Displaying items by tag: södra

The equipment is in place and production has now commenced. Södra’s new pulp mill in Värö was officially inaugurated on Friday 30 September. "We are delighted to announce that production is under way. Our focus in the immediate future will be on ramping up the production rate," said Gunilla Saltin, Business Area President of Södra Cell.

Södra is investing a total of SEK 6 billion (around half a billion USD) to expand for the future. Some SEK 4 billion has been invested in the pulp mill in Värö. The expansion is now complete and will result in an increase in pulp production capacity from today’s 425,000 tonnes to 700,000 tonnes annually. The mill will thereby become one of the world’s largest, most modern and energy-efficient mills for the production of softwood sulphate pulp.

"The expansion is an important part of our strategy and a necessary move if we are to develop our operations. The paper pulp market is growing globally, and we will now have the opportunity to meet this demand and to continue growing together with our customers. We already deliver high-quality pulp to several different customer segments, which we will now be able to develop even further. This expansion will allow us to further strengthen our market-leading position and remain our customers’ preferred supplier," said Lars Idermark, President and CEO of Södra.

Additional services in the forest industry
The investment in Värö is part of Södra’s Group strategy. The expansion is a prerequisite for generating long-term value for Södra’s members and for its pulp customers in the global market.

"The forests owned by Södra’s members provide the company with a stable, sustainable source of fibre which Södra intends to develop to the full to keep pace with customers’ increasing demands. In the short term, the focus is on making sure the startup tonnage is brought up to premium quality as smoothly and quickly as possible," said Gunilla Saltin, Business Area President of Södra Cell.

Södra was founded in 1938 and is the largest forest-owner association in Sweden, with a membership of more than 50,000 forest owners. We engage in modern and responsible forestry, and operate state-of-the-art mills in which we process our raw material. Through value-generating relationships and a long-term approach, Södra is leading the way for the next generation of forestry.

Within the context of Södra's Group strategy, investments and restructuring are now being realised to increase competitiveness and long-term profitability. The results for 2016 will be impacted, and operating profit for the first eight months of the year totalled SEK 553 million (1,660). "Operating profit is in line with expectations, due to lower prices for market pulp and sawn timber, our transition and the change programme," said Södra's CEO Lars Idermark.

Net sales rose slightly to SEK 12,268 million (12,186), while operating profit declined to SEK 553 million compared with an historically high year-on-year operating profit of SEK 1,660 million. Both prices and currencies have shown an unfavourable trend since last year, which affected the results. Earnings were also charged with restructuring costs of SEK 204 million related to Södra Wood, while the year-on-year comparative figures included a positive nonrecurring item of SEK 133 million derived from the sale of shares in Södra Cell Tofte AS.

"With account for prices, currencies and restructuring costs, the underlying operations delivered in line with the preceding year. 2016 is a year of transition for Södra. We are now realising our Group strategy with investments of SEK 6 billion to increase the capacity of our pulp mills, and a major restructure of our sawn timber and interior wood operations," said Lars Idermark.

"In the second four-month period, operations resumed in the mill at Värö after investments of just over SEK 4 billion and in 2017, we will achieve the expected production rate of 700,000 tonnes per year. The new mill will be one of the most advanced mills in the world, and our energy efficiency will continue to improve," said Lars Idermark.

"In sawn timber, we are restructuring and investing to boost profitability and secure long-term competitiveness, which will impact earnings for the second four-month period. Sawn timber is Södra's backbone and vital for promoting the profitability of forest estates," said Lars Idermark.

In the January-August period, operating profit for the Södra Skog business area totalled SEK 60 million (74). The earnings trend was attributable to lower year-on-year margins on field wood volumes.

Operating loss for Södra Wood totalled SEK 316 million (profit: 2). The lower earnings were mainly attributable to restructuring costs of SEK 204 million, but also to weaker prices for sawn timber and an unfavourable currency trend.

Operating profit for Södra Cell totalled SEK 886 million (1,713). The lower earnings were mainly the result of a weaker price trend.

