Svenska Cellulosa Ab Sca Class A · OMXSTO:SCA_A
Svenska Cellulosa Ab Sca Class A — SCA — Investor Presentation (October 2021)
111 slides from Svenska Cellulosa Ab Sca Class A's investor presentation, Oct 29, 2021
Slide 1: Investor Relations October, 2021
Investor Relations October, 2021
Slide 2: A strong and integrated value chain
A strong and integrated value chain Sales 1 (SEKbn) EBITDA 1 (SEKbn) 18.4 4.4 EBITDA margin 1 Industrial ROCE 2 24% 5% Climate benefit 1 Net growth in forest 1 9.6 m t CO2 3.2 m m3fo Note: Forest, Wood, Pulp and Containerboard are segments with full reporting. Renewable energy and 2 Logistics are re
Slide 3: Europe's largest private forest owner
Europe’s largest private forest owner Sawmill Forestland Pulp mill Kraftliner mill 6% 2.6 m ha of Sweden Pellet production SCA’s forest Productive forestland Munksund 2.0 m ha Obbola Rundvik Stugun Bollstabruk Standing volume 1 Gällö Härnösand Östrand 257 m m3fo Tunadal Ortviken 1. Including forest
Slide 4: We use the entire tree
We use the Wind turbines Electricity entire tree Heat Bioenergy Logging residue & wood fuel Pellets Tall oil, Liquid biofuels black liquor & bark Pulp & paper mills Pulp Pulpwood Paper Wood-chips Bark & sawdust Sawmills Solid-wood products Sawlogs 4
Slide 5: Sustainability as part of the business concept
Sustainability as part of the business concept Fossil-free world Valuable forests Efficient use of resources Responsibility for people and the community SCA generates climate benefits SCA’s forests shall be at least as rich All wood raw material that can SCA is to create a safe and positive through
Slide 6: Global trends favoring fiber based renewable materials
Global trends favoring fiber based renewable materials Renewed focus post pandemic on sustainability Resources being invested in recovery SCA’s entire business is built on resource efficient use of a SCA delivers key input goods, including pulp used in hygiene renewable asset – the forest produc
Slide 7: Profitable growth strategy
Profitable growth strategy Invest in integrated value chain: Increased • Grow Pulp value from • Grow Kraftliner each tree • Renewable energy new segment • Remove exposure to Publication Paper Growing Increase forest holdings: renewable • Increase growth and harvesting level forest asset • Acquir
Slide 8: Strong project portfolio driving profitable growth
Strong project portfolio driving profitable growth Value Östrand – further 50% completed capacity increase Acquisition of 2023 forest land Biofuel 2021 Exit publication Further increase 2023 paper NBSK pulp capacity at Östrand Grow CTMP pulp Additional 50k Potential 2023 ha fores
Slide 9: SCA 2025 – shifting the portfolio to growing product areas
SCA 2025 – shifting the portfolio to growing product areas Growing Forest asset Wood Publication paper Kraftliner Pulp Renewable energy Harvesting own forest (k m3) 1 Capacity (k m3) Capacity (kt) Capacity (kt) Capacity (kt) Wind power capacity (TWh) +1,100k m3 +200k m3 -1,810kt +340kt +880kt +11TWh
Slide 10: With the Taee of the forest; we contribute
With the Taee of the forest; we contribute ay) ‘to a ‘sustainable future. . ae ws) We do this through irseamlt forestry, "
Slide 11: Group sustainability targets 2030
Group sustainability targets 2030 Fossil-free world Valuable forests Efficient use of Responsibility for people resources and the community 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 w
Slide 12: SCA's forests bind CO2 and replace fossil based products
SCA’s forests bind CO2 and Replaces 2 Higher growth enables more substitution – 6.1 replace fossil based products Mt CO2 renewable alternatives replace fossil based products SCA’s renewable Non-renewable Binds 1 products products net Growing forests bind CO2 – 4.4 active forest management Bioenergy
Slide 13: Responsible forestry delivers many values
Responsible forestry delivers many values Growing High trees Preserving Diversified sustainable Consideration capture biodiversity forests yield CO2 High Ambitious conservation Consideration Substitution Trust silviculture values for other protected stakeholders Renewable Carbon capture Biodiversity
Slide 14: SCA preserves forest biodiversity
