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Holmen: The 400-Year Nordic Forest Empire
I. Introduction & Episode Roadmap
Picture this: a company whose origin story predates the Pilgrims' landing at Plymouth Rock, whose assets include over a million hectares of Scandinavian forest land, and whose transformation from weapons manufacturer to sustainability champion spans the better part of four centuries. The history of Holmen began in 1609 with an arms factory on the island of Kvarnholmen in Motala Ström—Kvarnholmen is also the place that gave the company its name. That's 416 years of continuous operation, making it one of the oldest continuously operating companies in the world.
The stock trades at around SEK 390 on the Nasdaq Stockholm exchange, with a market capitalization of roughly SEK 65 billion (approximately $6.3 billion). But that headline number radically understates the story. The valuation based on transactions in forest properties amounted to SEK 57,843 million at 31 December 2024, corresponding to SEK 55 thousand per hectare of productive forest land. The company's forest assets alone represent roughly 90% of its entire market cap—before counting the paper mills, sawmills, hydroelectric stations, and wind farms.
The central question for any investor contemplating this business: How does a 17th-century weapons maker become one of Europe's most sustainable forestry conglomerates? And what does that transformation reveal about surviving—and thriving—through centuries of technological disruption?
Here's the thesis: Holmen represents one of the most impressive corporate transformations in the commoditized paper industry. Over the past two decades, management has pivoted from a newsprint producer facing structural decline into a vertically-integrated forest asset company with meaningful exposure to renewable energy. The playbook is deceptively simple: own irreplaceable natural assets, process them through efficient operations, and patiently reallocate capital away from declining markets toward growing ones.
This episode traces five critical inflection points: the 1988 mega-merger that created the modern company structure; the arrival of patient capital through the Lundberg family in 1993; the "paper apocalypse" of the 2000s and 2010s that decimated the newsprint industry; the strategic pivot toward wood construction and renewable energy; and the 2024 restructuring that signals management's vision for the next decade.
What emerges is a masterclass in multi-generational thinking—the kind of strategic patience that only private ownership and long investment horizons can enable.
II. The Swedish Forest Context: Why This Industry Exists
Before diving into company specifics, understanding Sweden's unique position in global forestry is essential. Almost 70 percent of Sweden's land area is covered in forest, and that figure has remained stable for a long time. As much as 83 percent of Sweden's forest land is coniferous forest, with mixed forest accounting for 12 percent and pure broadleaf forest 5 percent.
This forest cover isn't an accident of geography—it's the result of deliberate policy stretching back over a century. Felling is so intense in places that a Forestry Act was introduced in 1903. It states that anyone harvesting trees must plant new ones. Sweden was among the first countries in the world to mandate reforestation, and the results have been remarkable.
The supply of timber in the Swedish forest has doubled since the 1920s. That's right—despite a century of industrial harvesting, Sweden has more standing timber today than it did 100 years ago. Growth is greater than the amount felled, and has been for the entire 20th century onwards. Annual growth stands at around 120 million cubic metres growing stock, and each year around 90 million m³ of that growth is harvested.
This dynamic creates an extraordinary business model. Forest companies in Sweden aren't depleting a finite resource; they're harvesting the annual interest on a growing natural capital base. The amount of forest in Sweden is constantly growing year on year, with the total volume of wood amounting to over 3 billion mÂł! In less than 100 years, Sweden's forest assets have doubled.
The economic implications ripple through the entire nation. The forest products industry is an important national source of employment and income and is the backbone of Sweden's foreign trade. Forest products represent one-fifth of the country's gross export value. For a country of only 10 million people, with only 1 percent of the world's forests, Sweden is third in world trade in pulp and paper and second in exports of sawnwood.
Why did Northern Europe—and Sweden specifically—come to dominate global forestry? The answer lies in a confluence of natural advantages and historical circumstances.
The industrialisation of Western Europe led to a great increase in the demand for timber. The saws along the Swedish waterways began delivering timber for export as early as the 18th century. The exports increased after the Napoleonic Wars.
Several factors tilted the playing field toward Sweden in the mid-19th century. During the industrial revolution of Western Europe in the 19th century, demand increased for sawn timber. In 1849, England's favourable customs duties on Canadian timber disappeared, causing Nordic sawmills to become more competitive. Britain's shift toward free trade in the 1840s removed the tariffs and policy of colonial preference that had kept Swedish products out of what was then the world's major industrial market.
Thanks to the invention of the steam engine and the frame saw, the Swedish sawmill industry was industrialised during the second part of the 19th century. In the 1870's, 40% of total Swedish exports were made up of timber.
The unique economics of Swedish forest ownership merit special attention. Unlike North American timberlands or tropical plantations, Swedish forests operate on extraordinarily long rotation cycles. In South America and China, where growth cycles are shorter than in Nordic countries (6 to 12 years compared to 60 to 100 years), plantations are still recorded at historical cost. A Swedish spruce or pine tree takes 60 to 100 years to reach maturity—meaning every harvest today was planted by your great-grandparents, and every tree planted today will be harvested by your great-grandchildren.
This creates a remarkable alignment between responsible stewardship and financial self-interest. The enactment in 1903 of the world's first modern silvicultural law with the obligation of reforestation after cutting triggered the restoration of the Swedish forests—the first "green movement". The result has already been mentioned: growing timber stocks have almost reached 3 billion m³ and the annual growth rate is higher than ever before and still rising.
For investors, understanding this context is crucial. Swedish forest companies aren't mining a depleting asset—they're farming a renewable one. The question isn't whether the resource will run out, but whether management can convert that biological growth into shareholder returns.
III. Origins: From Muskets to Sawmills (1609–1870s)
From muskets, pistols and armour via brass and textiles to paper, paperboard and wood products—a great deal has happened since Duke Johan of Östergötland established what was to eventually become Holmen in Norrköping in 1609. Like many other old Swedish companies, they have their roots in activities based around access to water, ore and later forests.
