Sweden's Setra attributes Q1 operating loss of 43M Swedish Kronor to higher raw material costs, lower prices for finished products
April 26, 2011
– First quarter 2011:
“Setra reports an operating loss of SEK 48 million (+15) for the first quarter of 2011. The negative earnings for the period are mainly explained by the unfavourable relation between raw material prices and market prices. Even though raw material prices started moving downwards to some extent during the period, this was insufficient to match the market’s ability to pay. The final month of the quarter showed positive figures, however, mainly due to high production and delivery levels.
The political events in North Africa have mainly affected sales of redwood products, with reduced volumes to some countries including Algeria and Egypt. Towards the end of the quarter, shipments reached high levels once again although there is still some way to go before a normal level is reached. Strategic work has started designed to further streamline our core business and concentrate operations geographically to central Sweden. Within this framework, the company’s owners have assigned management over time to sell the units that are located outside the core area. So far in these sales
processes, Setra’s Norwegian subsidiary Barkevik has been sold. Starting in April we are implementing an adjustment to our organisation to a more concentrated Setra and reducing the number of business areas to three. We have also started a determined focus on our sawmill in Skinnskatteberg where we are investing SEK 60 million in a new trimmer which will make planned expansion possible.
The rate of recovery in the market is still hard to assess and raw material prices, in relation to market prices, are still far too high. Underlying demand for wood products is rising, however, and the overall assessment is therefore that we will see a positive market development in the second half of the year. “