European Forestry Pulse #60 🌲

Hello,

Four of the biggest names in Nordic forestry reported results last week. All four processors lost money or saw profits shrink.

Then Tornator, a company that owns forests instead of processing wood, announced record profits.

That contrast tells you something important. The companies cutting trees and selling wood earned less. The company owning the trees earned more than ever.

For European forest owners, this is worth paying attention to.

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

The quarterly results from Scandinavia's biggest forest industry companies are in. The pattern is clear. Processing wood is getting harder. Owning forests is getting more valuable.

Metsä Group: €85 million loss. Finland's largest forest industry group posted a comparable operating loss of €85 million for 2025. Pulp and paperboard markets stayed weak. Prices fell. The company's massive Kemi bioproduct mill ramp-up added costs without matching revenue yet.

UPM: Profit down 25%. UPM reported its 2025 comparable EBIT fell 25% to €921 million, with sales down 7% to €9.656 billion. Lower prices hit hard. Higher pulp delivery volumes and capacity closures helped but couldn't offset the price pressure.

SCA: Weaker Q4. Sweden's SCA reported a weaker fourth quarter. Lower selling prices and negative currency effects outweighed higher delivery volumes across the period.

Billerud: European headwinds. Billerud reported continued challenges in Q4 2025. High supply levels in European markets and depressed carton prices weighed on results.

Now the contrast.

Tornator: Record results. Tornator achieved its best year ever. Revenue hit €232 million, up 9%. Operative operating profit reached €168 million — a new record. The driver? Rising wood prices and well-planned timber sales. Tornator's forest holdings now exceed 800,000 hectares (approximately 819,000 ha) across Finland, Estonia, and Romania. It doesn't process wood. It grows and sells it.

Why this divergence matters: The gap between processor and owner results reveals where value is moving in the supply chain. Processors face rising costs, weak demand, and overcapacity. Forest owners benefit from the one thing that remains scarce: the trees themselves.

The structural picture: European wood processing capacity expanded in recent years. New mills came online. Existing mills upgraded. But end-market demand — construction, packaging, paper — stayed flat or fell. That creates a squeeze. Too many mills compete for the same wood, pushing stumpage prices up. Good for forest owners. Bad for processors (see our previous reports on resulting mill-closures).

What this means for you: If you own forests, your asset is appreciating. Stumpage prices are rising because processors compete for wood supply. That competition won't stop soon. The new mills need feedstock.

If you process wood, margins will stay tight until demand recovers or overcapacity corrects. Neither looks imminent.

The investment signal: Tornator's record results explain why companies like Ingka Group (IKEA's parent) are buying forests. We reported last issue that Södra sold its entire Baltic portfolio to Ingka for €720 million. IKEA wants to own the supply, not just buy it. Forest ownership is becoming a strategic asset class again. The Nordic results prove why. Sources: Metsä Group Financial Bulletin | UPM Financial Statements Release 2025 | Tornator 2025 Results | Lesprom - UPM EBIT -25% | Fordaq - Billerud | Fordaq - SCA

Metsäliitto Cooperative increased its ownership in Metsä Fibre by acquiring a 5.1% stake from Japan's Itochu Corporation. The deal closed on February 4.

What happened: Itochu has been a long-term minority shareholder in Metsä Fibre, the pulp-producing arm of Metsä Group. This transaction brings more ownership back to the Finnish cooperative.

Why it matters: Metsäliitto represents Finnish forest owners. Buying back foreign stakes concentrates control closer to the people who supply the wood. It's a strategic move during a weak pulp market — buying when prices are low.

The bigger picture: Japanese trading houses have held stakes in Nordic forest companies for decades. This buyback signals that Finnish cooperatives see more value in full ownership than in foreign partnerships during a downturn.

The takeaway: When a cooperative buys back shares during a loss-making year, they're betting on long-term value. Forest owners in the cooperative benefit from tighter control over their value chain. Source: Fordaq

China imported 31.39 million cubic metres of logs in 2025. That's 13% less than 2024. The value fell even more — down 22% to USD 4.814 billion. Average prices dropped 10% to USD 153 per cubic metre.

Why it happened: China's construction sector remains in a deep slump. Property development — the main driver of log demand — hasn't recovered. Fewer buildings mean less wood.

