Svenska Cellulosa Ab Sca Class A · OMXSTO:SCA_A
Svenska Cellulosa Ab Sca Class A — SCA — Investor Presentation (July 2023)
110 slides from Svenska Cellulosa Ab Sca Class A's investor presentation, Jul 21, 2023
Slide 1: Investor Presentation
Investor Presentation Investor Relations July, 2023
Slide 2: A strong and integrated value chain
A strong and integrated value chain Sales (SEKbn) EBITDA (SEKbn) 20.8 10.2 EBITDA margin Industrial ROCE 1 49% 40% Climate benefit Net growth in forest 10.1 m t CO2 3.8 m m3fo Note: Logistics are reported as a part of relevant segments. 2 1. ROCE for the industrial segments; Wood, Pulp and Paper.
Slide 3: Europe's largest private forest owner
Europe’s largest private forest owner Sawmill Forestland Pulp mill Kraftliner mill 6% 2.7 m ha of Sweden Pellet production SCA’s forest Productive forestland Munksund 2.1 m ha Obbola Rundvik Stugun Bollstabruk Standing volume 1 Gällö Härnösand Östrand 267 m m3fo Tunadal Ortviken 1. Including forest
Slide 4: Strategy communicated in 2017
Strategy communicated in 2017 Invest in integrated value chain: Increased • Grow Pulp value from • Grow Kraftliner each tree • Develop Renewable energy • Reduce exposure to Publication Paper Growing Increase forest holdings: renewable • Increase growth and harvesting level forest asset • Acquire
Slide 5: Project portfolio delivered
Project portfolio delivered Value ~70% completed Acquire forest land →2023 Bio fuel and green chemicals 9 TWh wind power on SCA land →2022 Own Restructuring Sundsvall wind power Target 100k ha →2022 Kraftliner expansion forest land in the Baltic states, →2021 Grow CTMP pulp 201
Slide 6: SCA has an integrated value chain with high degree of self sufficiency
SCA has an integrated value chain with high degree of self sufficiency ~50% ~95% >100% ~40% ~50% Wood sourcing Electricity usage Solid biofuels SCA Logistics 1) Transportation fuel 10 M m3 1.6 TWh 11 TWh 2.8 SEKbn 100 kt External exposure District heating External Wind lease Sold externally supplier
Slide 7: SCA contributes to a fossil free society
SCA contributes to a Replaces 2 Higher growth enables more substitution – 5.4 renewable alternatives replace fossil fossil free society Mt CO2 based products SCA’s renewable Non-renewable Binds 1 products products net Growing forests bind CO2 – 5.4 active forest management Bioenergy Fossil Mt CO2 in
Slide 8: SCAs updated strategy for profitable growth
SCAs updated strategy for profitable growth Increased value Invest in integrated value chain: from each tree • Grow pulp, containerboard and wood • Realize business opportunities within renewable energy Growing Increase forest holding: renewable forest • Increased growth and harvesting level ass
Slide 9: Project focus upcoming years
Project focus upcoming years Value 2 Decided and ongoing projects 3 Organic growth Growing forest assets Renewable fuels Grow Wood Further potential Pulp & Containerboard Own wind power Increased forest ownership in Baltics Biofuel Bio refinery and Nordic Countries Acquire P2X po
Slide 10: Illustrative value development
Continued transformation with remained balance between forest and industry Pre split Post split Next step Industrial company with forest Forest company with Forest company with industry renewable energy and industry Decided projects and continued Illustrative value development organic growth Win
Slide 11: Group sustainability targets 2030
Group sustainability targets 2030 Fossil-free world Valuable forests Efficient use of Sustainable development resources Group target 2030 Group target 2030 Group target 2030 Group target 2030 Increase SCA’s climate benefit from 10 to 100% wood raw material from responsibly Zero waste SCA contributes
Slide 12: Forest
Forest @®SCA
Slide 13: Europe's largest private forest owner
Europe’s largest private forest owner Sales (SEKm) Forest holdings located close to SCA’s industry Sawmill 6% 6,686 Pulp mill Kraftliner mill of Sweden • 2.7m ha forestland Pellet production SCA’s forest • 2.1m ha productive forestland EBITDA (SEKm) • 267 m m3fo standing volume 1 Munksund 2,696 ~50%
Slide 14: Forest assets create value in several ways