Duke Johan—son of King Johan III of Sweden and brother of the reigning King Karl IX—chose the location strategically. The island of Kvarnholmen sat at a natural chokepoint on the Motala Ström river, where rushing water provided power for mills and factories. In an era before steam engines and electrical grids, proximity to falling water was the equivalent of today's access to cheap electricity.
The original munitions works produced weapons for Sweden's imperial ambitions during the Thirty Years' War and the era of Swedish military expansion. The same water wheels that turned grinding stones for gunpowder would eventually power paper machines—a transition that mirrors Sweden's broader evolution from military power to industrial economy.
Meanwhile, 500 kilometers to the north, another strand of the Holmen story was taking shape. Isak Breant Sr, a businessman and former court commissioner to Queen Kristina, established there a mill in 1685. Iggesunds Bruk (English: mill) was originally an ironworks, and the nearby forests were used to produce charcoal for the factory.
It was a major transformation for the factory, which had always been an ironworks. Iggesund's shares were first listed on Stockholmsbörsen in 1949. The Iggesund name would eventually become synonymous with premium paperboard—but that story would unfold over centuries.
The mid-1700s saw the birth of what was eventually to become MoDo, when the Mo water-powered sawmill in Söderåfors began operating for the first time.
The third strand emerged in the 19th century with the Kempe family's sawmill operations. Carl Kempe (1799-1872), a Pomeranian-born merchant, originally partnered with his brother-in-law, but was from 1836 single owner of a sawmill in Mo, at the river Moälven, near Örnsköldsvik in northern Sweden. Carl Kempe later established a steam-powered sawmill at Domsjö on Moälven.
Carl Kempe represents a fascinating archetype—the immigrant entrepreneur who built industrial empires by recognizing opportunities in Sweden's natural resources. Born in what is now northeastern Germany, Kempe made his fortune by understanding the coming boom in timber exports to industrializing Britain.
The transition from iron and weapons to timber and paper followed a logical path dictated by energy economics. Iron smelting required enormous quantities of charcoal, which led ironworks owners to acquire vast forest holdings. When iron production began shifting to coal-based smelting in the 19th century, these forest assets became the foundation for a new industry: wood products.
The lesson here: Holmen's origins demonstrate how great companies often emerge from geological and geographical advantages combined with entrepreneurial vision. The forests, rivers, and water power that made northern Sweden valuable for ironworks became even more valuable for pulp and paper—a business model that persists to this day.
IV. The Industrialization of Swedish Forestry (1874–1970s)
Holmen was originally called Mo och Domsjö AB (MoDo), a Swedish company created in 1874. Originally producing and exporting timber, the company moved into pulp and paper at the end of the 19th and early years of the 20th century and into wood-based chemicals during the middle part of the 20th century.
The late 19th century saw the emergence of industrial-scale pulp production—a technology that would transform the economics of forestry. Previously, paper had been made from cotton rags and other textile fibers, limiting supply and keeping prices high. Wood pulp changed everything, turning forest waste into the raw material for the exploding newspaper and publishing industries.
Holmens Bruk, meanwhile, evolved through its own transformation. It became a limited liability company in 1854, bought up forests in southeastern Sweden and established a newsprint mill around 1912. After World War II, the Swedish textile industry gradually ceased to be profitable, and in 1970 Holmens left the industry to concentrate on newsprint.
Lars G. Sundblad introduced paperboard manufacturing at Iggesund, which started in 1963. This decision—made six decades ago—would prove transformational. Holmen Iggesund started in 1963, manufacturing paperboard for packaging under the brand name Invercote. Since then, it has developed new products and aims for sustainable production processes.
The era of vertical integration defined this period. Forest companies didn't just grow trees—they controlled the entire value chain from seedling to finished product. They owned the forests, operated the sawmills, produced the pulp, manufactured the paper, and in many cases ran their own transportation networks. This integration provided crucial stability in a notoriously cyclical industry.
1987: Iggesund buys Thames Board Ltd, a British paperboard company. The purchase includes Workington Sawmill Ltd's sawmill. 1988: Mo och Domsjö AB, Holmens Bruk AB and AB Iggesunds Bruk merges under the name Modo.
The 1988 merger deserves special attention because it created the modern company structure. The strategic logic was straightforward: scale in commodity businesses, focus on core competencies, and European market positioning. Swedish forest companies recognized that competing on the global stage required consolidation.
V. The 1988 Mega-Merger: Creating the "Third Giant"
The year 1988 marked a pivotal moment in Swedish industrial history. Three venerable companies—Mo och Domsjö AB, Holmens Bruk AB, and AB Iggesunds Bruk—came together to form a new entity that would challenge the dominant players in the Nordic forest industry.
MoDo's purpose in taking over Holmens and Iggesund was to create a third giant in the Swedish forest industry, challenging the first- and second-ranking groups, Stora Kopparbergs Bergslag AB and Svenska Cellulosa AB (SCA), by diversifying its output. The merger created a company with meaningful positions across multiple product categories: newsprint, premium paperboard, pulp, and timber.
It became the dominant shareholder in the country's third largest forestry concern, Mo och Domsjö AB (MoDo). The strategic alliance was forged to promote collaboration in printing, paper production, and joint investments in paper mills. Although SCA controlled slightly more than half of MoDo, there were no immediate plans to merge the two companies to form a concern that would rival Sweden's Stora, Europe's largest pulp and paper company, in size.
The Thames Board acquisition in 1987 brought Workington Mill in northwest England into the fold. Workington manufactures folding box board (FBB, GC1, GC2) for the Incada range in Workington, England—one machine with an annual capacity of 200,000 tons. This UK presence would prove strategically valuable, providing access to European markets outside the Eurozone.
In 1988, MoDo decided to sell off its soft paper division to the Finnish company Metsä-Serla Oy. Although this division's domestic market share was significant, the company's leaders felt that its share of the European market as a whole was not sufficiently large to justify its existence as a diversification, and that it would be wiser to concentrate on the profitable fine paper and newsprint divisions.
