Interim report Q1 2009: 1 JANUARY–31 MARCH 2009 (compared with corresponding period a year ago)
• Net sales rose 3% to SEK 28,327m (27,513)
• Profit before tax was SEK 1,511m (1,946)
• Profit for the period was SEK 1,119m (1,537)
• Earnings per share were SEK 1.58 (2.18)
• Cash flow from current operations was SEK 1,640m (-19)
• New efficiency improvement programme in Packaging will generate annual savings of SEK 1,070m by second quarter 2010
• Profit before tax rose 31% compared with the preceding quarter
(Table included in attached pdf)
Net sales rose 3% compared with the same period a year ago, to SEK 28,327m. Operating profit for the first quarter was SEK 2,136m (preceding year 2,471). The weaker Swedish krona had a positive impact on profit. Adjusted for this effect, we see that several parts of the business are performing well. Profit before tax amounted to SEK 1,511m (preceding year 1,946). Compared with the preceding quarter, profit before tax rose 31%.
Cash flow from current operations amounted to SEK 1,640m (preceding year -19). The improvement is attributable to positive development of working capital.
Sales of Personal Care products rose in our emerging markets, particularly in Latin America and Southeast Asia. In Europe, operating profit for the unit fell compared with a year ago due to higher raw material costs. Price increases have been carried out in several markets. Volumes were down slightly in Europe, which is partly explained by strong sales at the end of 2008.
The Tissue operations showed an increase in net sales and a 58% rise in operating profit compared with a year ago. The continued integration of the 2007 acquisition, along with an improved product mix, higher prices and lower raw material costs, has had a favourable impact on earnings. However, the need for further margin improvements remains.
The packaging market continues to be very weak. Testliner prices have fallen by more than 35% compared with a year ago, which shows the imbalance that still exists between supply and demand. During the first quarter SCA cut its production of liner by 66,000 tonnes. Profitability in SCA's packaging operations weakened further during the first quarter as a result of low volumes and price pressure. The decision has been made to bring forward the closure of the New Hythe mill in the UK to mid 2009. In addition, we are currently initiating an expanded efficiency improvement programme that will result in SEK 1,070m in lower annual costs with full effect from the second quarter of 2010. 11 corrugated board plants will be closed, and several others will be streamlined. Efficiency improvement measures and closures will result in a reduction in the number of employees by approximately 2,200. The cost for these measures amounts to SEK 1,700m and will be booked successively in 2009, of which SEK 1,060m is cash expenditures. During 2009 the net impact on cash flow will be SEK -170m, however, for 2010 the effect will be positive.
In the Forest Products business, earnings for publication papers strengthened as a result of higher prices, higher sales outside Europe, and favourable currency effects. Competition is rising most notably in the publication papers segment. The sawmill operations are showing continued good volumes but weak earnings.
We believe that our hygiene operations have prospects for continued favourable development and that Forest Products will have stable development. However, the challenges are substantial in our packaging business, where the costs for the necessary action programme will be charged against earnings for the year for Packaging, which are thus expected to be negative.
Jan Johansson, President and CEO
For further information, please contact:
Bodil Eriksson, Corporate Communications, +46 8 788 52 34
Johan Karlsson, Investor Relations, +46 8 788 51 30
Pär Altan, Media Relations, +46 8 788 52 37