Dear shareholders,

As we close the books on 2022, we can clearly see that our business model − creating value based on our forest assets − is a successful one. We can also report that interest in owning forest remains high, as reflected in the 11 per cent increase in the value of our forest assets to a little over SEK 52 billion. In light of the solid earnings development and our strong financial position, the proposal is to increase the ordinary dividend to SEK 8 and to pay an extra dividend of SEK 8.

The transition to a sustainable world

Although we are seeing rapid advances in renewable energy, only a small proportion of the world’s energy comes from sustainable sources. Looking back over the past 50 years, the world’s energy consumption has tripled, and this increase in demand has almost exclusively been met using fossil fuels. Russia’s invasion of Ukraine has highlighted just how damaging our dependence on fossil energy sources can be, not only for the climate, but also for the economy and security policy. To wean us off this dependence, Europe needs to restructure its energy supply. This means not only that we need to produce more fossil-free electricity, but that we must also electrify substantial elements of industrial production, heating and transport.

Renewable electricity production

With a fossil-free energy system and opportunities to increase renewable electricity generation, Sweden is well placed to lead the development of next-generation, fossil-free industrial processes. Recent initiatives concerning everything from green steel to batteries are concrete examples of companies beginning to turn words into action. With our controllable hydro power, we can play our part in supplying the growing industry with green electricity when it is most needed, while at the same time helping to stabilise an increasingly weather-dependent electricity system. In 2022, we increased our capacity for renewable energy production by 40 per cent with the commissioning of Blåbergsliden Wind Farm and the acquisition of Varsvik. There is also significant potential to develop more wind power on our own land, but this is reliant on permit application processes that are currently protracted and unpredictable.

Sustainable building

The real estate sector accounts for over a third of Europe’s carbon emissions, something that the major construction companies have begun to acknowledge as they set targets to make the whole value chain fossil-free. The main challenge is that making the dominant construction materials, cement and steel, sustainable is both costly and difficult. Wood offers a renewable alternative that is more than just fossil-free. In contrast to cement and steel, it is also energy-efficient to produce, and it stores carbon in the buildings. This makes the market prospects for wood very good, not least when fossil construction materials are made to carry their true cost to the climate. Through the acquisitions and investments of recent  years, we have expanded our wood products business while at the same time shifting ourselves forward in the value chain. We are currently investing in the expansion of Iggesund Sawmill, and in higher volumes of products for large-scale construction. With a strong position in the wood market and well-invested sawmills, we have a platform for continued growth for many years to come. 

Fossil-free paper and paperboard

We grow forest with a view to building houses. When we saw the wood, whatever is left over is used in our paper and paperboard mills, where wood chips and shavings are topped up with the trees that are too narrow to become construction material. With a secure and largely fossil-free energy supply, we provide the market with climate-smart products − a winning concept in light of the energy and raw material shortages that have hit competitors on the continent. Our paper business is performing strongly against the competition, with interesting opportunities also opening up in the packaging area. On the paperboard front, we are now accelerating the pace of investment over a five-year period in order to drive up sales to our customers in the premium segment.

Managed forest generates climate benefits

The world’s forests absorb increasing amounts of carbon dioxide every year, but this increase only occurs in the forests that are actively managed. We have long combined active forestry with preservation of biodiversity, and we are seeing this bear fruit with a increasing volume of standing timber and larger harvests from healthy ecosystems. Our growing volume of standing timber contributes to a better climate by sequestering carbon, but the main benefit comes when we are able to increase the production of wood products, paperboard and paper to replace fossil alternatives, while at the same time keeping the carbon stored in the buildings. In 2022, our combined operations contributed towards a climate benefit of 7 million tonnes CO2e, equivalent to 15 per cent of emissions in Sweden. With our large forest holdings as a foundation, we grow houses while also harnessing the energy that blows over the treetops and flows in the rivers. We then make renewable packaging, magazines and books from what is left over from forestry. Our strong financial position makes us well equipped to exploit the opportunities opening up in a world that is working towards a sustainable society in a time when both raw materials and energy are in short supply

Stockholm, 20 February 2023

Henrik Sjölund
President and CEO