This decision—exiting a business with strong domestic market share because European-wide scale was insufficient—reveals sophisticated strategic thinking. Management understood that in commodity industries, subscale positions are value traps. Better to concentrate resources in businesses where you can achieve cost leadership.
The strategic insight: the 1988 merger positioned the combined entity to pursue a focused strategy across complementary product lines. Premium paperboard at Iggesund served different markets than newsprint at Braviken, reducing cyclical correlation while allowing shared infrastructure in forestry and logistics.
VI. The Lundberg Era: Sweden's Warren Buffett Takes Control
1993: L E Lundbergföretagen becomes MoDo's new main shareholder.
This single sentence in Holmen's corporate history understates the transformation that followed. The arrival of Fredrik Lundberg and L E Lundbergföretagen brought a fundamentally different approach to capital allocation and strategic patience—one that would prove essential during the traumatic restructuring ahead.
Fredrik Lundberg stands as one of Sweden's most influential business magnates, known for his leadership as the CEO and chairman of L.E. Lundbergföretagen AB, a diversified holding company with a rich legacy. This firm, originally founded in 1944 by Fredrik's father, Lars Erik Lundberg, began as a modest construction outfit but has since grown into a powerhouse of diverse investments.
In 1944, when Lars Erik Lundberg was only 24, he formed the company that was later to become Lundbergs in his apartment in Norrköping. This company engaged in construction operations and focused on residential building. From an early stage, Lars Erik aimed to master the entire building process from land acquisition to finished product.
The connection between Lundbergs and Holmen traces back to Norrköping—the same city where Duke Johan established his munitions factory in 1609. Lars Erik Lundberg built his construction empire in that same industrial city, and the family's ties to Holmen reflect these deep local roots.
Investments were also made in certain publicly listed companies, which gradually resulted in several major shareholdings in such companies as Incentive, Holmens Bruk, Alfa Laval, Siab and Östgöta Enskilda Bank. The Group's operations became increasingly diversified and, during the second half of the 1980s, it was decided that investments outside the core area of construction and real estate operations would be concentrated in a limited number of publicly listed companies.
During the 1990s and to date in the 2000s, substantial investments have been made and Lundbergs has become the principal owner of Holmen and Hufvudstaden.
Today, the largest owner in Holmen is L E Lundbergföretagen, controlled by billionaire Fredrik Lundberg with 32.9% of the shares and 61.6% of the total vote. This voting control is achieved through Sweden's dual-class share structure—a governance mechanism that allows controlling families to maintain influence without majority economic ownership.
Fredrik Lundberg's leadership philosophy is rooted in pragmatism and long-term thinking. He is known for his meticulous approach to decision-making, ensuring that every move aligns with the overarching vision of sustainable growth.
L E Lundbergföretagen AB is an investment company that manages and develops a number of companies based on long-term, active ownership. Clear leadership, responsibility and sound, sustainable business acumen, along with a solid financial positioning, are important values that characterize Lundbergs' approach.
Active ownership aimed at developing the companies over the long term promotes value creation for shareholders, the portfolio companies and society. Lundbergs invests for the long term, based on financial strength and a solid understanding of its portfolio companies. This creates stability and freedom of action for the companies to develop and to invest in sustainable, profitable operations.
Born 1951. Director since 2004. President and CEO of L E Lundbergföretagen. Now 74 years old, Fredrik Lundberg has led the family's investment empire for over four decades and serves as Chairman of Holmen's board—a position that gives him direct influence over strategic direction.
How did Lundberg's patient capital enable Holmen's decade-long transformation? The answer lies in the contrast with typical public market pressure. When newsprint demand collapsed in the 2000s and 2010s, publicly traded competitors faced intense pressure to maximize short-term earnings. Holmen, backed by an owner willing to accept near-term pain for long-term value creation, could pursue a multi-year restructuring without quarterly earnings pressure.
Holmen achieved strong earnings in 2024, although somewhat lower year-on-year. The newly merged Board and Paper business area continued to perform strongly. Despite a challenging market situation and a shortage of forest raw materials, Holmen managed to improve its positions in both paperboard and paper.
For investors, understanding the Lundberg ownership is essential. This isn't a company optimizing for next quarter's earnings call—it's one managed for generational wealth creation. That alignment can be immensely valuable when navigating structural industry change, but it also means minority shareholders must trust the controlling family's judgment.
VII. The Alliance That Wasn't: MoDo, SCA, and Strategic Choices (1990s–2000)
The early 1990s saw the formation and abandonment of an alliance between MoDo and SCA. It became the dominant shareholder in the country's third largest forestry concern, Mo och Domsjö AB (MoDo). The strategic alliance was forged to promote collaboration in printing, paper production, and joint investments in paper mills.
In December 1990, SCA purchased a 32 percent share of the voting rights in MoDo stock. The logic seemed compelling: two Swedish forest giants could collaborate on expensive paper mill investments while maintaining separate corporate identities. Europe's consolidating paper industry appeared to reward scale, and the SCA-MoDo partnership offered economies without full integration.
But alliances in commodity industries often fail—and this one proved no exception. The purchase, which was in large part debt financed, also increased SCA's debt load to about 70 percent of equity. The reason this ratio was not increased even more was that nearly simultaneous with its buyout of PWA, SCA sold its stake in MoDo since the alliance between the two Swedish firms had largely been unsuccessful.
In the late 1990s, SCA gained majority control of Mo och Domsjö (MoDo), Sweden's third-largest forestry company, and in 1999 formed a joint fine paper venture with MoDo, merging operations into a 50/50-owned entity to consolidate European market share without full integration.
1999: MoDo and SCA merge their fine paper and wholesaling operations to form the fine paper group Modo Paper. 2000: Modo Paper is sold. Holmen AB replaces Mo och Domsjö AB as the name of the parent company.
