Market
Koskisen’s main market segments include sawn softwood, birch plywood and chipboard. 38 percent of Koskisen revenue is generated from Finland, 33 percent from the rest of the EU and 29 percent from other countries, mainly the United Kingdom and the Asian market.
Demand drivers
Market growth is expected to be driven by several sustainability linked factors as environmental awareness is a key megatrend impacting all aspects of the market. Koskisen believes that companies that focus on sustainability throughout the value chain and include it in their strategies are well positioned to take advantage of this trend.
1. Increasing regulation to cut emissions
Several policies and initiatives across Europe aim to support the transition to a circular economy, enabling increased demand for wood products, and are some of the key drivers in green construction. For example, the Finnish government aims to increase the use of wood in public construction to 45 percent by 2025 from 50,000 cubic meters in 2019 to 210,000 cubic meters in 2025. Other examples of regulation shift in Europe include the French government’s requirement that all new public buildings be built of at least 50 percent of timber or other sustainable materials. The “Charter for wood 2.0” program in Germany aims to increase the contribution of sustainable forestry and wood use to climate change mitigation.
2. Growing construction volumes as a result of urbanization combined with wood materials create demand for wood products
A construction market with a forecast for long term growth driven by, for example, increasing urbanization, is expected to support growth in demand for wood products, further supported by the expectation of wood’s increasing share of the construction materials markets due to increasing environmental awareness and regulation. Construction is the largest end use sector of both the general wood products market and Koskisen’s products. Koskisen believes that it is well positioned to offer its customers the wood products needed to fulfill sustainability requirements (Sources: AFRY Market Study, IHS Markit Ltd (“IHS”).
The following charts set forth information on the indexed values and forecast compound annual growth rates (“CAGR”) for both new builds and renovation and modernization between 2021 and 2026:
3. Increasing logistics volumes and need for transportation vehicles create demand for plywood solutions in the light commercial vehicle industry
Projected increasing logistics volumes driven by globalization and e-commerce are expected to increase the demand for LCVs, such as trailers, trucks and vans. Plywood is used in LCVs as interior solutions, such as floors, linings and shelves, in order to provide a durable, comfortable and comparatively light material. Koskisen’s Kore business offering covers all of the paneling needs for LCVs (Sources: Company information, The Society of Motor Manufacturers and Traders Limited (”SMMT”) (New Car and LCV Registrations Outlook to 2023 at July 2022), International Monetary Fund (World Economic Outlook Database, April 2022), Statista (Global Parcel Shipping Volume between 2013 and 2026, September 2021).)
The following charts set forth information on global parcel shipping volumes and their forecast development as well as annual new LCV registrations in the United Kingdom and their forecast CAGR for the periods indicated:
4. Increasing use of wood in furniture as more sustainable, durable and resistant alternative
According to Koskisen, wood is currently a popular material in furniture production due to its features, such as durability, versatility, sustainability and trendiness. High quality wood, chipboard and plywood are becoming especially popular in furniture production. A major contributor to furniture demand growth is expected to be the forecast increase in the number of first time home buyers in Europe between 2022 and 2026. Wood’s position as a sustainable alternative for furniture is expected to attract consumers and thereby contribute to increased demand for wood. Koskisen’s panel products are widely used in different applications in the furniture industry. (Sources: Statista (European Furniture Market Sizes, June 2022), Company information.)
The following chart sets forth information on the size and forecast CAGR of the European furniture market for the periods indicated:
Key market segments
Sawn softwood
The value of the global sawn softwood market was estimated to amount to EUR 155 billion in 2021, of which 22 percent is considered as addressable for Koskisen. The end uses of sawn softwood in the European market in 2021 was divided to construction, packaging and other, joinery and furniture. The global annual sawn softwood volume demand is expected to grow at an average annual growth rate of 1.9 percent until 2030 from 2021 levels. Prices have reached all time high levels during the past 18 months on a global level due to strong demand relative to the available supply, particularly in Europe and North America. (Sources: Company information, AFRY Market Study.)
The following chart sets forth information on global (excluding Russia and Belarus) demand volume for sawn softwood and its CAGR between 2008 and 2030:
Birch plywood
The value of the global birch plywood market was estimated to amount to EUR 3.1 billion in 2021, of which 66 percent, or more than EUR 2 billion, is considered addressable for Koskisen. Geographically, most of the birch plywood market is in Europe due to the European tradition of using birch plywood instead of other board alternatives. The main drivers behind the growth of birch plywood are expected to be linked to growth in the logistics and construction sectors globally. Koskisen is expected to benefit from the tight supply situation in Europe in the coming years due to sanctions on imports from Russia.
The following chart sets forth information on global (excluding Russia and Belarus) demand volume for birch plywood and its CAGR between 2008 and 2030:
Chipboard
The European chipboard market size in 2021 was estimated to amount to EUR 11 billion, of which 5 percent is considered addressable for Koskisen. The chipboard market segment comprises a wide range of products suitable for applications within the furniture, interior design and construction industries. The demand is estimated to grow annually approximately 2.2 percent until 2030 from 2021 levels mainly due to increased demand from the furniture manufacturing and construction industries. (Sources: Company information, AFRY Market Study.)
The following chart sets forth information on European (excluding Russia and Belarus) demand volume for chipboard and its CAGR between 2008 and 2030:
Competitive environment
As the sawn wood market is global, Koskisen competes with a diverse set of competitors that includes, for example, large global wood companies as well as mid- and small-sized local companies. In birch plywood market segment, UPM Kymmene’s Plywood business is the largest entity that is active in Koskisen’s markets. In addition, Russia has traditionally been a large birch plywood exporter to Europe. In the chipboard market segment, Koskisen faces competition only from outside of Finland as it is the only domestic chipboard producer, supplying approximately 47 percent of the domestic demand in 2021. The main competitors of Koskisen’s Kore brand are relatively small companies in Central and Southern Europe within the vehicle solutions industry.