Forest assets create value in several ways Harvesting Net growth Land value Positive climate effect 14
Slide 15: Profitable growth since 1950
Profitable growth since 1950 Standing volume SCA Growing Harvest plan own forest Increasing Increasing Land value Sweden 1 Increasing million m3fo asset base million m3sub cash cashflow flow SEK/m3fo (real value) land value +75% +140% +430% 260 4.8 587 146 >6,000% nominal 2.0 increase 111 1950 2022
Slide 16: Forest Total Return
Forest Total Return CAGR of 10% since 1956 Forest Total Return index Sweden (1956-2022) 1 Increasing cash flow 60,000 CAGR • Harvesting provides raw materials to the industries and generates cash flow 10% − Cash flow: ~3% CAGR CAGR 2004-2022 50,000 8% 2 Growing asset base • Forest growth exceeds har
Slide 17: Significant real growth
Significant real growth Forest growth metrics (m m3fo) Gross growth of standing forest 10.5 Natural losses and pre-commercial thinning -1.4 Available growth of standing forest 9.1 1 Current cash flow Annual harvesting -5.3 New harvesting plan every 8-10 years Harvesting increase to >7m m3fo in 2114
Slide 18: Increase in both standing volume and harvesting level
Based on Increase in both standing volume current technology and harvesting level Harvesting from own forest (m m3sub) Standing timber volume (m m3fo) +200% 350 +100% 6 300 5 250 4 200 3 150 2 100 Increasing cash flow Growing asset base 1 50 0 0 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
Slide 19: Improved practices and technology increase growth
Improved practices and technology increase growth m3fo/ha Growth plan at different taxations (standing volume / hectare) 140 1 Tax X vs 2019 Tax IX Silviculture 130 +9 m fo/ha 3 120 2 Tax IX vs 2014 Improved seedlings 110 Tax VI +14 m fo/ha 3 100 Tax VI vs 1984 3 Tax II Introduction of Contorta pine
Slide 20: Harvesting plan
Harvesting plan Optimizes value and supply Harvesting plan per tree species (m m3sub) 6.0 1 Deciduous trees Secure supply 5.0 Contorta 4.0 2 Meet restrictions 3.0 Spruce 2.0 3 Optimize value 1.0 Pine 0.0 2015-2019 2020-2024 2025-2029 2030-2034 2035-2039 2040-2044 2045-2049 Note: Based on Tax X (2019
Slide 21: Forest acquisitions part of SCA's DNA
Forest acquisitions part of SCA’s DNA Continued acquisitions of forest land in Nordics and Baltics Productive forest land has increased 60% since 1950, million hectares productive land 2.5 +60% Graninge/Scaninge +275k ha Baltics Svanö Wifstavarvs +120k ha 2.0 +275k ha Kungsgården Marieberg +90k ha 1
Slide 22: Forest land acquisitions in the Baltics
Forest land acquisitions in the Baltics – strengthen the fiber base for future projects 1 2 3 Strengthen our High growth SCA’s competence integrated value chain and resources • Strengthen the raw material supply • High growth – 2.5x northern Sweden • Harvesting volume and standing and maintain self-
Slide 23: The Baltics offer high forest growth potential
The Baltics offer high forest growth potential Price (EUR/ha forest land) Growth potential (m3fo/ha/year) 14,000 12 ~2.5x 12,000 10 10,000 8 8,000 6 6,000 1.3x 4 4,000 2 2,000 0 0 Southern Mid Northern Baltic Southern Mid Northern Baltic Sweden Sweden Sweden states Sweden Sweden Sweden states Source
Slide 24: SCA's forest holdings in the Baltics
SCA’s forest holdings in the Baltics Land in the Baltics Value of forest land 1 Location (ha) (mEUR) SCA’s forest +40-50% ~70% 100,000 completed ~70,000 Current Target Purchase Price Market Value 1 Estimated market value 2021-12-31 based on transactions in the Baltic countries. 24
Slide 25: Long term demand larger than supply
Long term demand larger than supply – Forest a strategic resource for the future Estimated change in harvesting potential 2021-2030e (softwood sawlogs) Demand of wood products limited by supply CAGR 2021-2030e • Russian invasion of Ukraine +1.7% +15m m3 • Insect damage in Europe -1 m m3 -7m m3 • Har
Slide 26: Forest – strategic direction
Forest – strategic direction 1 Increase growth and harvesting while maintaining high environmental ambitions 2 Acquire forest that supports SCA industries 3 Increase the precision and quality in biodiversity conservation measures 4 Increase digitalization of planning, logging, forest management and
