Ponsses financial report for the first six months of 2023 has arrived. Let’s see in which direction the market for forest machines is heading. Ponsse predicts that the result for 2023 will be the same as for 2022, which was a good year, despite the loss of the large Russian market.
This is a translation of an article signed Torbjörn Johnsen at Skogsforum.se.
Ponsse Q2 report 2023 – Stable result but fewer orders
The Finnish company Ponsse is a pure forest machine manufacturer (CTL*) and a publicly listed company. This means that the Ponsse quarterly reports are the only way of following how the market for CTL machines is doing. None of the other manufacturers of CTL machines reports quarterly.
The first six months of 2023 show higher figures both for turnover and profit compared to the same period last year. But looking only at Q2, it doesn’t look as good as Q2 last year. Ponsse reports that the net turnover increases, but the result is affected by higher material costs and the fact that the second-hand market is slow and binds capital.
The problems with the material- and component supply are now solved. Today there are no machines in stock waiting for “missing components” at the Ponsse factory. This was a huge problem for all manufacturers during the last few years.
Ponsse’s sales, the turnover, come from deals that were made earlier. Therefore, it’s interesting to see how the order flow is developing and how many orders are in the books compared to earlier quarters. Turnover, order flow, and the value of the order books give information about how the last few years’ forest machine market has been and maybe also where it’s heading.
The roller coaster of forest machine manufacturing
Looking at the chart below, several interesting things are revealed. Most likely it has looked the same with Komatsu Forest and John Deere Forestry, but Ponsse presents hard facts to study. 
The order flow increased rapidly by the end of 2020 and the beginning of 2021 and peaked during Q1 2021. The growing order flow in combination with escalating problems in component supply made the order books swell vastly. Manufacturing and deliveries couldn’t keep pace with the demand. This meant that order book value kept increasing until Q4 2021.
In Q1 2022, Russia invaded Ukraine, and from one day to another the major manufacturers of forest machinery (and many other companies) stopped delivering machines to Russia and Belarus. These were large markets for the manufacturers which is obvious in Ponsse’s Q1 report for 2022 (see chart above). But the rest of 2022 was good as other markets took what was lost in Russia and Belarus.
From Q4 2022 onward, the order flow decreases. A development that still goes on in Q2 2023. This, in combination with the solved sub-supplier problems, meaning manufacturing is in phase with the order flow, makes the value of the order books go down. It means shorter delivery times for the customers, which is good, but it also indicates that tougher times are coming.
Just like other businesses, the forest machine business is struck by higher costs and would have to raise the prices to reach the desired profit levels. But that’s difficult to do in a decreasing market. Ponsse’s profit margin for Q2 -23 was 4,9 percent which is the lowest level during the period Q1 2020 – Q2 2023.
Continued large wood flow and need for machines
Even though the consumer market and construction business are going down, there seems to be a need for new forest machines. One reason is that the utilization of saw- and pulp mills is still high, and higher than ever for energy wood. Timber prices have increased in Sweden and the price levels in Northern Europe are still high. The large margins make it possible to pay reasonable fees to the forest machine contractors to compensate for increased interest rates.
Furthermore, in Sweden, fewer new machines were sold in the last few years than normal which should mean that the demand for new forest machines will continue.
We will follow the forest machine market and write about it.
Read the Ponsse half-year report here. 
* CTL – Cut-To-Length