Securing access to habitats for vulnerable species SCA preserves forest biodiversity New approach in 2020 • Increased quality and precision in nature conservation • Focus on red listed species and their habitat • Conservation and restoration Horned powderpost beetle • Partnerships • Monitoring and r
Slide 15: Mitigating global warming
Mitigating global warming SCA’s products substitute fossil based alternatives Renewable packaging Green electricity Sustainable buildings Replacing fossil materials Material efficient packaging Bioenergy and green chemicals 15
Slide 16: Long term commitment
Long term commitment 2020 2019 2018 Employees trained in SCA’s Code of Conduct 96% 96% 90% Contract suppliers approved SCA’s Supplier Standard 94% 93% 94% Total shareholder return 51% 41% -17% Credit rating Investment grade Investment grade Investment grade Climate benefit, million tonnes CO2 9.6 10
Slide 17: SCA is part of the UN Sustainable Development Goals
SCA is part of SCA contributes to SCA is engaged in Fossil-free Sweden, SCA ranked number all the 17 UN’s the development of supporting Sweden two in biodiversity Sustainable responsible forest in becoming the index 2021 Development Goals management world’s first fossil- free welfare nation
Slide 18: Forest
Forest @®SCA
Slide 19: Europe's largest private forest owner
Europe’s largest private forest owner Sales (SEKm) Forest holdings located close to SCA’s industry Sawmill 6% 6,486 Pulp mill Kraftliner mill of Sweden • 2.6m ha forestland Pellet production SCA’s forest • 2.0m ha productive forestland EBITDA (SEKm) • 257m m3fo standing volume 1 Munksund 2,213 ~50%
Slide 20: Forest assets create value in several ways
Forest assets create value in several ways Harvesting Net growth Land value Positive climate effect 20
Slide 21: Profitable growth since 1950
Profitable growth since 1950 Standing volume SCA Growing Harvest own forest SCA Increasing Increasing Land value Sweden 1 Increasing million m3fo asset base million m3sub cash cashflow flow SEK/m3fo (real value) land value +70% +130% +300% 4.6 461 250 146 >6,000% 2.0 nominal increase 111 1950 2020 1
Slide 22: SCA's Forest Total Return
SCA’s Forest Total Return CAGR of 10% since 1956 Forest – Total Return SCA’s Forest Index (1956-2020) CAGR 1 Increasing cash flow 10% • Harvesting provides raw materials to the industries and generates cash flow − Cash flow: ~3% CAGR CAGR 2004-2020 8% 2 Growing asset base • Forest growth exceeds har
Slide 23: Significant real growth of 3.7%
Significant real growth of 3.7% Forest growth metrics (m m3fo) Gross growth of standing forest 10.5 Natural losses and pre-commercial thinning -1.4 Real growth rate of 3.7% (in relation to ingoing Available growth of standing forest 9.1 standing volume in Sweden of 249m m3fo) 1 Current cash flow Ann
Slide 24: Higher forest growth enables increased harvesting
Higher forest growth enables increased harvesting Gross forest growth Sweden Harvesting plan (m m3fo / year) (m m3sub / year) New forest survey conducted in 2019 +1 +1.1 5.4 Annual growth 1m m3fo higher than expected 10.5 9.5 • Gross growth of 10.5 (9.5) m m3fo per year 4.3 • Net growth of 4.0 (3.0)
Slide 25: 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 26: 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 27: 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 28: Forest land prices and interest rate
Forest land prices and interest rate Change in forest land prices Northern Sweden and interest rates 16% 14% Average change in 12% forest land price 10% 8% 6% 4% Average interest rate 2% 0% -2% -4% 1995-2000 2000-2005 2005-2010 2010-2015 2015-2020 Source: Ludvig &Co, Refivitiv. 28 Swedish government
Slide 29: Forest acquisitions in the Baltics
Forest acquisitions in the Baltics – strengthen wood supply for future projects 1 2 3 Strengthening of the High growth potential Repeat SCA’s successful integrated value chain • High growth – 3x northern Sweden Swedish forest development • Strengthen raw material supply and • Platform for further ex
Slide 30: SCA's forest holdings in the Baltics
SCA’s forest holdings in the Baltics SCA forest holdings in the Baltics • ~ 43,000 hectare forest land (target 100,000 hectare) • Located in Estonia and Latvia Younger than SCA’s forest holdings in Sweden More fertile ground and warmer climate – higher growth Mainly located in the northern regio