The Nordic connection: Wood Resource Quarterly reports that Nordic lumber exports are declining. While Scandinavian producers loose ground, Russia is increasing its share of the Chinese lumber market.

European impact: When China buys less, global log supply backs up. Some of that surplus flows into European markets. More supply plus weak demand equals more price pressure.

The takeaway: Don't expect Chinese demand to rescue European timber prices in 2026. The world's largest wood importer is still shrinking its purchases. Source: Global Wood Markets Info | GlobalWood / Wood Resource Quarterly

A new European Central Bank discussion paper on natural capital economics found that privately owned forests have 9% lower biodiversity than publicly managed ones.

The finding: ECB economists modelled natural capital alongside labour and manufactured capital. They found that private firms conserve biodiversity to sustain their own production. But they consistently underinvest compared to what society needs.

Why it matters for forest owners: This finding will feed policy discussions. Expect it to appear in arguments for more regulation of private forests. Environmental groups will cite it. Policymakers will reference it.

The other side: Private forests produce most of Europe's timber. They employ people. They generate tax revenue. Lower biodiversity doesn't mean zero biodiversity. Context matters.

The takeaway: This paper gives ammunition to those who want stricter rules for private forest owners. Be ready with your own data. Document what your forest provides. Biodiversity surveys, species lists, habitat management — evidence beats assumptions. Source: ECB Discussion Paper

On February 3, the European Commission adopted its first certification methodologies for permanent carbon removals under the Carbon Removal Certification Framework (CRCF).

What got approved: Three types of permanent carbon removal now have official EU certification methods. Direct Air Capture with Carbon Storage (DACCS). Biogenic emissions capture with storage (BioCCS/BECCS). And biochar carbon removal.

What didn't get approved: Forest-based carbon farming. The specific methodologies for carbon storage in forests and long-lived bio-based products will come later in 2026. They're planned, not adopted.

The timeline: The three approved methodologies now enter a two-month review by the European Parliament and Council before becoming official.

What this means for you: If you're a forest owner exploring carbon credits, the EU framework is coming — but not yet. The permanent removal methods (industrial capture, biochar) move first. Forest carbon methodologies follow later.

The strategic point: This confirms the EU is serious about carbon removal certification. Forest owners should prepare now. When the forest methodologies arrive, early movers will have an advantage. Source: EU Carbon Removal Certification Framework | Climate Policy Database - CRCF | Senken Explainer

New research published January 27 shows that fast-growing, naturalized tree species are increasingly dominating future forests across Europe.

What the study found: Species that were introduced to Europe but have naturalized — meaning they grow and spread without human help — are outcompeting native trees in many areas. Climate change accelerates this. Warmer conditions favour fast growers.

The AI challenge: Many forest management AI models assume historical species distributions will hold. They don't. The models that predict which tree to plant where need updating. Training data based on what grew in the past may not reflect what thrives now.

The practical angle: Forest managers making planting decisions should consider which species actually perform best today. Not just which were traditionally used. Site-species matching needs to account for changing conditions.

The takeaway: Your next generation of trees will grow in a different climate than today's forest. Plan accordingly. Test assumptions about species choice against current data, not historical habit. Source: Phys.org research publication

February 12–14, 2026: For Wood — Prague, Czech Republic

February 19, 2026: EU Carbon Farming Consultation deadline (last chance!)

February 24–27, 2026: DACH+HOLZ International — Cologne, Germany

March 4–5, 2026: RFSI Europe — Brussels (regenerative investment)

March 11–12, 2026: FEA Global Softwood Log & Lumber Conference — Vancouver

March 17–19, 2026: Wood Tech Expo — Warsaw, Poland

April 30, 2026: EUDR simplification review deadline

Check where your wood actually goes after it leaves your forest.

The Nordic results show a clear split. Processors are losing money. Forest owners are making more. But do you know who buys your wood — and how healthy their business is?

Fifteen minutes of supply chain awareness:

Tornator's record profits came from rising stumpage prices. But those high prices depend on multiple buyers competing. If one buyer dominates your area — and they're struggling — your prices could fall fast.

Knowing your buyers' health protects your own.

The best time to find alternative buyers is when you don't need them. Because when you do need them, it's already too late.

Until Tuesday!

Wish you all the best: Peter

P.S. What’s the biggest challenge you’re facing in forestry right now?
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