Holmen, a Swedish forest and industrial products company, reported second-quarter operating profit of SEK 689 million, down from SEK 807 million a year earlier and SEK 827 million in the first quarter.

Consumers remained cautious and activity in the construction market remained weak during the quarter. Demand for wood products increased seasonally and prices increased slightly, but the improvement was not enough to produce a positive result. Wood Products recorded an operating loss of SEK 55 million, although the loss narrowed by SEK 35 million from the first quarter.

For the first half, earnings in Wood Products were affected by lower revenue from wood chips and biofuels and a weaker dollar. Lower log costs and a better sales mix helped reduce the second-quarter loss.

Demand for board and paper in Europe was broadly unchanged from the first quarter, while prices remained stable. Deliveries increased 9% in the second quarter to 365 thousand tonnes, lifting operating profit to SEK 254 million from SEK 168 million in the first quarter.

The Forest business faced lower prices for both pulpwood and logs as demand weakened. Harvesting from Holmen's own forests reached 1.2 million m3 in the first half, about 15% below the long-term harvest plan. The company prioritized clearing 500 thousand m3 of storm-felled timber after a year-end storm in central Sweden, and its own-forest harvest in 2027 will be lower than normal.

Electricity prices also reduced earnings. In northern Sweden, the second-quarter electricity price fell to SEK 400/MWh from SEK 700/MWh in the first quarter, while the price in central Sweden fell to SEK 700/MWh from SEK 900/MWh. Renewable Energy operating profit fell to SEK 74 million from SEK 281 million in the first quarter because of lower electricity prices and lower production.

Maintenance on the national grid reduced hydro and wind deliveries by 176 GWh in the second quarter. About half of the reduction came from normal seasonal patterns and half from grid maintenance.

For the third quarter, a maintenance shutdown at Iggesund Mill is expected to reduce earnings by SEK 150 million. Electricity price hedges cover 85% of expected paper-mill consumption for the remainder of 2026 and 70% for 2027.

Competition for wood raw material has eased, with prices decreasing slightly from high levels. Holmen is continuing to balance wood-products production with market conditions and has reduced production costs. Its sawmills have annual capacity of 1.5 million m3.

Market conditions remain challenging in several markets. Board and paper demand is stable, wood-product demand has improved seasonally, and electricity prices in northern Sweden are below the levels seen earlier in the year.