Svenska Cellulosa Aktiebolaget SCA
SCA Interim Report
1 January–30 September 2006
Jan Åström
President and CEO
1
Highlights
ƒ Positive profit development Jan-Sept 06 vs. 05
Š Pre-tax profit up 19%(1) to SEK 5,030m
Š Growth 6%
ƒ Positive profit development Q3 06 vs. Q2 06
Š Pre-tax profit up 3% to SEK 1,753m
Š Positive price movements (SEK 300m)
Š Negative currency movements
ƒ Good cost control through efficiency
enhancement programs
1
Excluding items affecting comparability
2
1
Svenska Cellulosa Aktiebolaget SCA
Financial Summary
Q3 2006
Net sales, SEKm
Change
Q3/Q2 (%)
Change(1)
9M 06/9M 05 (%)
25,095
-1%
+6%
Profit before tax, SEKm
1,753
+3%
+19%
Earnings per share, SEK
6.51
+16%
+24%
1
Excluding items affecting comparability
3
Group – Quarterly Development(1)
EBITDA (%)
SEKm
30,000
14.3%
14.7%
14.3%
13.9%
14.4%
16%
14%
25,000
12%
20,000
10%
15,000
25,095
24,740
25,400
25,141
25,294
8%
6%
10,000
4%
5,000
2%
0
0%
Q3 2005
Q4 2005
Sales
1
Q1 2006
Q2 2006
Q3 2006
EBITDA margin
Excluding items affecting comparability
4
2
Svenska Cellulosa Aktiebolaget SCA
SCA Group Sales and EBIT
9M 2006 compared with 9M 2005(1)
Sales
SEKm
80,000
76,000
+1,628
+900
+821
+1,307
-111
Forest
Products
Other
75,789
71,244
72,000
ƒ
ƒ
ƒ
Volume: +3%
Price: +2%
Currency: +1%
ƒ
ƒ
ƒ
ƒ
Savings: +18%
Price/mix: +18%
Volume: +16%
Energy and raw
materials: -26%
68,000
64,000
60,000
Sales 9M
2005
Personal Care
Tissue
Packaging
Sales 9M
2006
EBIT
SEKm
6,400
+466
5,800
5,318
+318
-66
+117
Tissue
Packaging
+91
6,244
5,200
4,600
4,000
EBIT 9M 2005 Personal Care
1
Forest
Products
Other
EBIT 9M 2006
Excluding items affecting comparability
5
SCA Group Sales and EBIT
Q3 2006 compared with Q2 2006
Sales
SEKm
26,000
25,294
-3
-44
+57
-115
-94
25,095
25,000
ƒ
Currency: -1%
ƒ
ƒ
Price: +14%
Energy and raw
materials: -11%
Currency: -3%
24,000
23,000
22,000
Sales Q2
2006
Personal Care
Tissue
Forest
Products
Other
-40
+1
Sales Q3
2006
EBIT
SEKm
2,200
Packaging
2,113
-12
+30
+84
2,176
2,000
1,800
ƒ
1,600
1,400
EBIT Q2 2006 Personal Care
Tissue
Packaging
Forest
Products
Other
EBIT Q3 2006
6
3
Svenska Cellulosa Aktiebolaget SCA
Cash-Flow Analysis
9M 2006 compared with 9M 2005
ƒ Operating cash flow SEK 4,384m (5,123)
Š Higher operating cash surplus
Š Higher current capex
Š Volume growth and higher prices resulted in higher working capital
Š Increased cash outflow related to structural costs
ƒ Cash flow before dividend SEK 778m (872)
Š Lower strategic capex
ƒ Debt/equity ratio: 0.69 (0.73)
7
Personal Care – Quarterly Development
SEKm
6,000
EBITDA (%)
19.1%
17.7%
17.8%
17.9%
Q3/Q2 comments:
17.6%
5,000
18%
16%
14%
4,000
12%
ƒ Stable prices and
volumes
ƒ Negative currency
movements
10%
3,000
5,026
5,136
5,348
5,249
5,246
2,000
8%
6%
4%
1,000
2%
0
0%
Q3 2005
Q4 2005
Sales
Q1 2006
Q2 2006
Q3 2006
EBITDA margin
8
4
Svenska Cellulosa Aktiebolaget SCA
Personal Care
ƒ Incontinence products
Š Good volume growth in retail segment
Š Improved product mix – increased sales from
new products
ƒ Baby diapers
Š Maintained/strengthened shares for Libero
Š Improved profit in Latin America
ƒ Feminine hygiene products
Š Gained market shares in Europe and
Latin America
Š Favourable development in Australia and
New Zealand
9
Tissue – Quarterly Development
SEKm
10,000
EBITDA (%)
14%
12.6%
11.6%
11.9%
12.2%
12%
10.7%
8,000
Q3/Q2 comments:
ƒ Higher prices and
volumes improved
margins
10%
6,000
4,000
8%
7,917
8,109
7,962
7,787
7,743
6%
ƒ Negative currency
movements and
higher raw material
costs
4%
2,000
2%
0
0%
Q3 2005
Q4 2005
Sales
Q1 2006
Q2 2006
Q3 2006
EBITDA margin
10
5
Svenska Cellulosa Aktiebolaget SCA
Tissue
ƒ Consumer tissue
Š Some price increases achieved in
Europe but financial performance not
satisfactory
Š Improved volumes and prices in Mexico
and South America
ƒ AFH tissue
Š Continued strong performance in North America
Š SCA’s earnings stable in Europe
Š Improved sales in Australia and New Zealand
11
Packaging – Quarterly Development
SEKm
EBITDA (%)
12,000
14%
11.9%
10,000
10.8%
12%
10.8%
10.2%
10.2%
10%
Q3/Q2 comments:
ƒ Margin improvement
through higher
prices on corrugated
board
8,000
8%
6,000
6%
4,000
8,351
8,272
8,389
8,231
8,288
2,000
ƒ Slightly lower
volumes of
corrugated board
4%
2%
0%
0
Q3 2005
Q4 2005
Q1 2006
Sales
Q2 2006
Q3 2006
EBITDA margin
12
6
Svenska Cellulosa Aktiebolaget SCA
Packaging
ƒ Corrugated board
Š Prices up some 5%(1), sequential
increase Q3 vs Q2 of 2%
Š Further price increases announced, 5-8%
ƒ Containerboard
Š Strong demand, prices up in
September/October
ƒ North America
Š Higher prices and lower production costs
1
Measured from year-end 2005
13
Forest Products – Quarterly Development
SEKm
5,000
EBITDA (%)
21.4%
25%
22.4%
21.8%
21.0%
21.0%
4,000
20%
3,000
15%
2,000
3,986
4,071
4,378
4,454
4,339
10%
Q3/Q2 comments:
ƒ Sales declined due to
negative currency
movements
ƒ Higher energy costs,
negative currency
movements and
negative market mix
for publication papers
5%
1,000
0%
0
Q3 2005
Q4 2005
Sales
Q1 2006
Q2 2006
Q3 2006
EBITDA margin
14
7
Svenska Cellulosa Aktiebolaget SCA
Forest Products
ƒ Lower profit in publication papers
Š Increased export from Europe resulted in lower
average prices in Q3
Š Negative currency movements
Š Higher energy costs
ƒ Pulp, timber and solid-wood products
Š Higher prices for pulp and solid-wood products
Š Start-up of new recovery boiler in Östrand in
early Q4
15
Outlook
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Energ
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Good
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SCA is well positioned to gradually improve earnings in accordance
with the targets released during the Capital Market Day 2006
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Svenska Cellulosa Aktiebolaget SCA
17
9