JANUARY 1 – JUNE 30, 2020
(compared with January 1 – June 30, 2019)
APRIL 1 – JUNE 30, 2020
(compared with January 1 – March 31, 2020)
COMMENTS ON THE FINANCIAL STATEMENTS
Earnings for the second quarter of 2020 were in line with the preceding quarter, but declined year on year.
The quarter was marked by the uncertainty surrounding the coronavirus pandemic, with demand for SCA products at a generally lower level than in the preceding quarter. The publication paper product area was most affected, due to a significant drop in demand for marketing and print advertising. Delivery volumes also decreased for the Pulp and Paper segments. The Wood segment reported improved earnings compared with the preceding quarter. During the quarter, SCA continued to take a number of measures to protect employee risk groups, reduce the spread of the virus and ensure that production and operations are maintained. SCA has a continued strong focus on cost control and cash flow, and has a solid financial position and strong liquidity.
The supply of wood to SCA’s industries was stable during the quarter. Wood consumption declined slightly during the period due to lower delivery volumes and the planned maintenance stop at Obbola. The price of timber and pulpwood remained stable.
The market for the Wood segment strengthened during the quarter, driven by strong demand in the building materials trade in Scandinavia and the rest of Europe. Market prices rose slightly compared with the preceding quarter.
Production volume in the Pulp segment was maintained at the same level as preceding quarter but deliveries decreased, due primarily to falling demand for pulp for publication paper. The average selling price during the quarter was slightly higher than the preceding quarter due to the price increase implemented at the beginning of the period.
Demand in the kraftliner product area weakened during the second quarter following a strong first quarter. SCA implemented a price increase at the start of the second quarter and the prices were therefore higher than in the preceding period. A planned maintenance stop was carried out at Obbola during the period, and the expansion project is progressing on schedule and on budget.
Demand in the publication paper product area decreased by between 30% and 40% for SCA’s grades during the quarter compared with last year. SCA has adjusted production levels to the prevailing market situation. The price of publication paper was stable for the period.
New harvesting plan confirmed
SCA made a new forest survey in 2019 which showed that SCA had, in addition to a higher standing volume, a 1 million m3fo higher annual growth than previously estimated. A higher growth rate gives greater long-term harvesting potential and SCA will increase annual harvesting successively from about 4.3 million m3sub in 2020 to 5.4 million m3sub in 2025. The new harvesting plan results in a higher long term cash flow, which will increase successively with full effect of an estimated SEK 300-400m per year from 2025.
Higher transaction prices for forest assets in northern Sweden
SCA has based its valuation of forest assets in Sweden on forest transactions in the areas where SCA owns forest land. The market value of the forest has increased during the first six months of 2020. The average market price used in valuation of SCA’s forest assets was SEK 281/m3fo at the end of June 2020. The market price in 2019 was SEK 276/m3fo.
INVITATION TO PRESS CONFERENCE ON HALF YEAR REPORT 2020
The press conference can be followed via webcast or telephone. The President and CEO, Ulf Larsson, and CFO, Toby Lawton, will present the report and answer any questions.
Time: Tuesday, July 21, 2020 at 10:00 a.m.
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: 3341528.
For further information, please contact
Toby Lawton, CFO, +46 (0)60 19 31 09
Josefine Bonnevier, Investor Relations Director, +46 (0)60 19 33 90
Björn Lyngfelt; SVP Communications. +46 (0)60 19 34 98
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 July 21, 2020 at 08:00 a.m. CEST. The report has been reviewed by the company’s auditors.
Björn Lyngfelt, Vice President, Communications, +46 (0)60 19 34 98
The core of SCA’s business is the forest, Europe’s largest private forest holding. Around this unique resource, we have built a well-developed value chain based on renewable raw material from our own and others’ forests. We offer paper for packaging and print, pulp, wood products, renewable energy, services for forest owners and efficient transport solutions.
2019 the forest products company SCA had approximately 4,000 employees and sales amounted to approximately SEK 19.6 bn. SCA was founded in 1929 and has its headquarters in Sundsvall, Sweden. More information at www.sca.com