Södra's operating profit for 2012 amounted to SEK -929 million (SEK 1,005 million in 2011). Profit after net financial items amounted to SEK -919 million (SEK 883 million in 2011). Net sales fell by SEK 1,384 million to SEK 16,807 million, primarily as a consequence of a major economic downturn with declining markets for Södra's products and strengthening of the Swedish krona. The reported results also include non-recurring items.

• Forest activities were reduced as a consequence of lower production in the industry.
• Production ceased at Södra Cell Folla in November. This mill has been in Södra's possession since 2000.
• A savings programme has been implemented in order to handle the recession, and the aim of this is to reduce the Group's fixed costs by 10 per cent. The measures undertaken included notice of layoffs in the autumn, resulting in 232 jobs being lost.
• A decision has been made to phase out Södra's involvement in Södra Cell Tofte.

2012 was characterised by very weak development in the markets for Södra products. Net sales fell, mainly as a result of lower pulp and timber product prices and the strengthening of the krona. Production at Södra's industries was also affected by the stoppages which took place at the start of the year.
 
Comments on the results from Acting CEO and Group President Gunilla Saltin:

"We were facing a relatively weak economic situation at the start of the year, and it was hoped that the situation would gradually improve. But the opposite was true. As the year continued, we were affected more and more by the major recession in Europe, which is our primary market. This extremely weak market situation has affected all our business areas," said Gunilla Saltin, Acting CEO and Group President for Södra.

The results reported for 2012 include a number of non-recurring items, such as the costs involved in the closure of Södra Cell Folla and costs linked with organisational changes.

"We hope we will see an upturn in the markets for our products in 2013. The economic situation remains uncertain, but towards the end of the year we were seeing some stabilisation, mainly on the pulp market. The situation remains uncertain for timber products, but we are seeing signs of a certain amount of improvement. We do not think that present exchange rates will be altered to any great extent.

"When it comes to finding a way out of the economic crisis affecting the world economy, this is something our politicians need to do. As far as Södra is concerned, we need to take responsibility for the company and attempt to deal with the prevailing circumstances. This is why we have implemented a series of measures in order to enhance our competitiveness - measures that will take effect over the year.

"Despite the weak results, Södra's equity ratio remains high, amounting to 61 per cent at the end of the year."

Business in 2012
2012 saw the start of permanent production of textile pulp on one of the pulp lines at Södra Cell Mörrum. A total of just under 100,000 tonnes of textile pulp were produced over the year.

Work on the long-term development of energy activities is continuing within the Group. Decisions were made in 2012 to install a new lime kiln and pellet plant at Värö. 

"These investments will allow us to further increase energy efficiency at the Värö plant, while at the same time creating profitable processing of our members' raw timber. We are benefiting from the fact that we have access to raw materials in the form of shavings and the energy to dry the shavings to form pellets, all in the same place," said Gunilla Saltin.

Having spent a relatively long time working on creation of profitability at Södra Cell Folla, where CTMP (chemithermomechanical pulp) is manufactured, Södra Cell made the decision to cease production from November 2012. In December, a declaration of intent was signed between Södra and Mayr Melnhof Karton in which Mayr Melnhof Karton stated its intention to take over the pulp mill and resume production.

Pulp production amounted to 1,782,000 tonnes, compared with 1,912,000 tonnes in 2011. This reduction is explained by the stoppages which took place at the Norwegian mills at the start of the year and the decision to cease production at Södra Cell Folla. 

Production of sawn timber products increased by 18,000 m3 to 1,399,000 m3. Södra Timber's operating profit was affected by lower prices for finished goods, the strengthening of the Swedish krona and the high cost of raw materials. The business was also affected by the fact that the commissioning of the new sawmill in Värö has taken longer than planned. The new plant is expected to reach its intended production level early next autumn, almost a year later than originally planned. 

Södra Interiör's net sales increased by SEK 41 million to SEK 1,281 million. Weak demand combined with price pressure from competing cut-price imports led to a decline in operating profit. 

The affiliated member area at the end of the year amounted to 2.36 million hectares, with 50,888 members. Södra Skog managed a total of 15.6 million m3sub of raw timber, compared with 17.0 million m3sub in the previous year.

Södra suggests SEK 302 million profit share

"2012 saw Södra making massive losses. Despite this, Södra's strong financial position means that we are proposing to the meeting a transfer to members totalling SEK 295 million," said Christer Segerstéen, Chairman of Södra. 

Södra's executive committee made a decision at its meeting on 14 February on the following suggested dividend to be submitted to the Annual General Meeting on 15 May 2013:

Dividend
The following dividend  will be distributed to members:

Contribution issue
SEK 106 million will be transferred to members' deposit accounts through bonus shares. This contribution issue amounts to 10 per cent of outstanding deposited capital contributions.
   
In addition to dividends and a contribution issue, a 5.7 per cent dividend is proposed on debenture contributions, Series D, equivalent to SEK 7 million.

Comments from Chairman Christer Segerstéen

"2012 saw massive losses for Södra, but despite this we are proposing a profit share of SEK 302 million. This is because it is important for Södra's owners to receive returns on their venture capital and wood deliveries," said Christer Segerstéen, Chairman of Södra.

"Adopting a long-term strategy in terms of our dividend will help to make active forestry and active participation in Södra profitable for our members. The Södra model aims to reward the members who choose to supply all their timber to Södra and who therefore participate fully in our partnership. This proposal characterises this principle," said Christer Segerstéen.

"Södra's balance sheet, which has been built up over a number of good years, makes it possible to propose a dividend to our members despite the massive losses we saw in 2012."