The name change to Holmen in 2000 signaled more than rebranding—it marked a strategic pivot toward focused ownership. Management had concluded that alliances and joint ventures added complexity without proportionate value. Better to own businesses outright and manage them directly.
The latter has been running as an independent company called Domsjö Fabriker since 2000, and in 2011 it was acquired by India's Aditya Birla Group. The Domsjö operations, focused on wood-based chemicals, didn't fit the emerging strategy. Rather than maintain a subscale position in an adjacent industry, Holmen divested—freeing capital for reinvestment in core businesses.
The lesson: horizontal consolidation in commodity industries often destroys value. The SCA-MoDo alliance failed because neither party could achieve the cost savings or market power that full integration might have provided. Holmen's decision to focus on controlled assets—rather than pursuing partnerships and joint ventures—proved wise.
VIII. The Paper Apocalypse: Digital Disruption Hits Newsprint (2005–2018)
Walk through the entrance to the Braviken Paper Mill today, and the walls tell a story of vanished glory. "A walk through the entrance to the Braviken Paper Mill tells one that the paper machines at this mill were once thoroughbreds in the world of newsprint production—the walls here are adorned with congratulatory world record-breaking plaques heralding a different time in the 1970s and 80s. Fredrik Bragsjö, TMP Manager at Braviken says, 'Our whole business landscape has changed over the years. At one time we were sending newsprint all over Europe, now we are much more focused on producing high-quality, wood-containing SC papers for large volume catalogues.'"
The structural decline of printing papers represents one of the most devastating industry disruptions of the 21st century. The internet, smartphones, and digital advertising migration combined to destroy demand for newsprint in wealthy countries. European and North American newspaper circulation collapsed, taking the mills that served them into oblivion.
Holmen Paper announced that it intends to cease production on PM 51 at its Braviken Paper Mill outside Norrkoping, Sweden during the third quarter of 2013. Holmen said the mill's product mix will be improved when the proportion of newsprint shrinks by 200,000 tons.
"Holmen said that the restructuring process furthers the company's strategy of focusing its Swedish operations on speciality paper. 'This spring, we'll be introducing book paper from Braviken while further refining the speciality products that are already being produced today,' said Henrik Sjolund, head of Holmen Paper. Following the shutdown of PM 51, Braviken Paper Mill will have about 360 employees and two paper machines with an annual capacity of just under 600,000 tons of printing paper."
2008: Production ceases at Holmen's paper mill in Wargön and the operation is shut down. This brings to an end 135 years of paper production at the mill.
The Wargön closure after 135 years of operation captures the human cost of technological disruption. Entire communities built around paper mills faced economic devastation as demand evaporated.
In June 2016 the newsprint mill in Madrid, Spain, was sold to International Paper. The Spanish operation, opened with great fanfare in 2006, became a casualty of the accelerating decline just a decade later.
In February, Burgo Group has permanently ceased production at its 160,000 tpy Mantua newsprint mill. Stora Enso will close two newsprint machines at the Hylte and Kvarnsveden mills in Sweden in the second quarter of the year, reducing newsprint capacities by a total of 475,000 tpy. At the very end of 2012, the company had already ceased newsprint production on 180,000 tpy PM 1 at the Hylte mill.
In 2020, SCA decided to shut down the production of printing paper at the Ortviken paper mill due to a shrinking market. At the same time, a decision was made to invest SEK 1.45 billion in the production of chemically pre-treated thermomechanical pulp (CTMP) at Ortviken. In 2021, all three paper machines at Ortviken were shut down, and the production of printing paper ceased.
Even SCA—Europe's largest private forest owner—couldn't escape the carnage.
Why did Holmen survive when competitors didn't? The answer lies in two structural advantages: forest assets as ballast and premium paperboard as an escape route.
Companies that had sold their forest holdings to fund expansion in the 1990s and 2000s found themselves exposed when paper demand collapsed. Without the steady cash flow from timber sales and the buffer of asset value, they faced bankruptcy or forced consolidation. Holmen's million hectares of forest provided both cash generation and balance sheet strength through the downturn.
Meanwhile, the premium paperboard business at Iggesund served fundamentally different end markets than newsprint. While newspapers died, demand for luxury packaging remained robust. Premium cosmetics, pharmaceuticals, and consumer goods required the same high-quality packaging as ever—perhaps more so as brands differentiated on presentation.
For investors, the paper apocalypse offers a cautionary tale about technological disruption in mature industries. Management teams that dismissed digital threats as overblown found themselves scrambling to survive. Holmen's early recognition—and proactive restructuring—made the difference between decline and transformation.
IX. The Strategic Pivot: "Own and Add Value to the Forest"
The clearest articulation of Holmen's strategic transformation came from then-CFO Anders Jernhall: "Over the past decade we have transformed Holmen from a newsprint and board producer partly self-sufficient in wood fibre and energy into a company whose business concept is to own and add value to the forest."
Holmen's business concept is to own and add value to forests. The forest holdings constitute the basis for the operations, which form a sustainable closed circuit whereby raw materials grow and are processed into every-thing from wood for climate-smart construction to renewable packaging.
This isn't marketing language—it represents a fundamental reorientation of corporate strategy. The old model treated forests as raw material suppliers for paper mills. The new model treats paper mills as one of several value-extraction mechanisms for the forest.
The forest holdings constitute the basis for the operations, which form a sustainable closed circuit whereby raw materials grow and are processed into every-thing from wood for climate-smart construction to renewable packaging, magazines and books. In addition, hydroelectric and wind power is generated on land owned by the company.
The 2020 acquisition of Martinsons represented a major milestone in executing this strategy. Today Holmen signed an agreement to acquire Martinsons, one of Sweden's leading players in sawn and processed wood products. The purchase price is SEK 1.0 billion for 100 per cent of the shares. The acquisition will almost double Holmen's sales of wood products to over SEK 3 billion.
