Svenska Cellulosa : 2020 Q1 Presentation

April 24, 2020

Coronavirus pandemic

• Health and safety highest priority
• Limited effect in Q1, significant uncertainty going forward
• Higher demand for pulp to tissue and hygiene products, and for packaging paper toe-commerce and essential products
• Lower demand for solid wood products and publication paper

Sales declined 6% vs Q1 2019

• Price/mix-16%, volume 11%, currency 2%, acq/div -3%

EBITDA down 34% vs Q1 2019

• Lower selling prices

• Higher pulp and kraftliner volumes
• Lower raw material costs

Higher forest growth enables increased annual harvesting

• Gradual increase from 4.3m m3sub / year2020 to 5.4m m3sub /year2025

3

EBITDA (SEKm)	Industrial ROCE 1)
1,030	9%

EBITDA margin	Net debt/EBITDA
21%	1.9x

Note: 1) ROCE for the industrial segments; Wood, Pulp and Paper. ROCE calculated as LTM.

EBITDA development (SEKm)

					-34%
	1,549	1,494	1,560
			1,340	1,364
1,175
1,034	33%			1,055	1,030
	30%	31%
27%		27%
		26%
		24%
22%
						21%

Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 '20

4

Net sales (SEKm)	EBITDA (SEKm)	EBITDA margin
	11%			37%

	1,833	452	24.6%
1,651
		20.0%
		331

Q1 2019

Q1 2020

Q1 2019

Q1 2020

Q1 2019

Q1 2020

Price development - Pulpwood and Sawlogs

140

130

120

110

100

90

Q1 '18

Q2 '18

Q3 '18

Q4 '18

Q1 '19

Q2 '19

Q3 '19

Q4 '19

Q1 '20

Pulpwood Sawlogs

Declining prices

Stable wood supply to industries

Sales up 11%

• Increased pulp and kraftliner volumes - Lower prices

EBITDA up 37%

• Higher forest growth increasing earnings from revaluation of biological assets

• Lower prices

5

Net sales (SEKm)	EBITDA (SEKm)	EBITDA margin
	-14%			-68%
						17.7%
1,678		297
1,436

Stable consumption, but low prices due to over supply in continental Europe

Sales down 14%

95

6.6%

• Lower prices
• Deconsolidation in Wood France following merger with Groupe ISB

Q1 2019

Q1 2020

Q1 2019

Q1 2020

Q1 2019

Q1 2020

Price development - Solid Wood Products

120

110

100

90

80

Q1 '18

Q2 '18

Q3 '18

Q4 '18

Q1 '19

Q2 '19

Q3 '19

Q4 '19

Q1 '20

Price index SEK

EBITDA down 68%

• Lower prices
• Restructuring SCA Wood France 0 (+90) SEKm

6

Softwood pulp price (USD/t) vs deliveries (Mt)	Increased
demand
1,400		24.6
1,200		24.2
1,000		23.8
800		23.4
600		23.0
400	NBSK PIX Price Europe (LHS)	22.6
200	Global Softwood Kraft deliveries (RHS)	22.2

0 21.8

Softwood pulp inventories (days of supply)	Normalized
45			inventories

40

35Average

30

25

20

Source: PIX, PPPC.

Hardwood pulp inventories (days of supply)

80	Normalized
inventories
70
60	Average
50
40
30
20

Higher pulp demand

• Increased global pulp deliveries
• Decreased softwood and hardwood inventories
• However, prices lagging behind
• European NBSK PIX price up from 820 to 840 USD/t in March
• Further price increase announced

7

Net sales (SEKm)	EBITDA (SEKm)	EBITDA margin
	5%			-47%
						31.0%
1,134	1,188	351
			186	15.6%

Q1 2019

Q1 2020

Q1 2019

Q1 2020

Q1 2019

Q1 2020

Price development - NBSK Pulp

130

120

110

100

90

80

Q1 '18

Q2 '18

Q3 '18

Q4 '18

Q1 '19

Q2 '19

Q3 '19

Q4 '19

Q1 '20

Price index SEK

Sales up 5%

• Increased volumes to expanded pulp mill - Lower prices

EBITDA down 47%

• Lower prices

• Increased volumes to expanded pulp mill
• Positive currency effects

8

Price (EUR/t) vs Kraftliner deliveries (Mt)

850

800

750

700

650

600		Unbleached kraftliner price Euwid (LHS)
550		Kraftliner deliveries Europe (RHS)

500

Strong annual			European box demand (index)
					Stable increase in
run rate		5.5	108
			end demand
			106
		5.4

104

5.3

102

5.2100

5.198

Kraftliner inventories (days of supply)

40

35

30Average

25

20

Source: Euwid, Numera.

