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October 16, 2019

Swedish Setra reports lower profits on ”increasingly challenging market conditions”

Swedish Setra reports lower profits on ”increasingly challenging market conditions”

Swedish wood products company Setra has reported an operating profit of SEK 95 (287) million for the period January-September 2019. Net sales totalled SEK 3,262 (January-September 2018: 3,325) million. There was an operating loss for the third quarter of SEK -22 (January-September 2018: 54) million, with net sales of SEK 879 (January-September 2018: 966) million.

"We're reporting an operating loss of SEK -22 million, which is SEK 76 million lower than last year. The poorer results are mainly attributable to lower sales prices in combination with higher wood prices and lower production volumes," says Anders Nordmark, acting CEO of Setra.

Since the end of 2018, market conditions have become increasingly challenging. A good supply of timber - spruce in particular - in both Scandinavia and Central Europe, combined with a somewhat weaker growth rate is putting pressure on prices in the wood products market across the globe. There is still a high degree of uncertainty regarding the market trend in the next quarter. Setra's strategic investments are running according to schedule. Construction of our cross-laminated timber factory is in progress in Långshyttan with work set to be completed in the first half of 2020. The new trimming and planing line in Hasselfors will be fully operational in the second half of 2020. Both these investments mean Setra will be able to meet customers' demand for climate-smart, value-added products for the construction sector.

Construction of the first plant for manufacturing pyrolysis oil will begin at Setra's Kastet sawmill in the autumn. Production is being run by the company Pyrocell, which is jointly owned by Setra and Preem. The plant is expected to be operational in 2021.

"We want to increase the value and the climate benefits of our products, which is why we've chosen to focus on the production of bio-oil from sawdust, which is used in the production of biofuels. This will help us contribute to the goal of fossil-free transport in Sweden by 2030," says Anders Nordmark.

Cash flow from operating activities for the period January-September amounted to SEK 125 (January-September 2018: 318) million. The Group's financial position continues to be strong. The Group's net financial debt amounted to SEK 268 (January-September 2018: -120) million at the end of the period, which corresponds to a net debt/equity ratio of 18% (January-September 2018: -8).

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