Plywood earnings

January 28, 2022 – This week companies start to unfold the 2021 results. It was an unusual year, and so will also be some of the annual results.

When a customer orders three truckloads of plywood and gets only two, the price has no other option than go up. In the first half of 2021, demand exceeded supply, and everybody increased prices. At the end of the year, the price curve bent a bit but stayed on an elevated level.

Together with the prices, the costs started hiking. The two main cost elements in plywood are round wood and labour, followed by glue and electricity. Even though none of them got cheaper in 2021, the main expense hit came from round wood.

Due to the different kinds of forest ownership and industry structure, the log price development varies between countries and regions. In addition, some mill locations enjoyed last year fluent log supply, whereas in other regions shortages pushed the prices even higher. It makes a difference if the main cost type, the log price, increases 20% compared to 60%. 

Good volumes and impressive price increases meant record sales for several companies in 2021. However, the best earnings growth comes from companies whose costs rose the least. The learning lesson is old and traditional: buy cheap, sell expensive.