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SCA's hygiene operations showing favorable growth

22 Oct '12

3 min read

Svenska Cellulosa Aktiebolaget (SCA) releases Interim Report Q3 2012 from January 1–September 30, 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)

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%.

Svenska Cellulosa Aktiebolaget (SCA)