Improved demand	Higher kraftliner demand
and lower production	• European deliveries continued to be strong
	• Inventories continued to decrease
	• Good order in-flow
	•	Stable box demand
	•	Price increase announced

9

Net sales (SEKm)	EBITDA (SEKm)	EBITDA margin
	-5%			-38%
			616			26.0%
2,366
2,242
			379	16.9%

Q1 2019 Q1 2020 Q1 2019 Q1 2020Q1 2019 Q1 2020

Price development -

Price development -

Kraftliner

Publication paper (LWC)

140

140

120

120

100

100

80

80

Q1

Q1

Q1

Q1

Q1

Q1

'18

'19

'20

'18

'19

'20

Price index SEK

Sales down 5%

• Lower kraftliner and publication paper prices + Higher kraftliner volumes

EBITDA down 38%

• Lower kraftliner and publication paper prices + Higher kraftliner volumes
  + Lower raw material costs and positive currency effects

10

New forest survey conducted in 2019

Annual growth 1m m3fohigher than expected

• Gross growth of 10.5 (9.5)m m3fo per year
• Net growth of 4.0 (3.0)m m3fo per year

New harvesting plan calculated based on the new survey

• Gradual increase from 4.3m m3sub / year2020 to 5.4m m3sub / year2025
• Ramp-upexpected to be linear over 5 years

Gross forest growth Sweden	Harvesting plan
(m m3fo / year)	(m m3sub / year)
	+1			+1.1

10.5	5.4
9.5
	4.3

Forest survey	Forest survey	Harvesting	Harvesting
2012-2013	2019	plan 2020	plan 2025

11

No disruptions in production or distribution in Q1

• Forest- no effect in Q1
• Wood- limited effect in Q1, significant uncertainty going forward
• Pulp- increased demand in Q1
• Paper- higher demand for kraftliner, significantly lower for publication paper

Actions to mitigate impact

• Protect risk groups and reduce the spread of the virus
• Strict procedures in place to minimize impact on production
• Secure supply chain and key raw materials
• SCA Logistics with own ships and controlled harbors
• Cost control, inventory levels and capex
• High liquidity reserve and forest asset backing

SCA supplies raw material to tissue and hygiene products

12

			Quarter
SEKm	Q1 2020		Q1 2019		Change
Net sales	4,793		5,076		-6%
EBITDA	1,030	1,560	-34%
EBITDA margin	21.5%	30.7%		-9.2 p.p.
EBIT	628	1,168	-46%
EBIT margin	13.1%	23.0%		-9.9 p.p.
Financial items	-24	-30
Profit before tax	604	1,138	-47%
Tax	-121	-230
Profit for the period	483	908	-47%
Earnings per share, SEK	0.69	1.29

14

Forest

Wood

Pulp

Paper

Net sales (SEKm)

2,426

2,413

2,421

2,366

2,375

2,380

2,108

2,242

1,162

1,455

1,540

1,651

1,746

1,865

1,694

1,833

1,846

1,712

1,558

1,678

1,727

1,545

1,376

1,436

485

743

1,049

1,134

1,214

1,129

900

1,188

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

'18

'18

'18

'19

'19

'19

'19

'20

'18

'18

'18

'19

'19

'19

'19

'20

'18

'18

'18

'19

'19

'19

'19

'20

'18

'18

'18

'19

'19

'19

'19

'20

EBITDA (SEKm) and EBITDA margin

																									728
						607																		618		536	616		577
																											489
		427					452
			414	388																								382
371															370												379
															351	344
292		331			36%			276		297
32%												273	35% 31%		268		16%
28%						230	226	188					28%			30%
									180						186	26%		26%		24%
			24%	21%		25%					125			37%				24%			22%	21%
	20%		20%			16%		18%			95					2%					18% 17%
						13%	15%
									11%	12%	9%	7%	-112						20
Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1
'18	'18	'18	'19	'19	'19	'19	'20	'18	'18	'18	'19	'19	'19	'19	'20	'18	'18	'18	'19	'19	'19	'19	'20	'18	'18	'18	'19	'19	'19	'19	'20
																															15

					Deconsolidation in Wood
	Negative for all	Expanded pulp mill and		France following merger
	segments		with Groupe ISB
	higher Kraftliner volumes
SEK								SEK
5,076m	-16%		11%	2%	-3%
				4,793m

- 6%

Net sales	Price/Mix	Volume	Currency	Acquisitions/	Net sales
Q1 2019				divestments	Q1 2020

16

Lower prices for

all segments

SEK						Restructuring SCA Wood
1,560m	-912				France (positive one-off item
				EUR and		of SEK 90m in Q1 2019)
		Lower costs for
			USD positive
		wood and other
	Expanded pulp mill and	raw materials
		+140	-96
	higher Kraftliner volumes		SEK
		+174	-3				1,030m