Slide 31: Limited supply of wood raw material
Limited supply of wood raw material Estimated change in harvesting potential 2018-2025 (softwood sawlogs) Demand of wood products growing faster than supply CAGR 2018-2025e ~2.0% • Insect damage in Canada +11m m3 • Harvesting restrictions in China -10m m3 +3m m3 • Limited potential for new softwood
Slide 32: 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 32
Slide 33: Wood
\Nlood @®SCA
Slide 34: Leading European wood producer
Leading European wood producer Sales (SEKm) 6,296 5 modern and well invested sawmills 2 painting and 5 planing facilities 2.2m m capacity 3 EBITDA (SEKm) Own distribution network 420k Munksund 657 Focus on value added products • Adapted wood to the further processing industry 330k • Distribution of
Slide 35: 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 36: 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 37: 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 38: 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 2018 prices) 70 16 1 ~75% of all softwood is used for 60 14 RMI and new build 12 50 2 10 RMI more stable over time than new build 40 and single largest consume
Slide 39: 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 2020 2025 Harvesting own forest (k m3) +1,100k m3 Boden 5,400 Vilhelmina Munksund Munksund Munksund
Slide 40: Digitalization increases the value from each tree
Digitalization increases the value from each tree 1 CT-Scan Improve efficiency 3D-visualization of every log and value optimization Volume growth and production optimization Log Eye Detection of log-ID to 2 control rotation for maximized value Increase revenue Secure highest value from each tree Sca
Slide 41: 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 through: • Value-added and customized products • Volume growth in Bollsta and Tunadal 3 Production optimization to achieve the highest level of efficiency
Slide 42: Pulp
Pulp @®SCA
Slide 43: High quality pulp producer
High quality pulp producer Sales (SEKm) High quality bleached softwood kraft pulp (NBSK) 4,431 • Focus on high strength properties • Capacity: 900 kt/year 1.0Mt capacity • The pulp is used in tissue, packaging, publication paper EBITDA (SEKm) and filters 614 Chemical thermomechanical pulp (CTMP) • C
Slide 44: 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 45: Increasing pulp demand driven by a growing tissue market
Increasing pulp demand driven by a growing tissue market Demand growing ~2% per year driven by tissue SCA has ~90% exposure to tissue and specialty paper Global softwood pulp demand (m tonnes) 2019 Present 30 CAGR ~2% 30% 30% 30% 25% Market (global) 25 40% 45% Limited exposure to Printing & Writing
Slide 46: World's largest NBSK pulp line in operation
World’s largest NBSK pulp line in operation Total capacity (tonnes/year) Production began in June 2018 • On budget and on time New capacity 8 SEKbn investment Meets long-term demand growth Competitive cost position • Doubled NBSK capacity Before start-up 900,000 NBSK • Fixed cost reduction • Improve
Slide 47: 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 47
Slide 48: CTMP investment
CTMP investment @SCA
Slide 49: 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 49
Slide 50: 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 51: Increasing exposure to structurally growing segments
Increasing exposure to structurally growing segments Market plan by geography Market plan by customer Market plan by product Printing Existing paper New CTMP Specialty Asia customers volume Europe Board Tissue USA Former customers Growth with current CTMP CTMP to customers current NBSK customers Eur
Slide 52: SCA invests in businesses with market leading positions
SCA invests in businesses with market leading positions Investment rationale Cost curve SW CTMP producers Increase capacity from 100kt to 300kt Move production from Östrand to Ortviken Low CAPEX per tonne • CAPEX SEK 1.45bn • CAPEX SEK 5k per tonne CTMP today • Utilize existing modern TMP asset CTMP
Slide 53: CTMP expansion drives profitable growth
CTMP expansion drives profitable growth Investment ’20-’23 (SEKbn) CTMP capacity (kt) EBITDA (SEKbn) Financial summary +1.45bn +200kt +0.3bn Capex of SEK ~1.45bn 1.45 300 Profitable growth • +SEK 0.3bn EBITDA • Secure current business Expected start-up beginning 2023 • CTMP production to stop at Öst
