SCA (NASDAQ:SVCBY) (STO:SCAA) (STO:SCAB):
1 JANUARY–31 DECEMBER 2009 (compared with corresponding period a year ago)
• Net sales up slightly, totalling SEK 110,857m (110,449)
• Profit before tax, excluding restructuring costs, was SEK 8,004m (6,237)
• Restructuring costs in Packaging amounted to SEK 1,458m (0)
• Profit for the year, excluding restructuring costs, was SEK 5,906m (5,598)
• Earnings per share were SEK 6.78 (7.94)
• Cash flow from current operations was SEK 11,490m (3,810)
• The Board of Directors proposes a 5.7% increase of the dividend, to SEK 3.70 per share (3.50)
The favourable trend for the SCA Group as a whole continued during the fourth quarter. Operating profit excluding restructuring costs improved by 13% for the full year compared with a year ago and by 40% for the fourth quarter compared with a year ago. Profit before tax rose 28% to SEK 8,004m, and by 98% for the fourth quarter, to SEK 2,280m.
All parts of the Group were involved in improving cash flow in 2009, which was further strengthened during the fourth quarter. Working capital continued to decrease through ongoing reductions of inventories. This, together with a higher operating surplus and a lower level of current capital expenditures, helped strengthen cash flow from current operations, which for the full year amounted to SEK 11,490m, compared with SEK 3,810m a year ago. To strengthen organic growth, expansion investments totalling SEK 3,031m have been made in Russia and Mexico, among other areas. SCA's net debt has decreased to SEK 40,430m (47,002).
Demand for hygiene products remained stable during the fourth quarter, and operating profit strengthened by 56% for Tissue and by 27% for Personal Care compared with the same period a year ago. While the large European tissue operations for the most part managed to offset higher raw material costs in recent months by a larger volume of deliveries and a better product mix, prices of recycled fibre rose sharply during the final month of the year in the USA and put pressure on margins there. In the Personal Care business area, operating profit and the margin improved during the fourth quarter due to favourable performance for the Tena business (incontinence care products) in both North America and Europe. As per the end of December, the action programme in Packaging had delivered savings of slightly more than SEK 300m, and all 11 of the announced plant closures have been carried out. The decline in demand has ceased, and a recovery of liner prices has begun. The operating result for Packaging was positive in the seasonally weak fourth quarter.
Despite a weak market for publication papers, operating profit for Forest Products improved by 13% compared with a year ago and by 28% for the fourth quarter compared with a year ago.
The outlook for 2010 is cautiously optimistic. Demand for packaging is expected to strengthen, and in Europe there are indications of market growth of 2%-3%. However, several factors point to a relatively weak start to 2010. On the forest products side, we have noted a weak market with lower prices for publication papers, but a cautious recovery in the construction sector, where the market balance for solid-wood products has now improved. The market outlook for SCA's hygiene categories appears stable for the most part, with continued favourable growth potential in Russia, Latin America and Southeast Asia, among other markets.
Jan Johansson, President and CEO
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