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1. Company Snapshot

1.a. Company Description

Holmen AB (publ) produces and sells paperboards, papers, wood products, and renewable energy in Sweden, Germany, the United Kingdom, France, Italy, rest of Europe, Asia, and internationally.The company's Forest segment offers logs, pulpwood, and biofuel to sawmills, pulp mills, and paperboard and paper mills; and manages forests, which cover approximately one million hectares.Its Paperboard segment provides paperboards for consumer packaging to brand owners, converters, and wholesalers.


The company's Paper segment offers papers for books, magazines, printed advertising, and packaging to publishers, printing firms, and retailers.Its Wood Products segment provides construction and joinery timber, CLT and glulam products, and wood for pallets and packaging to construction, joinery, and packaging industries, as well as builders' merchants; and operates sawmills.The company's Renewable Energy segment operates 21 hydro power stations; and wind farms with a capacity of approximately 1.2 TWh of electricity.


Holmen AB (publ) was founded in 1609 and is headquartered in Stockholm, Sweden.

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1.b. Last Insights on HOLM

Holmen AB's recent performance has been impacted by market challenges, particularly in its energy division, which reported losses. Despite efforts to maintain strong shareholder returns and cost efficiencies, the company faces pressures in the market. The recent earnings call highlighted these challenges, but also emphasized the company's ability to navigate them. Additionally, a 10% drop in value this year has raised questions about the timing of reevaluating the company. Its long history and solid presence in forestry and paper have kept it in focus for both long-term and short-term investors.

1.c. Company Highlights

2. Holmen's Q3 Earnings: A Mixed Bag

Holmen Group reported a challenging third quarter with revenues impacted by low demand for wood products, but a good result from wood and paper, totaling over SEK 700 million. The EPS came out at 6.1, significantly beating estimates at 4.05. The industry delivered a 15% return on capital employed for the first nine months. The company's Forest division result was SEK 538 million, an increase of SEK 20 million from the second quarter, due to price increases. The result was a mixed bag, with the Wood Products segment seeing a deterioration in results to SEK -91 million, due to lower selling prices.

Publication Date: Oct -26

📋 Highlights
  • Total Wood & Paper Result:: Combined result of over SEK 700 million despite low wood product demand.
  • Return on Capital Employed:: 15% ROCE for first nine months, driven by stable Board & Paper segments.
  • Dividend & Buybacks:: Distributed SEK 3 billion in dividends and share buybacks from January to September.
  • Wood Products Loss:: Segment result fell to SEK -91 million due to lower selling prices and destocking.
  • Forest Division Growth:: Result rose to SEK 538 million (+SEK 20 million QoQ) from price increases.

Segment Performance

The Board and Paper segment had a stable price environment, but with some price pressure for marginal volumes. The result for the third quarter was on par with the second quarter, despite an annual maintenance shut in the Iggesund mill. The graphic paper segment saw several curtailments across the industry in Europe, mainly on mechanical grades. Holmen's graphic paper segment saw a gain of SEK 250 million from better electricity management, which helped profitability.

Outlook and Guidance

The company expects more or less flat sawlog prices and soft market conditions for Wood Products in the fourth quarter. For Board and Paper, the company sees stable prices but with some pressure on marginal volumes. The maintenance shut in the Iggesund mill and lower personnel costs in Q3 will make Q4 comparison challenging. Holmen anticipates a cash inflow from a tax ruling in the fourth quarter.

Valuation and Estimates

With a P/E Ratio of 20.64 and an EV/EBITDA of 11.05, the stock seems to be fairly valued. The Dividend Yield is 2.53%, which is a decent return for investors. Analysts estimate next year's revenue growth at 1.0%. The company's ROIC is 3.64%, and ROE is 4.82%, indicating a reasonable return on capital employed. The Net Debt/EBITDA ratio is -0.02, indicating a healthy debt position.

Operational Insights

Pulpwood prices have started to decline, but it takes about 6 months for the lower costs to reach the industry. The company sees a lag before lower pulpwood costs become a tailwind for the consumption segments like Board and Paper. The wood cost effect is hard to quantify and comment on at this point. Holmen's board business is more stable, with a larger share of solid bleached board, which tends to have more stable prices.

3. NewsRoom

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Sweden to receive wind-energy lift with EIB loan to Holmen

Nov -03

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Holmen AB (FRA:HL9C) Q3 2025 Earnings Call Highlights: Navigating Challenges with Strategic ...

Oct -23

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Is Now the Right Moment to Reevaluate Holmen After a 10% Drop in 2025?

Sep -09

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Holmen AB (FRA:HL9C) Q2 2025 Earnings Call Highlights: Navigating Market Challenges with ...

Aug -15

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Holmen AB (FRA:HL9C) Q1 2025 Earnings Call Highlights: Strong Financial Position Amid Market ...

