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SCA launches efficiency program at Forest Products
Against the backdrop of the prevailing economic and currency situation, SCA is introducing a comprehensive program to enhance the efficiency of its forest products operation. The program will generate annual earnings improvements of SEK 1,300m with full effect from 2015.
Against the backdrop of the prevailing economic and currency situation, SCA is introducing a comprehensive program to enhance the efficiency of its forest products operation. The program will generate annual earnings improvements of SEK 1,300m with full effect from 2015.
The total cost of the program is SEK 370m, of which SEK 250m is cash flow impacting and SEK 120m comprises impairment losses. Of the total costs, SEK 175m will be charged to profit for the fourth quarter and will be recognized as items affecting comparability. The remaining SEK 195m will be charged to profit for the first six months of 2013.
Actions include the previously announced closures of the sawmills in Vilhelmina and Holmsund, and cutbacks at Ortviken paper mill, SCA Transforest’s terminals in Sundsvall and Umeå, and at SCA’s R&D Center. About 200 positions are affected, the majority of which have already been announced.
The program includes a structured plan to reduce fixed and variable costs, income improvements by way of increased production and streamlining activities, and a changed product and market mix. This will be achieved through improved raw material yield at the sawmills, higher productivity in harvesting activities, an increased share of value-added publication papers and a larger share of container transportation.
SCA invests approximately SEK 380m in expanded cooperation with Sundsvall Energi
SCA has approved an investment of approximately SEK 380m in expanded cooperation between SCA’s industries in the Sundsvall region and Sundsvall Energi AB. The agreement will enable SCA to increase its deliveries of energy to Sundsvall’s district heating grid.
The investments will cover the rebuilding of two boilers, a new facility for handling and grinding wood pellets and equipment for cleaning flue gases at Ortviken paper mill. Östrand pulp plant will also be connected to Sundsvall’s district heating grid as part of the investment.
As a result of the investments deliveries of heat derived from renewable fuels to Sundvall’s district heating grid will increase. Ortviken paper mill will then have the capacity to deliver up to 300 GWh/a based on wood pellets from SCA’s BioNorr facility in Härnösand.
Oil consumption in Sundsvall will be reduced by a total of 25,000 cubic meters annually as a result. For Ortviken, the annual decrease in oil consumption will be 4,500 cubic meters, thereby reducing the mill’s already low carbon footprint by about 40%.
The new facilities are expected to be operational in November 2013.
SCA and E.ON sign agreement on wind power joint venture
SCA signed a joint venture agreement with E.ON today, through which E.ON will develop a number of wind power projects together with SCA.
The joint venture includes the areas operated by SCA Vind up until the licence application: Hästkullen and Björnlandhöjden in Härnösand, and Kramfors and Timrå municipalities. The agreement also covers wind power projects in southern Ånge and in Ljusdal.
“The joint venture includes approximately 270 wind power stations and a total energy production of more than 2 TWh, corresponding to the electricity required for warming 100,000 Swedish households,” says Head of SCA Energy, Åke Westberg.
Future investment decisions can be expected by 2014 or 2015 at the earliest. The project is expected to be in operation by 2016 to 2017 at the earliest.
SCA Capital Market Day focuses on profitability
SCA – the hygiene and forest company – is holding a CMD in Stockholm. The Group-wide financial targets and strategy remains with a focus on efficiency, innovation, growth and sustainability. The target for return on capital employed for Tissue and Forest Products has been adjusted. In recent years, SCA has completed hygiene acquisitions and divested for example the packaging operations. In order to further strengthen profitability in the hygiene operations, measures are initiated for decreased costs and improved efficiency.
SCA is undergoing a major transformation and restructuring, and retains its Group-wide financial targets: a 13% return on capital employed (ROCE) over a business cycle, a debt/equity ratio of 0.70 and a debt-payment capacity of 35%. The dividend policy is to pay out one-third of cash flow from current operations. The ROCE target has been revised from 13% to 15% for Tissue and, for Forest Products, from 11% to being in the top quartile of the sector.
The integration of the European tissue operations acquired from Georgia-Pacific is progressing in line with or better than planned, and is expected to provide EUR 125m in annual cost synergies, with full effect after three years.