The interim report in brief:

Södra was founded in 1938 and is the largest forest-owner association in Sweden, with a membership of more than 50,000 forest owners. We engage in modern and responsible forestry, and operate state-of-the-art mills in which we process our raw material. Through value-generating relationships and a long-term approach, Södra is leading the way for the next generation of forestry. 

Yesturday the ground was officially broken for the new evaporator and brown stock washing system at Södra’s pulp mill at Mörrum. The investment decision was made in February 2016 and will have several positive effects.

“A ground-breaking ceremony was held today for the new evaporator and brown stock washing system. This investment will enable us to grow with our customers by increasing the production rate for paper and dissolving pulp. The energy balance at the facility will also be improved, which means we can increase our deliveries of district heating and biofuels,” said Stefan Sandberg, Mill Manager.

Caption: Lars Idermark, Södra’s President and CEO, at the ground breaking in Mörrum

Södra’s investment is the second stage of a long-term focus on the pulp mill at Mörrum and brings Södra’s total investment in the facility to SEK 1.7 billion.

Increased production

In addition to investment in a new evaporation plant, the brown stock washing system on the dissolving pulp line will be modernised. The evaporator will raise the production capacity, enabling increased supplies of energy products such as electricity, district heating and biofuels.  This investment will mean that Södra can offer its customers higher volumes of both paper pulp and dissolving pulp, and the expansion will increase the total annual production capacity from 425,000to 470,000 tonnes.

“It is very exciting to be able to make such long-term investments here at Mörrum,” said Mill Manager Stefan Sandberg.

Tuesday’s ground-breaking ceremony took a slightly different turn when Södra’s President and CEO, Lars Idermark, and Mill Manager, Stefan Sandberg, used explosives instead of a spade. They commemorated the start of the project by blowing up a mound of earth.

The ceremony was also attended by Per-Ola Mattsson (Deputy Mayor of the City of Karlshamn), Daniel Wäppling (Chief Executive of the City of Karlshamn), Maria Zimdahl (Segment Executive/Vice President of the Infra Services division at NCC) and Jimmy Lindström (Head of Recycling at Skandinavien Andritz).

The construction project is scheduled for completion by November 2017.

For comments:

Stefan Sandberg, Mill Manager: Tel, +46(0) 454 5550

By 2030, Södra will be completely free of fossil fuels, members’ forests will continue to grow at the same rate as in recent decades and there will be zero tolerance for workplace injuries. These sustainability targets will now acquire the same status as the Group’s financial targets,  Södra’s Board recently announced.

In addition to the three Group-wide targets, there are also 12 specific sustainability targets for various parts of the operations.

“As a Group operating in the green sector, it is important for us to be a sustainability leader. Our operations can offer so many social benefits in the transition to a bioeconomy,” said Södra’s President Lars Idermark. “We are now increasing the tempo by giving these targets the same status as our financial targets.”

“Climate change is a global issue and affects us all. Södra’s targets for fossil-fuel independence and a higher rate of forest growth will help us work strategically with climate change. In this context, however, it is vital to point out that any efforts to increase forest growth shall never take place at the expense of biodiversity conservation, nor compromise the natural features and production capacity of forest land,” added Idermark.

The sustainability targets are the result of a long and thorough process, with a great deal of participation from both Södra’s operations and external influence.

“We invited external stakeholders to participate in some parts of the process, since we believe that this work should be part of a larger context,” said Kristina Altner, Sustainability Coordinator at Södra. “It’s also important that both our customers and other stakeholders are able to voice their opinions.”

The results will be monitored in Södra’s business plans and presented in the Group’s Annual Reports with Sustainability Reports.

Södra’s Board has called these financial targets “long-term”. The percentages for return, equity ratio and profit distribution have not changed. Södra’s financial targets are now as follows:

• The long-term consolidated return on capital employed should be at least 10 percent.
• The long-term equity ratio should be at least 55 percent.
• Overall long-term profit distribution should correspond to at least 50 percent of profit before tax.

