Profit margins declined faster for sawmills in Finland than in neighboring Sweden

Copyright: WRQ

Profit margins declined faster for sawmills in Finland than in neighboring Sweden during 2018 and 2019, and in the 3Q/19 reached their lowest levels in 15 years, reports the Wood Resource Quarterly

The financial health of the world’s lumber producers was mixed in the 3Q/19. The gross margins fell in Northern Europe, while they improved slightly in Austria, Eastern Russia, Western US, and Western Canada, reports the WRQ. In North America, lumber prices started to flatten out and increased slightly in the fall.

Domestic sawlog prices in Finland and Sweden have been declining for over a year because of lower demand from the region’s sawmills. However, the reduced wood raw-material costs have not kept pace with the falling prices for lumber, which has resulted in lower margins for the sawmilling sectors in both countries.

The Wood Resource Quarterly (WRQ) has been tracking quarterly wood costs, product prices and gross margins worldwide since 2005, and for the entirely of this time period, Finnish sawmills have never had profits as low as in the 3Q/19. The gross margins for lumber producers in Finland have fallen more rapidly than those of their Swedish competitors during 2018 and 2019 (see chart), mainly as a result of lower lumber prices in Finland than in Sweden.