Svenska Cellulosa AB SCA Class A · OMXSTO:SCA_A
Svenska Cellulosa AB SCA Class A — SCA — Q3 2004 Earnings Presentation
33 slides from Svenska Cellulosa AB SCA Class A's earnings presentation, October 2004
Slide 1: SCA Interim Report 1 January–30 September 2004
SCA Interim Report 1 January–30 September 2004 Jan Åström President and CEO 1
Slide 2: Market situation
Market situation Market outlook in second quarter: Development since second quarter: Favorable demand trend for SCA’s Fair demand in a competitive market consumer products Volume growth in tissue and price No price increases in consumer tissue due increases to compensate for rising raw to lo
Slide 3: SCA Group 1 January–30 September 2004
SCA Group 1 January–30 September 2004 2004:3 2004:2 0409 0309 Earnings per share, SEK 4.09 4.32 12.75 15.77 Cash flow from current operations 9.59 2.27 15.34 23.71 per share, SEK Earnings after financial items, SEK M 1,377 1,502 4,351 5,181 Net earnings, SEK M 955 1,009 2,978 3,656 3
Slide 4: SCA Group: Compared with first nine months of 2003
SCA Group Compared with first nine months of 2003 SEK M Sales 80 000 64 185 66 839 Sales increased by 4%. Adjusted 60 000 for currency and price effects net 40 000 sales rose 9% 20 000 0 Operating profit decreased by 13% 2003 2004 Currency effects –6% Operating Profit SEK M 5 793 6 000 5 017 4
Slide 5: SCA Group: Compared with second quarter of 2004
SCA Group Compared with second quarter of 2004 SEK M Sales 25 000 22 340 22 812 Sales increased by 2% due to 20 000 15 000 acquisitions that were carried out 10 000 successively during the second 5 000 quarter 0 Q2 Q3 Operating profit declined by 5% SEK M Operating Profit 2 000 1 742 1 648 1 500
Slide 6: Pre-tax profit
Pre-tax profit Change third quarter vs. second quarter 2004 SEK M 1 600 71 19 12 1 500 -31 -10 -6 -18 1 400 -124 1 300 AFH - US 1 502 Personal Care - 1377 1 200 vacation stoppages Pulp - production stoppages 1 100 1 000 Q2 Price/mix Volume Currency Raw Acqui- Goodwill Net Other Q3 material + sitions
Slide 7: Cash Flow Analysis
Cash Flow Analysis 1 January–30 September 1 (2) SEK M 2004 2003 Change Operating cash surplus 10,366 10,160 2% Changes in working capital -1,575 -693 Current capital expenditures, net -2,674 -2,352 Other operating cash flow changes -160 -181 Operating cash flow 5,957 6,934 -14% Financial items -666
Slide 8: Cash Flow Analysis
Cash Flow Analysis 1 January-30 September 2 (2) SEK M 2004 2003 Cash flow from current operations 3,582 5,503 Company acquisitions -7,583 -958 Strategic capital expenditures -1,729 -2,106 Strategic structural expenditures -180 -334 Divestments 0 950 Cash flow before dividend -5,910 3,055 Debt equity
Slide 9: Group - Development
Group - Development Quarterly data SEK M 17.4% EBITDA Target 30 000 17.0% 18% 16.0% 16.3% 18% 15.2% 15.7% 15.7% 16% 14% 20 000 12% 10% Sales 8% 22 340 22 812 EBITDA- 21 890 21 231 21 064 21 153 21 687 10 000 6% margin 4% 2% 0 0% 03:1 03:2 03:3 03:4 04:1 04:2 04:3 ROCE 13% 12% 11% 11% 10% 10% 9% 9
Slide 10: Hygiene Products - Operating Profit
Hygiene Products - Operating Profit Compared with first nine months of 2003 2004 2003 Change Comments Hygiene Products 3 378 3 636 -7% Consumer Tissue 1 041 1 014 3% Acquisitions and lower production and distribution costs have been partly offset by lower prices AFH Tissue 531 823 -35% Lower prices
Slide 11: Hygiene Products - Operating Profit
Hygiene Products - Operating Profit Compared with second quarter of 2004 2004:3 2004:2 Change Comments Hygiene Products 1 068 1 157 -8% Consumer Tissue 327 329 -1% Higher competition in markets outside Europe, mainly in Mexico AFH Tissue 153 210 -27% Higher raw material and personnel (pension and he
Slide 12: Hygiene Products - Development
Hygiene Products - Development Quarterly data SEK M 17.4% 17.0% EBITDA 15 000 16.8% 16.6% 16.8% 16.6% 18% target 18% 15.8% 16% 14% 10 000 12% 10% 8% 11 149 11 761 10 906 10 791 10 753 10 531 10 545 5 000 6% 4% 2% 0 0% 03:1 03:2 03:3 03:4 04:1 04:2 04:3 Sales EBITDA-margin 12
Slide 13: Tissue - Europe
Tissue - Europe Market Consumer Tissue Stable prices in competitive markets AFH Tissue Fair demand and stable prices 13
Slide 14: AFH Tissue - North America
AFH Tissue - North America Market Increasing demand US shipments up 2.4 % YTD August Higher prices About 3% price increase during spring Further price increases implemented during fourth quarter • To compensate for higher raw material costs 14
Slide 15: Personal Care
Personal Care Market Incontinence products Retail continues to show double-digit growth Baby diapers Price pressure within retailers’ brands due to branded price decreases in selective markets Feminine hygiene products Competitive situation in Europe 15
Slide 16: Packaging - Operating Profit
