Södra 1 January-31 March

Södra's operating profit for the first quarter of 2011 was SEK 378 million (SEK 371 million in the same period last year). Net sales increased to SEK 4,912 million (4,575). Return on capital employed was 15 percent, which is the same as the first quarter of 2010.

"Productivity at Södra is still increasing, and I'm thinking particularly of the employees' suggestions for improvement. During the quarter we've implemented 1,062 improvement suggestions from employees, and total productivity has increased by a further 1.5 percent," said Södra's Group Chief Executive, Leif Brodén.

The pulp market continued to grow steadily in the first quarter of 2011. The price of bleached softwood sulphate pulp continued to increase and at the end of the period, from 1 April, the price was USD 1,010 per tonne. However, the weakening dollar neutralised the price increase in terms of Swedish krona.

Production from Södra's five pulp mills amounted to 522,000 tonnes, compared with 506,000 tonnes in the same period last year.

A pulp line at Södra Cell Mörrum is being converted to produce dissolving pulp for the textile industry. The work is proceeding according to plan. Production is expected to start at the end of the year.

The market for sawn timber products was influenced by a relatively strong Swedish krona and higher raw material prices, which made the saw mills less competitive. In Germany, prices for sawn timber products rose during the winter, but they remained suppressed elsewhere in Europe, not least in the UK and Sweden. After a turbulent period in North Africa and the Middle East, deliveries are now taking place as normal in these areas, with the exception of Libya.

Södra produced 391,000 cubic metres of sawn timber products in the period, compared with 396,000 cubic metres in the same period last year.

During the period Södra decided to close the Södra Timber Åtvidaberg saw mill. This is part of Södra's strategy to improve its competitive position in sawn timber products and to improve the effect of productivity-stimulating investments. As far as possible, employees have been offered new positions within Södra.

The building of a new saw mill with an annual capacity of 750,000 cubic metres at Södra's facility in Värö continues according to plan. The mill should be ready in October 2011. Together with the adjacent pulp mill, the saw mill will use no fossil-based energy in normal operation.

"We're currently experiencing a major imbalance in the market for timber products. However, looking further ahead, we believe demand for sawn timber products will increase. This will be driven by the consumers' need for value-for-money, environmentally-sound materials that are produced in a sustainable manner and that also store carbon dioxide for a long time," commented Leif Brodén.

In the first quarter of this year, the saw mill in Traryd was converted from pine production and now only handles hardwood. This has led to some reorganisation. The saw mill has been transferred to Södra's business area for interior products, Södra Interiör, which now has two hardwood saw mills.

The market for interior products has strengthened during the quarter. Prices are stable and volumes are slowly increasing. Södra Interiör's product range is being supplemented by more products made from Swedish, locally-produced hardwoods. The business area launched four new products during the period.

The price of softwood pulp was raised by SEK 35 to SEK 350 per cubic metre sub (solid under bark) on 1 January. At the end of the period, the price of hardwood pulp was also increased. From 11 April, the price of sorted birch pulp will also be SEK 350/m3sub.

Södra members have continued to certify their forests in accordance with FSC at a fast rate. Currently 1,254,000 hectares of members' forests are dual-certified in accordance with both FSC and PEFC. Some 1,728,000 hectares are certified only in accordance with PEFC.

In March, Södra's first wind power plant was opened. Södra has built six turbines of its own on land that belongs to Södra's production unit in Mönsterås. A further four wind power plants are built on members' land adjacent to the plant. These were built jointly by Södra and the Norwegian energy group, Statkraft. Södra and Statkraft jointly own and operate wind power projects comprising approximately 350 wind power plants.

For further information please contact:
Leif Brodén, CEO and Group Chief Executive, +46 (0)470-89 435
Per Braconier, Director of Communications, +46 (0)70-534 51 66
Mikael Staffas, CFO, +46 (0)70-511 64 97