“Our efficiency program from 2011 goes according to plan and to date we have achieved more than half of the expected annual savings of EUR 80m. A new efficiency program has been initiated within the hygiene operations to further reduce costs and increase productivity. It will provide annual cost savings of some EUR 300m, with full impact in 2015. About 1,500 employees are affected and costs are expected to some EUR 100m,” says Jan Johansson, President and CEO.
During the past year, SCA completed a number of major acquisitions and divestments, which has strengthened the company and focused operations on hygiene and forest products. The hygiene operations currently accounts for 80% of SCA’s sales, with the majority in Europe, but with increasing exposure to emerging markets, both via organic growth and acquisitions. Increasing disposable income in emerging markets offers continuing favourable conditions for growth in the hygiene operations.
“We have seen great innovation progress with successful examples such as the Tork Xpressnap napkin dispenser and the TENA Belt incontinence product,” notes Jan Johansson.
“We have taken several steps to sharpen the focus of forest products operations on high value added products, most lately with the rebuild of a paper machine in Ortviken and the disposal of SCA’s shareholding in the UK-based Aylesford paper mill. We are also continuing to take steps in decreasing costs and making our production more environmentally friendly, most recently with the investment in a biofuel lime kiln at the Munksund kraftliner mill.”
Sca's Interim Report Q3 2012
The packaging operations that were divested on June 30, 2012, are reported for the current and preceding year only as a separate line item in the income statement – Net profit for the period from disposal group. Comments in this report are thus entirely exclusive of the packaging operations.
The formation of a joint venture in Australia/New Zealand through the sale of 50% of the shares and a deconsolidation of the operations from the start of the year constitutes the divestment that is referred to in this report. Figures for the preceding year have not been recalculated.
- Net sales rose 3% (8% excluding exchange rate effects and divestments) to SEK 61,963m (60,402)
- Operating profit excluding items affecting comparability rose 11% (13% excluding exchange rate effects and divestments) to SEK 6,224m (5,599)
- Items affecting comparability amounted to SEK -1,441m (-152)
- Earnings per share were SEK 4.09 (5.66)
- Cash flow from current operations was SEK 5,607m (3,802)
(Table included in attached pdf download link provided below)
CEO’S COMMENTS
The acquisition of Georgia-Pacific's European tissue business was completed in July. The acquisition strengthens our product offering and geographic presence in Europe and will generate substantial synergies. The business has developed in line with or slightly better than the projections in the acquisition plan.
In accordance with our strategy to focus on more highly refined products in the publication papers business, in October we divested our 50% shareholding in Aylesford Newsprint, and during the same month we completed the upgrade of a newsprint machine in Sweden.
The hygiene operations are showing favorable growth and earnings performance. For Forest Products, weak demand, low prices and a strengthened Swedish krona have had a negative impact on profitability.
Consolidated net sales for the first nine months of 2012, excluding exchange rate effects and the divestment, increased by 8% compared with the same period a year ago. Net sales increased for the Personal Care and Tissue businesses by 11% and 12%, respectively, excluding exchange rate effects and the divestment in Australia/New Zealand. For Forest Products, net sales fell 7%. Operating profit excluding exchange rate effects, the divestment and items affecting comparability rose 13%. The Group's operating cash flow increased to SEK 7,198m (5,326), mainly owing to a lower level of tied up working capital, and a higher operating surplus.
Consolidated net sales for the third quarter of 2012, excluding exchange rate effects and the divestment, increased by 16% compared with the third quarter of 2011. Most of the increase is attributable to the acquisition of the tissue business in Europe and favorable sales performance for both the Personal Care and Tissue operations. Operating profit excluding exchange rate effects, the divestment and items affecting comparability rose 20%. Profit for Personal Care and Tissue rose 23% and 58%, respectively, while profit for Forest Products fell 57%.
SCA divests newsprint mill in Aylesford
SCA has divested its 50% shareholding in the UK-based newsprint facility Aylesford Newsprint to the private equity company Martland Holdings.
Martland Holdings has acquired all of Aylesford Newsprint, which was equally owned by SCA and Mondi. The company has 280 employees and its annual capacity is approximately 400,000 tonnes of recovered fibre-based newsprint. Total sales for 2011 were approximately SEK 1.6bn (GBP 150m). The operations have been loss-making for the past years.
