As a forest owner, you naturally want the highest possible return on your forest. Deliver to Södra, and you'll get money now and topped up again next year. And the year after that. And the next. With the Södra model, you receive dividends on the value your raw material generates in Södra’s industrial operations.
The Purpose of the Södra Model
The purpose of the model is to reward those members who participate in the association's activities by delivering their raw materials to Södra over the long term. The profit-sharing offers you a return both on the timber you delivered last year and the investment capital you contributed. This way, the value of the timber you sell to Södra continues to grow year after year, long after the timber payment has been made.
How the Södra Model Works
Södraʼs assignment is to refine and renew family forestry, and profitability is an important part. When you sell your forest raw material to Södra, it is taken care of and processed in our own mills. It is used to make renewable and climate-smart products – timber, pulp, building systems, liquid bioproducts and energy – that are sold in global markets.
The aim is that half of the profit generated by our mills will be used for investment and development to keep Södra financially strong and ensure continued growth. A well-invested and competitive industrial operation is essential for securing markets for members’ forest raw material.
But the profit is not only used for investment. The cooperative form of ownership also means that members share the profit, in addition to the profit from their forest estates. Over a business cycle, you and all the other members of Södra share half of the profit generated by our mills. We call this Södraʼs financial model, or the Södra Model.
First Part: Wood sales
(numbers refer to the model above)
1. Basic price wood
Södraʼs wood prices are aligned with the market and governed by the supply of forest raw material and demand from our mills.
2. Wood Premiums
A range of premiums can be added to the basic price, including:
» Certification premium for certified wood (PEFC and FSC®) 1)
» Size premium for large harvesting operations
» Availability premium for harvesting operations where forest roads and forest land have good bearing capacity
» Market premium in strong market conditions
» Nature conservation premium.
3. Contribution deduction
Contributions are paid into your contributed capital via deductions from your wood deliveries. We call these paid-up contributed capital. Four percent is deducted from the payment for your deliveries during the year. You can choose to limit the deduction to two percent. The mandatory contributions are bound to the association until the membership ceases.
Subsequent years: Profit distribution
As a member of Södra, you share the created profits. Decisions on profit distribution are made by the Annual General Meeting after each business year. The distribution is done through dividends on investment capital and the wood deliveries you as a member have made during the year.
Profit sharing consists of three parts:
4. Dividend on wood deliveries
Paid as a percentage of the value of your wood deliveries that were measured in during the preciding year (basic price + wood premiums).
5. Dividend on contributed capital
Paid as a percentage of your contributedcapital (both paid-up and issued) at year-end.
What is contributed capital?
Contributed capital is the risk capital that you as a member invest in the association. It belongs to you but is used by the association to finance operations as long as you are a member. You can also trade contributed capital. If you leave Södra, you are entitled to a repayment of the contributed capital.
6. Bonus issue
Profit in Södra transferred to your contributed capital that makes it grow. Calculated as a percentage of the paid-up contributed capital at year-end and becomes issued contributed capital.