The acquisition will almost double Holmen's sales of wood products to over SEK 3 billion, while also advancing positions in wood construction and providing Holmen with the capacity to process the majority of the raw material from its own forests in its own industry. Martinsons consists of two well-invested sawmills in northern Sweden with extensive processing of wood products for Scandinavian wood construction, as well as a project operation for construction of complete frames made of cross-laminated timber (CLT) and glulam beams.
"Martinsons is an extremely well-run family-owned company that has built a strong brand and succeeded in achieving growth with solid profitability. As our largest timber customer, we have followed their progress for a long time and have been impressed by of how they have developed a leading position in sustainable wood construction in Sweden. Backed by our large forest holdings, we look forward to continuing to grow the business and to contributing to increased construction using wood, which is part of the solution to the climate challenge," says Henrik Sjölund, President and CEO of Holmen.
Holmen AB completed the acquisition of Martinson Group AB from Lars Martinson and family on October 1, 2020.
The acquisition brought critical capabilities in mass timber construction. Bygdsiljum also manufactures CLT and glulam beams, while Kroksjön processes wood products through trimming, planing, painting, treatment and finger jointing.
The facility also houses the production of glulam and CLT. Today, Bygdsiljums Sawmill is one of the largest glulam producers in the Nordic region.
The strategic rationale for focusing on mass timber construction reflects a secular tailwind. The global cross-laminated timber (CLT) market is projected to grow from USD 1.90 billion in 2025 to USD 5.02 billion in 2033, exhibiting a CAGR of 12.9% during the forecast period.
Such countries as Austria, Germany, and Sweden have instituted mass timber as one of the desired building materials, wherein there are favorable zoning regulations, subsidies, and simplified processes for permitting timber buildings. These governments have funded educational buildings and other public works in terms of infrastructure using cross-laminated timber to set an example and make the use of the material a standard.
This dominance is attributed to the region's long-standing tradition of timber construction and favorable regulatory frameworks promoting sustainable materials. Countries like Austria, Germany, and Sweden are at the forefront of CLT adoption, supported by government initiatives and investments in green infrastructure.
The facility is one of the largest in Sweden with the capacity to supply framing materials for more than 4,000 homes annually, representing a tenfold increase in CLT production capacity. Flagship projects such as Stockholm Wood City, the world's largest timber-based urban district, highlight Sweden's global leadership in mass timber construction. Supported by favorable policies, sustainability goals, and growing demand for eco-friendly buildings, Sweden is set to remain a key hub for CLT production and adoption.
For investors, the strategic pivot toward wood construction represents a bet on structural change in building materials. If CLT and glulam capture meaningful share from concrete and steel—as climate regulations increasingly favor low-carbon construction—Holmen is positioned to benefit.
X. The Renewable Energy Pivot: From Paper to Power
Energy accounts for the Holmen Group's hydroelectric power and wind power assets, as well as electricity supply to Holmen's Swedish units. In a normal year, Holmen generates around 1.8 TWh of renewable electricity. Together with the electricity produced at the mills, the production of hydroelectric and wind power currently accounts for approximately 60% of the group's electricity consumption.
Holmen produces renewable energy from wind and water on their land. They contribute towards a sustainable energy supply in Sweden and towards Europe's transition to fossil-free energy sources. Controlling renewable energy resources makes them unique among forest and industrial companies.
Holmen wholly or partly owns 21 hydro power stations located on the Umeälven, Faxälven, Gideälven, Iggesundsån, Ljusnan and Motala Ström rivers. Normal annual production amounts to about 1100 GWh.
The hydroelectric assets represent legacy infrastructure—many stations dating back decades—that generates consistent cash flow regardless of paper market conditions. Rivers flow every year, and electricity prices in Sweden have been structurally higher since the energy crisis of 2022.
"Holmen's Board has today taken the decision to construct the Blåbergsliden wind farm on its land outside Skellefteå in northern Sweden. The investment totals SEK 1.3 billion and comprises 26 wind turbines with a combined capacity of 143 MW. 'For Holmen, the establishment of large-scale wind power provides a logical complement to our hydro power. It's also an effective way of obtaining added value from our forest ownership, and additional renewable electricity is positive for both Sweden and the climate,' says Henrik Sjölund, Holmen President and CEO."
Construction of the wind farm began in April 2020 and the first turbine was commissioned in November 2021. The facility was fully completed in May 2022. The 26 wind turbines are estimated to have an annual energy production of just over 400 GWh.
2014 saw the opening of Varsvik Wind Farm in Uppland, and BlĂĄbergsliden Wind Farm outside SkellefteĂĄ came into operation in 2022. With 26 turbines, the wind farm will boost our annual production of renewable energy to 1.8 TWh.
The scale of wind power ambitions continues to grow. "Holmen's Board has decided to invest SEK 1.5 billion in the construction of Blisterliden Wind Farm in SkellefteĂĄ Municipality. As part of Holmen's drive to develop its renewable energy business, the investment will boost hydro and wind power production by 20 per cent."
"This investment is fully in line with our strategy to create long-term value, while facilitating the green transition through greater electrification. We are in no doubt that wind power will play an important role in the electricity system of the future, along with controllable hydro power, and we are proud to be able to contribute to this development," says Fredrik Nordqvist, Senior Vice President Renewable Energy.
In addition to Varsvik and Blåbergsliden Wind Farms, Holmen has around 30 projects in various stages of development, from in-depth analysis to permit applications. Next in line is Stormyrberget Wind Farm in Västernorrland, a project run jointly with Vattenfall that could be considered for an investment decision in 2025.
The European Investment Bank recognized the strategic importance of this pivot. The European Investment Bank (EIB) is lending 1.1 billion Swedish kronor (around €100 million) to forest-industry group Holmen to expand its renewable energy generation. The financing will support the ongoing expansion of onshore wind installations in northern Sweden, strengthening the country's clean-energy supply and reducing greenhouse gas emissions.
