European Forestry Pulse #84 🌲

Hello,

Stora Enso publishes Q1 2026 at 08:30 EET this morning.

That is about now.

By the time you finish your coffee, the third leg of the Nordic processor Q1 cycle will be on the wire. SCA reported two weeks ago. Metsä reported a week ago. Today closes the cycle.

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

Two Nordic forest giants have already reported. A third lands today. The pattern across the first two is consistent enough to read as a thesis.

SCA Q1 (published April 24) — covered in EFP #82:

Metsä Group Q1 (published April 29) — covered in EFP #83:

The two reports tell different halves of the same story. SCA is paying for the cycle. Metsä is recovering from the worst of it.

Both are normal in a turning market.

Five questions to keep open as the numbers come in.

1. Is Metsä the outlier or the leading indicator?

Metsä's recovery from −€85 million full-year 2025 to −€4 million in Q1 is dramatic. If Stora Enso shows a similar trajectory, the Nordic mill cycle has found a floor. If Stora Enso looks more like SCA — operating profit cut in half — Metsä is the outlier and the cycle is still running down.

2. What does the hybrid bond cash actually fund?

On April 10, Stora Enso completed two hybrid bond tranches totalling €1 billion. €500 million callable in 3 years at 5.625% (issued at par, fixed until 17 April 2029). €500 million callable in 5.5 years at 5.875% (issued at 99.47, fixed until 17 October 2031). Listed on the Global Exchange Market of Euronext Dublin. Classified as equity under IFRS.

That is a lot of pricey equity-like cash to raise just to refinance. Watch the CFO commentary for hints on what the cash actually funds. Mill modernisation? Acquisition pipeline? Working capital? Each answer points at a different forward strategy.

3. Pulp pricing commentary, not the pulp price

The price index will be in the report. The CEO commentary is what matters. Listen for the difference between "stabilising" and "recovering." Those are not the same word.

4. Operating margin trajectory by segment

Stora Enso runs Forest, Wood Products, Biomaterials (pulp), Packaging Materials, Packaging Solutions. The aggregate operating margin tells you nothing without the segment split. Forest will be strong. Pulp will be weak. The interesting numbers will be Wood Products and Packaging — both leading indicators of construction and consumer demand.

5. Curtailments, closures, restarts

Stora Enso has been reshaping its mill portfolio for two years. Watch the report for any new shutdowns, restarts, or capacity changes. These shape next year's wood demand, not next quarter's profit.

Three messages, depending on where you sit.

If you sell timber in the Nordics or Central Europe: Forest owners are still winning on stumpage. The processor pain is not yet flowing back to log buyers as price reductions. German sawmills tried in mid-April and failed. That holds for now.

If you hold European forest assets in a fund: Today's Stora Enso report will tell you whether the cycle has bottomed or whether 2026 has more downside ahead. A flat or recovering Stora Enso confirms the bottom. A weakening Stora Enso means another quarter of pain.

If you process wood: Watch Stora Enso's commentary on Wood Products demand for European construction signals. The Quick Hit in EFP #79 showed German sawmills failing to push log prices down. Stora Enso's commentary will tell you whether that posture is sustainable. Sources: Stora Enso press page | Stora Enso hybrid bond release | SCA Q1 2026 Interim Report | Metsä Group Q1 2026 release

The European Commission's first delegated regulation under the Carbon Removal and Carbon Farming Regulation (CRCF) enters into force today, May 7.

It covers three permanent carbon removal pathways:

The first transaction under the new framework was already announced. ClimeFi disclosed on March 26 that Nasdaq and Adyen will receive BioCCS removal units from BECCS Stockholm, operated by Stockholm Exergi. The plumbing works.

EU CRCF Days, Brussels, May 20–21. DG CLIMA's first stakeholder convening under the new regulation. This is where certification schemes, project developers, buyers and Member State authorities meet for the first time under the same EU framework.

Carbon farming methodology — expected before summer recess. This is the methodology that matters for European forests. It covers afforestation, agroforestry on mineral soils and peatland rewetting. Public consultation closed February 19. Parliamentary scrutiny is the last gate.

If you are picking a methodology for a forest carbon project this summer, the CRCF carbon farming framework is the new option to weigh against Verra, Gold Standard and the existing schemes.

The choice has consequences. Each methodology determines which buyer pool you can sell to. Picking CRCF first means signalling to corporate buyers that need EU-certified credits for CSRD compliance. Picking VCS or Gold Standard signals to a wider voluntary market. Picking both means more documentation work for parallel registration.

The takeaway: CRCF is real. Permanent removals are live today. Forest carbon farming credits should follow this summer. The European voluntary carbon market is shifting from concept to instrument. Sources: EU Official Journal | European Parliament briefing PE 785.709 | Thommessen legal advisory

On April 28, BTG Pactual Timberland Investment Group (BTG Pactual TIG) announced the final close of its Latin American Reforestation Strategy at US$1.24 billion.

Per Agri Investor and Preqin data, this is the largest known greenfield reforestation and restoration fund closed to date.

