SCA Year-end Report 1 January - 31 December 1999

Year-end Report 1 January - 31 December 1999 99:4 99:3 99:2 99:1 9912 9812 1 Net sales, SEK M 15,662 16,603 16,389 16,242 64,896 61,273 Earnings after financial 1,711 1,395 1,287 1,128 5,521 5,169 items, SEK M Excluding nonrecurring 5,521 4,769 items 2 Earnings per share, SEK 5.10 4.19 4.01 3.55 16.85 16.11 Cash flow from current 11.16 8.19 8.09 4.01 31.45 18.46 operations 2 per share, SEK 2 3 Dividend, SEK per share 6.80 6.14 1 Does not include SCA's share of net sales in Modo Paper AB. 2 Adjusted historically to reflect new issue. 3 Board proposal. FULL-YEAR 1999 *Cash flow from current operations improved significantly and was the best ever. *The Board proposes a dividend of SEK 6.80 per share, up 11%. Accordingly, dividend growth during the past five years is 14%. *Earnings after financial items, excluding nonrecurring items, improved 16%, the highest result ever. FOURTH QUARTER 1999 COMPARED WITH THIRD QUARTER *Earnings after financial items rose 23% to a new all time high. * All business areas improved their operating profit. - Hygiene Products +15%, improved productivity. - Packaging +34%, favorable demand and positive price trend. - Forest Products +13%, favorable volume trend for publication papers and rising pulp prices. CHANGED REPORTING SCA's fine paper operations were transferred on 1 October 1999 to the newly formed Modo Paper AB, in which SCA holds a 50% interest. As of the fourth quarter, Modo Paper is considered an associated company and is reported as a share in earnings, which among other effects means that net sales and operating surplus from these operations are not included from the aforementioned date. This affects historical comparisons. In conjunction with the transfer of the fine paper operations, a new business area was created in SCA Forest Products, which comprises the two subunits pulp, Forest and Timber and also publication papers. To facilitate comparison with competing companies in the hygiene products and packaging sectors, which have applied 40-year amortization periods for goodwill or the pooling method, SCA is now reporting earnings for its business areas excluding goodwill amortization. This amortization is reported separately for each business area. Historical key figures are adjusted to reflect the dilution of the SCA share in conjunction with the new issue in the autumn, in which the bonus issue element amounted to 5.6%. Moreover, the key figures affected by SCA's redefining of net debt, that is, that pension liabilities are included, are also adjusted. NET SALES AND EARNINGS Consolidated net sales amounted to SEK 64,896 M (61,273), an increase of 6% compared with 1998. Adjusted for deconsolidation of the fine paper operations, the increase is about 12%. The largest increase was in Packaging, but Hygiene Products also rose. The increases are due mainly to company acquisitions. Currency movements affected Group net sales only marginally. Net sales, excluding the fine paper operations, rose 12% during the fourth quarter. However, as a consequence of Modo Paper being reported as of 1 October as an associated company, the Group's total net sales declined 6%. Group operating profit amounted to SEK 6,733 M (6,428). Adjusted for nonrecurring items amounting to SEK 400 M in 1998, operating profit for the period increased by 12%. All business areas reported improved profits. The increase for Packaging was significant, amounting to 47%. Operating profit in the fourth quarter was 18% higher than in the third quarter. Operating profit improved in all business areas. Financial items amounted to an expense of SEK 1,212 M (1,259). The effect of a higher net debt attributable to company acquisitions was more than offset by lower interest rates. Financial items in the fourth quarter amounted to an expense of SEK 313 M, compared with financial items to an expense of SEK 315 M in the third quarter. The change is the net effect of lower net debt, as a result of the new issue and higher interest rates. New issue proceeds were paid in on 22 October. Group earnings after financial items amounted to SEK 5,521 M (5,169). Adjusted for nonrecurring items, this was equal to an increase of 16% compared with 1998. Earnings after financial items in the fourth quarter were 23% higher than in the third quarter. Net earnings after tax amounted to SEK 3,602 M (3,379). Earnings per share after full tax and full dilution amounted to SEK 16.85 (16.11). Return on shareholders' equity was 12% (13). The return on capital employed, calculated excluding nonrecurring items in 1998, was 12% (13). CASH FLOW Operating cash surplus amounted to SEK 11,101 M (9,960), equal to 17% (16) of net sales. Operating cash flow amounted to SEK 8,707 M (6,679). Working capital increased by only SEK 226 M (932) during the period. Working capital decreased by SEK 386 M during the fourth quarter. Current net capital expenditures totaled SEK 2,046 M (2,058). Interest and tax payments totaled a significantly lower amount than in the preceding year. Cash flow from current operations, that is before strategic capital investments and dividends, amounted to SEK 6,740 M (3,876), equal to SEK 31.45 (18.46) per share. Accordingly, SCA clearly exceeded the established cash flow targets. Company acquisitions and strategic capital expenditures in machinery and plant amounted to SEK 13,015 M (5,041). Company acquisitions amounting to SEK 10,400 M (2,793) included the purchase of large packaging companies in Great Britain, Denmark and France and a small acquisition in Ireland. In addition, the figure includes the purchase of hygiene operations in Great Britain, acquisition of a minority interest in Metsä Tissue and smaller acquisitions in Portugal and Spain. Also includes acquisition of the minority holding outstanding in Laakirchen. Strategic capital expenditures in machinery and plant amounted to SEK 2,615 M (2,248), mainly in Hygiene Products but also in Packaging. Divested units amounted to SEK 2,885 M (1,511) and pertains to deconsolidation of the fine paper operations. 1 SEK M 9912 9812 Net sales 64,896 61,273 Operating cash surplus 11,101 9,960 % of net sales 17 16 Current capital expenditures, -2,046 -2,058 net % of net sales 3 3 Changes in working capital -226 -932 Other operating cash flow -122 -291 changes Operating cash flow 8,707 6,679 Income taxes paid, etc² -1,351 -1,694 Free cash flow 7,356 4,985 per share, SEK 34.33 23.74 Interest paid after taxes -616 -1,109 Cash flow from current 6,740 3,876 operations per share, SEK 31.45 18.46 Strategic capital investments, -10,500 -3,531 net Cash flow before dividend -3,760 345 ¹ Figures for 1998 adjusted to conform to SCA's new cash flow statement. 2 Tax attributable to operating profit. ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/2000/01/31/20000131BIT00460/bit0001.doc Full Report http://www.bit.se/bitonline/2000/01/31/20000131BIT00460/bit0002.pdf Full Report