Södra, 1 January - 31 December

Income statement, MSEK	2010	2009
Net revenue	19,727	16,696
Operating profit	2,271	593
Financial income and expenses	61	69
Profit after financial income and expenses	2,332	662
Cash flow after investments	1,381	1,438
Return on capital employed, per cent	23	6
Equity ratio, per cent	61	58
Productivity increase, per cent	3.4	1.7

           
Södra's business areas, 1 January - 31 December  

MSEK	Net revenue		Operating profit
	2010	2009	2010	2009
Södra Skog	10,186	8,723	56	29
Södra Cell	11,310	9,601	2,224	406
Södra Timber	4,250	3,442	129	119
Södra Interiör	1,174	935	30	0
Other, eliminations	-7,193	-6,005	-168	39
Total	19,727	16,696	2,271	593

In 2010, Södra's net profit increased by SEK 1,670 million compared with 2009 to SEK 2,332 million. Net revenue increased by SEK 3,031 million to SEK 19,727 million. The increase in profit and sales is the result of improved prices, greater productivity and good volumes. Return on capital employed increased to 23 per cent, compared with 6 per cent in 2009.

"I'm particularly pleased that we continued to increase productivity in the association in a year like this. We've implemented 3,867 (3,472) improvement suggestions from employees, and our total productivity has increased from 1.7 to 3.4 per cent," said Group Chief Executive Leif Brodén.

The pulp market has been strong all year, and this also applied in the fourth quarter. Gross price nationwide was SEK 6,689 (4,917) per tonne on average. Production increased to 2,012,000 (1,875,000) tonnes, and stocks were 152,000 (140,000) tonnes on 31 December.

At the end of the year, Södra decided to invest in the production of textile pulp in Södra Cell Mörrum. This is a new chapter for Södra, which is producing pulp for the textile industry for the first time. The pulp mill in Mörrum will be able to produce 170,000 tonnes of textile pulp based on hardwood each year.

The market for sawn timber products weakened towards the end of the year. In order to keep stocks down, Södra shut down production during the Christmas and New Year holidays 2010/2011.

During the year, a decision was made to set up a new sawmill in Värö and work is progressing according to plan. Production is expected to start in the third quarter of 2011.

"We're very positive about the long-term development of the timber market. Our confidence is supported when we look at the construction sector in Europe and USA, which is still below average, but at the same time wood is being increasingly used in construction," says Leif Brodén.

The market for interior products strengthened towards the end of the year. Prices are stronger and volumes are slowly increasing.

After increasing by nearly 50 per cent from autumn 2009 to the end of June 2010, timber prices fell during the fourth quarter as an effect of the saw mill recession. Good supply of cellulose chips meant that the pulp wood market was in balance, in spite of relatively low pulpwood stocks. Pulp wood prices increased gradually during the year and were increased again just before Christmas by a further SEK 35 to SEK 350 per cubic metre (m3sub) softwood pulp.

The membership area increased during the year by 20,000 hectares to a total of 2.37 million hectares. In 2010, Södra Skog handled a total of 16.6 million m3sub timber raw material, which is an increase of 25 per cent compared with 2009. During the year, Södra Skog increased delivery of biofuel by 16 per cent to 4.3 TWh.

"2010 was a strong year. But at the same time we know that we're influenced by global market prices over which we have no control. If we are to compete long-term, we must continue to work with what we can influence, and that is to improve our productivity," says Leif Brodén.