• Fourth Quarter Revenue: Over SEK700 million.
• Full Year 2024 Revenue: SEK3.7 billion.
• Return on Capital Employed: 19% over the last 10 years; over 20% for Board and Paper in 2024.
• Proposed Dividends: Ordinary dividend of SEK9 and an extra dividend of SEK3.
• Forest Valuation: Close to SEK58 billion.
• Cash Flow from Harvesting: Increased by 80% over three years.
• Electricity Prices in Sweden: Below EUR15 per megawatt in the north; EUR40-50 in mid-south Sweden.
• Wood Products Price Increase: Prices up 10% year over year.
• Board and Paper Division: Increased deliveries and stable prices; profit impacted by SEK250 million due to maintenance and rebuilds.
• Wood Costs Increase: Up close to SEK0.5 billion year over year.
• Fire Impact at Braviken Mill: Expected cost of SEK40 million in the fourth quarter.

• Warning! GuruFocus has detected 5 Warning Signs with FRA:HL9C.

Release Date: January 31, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Holmen AB (FRA:HL9C) reported a strong full-year result for 2024 with SEK3.7 billion, marking a historically good performance.
• The company proposed an ordinary dividend of SEK9 and an extra dividend of SEK3, reflecting a strong financial position and shareholder returns.
• Holmen AB has successfully distributed SEK6 billion to shareholders over the past two years through dividends and share buybacks.
• The company has maintained a healthy margin in the pulpwood sector, indicating resilience despite rising wood costs.
• Holmen AB's Board and Paper division continues to deliver strong results, with successful integration and promising outcomes from the merger of the two divisions.

Negative Points

• The fourth quarter of 2024 was slower than usual, with market softness and operational stops impacting performance.
• High wood costs, particularly in southern Sweden, are challenging for the Wood Products business, affecting profitability.
• Electricity prices in northern Sweden are extremely low, making it difficult for the Energy division to generate significant profits.
• The renewable energy market faces excess capacity and project delays, impacting growth projections.
• The company faces challenges in the sawlog market due to scarcity and high costs, particularly in the south of Sweden.

Q & A Highlights

Q: Can you provide insights on the current trends in wood prices and forest valuation? A: Anders Jernhall, CFO, explained that while there is strong demand for logs, the pulpwood market is more balanced, likely due to industrial downtime. The rate of increase in wood prices may be stabilizing, particularly for pulpwood.

Q: What is the rationale behind increasing the base dividend despite lower profits and higher net debt? A: CEO Henrik Sjolund stated that the decision reflects a balanced approach considering the company's financial position and profitability. The extra dividend indicates a strong balance sheet and profitability shift, while the base dividend reflects a sustainable increase over time.

Q: How did the product mix in the Board and Paper segment affect Q4 results, and what are the expectations for 2025? A: CFO Anders Jernhall noted that Q4 had a normal product mix compared to the strong mixes in Q2 and Q3. Deliveries were seasonally lower in Q4, but overall, the run rate remains normal. The focus is on maintaining a sustainable product mix into 2025.

Q: What are the growth prospects for the renewable energy sector, and what is the expected CapEx for 2025? A: Anders Jernhall highlighted excess capacity in the northern region due to high water levels. CapEx for 2025 is expected to be around SEK2.5 billion, including SEK1 billion for the wind farm project. The company is evaluating the timing for constructing the permitted Stormyrberget wind farm.

Q: How is Holmen addressing the challenges in the Wood Products segment, particularly with high sawlog costs? A: CFO Anders Jernhall mentioned that the company is managing the situation by adjusting production volumes and logistics. The disparity in sawlog costs between regions is a challenge, but Holmen is leveraging its forest resources and logistics to mitigate impacts.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.