Facts – Södra’s sustainability targets

1. 1.Södra’s production will be fossil-fuel-free by 2020, and Södra’s transportation will be fossil-fuel-free by 2030.*
2. 2.By 2050, the annual rate of forest growth on estates owned by Södra’s members will be 20 percent higher than in 2015.
3. Södra will continue to harvest within recommended, sustainable harvesting levels.
4. By 2020, the conservation considerations in final harvesting operations performed by Södra will have an approval level of 95 percent.
5. By 2020, the area assigned by Södra to nature-conservation management will be 3,000 hectares per year.
6. By 2020, Södra will have commercialised three to four products with better sustainability performance than today’s alternatives.
7. By 2025, Södra’s electricity and heating consumption will have declined by at least 10 percent compared with 2015.
8. Södra’s annual electricity generation will exceed its electricity use.
9. By 2020, Södra’s sickness absence rate will not exceed 3 percent.
10. 10.Södra has zero tolerance for workplace injuries and by 2020, the injury frequency rate will have declined 15 percent.*
11. By 2020, at least 30 percent of Södra employees will be women.
12. By 2020, at least 85 percent of employees will recommend Södra as an employer.
13. By 2017, the Supplier Code will be included in all of Södra’s supplier contracts.
14. By 2020, all suppliers holding supplier contracts with Södra will be risk-assessed, and prioritised suppliers will be evaluated under the requirements of Södra’s Supplier Code.
15. By 2020, all of Södra’s investments and transactions will include the consideration of sustainability-related criteria.

*Group-wide sustainability targets

In recent years, the Södra Foundation for Research, Development and Education has distributed SEK 10-12 million per year to new research and development projects.  Pulp grade, conservation values and seed cultivation are now the focus as a further SEK 1.7 million is distributed. To date in 2016, research projects for SEK 4.2 million have been approved.

The mission of the Södra Foundation for Research, Development and Education is to promote research and education of significance to forestry, and forest industry operations, in Southern Sweden. At the most recent Board meeting, support was approved for three new projects. The projects being granted funding comprise relevant and important research and development areas for both forestry and the pulp industry, as well as support for the arrangement of an international conference on seed cultivation.

Projects granted funding

    “Higher pulp yield without additives in cooking,” Elisabeth Brännvall och Anna Jacobs, Innventia AB, Stockholm, SEK 662,000  
    This project is aimed at increasing understanding of the impact of process conditions impact on reactions that lead to carbon dioxide losses during chemical pulp production. The aim is to achieve a higher pulp yield without additives in cooking by controlling the process conditions so that carbohydrate losses are minimised.   

    “Nature conservation management of general consideration in conjunction with first thinning,” Per Westerfelt, the Forestry Research Institute of Sweden, Uppsala, SEK 971,000
    This project will document the need for nature conservation management in accordance with general consideration in conjunction with first thinning as submitted earlier. Furthermore, there will be a study of how conservation values are strengthened by nature conservation management and proposals will be made for future routines regarding nature conservation management in areas of special consideration and edge zones.
     
    "Funding application for the conference project Seed Orchards – The Key to a Sustainable Bio-based Economy,” Thomas Funda, Swedish University of Agricultural Sciences (SLU), Umeå and Curt Almqvist, the Forestry Research Institute of Sweden, Uppsala, SEK 50,000
    The Research Foundation is contributing in this manner to the establishment of an international conference on research into seed cultivation and seed orchards. This conference is scheduled for 2017 and is being arranged by the Swedish University of Agricultural Sciences (SLU) and the Forestry Research Institute of Sweden in partnership.

In recent years, the Foundation has distributed SEK 10-12 million per year to various projects.

Facts
The mission of the Södra Foundation for Research, Development and Education is to promote research and education of significance to forestry, and forest industry operations, in Southern Sweden.
 
