Interim Report Q1 2020

JANUARY 1 – MARCH 31, 2020
(compared with January 1 – March 31, 2019)

• Net sales declined 6% to SEK 4,793m (5,076). The decrease was mainly related to lower selling prices, which were offset by higher delivery volumes from the expanded pulp mill.
• EBITDA decreased to SEK 1,030m (1,560), which was mainly related to lower selling prices
• EBITDA margin amounted to 21.5% (30.7)
• Operating cash flow declined to SEK 341m (626)
• Earnings per share was SEK 0.69 (1.29)

JANUARY 1 – MARCH 31, 2020
(compared with October 1 – December 31, 2019)

• Net sales increased 11% to SEK 4,793m (4,312), mainly related to higher delivery volumes, offset by lower selling prices
• EBITDA amounted to SEK 1,030m (1,055), corresponding to an EBITDA margin of 21.5% (24.5). Lower selling prices were offset by higher delivery volumes and lower costs for maintenance stops.

 
COMMENTS ON THE FINANCIAL STATEMENTS

Earnings for the first quarter of 2020 were in line with the preceding quarter, but declined year on year. Lower selling prices were offset by higher delivery volumes for all product areas compared with the preceding quarter.

We are in the midst of a pandemic, the consequences of which are difficult to predict, but our highest priority is the health and safety of our employees and society. SCA also has a responsibility to deliver important input goods to, among others, hygiene products and packaging for food and medicines.

The impact on production, deliveries and demand for SCA’s products as a result of the coronavirus has so far been limited. SCA has taken a number of actions to protect risk groups, reduce the spread of the virus and to maintain production and operations. SCA has a solid financial position and strong liquidity.

The supply of wood to SCA’s industries was stable. Wood consumption increased during the quarter due to higher delivery volumes in all business areas. The price of pulpwood and sawlogs declined slightly compared with the preceding quarter.  

The consumption of solid-wood products remained stable during the period and SCA’s deliveries increased compared with the preceding quarter. However, market prices decreased slightly. 

The pulp market improved during the quarter, driven by an increased demand for tissue and hygiene products, SCA’s prioritized market segments in pulp. A price increase was implemented at the end of the quarter, the average selling price however remained lower than the preceding quarter.

Demand for kraftliner improved and European inventory levels continued to decline. SCA implemented a price increase for brown kraftliner from the end of the quarter, though the average selling price remained lower than the preceding quarter. For publication paper, demand and market prices declined.

Higher growth enables increased harvesting

SCA performed a new forest survey in 2019 that showed a greater standing volume and higher growth than previously calculated. The annual net growth amounts to approximately 10.5 million m³fo, 1 million m³fo higher than the estimate in the previous survey. Higher growth gives greater long-term harvesting potential and means a further increase in the contribution made by SCA’s forests to reduce the adverse effects of climate change.

Based on the new forest survey, a new harvesting calculation is being conducted and a preliminary assessment indicates that annual harvesting can gradually increase from about 4.3 million m³sub in 2020 to 5.4 million m³sub in 2025.
 

INVITATION TO PRESS CONFERENCE ON INTERIM REPORT FOR THE FIRST QUARTER OF 2020

The press conference can be followed via webcast or telephone. The President and CEO, Ulf Larsson, and CFO, Toby Lawton, will present the report and answer any questions.

Specify “SCA” or the conference ID: 6461139.

Sundsvall, April 24, 2020

SVENSKA CELLULOSA AKTIEBOLAGET SCA (publ)

Ulf Larsson
President and CEO
   

For further information, please contact
Toby Lawton, CFO, +46 (0)60 19 31 09  
Andreas Ewertz, Investor Relations Director, +46 (0)60 19 31 97
Josefine Bonnevier, Investor Relations Director, +46 (0)60 19 33 90 (as of May 4)
Björn Lyngfelt, SVP Communications, +46 (0)60 19 34 98

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 April 24, 2020 at 08:00 a.m. CEST. The report has not 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. 2019 the forest products company SCA had approximately 4,000 employees and sales amounted to approximately SEK 19.6 bn. SCA was founded in 1929 and has its headquarters in Sundsvall, Sweden. More information at www.sca.com.