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Year-end Report 2015

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JANUARY 1 – DECEMBER 31, 2015 (compared with same period a year ago)

  • Net sales rose 11% (5% excluding exchange rate effects) to SEK 115,316m (104,054)
  • Organic sales growth, which excludes exchange rate effects, acquisitions and divestments, was 5%
  • Operating profit, excluding items affecting comparability, rose 10% to SEK 13,014m (11,849)
  • The operating margin, excluding items affecting comparability, was 11.3% (11.4%, 11.1% excluding gains on forest swaps)
  • Profit before tax, excluding items affecting comparability, rose 11% to SEK 12,059m (10,888)
  • Items affecting comparability totaled SEK -2,067m (-1,400), of which SEK -874m (-906) affects cash flow
  • Earnings per share were SEK 9.97 (9.40)
  • Return on capital employed, excluding items affecting comparability, was 12.0% (11.2%)
  • Cash flow from current operations was SEK 9,890m (8,149)
  • The Board of Directors proposes an increase in the dividend by 9.5% to SEK 5.75 per share (5.25)
  • Decision to acquire Wausau Paper Corp. The acquisition was closed January 21, 2016

(Table included in attached pdf)

CEO’S COMMENTS
Organic sales growth was 5% for the full year 2015, and operating profit, excluding items affecting comparability, rose 10% compared with 2014.

The Board of Directors proposes an increase in the dividend by 9.5%, to SEK 5.75 per share.

2015 was an eventful year. We continued the work with our strategic priorities profitable growth, innovation and efficiency. Our successful innovation work resulted in approximately thirty innovations and product launches and the efficiency improvement measures continued with undiminished strength across the value chain. To further intensify the focus on the Group’s two main operations, we took the decision to initiate a dividing of the Group into two divisions: a Hygiene division and a Forest Products division. During the year the decision was made to further enhance SCA’s hygiene organization. This change took effect on January 1, 2016. We decided to invest in increased capacity at the Östrand pulp mill in Sweden and in a new production plant for incontinence products in Brazil.

The acquisition of Wausau Paper Corp., a North American Away-from-Home tissue company, is a good strategic fit and strengthens our presence in North America. Wausau Paper’s product portfolio complements SCA’s offerings in North America and gives us access to premium tissue in the region. In Asia we are strengthening our collaboration with Vinda by divesting our business in Southeast Asia, Taiwan and South Korea for integration with Vinda. SCA is the majority shareholder in Vinda, one of China’s largest hygiene companies. The transaction enables us to leverage our joint strengths to build a leading Asian hygiene business.

We have also continued to address areas with weak profitability. Due to declining global demand for publication papers and weak profitability, one newsprint machine at Ortviken paper mill in Sweden was closed, and as a result of weak market positions and insufficient profitability the baby diaper markets in Brazil and South Africa have been left. As part of the cost-savings program related to the acquisition of Georgia-Pacific’s European tissue operations, during the year we closed a tissue production plant in France. The program was concluded at year-end, but we continue to see opportunities for efficiency improvement measures.

Consolidated net sales for the fourth quarter of 2015 increased by 6% compared with the same period a year ago. Organic sales growth was 4%. In emerging markets, which accounted for 32% of sales, organic sales growth was 11%, and in mature markets organic sales growth was 2%.

Consolidated operating profit for the fourth quarter of 2015, excluding items affecting comparability and currency translation effects, rose 5% compared with the same period a year ago. The increase is mainly attributable to a better price/mix, higher volumes and cost savings. Raw material costs increased by SEK 529m, mainly due to the stronger U.S. dollar. The operating margin, excluding items affecting comparability, was unchanged at 11.9%. Operating cash flow increased by 1%. Return on capital employed, excluding items affecting comparability, grew by 1.1 percentage points to 13.1%.

    
For further information, please contact:
Fredrik Rystedt, CFO and Executive Vice President, +46 8 788 51 31
Johan Karlsson, Vice President Investor Relations, Group Function Communications, +46 8 788 51 30
Linda Nyberg, Vice President Media and Online, Group Function Communications, +46 8 788 51 58
Joséphine Edwall-Björklund, Senior Vice President, Group Function Communications, +46 8 788 52 34

      
NB
SCA discloses the information provided herein pursuant to the Securities Markets Act. 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. Submitted for publication at 08:00 CET on January 28, 2016. This report has not been reviewed by the company’s auditors.


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