SCA Interim Report
1 January–30 June 2006
Jan Åström
President and CEO
1
Highlights
Pre-tax profit H1 2006: SEK 3,277m (+22%(1) vs. H1
2005)
Highest quarterly pre-tax profit in three years:
SEK 1,708m (+9% vs. Q1 2006)
Good underlying volume development - fewer invoicing
days in second quarter vs. first quarter
Positive price movements
Seasonally lower energy costs in Q2, but still on a high
level
Efficiency enhancement program is developing
according to plan
1
2
Excluding items affecting comparability
Financial Summary
Q2 2006
Change
Q/Q (%)
25,294
0%
+9%
Profit before tax, SEKm
1,708
+9%
+22%
Earnings per share, SEK
5.62
+13%
+25%
Net sales, SEKm
1
3
Excluding items affecting comparability
Change
H1 06/H1 05(1) (%)
Group – Quarterly Development(1)
SEKm
EBITDA (%)
35,000
18%
30,000
13.7%
14.3%
14.3%
13.9%
14.4%
16%
14%
25,000
12%
20,000
10%
15,000
8%
10,000
23,986
25,141
24,740
25,400
25,294
6%
4%
5,000
2%
0
0%
Q2 2005
Q3 2005
Sales
1
4
Excluding items affecting comparability
Q4 2005
Q1 2006
EBITDA margin
Q2 2006
SCA Group Sales and EBIT
H1 2006 compared with H1 2005(1)
Sales
SEKm
52,000
50,000
48,000
+1,408
+1,074
+884
+954
-130
Forest
Products
Other
+391
+72
50,694
Volume: +5%
Currency: +3%
46,504
46,000
44,000
42,000
40,000
Sales H1
2005
Personal Care
Tissue
Sales H1
2006
EBIT
SEKm
4,000
3,500
Packaging
3,381
+292
-69
+1
Tissue
Packaging
4,068
Volume: +20%
Price/mix: +12%
Currency: +6%
Energy and raw
materials: -26%
3,000
2,500
2,000
EBIT H1 2005 Personal Care
1
5
Excluding items affecting comparability
Forest
Products
Other
EBIT H1 2006
SCA Group Sales and EBIT
Q2 2006 compared with Q1 2006
Sales
SEKm
26,000
25,400
-99
-175
25,000
-158
+76
+250
25,294
Currency: -1%
24,000
23,000
22,000
Sales Q1
2006
Personal Care
Tissue
Forest
Products
Other
Sales Q2
2006
-29
2,113
EBIT
SEKm
2,200
2,000
Packaging
1,955
-6
+101
+38
+54
1,800
1,600
1,400
EBIT Q1 2006 Personal Care
6
Tissue
Packaging
Forest
Products
Other
EBIT Q2 2006
Price: +5%
Energy and raw
materials: +6%
Volume: +2%
Currency: -4%
Energy Costs
Energy costs SEK 150m lower
compared with first quarter 2006 due
to lower consumption and lower
average prices
Costs in third quarter expected to be in
line with second quarter
Price hedges in place for 2006:
–Electricity: ~40%
–Natural gas: ~30%
7
Cash Flow Analysis
H1 2006 compared with H1 2005
Operating cash flow SEK 2,387m (2,563)
Higher operating cash surplus
Slightly increased current capex
Negative effect from increased working capital, due to volume growth
and price increases
Increased cash outflow related to structural costs
Cash flow before dividend SEK 325m (-345)
Lower strategic capex
Debt/equity ratio: 0.70 (0.74)
8
Personal Care – Quarterly Development
SEKm
6,000
17.1%
17.7%
EBITDA (%)
19.1%
17.8%
17.9%
5,000
18%
16%
14%
4,000
12%
10%
3,000
4,727
5,026
5,136
5,348
5,249
2,000
8%
6%
4%
1,000
2%
0
0%
Q2 2005
Q3 2005
Sales
9
Q4 2005
Q1 2006
EBITDA margin
Q2 2006
Q2/Q1 comments:
Lower sales due to
negative calendar
and currency
effects
Increased costs for
raw materials and
higher advertising
and promotion
spending
Personal Care
Incontinence products
Good volume growth in retail segment
Improved product mix – increased sales from
new products
Baby diapers
Maintained / strengthened shares for Libero
Strong growth in retailers’ brands
Feminine hygiene products
Increased sales of branded products
Higher advertising and promotion spending
10
Tissue – Quarterly Development
SEKm
EBITDA (%)
10,000
11.8%
14%
12.6%
11.6%
8,000
10.7%
11.9%
12%
10%
6,000
4,000
8%
7,531
7,917
8,109
7,962
7,787
6%
4%
2,000
2%
0%
0
Q2 2005
Q3 2005
Sales
11
Q4 2005
Q1 2006
EBITDA margin
Q2 2006
Q2/Q1 comments:
Lower sales due to
negative calendar
and currency effects
Higher prices and
lower energy costs
improved the
profitability
Tissue
Consumer tissue
Competitive pressure remains in Europe
Some price increases
Lower energy costs
Improved volumes and prices in Mexico and
South America
AFH tissue
Seasonally strong volumes and higher prices in
North America
Improved product mix in Europe
Strong volume development in Eastern Europe
12
Packaging – Quarterly Development
SEKm
EBITDA (%)
12,000
10,000
14%
11.4%
10.8%
10.2%
10.2%
10.8%
12%
10%
8,000
8%
6,000
6%
4,000
8,094
8,351
8,272
8,389
8,231
2,000
2%
0
0%
Q2 2005
Q3 2005
Q4 2005
Sales
13
4%
Q1 2006
EBITDA margin
Q2 2006
Q2/Q1 comments:
Lower sales due to
negative currency,
calendar effects and
higher own liner
integration
Improved
profitability through
lower energy costs
and higher prices
Packaging
Corrugated board
Acceptance for price increases of ~5%(1) of which
approximately half is expected to have an impact on
earnings during the third quarter
Containerboard
Price increases implemented in June
North America
Improved prices and lower raw material costs
1
14
Measured from year-end 2005
Forest Products – Quarterly Development
SEKm
EBITDA (%)
5,000
18.4%
21.4%
21.0%
21.8%
4,000
20%
3,000
15%
2,000
4,116
3,986
4,071
4,378
4,454
10%
1,000
5%
0
0%
Q2 2005
Q3 2005
Sales
15
22.4%
25%
Q4 2005
Q1 2006
EBITDA margin
Q2 2006
Q2/Q1 comments:
Sales increased as a
result of high
deliveries of solidwood products and
LWC paper
Continued high
volumes and lower
energy costs
improved the
profitability
Forest Products
Continued good volumes within
publication papers
High capacity utilization
Lower energy costs
Pulp, timber and solid-wood products
Higher pulp prices
Strong demand and positive price movements on
solid-wood products
16
Outlook
Positive price momentum, primarily in
Packaging
Continued stable volume development
Energy expected to remain flat in third
quarter, increase in fourth quarter
Increased raw material cost to be expected
(oil-based and pulp)
17
18