Risk sensitivity and action

Here you find an overview over the most signinficant risks that impact SCA's ability to achieve established targets, together with a description of how these risks are managed.

GDP trend and economic conditions

SCA’s volume trend is linked to the development of GDP and related factors, including industrial production, in countries representing SCA’s main markets. Movements in the GDP trend influence demand for certain SCA products.

Environmental impact and climate change

SCA’s operations have an impact on air, water, land and biological processes. These effects could lead to costs for restoring the environment. The matter of the economic impact of climate change is also growing in significance.

Impact of substitute

Other product solutions (substitutes) can replace
products that are included in SCA’s offering and
thereby reduce sales. By offering competitive
products, SCA can also take market shares from
the substitute.

Dependence on major customers and distributors

The retail trade is SCA’s single largest customer group and thus exercises considerable influence. SCA also uses other distributors or retailers that could impact the Group. A general consolidation process is taking place in several of SCA’s sales channels, thus increasing dependence on individual customers. This increase in dependence could result in negative consequences if SCA does not fulfil the demands imposed.

Expansion into new markets

In recent years, SCA has expanded the operation into new geographic emerging markets outside Western Europe and North America. If the conditions differ from those in already established markets, this expansion could involve new risks for SCA.

Movements in the market price for SCA’s products

Movements in the market price of SCA’s products could create large fluctuations in the profitability of the product in question when these movements are not related to changes in costs for SCA.

Risks at plants

SCA has a large number of production facilities in some 40 countries and many of these conduct continuous production. Fires, machinery break-downs and other types of harmful incidents could damage the plant in question and also cause delivery problems.

Suppliers

SCA is dependent on a large number of suppliers. The loss of key suppliers could result in costs for SCA and problems in manufacturing. Suppliers could also cause problems for SCA through non-compliance with applicable legislation and regulations or by otherwise acting in an unethical manner.

Energy price risk

Energy price risk is the risk that increased energy prices could adversely impact SCA’s operating profit. SCA is exposed to price movements of electricity and natural gas, but the price of other energy commodities also directly and indirectly impacts SCA’s operating profit.

Currency risk | Transaction exposure

Transaction exposure is the risk that exchange rate movements in export revenues and import expenses could negatively impact the Group’s operating profit and the cost of non-current assets.

Currency risk | Translation exposure

Translation exposure is the risk to which SCA is exposed when translating foreign subsidiaries’ balance sheets and income statements to SEK.

Credit risk

Credit risk refers to the risk of losses due to failure to meet payment obligations by SCA’s counterparties in financial agreements or by customers.

Liquidity and refinancing risk

Liquidity and refinancing risk is the risk that SCA is unable to meet its payment obligations as a result of insufficient liquidity or difficulty in raising new loans.

Interest rate risk

Interest rate risk relates to the risk that movements in the interest rates could have a negative impact on SCA. SCA is affected by interest rate movements through its net financial income and expense.
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