Segezha attributes the year-on-year decline in first-quarter revenues to lower sales volumes and prices. This is due to the sluggish economy in key sales markets and the appreciation of the ruble against the main sales currencies, i.e. the US dollar and the renminbi yuan. The hostilities in Iran, including the logistical blockade of trade routes, also negatively impacted business.
The persistent stagnation in the construction market had a noticeable effect on sales of plywood and lumber. Lumber sales fell by 22% to 400,000 m³ in the first quarter. Birch plywood production decreased by 21% to 35,000 m³. A positive development is the resumption of exports to India and the expansion of the market, including into East Asian countries, with high-margin birch plywood for LNG transport.
Paper sales were down by 38% (51,000 t), and sales of paper packaging decreased by 15% (149 million units). In this sector, the shutdown of the pulp and paper mill in Segescha/RU was the primary cause of lower production and sales volumes.
Cold winter caused problems
Log harvesting volumes recently declined by 23% to 2 million m³. In Russia, the past winter was very cold, which significantly hampered work in the logging areas and caused difficulties in transport.
In order to financially stabilize the company, Segezha is increasing its paper sales price by 15% and the price for lumber by up to 10%. The company is also working on developing alternative sales markets for plywood in Asia. Furthermore, Segezha issued bonds worth 2.9 billion rubles (34.5 million euros).
