Earnings call transcript: Holmen Q1 2026 sees earnings miss, stock rises

Holmen’s Q1 2026 EPS of 4 SEK missed the 4.37 SEK consensus and revenue of 5.47 billion SEK fell short of 5.67 billion SEK, even as the stock rose 1.32% to 311.1 SEK. The company cited strong Energy Division performance from high Nordic electricity prices and weather conditions, partly offsetting weakness in wood products and board/paper amid lower wood prices, high raw material costs, and USD headwinds. Management said Q2 energy volatility remains limited and wood costs should be stable to slightly lower, while reaffirming a strong balance sheet and continued renewable investment.

Analysis

The market is signaling that the miss is a cyclical noise event, not a thesis break: the equity is being valued more like a defensive, cash-generative utility with optionality than a pure forest-products cyclical. The key second-order effect is that higher power prices are effectively transferring margin from the board/paper chain into the energy asset base, while storm-driven harvesting disruptions may temporarily suppress own-forest supply and support downstream wood prices. That creates an unusual internal hedge: weaker industrial demand can coexist with stable-to-better consolidated profitability if energy stays tight.

The bigger medium-term variable is not current earnings, but the lagged pass-through from falling sawlog/pulpwood prices and whether the company can harvest enough of its “backpack” inventory at attractive historical costs before those lower spot prices fully flow into P&L. If wood costs reprice down into late summer, the wood-products leg should see margin relief with a meaningful lag, making Q3/Q4 the first plausible inflection window. Conversely, if storm remediation keeps operational resources tied up longer, the expected cost benefit may be delayed while working capital and logistics complexity rise.

Consensus appears to be underestimating how much of the downside is already de-risked by the share price being near trough levels and by the company’s balance sheet/return-of-capital flexibility. The more interesting contrarian read is that the stock may be cheap not because fundamentals are about to inflect, but because the market is paying for embedded power exposure and balance-sheet resilience while ignoring that this mix can re-rate quickly if volatility in electricity returns. The risk is that power normalizes faster than wood costs do, compressing the current offset and exposing the still-weak industrial end markets.

For now, the setup favors patience on direction but not on catalyst timing: the next real move likely comes with Q2/Q3 energy pricing and the pace of raw-material deflation. If electricity stays rangebound and volume remains weak, the stock can drift higher on defensiveness; if power falls while wood costs remain sticky, the downside is more than just an earnings miss — it becomes a multiple reset on the “good diversified portfolio” narrative.

Key Decisions for Investors

• Long Holmen (HOLM-B SS) on weakness with a 3-6 month horizon; target a re-rating as Q2/Q3 wood-cost deflation appears, but trim if Nordic power prices normalize before margin recovery. Risk/reward: favorable if you believe energy volatility returns.
• Pair trade: long Holmen vs short a more leveraged forest-products/industrial name exposed mainly to end-market demand and raw-material pressure. The thesis is that Holmen’s energy hedge and balance-sheet quality should outperform in a slow-growth, high-volatility input-cost regime.
• Sell downside via puts or put spreads on Holmen into any post-earnings strength; use 2-4 month tenor to monetize the implied overreaction to a soft quarter while protecting against a delayed Q3 margin inflection.
• Watch Nordic power forwards and summer wind/precipitation conditions as the key catalyst; add to Holmen only if electricity volatility re-emerges, because that is the mechanism that expands board/paper earnings power most quickly.
• Avoid chasing the stock if the move is purely defensive flow-driven; instead wait for confirmation that falling wood costs are actually reaching P&L, which is the cleaner entry point for a cyclical recovery trade.