"The expansion of wind power will increase the regional energy production and contribute to Sweden's goal of achieving net-zero greenhouse gas emissions by 2045. 'Sweden has long been a leader in renewable energy and sustainability,' said EIB Vice-President Karl Nehammer. 'By financing Holmen's expansion of clean power generation, we are strengthening Europe's energy resilience while supporting one of the country's most sustainable industrial players.'"
The strategic rationale for energy investments is threefold. First, energy self-sufficiency reduces exposure to volatile power prices—particularly important for energy-intensive paper and pulp operations. Second, wind farms monetize underutilized land assets; the same forests that grow timber also capture wind. Third, renewable energy positions Holmen favorably for regulatory trends favoring green producers.
For investors, the energy business transforms Holmen from a pure-play forest products company into something closer to an integrated natural resources company. The question is whether management can achieve satisfactory returns on wind investments while maintaining focus on core forestry and manufacturing.
XI. The 2024 Restructuring: Board & Paper Merger
The Holmen Group's paperboard and paper operations have been incorporated into a new combined business area, Holmen Board and Paper, to increase efficiency, competitiveness, and development opportunities. Over the years, Holmen has successfully developed paper and paperboard products based on raw fresh wood material and a largely fossil-free production process. By combining our process industry expertise in one business area, we are increasing our ability to develop our business within premium paperboard and innovative paper with four production facilities in Sweden and the UK.
Holmen has developed well by creating added value from the forest and land we own. By merging the Board and Paper business areas at the start of 2024, we further strengthened our competitiveness and focused our business model on four distinct business lines: forestry, hydro and wind power, woodworking industry and process industry operations. With our large forest holdings as a foundation, we grow trees for sustainable construction while also harnessing the energy that blows over the treetops and flows in the rivers.
The merger reflects several strategic insights. First, both paper and paperboard share common production inputs (wood fiber) and many process technologies. Combining expertise allows better knowledge sharing and innovation. Second, a unified business area provides clearer accountability for capital allocation decisions across process industries.
The rebuild of PM52 at Braviken Paper Mill demonstrates the ongoing evolution. ANDRITZ implemented its unique concept to allow for flexible production of book paper, newsprint, and containerboard based on thermo-mechanical pulp (TMP) on PM52. The machine has a wire width of 9.3 m and a design and operation speed of 1600 m/min. The rebuild enables Holmen to strengthen its position in the packaging market by increasing both the quality and production capacity of containerboard grades. Mechanical pulp-based containerboard products developed by Holmen are considered significant innovations in the paper packaging space. They offer basis weight reductions of up to 20% compared to traditional products combined with excellent visual appearance.
This flexibility—the ability to switch between book paper, newsprint, and containerboard on the same machine—provides resilience against market shifts. When catalog demand weakens, the same equipment can produce packaging materials. That optionality has value in an uncertain market environment.
"We are very satisfied with the ANDRITZ solution, which meets our high requirements and enables us to increase production efficiency and capacity as planned. With the sophisticated new concept, we can now switch seamlessly between different paper grades."
For investors, the 2024 restructuring signals management's vision for the next decade: four distinct business lines (forestry, energy, wood products, and process industries) with clear accountability and investment criteria for each. The organizational clarity should improve capital allocation discipline.
XII. Current Business Model Deep Dive
Forest 50.0% of operating profit, Paperboard & Paper 43.0%, Energy 7.0%, Wood Products 0.0% (Note: excluding items affecting comparability). By capital employed: Forest 75.0%, Paperboard & Paper 13.0%, Energy 8.0%, Wood Products 4.0%.
Understanding Holmen requires grasping the interaction between these four segments. Forest generates most of the profit and employs most of the capital. Board & Paper converts forest output into finished products. Wood Products captures value from sawlogs. Energy monetizes the water that flows through Holmen's land and the wind that blows across it.
Forest Segment: Holmen's land holding amounts to just over one million hectares of productive forest land in Sweden, and harvesting in wholly owned forests largely satisfies the Swedish production units. The forest is a stable source of revenue for Holmen and contributes considerable climate value by binding carbon dioxide.
Holmen's land holdings amount to 1,303,000 hectares, of which 1,160,000 hectares are classified as forest land according to international definitions.
The forest valuation methodology deserves attention. The value of the biological assets is determined by calculating the present value of expected future cash flows, less selling costs but before tax, from current standing trees. Post-harvest replanting costs are not included. Trees that are currently growing are expected to be harvested when they reach an average age of 85 years.
Board & Paper Segment: We offer renewable solid bleached board and folding box board. Our paperboards Invercote, Incada and Inverform are used for premium packaging applications within multiple different end-use areas. Invercote is our strong, multi-layered solid bleached board, designed to meet the highest demands of image reproduction in printing and surface treatment methods. It is ideal for packaging applications such as cosmetics, perfumes, chocolate, pharmaceuticals and electronics.
Our folding box board Incada is paperboard in its best form, delivering what is expected and more. In developing Incada, our goal was to design a paperboard that does what a paperboard should do: protect and promote. Inverform is a formable solid bleached board that has been specifically designed for ready-made food packaging such as pressed and folded trays. It offers a more sustainable alternative that has all the advantages of plastic without leaving a big carbon footprint.
Wood Products Segment: Wood Products supplies sawn and processed wood products for the construction trade, carpentry and construction industry at five sawmills located close to own forests. Holmen also offers customized solutions for climate-smart, large-scale timber construction. The positioning of the sawmills close to the sea, railways and roads facilitates effective logistics solutions to customers. The operations will be developed through increased processing and better utilization of timber raw materials in combination with large-scale production.
Energy Segment: Holmen's production of renewable hydroelectric and wind power contributes to sustainable energy supply in Sweden and to the European transition to fossil-free energy sources.
The European market makes up about 88% of Holmen's total net sales. Sweden is the single largest market with 24% of net sales, meaning roughly two-thirds of revenue comes from elsewhere in Europe.
XIII. Financial Profile & Capital Allocation
Operating profit for 2024 amounted to SEK 3,721 million (2023: 4,755). The decrease in profit is due to lower paper prices and the positive impact of income from the sale of surplus electricity the previous year. The operating margin was 16 per cent (21).
