Earnings call transcript: Holmen AB sees mixed results in Q1 2026

Holmen AB posted mixed Q1 2026 results: Forest division operating profit rose to SEK 511 million, while Board and Paper EBIT fell to SEK 168 million and Wood Products remained unprofitable. Renewable Energy benefited from high Nordic power prices and the ramp-up of the Blåbergsliden wind farm, but board/paper margins were pressured by energy costs, weaker paper pricing, and a weaker dollar. Management expects continued board/paper pressure, gradual wood-cost relief after summer, and limited 2026 impact from storm-related harvesting disruptions; the stock fell 1.73% after the call.

Analysis

The key read-through is not the headline earnings mix, but the internal transfer of economics from cyclicals to the utility-like asset base. When power prices spike and volatility disappears, the company’s integrated hedge weakens: the renewable arm monetizes scarcity immediately, while the board/paper franchise loses its optionality on energy trading and becomes a cleaner exposure to weak volume and input-cost inflation. That makes the current earnings profile more dependent on weather, transmission constraints, and gas/power geopolitics than on end-demand alone.

The second-order effect is that raw-material deflation will likely help Wood Products and parts of the forest chain only with a lag, while the market may be underestimating how long hedged versus unhedged energy and FX effects can mask the underlying operating recovery. The next 1-2 quarters can still look sluggish even if the trough has passed, because the company is effectively carrying higher-cost inventory/harvesting decisions through the P&L. That creates a setup where reported results remain noisy just as the forward trend begins to improve.

Contrarian take: the market is probably anchoring too much on current weakness in board and wood and too little on the durability of the renewables cash flow once transmission bottlenecks persist into 2027-2028. If power stays structurally tight in the north, the company’s renewable assets can compound at a rate the broader market may still be underappreciating, while the drag from timber and paper should be cyclical rather than permanent. The risk is that a rapid easing in power prices or a stronger USD recovery would unwind the mix benefit and expose the still-soft industrial legs.

Key Decisions for Investors

• Long Holmen (0XS9) on weakness over the next 1-3 months; use a tight risk box around the recent low. Thesis: the market is pricing cyclical pain but not the asymmetric upside from constrained Nordic power supply into 2027-2028.
• Pair trade: long European renewable/power-exposed names vs short European paper/packaging cyclicals over 3-6 months. Expect relative outperformance as energy scarcity and transmission bottlenecks favor generation assets over energy-intensive converters.
• If accessible in the local market, buy a medium-dated call spread on Holmen rather than spot equity. Risk/reward improves because the stock can stay range-bound while the thesis resolves through renewable cash-flow rerating and gradual cost relief.
• Watch for a tactical short in Holmen if electricity volatility reappears sharply lower and the USD rebounds; that combination would remove the current cross-subsidy and could pressure earnings revisions for 1-2 quarters.