Interim Report Jan – June, 2017

JANUARY 1 – JUNE 30, 2017
(compared with the year-earlier period) 

During the period, shares in the discontinued operation Essity (the hygiene business) were distributed to SCA’s shareholders and on June 15, Essity was listed on Nasdaq Stockholm. Net profit for the period mainly comprised an earnings effect of SEK 136,914m from the distribution of Essity shares. The distribution was a non-recurring event. Unless otherwise stated, only SCA’s continuing operations (the forest products business) are described in this report. 

• Net sales increased 7% to SEK 8,191m (7,665)
• Adjusted EBITDA increased 2% to SEK 1,634m (1,602)
• The adjusted EBITDA margin was 19.9% (20.9)
• Adjusted operating profit amounted to SEK 1,062m (1,039)
• Operating profit amounted to SEK 949m (1,158)
• Net profit for the period from continuing operations amounted to SEK 651m (914)
• Earnings per share from continuing operations amounted to SEK 0.93 (1.30)
• Operating cash flow from continuing operations amounted to SEK 906m (1,340)

COMMENTS ON THE FINANCIAL STATEMENTS

The Annual General Meeting’s decision to split SCA into two listed companies has been implemented. For every share in SCA, shareholders have received one new share in the global hygiene and health company Essity. SCA is therefore a focused and cost-efficient forest and forest products company.

The reported result for the second quarter of 2017 was significantly impacted by extended planned maintenance stops at several of SCA’s mills. Earnings were similarly affected by costs for the recently completed company split, and for the major ongoing investment project at the Östrand pulp mill. Underlying earnings are stable.

General market conditions for forest industry products are relatively strong with high demand in China, North America and Europe. The exception is publication papers, which have been adversely impacted by a continued structural decline.

Supplies of timber are balanced in SCA’s operating area, creating a stable raw material market.

The market balance is strong in the Wood segment, with favorable underlying demand, and prices have gradually risen. The market is driven by continued high levels of construction activity in the US and high demand for wood products in China. The European market is also strong where the building materials trade, in particular, has shown continued positive growth.

The market for kraftliner has shown strong growth in recent years and the beginning of 2017 was no exception. Underlying factors include growing online shopping and demands for high quality packaging, which are increasing the preference for kraftliner – a packaging material made from fresh fiber. We have seen stepwise price increases over the past six months and another price increase for unbleached kraftliner has been announced for August.

The pulp market developed favorably during the first six months of the year, with strong demand in China and relatively good demand in other markets. Market conditions were characterized by stable prices and volumes, with no significant inventory build-up to date due to increased production capacity. However, a weakened USD has recently resulted in lower delivery prices measured in Swedish kronor.

In view of the stable and long-term growing demand for long-fiber pulp, in particular from tissue and packaging producers, SCA decided in August 2015 to invest SEK 7.8bn in the expansion of the Östrand pulp mill. The project will double Östrand’s capacity and make Östrand one of the most cost-efficient mills in the world for long-fiber kraft pulp production. The project is on track in terms of both time and budget.

INVITATION TO PRESS CONFERENCE ON THE INTERIM REPORT FOR THE FIRST SIX MONTHS OF 2017

The six-month report will be published on July 21, 2017 at about 8:00 a.m., followed by a press conference at 10:00 a.m.

At the press conference, the President and CEO, Ulf Larsson, and CFO, Toby Lawton, will present the report and answer any questions.

The press conference will be webcast live at www.sca.com It is also possible to participate by telephone by calling +44 (0) 20 7162 9960 or +1 646 851 2094 or + 46 (0) 8 5052 0337. Ring in good time before the conference commences. Specify “SCA” or conference ID no. 962387.

For further information, please contact:

Ulf Larsson, President and CEO, tel: +46 (0) 60 19 46 46
Toby Lawton, CFO, +46 (0) 60 19 31 09
Björn Lyngfelt, Senior Vice President, Group Communications, tel: +46 (0) 60 19 34 98
Nils Lindholm, Investor Relations Director, tel: + 46 (0) 70 585 41 05

Please note:

SCA discloses the information provided herein pursuant to the EU Market Abuse Regulation. This report has been prepared in both Swedish and English versions. In case of variations in the content between the two versions, the Swedish version shall govern. The information was submitted for publication, through the agency of the contact person set out below, on July 21, 2017 at 8:00 a.m. CET.

Björn Lyngfelt, Senior Vice President, Group Communications, tel: +46 (0) 60 19 34 98

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