Profit after tax in 2024 amounted to SEK 2,861 million (3,697), which corresponds to earnings per share of SEK 18.0 (23.0). The book value of the Group's forest assets, calculated based on transactions in forest properties, increased by 3 per cent after the annual revaluation, from SEK 56,348 million at the beginning of the year to SEK 57,843 million.
This is illustrated by the fact that, although the market was weak in 2024, we were able to deliver a return on capital employed of 21 per cent.
The AGM adopted the income statement and balance sheet for the parent company and the Group for the past financial year and resolved to pay a dividend of SEK 12 per share. The dividend record date was confirmed as 2 April 2025. Given this record date, the dividend is expected to be paid on 7 April 2025.
It was resolved that a dividend of SEK 9 per share and an extra dividend of SEK 3 per share would be distributed. The record date for the dividend was set for April 2, 2025, and the dividend is expected to be paid out on April 7, 2025.
The SEK 12 total dividend (SEK 9 ordinary plus SEK 3 extra) on a share price around SEK 390 implies a yield of roughly 3%—modest by income standards but sustainable given the earnings base.
Standard & Poor's long-term credit rating for Holmen is BBB+ with a stable outlook.
As a company with international businesses, Holmen has actually paid for an S&P Credit rating, and you may be surprised to learn that Holmen is actually BBB+ rated, which makes it the highest-rated paper/forest company that I cover.
This credit rating deserves emphasis. In an industry notorious for leverage and cyclicality, Holmen maintains investment-grade credit with a stable outlook. The financial discipline reflects both Lundberg's conservative philosophy and the ballast provided by forest assets.
Industrial operations are conducted with a focus on long-term profitability and the objective is to sustainably achieve a return on capital employed of more than 10%. Financial net debt must not exceed 25% of shareholders' equity. Holmen aims to generate a favorable annual dividend to the shareholders. The level is adapted to the group's profitability situation, investment plans and financial position.
The Board of Directors of Holmen has decided to exercise its authorisation from the Annual General Meeting held on 31 March 2025 to buy back own shares. The Board's decision concerns the repurchase of up to 3 million shares of class B during the period from and including 8 May 2025 until the next annual general meeting.
The share buyback authorization signals management's view that the stock is undervalued relative to intrinsic asset value—not surprising given that forest assets alone approximate the market cap.
Operating profit for January-March amounted to SEK 988 million (January-March 2024: 944), corresponding to an operating margin of 17 per cent (17). Compared with the fourth quarter, operating profit increased by SEK 272 million due to higher deliveries of paperboard and paper, lower energy costs.
XIV. Competitive Landscape & Industry Analysis
The three largest private forest companies, Svenska Cellulosa AB (SCA, the largest private forest owner in Europe), Stora Enso, and Holmen, own nearly 19% (5.3 million hectares) of the Swedish forestland and buy 40–50% of the timber in Sweden.
SCA is Europe's largest private owner of forest land, with 2.7 million hectares. Holmen's approximately 1 million hectares makes it substantially smaller than SCA but still among Sweden's largest owners.
Following the recent agreement to divest approximately 175,000 hectares of Swedish forestland for an enterprise value of EUR 900 million, in line with book value, Stora Enso retains ownership of over 1.2 million hectares (1.0 million hectares of productive forestland) in Sweden, with a fair value of approximately EUR 5.8 billion as of 31 March 2025.
As part of its stronger focus on renewable packaging, Stora Enso is initiating a strategic review of its Swedish forest assets. The review includes assessing a potential separation and public listing of the forest assets through a partial demerger. The initiative aims to further increase business focus, streamline operations, and fully unlock the value of both the forest assets and Stora Enso's core packaging business. As part of this review, Stora Enso will explore various options, including a potential separation and listing of the forest business through a partial demerger into a new company.
Stora Enso's potential forest spinoff would create a direct comparable for Holmen's forest valuation—and likely increase investor awareness of the asset class.
The largest companies among The Swedish Forest Industries' members are Billerud, Holmen, SCA, Stora Enso and Södra.
Porter's Five Forces Analysis:
Threat of New Entrants: Low. Forest assets take 60-100 years to mature. No new competitor can simply enter the market by planting trees—they must acquire existing forests at market prices. The capital intensity of paper and pulp mills (billions of dollars for world-scale facilities) creates additional barriers.
Bargaining Power of Buyers: Moderate. End customers for paperboard and paper are sophisticated purchasers (brand owners, publishers) with multiple supply options. However, product differentiation in premium paperboard creates some pricing power.
Bargaining Power of Suppliers: Low. Holmen owns its primary raw material (forests). Equipment suppliers exist in competitive markets. Labor is skilled but available in Nordic countries.
Threat of Substitutes: High for Paper, Low for Forests. Digital media substitution has devastated newsprint demand. Packaging faces substitution from plastics and recycled materials. However, forest assets face no substitution threat—land is irreplaceable.
Competitive Rivalry: Moderate to High. The Nordic forest industry is consolidated among a handful of players, but global competition from North American, Brazilian, and Asian producers creates pricing pressure in commodity segments.
Hamilton Helmer's 7 Powers Analysis:
Scale Economies: Moderate. Paper and pulp mills exhibit scale economies, but these accrue to individual facilities rather than corporate scale. Holmen's mills are competitive at their scale levels.
Network Effects: None. Forest products don't exhibit network effects.
Counter-Positioning: Potentially present. Holmen's business model—focusing on forest asset ownership and long-term value—may represent a position that incumbent competitors find difficult to match without restructuring.
Switching Costs: Low for commodities, higher for premium paperboard where customer specifications and qualification processes create some stickiness.
Branding: Present in premium paperboard. Invercote and Incada brands command specification by premium brand owners.
Cornered Resource: Strong. This is Holmen's primary competitive advantage. Swedish forest land is finite, irreplaceable, and predominantly already owned. No competitor can create more forests in Sweden.
