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With most listed European consumerboard producers having now reported their Q3''s, we summarise our learnings from listening to the conference calls of relevant companies. We find evidence that oversupply is likely to worsen in coming quarters and pricing pressure in FBB is likely to continue. Stora Enso: Oulu ramp up behind schedule Stora Enso''s 750kT FBB Oulu facility is currently ramping up. Q3 brought news that this is behind schedule. Our main takeaway is the brunt of the supply pressure is still to come and we see European industry operating rates in 2026 falling to 72%. We also explore the opportunity management sees to sell FBB into geographies outside Europe and taking share from WLC. Billerud and Holmen: Both acknowledge pricing pressure Both CEO''s of Billerud and Holmen pointed towards price pressure in Folding Box Board. As a result, Billerud is exploring brown alternative grades. Holmen is seeing more resilient pricing due to also having SBB exposure where S/D balance is tighter. Metsa Board: Tariffs taking a toll on US shipments The No.1 European exporter of Folding Box Board to the US has noted that 15% tariffs are taking a toll on shipments and profitability - adding further supply pressure in Europe. We expect the US will prove a challenging market for Stora Enso to gain meaningful share in with its new Oulu site. We expect further price pressure is likely in Folding Box Board Given the extensive oversupply paired with soft demand, we expect pricing pressure will continue in FBB. As a result, we maintain our cautious stance on the sub-sector, forecasting a further EUR15/T price decline in Folding Box Board by the start of 2026 impacting Stora Enso (=) and Holmen (-).
Holmen Ab-B Shares Stora Enso Oyj Class R
Q3 EBIT misses consensus by 5%; lowering estimates Holmen''s Q3 EBIT of SEK737m was 5% below consensus'' SEK777m estimate and 12% below our SEK839m forecast. Weaker performance in Board and Paper and Renewable Energy drove the shortfall to our expectations. Looking ahead Q4 should benefit from non-recurrence of maintenance in Board, but higher seasonal labour. Wood Products markets remain weak and there are signs of price erosion in both paper and relevant paperboard markets. We cut estimates and our DCF-based target to SEK300/share. Given downside consensus risks too, we reiterate our Underperform rating. Pulpwood showing signs of easing, but logs are not Management reiterated the views of peers that pulpwood prices are showing signs of decline in Sweden, similar to adjacent Finland where more timely data is available. This should provide some tailwind for Board and Paper in the coming quarters. However, log prices in Sweden remain stubbornly high, especially in the south where Holmen''s sawmills are mainly located. As such, with demand and thus pricing weak in lumber we expect Wood Products margin pressures to persist. Board and Paper faces price pressures Paper production has benefitted from unusually low power prices. However, most major relevant board and paper price indices are showing signs of weakening. As annual board negotiations progress we see headwinds into 2026. Moreover Holmen''s long FX hedges mean it has yet to feel the full pain from strengthening SEK. Lowering estimates, stay Underperform Holmen is a solid company with low financial leverage in a tough sector, as profiled in our recent initiation of coverage: Solid but we wooden buy it - initiate at Underperform, 29 Sep. However, we see several headwinds into 2026 not fully reflected in consensus estimates, whilst there are peers better geared into wood cost tailwinds. For those meeting mgmt. soon see inside for questions.
Holmen Ab-B Shares
Conference call: The focus of the call was on the outlook, with management sharing largely qualitative thoughts on some areas of price and cost evolution into Q4 and early 2026. Paper and Board pricing is relatively stable but negotiations are now under way for next year and Holmen understandably was unwilling to guide, albeit acknowledged the very weak supply-demand balance. Similarly, Wood Products demand weakness means pricing remains under pressure in the near term. Pulpwood pricing is coming down (headwind for Forest but net tailwind to Group) but log prices still are not, despite very weak profitability of the sawmill segment. Overall we expect consensus to trim estimates. We sit 8% below consensus EBIT for 2026, as elaborated on in our recent initiation: Solid but we wooden buy it - initiate at Underperform, 29 September. Results: Today the company reported Q3 EBIT of SEK737m - a 5% miss vs. consensus'' SEK777m (and our SEK839m). This was driven by a miss in Wood Products (lumber) only partially offset by a beat in Board and Paper and Forest. The weakness in Wood Products is consistent with that seen at Stora Enso, also reporting this morning and includes a SEK30m inventory value impairment. The company cites pulpwood prices beginning to fall from very high levels but log prices unchanged. EPS beats, driven by a one-time favourable tax settlement. Main points from the call n.b. outlook comments already provided in the statement in detail (see 3Q25 first take: 5% EBIT miss on weak Wood Products). So below we just summarise incremental news from the call. - Forest: still expect full year harvest from own forest to be flat yoy (i.e. pick up in Q4). Profit growth qoq was driven by pricing. Pulpwood prices are coming down though logs are not. Too early in management''s view to quantify declines. There is a 6 month lag for the impact on the group, so price declines still to come. Geographic mix effects in harvesting contributed to Q3. - Wood...
