Stora Enso’s Wood Products division has two main business areas: traditional wood products, consisting of classic and planed timber products, pellets and industrial components, and building solutions, such as walls, floors, stairs, construction beams and services including logistics and digital construction services. While both these businesses are performing well, the biggest growth potential is within building solutions. Here we can support the construction industry to make a step-change regarding sustainable materials and process efficiencies via prefabrication and digital planning. By offering high-quality and flexible solutions for a wide range of construction types, including multi-storey residential, public and commercial buildings, we can differentiate ourselves in the face of competition, and do so with good profit margins. Our long-term target is to triple our sales in building solutions with sustainably improved profitability.
The common denominator for our strategic focus areas is sustainable and profitable growth in markets where we already have a strong foothold. Our wooden building solutions fit perfectly into our sustainable growth strategy as they replace concrete with massive wood products that naturally store carbon through their entire lifecycle. Today, the wooden construction market is growing by 10% annually, and as the second largest global supplier of wood-based building solutions, we are in the sweet spot of a high-margin business. Around 40% of our total wood products sales comes from outside of Europe, and given our company’s size and global reach, coupled with local market knowledge, we are in a great position to grow that customer footprint.
Construction materials used in the world today account for 11% of global CO2 emissions. Therefore there is a need to shift from non-renewable construction materials, such as steel and concrete, to renewable, circular low-carbon building materials, such as wood. In fact, if cement was a country, it would be the third largest CO2 emitter in the world. Constructing large buildings, such as offices, schools and residential houses with wooden elements helps store CO2 and reduce the climate footprint by up to 75%. Also, the lifecycle process of building with wood is more sustainable, as it is lighter in weight and can be reused for other purposes. Those include use for new buildings, wooden furniture, and paper, or thermal use as energy after 5–7 recycling turns. Wood will play a crucial role in green construction, and we have the solutions and experience to drive this change.
Wood Products puts a lot of effort into developing new products and services. For our Building Solutions business, this encompasses offerings throughout the entire lifecycle of a building, i.e. from the initial design to the recycling of a building. We expect up to 45% of the construction value chain to move towards prefabrication and digital tools. For this, we develop digital design, logistics and construction tools as well as Building Concepts by Stora Enso. These have standardised prefabricated modules in order to reduce planning and construction costs, complying with building regulations and improving raw material efficiency. We do this in an open setting where customers, suppliers and partners can jointly contribute to the process. One example is how we address one of the main challenges in mass timber buildings: moisture. Wood Products offers a full solution, including coated products, sensors to identify moisture early on, and dashboards which alert the customers about a potential issue. Another example is our focus on becoming the industry leader in sustainable materials by exploring bio-based glue to replace fossil-based adhesives, making laminated building materials such as CLT and LVL 100% fossil-free and thus being a forerunner in terms of building recyclability.
Our Wood Products business is in an excellent position and we recently recorded the second best financial third and fourth quarters for the division ever. Moving forwards, we will continue to focus on leveraging our investments, such as Zdirec in the Czech Republic, where we’re building our fourth CLT production plant, scheduled to be up and running at the end of next year. We already have a global market share of some 20% within CLT. Another CLT line in the Czech Republic increases our CLT capacity by 44% and enables us to capture opportunities in the important Central European market. We will also continue to develop new products, applications and concepts for the global construction market. Stora Enso is a leader in this space and our unique expertise and experience make us stand out against competitors.