Slide 54: Pulp – strategic direction
Pulp – strategic direction 1 Establish Östrand as the leading supplier of softwood kraft pulp for tissue manufacturers 2 Expand and move the CTMP production to the Ortviken industrial site 3 Plan for continued expansion of the softwood kraft pulp capacity 54
Slide 55: Paper
Paper @®SCA
Slide 56: Leading Kraftliner supplier
Leading Kraftliner supplier Sales (SEKm) No.1 independent producer of Kraftliner in Europe 7,916 • Strong Nordic fresh fiber for high quality packaging • Capacity: 865 kt/year • Products: brown and white-top kraftliner for consumer and EBITDA (SEKm) transport packaging, including specialized heavy-d
Slide 57: Containerboard demand shows resilience during corona pandemic
Containerboard demand shows resilience during corona pandemic Containerboard a 160 Mt global market... …with a stable growth of ~3% per year CAGR ~3% 370Mt +60 Mt NSPT UM CM 180 Resilient demand during Specialties corona pandemic CWF Containerboard UWF 160 140 Tissue 120 Sack 160Mt 100 CB 80 2003 20
Slide 58: 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 58
Slide 59: 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 America Europe Kraftliner Testliner 5 Mt 35 Mt Unbleached Kraf
Slide 60: 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 61: 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 62: Obbola kraftliner expansion
Obbola kraftliner expansion Project overview De-bottlenecking New OCC line New lime kiln New dispatch area New paper machine The Obbola paper mill area as of June 2021. Project running on time and on budget 62
Slide 63: 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 64: Start-up expected in Q1 2023
Start-up expected in Q1 2023 Profitable during first year of operation Obbola production (kt) New 725kt paper machine at Obbola +275kt 725 SEK 7.5bn investment Start-up expected in Q1 2023 • Ramp-up period of ~3 years 450 Project proceeding according to plan and budget Current 2023e 2026e 64
Slide 65: 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 66: Paper – strategic direction
Paper – strategic direction 1 Complete the investment to increase kraftliner production at the 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
Slide 67: Renewable energy
Renewable energy @®SCA
Slide 68: Renewable energy – potential to increase value of each tree
Renewable energy – potential to increase value of each tree Target 2025 Long-term potential 11 300k TWh m3 Increasing the value of forest and land Corresponding to fossil-free domestic Corresponding to electrification of all cars in Sweden aviation in Sweden 68
Slide 69: 11.0 TWh wind power on SCA land by 2025
11.0 TWh wind power on SCA land by 2025 Initiate new wind projects on SCA land and develop after market offering New target 11 TWh Today, 628 wind turbines operate on SCA’s land with an annual production capacity of 6.4 TWh • Corresponds to ~20% of Sweden’s wind power 2023 production 9.5 TWh 9.5 TW
Slide 70: SCA and St1 joint venture for biofuels from tall oil
SCA and St1 has started a joint venture for the production of biofuels from tall oil • Joint venture invests in biorefinery in Gothenburg Development of HVO and biofuels volumes in Sweden 20 • SCA invests ~0.6 bn SEK, total investment ~2.5 bn SEK 18 • Total biorefinery capacity 200,000 tonnes, JV’s
Slide 71: Three potential feedstocks with different technology maturity
Three potential feedstocks with different technology maturity 1 Crude tall oil and other vegetable oils Mature technology In operation 2023 CTO HVO, biojet Destillery Biorefinery 2 Solid biomass Long term Under development in demo scale – long term option Solid biomass Advanced biofuels, Biorefinery
Slide 72: Renewable energy – strategic direction
Renewable energy – strategic direction 1 Maximize wind power on SCA’s land and develop viable projects for investors 2 Optimize production, product portfolio and profitability in the biofuel business 3 Commercialize business opportunities in biofuels and green chemicals 72
Slide 73: Financials
Financials @®SCA
Slide 74: EBITDA, Industrial ROCE and EBITDA development
