SCA: Interim Report Q2 2019

STOCKHOLM, July 26, 2019 /PRNewswire/ --

JANUARY 1 – JUNE 30, 2019
(compared with January 1 – June 30, 2018)

• Net sales increased 14% to SEK 10,304m (9,070), mainly attributable to the continued ramp-up of the expanded Östrand pulp mill.
• EBITDA rose 31% to SEK 2,900m (2,209). The improvement was mainly related to higher delivery volumes from the expanded Östrand pulp mill and positive exchange rate effects.
• EBITDA margin increased to 28.1% (24.4).
• Operating cash flow amounted to SEK 1,245m (1,265).
• Earnings per share declined to SEK 2.30 (2.57). After adjusting for a non-recurring item in 2018 related to deferred tax, earnings per share increased by 28 percent.
• The investment to increase white-top kraftliner production at the Munksund paper mill was completed in May. The project was implemented on time and on budget.
• SCA acquired approximately 30,000 hectares of forest in the Baltic region through three transactions, two of which were closed during the quarter, with closure of the final transaction expected in the third quarter.

APRIL 1 – JUNE 30, 2019
(compared with January 1 – March 31, 2019)

• Net sales rose 3% to SEK 5,228m (5,076), which mainly related to higher delivery volumes for Pulp, Kraftliner and Wood.
• EBITDA amounted to SEK 1,340m (1,560). Adjusted for the effect of planned maintenance stops of SEK  -63m (0) and the positive contribution from restructuring in the French wood business in the first quarter of SEK 0m (90), earnings declined by 5%. The decrease was mainly explained by lower selling prices.

COMMENTS ON THE FINANCIAL STATEMENTS 

Operating profit for the second quarter of 2019 improved year on year, but declined compared with the preceding quarter. The expanded Östrand pulp mill has now reached about 90% of the expected production capacity and work to ramp up the plant toward full capacity is progressing according to plan. Pulp production increased 22% compared with the preceding quarter, which made a positive contribution to earnings. 

Demand for SCA's products in the quarter was generally weaker than in the preceding quarter and market prices declined somewhat in all product areas. Market prices were generally higher in Europe and the US compared with Asia and other overseas markets. 

SCA's wood consumption continued to increase due to the continued ramp-up of the Östrand pulp mill. Prices for both pulpwood and sawlogs increased slightly. 

Wood reported stable consumption, although the market was cautious. Market prices declined compared with the preceding quarter. 

Within Pulp, both production and deliveries increased. The market weakened during the quarter and the price of pulp declined. Favorable production combined with a cautious pulp market resulted in a higher proportion of overseas sales volumes. 

Kraftliner prices fell during the quarter. However, prices stabilized at the end of the quarter and the market situation improved. Implemented and planned capacity reductions in publication paper have, for the time being, created a better balance between supply and demand. The price of publication paper was stable for the quarter.

Events during the quarter

The investment to increase white-top kraftliner production at the Munksund paper mill was completed in May. The project was implemented on time and on budget.  

During the period, SCA acquired approximately 30,000 hectares of forest in the Baltic region through three transactions, two of which were closed during the second quarter, with closure of the final transaction expected in the third quarter. The acquisitions strengthen SCA's ability to sustainably source timber in the region. Forest is an asset that offers stable growth and is the base for value creation in SCA's integrated value chain.  

SCA has signed an agreement regarding the sale of its logistics terminal in Rotterdam. The transaction is estimated to reduce net debt by about SEK 575m and is expected to be finalized in the third quarter.  
 

Invitation to SCA's Q2 2019 press conference

The press conference is held in connection with the publication of SCA's interim report for the second quarter of 2019 and is available via webcast or by phone.

The interim report will be published on Friday July 26, 2019, at approximately 08:00 CET and is followed by a press conference at 10.00 CET.

At the press conference, President and CEO Ulf Larsson and CFO Toby Lawton will present and answer questions regarding the report

Press conference:
Date: July 26, 2019
Time: 10:00 CET.  

The press conference will be webcast live at www.sca.com. It is also possible to participate by telephone by calling:  

Sweden:          +46 (0)8-5069-2180
UK:                  +44 (0) 2071-92-80-00
USA:                +1-631-510-7495 

Specify "SCA" or the conference ID: 3676018.

For further information, please contact
Toby Lawton, CFO, +46 (0)60 19 31 09
Björn Lyngfelt, Vice President, Communications, +46 (0)60 19 34 98
Andreas Ewertz, Investor Relations Director, +46 (0)60 19 31 97

Please note:
This is information that SCA is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. This report has been prepared in both Swedish and English versions. In case of variations in the content between the two versions, the Swedish version shall govern. The information was submitted for publication, through the agency of the contact person set out below, on July 26, 2019 at 08:00 a.m. CEST. The report has been reviewed by the company's auditors.
Björn Lyngfelt, Vice President, Communications, +46 (0)60 19 34 98
 

The core of SCA's business is the forest, Europe's largest private forest holding. 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. 2018 the forest products company SCA had approximately 4,000 employees and sales amounted to approximately SEK 18.8 bn (EUR 1.8 bn). SCA was founded in 1929 and has its headquarters in Sundsvall, Sweden. More information at www.sca.com

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SOURCE SCA