Slide 27: Wood
Wood @®SCA
Slide 28: Leading European wood producer
Leading European wood producer Sales (SEKm) 6,753 5 modern and well invested sawmills 2 painting and 5 planing facilities 2.2m m capacity 3 EBITDA (SEKm) Own distribution network 400k Munksund 2,079 Focus on value added products • Adapted wood to the further processing industry 320k • Distribution o
Slide 29: Long-term structural drivers sustain softwood demand growth
Long-term structural drivers sustain softwood demand growth Underlying economic drivers Strong global softwood demand Economic growth: Continued increased living standard in m m3 several fast growing markets drives consumption of softwood ~2% 3.1% CAGR CAGR Other Building activities: Recovery for bo
Slide 30: Wood based products creates strong legitimacy for active forestry
Wood based products creates strong legitimacy for active forestry 1 Carbon footprint building materials (g CO2eq/kg) 5,000 Other building materials Substitution effect 4,500 Wood is the building material that has the lowest 4,000 carbon footprint thus climate effect 3,500 2 3,000 >8x higher Carbon s
Slide 31: The Global Wood value chain
The Global Wood value chain Segment Value chain, integration and product group Consuming sector Sawn wood products Finished wood product End consumer (examples) channel ~20% Furniture ~12% ”Furniture-retail” Interior Decoration Living with Wood Solid Wooden Flooring Interior Cladding ~40% ~65% RMI (
Slide 32: SCA's position in the global wood value chain
SCA’s position in the global wood value chain Optimizing value and integration level Segment Sawn wood products Finished wood product End consumer SCA volume channel ~27% ~10% Furniture ”Furniture-retail” Living with Wood Solid Wooden Flooring Interior Cladding ~70% ~65% Boards Exterior Cladding ”DI
Slide 33: Building with wood – RMI has the largest wood consumption
Building with wood – RMI 1 has the largest wood consumption and is stable New builds in Sweden RMI in Sweden (k housing starts) (k m euro at 2020 prices) 70 18 1 ~75% of all softwood is used for 16 RMI and new build 60 14 50 2 12 RMI more stable over time than new build 40 10 and single largest cons
Slide 34: One of the largest and most efficient sawmill operations in Europe
One of the largest and most efficient sawmill operations in Europe Growing forest asset Structural change and increased productivity State of art technology Europe’s largest private forest owner 2010 2022 2025 Harvesting own forest (k m3) +1,100k m3 5,400 Boden 4,800 4,300 Vilhelmina Munksund Munksu
Slide 35: Investment in increased efficiency in Bollsta Sawmill
Investment in increased efficiency in Bollsta Sawmill Increased yield Increased revenue from each log 52.0% • Increased raw material yield • Optimize product value from each saw log Accumulated Target 51.5% Best available technology enables further growth 51.0% • The world’s most efficient gradi
Slide 36: Wood – strategic direction
Wood – strategic direction 1 Strengthen SCA’s integrated value chain – sawlogs give the largest revenue from a tree 2 Continued profitable growth in balance with access to raw materials through: • Value-added and customized products • Developing the business offering to the building-materials trade
Slide 37: Pulp
Pulp @®SCA
Slide 38: High quality pulp producer
High quality pulp producer Sales (SEKm) High quality bleached softwood kraft pulp (NBSK) 7,209 • Focus on high strength properties • Capacity: 900 kt/year 1.2Mt capacity • The pulp is used in tissue, packaging, publication paper EBITDA (SEKm) and filters 2,961 Chemical thermomechanical pulp (CTMP) •
Slide 39: SCA pulp portfolio
SCA pulp portfolio NBSK CTMP Produced by cooking wood chips in white liquor Produced by grinding wood chips in a refiner Gives pulp with long, strong fibers Gives shorter, stiffer fibers that provide absorption capacity, bulk and stiffness Provides high strength and brightness Lower consumption of w
Slide 40: Global pulp market