The projects that are granted funding include fields of research and development that are relevant and important for both forestry and the forest industry. Since the inception of the Foundation in 1995, some 150 research projects have been awarded grants. The findings of the research projects have been significant both from a social perspective, and for the forest industry.

The Foundation holds four Board meetings per year, at which grant applications are considered.

As of mid-May, Södra has produced 500,000 tonnes of dissolving pulp at its pulp mill in Mörrum. Production started in December 2011 and has increased steadily since then.

“Demand for dissolving pulp for textile purposes is increasing globally,” said Magnus Björkman, Marketing and Sales Director at Södra Cell. “Demand is being driven by population growth and rising prosperity along with a shift toward textiles that offer a more sustainable alternative.”

Wood can be used in many areas and in the production of numerous products. Fibre is the main component and is thus ideal for production on an industrial scale.

“Södra made the strategic decision in 2011 to invest in an additional strong fibre product through the production of dissolving pulp,” said Annica Larsson Ahlstedt, Development Manager at Södra Cell Mörrum. “We have two production lines at Mörrum – one for dissolving pulp and one for paper pulp – which provides us with ample room to grow in the future.”

Replacing synthetic, oil-based fibre with fibre from forest raw material can significantly reduce the greenhouse gas effect. Substantial environmental gains can also be achieved by using forest-based textile fibres instead of cotton.

Sustainability and quality

Södra’s dissolving pulp is entirely traceable to certified, sustainable forestry operations. But quality is also crucial.

“Dissolving pulp from Södra maintains a high standard of quality and is a certified sustainable product,” said Magnus Björkman. “This combination is important to customers.”

Following the company’s recent decision to invest an impressive SEK 1 billion in Södra Cell Mörrum, its production of dissolving pulp is expected to increase even further as of 2018.

Facts:

Södra Cell Mörrum produces dissolving pulp for textile purposes from hardwood and paper pulp from softwood. The mill produces 145,000 tonnes of dissolving pulp for textile purposes and 280,000 tonnes of paper pulp annually, corresponding to a total of 425,000 tonnes.

In February, Södra’s Board of Directors decided to invest SEK 1 billion in the pulp mill at Mörrum. Following this new investment, the mill’s production capacity is expected to total 470,000 tonnes by 2018.

Södra is inviting the capital market to take part and finance investments in Södra’s green industry. It will take the form of green corporate bonds, issued by Södra, to finance energy and environmental investments in the Group’s industry.

“The capital market has shown great interest in investing in Södra, which has a strong history in sustainability leadership. Our pulp mills are virtually fossil-fuel free already and these major investments will further strengthen our environmental performance and increase the production of renewable and green energy from the mills,” said Lars Idermark, President and CEO of Södra.

Södra, which is owned by 50,000 forest owners in southern Sweden, is expanding its pulp production capacity and has an investment programme of some SEK 6 billion in place, in addition to regular maintenance investments. Expansion of the Värö pulp mill accounts for the largest investment, but major investments are also being made in the mill at Mörrum. The investments are two-fold – to increase production capacity, and to make the mills more energy-efficient by installing, for example, condensation turbines and evaporation plants.

The framework for Södra’s green bonds has been reviewed by the Centre for International Climate and Environmental Research Oslo (CICERO), an independent research centre linked to the University of Oslo in Norway. CICERO has given Södra its highest “Shades of Green” rating – Dark Green.

Södra’s first Green Bond, which amounts to a total value of SEK 1 billion, has a 5 year maturity and was priced with a floating rate coupon of three-month STIBOR* +1.60 per cent annually. The Green Bond was issued under Södra’s Medium Term Note (MTN) programme.

SEB acted as lead arranger of the transaction and also served as advisor for the green framework.

*Stockholm Interbank Offered Rate

For questions, please contact:

Peter Karlsson, Interim Chief Financial Officer,
Tel: +46 (0)470 – 890 28

Johan Löfmark, Director Group Treasury,
Tel: +46 (0)470 -  891 35

Södra’s operating profit for the first four months of the year totalled SEK 334 million (941). Sales amounted to SEK 6,239 million (6,243) and the operating margin was 5 percent (15).