Process Power: Moderate. Holmen's integrated operations and fossil-free electricity provide cost advantages, but these are replicable with sufficient capital investment.
XV. Bull and Bear Case
BULL CASE:
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Hidden Asset Value: Forest assets valued at SEK 57.8 billion represent approximately 90% of market cap. Any revaluation toward transaction multiples observed in recent deals (like Stora Enso's EUR 900 million sale at roughly EUR 5,100/hectare) suggests upside.
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Secular Growth in Mass Timber: The CLT market's projected 12.9% CAGR through 2033 benefits Holmen's wood products business. Swedish companies lead globally in mass timber expertise.
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Energy Transition Tailwinds: Wind and hydroelectric assets provide stable cash flows while positioning Holmen as a beneficiary of decarbonization trends. The EIB loan demonstrates institutional support for expansion.
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Patient Capital Advantage: Lundberg family ownership enables decade-long investment horizons that publicly traded competitors cannot match.
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Premium Paperboard Moat: Invercote and Incada brands hold specification positions with premium brand owners resistant to commoditization.
BEAR CASE:
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Structural Paper Decline Continues: While Holmen has pivoted away from newsprint, significant paper exposure remains. Continued digital migration threatens volumes.
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Forest Valuation Risk: Forest assets are marked to market based on transaction prices. A recession or decline in timber prices could trigger writedowns.
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Concentrated Ownership Risks: Lundberg family control means minority shareholders must trust governance decisions without meaningful voice. Conflicts of interest between controlling and minority shareholders could emerge.
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Energy Price Volatility: While energy assets provide upside in high-price environments, normalized power prices would reduce this segment's contribution.
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Capital Intensity: Wind power investments require substantial upfront capital with uncertain long-term returns. The SEK 1.5 billion Blisterliden investment ties up capital that could be returned to shareholders.
XVI. Key Performance Indicators
For tracking Holmen's ongoing performance, three KPIs stand out as most material:
1. Forest Asset Value Per Hectare: Currently SEK 55,000 per hectare of productive forest land. This metric captures both timber price trends and transaction market valuations. Rising values indicate forest asset appreciation; declining values signal either price pressure or reduced demand for forest assets.
2. Return on Capital Employed in Industrial Operations: Currently 16% (2024). This metric isolates the profitability of manufacturing activities from the forest holding gain/loss. Management targets sustainable ROCE above 10%. Tracking this metric reveals whether the industrial businesses generate adequate returns on invested capital.
3. Renewable Energy Production Growth: Currently approximately 1.8 TWh annually. This metric tracks the expansion of Holmen's energy business—a strategic priority signaled by billions of SEK in wind power investments. Production growth validates the capital deployment thesis.
XVII. Management Assessment
Magnus Hall, Holmen President and CEO, has informed the Board of his wish to resign. The Board has appointed Henrik Sjölund, currently CEO of the business area Holmen Paper, to be his successor. Magnus Hall remains CEO until the AGM April 8. Henrik Sjölund will take up the position April 9.
Mr. Henrik Sjolund has been the President, Chief Executive Officer, and a Director of the company since 2014. He also serves as a Director at Skanska, Skogsindustrierna.
Previously, he was Chairman at the Swedish Forest Industries Federation and a Board Member of the Confederation of Swedish Enterprise. He holds a MSC in International Economics from Linköping University.
"As CEO of Holmen Paper I have concentrated on restructuring the operations and moving the business toward specialty paper. I look forward to the challenges in other business areas, and together with all my colleagues within Holmen, lead the development of the Group. Major focus will be taking advantage of the opportunities offered by the significant investments in paperboard and sawmill operations made in recent years."
Henrik Sjölund's background in restructuring the paper business—the segment hardest hit by digital disruption—prepared him well for leading the broader transformation. His external board service (Skanska, Swedish Forest Industries Federation) provides governance experience and industry perspective.
President and CEO Henrik Sjölund explains why managing forests responsibly is vital in the fight against climate change. Holmen's story starts in Sweden's forests—taking care of the forest is the foundation of everything the company does. For every tree it harvests, it plants at least two new ones.
The alignment between Sjölund and Chairman Lundberg appears strong. "I am convinced that Henrik Sjölund will be a capable CEO of Holmen and look forward to a more close cooperation, says Fredrik Lundberg, Chairman of the Board."
XVIII. Conclusion
Holmen's 416-year history offers lessons that transcend the specifics of forestry and paper. Great businesses often emerge from geographical or resource advantages—but sustaining them requires continuous adaptation. The muskets and armor of 1609 gave way to brass and textiles, which gave way to paper and pulp, which is now giving way to wood construction and renewable energy.
The Lundberg family's patient capital has enabled a transformation that shorter-term investors might have prevented. When newsprint demand collapsed, Holmen could pursue a multi-year restructuring rather than desperately defending declining markets. When wind power required billion-kronor investments with decade-long paybacks, management could commit without quarterly earnings pressure.
We use the residual forestry products to make renewable packaging, magazines and books that are already today helping customers to reduce their fossil carbon footprints. Supported by a strong financial position, we are well placed.
For investors, Holmen presents a distinctive proposition: exposure to irreplaceable Swedish forest assets, combined with manufacturing operations that convert those assets into products, plus a growing renewable energy portfolio. The BBB+ credit rating and disciplined capital allocation provide downside protection.
The question isn't whether Holmen will survive another century—the forests will certainly remain productive. The question is whether management can continue converting biological growth and transformation opportunities into shareholder returns. Based on the evidence of the past three decades, the Lundberg-Sjölund partnership has earned some benefit of the doubt.
Our business rests on the power of the forests. We deliver the renewable products the world and the climate need.
Four centuries ago, Duke Johan built a munitions factory where river water met human ambition. Today, that same combination—natural resources, patient capital, and adaptive management—continues to create value. The forest grows. The products change. The story continues.
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