Global pulp market 70 Mt of which 20 Mt adressable for SCA Global demand Virgin pulp Market pulp Adressable market SCA NBSK 415Mt 200Mt 68Mt 15Mt Other Softwood Europe 5 Mt China SBSK NA 2,5 Mt Core NBSK 15 Mt markets Integrated Market pulp Recycled Virgin pulp CTMP BHK CTMP 4.1Mt TMP Unbleached Oth
Slide 41: Softwood grows with 1.0-2.0% per year, limited new capacity
Softwood grows with 1.0-2.0% per year, limited new capacity New pulp capacity (k tonnes) 3,000 2022 2023 2024-2028 Softwood 2,500 Uncertain softwood Hardwood 2,000 Uncertain hardwood High-Yield (CTMP) 1,500 Uncertain High-Yield Dissolving 1,000 Unbleached +200 kt at 500 Ortviken 0 -500 Source: Brian
Slide 42: World's largest NBSK pulp line
World’s largest NBSK pulp line Cash cost global BSK producers Production began in June 2018 • On budget and on time Meets long-term demand growth Östrand Competitive cost position • Doubled NBSK capacity • Fixed cost reduction • Improved energy balance • Wood supply secured 1st Quartile 2nd Quartile
Slide 43: Northern Swedish fiber for premium pulp products
Northern Swedish fiber for premium pulp products 1 Premium strength 2 Wet strength 3 Filter application 4 Custom-made grades 43
Slide 44: CTMP investment
CTMP investment @SCA
Slide 45: Investment in increased CTMP production
Investment in increased CTMP production Expanding a profitable CTMP business Low investment per tonne CTMP plant with global competitiveness Improves customer product properties at lower cost High share of growth with existing customers 45
Slide 46: CTMP improves customer product properties at lower cost
CTMP improves customer product properties at lower cost Cost-cutting for customer Product properties Replaces more expensive pulp 1 High bulk and bending rigidity Lower weight at a given strength Board Good smell and taste properties provides a lower production cost 2 Increased absorption per kg Tis
Slide 47: CTMP expansion drives profitable growth
CTMP expansion drives profitable growth Scale up profitable business Cost curve SW CTMP producers • ~15% lower cash cost per tonne • Top quartile in cost position Low investment per tonne • Utilize existing modern TMP asset CTMP improves customer product properties at lower cost CTMP today CTM
Slide 48: Project status and ramp up
Project status and ramp up Production CTMP, kt Robust market plan +200kt • Mainly existing customers 300 • Main market Europe • Product development in collaboration with customers Prior to time plan • Started up end of 2022 CTMP at Östrand closing when Ortviken up and running • Enables for new oppor
Slide 49: Pulp – strategic direction
Pulp – strategic direction 1 Develop the position as premium supplier – for quality and service – for tissue manufacturers 2 Develop a position as leading supplier of CTMP from the Ortviken site 3 Plan for continued expansion of the softwood kraft pulp capacity 4 Maximize the value of by-products su
Slide 50: Containerboard
Containerboard @®SCA
Slide 51: Leading Kraftliner supplier
Leading Kraftliner supplier Sales (SEKm) No.1 independent producer of Kraftliner in Europe 6,823 • Strong Nordic fresh fiber for high quality packaging • Capacity: 1,140 kt/year (year 2026) • Products: brown and white-top kraftliner for consumer and EBITDA (SEKm) transport packaging, including speci
Slide 52: Discontinuities in economy effects containerboard demand
Discontinuities in economy effects containerboard demand short-term but long-term trend resilient Global containerboard demand (Mt) CAGR ~3% +90 Mt 200 Resilient demand during corona pandemic 180 160 Financial crisis 140 120 100 80 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023e 2025e Source
Slide 53: Long-term structural trends drive growth
Long-term structural trends drive growth Kraftliner demand growth Economic drivers 3 4 5 1• Industrial production Favorable trends 2• Consumer spending Kraftliner 1 2 Structural growth 3• E-commerce Underlying growth 4• Changes in retail 5• Sustainable packaging 2005 2019 53
Slide 54: SCA focuses on the European kraftliner market
SCA focuses on the European kraftliner market Containerboard global demand Kraftliner global demand Kraftliner European demand 160Mt 35Mt 5Mt SCA’s core markets SemiChem CIS & China Asia Turkey Africa Australia White-Top Kraftliner Latin Europe Kraftliner America Testliner 5 Mt 35 Mt Unbleached Kraf