EBITDA (SEKm) Industrial ROCE 1 EBITDA development (SEKm) +160% 2,684 25% 2,684 2,260 53% 47% EBITDA margin Net debt/EBITDA 1,451 1,364 1,359 33% 53% 1.0x 27% 1,055 24% 1,030 21% 1,001 21% 1,032 24% 32% Q3 '19 Q4 '19 Q1 '20 Q2 '20 Q3 '20 Q4 '20 Q1 '21 Q2 '21 Q3 '21 1. LTM 74 Note: EBITDA excluding e
Slide 75: Net sales and EBITDA by segment
Forest Wood Pulp Containerboard/Paper 1 2,242 Net sales (SEKm) 2,183 2,108 1,981 1,876 1,817 1,833 1,770 1,765 1,694 1,659 1,627 1,592 1,592 1,565 1,522 1,500 1,498 1,494 1,455 1,436 1,340 1,376 1,326 1,272 1,288 1,264 1,188 1,166 1,091 986 900 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q
Slide 76: Capital employed and net debt
SEKm Sep 30, 2021 Dec 31, 2020 Forest assets 77,493 74,900 Working capital 3,189 2,759 Working capital/Net sales 1 16% 18% Deferred tax relating to forest assets -15,478 -14,977 Other capital employed 18,579 17,152 Total capital employed 83,783 79,834 Net debt 7,631 7,671 Net debt/EBITDA 2 1.0x 1.7x
Slide 77: Sales and EBITDA development
Sales and EBITDA development Sales (SEKm) EBITDA1 (SEKm) and EBITDA margin 19,591 18,755 18,410 5,252 5,319 16,664 16,152 15,412 15,373 4,440 3,781 3,648 3,300 3,385 28% 27% 23% 24% 21% 22% 22% 2014 2015 2016 2017 2018 2019 2020 2014 2015 2016 2017 2018 2019 2020 1 Excluding effect of one-off items
Slide 78: Share information
Share information @®SCA
Slide 79: Constantly changing world – but the forest always creates value
Constantly changing world – but the forest always creates value SCA discontinues publication paper and expands pulp and kraftliner, creating value in and from the forest SCA took the first step towards becoming a consumer goods company with the acquisition of the Swedish personal care company Mölnly
Slide 80: SCA's total shareholder return
SCA’s total shareholder return SCA’s total shareholder return (TSR) since the distribution of Essity 290 280 270 260 250 240 230 220 210 200 Index 190 180 170 160 150 140 130 120 110 100 90 80 70 60 jun-17 sep-17 dec-17 mar-18 jun-18 sep-18 dec-18 mar-19 jun-19 sep-19 dec-19 mar-20 jun-20 sep-20 dec
Slide 81: Shareholder structure
Shareholder structure SCA’s largest shareholders as of September 30, 2021 # Shareholder Capital Votes Number of shareholders 1 Industrivärden 10,3% 29,3% 2 3 Norges Bank AMF Pension & Fonder 7,2% 8,5% 9,6% 6,1% ~107,000 4 Handelsbanken Pensionsstiftelse 1,4% 3,4% 5 Alecta Pensionsförsäkring 3,9% 2,1
Slide 82: Appendix
Slide 83: Forest Total Return
Forest Total Return @®SCA
Slide 84: Forest assets create value in several ways
Forest assets create value in several ways Harvesting Net growth Land value Positive climate effect 84
Slide 85: 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% +100% +270% 461 142 3.9 89 2.0 124 1956 2020 1956 2020 19
Slide 86: Forest Total Return
Forest Total Return CAGR of 10% since 1956 CAGR Forest – Total Return Index Sweden (1956-2020) 1 Increasing cash flow 10% • Harvesting provides raw materials to the CAGR 2004-2020 industries and generates cash flow − Cash flow: ~3% CAGR 7% 2 Growing asset base • Forest growth exceeds harvesting • La
Slide 87: 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 88: Forest a strategic resource for the future
Forest a strategic resource for the future Estimated change in harvesting potential 2018-2025 (softwood sawlogs) Demand of wood products growing faster than supply CAGR 2018-2025e ~2.0% • Insect damage in Canada +11m m3 • Harvesting restrictions in China -10m m3 +3m m3 • Limited potential for new so
Slide 89: Growing forest asset
Growing forest asset @®SCA
Slide 90: Swedish forest transformation
Swedish forest transformation Exploitative selective logging of the 1920’s 1 The forest landscape of today Note: 1. Source SLU, Skogsbilder. 90
Slide 91: 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 92: 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 93: Efficient wood sourcing organization
Efficient wood sourcing organization Kiruna Europe’s largest private forest owner 50% self 2.6 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 94: Forest seasonality
Forest seasonality Net sales (SEKm) EBITDA (SEKm) Harvesting of own forest (k m3sub) 1,865 1,833 1,629 1,561 747 753 1,694 1,659 1,627 1,592 1,500 1,494 1,451 1,291 1,230 607 1,147 47% 515 45% 516 499 452 449 927 36% 34% 821 388 33% 767 751 25% 21% 36% 28% High level of harvesting from own forest in
