Södra's interim report for the January-March 2010 period

- The group reported an operating profit of SEK 371 (-52) million for the first three months of the year.

- Profit after net financial items amounted to SEK 382 (-59) million .

- Net sales increased to SEK 4,575 (3,773) million.

- Return on capital employed was 15 percent (neg).

- Profits in all business areas increased compared with the same period last year.

- Increases in the price of pulp and sawn timber products boosted figures.

- The drastic increase in sales of interior products stemmed from the effects of last year's acquisitions.

- Growth in the biofuel business boosted the profits of the forestry business.

- Real productivity grew by 2.1 percent.

The Group Chief Executive's comments

"2010 began with a continued recovery after a year suffering the adverse effects of the recession. Profits were boosted by increased deliveries and higher prices in the pulp and sawn timber products areas."

"In the course of a single year we have gone from the shadow of the recession and the dramatic events it entailed to a position where all our business areas comply with or almost comply with return requirements."

"Although we are not exactly in a boom, we have moved from recession to prosperity."

"Thus together we have navigated from extreme market conditions, which were at their most critical stage this time last year, to the situation today, one of recovery. Inhouse, we continue to focus on those things we can influence: customer care and productivity. It is a matter of some satisfaction to see that real productivity during the period increased by 2.1 percent year on year."

"Staff continue to be deeply involved in the development of new ideas. During the period, we implemented 743 improvement suggestions from Södra employees, which overall corresponded to a SEK 31.1 million improvement in annual profit."

Business areas

Pulp -Södra Cell
Net sales improved by 19 percent compared with the same period last year to SEK 2,615 (2,199) million. Operating profit amounted to SEK 322 (-24) million. Return on operating capital was 18 percent (neg).

The period was characterised by relatively low stock levels and high deliveries. Production increased compared with the same period last year, which was influenced by market-related stoppages at the Norwegian pulp mills. The market also strengthened as a result of the earthquakes in Chile, which reduced pulp supplies.



Sawn timber products - Södra Timber
Net sales improved by 40 percent compared with the same period last year to SEK 956 (684) million. Operating profit amounted to SEK 61 (3) million. Return on operating capital was 10 percent (1).

The long cold winter restrained demand for and also the production of sawn timber products. Price levels have recovered compared with the rock bottom levels prevailing during the recession at this stage last year. There is good demand in Sweden, North Africa and the Middle East. The US market has now stabilised at a low level. Price levels in China have almost doubled in a single year, and are starting to attract the interest of European producers.

Interior products - Södra Interiör
Net sales improved by 46 percent compared with the same period last year to SEK 301 (206) million. Operating profit amounted to SEK 3 (2) million. Return on operating capital was 3 percent (2).

The impact of acquisitions boosted sales and strengthened the position of all Södra Interiör's markets. The Swedish building and construction trade has been thriving despite a long and cold winter. The repairs and extension tax allowance (ROT-avdrag) has had a positive impact on sales. While sales in Sweden and Norway have thrived, sales in Denmark, where the building sector and the building trade are in a period of stagnation, have been considerably poorer.

Södra Skog
Net sales improved by 1 percent compared with the same period last year to SEK 2,325 (2,302) million. Operating profit amounted to SEK 19 (5) million. Return on operating capital was 7 percent (1).

The pulp wood market in Södra's district has been relatively calm, but with a decrease in the availability of deciduous pulp wood. The supply of standing forest timber and timber for delivery has decreased at the beginning of 2010, and there is still intense competition for clear cutting sites. Improved price levels and volumes are boosting Södra Skogsenergi profits.

For further information please do not hesitate to get in touch with:
Leif Brodén, CEO and Group Chief Executive
+46 470 894 35

Mikael Staffas, CFO
+46 470 892 20

Per Braconier, Director of Communications
+46 70 534 5166