldehyde limits from 6 August 2026

On 16 July, the Administrative Court of Cologne ruled on a teak-import test case. It dismissed the claim.

An environmental group — the Deutscher Naturschutzring (DNR), with WWF Germany support — had asked the court to force Germany's food-and-agriculture office (BLE) to declare a teak import illegal. The wood, from Myanmar, was used on the navy training ship Gorch Fock. The court held that an environmental association has no legal right to demand that official ruling.

Why it matters: The case tested how far groups can push a national authority to act on EU timber-legality law. The same authority, BLE, enforces the EUDR from December.

The takeaway: Enforcement still runs through the competent authority, not private lawsuits. Know who your national authority is before December. Sources: WWF Germany — Holz der Gorch Fock vor Gericht | urteile.news — VG Köln, case 13 K 2956/22

Read past one headline number this week. It takes 15 minutes.

Södra's half-year looked cushioned by a forest-sale gain. The business under it still lost about a billion kronor. The number under the number is the one that matters.

The next time someone asks why you cut trees, you'll have thirty seconds to answer.

Right now — what do you say?

If the answer isn't ready, the Playbook is.

Södra's headline was cushioned by a one-off land sale. Reading what a number really says is a skill. That is the skill this book builds.

I wrote the Forest-Investment Dictionary with Danish forest economist Anders Tærø Nielsen. It has 151 pages, 11 chapters, 14 printable tools, and 3 calculators. Investors learn to read a forest. Foresters learn to read a term sheet.

When the market turns, the people who can read the numbers make the better calls. The price is €99. Get yours below.

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Until Thursday!

Wish you all the best: Peter

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