SCA profits up on strong tissue business and cost savings
Despite a generally weak economy in Europe and trade going down in many countries, SCA reported upbeat results for the first nine months of the year.
So far, 2013 has been a successful year for the Swedish hygiene and forestry Svenska Cellulosa Aktienbolaget (SCA). Net sales increased by 7% year-on-year to SEK66.6bn (€7.6bn) while operating profit grew by 22% y-o-y to SEK5.9bn (€668.4m). Net profit amounted to SEK3.7bn (€426.3m), showing a 28% increase compared to the January-September period of 2012.
According to SCA, higher volumes and acquisitions had a positive impact on sales while divestments and lower prices in the Forest Products division negatively affected sales in the first nine months of 2013. Operating earnings in the January-September 2013 period improved on acquisitions in Europe, higher volumes, lower raw materials costs and cost savings. At the same time, lower prices for Forest Products, higher energy prices and a strong Swedish krona had a negative effect on earnings.
Excluding items affecting comparability, SCA said its operating profit and net profit were 6% and 11% higher than in the same period last year, at SEK6.9bn (€786.9m) and SEK4.5bn (€513.2m), respectively. Those items - restructuring costs for the previously announced efficiency programmes, transaction costs for acquisitions and divestments, and integration costs for the Georgia-Pacific acquisition - amounted to SEK1.02bn (€116.8m) in the period under review and compared to SEK1.4bn (€164m) in the same period a year ago, the company explained.
SCA's Tissue division performed well in the first nine months of 2013, due to acquisitions, higher volumes and cost savings. The company reported a 17% y-o-y increase in net sales to SEK34.9bn (€4.0bn). Operating profit excluding items affecting comparability rose by 25% to SEK4.0bn (€459.4m). According to SCA, demand for tissue showed some growth in Europe ands North America during the first nine months of the year while growth in demand in emerging markets remained good.
Results of SCA’s Forest Products division were strongly affected by the divestment of the Aylesford newsprint mill in the fourth quarter of 2012 and the Laakirchen SC paper mill in the second quarter 2013. Net sales decreased by 16% to SEK11.9bn (€1.4bn), with the two divestments accounting for a 14% decrease in total sales, SCA reported. Operating profit excluding items affecting comparability decreased by 11% to SEK927m (€105.7m). The company attributed lower profits in the January-September period to lower prices for publication paper and pulp, negative exchange effects, higher energy costs and additional costs for extended maintenance shutdowns. On the other side, the ongoing efficiency programme resulted in an earnings improvement of SEK305m (€34.7m) in the first nine months of 2013.
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