SCA is one of Europe’s most profitable producers of forest products based on its in-depth customer insight, high innovative ability, efficient production, high value-added products, integration with SCA’s own wood raw material and a sustainability perspective at all levels. Forest Products offers its customers magazine paper, newsprint, pulp, wood components for building construction and furniture manufacturing, customised wood products for the building trade, solid-wood products and biofuel. SCA is Europe’s largest private forest owner.
Production and efficiency
Manufacturing takes place at SCA’s 17 facilities in three countries. Having its own logistics is part of the company’s integration strategy, with loading and unloading terminals in Sweden and on the continent and freight transportation on vessels. SCA’s forest assets are located in northern Sweden, where the Group has built up an efficient supply system for its own mills and sawmills.
The company’s forest holdings are managed on a very long-term basis. Integration of SCA’s own wood raw material is a key aspect of the company’s strategy that contributes to stable cash flow and reliable supplies, and facilitates quality and cost control. SCA’s forest holdings are becoming increasingly important as competition for timber raw material in northern Europe intensifies and demand for biomass from the energy sector grows.
Productive, cost-effective production plants – and not necessarily a high market share – are a precondition for favourable profitability. As a result, SCA applies what is referred to as the strong-mill concept, which focuses resources on a number of large, high-tech paper and pulp mills and sawmills. The concentration of resources and know-how creates a platform for value-building innovation – resulting in market-leading product development and manufacturing.
Innovation and product development
Innovation is an integral part of SCA’s strategy to shift its operations towards increasingly developed products in high-value segments and towards more attractive customer offerings. Focus is directed to further processing, customisation in segments with favourable price trends and growth to gain higher profitability. Efforts in this respect permit Forest Products to move up the value chain and produce products and solutions with higher value and margins. By this means, SCA differentiates itself from the rest of the industry, while also meeting requirements among business partners and customers.
SCA R&D Centre in Sundsvall, Sweden, conducts strategic research and development. The centre has specialist know-how in key areas and works closely with Mid-Sweden University in Sundsvall, which adjoins the Centre.
The properties of the company’s publication papers are developed continuously, enabling the product to match a newspaper’s or magazine’s profile and message.
In solid-wood products, SCA develops and further processes purpose-designed products for interiors, carpentry and the building trade. All products are customised for the next stage in the processing chain and are supported by services and warehousing integrated into the customer’s distribution and sales. Development programmes are not solely focused on products, but also involve the development of business models, service, distribution solutions and so forth. Development work is largely conducted together with customers.
Growth
The aim for Forest Products is to grow in line with the market. Continuing the work on enhancing efficiency and customer-driven innovation is essential for consolidating positions and improving profitability. The primary focus is on increasing the share of customised publication papers and solid-wood products. Efforts to develop the value chain, make it more efficient and sustainable, and develop new product areas are also important to strengthening competitiveness. A new business unit, SCA Energy, was started in 2011 to drive and develop SCA’s expanding business operations in renewable energy. Work is progressing on realising SCA’s wind power venture via the agreement with the Norwegian energy company, Statkraft, in 2007. Long-term competitiveness is also favoured by access to the Group’s own wood raw material and SCA’s environmental profile.
Although demand for both wood and other building materials declined compared with pre-financial crisis levels, wood is strengthening its position as a material. The favourable environmental and climate-neutral properties of wood products are in demand from customers and have also resulted in several countries stimulating high wood utilisation. This trend is expected to persist and the supply of materials, rather than demand, will govern market trends in wood products. Demand is expected to increase for renewable energy, particularly when the EU and other countries establish political means for achieving the pledges they have made to lower fossil carbon emissions and increase use of renewable energy.
