SCA reports plus in operating earnings and net profit

2012 was a year full of changes for SCA. The company has not only streamlined its operations and sharpened its profile as a leading producer of hygiene products, it was also able to increase its sales and earnings.

In 2012, SCA increased its net sales, operating profit and net profit compared to 2011. Sales amounted to SEK85,408m, 5% up from 2011, operating profit came to SEK6,012m, compared to SEK2,299m in the previous year, and the net profit from continuing operations in 2012 was at SEK4,497m, compared to a loss of SEK293m in 2011.

SCA completed two major transactions in 2012 – one was the divestment of the packaging operations, excluding the two kraftliner mills in Sweden. The sale to DS Smith was completed on 30 June 2012. Therefore SCA has excluded all revenues and costs from the packaging operations in its year-end report. Net profit from these operations were reported individually and amounted to SEK500m.

The second major transaction was the acquisition of Georgia-Pacific’s European tissue operations. This acquisition is to increase SCA’s competitive strength in the European tissue market. It is supposed to lead to annual cost synergies of EUR125m, with full effect from 2016.

The sale of the packaging business reduces SCA’s exposure to volatile markets and opens financial opportunities to grow the hygiene business. Also in 2012, SCA acquired Everbeauty, a leading Asian personal care company, for SEK1.9bn that is to strengthen the company’s position in Asia – especially in China. According to SCA, Everbeauty is one of the leading companies in the personal care sector in China and Taiwan as well as Southeast Asia. It is considered the market leader for incontinence products in Taiwan and the second largest supplier in China. In diaper sales, Everbeauty is one of the five key players in these countries.

Tissue and Personal Care remained SCA’s strongest businesses also in 2012. Operating profit in the Tissue segment amounted to SEK4,640m (2011: SEK3,150m) while operating profit in Personal Care increased from SEK2,645m to SEK3,180m. Forest Products was the weakest business with an operating profit of SEK1,363m compared to SEK2,423m in 2011.

The Forest Products business has also undergone some changes in 2012. SCA divested its 50% shareholding in Aylesford Newsprint in the UK. Moreover, the company signed an agreement to sell the Austrian publication paper mill in Laakirchen to the Heinzel Group. SCA is thereby focusing on its Swedish operations that are well integrated with nearby forest holdings.

In the hygiene operations, SCA has launched an extensive cost-cutting program that will lead to 1,500 job cuts world wide and annual cost savings of EUR300m, with full effect from 2015.

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