A decent year despite the weak timber market in the second half of the year
The last quarter of the year was affected by the deteriorating wood product market. Net sales decreased to SEK 640 million compared to SEK 790 mil- lion the previous year, mainly because of lower sales prices and sales volumes within Wood Protection and Sawn Wood. Operating profit before depreciation and amortisations, EBITDA, amounted to SEK 30 million com- pared to SEK 106 million the previous year. The lower result was explained by continued weak development for Wood Protection and lower result for Sawn Wood. The development for pellets and our growing window and door business within the Joinery product area continued to be good. Cash flow for the quarter amounted to SEK 80 million, mainly an effect of inventory reductions within Wood Protection.
For the full year, EBITDA amounted to SEK 331 million compared to
SEK 503 million the previous year. The year’s EBITDA margin amounted to 10.1%. Net sales amounted to SEK 3,267 million compared to SEK 3,055 million. The year’s cash flow was strong and amounted to SEK 491 million, which resulted in a net cash position of SEK 29 million at the end of the year.
The board of Bergs has approved an investment in a new boiler in Vika Wood, providing the sawmill with significantly improved environmental parameters and a potential capacity increase as well as cost savings. The investment will be concluded in 2025 and amounts to about SEK 125 million.
The board proposes a dividend of SEK 2.00 (3.00) per share. The proposed dividend totals approximately SEK 69 million. Taking into account the Group’s financial position, it is the board’s intention to propose a share repurchase program to the annual general meeting.
The economic situation is uncertain, which results in a continued weakening of the construction market and the demand for wood products. During the second half of the year, the reduced demand resulted in an oversupply of wood products with price pressure as a result. At the same time, the customers have reduced purchases, which has resulted in more balanced stocks and increased buying interest ahead of coming spring.
We see a continued good development of our market for bespoke windows and doors, where the order situation for the spring is good. Likewise, the market for pellets remains strong.
PERFORMANCE BY PRODUCT AREA
Demand for wood protection products remained weak during the fourth quarter. Our stocks have continued to decrease during the quarter and are now at a more normal level for the season, which is a signal of an improved situation. At the same time, cost-saving measures have been taken and, among other things, our Latvian workforce has been reduced by approximately 100 employees.
The transition towards more highly refined products is following plan and, among other things, the production and sale of heat-treated wood has started at our facility in Nybro.
Our market for windows and doors is still good with normal order intake and order backlog. The target of continued volume growth in 2023 remains. As part of this, during the year we will increase the number of showrooms in our Timber Windows dealer network by five to 50 in total.
Demand for garden products shows a corresponding decrease as wood protection products. Here, too, cost savings and inventory reductions have been implemented during the quarter. We see signs of improved demand ahead of the upcoming spring season.
The market for sawn wood products has continued to develop weakly during the fourth quarter. At the same time, there are indications that the buyer side has carried out stock reductions and will need to increase purchases during the spring. Inventories at our own sawmills are still low and production is basically only made to order. The price for timber raw material is now decreasing in the Baltics. This, in combination with increased prices for by-products, is expected to gradually strengthen margins during the spring.
At our Estonian sawmill, production curtailments and cost saving measures were implemented in the fourth quarter due to the weaker market. Our Latvian sawmill produced at normal levels.
OTHER (ENERGY & LOGISTICS)
Demand for pellets remains good. The market during the autumn can be described as nervous with partly very high spot prices. What we now see ahead of the rest of the winter season is a more balanced market, although- with a price level that continues to provide a good margin.
The economic situation remains uncertain, which will further reduce construction activity in Europe. At the same time, there are indications that the important American construction market has bottomed out. We expect the market for energy-saving measures, such as window and door replacement, to continue to be favourable.
As inventory levels for sawn timber products decrease at customers, the impact of the lack of Russian exports will now be fully felt. The timber market remains difficult to assess, but some signals point in the direction of an improvement during the spring.
Profitability for the product area Wood Protection and garden products is sea- sonally weak during the first quarter. Volumes will also be lower compared to the corresponding record quarters of 2021 and 2022. The effects of cost savings and lower raw material costs are expected to gradually improve margins.
Business for windows, doors and pellets will continue to develop favour-
ably during the winter and spring.
FOURTH QUARTER (1 OCTOBER–31 DECEMBER)
• Net sales decreased by 19% to SEK 640 million (790). The decrease in
net sales was mainly related to lower sales prices and sales volumes
in Wood Protection and Sawn Wood.
• EBITDA amounted to SEK 30 million (106), a decrease primarily related
to lower sales prices and sales volumes in Wood Protection and lower
sales prices and higher raw material costs in Sawn Wood. Higher
sales prices and sales volumes in the pellet business contributed positively.
The EBITDA margin was 4.7% (13.4).
• Operating profit amounted to SEK 6 million (85), corresponding to an
operating margin of 0.9% (10.8).
• Loss/profit for the period amounted to SEK –7 million (88).
• Earnings per share, before and after dilution, was SEK –0.20 (2.54).
• Cash flow from operating activities amounted to SEK 80 million (83),
positively affected by a lower level of working capital.
• Net cash position totalled SEK 29 million (net debt: 223) as of
31 December 2022, corresponding to a net debt/equity ratio of –0.02
• The Board of Directors proposes a dividend of SEK 2.00 (3.00) per
share. The total proposed dividend is approximately SEK 69 million.
Due to the strong financial position, it is the Board’s intention to propose
a share repurchase program to the annual general meeting.
FULL-YEAR (1 JANUARY–31 DECEMBER)
• Net sales increased by 7% to SEK 3,267 million (3,055). The increase
in net sales was mainly related to higher sales volumes of windows
and doors within Joinery, higher sales prices for Sawn Wood and
higher sales prices and sales volumes of pellets.
• EBITDA amounted to SEK 331 million (503), a decrease primarily
to lower sales volumes and higher raw material costs in Wood
Protection. Higher sales volumes of windows and doors and highersales
prices and sales volumes in the pellet business contributed
The EBITDA margin was 10.1% (16.5).
• Operating profit amounted to SEK 241 million (426), corresponding to
an operating margin of 7.4% (13.9).
• Profit for the period amounted to SEK 231 million (417).
• Earnings per share, before and after dilution, was SEK 6.66 (12.03).
• Cash flow from operating activities amounted to SEK 491 million (65),
positively affected by a lower level of working capital.
• A new loan agreement was made with Danske Bank and SEB.
The total credit facilities amount to SEK 650 million and have a threeyear
• Acquisitions of window and door companies was made in the UK and
• A consolidation of shares (reverse split) was made in May, wherby ten
(10) shares were consolidated into one (1) share.