That is on top of a separate move twelve days earlier. On April 16, BTG Pactual TIG completed the first close of US$370 million for a new core Latin American timberland strategy. The five-year target for the core strategy is US$1.5 billion in core timberland assets across Chile, Uruguay and Brazil.

BTG Pactual TIG's total global portfolio now stands at about US$7.5 billion.

Two reasons.

Capital signal. When the largest greenfield reforestation fund on record closes at $1.24 billion, institutional investors are voting that scaled forest restoration is now investable. That signal travels. The European institutions running smaller pilot funds — and the FBIA call covered in EFP #83 — are working in a market where the upper bound just moved.

Wood market signal. Eucalyptus pulpwood from Latin American plantations and softwood from European forests are partial substitutes in some pulp and board markets. More LatAm capital deployed at scale means more LatAm wood supply in 2030. That is a long-dated competitive signal European foresters will feel through the next decade — not this quarter.

The takeaway: The European institutional forest investment market is small and fragmented. The Latin American institutional forest investment market just sized one fund larger than most European forest funds combined. The shape of capital is what shapes the shape of the wood market five years out. Sources: BTG Pactual TIG via BusinessWire — final close announcement | ESG Today — fund details and structure | Alternatives Watch — investor breakdown

On February 26, United Bankers' UB Timberland Fund — an alternative investment fund that holds Finnish forest properties — sold 327 hectares of land in the municipality of Vaala to Google.

The 327 hectares was part of a larger Google land assembly. Google bought roughly 900 hectares total in Vaala. 380 hectares from the municipality. 327 hectares from UB Timberland Fund. The land sits near Fingrid's Nuojua substation. Google's stated purpose is potential data centre development.

The sale price was not disclosed.

This is the fund's first land sale for a data centre project, per United Bankers' own statement.

European forestry investment has historically had three exit mechanisms.

Now there is a fourth.

Sell the substation neighbour. Forest land that happens to sit near grid infrastructure, water, and cool air can be worth more to a hyperscaler than to a forest fund. This is not a Finnish-only phenomenon. Sweden has seen similar transactions. So has Ireland.

The fourth exit changes the underwriting calculus. Two years ago, a Finnish forest fund evaluated each parcel on stumpage value, harvest schedule, and resale value to peers. Today, parcels within 25 kilometres of high-voltage substations or major fibre routes have an additional optionality the underwriting models did not include.

If you advise a Finnish or Swedish forest fund: Update your asset-by-asset assessment. Substation distance, fibre proximity and grid capacity are now valuation inputs. Not for every parcel — for some.

If you sell forest land: Know who else might want it. The buyer with the highest reserve price is no longer always another forest fund.

The takeaway: A new exit mechanism has appeared in European timberland investment. It does not apply everywhere. Where it applies, it changes valuation. The early movers will be the funds that update their underwriting before the price gets baked in. Sources: United Bankers Plc — official press release | Data Center Dynamics — Google's 900-hectare Vaala assembly | Inderes — release distribution, English

On April 23, Tornator Plc — Finland's largest private forest owner — published an updated Green Finance Framework. The Second Party Opinion gave the framework the highest possible rating.

The numbers behind the framework matter as much as the rating.

Tornator full-year 2025 (published February 3, 2026):

That is a single private forest portfolio approaching the size of Cyprus.

A Green Finance Framework is the document a borrower uses to issue green bonds. It defines which projects qualify as eligible green expenditure. The rating from a Second Party Opinion provider tells lenders how rigorous the framework is.

For a forest company, the framework is also a strategy document in disguise. Tornator's eligible categories tell you where management thinks the company creates real environmental value — not just where it borrows money cheaply.

The 800,000-hectare milestone connects to the FBIA Theme 3 thesis covered in EFP #83. Tornator is a working example of what European forest aggregation at scale looks like. Three countries. One management platform. Bond-financed.

The takeaway: Tornator did the platform-aggregation thing FBIA wants more of, twenty years before the EIB asked. The companies that learn fastest from the Tornator playbook will be the ones that get the next institutional cheques. Sources: Tornator press release | Tornator full-year 2025 results | GlobeNewswire

Write your own three-sentence Stora Enso forecast before the numbers come out.

It is 09:00 CET as some readers open this. Stora Enso publishes at 08:30 EET. That is 07:30 CET. The numbers may already be out.

Whichever side of 07:30 you are on, do this. Open a blank document. Write three sentences:

Sentence 1. What you expect Stora Enso's Q1 operating result to look like, based on the SCA and Metsä reports.

Sentence 2. Which one of Stora Enso's segments — Forest, Wood Products, Biomaterials, Packaging Materials, Packaging Solutions — will print the strongest result. And why.

Sentence 3. What you would tell a forest-owner client, in plain language, about what this Q1 result means for their stumpage prices in 2026.

Now read the actual report.

The exercise is not about being right. The exercise is about catching what your own assumptions look like when you write them down. Most of forestry decision-making is invisible until something forces it onto paper.

Three sentences. Five minutes. The discipline of writing down what you think before you read what someone else thinks is one of the smallest, most useful habits in this market.

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, you need this Playbook.

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Until Thursday!

Wish you all the best: Peter

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