“During the first four-month period, the forest economy was slightly weaker year-on-year, particularly in the sawn timber market. While sales and production volumes remained stable, exchange rates and price trends – which contributed to Södra’s historically high operating profit in 2015 – were less favourable. 2016 is a year of transition for Södra, since the effects of the investment programme at the Värö pulp mill will not be fully realised until 2017,” said Lars Idermark, President and CEO.

The Group’s operating profit totalled SEK 334 million (941). The decline was mainly due to a weaker price and currency trend. The preceding year’s result included a nonrecurring item of SEK 133 million related to divestment of the shares in Södra Cell Tofte AS.

Operating profit for the Södra Skog business area totalled SEK 33 million (41). The lower result was mainly due to a lower rate of harvesting in Södra’s own forests, both in Sweden and the Baltic countries.

Operating loss for Södra Wood totalled SEK -107 million (profit: 22). The negative result was due to weaker prices for sawn timber and less favourable exchange rates. Steps are being taken to improve profitability.

Operating profit for Södra Cell totalled SEK 466 million (968). The lower result was mainly due to unfavourable price and currency trends.

 For questions, please contact:
Annica Gerentz, Senior Vice President Corporate Communications
Tel: +46 (0)470-894 81

In February 2016, Södra’s Board of Directors decided to invest SEK 1 billion in a new evaporator and modernisation of the brown stock washing system in the dissolving pulp line, where textile pulp is produced.  Södra is now awarding ANDRITZ Oy, a subsidiary of the international technology Group ANDRITZ, the contract to supply the evaporator. 

Södra is growing together with its customers. During the 2014-2020 strategy period, Södra Cell Mörrum will gradually begin to offer larger volumes and increase production capacity from 380,000 tonnes to 500,000 tonnes, of which 200,000 tonnes will consist of high-quality dissolving pulp.

On 18 March, Södra awarded ANDRITZ Oy, a subsidiary of the international technology Group ANDRITZ, the contract to supply a new evaporation plant for the pulp mill in Mörrum. The start-up is planned for the fourth quarter of 2017.

“We are looking forward to increasing the volume of Södra Cell Mörrum’s leading-edge products. Together with Andritz, we will build a highly technological evaporator that not only reinforces the energy efficiency of our pulp mill, but also strengthens and improves the process as a whole,” said Stefan Sandberg, Mill Manager, Södra Cell Mörrum

A new evaporator will make it possible for Södra to increase its production rate while also enabling larger deliveries of energy products, such as electricity, district heating and biofuels. The new investment will increase production capacity by 45,000 tonnes, bringing the total production of paper and dissolving pulp to 470,000 tonnes.

The new 7-effect evaporator represents an important step in Södra Cell Mörrum’s strategy plan to expand its production capacity. The evaporation plant will produce lye with a high content of dry solids, and replace the existing evaporation lines while considerably improving the energy efficiency of the mill. This will lead to a significant energy surplus at the mill, in turn enabling increased energy supplies.

Read more: major investment in Morrum

For further comments:
Stefan Sandberg, Site Manager at Södra Cell Mörrum,
+46 (0)70-638 78 78

Following a period of downward price pressure last year, the softwood pulp market stabilized in early 2016 and the outlook is now improving. As a result, a number of global price initiatives have already been announced.

"We know from experience that the spring is typically characterized by stronger demand than the start of the year, and that this is also a time for maintenance stoppages in Europe. That's why we anticipate that the market will tighten even further", said Magnus Björkman, President of Södra Cell International.

In the expectation of a stronger global market and solid demand, Södra will increase its market price for NBSK deliveries in Europe to USD 810/tonne, effective from April 1st 2016.

For further information, please contact:
Magnus Björkman, President of Södra Cell International,
+46 70 265 75 22

Henrik Wettergren, Sales Director Europe,
+46 73 069 70 12