Slide 55: Kraftliner for packaging that requires strength
Kraftliner for packaging that requires strength SCA’s strong fiber suitable for kraftliner applications Applications Containerboard Applications Kraftliner 1 Climate variations in 25% industrial supply chain and fresh food Other Industrial 2 Other Long distance transport Consumer products Fresh food
Slide 56: Need for additional 900,000 tonnes supply in Europe
There is a need for additional 900,000 tonnes supply in Europe from investment-decision until 2028 Kraftliner Europe, kt CAGR 2.4% CAGR 1.8% 6,000 5,000 +900kt 4,000 3,000 2,000 1,000 0 2013 2014 2015 2016 2017 2018 2028e Source: SCA & Numera. 56
Slide 57: Asset renewal secures long-term competitiveness
Asset renewal secures long-term competitiveness New Kraftliner PM’s since 2000 Obbola largest Strengthened market leading position Kraftliner PM 800 • Europe’s largest independent producer of kraftliner • Increased market share 700 600 PM capacity (kt) Improved cost position 500 • Significantly
Slide 58: Parallel start-up ensures EBITDA enhancement from start
Parallel start-up ensures EBITDA enhancement from start Parallel construction of the new paper machine ensures full production during the construction period • Fiber line switched to new machine post construction • Only a minor investment stop required Sequential start-up of pulp line minimizes
Slide 59: Kraftliner expansion drives profitable growth
Kraftliner expansion drives profitable growth We invest to secure the first 450kt and to add 275kt Obbola investment ’19-’23 Obbola production (kt) EBITDA (SEKbn) Profitable growth +5bn +275kt +0.8-1.0 Most value creative alternative ~7.5 Capex of ~7.5 SEKbn 725 • Life extension: ~2.5bn non-optional
Slide 60: Obbola expansion is on budget and ahead of time
Obbola expansion is on budget and ahead of time Fiber Line Q3 2021 Recovery Boiler Q3 2021 Wood Handling Q4 2021 Lime Kiln Q4 2021 Paper Machine Q4 2022 Effluent Treatment Q1 2023 OCC Q2 2023 2019 2020 2021 2022 2023 60
Slide 61: Project status and ramp up
Project status and ramp up Production kraftliner in Obbola, kt Ahead of time plan • Ramp up of paper machine, started up year-end 2022 +275kt 725 New recovered fiber line expected to be completed mid year 2023 • Necessary for ramp-up 450 Ramp-up period of ~3 years • 2026 first full year with full ca
Slide 62: Paper – strategic direction
Paper – strategic direction 1 Ramp up kraftliner production at the new machine in Obbola paper mill 2 Continue the initiative to offer the market’s best service and product range as an independent supplier 3 Continue investments in specialty products, such as white-top and wet- strength kraftliner 4
Slide 63: Renewable energy
Renewable energy @®SCA
Slide 64: Leading producer of renewable energy
Leading producer of renewable energy Pellet production Wind farm SCA is a leading producer of renewable energy • 20% of Sweden’s wind power capacity installed at SCA’s land • Leading European producer of bioenergy – annual production of 12 TWh • Produced ~1% of Sweden’s total electricity consumption
Slide 65: Net Zero policy will shape demand for renewables
Net Zero policy will shape demand for renewables SCA has competitive Global CO2 emissions pathways to Net Zero Global energy supply towards Net Zero advantages in… <2.0° 1 Wind Net zero by 2060 scenario 1.5° Net zero by 2050 scenario 2 Biofuels Predictions in line with IPCC 2021 special report on gl
Slide 66: Renewable demand is growing significantly
Renewable demand is growing significantly 1 2 3 Renewable hydrogen and E-fuels Global consumption, Mt , Wind CAGR (+11%) E-fuels Total CAGR (+8%) Drivers of growth Drivers of growth Drivers of growth LV transportation, Aviation, maritime & Industrial feedstock, maritime, industry processe & heating
Slide 67: SCA uniquely positioned to capitalize on transformation towards renewables