Slide 95: Factors affecting relative profitability
Factors affecting relative profitability ~40 & ~60 80+ Thinning Final harvesting i Price to industry Income / m3 Index Income / m3 Index Income • Market prices, externally sourced wood sold at cost Price 80 Price 100 Harvesting cost -40 Harvesting cost -25 Gross profit 40 Gross profit 75 ii Harvesti
Slide 96: SCA wood sourcing
SCA wood sourcing Wood sourcing 2019 Wood sourcing 2025 1 Supplies industry segments with wood m m3sub 13 13 External suppliers Sold at market price 12 External Sawmills 12 Sawmills 11 11 Locally • Prices based on market prices in SCA’s suppliers purchased 10 10 region 9 9 Locally Price premium for
Slide 97: Forest portfolio optimization through buying and selling land
Forest portfolio optimization through buying and selling land 1 SCA’s land purchases 2014 2015 2016 2017 2018 2019 2020 1Move forest closer to the industry Volume (thousand m3fo) 1,655 185 123 261 197 429 288 2 Price (SEK/m3fo) 264 273 263 259 286 334 294 2Improve forest consolidation Value (SEKm) 4
Slide 98: Improving forest consolidation
Improving forest consolidation Forest land swaps Acquisition of land to create larger consolidated areas SCA’s forest land SCA gains Counterparty’s forest land SCA gives to counterpart Forest ownership in Roggsjön 1955 Forest ownership in Roggsjön 2017 98
Slide 99: Wood swaps drive both financial and environmental gains
Wood swaps drive both financial and environmental gains Wood swaps totaling 1-1.5m m3sub annually SEK 60 m annual saving Cost saving from lower transportation costs Reduced emissions Collaboration with several large forest owners 99
Slide 100: Forest holdings in the Baltics
Forest holdings in the Baltics @®SCA
Slide 101: Strategic rationale – strengthen wood supply for future projects
Strategic rationale – strengthen wood supply for future projects 1 2 3 Strengthening of the High growth potential Repeat SCA’s successful integrated value chain • High growth – 3x northern Sweden Swedish forest development • Strengthen raw material supply and • Platform for further expansion • Track
Slide 102: Strengthen raw material supply and increasing self sufficiency
1 Strengthen raw material supply and increasing self sufficiency Wood sourcing 2019 Wood sourcing 2025 1 m m3sub 13 13 Potential investment projects will External suppliers 12 12 increase SCA wood demand External Sawmills Locally Sawmills 11 suppliers 11 purchased 10 10 9 9 Locally 8 purchased 8 7 P
Slide 103: The Baltics offer high forest growth potential
2 The Baltics offer high forest growth potential Price (EUR/ha forest land) Growth potential (m3fo/ha/year) 12,000 12 ~2.5x 10,000 10 8,000 8 6,000 6 4,000 ~1.1x 4 2,000 2 0 0 Southern Mid Northern Baltic Southern Mid Northern Baltic Sweden Sweden Sweden states Sweden Sweden Sweden states Source: No
Slide 104: Opportunity to repeat SCA's successful development of the Swedish forests
3 Opportunity to repeat SCA’s successful development of the Swedish forests Standing volume Growing Harvest plan Increasing Land value 1 Increasing asset base cash flow land value million m3fo million m3sub SEK/m3fo (real value) 1 Silviculture +70% +130% +300% 2 4.6 461 Fertilization 250 3 146 Impro
Slide 105: SCA's forest holdings in the Baltics
SCA’s forest holdings in the Baltics SCA forest holdings in the Baltics • ~ 43,000 hectare forest land (target 100,000 hectare) • Located in Estonia and Latvia Younger than SCA’s forest holdings in Sweden More fertile ground and warmer climate – higher growth Mainly located in the northern regio
Slide 106: Long term goals in the Baltics
Long term goals in the Baltics Total area (k ha) Standing volume (m m3fo) ~100 ~12 Final fellings (m m3fo/year) Local purchases (m m3fo/year) ~0.5 0.5-1.0 106
Slide 107: SCA Logistics
SCA Logistics @®SCA
Slide 108: SCA Logistics
SCA Logistics Turnover Terminal volume RoRo vessels ~2.8 SEKbn 4,510 kt 3 st Share of SCA’s cost Sea freight volume Container vessels ~20% 2,810 kt 2 st 108
Slide 109: 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 110: 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 4 5 m/s SCA Tunadal m/s SCA Munksund • Container Carrier •
Slide 111: 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