JANUARY 1 – SEPTEMBER 30, 2019
(compared with January 1 – September 30, 2018)
JULY 1 – SEPTEMBER 30, 2019 (compared with April 1 – June 30, 2019)
COMMENTS ON THE FINANVIAL STATEMENTS
Operating profit for the third quarter of 2019 improved compared with the preceding quarter. Compared to the same quarter last year earnings declined.
Demand for SCA’s products in the quarter was generally weaker than in the preceding quarter and market prices declined in all product areas. SCA has a continued strong focus on cost control and cash flow. For the first nine months of 2019, operating cash flow rose 17% while net debt declined 16% during the quarter.
SCA’s wood consumption continued to increase due to the continued ramp-up of the Östrand pulp mill. Prices for pulpwood and timber remained stable during the quarter.
Wood reported stable consumption, although a high level of supply led to a further fall in selling prices.
Within Pulp, work continues to trim the mill toward full capacity. The average price was lower compared with the preceding quarter. Demand for long-fiber pulp improved slightly during the quarter and inventory levels declined. However, inventory levels for short fiber pulp remains high.
After a period of falling prices, kraftliner prices have remained stable during the third quarter, although lower than the second quarter. Demand for publication paper declined during the quarter and prices fell.
In light of the price level of forest land in a number of large and recently completed forest land transactions, SCA has reviewed the method and assumptions for valuation of the company’s forest land in its balance sheet. The review shows that a large number of forest transactions take place in areas where SCA owns land, and that the value of larger forest transactions is generally in line with the values of smaller and mid-sized forest transactions.
SCA plans at year-end to change the accounting method for valuing the company’s forest holdings so that it is based on the market value calculated on the basis of transactions in areas where SCA owns forest. Currently available transaction prices and estimated standing volume indicate a market value of SEK 63-67 billion, compared with the current book value of SEK 34 billion.
SCA announced in September 2019 that the company is building a new paper machine for the production of kraftliner at its Obbola paper mill in Umeå. Production in Obbola will increase from the current 450,000 tonnes of kraftliner to 725,000 tonnes per year to meet an expected increase in demand for renewable packaging. The total investment totals approximately SEK 7.5bn over a five-year period.
Members of the media and analysts are hereby invited to attend a press conference where this interim report will be presented by the President and CEO, Ulf Larsson, and CFO, Toby Lawton.
Time: Wednesday, October 30, 2019 at 10:00 a.m.
Venue: Kreugersalen, Tändstickspalatset, Västra Trädgårdsgatan 15 in Stockholm, Sweden.
The press conference will be webcast live at www.sca.com. It is also possible to participate by telephone by calling:
Sweden: +46 (0)8 5069 2180
UK: +44 (0)2071 928000
US: +1 631 510 7495
Specify “SCA” or the conference ID: 9166467.
Sundsvall, October 30, 2019
SVENSKA CELLULOSA AKTIEBOLAGET SCA (publ)
Ulf Larsson
President and CEO
Please note:
This is information that SCA is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. This report has been prepared in both Swedish and English versions. In case of variations in the content between the two versions, the Swedish version shall govern. The information was submitted for publication, through the agency of the contact person set out below, on October 30, 2019 at 08:00 a.m. CET. The report has not been reviewed by the company’s auditors.
Björn Lyngfelt, SVP Communications, +46 (0)60 19 34 98
For further information, please contact
Toby Lawton, CFO, +46 (0)60 19 31 09
Andreas Ewertz, Investor Relations Director, +46 (0)60 19 31 97
Björn Lyngfelt, SVP Communications. +46 (0)60 19 34 98