SCA uniquely positioned to capitalize on transformation towards renewables Wind power Biofuels E-fuels Ownership of land with Access to sustainable Access to low-cost good wind conditions biomass feedstock renewable energy SCA Current land lease agreements Existing infrastructure Access to biogenic
Slide 68: Participating in the development phases of a project ensures highest returns
Participating in the development phases of a project ensures highest returns Early entry in value chain drives higher returns but The identified growth opportunities for SCA vary entails more risk in return profile Competitive Time advantage Profitability Project Route to Asset mgmt./ Financing EPC
Slide 69: Factors in line for SCA to transition from land lessor to developer
Factors in line for SCA to transition from land lessor to developer 0.1 Global levilized cost of electricity from onshore wind (2020 USD/KWh) Post 2021 trend Cost of 0.05 production Favourable conditions to transition from 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 lessor of land
Slide 70: Shortage of wind power projects 2022-2028 presents opportunity
Shortage of wind power projects 2022-2028 presents opportunity for SCA Yearly commissioned onshore wind capacity , Organic development focus , A lack of appetite for new project planning in mid 2010s cause of , diminished commissioning today Wide span between predictions could reflect beliefs about
Slide 71: Repowering of existing wind farms on SCA land
Repowering of existing wind farms on SCA land represents a major opportunity Repowering offers an attractive business case In 2030, older turbines benefit from repowering under all price scenarios Turbine size can be increased from 2MW to 7-10MW, significantly increasing production and profit margin
Slide 72: The market for renewable fuels is expected to grow
The market for renewable fuels is expected to grow EU potential ramp-up of sustainable aviation fuel 2020-2050 1 Greenhouse gas reduction quotas will Mt/year increase as Europe redirects 60 ~10% total EU jet fuel demand ~75% total EU jet fuel demand 50 2 Available biomass will not be sufficient 40 3
Slide 73: SCA and St1 creating two companies
SCA and St1 creating two companies – from forest to fuel station Ownership structure maximizes value creation Leading Nordic supplier Access to market, Biorefinery Gothenburg biorefinery of liquid biofuel biorefinery and customers Tall oil, Europe’s largest Access to feed stock and biomass priva
Slide 74: Gothenburg Biorefinery
Gothenburg Biorefinery St1 is constructing a biorefinery in Gothenburg • Expected start up in Q4 2023 • Yearly capacity of 200 kt (SCA share 50 kt) • Flexible design allowing the use of a wide range of feedstocks • Capable of meeting current and future specifications of renewable fuels • Includes HV
Slide 75: Östrand Biorefinery
Östrand Biorefinery Development company • Next to Östrand pulp mill • Land reclamation started • Sustainable feed stocks and energy available • Environmental permit received to build a biorefinery at the Östrand pulp mill • 300 kt tonnes capacity • Finalizing design phase 75
Slide 76: Renewable energy – strategic direction
Renewable energy – strategic direction 1 Develop new position as a supplier of biofuels and green chemicals 2 Prepare for increased production of biofuels and green chemicals adjacent to SCA’s own industrial plants 3 Maximize wind power on SCA’s land and invest in own wind power 3 Maximize productio
Slide 77: Financials Q2 2023
Financials Q2 2023
Slide 78: SCA's performance Q2 2023
SCA’s performance Q2 2023 EBITDA (SEKm) Industrial ROCE 1 EBITDA (SEKm) and EBITDA margin 1,700 20% 3,121 -46% 2,806 2,684 2,608 2,484 2,260 1,981 2,055 EBITDA margin Net debt/EBITDA 59% 1,700 53% 52% 53% 50% 37.1% 1.3x 47% 41% 43% 37% Q2 '21 Q3 '21 Q4 '21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 1. LTM
Slide 79: Development per segment and quarter
Development per segment and quarter Forest Wood Pulp Kraftliner Renewable Energy Net Sales (SEKm) Income 2,202 1,931 1,945 1,926 1,897 1,822 1,881 1,760 1,760 1,772 1,694 1,642 1,612 1,626 1,573 1,412 1,422 1,432 1,297 1,353 470 514 330 324 402 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q
Slide 80: Balance sheet