The sale of shares was carried out on a debt-free basis for a symbolic amount. The transaction involved a book loss of SEK 850m (GBP 80m) and a negative cash flow effect of SEK 140m (GBP 13m) for SCA. The loss will be booked in the third quarter of 2012.
The transaction was finalised on 2 October 2012.
SCA in Dow Jones Sustainability Index
SCA has once again been included in the Dow Jones Sustainability Europe Index, which is one the world’s most prestigious sustainability indexes.
“We are pleased that our sustainability work is being recognized in this way. We are proud to have been included in the index five times during the last eight years. Our sustainability work is an essential part of our strategy for growth and value creation for our business and also for people and nature,” says Kersti Strandqvist, SVP Corporate Sustainability at SCA.
More information is available at www.sustainability-indexes.comNew General Counsel at SCA
SCA's current General Counsel, Anders Nyberg, will be leaving the company for a new position as Executive Vice President in charge of corporate governance and legal affairs for AB Industrivärden.
"Anders Nyberg has served for SCA for 24 years in a wide range of senior positions," comments SCA's President and CEO, Jan Johansson. "With his solid background in the legal profession, experience in international business and partners, he has contributed valuable experience, professionalism and knowledge to our company. I wish him the best in his new assignment. His successor, Mikael Schmidt, has an extensive and wide record of experience in international business and firm knowledge about our business."
Mikael Schmidt, 52, joined the SCA Group in 1992 and served most recently as head of Legal Affairs in Brussels for the Packaging operation, which was recently divested.
In his role as General Counsel, Mikael Schmidt will be a member of SCA's Corporate Senior Management Team and will report to the CEO.
The appointments take effect on October 1, 2012.
Source: SCA
SCA participates in Volvo Ocean Race 2014-2015
About 80 percent of SCA’s consumers globally are women. This strong reason is behind SCA’s decision to sign an all-female crew for one of the sporting world’s most challenging events. SCA is participating with a boat in the next round of the world Volvo Ocean Race in 2014-2015.
“SCA’s participation in the Volvo Ocean Race is important in our continued journey of change. As a Group, SCA invests in global growth, particularly in the hygiene area. The Volvo Ocean Race will increase awareness of the SCA brand and create stronger links to product brands such as TENA, Tork, Lotus, Tempo, Saba and Libero. We also want to highlight how our products improve our consumers’ quality of life,” says Kersti Strandqvist, Senior Vice President, Corporate Communications at SCA.
SCA’s participation will be managed by a team headed by Richard Brisius, co-founder of Atlant Ocean Racing that has extensive experience of successful Volvo Ocean Race projects. Atlant has organised and managed five Volvo Ocean Race projects and won twice: in 1998 with EF Language and in 2009 with Ericsson Racing Team.
“SCA’s investment in an all-female crew is unique. Competing for nine months in the world’s toughest offshore sailing race is a challenge that deserves respect. The new boat design lends itself to an all-female crew, and our aim is to create a strong team that will have the best possible platform to undertake the challenge," says Richard Brisius, Atlant.
SCA is the world’s second-largest hygiene company and Europe’s largest private forest owner with sales in more than 100 countries.
SCA´s acquisition of Georgia-Pacific´s European tissue business has been closed
SCA’s acquisition of Georgia-Pacific´s European tissue business has been completed. The purchase price amounts to EUR 1.32 bn on a debt-free basis. The acquired operations had sales in 2011 amounting to EUR 1.25 bn.
Georgia-Pacific has a well-established presence in Europe in both away-from-home and consumer tissue products. Their products in both segments are in particular marketed with the well-known Lotus brand.
“We are pleased that we now have closed the deal. The acquisition is a strategic fit that will strengthen our product offering with well-known brands and geographic reach in Europe. It also leads to substantial synergies”, says Jan Johansson, President and CEO of SCA.
The annual synergies are estimated at EUR 125m, with full effect in three years after closing. Related costs are estimated at EUR 130m.
The closing follows the EU clearance and its requirement that SCA divest Georgia-Pacific´s consumer tissue business in the UK including production capacity, Georgia-Pacific´s consumer tissue branded business in Benelux licensing out the Lotus brand during a limited time, and some of Georgia-Pacific´s and SCA´s retailer branded business in Scandinavia including production capacity. The businesses that are to be divested account for sales of approximately EUR 200m, which is in line with the expectations and does not change SCA´s evaluation of the deal.