+167

- 34%

EBITDA margin

EBITDA margin

30.7%

21.5%

EBITDA

Price/Mix

Volume

Raw material

Energy

Currency

Other

EBITDA

Q1 2019

Q1 2020

17

	Quarter
SEKm	Q1 2020			Q1 2019
EBITDA	1,030			1,560
Revaluation of biological assets and other non cash flow items	-340			-246
Operating cash surplus	690			1,314

Change in working capital	-146
Current capital expenditures	-175
Other operating cash flow	-28

-353

-168

-167

Operating cash flow	341		626
Acquisitions	0	-158
Strategic capital expenditures	-189	-143

18

									SEK	SEK
	SEK	SEK		SEK	SEK	SEK		+600m	9,087m
	8,597m	-341m		+189m	0m	+42m				835	Lease
Lease	854
						Revaluation of pension
	Kraftliner and pulp
				expansion			assets and Other

Net debt / EBITDA						Net debt / EBITDA
1.6x						1.9x
Net debt	Operating	Strategic capex	Acquisitions	Paid tax	Other	Net debt
Q4 2019	cash flow					Q1 2020

19

Debt overview (Mar 31, 2020)

			Maturity, years		Total
Debt (SEKbn)	Limit	0-1	1-2	2-	utilized
Syndicated credit facilities (RCF)	5.0				-
Bond loans within MTN program	8.0	1.0	1.1		2.1
Commercial paper (CP)	5.0	2.9			2.9
Other loans1				4.0	4.0
Total Group		3.9	1.1	4.0	9.0

1SEK, EIB and NIB

Actions and measures after end of period:

• New loan from Swedish Export Credit Agency (SEK 1bn) used to repay CP in April
• New additional syndicated RCF (SEK 1.6bn)
• Total liquidity reserve of SEK ~7.5bn (5.0bn RCF + 1.6bn new RCF + Cash)

Note: Leasing excluded.

Financing overview (Mar 31,2020)

8.0

5.0 5.0

4.0

2.9

0.9

2.1

Syndicated Commercial	Bond loans	Other loans	Cash
credit facilities	paper	within MTN
				program
		Utilized	Not utilized	Not utilized, secured

20

SEKm	Mar 31, 2020
Forest assets	70,097
Working capital	3,470
Working capital/Net sales 1)	20%
Deferred tax relating to forest assets	-14,107
Other capital employed	17,878
Total capital employed	77,338
Net debt	9,087
Net debt/EBITDA 2)	1.9x
Equity	68,251
Net debt/Equity	13%

Dec 31, 2019

69,682

3,748

20%

-13,977

17,654

77,107

8,597

1.6x

68,510

13%

Note: 1) Average working capital for 13 months as a percentage of 12-month rolling net sales.	21
2) 12-months EBITDA, up to end of each period.

Coronavirus pandemic

Sales declined 6% vs Q1 2019

EBITDA down 34% vs Q1 2019

Higher forest growth enables increased annual harvesting

23

Forest				Wood				Pulp		Paper
Net sales (SEKm)										8,226 8,548		8,434	9,643 9,229	9,105
										7,744
		6,956	7,138
			6,618	6,325	6,084
5,187 5,108 4,9785,070 5,455			5,1145,315 5,441 5,994
					4,377 4,431
								2,518 2,7602,492 2,542 2,866
2014 2015 2016 2017	2018	2019	LTM	2014 2015 2016 2017 2018 2019	LTM	2014 2015 2016 2017 2018 2019	LTM	2014 2015	2016	2017	2018 2019	LTM

EBITDA (SEKm) and EBITDA margin 1)

					1,740 1,861
1,232	1,213 1,238	1,363 1,394
24%	24%	25%	27%	26%	25%	26%							904	789
		603			670		588
							478	531
									12%	9%	10%	11%	14%	12%		10%
2014	2015 2016	2017	2018	2019	LTM		2014 2015 2016 2017 2018 2019	LTM

												2,468
													2,064
35%														1,827
31%		25%					1,243	1,295 1,245	1,479	26%
21%		23%	18%	22%		20%
970	19%					16% 18%
768		709	983	818		15%	15%
530	482
2014 2015 2016 2017 2018 2019	LTM	2014 2015 2016 2017 2018 2019	LTM

Note: 2014 and 2015 EBITDA refer to adjusted figures. 2016 and forward refer to unadjusted	26
figures. For details please see the quarterly report.

This presentation may contain forward-looking statements. Such statements are based on our current expectations and are subject to certain risks and uncertainties that could negatively affect our business. Please read SCA's most recent annual report for a better understanding of these risks and uncertainties.