SCA Interim Report Q1 2018 - Net Sales Up 11%

SCA Interim Report Q1 2018 Net sales increased 11% to SEK 4,400m (3,972). Sales growth was mainly related to higher prices in the industrial units. EBITDA rose 47% to SEK 1,175m (797). The improvement in EBITDA was mainly related to higher prices in Wood, Pulp and Kraftliner, and an improved market and product mix.

JANUARY 1 – MARCH 31, 2018

(compared with the year-earlier period)

EBITDA margin increased to 26.7% (20.1)

Earnings per share amounted to SEK 1.00 (0.52)

Operating cash flow, which excludes strategic capital expenditures, rose to SEK 591m (85). Strategic capital expenditures amounted to SEK 634m (515) and relates to the Östrand investment which proceeds according to plan.

COMMENTS ON THE FINANCIAL STATEMENTS

The market trend in the first quarter was positive in all of SCA’s product areas, with healthy demand and continued price increases. Earnings improved compared with the preceding quarter as well as the first quarter last year. The main contribution toward the earnings improvement was from kraftliner and pulp.

Despite exceptionally harsh winter conditions, timber supply to SCA’s industries remained stable, and there were no production stoppages due to lack of timber. Transportation and felling operations however were affected, resulting in slightly higher costs for the period.

Demand in the Wood segment remained strong in all SCA’s main markets, driven by a favorable level of construction activity and a growing market for home improvement. Further price increases were implemented during the first quarter.

The positive trend in the pulp market continues, with favorable global demand. The price of softwood kraft pulp rose in the quarter and additional price increases have been announced from April. SCA is investing SEK 7.8bn in doubling the production of bleached softwood kraft pulp. The expanded facility will begin operating in June 2018 and then gradually increase to full capacity. The project is on track both in terms of time and budget.

The market for kraftliner remains strong, with growing demand and limited supply. In addition to the positive economic trend in Europe, growth in e-commerce increases demand for transport packaging. During the quarter, price increases of EUR 60 per tonne were announced for all grades of brown and white kraftliner.

Capacity reductions in publication papers have created a better balance between supply and demand in a structurally contracting market. The improved balance has resulted in a more stable market with higher prices.

The core of SCA’s business is the forest, 2.6 million hectares in northern Sweden. Around this unique resource, we have built a well-developed value chain based on renewable raw material from our own and others’ forests. We offer paper for packaging and print, pulp, wood products, renewable energy, services for forest owners and efficient transport solutions.

In 2016 the forest products company SCA had approximately 4,000 employees and sales amounted to approximately SEK 15,4 bn (EUR 1,6 bn). SCA was founded in 1929 and has its headquarters in Sundsvall, Sweden.

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