SCA Interim Report 1 January - 30 September 2000

Interim report 1 January - 30 September 2000 00:3 00:2 00:1 0009 9909 Net sales, SEK M 16,784 16,351 15,992 49,127 49,234¹ Earnings after financial 1,805 1,773 1,670 5,248 3,810 items, excl. Non- recurring items, SEK M Earnings per share, 5.40 5.05 4.79 15.24 11.75 excl. non-recurring 2 items, SEK Earnings per share, 15.02 24.86 incl. non-recurring items, SEK Cash flow from current 9.21 6.37 3.79 19.37 20.29 operations 2 per share, SEK 1 Including net sales in SCA's former fine paper operations. 2 Adjusted historically to reflect new issue. *Earnings for the quarter, excluding non-recurring items, were record high. *Operating margins for Hygiene Products and Packaging improved in the third quarter, compared with the second quarter. *Nine-month earnings after financial items, excluding non-recurring items, rose 38% compared with the year-earlier period. All business groups improved their operating profit. *Sales growth - excluding fine paper operations - was 19% during the year compared with the corresponding period a year earlier. *Capital gains from the sale of Modo Paper amounted to SEK 2,656 M. SEK 625 M has been reserved for possible structural measures pending the outcome of the planned acquisition of Metsä Tissue. NET SALES AND EARNINGS Consolidated net sales amounted to SEK 49,127 M and thus remained unchanged from the preceding year (SEK 49,234) M. Adjusted for the influence of fine-paper operations, which were included in the first three quarters of 1999, net sales rose 19% for the Group's other operations. Changes in exchange rates reduced Group net sales by 2%. The divestment of Modo Paper provided a capital gain of SEK 2,656 M. As regards the acquisition of Metsä Tissue, the EU Commission has requested a more detailed examination, which is expected to be finalized not later than February 2001. Consequently, there is uncertainty as regards the completion of the transaction. At the same time, SCA, for competition regulatory reasons, has been unable to conduct a final acquisition estimate. Accordingly, for reasons of prudence, an amount corresponding to a slightly less than 25% of the capital gain, or SEK 625 M, has been allocated as a provision for possible structural measures. As a result, non-recurring items amount to SEK 2,031 M in the consolidated operating profit. Group operating profit, excluding non-recurring items, amounted to SEK 6,169 M (4,709), an increase of 31% compared with the corresponding period in 1999. Including non-recurring items, operating profit totaled SEK 8,200 M. Currency movements had a marginally negative impact on earnings. Operating profit rose in all business areas. Operating profit for Hygiene Products amounted to SEK 2,044 M (1,866), up 10%, while the corresponding figure for Packaging was SEK 2,123 M (1,479), an increase of 44%, and Forest Products reported operating profit of SEK 1,986 M (1,498), up 33%. Operating profit includes SCA's share of earnings in Modo Paper for the period January-July, amounting to SEK 644 M. Operating profit in the preceding year included SEK 355 M relating to SCA's former fine paper business for the entire period. Financial items amounted to an expense of SEK 921 (expense: 899). Despite lower net debt, interest expense rose as a result of higher interest rates. Group earnings after financial items, excluding non-recurring items, amounted to SEK 5,248 M (3,810), up 38% from the year-earlier period. Including non-recurring items, earnings after financial items was SEK 7,279 M. Net earnings after tax, excluding non-recurring items, totaled SEK 3,528 M (2,470), equal to earnings per share after full tax and dilution, of SEK 15.24 (11.75), representing an increase of 30%. The corresponding earnings per share, excluding goodwill amortization, totaled SEK 17.53 (13.72). Net earnings after tax, including non-recurring items, was SEK 5,759 M, equal to earnings per share, after full tax and dilution, of SEK 24.86. Excluding non-recurring items, the return on shareholders' equity was 14% (11), while the return on capital employed was 14% (12). COMPARISON WITH THE SECOND QUARTER Modo Paper was divested at the end of July. During the third quarter, SCA's share in earnings amounted to SEK 120 M, compared with SEK 306 M during the second quarter. Despite the decline of SEK 186 M in the share in earnings of Modo Paper, the overall operating profit increased to SEK 2,125 M (2,093). The increase for other operations thus amounted to 12%. The Group's operating profit, including non-recurring items, amounted in the third quarter to SEK 4,156 M. For Hygiene Products as well as Packaging, operating profit rose 17% between the quarters, amounting to SEK 740 M and 787 M, respectively. The rise in earnings is due to the implementation of sales price increases, combined with a favorable outcome for various efficiency-enhancement programs. Earnings for Forest Products totaled SEK 693 M (686). Earnings after financial items, excluding non-recurring items, rose 2% and amounted to SEK 1,805 M (1,773), representing record quarterly earnings. CASH FLOW The operating cash surplus amounted to SEK 8,811 M (8,031), equal to 18% (16) of net sales. Operating cash flow amounted to SEK 5,976 M (5,912). Working capital increased by SEK 1,413 M (612) during the period. The trend in working capital during the year was affected by the exceptionally low level of tied-up working capital at year-end, when it amounted to 10.3% of net sales. Tied-up working capital at the end of the quarter amounted to 12.0%, compared with 11.7%, adjusted for fine-paper operations, at the corresponding date a year earlier. Current net capital expenditures amounted to SEK 1,427 M (1,441). Cash flow from current operations, that is before strategic investments and dividends, amounted to SEK 4,493 M (4,276), equal to SEK 19.37 (20.29) per share. Company acquisitions during the period totaled SEK 2,278 M, and were primarily attributable to the acquisition of Metsä Corrugated and Johnson & Johnson's North American incontinence products operations. A couple of minor divestments were conducted, resulting in proceeds of SEK 32 M. Strategic investments in plant and machinery and restructuring costs amounted to SEK 1,215 M and primarily involved expansion expenditures in hygiene operations. The sale of SCA's shareholding in Modo Paper resulted in proceeds of SEK 6,522 M. The establishment of the joint forest and sawmill company with Graninge released SEK 916 M. As a result, a net inflow of SEK 3,977 M was achieved for strategic investments, acquisitions and divestments, which can be compared with an outflow of SEK 10,167 M during the year-earlier period. SEK M 0009 9909 Net sales 49,127 49,234 Operating cash surplus 8,811 8,031 % of net sales 18 16 Current capital expenditures, -1,427 -1,441 net % of net sales 3 3 Changes in working capital -1,413 -612 Other operating cash flow 5 -66 changes Operating cash flow 5,976 5,912 1 Tax payment etc -800 -1,002 Free cash flow 5,176 4,910 Per share, SEK 22.31 23.31 Interest payment after taxes -683 -634 Cash flow from current 4,493 4,276 operations Per share, SEK 19.37 20.29 Strategic investments and 3,977 -10,167 divestments Cash flow before dividend 8,470 -5,891 1 Tax attributable to operating profit. ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2000/10/30/20001030BIT00480/bit0001.doc The full report http://www.bit.se/bitonline/2000/10/30/20001030BIT00480/bit0002.pdf The full report

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