What happened? As a reminder we last heard from Holmen on 14 August at Q2. Today the company reports Q3 EBIT of SEK737m - a 5% miss vs. consensus'' SEK777m (and our SEK839m). This was driven by a miss in Wood Products (lumber) only partially offset by a beat in Board and Paper and Forest. The weakness in Wood Products is consistent with that seen at Stora Enso, also reporting this morning. The company cites pulpwood prices beginning to fall from very high levels but log prices unchanged. EPS beats, driven by a one-time favourable tax settlement. As per usual, Holmen provides no outlook in the statement, but may give some colour on the call. Given the results we think shares may underperform peers a little this morning. Main points from Q3 results: We set out a full variance table in Figure 1 below. - Valuation: On our current forecasts Holmen (at SEK352/share) trades on 11.5x/ 11.5x EV/EBITDA, 16.4x/ 16.4x EV/EBIT, 20.5x/ 20.9x PE for FY Dec-25/26. - Conference call: There will be a webcast/ conference call at 10:15 EET/ 9:15 CET/ 8:15am UK time here. Figure 1: Holmen 3Q25 results variance / source: Company data, InFront (consensus), BNP Paribas Exane
A conservatively run forest-owning company, but facing headwinds - initiate at Underperform Holmen is a conservatively run wood products, paperboard and paper company, 45% self-sufficient in its fibre needs from its own 1.3m ha forest land holdings. Over the next year we see headwinds from: i) paperboard (FBB) pricing due to excessive European supply, ii) likely normalisation of graphic paper profits as abnormally low Nordic electricity prices recover (partially offset by renewables generation), iii) the unwind of protective SEK/EUR hedges. We see downside risks to consensus and downside to our DCF-based target. We therefore initiate coverage at Underperform. Board and Paper profits look set to normalise... Holmen''s Board and Paper profits remain elevated vs. pre-pandemic levels, in contrast to peers, but we anticipate will face headwinds. Its Folding Boxboard exposure faces the supply-side headwind of peer Stora Enso''s new Oulu start, adding 20% to European capacity, whilst US tariffs hit EU exports denting already weak demand. Unusually low Nordic grid prices have also aided its graphic paper margins. Normalisation of regional grid prices, which we anticipate in 2026, would be a headwind only partially offset by better profits in the Renewable Energy segment. ...and currency looks set to be a headwind out to 2027 Weaker USD is already hurting a smaller share of Holmen''s revenues. However, 24 months plus hedging of EUR means, if current spot holds, this is a larger drag worth c.5% of group EBIT by 2027. Despite these headwinds, consensus forecasts material profit growth next year. Our flatter estimates place us 9-11% below sell-side EBIT in 2026-2027. Falling wood costs is an upside risk, but one to which others are also exposed Buying 55% of wood externally Holmen may benefit from nascent reversal of the 100%+ increases in Nordic roundwood seen since 2021. However, PandL gearing is similar at peers. A reverse SoTP also shows Holmen''s forest holdings at...
Reversing paper and related market excesses of 2021-22 remains an unchanged reality, which was also evident in Holmen’s Q3 results. Profitability (despite some moderation) nonetheless smashed the street’s expectations. Forest continued to be a solid support and was well-complemented by Paper plus Energy. While there were sustained challenges in Paperboard and Wood, these are not lasting concerns. Overall, with better preservation of profitability in challenging markets and growth being well-aligned with customer needs, Holmen remains an attractive and somewhat defensive sector bet.
Like its peers, Holmen reported weak Q2 results. Profitability was however well ahead of the street’s expectations. Valuable support came from Forest, which had been expected, but the bigger surprise came from Paper, which remained extremely-healthy. Although business challenges are likely to persist for the next couple of quarters, Holmen by virtue of its focus areas remains an attractive sector bet and, hence, could be the first to recover (vs. most peers) in terms of both operations and the share price dynamic.