Packaging - Operating Profit Compared with first nine months of 2003 2004 2003 Change Comments Operating profit 1 778 1 944 -9% Lower prices for corrugated board were partly offset by improved productivity and improved paper integration as well as acquisitions and lower energy costs Higher costs for
Slide 17: Packaging - Operating Profit
Packaging - Operating Profit Compared with second quarter of 2004 2004:3 2004:2 Change Comments Operating profit 636 609 4% Some price hikes in North America and selective European markets 17
Slide 18: Packaging - Development
Packaging - Development Quarterly data SEK M 12 000 18% EBITDA- 16% 14.3% 13.9% 13.8% Target 16% 13.8% 13.2% 12.9% 14% 12.5% 8 000 12% 10% 8% 4 000 7 715 7 421 7 434 7 459 7 830 7 939 7 928 6% 4% 2% 0 0% 03:1 03:2 03:3 03:4 04:1 04:2 04:3 Sales EBITDA-margin 18
Slide 19: Packaging - Deliveries
Packaging - Deliveries Quarterly data Mm2 k tons 2 000 800 663 668 639 635 640 610 621 1 500 600 1 041 1 029 1 027 1 041 1 068 1 060 1 056 1 000 400 500 200 0 0 03:1 03:2 03:3 03:4 04:1 04:2 04:3 Liner Corrugated board 19
Slide 20: Recovered Paper
Recovered Paper Market Europe OCC and Mixed prices marginally up after stable summer De-ink and tissue grades - stable prices US Stable markets – high quality grades prices level out 20
Slide 21: Containerboard
Containerboard Market Testliner Fair market balance in Europe Price announcements of EUR 50 increase across Europe for fourth quarter Kraftliner European shipments up 7% YTD August USD 50 price increase implemented in September-October Imports from the US remain on a low level • Strong
Slide 22: Corrugated Board - Europe
Corrugated Board - Europe Market Increasing demand in Europe Demand up 2% YTD August • Germany up >3% • Spain and Italy up about 2% • France and UK up around 1.5% Competitive markets – average prices remain flat 22
Slide 23: Forest Products - Operating Profit
Forest Products - Operating Profit Compared with first nine months 2004 2004 2003 Change Comments Forest Products 1 104 1 090 1% Publication papers 313 454 -31% Lower prices, higher raw material costs and negative currency effects Pulp, timber and 791 636 24% Positive contribution from acquisition s
Slide 24: Forest Products - Operating Profit
Forest Products - Operating Profit Compared with second quarter 2004 2004:3 2004:2 Change Comments Forest Products 374 385 -3% Publication papers 121 96 26% Higher volumes Pulp, timber and 253 289 -12% Maintenence stops in the pulp solid-wood products operations 24
Slide 25: Forest Products - Development
Forest Products - Development Quarterly data SEK M EBITDA 5 000 25% target 25% 19.7% 20.4% 19.5% 18.6% 19.1% 17.5% 19.0% 4 000 20% 3 000 15% 2 000 3 813 3 741 10% 3 561 3 736 3 586 3 406 3 378 1 000 5% 0 0% 03:1 03:2 03:3 03:4 04:1 04:2 04:3 Sales EBITDA margin 25
Slide 26: Forest Products - Deliveries
Forest Products - Deliveries Quarterly data km3 k tons 500 500 443 383 400 370 366 400 330 345 346 380 300 340 344 300 332 336 324 238 200 200 100 100 0 0 03:1 03:2 03:3 03:4 04:1 04:2 04:3 Publication papers Solid-wood products 26
Slide 27: Publication Papers
Publication Papers Market Strong European demand for Newsprint Standard newsprint up 3% YTD September Improved grades up 21% YTD Strong demand for SC and LWC paper SC and LWC paper up 5% YTD September Increased capacity utilization 27
Slide 28: Market Pulp
Market Pulp Market Sharp price fall after summer Consumers de-stocking Producer inventories up from 38 to 41 days of supply in August NBSK prices below USD 600 in October 100 USD gap between softwood and hardwood remains Attempts to raise prices in fourth quarter Downtime to reduce inv
Slide 29: Solid-Wood Products
Solid-Wood Products Market Pressure on pine markets Demand has improved, but high supply put pressure on prices Stable spruce markets Producer inventories down, prices marginally up 29
Slide 30: Rationalization Program: Activities
Rationalization Program Activities Personal Care In France all production of incontinence products in Mâcon is being moved to the plant in Linselles All production of feminine hygiene products in Europe will be concentrated to Gemerská-Hôrka in Slovakia Packaging (Europe) Programs comprising s
Slide 31: Rationalization Program: Impact
Rationalization Program Impact In total, this affects about 1,200 persons, mostly in Europe. The reduction in North America is about 150 persons and in Australia 100 The total costs of the programs are estimated at about SEK 700 M. Main part will be charged in the fourth quarter These progra
Slide 32: Market Outlook
Market Outlook Europe The demand trend has not created the conditions for a price recovery that SCA expected to be implemented during the latter part of the current year The reason is that the recovery in the general economy is proceeding very slowly, while at the same time the competitive situa
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