BillerudKorsnäs Impacted by Pulpwood Shortage Due to Wet, Mild Winter

BillerudKorsnäs, Sweden, reports that the root cause of the current shortage of pulpwood is the unusually wet and mild start of this (2017- 2018) winter. During normal winters the ground freezes, which allows for efficient forestry. At present, forestry machines cannot be used in the forests in certain areas. 

In addition, the possibility of driving on the forest road network is limited in some areas, which also reduces the flow of wood. The situation is the same in the Nordic countries, western Russia, and the three Baltic states.

BillerudKorsnäs has taken measures to minimize the effects of the lack of pulpwood and follows the situation on a daily basis. The measures taken are mainly mix changes in production and redistribution of flows to optimize the use of wood.

"We have the opportunity to change the product mix in our production to optimize wood usage. This is something we look over every day but what we now do from the perspective of economizing wood, especially short fiber. To the plant in Gävle, we have also imported eucalyptus chips from South America, something that has been evaluated to be used in these types of situations that historically happens every 5-10 years," said Uno Brinnen, SVP of Forestry, BillerudKorsnäs.

The financial impact on Q4 2017 results is minor and it is difficult to assess the extent of the lack of pulpwood and how long the situation will last, but given current assessments the estimated negative impact on earnings in Q1 2018 is approximately SEK 80-100 million, BillerudKorsnäs noted.