While Holmen also witnessed a Q1 performance normalisation, unlike its peers (ex. SCA) its results materially-exceeded the street’s expectations. Barring Wood Products, there were positive takeaways from all the other divisions (despite their performance erosion (risks)). Overall, given the Q1 surprise and the sell-off in recent months, we believe that the upside on Holmen is worth capitalising on. Also, it remains our preferred bet vs. SCA.
2022 ended on an impressive note – with another quarterly beat. While the wood markets’ reversal of fortunes and Paperboard’s maintenance shutdown were some bottlenecks, sizeable tailwinds in other areas pushed the full-year results to record-highs, facilitated further leveraging and, hence, resulted in even higher rewards. Even though we remain wary of another round of forest revaluation gains and, in general, expected medium-term margin normalisation, one can re-consider the firm’s investment once we are past the peak of the interest rate cycle.
In Q3, while Paperboard, Energy and Forest continued to do well, euphoria is Paper was (again) at an extreme – especially on the back of very-tight markets. However, a sharp reversal of fortunes in Wood was evident. Moreover, with brewing (weather-induced) limitations/risks for Energy and material forest revaluation gains too most-likely nearing an end, sell-off in recent months wasn’t surprising. While there’s a window of opportunity – considering the firm’s ‘relatively’ favourable business mix – a better entry point is still probable.
On the back of sizeable and broad-based price tailwinds, Holmen reported impressive Q2 results – with profitability materially-ahead of street expectations. While the good performance in stronghold divisions was largely expected, the massive uptick in Paper came as a big surprise. Nevertheless, given the high/growing vulnerability of the current market dynamics for the firm’s most profitable divisions – already evident to some extent in wood – our cautious stock recommendation should be maintained. Any material sell-off could however open-up an entry/accumulation opportunity.
2022 began on an impressive note, with Holmen reporting ‘record’ quarterly results. The biggest surprise was the turnaround in Paper, and healthy support emanating from Wood and Energy. However, the performance in Forest and Paperboard (traditional strongholds) was somewhat disappointing. While the prospect of various pricing excesses reversing in the coming quarters still remains high, GDP growth and inflation risks (in Europe) are added concerns and hence, our cautious stock recommendation is reiterated.
Even Holmen reported healthy results on the back of forest and wood market (valuation) euphoria, and buzzing energy markets. These improvements materialised despite below-par packaging results. While we expect forest and wood market tailwinds to reverse – somewhat also evident in the Q4 sector results, Holmen remains well-positioned to limit EPS erosion via promising dynamics in other divisions, and ‘somewhat’ lower downside risk for forest and wood divisions. Also, given the revaluation gains, our DCF and NAV estimates should reset higher.
On the back of ‘record’ results in Wood Products and resilience in Forest, Holmen reported strong Q3 results. While these natural resources-centric divisions are set for normalisation in the medium term, the firm is well-positioned to leverage favourable dynamics in other areas, i.e. Paperboard, Paper and Energy. Overall, as we expect group-level margin normalisation to be controlled, profitability/cash flow resilience and, hence, balance sheet flexibility should be maintained, thereby still supporting the case for occasional extraordinary shareholder rewards.
Strong Q2 results were a function of wood market euphoria. The wood-related gains were such that (temporary) headwinds in forest and paperboard were completely overshadowed. While the prospect of a normalising forest and wood performance is on the rise, Holmen has ample cushion from other divisions to sustain earnings growth. Even after the ytd share price run-up, the stock remains attractive, but with limited upside potential.
2021 began on an extraordinary note for Holmen. Q1 results were driven by healthy gains / stability across key / high-margin divisions, which helped dwarf the weakness in Paper. With intact business fundamentals, the current momentum should gradually reflect in better margins and, hence, cash generation capabilities. Our positive recommendation should be maintained.
Despite a challenging macro environment, Holmen reported healthy Q4 and FY results. As expected, high-margin Forest and Paperboard divisions continued to do well, with apt (surprising) support being rendered by other divisions (ex. Paper). With sorted business fundamentals and, hence, varying growth investments across divisions, Holmen remains in a sweet spot, wherein the sustainability-quotient of its offerings are well-aligned with the markets’ dash for greener stories. This business optimism is also reflected in the group’s 2020 dividend generosity.
