Segezha Group reported a sharp deterioration in its first-half results as weak wood markets, lower Chinese demand and fuel shortages following attacks on Russian oil refineries pushed up production costs.<\/p>\n
Operating income before depreciation and amortisation (OIBDA), a measure of the profitability of the group\u2019s core operations before depreciation and amortisation costs, fell fourfold year-on-year to RUB 0.66 billion (EUR 6.7 million) in the first half of 2026. Revenue declined 15% to RUB 37.98 billion (EUR 386 million), while the OIBDA margin dropped to only 1.7% from 5.8% a year earlier.<\/p>\n
The Russian forest industry group remained heavily loss-making, although its net loss narrowed by 6% to RUB 15.3 billion (EUR 156 million), compared with RUB 16.2 billion (EUR 165 million) in the first half of 2025.<\/p>\n
Segezha said fuel shortages following a series of attacks on major refineries in European Russia had significantly increased production costs. The problem is particularly important for the forest industry, where logging and long-distance timber transport are heavily dependent on diesel.<\/p>\n
Pressure on the Russian fuel market continued during the summer, prompting government measures aimed at maintaining domestic supplies. For Segezha, the additional costs came on top of weak construction activity in international markets, excess supply and limited domestic demand.<\/p>\n
Softwood lumber sales fall as Chinese demand weakens<\/strong><\/p>\n Segezha's wood processing business recorded a particularly weak first half. Softwood lumber sales fell 12% year-on-year to 847,000 m\u00b3, partly because of lower production caused by insufficient log supply following difficult weather conditions towards the end of the logging season.<\/p>\n Sales of softwood lumber to China dropped 27% compared with the first half of 2025. The decline is significant for a Russian industry that has become much more dependent on Asian markets since access to Europe was sharply reduced after 2022. Longer transport distances have also increased the importance of freight and fuel costs.<\/p>\n Revenue from Segezha's wood processing segment fell 16% to RUB 15.9 billion (EUR 162 million), while OIBDA was negative at RUB 0.8 billion (EUR 8.1 million loss).<\/p>\n Logging volumes also declined sharply. Segezha harvested 3.2 million m\u00b3 of roundwood during the first six months, down 22% year-on-year, although raw material self-sufficiency remained above 89%.<\/p>\n Birch plywood volumes also decline<\/strong><\/p>\n Birch plywood sales fell 7% to 79,000 m\u00b3, with the company reporting weak demand from the construction sector. Sales of specialised tanker plywood remained close to the previous year's level.<\/p>\n Revenue from wood-based panels and housebuilding declined 4% to RUB 6.2 billion (EUR 63 million), while OIBDA reached RUB 0.5 billion (EUR 5.1 million).<\/p>\n Paper operations faced separate problems. Production at the Segezha Pulp and Paper Mill was affected by instability linked to disruptions in Karelia's regional electricity system. Paper sales consequently fell 21% to 114,000 tonnes.<\/p>\n Debt remains high as investment is cut<\/strong><\/p>\n Segezha has responded to the difficult market by cutting spending and focusing investment on existing operations. Capital expenditure excluding M&A fell 41% to RUB 1.4 billion (EUR 14 million) during the first half, with most spending directed towards maintenance.<\/p>\n Net debt stood at RUB 77.04 billion (EUR 784 million) at the end of the second quarter, up from RUB 74.3 billion (EUR 756 million) at the end of March. This follows the large recapitalisation completed in 2025, which had substantially reduced the group's debt.<\/p>\n The company is continuing measures to lower production costs, improve logistics and redistribute production between its facilities. These efforts come as Segezha faces pressure from weak markets as well as higher domestic operating costs.<\/p>\n There were some signs of stabilisation in the second quarter. Revenue increased 1.3% year-on-year to RUB 20.5 billion (EUR 209 million), while the quarterly net loss narrowed 18% to RUB 7.44 billion (EUR 76 million). OIBDA remained weak at RUB 0.45 billion (EUR 4.6 million), down 10%, with a margin of around 2%.<\/p>\n The first-half figures show pressure across several parts of the business. Weak construction activity is affecting softwood lumber, plywood and industrial packaging, while Chinese softwood lumber purchases have fallen sharply. Lower logging volumes have restricted raw material availability, and fuel shortages following attacks on Russian refineries have added another source of cost pressure.<\/p>\n The 27% decline in Chinese softwood lumber sales is particularly important. Russian producers have become increasingly reliant on China and other non-European destinations, leaving fewer alternative export markets when Chinese purchasing slows.<\/p>\n For Segezha, profitability remains the main problem. Revenue of almost RUB 38 billion (EUR 386 million) generated only RUB 0.66 billion (EUR 6.7 million) of OIBDA in the first half. With the margin down to 1.7%, further increases in logging, transport or energy costs would add pressure to an already weak operating result.<\/p>","protected":false},"excerpt":{"rendered":" Segezha Group reported a sharp deterioration in its first-half results as weak wood markets, lower Chinese demand and fuel shortages following attacks on Russian oil refineries pushed up production costs.<\/p>","protected":false},"author":1,"featured_media":99793,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"Default","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[5204],"tags":[],"class_list":["post-99792","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-daily-news"],"acf":[],"yoast_head":"\n