Characterization of forestry contractors’ business models and profitability in Northern Sweden

Abstract

ABSTRACT Forestry contractors have doubled their share of work in Swedish forests since the 1990s and have thus become important actors in the industry’s supply chain. Yet, their profitability has often been low. It is essential for a firm’s success to have a well-functioning business model. Therefore, the aim of this study was to characterize business models currently used by forestry contractors and identify differences in the contractors’ financial performance in relation to a chosen business model. A survey was sent to all limited liability companies in northern Sweden that were registered to carry out logging or silviculture. One hundred and ninety-eight contractors responded, and their financial performance was analysed based on information in financial statements. The study highlights that there are clear differences both within and between contractor categories in relation to several business model components, as well as their financial performance. Logging contractors had the lowest profitability, measured as return on assets, and also a lower solidity and liquidity compared to silvicultural and mixed service contractors. The largest logging contractors tended to have a better and more stable profitability than small ones, although the differences were small and varied between years. However, a negative trend in profitability was identified for all contractor groups.