May -09

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Holmen AB (FRA:HL9C) Q4 2024 Earnings Call Highlights: Strong Full-Year Performance Amidst ...

Apr -21

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Holmen AB (HLMMF) Q3 2024 Earnings Call Highlights: Strong Operating Profit Amidst Market Challenges

Oct -25

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Holmen AB (HLMMF) (Q2 2024) Earnings Call Highlights: Strong Financial Performance Amid Market ...

Oct -09

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.53%)

6. Segments

Paper

Expected Growth: 2.5%

Holmen AB's 2.5% growth in paper segment is driven by increasing demand for sustainable packaging, rising e-commerce sales, and growing need for paper-based products in the food and pharmaceutical industries. Additionally, the company's focus on cost savings, operational efficiency, and strategic investments in new products and markets contribute to its growth momentum.

Paperboard

Expected Growth: 2.8%

Holmen AB's paperboard segment growth of 2.8% is driven by increasing demand for sustainable packaging, expansion in e-commerce, and rising consumption of premium paperboard products. Additionally, the company's strategic investments in production capacity and cost-saving initiatives have improved operational efficiency, contributing to the growth.

Wood Products

Expected Growth: 2.2%

Holmen AB's Wood Products segment growth of 2.2% is driven by increasing demand for sustainable building materials, favorable housing market trends in Sweden and the UK, and the company's strategic focus on high-margin products such as glulam and CLT. Additionally, investments in production efficiency and cost savings initiatives contribute to the segment's growth.

Forest

Expected Growth: 1.8%

Holmen AB's Forest segment growth of 1.8% is driven by increasing demand for sustainable forestry products, favorable timber prices, and efficient forestry management practices. Additionally, the company's focus on reforestation and biodiversity initiatives contributes to long-term growth. Strong market demand from the pulp and paper industry, as well as the growing bioenergy sector, also supports the segment's growth.

Renewable Energy

Expected Growth: 4.2%

Holmen AB's 4.2% growth in Renewable Energy is driven by increasing demand for sustainable power, Swedish government's renewable energy targets, and declining production costs. Additionally, Holmen's diversified portfolio of hydro, wind, and bioenergy sources, as well as its strong operational efficiency, contribute to its growth momentum.

7. Detailed Products

Paperboard

A dense and stiff paperboard used for packaging, graphical and industrial applications

Packaging Paper

A range of paper grades used for packaging, including kraft paper, sack paper and specialty paper

Printing Paper

A range of paper grades used for printing, including offset, coated and uncoated paper

Sawn Timber

A range of sawn timber products, including construction timber, planed goods and glulam

Wood Products

A range of wood products, including plywood, oriented strand board (OSB) and glulam

Bioenergy

Renewable energy products, including biofuel and district heating

8. Holmen AB (publ)'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Holmen AB (publ) is medium due to the availability of alternative products in the market.

Bargaining Power Of Customers

The bargaining power of customers for Holmen AB (publ) is low due to the company's strong brand reputation and customer loyalty.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Holmen AB (publ) is medium due to the company's dependence on a few key suppliers.

Threat Of New Entrants

The threat of new entrants for Holmen AB (publ) is low due to the high barriers to entry in the industry.

Intensity Of Rivalry

The intensity of rivalry for Holmen AB (publ) is high due to the competitive nature of the industry and the presence of several established players.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 5.03%
Debt Cost 3.95%
Equity Weight 94.97%
Equity Cost 5.63%
WACC 5.55%
Leverage 5.29%

11. Quality Control: Holmen AB (publ) passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Navigator

A-Score: 6.5/10

Value: 6.4

Growth: 4.8

Quality: 5.7

Yield: 10.0

Momentum: 2.5

Volatility: 9.7

1-Year Total Return ->

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BillerudKorsnäs

A-Score: 4.8/10

Value: 7.9

Growth: 4.9

Quality: 5.0

Yield: 5.6

Momentum: 0.5

Volatility: 5.0

1-Year Total Return ->

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Stock-Card
Holmen

A-Score: 4.6/10

Value: 4.1

Growth: 4.6

Quality: 6.2

Yield: 3.1

Momentum: 1.0

Volatility: 8.7

1-Year Total Return ->

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Stock-Card
Mondi

A-Score: 4.5/10

Value: 6.1

Growth: 2.0

Quality: 2.8

Yield: 10.0

Momentum: 1.0

Volatility: 5.0

1-Year Total Return ->

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Stock-Card
SCA

A-Score: 4.2/10

Value: 3.6

Growth: 1.8

Quality: 6.6

Yield: 2.5

Momentum: 2.0

Volatility: 8.7

1-Year Total Return ->

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Stock-Card
Stora Enso

A-Score: 3.7/10

Value: 8.3

Growth: 1.3

Quality: 2.1

Yield: 6.2

Momentum: 1.5

Volatility: 3.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

346.8$

Current Price

346.8$

Potential

-0.00%

Expected Cash-Flows