International demand for wood articles has resulted in a revenue growth the industry has hardly seen before. "Our operating margin gives us unique opportunities to get the lumber industry ready for the great demand for climate-smart products going forward," says Morten Kristiansen, CEO of Moelven Industrier ASA.
Moelven had a turnover of NOK 7,331.5 million in the first half of the year (NOK 5,970.6 million in the same period last year). Operating profit of NOK 1,113.0 million (NOK 286,6 million) gives a gross operating margin of 17.6 % (7.2 %) after the first six months of the year.
The reason for the strong developments lies in the international lumber market. The figures from the first half of the year are characterised by higher demand than supply in the market. This is partly due to less production in key geographies such as Canada, higher activity than normal in the international construction market as well as a larger shift towards the use of sustainable materials as a result of the green shift.
“We are witnessing a strong cyclical growth for wood articles, and we have hardly seen a development similar to this. While we see that the lumber market for the industrial and consumer sector is unusually strong, our Building Division is experiencing calmer times. This applies to our glued laminated timber, building module and office furnishing companies. We even face the high prices of lumber in our own industry, and this means that there will often be a delay in the cyclical effect for these companies,” says Kristiansen.
Higher lumber prices
The CEO makes no secret of the fact that the strong rise in prices in the market has changed the operating margin for Moelven as a whole.
"We believe that over time the entire value chain will benefit from the strong interest in wood articles, and we clearly see that prices for lumber have increased. Overall, we have never had prices as high as at the current moment, and it is gratifying to see that the value chain is strengthening into the green shift.
The timber processing industry has not traditionally been accustomed to such margins. Kristiansen points out that it is high time for the industry to rise so that it can be further developed.
“The operating margins we have now are not uncommon in other parts of the value chain or in other industries. This is the level we must strive for in order to further develop our international competitiveness in everyday life,” says Kristiansen, adding:
“It is uncertain how long the strong demand will persist, and it is in good times that we must take steps to meet the new realities when they arrives.”
Major investment in sawmills in Sweden
In June, Moelven launched the Group's largest investment plans of all time. The Board decided to modernise and further develop the capacity at Moelven Edansesågen AB and Moelven Valåsen AB. Overall, Moelven will invest more than SEK 600 million in the two sawmills in the years to come.
"Moelven has as much activity in Sweden as Norway, and these two units will be crucial for us in developing our competitiveness in the years ahead,” says Kristiansen.
Read the quarterly report for Q2 2021 here.
The future is built with wood
Sustainability is crucial to our competitiveness. Therefore, we have set ambitious and concrete sustainability goals within four main areas. For one thing we can state for years to come: We will contribute to a sustainable future in wood.Read more about our sustainability goals