Group targets and strategy

Mission

On behalf of more than 53,000 owners, Södra’s mission is to promote the profitability of their forest estates, and to secure markets for their forest raw material. This mission also includes promoting high-yield and valuable forest production combined with nature conservation and cultural considerations, and monitoring and promoting its members’ business policy interests, particularly in regard to property ownership rights.

Articles of association for Södra

Group-wide targets

​​Södra’s overarching objective is to be an even more sustainable, profitable, innovative and resource-efficient growth company by 2025. Our success will be based on long-term profitability and a strong financial position. That will enable the development of our business and the distribution of profits to our owners.

Financial targets:

• ​The aim is to generate value for our members. Realisation of the strategy will improve our cost and capital efficiency. The long-term consolidated return on capital employed should be at least 10 percent.
  
  
• The financial position should be strong enough to provide the flexibility for making long-term business decisions. The long-term equity ratio should be at least 55 percent.
  
  
• Decisions on profit distribution should be based on an assessment of the Group’s profitability, investment plans and financial position. Overall long-term profit distribution should correspond to at least 50 percent of profit before tax.

Sustainability targets:

• Södra’s production will be fossil-free by 2020, and Södra’s transportation will be fossil-free by 2030.
• In 2050, the annual rate of forest growth on Södra members’ estates shall be 20 percent higher than 2015.
• Södra has a zero accident vision and by 2020, the lost-time accident rate will have declined 15 percent.

Sustainable Group Strategy

Södra’s Group-strategic focus until 2025 is to create profitable and sustainable growth in an ever-changing world. We will continue to develop our existing products, but also increase our focus on processing, innovation, resource-efficiency, our customers and market and maximise value from digitisation. All future growth should be profitable and sustainable with climate-smart solutions along the entire value chain – from forest to customer.

Profitable growth

Growth is essential for generating long-term value and Södra needs to grow in order to evolve and be competitive, but not at the expense of profitability. The growing stocks of Södra’s owners are increasing due to responsible Swedish forestry, as a result of replanting, proper care and long-term management. Södra therefore has access to large supplies of raw material that require markets.

At the same time, market demand for Södra’s existing products is growing. A key component of increased profitability is greater efficiency and better utilisation of joint resources.

Stable and flexible

The ability to remain profitable in an ever-changing business environment requires an organisation that is both stable and flexible. Stability is required to meet the impact of external factors. Flexibility is required to enable continued adaptation, to meet negative external changes and to offensively leverage positive trends.

Södra is already a stable company but the aim is to further strengthen stability and flexibility during the strategy period.

Sustainable and resource-efficient

Sustainability – economic, social and environmental – permeates the strategy and shall be an integral part of business decisions in order to realise value across the operations. As part of this process, the focus on resource-efficiency and on maximising the value generated by of our existing raw material will increase.

This will take place by making full use of residue flows from forestry and our sawmills and pulp mills (such as processing) and by utilising and contributing to circular value chains (such as our OnceMore™ solution). Södra will intensify these efforts in order to achieve a higher rate of resource utilization.

Customer and market focus

Part of Södra’s growth strategy is to strengthen our customer and market focus, to manage a range of external trends, both challenges and opportunities, to continue leading sustainability efforts as an integral part of our business, and to increase the level of digitisation in the organisation. During the strategy period, the aim will be to increase our understanding of consumer needs and the steps that are closer to end customers in the value chain.

Maximise value from digitisation

Digitisation enables profitable growth and builds flexibility in an ever-changing world. During the strategy period, Södra will work actively with digitisation as a tool for further increasing the Group’s productivity and accelerating the further strengthening of our competitiveness.

​New products and innovation

Södra’s product portfolio mostly comprises high-volume products, such as pulp and sawn timber. Innovations in existing product areas and increased processing are important for the development of our customer offering.

At the same time, innovation is a priority for the development of applications for forest owners’ raw material. Commitment to efficient commercialisation of new products with clear commercial potential will increase. Södra’s ambition is to strengthen its position in the bioeconomy with innovative products and solutions.