Balance sheet SEKm Jun 31, 2023 Dec 31, 2022 Forest assets 98,891 97,882 Working capital 4,290 4,138 Deferred tax relating to forest assets -19,578 -19,468 Other capital employed 24,089 23,795 Total capital employed 107,692 106,347 Net debt 10,809 9,989 Net debt/EBITDA 1.3x 1.0x Equity 96,833 96,358
Slide 81: Strong financial development
Strong financial development Sales (SEKm) EBITDA1 (SEKm) and EBITDA margin 12,000 100% 10,194 90% 20,794 19,591 10,000 18,755 18,822 9,109 80% 18,410 16,664 70% 8,000 60% 48% 49% 6,000 50% 5,252 5,319 4,440 40% 3,648 28% 27% 4,000 24% 30% 22% 20% 2,000 10% 0 0% 2017 2018 2019 2020 2021 2022 2017 201
Slide 82: Share information
Share information @®SCA
Slide 83: Constantly changing world – but the forest always creates value
Constantly changing world – but the forest always creates value SCA discontinues publication paper expands pulp and kraftliner, and entering renewable biofuel creating SCA took the first step towards value in and from the forest becoming a consumer goods company with the acquisition of the Swedish p
Slide 84: SCA's total shareholder return
SCA’s total shareholder return SCA’s total shareholder return (TSR) since the distribution of Essity 350 325 300 275 144% 250 141% 225 Index 200 175 64% 150 39% 125 34% 100 13% 75 -16% OMX Stockholm 30 50 jun-17 okt-17 feb-18 jun-18 okt-18 feb-19 jun-19 okt-19 feb-20 jun-20 okt-20 feb-21 jun-21 okt-
Slide 85: Shareholder structure
Shareholder structure SCA’s largest shareholders as of June 30, 2023 # Shareholder Capital Votes Number of shareholders 1 Industrivärden 10.5% 29.4% 2 3 Norges Bank AMF Pension & Fonder 7.2% 8.8% 9.6% 6.5% ~110,000 4 Handelsbanken Pensionsstiftelse 1.4% 3.4% 5 Alecta Tjänstepension 4.8% 2.6% 6 Swedi
Slide 86: Capital allocation to secure long term profitable growth
Capital allocation to secure long term profitable growth 1 2 3 Profitable growth strategy Stable and increasing dividend Investment grade credit rating EBITDA (SEKbn) and EBITDA margin Dividend (SEK/share) Net debt (SEKbn) and leverage (ND/EBITDA) 3.50 1.00 3.00 +0.25 +0.25 10.0 2.50 2.50 +0.25 10.2
Slide 87: Appendix
Appendix
Slide 88: Forest Total Return
Forest Total Return Swedish forest assets
Slide 89: Forest assets create value in several ways
Forest assets create value in several ways Harvesting Net growth Land value Positive climate effect 89
Slide 90: We have never had as much forest in Sweden as we have today
We have never had as much forest in Sweden as we have today Standing volume Sweden Growing Harvest Sweden Increasing Increasing Land value Sweden 1 Increasing m3fo/ha asset base m3fo/ha cash cashflow flow SEK/m3fo (real value) land value +60% +110% +370% 4.1 143 587 89 2.0 124 1956 2022 1956 2022 19
Slide 91: Forest Total Return
Forest Total Return CAGR of 10% since 1956 1 Increasing cash flow 60,000 CAGR • Harvesting provides raw materials to the industries and generates cash flow 10% − Cash flow: ~3% CAGR CAGR 2004-2022 50,000 8% 2 Growing asset base • Forest growth exceeds harvesting 40,000 • Larger standing volume allow
Slide 92: The climate benefit from Sweden's forest industry has more than doubled
The climate benefit from Sweden’s forest industry has more than doubled Positive climate effect of Swedish forestry industry vs. Sweden's total fossil emissions 1 Growing forests bind CO2 (million tonnes CO2 equivalents per year) Mt CO2 • Growing forests capture and bind CO2 – 100 2019 active forest
Slide 93: Forest a strategic resource for the future
Forest a strategic resource for the future Estimated change in harvesting potential 2021-2030e (softwood sawlogs) Demand of wood products limited by supply CAGR 2021-2030e • Russian invasion of Ukraine +1.7% +15m m3 • Insect damage in Europe -1 m m3 -7m m3 • Harvesting restrictions in China -37m m3
Slide 94: Growing forest asset
Growing forest asset @®SCA
Slide 95: Swedish forest transformation
Swedish forest transformation Exploitative selective logging of the 1920’s 1 The forest landscape of today 1. Source: SLU, Skogsbilder. 95
Slide 96: Improved seedlings
Improved seedlings The world’s largest forest tree nursery with capacity to produce 100 million seedlings per year >25% faster growth potential than natural regeneration Selective breeding bring seed with higher quality, survival rate and growth On site R&D to improve growth and protection Innovativ
Slide 97: Global climate change
Global climate change Global warming will have a significant Increased growth in northern Sweden Increased risk impact on the climate in northern Sweden Significant longer growth period – Increased risk for storms, fire, ✓ earlier in spring, later in autumn × infestation and snow damage 25-30% incre
Slide 98: Efficient wood sourcing organization
Efficient wood sourcing organization Kiruna Europe’s largest private forest owner 50% self 2.7 m ha sufficiency Murjek Wood sourcing Luleå to industries Storuman Piteå 12 m m3sub Lycksele Terminal Industry (pulp wood) Industry (saw logs) Hoting Umeå Forest district Wood supply unit Control of Plant
Slide 99: Forest seasonality
Forest seasonality Net sales (SEKm) EBITDA (SEKm) Harvesting of own forest (k m3sub) 1000 100% 1,561 900 90% 1,509 1,945 1,931 1,383 1,365 800 80% 1,759 1,691 1,629 1,609 1,592 700 70% 1,121 1,474 1,451 600 60% 62% 923 917 829 500 50% 400 47% 40% 43% 40% 40% 42% 37% 454 300 35% 35% 30% 200 20% High
Slide 100: Biodiversity
Biodiversity
Slide 101: Monitoring pre-conditions for biodiversity
Monitoring pre-conditions for biodiversity Average size cutting area, ha Volume hard dead wood, Mm3 25 5-year average, data from 2021 120 20 100 15 80 Corporates/Other 10 60 40 5 Private owners 20 0 0 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 1955 1965 1975 1985 1995 2005 2015 Old forest1 on
Slide 102: Why is a biodiversity a concern and how do we address it?
Why is a biodiversity a concern and how do we address it? Nature conservation strategy since 1987 SCA introduced a new approach in 2019 • To increase precision and quality in nature conservation measures Measuring biodiversity using the IUCN Red List : • IUCN: International Union for Conservation of
Slide 103: Our species commitment
Our species commitment Species reviewed in red list Redlisted species Species negative affected by harvesting 22k 4.7k 1.7k 203 4.7k 1.7k Red listed Species found on Negatively affected SCA’s land and by harvesting affected by forest management 103 Source: SLU, artdatabanken.
Slide 104: Biodiversity in the forest landscape – managed locally
Biodiversity in the forest landscape – managed locally Connecting activities on the ground to large-scale processes - at the landscape level Creating habitat linked to species commitment The forest is dynamic – disturbance is natural Fire is essential in boreal forests Actively managing for importan
Slide 105: Responsible forestry in SCA
Responsible forestry in SCA Voluntary set-asides Combined targets 7% 3% SCA’s forests should be at least as rich in biodiversity, nature experiences and Adapted retention raw material in the Basic retention future as today 3% 87% 105 x% Share of productive forest land
Slide 106: SCA Logistics
SCA Logistics @®SCA
Slide 107: SCA Logistics
SCA Logistics Turnover Terminal volume RoRo vessels ~3.5 SEKbn 3,200 kt 3 st Share of SCA’s cost Sea freight volume ~20% 2,550 kt 107
Slide 108: SCA Logistics network
SCA Logistics network RoRo, Container och Railroad Roll-On-Roll-Off Container Traffic Traffic Terminals MO Oxelösund Umeå TU Sundsvall Piteå Umeå WE Umeå Vasa Sundsvall TH Sundsvall Sundsvall FR Sundsvall Iggesund SA Oxelösund SU Kiel Skövde MO Helsing- borg TU Rotterdam Malmö Rotterdam WE Rotterdam
Slide 109: SCA ships
SCA ships 1 2 3 m/s SCA Obbola m/s SCA Östrand m/s SCA Ortviken • RoRo Cassette / Paper Carrier • RoRo Cassette / Paper Carrier • RoRo Cassette / Paper Carrier • Owner: SCA • Owner: SCA • Owner: SCA • Built: 1996 • Build: 1996 • Built: 1996 109
Slide 110: are subject to certain risks and uncertainties that could negatively affect our business. Please
This presentation may contain forward-looking statements. Such statements are based on our current expectations and are subject to certain risks and uncertainties that could negatively affect our business. Please read SCA’s most recent annual report for a better understanding of these risks and unce