Q12021

  • SCA decided in September 2020 to discontinue its publication paper operations in line with the communicated strategy for profitable growth. During the quarter, SCA closed the three remaining publication paper machines at the Ortviken site.
  • Measures continue to be taken to avoid the spread of Covid-19. The pandemic has not had any significant effects on production.

January-March 2021 compared with January-March 2020

  • Net sales amounted to SEK 4,172m (4,793). The lower sales level was related to the discontinued publication paper operations and the divestment of Wood Supply UK, excluding this effect net sales increased with 8%.
  • EBITDA improved 32% to SEK 1,359m (1,030), the increase was mainly attributable to higher selling prices in all product areas. EBITDA margin increased to 32.6% (21.5), the higher level was mainly related to the discontinued publication paper operations.
  • Operating profit increased to SEK 1,046m (628)
  • Operating cash flow amounted to SEK 475m (341)
  • Earnings per share improved to SEK 1.14 (0.69)

January-March 2021 compared with October-December 2020

  • Net sales decreased by 9% to SEK 4,172m (4,592). The change was mainly attributable to the discontinued publication paper operations and the divestment of Wood Supply UK.
  • EBITDA amounted to SEK 1,359m (1,451) and EBITDA margin rose to 32.6% (31.6)

KEY FIGURES

Quarter

SEKm

2021:1

2020:1

%

2020:4

%

Net sales

4,172

4,793

-13

4,592

-9

EBITDA

1,359

1,030

32

1,451

-6

EBITDA margin (%)

32.6

21.5

31.6

Operating profit

1,046

628

67

1,084

-4

Net Profit

802

483

66

783

2

Earnings per share SEK

1.14

0.69

1.11

Operating cash flow

475

341

957

Net Debt / EBITDA (LTM)

1.5x

1.9x

1.7x

SVENSKA CELLULOSA AKTIEBOLAGET SCA (publ), Skepparplatsen 1, 851 88 SUNDSVALL. www.sca.com. Corp. Reg. No. 556012-6293

S C A I n t e r i m r e p o r t - J a n u a r y 1 - M a r c h 3 1 , 2 0 2 1

2

SUMMARY OF THE FIRST QUARTER OF 2021

Earnings for the first quarter of 2021 were in line with the preceding quarter and represent a significant improvement on the year-earlier quarter. Higher selling prices in all product areas had a positive impact on earnings.

During the quarter, SCA discontinued its remaining publication paper operations consisting of three paper machines at the Ortviken site. Following the discontinuation of publication paper operations, SCA is focused on growth in all product areas.

The supply of wood to SCA's industries was stable during the quarter. The price of pulpwood fell slightly while the price of sawlogs remained stable compared with the preceding period.

The market situation for solid-wood products continued to strengthen during the quarter, driven by high global demand in the building materials trade and an increased level of new construction. Sustained strong demand has led to low inventory levels and higher market prices in all regional markets.

During the quarter, the market for pulp strengthened further and selling prices increased. Delivery volumes rose slightly compared with the preceding quarter. Global inventory levels were normal.

Demand for kraftliner was highly favorable during the quarter, driven by higher box demand. The average selling price was also higher than the preceding quarter.

SCA's ongoing investment projects - to expand kraftliner manufacturing in Obbola and increase production of chemically pre-treated mechanical pulp (CTMP) at the Ortviken industrial site - are progressing on time and on budget.

SVENSKA CELLULOSA AKTIEBOLAGET SCA (publ), Skepparplatsen 1, 851 88 SUNDSVALL. www.sca.com. Corp. Reg. No. 556012-6293

S C A I n t e r i m r e p o r t - J a n u a r y 1 - M a r c h 3 1 , 2 0 2 1

3

Net sales

SEKm

5,000

4,000

3,000

2,000

1,000

0

2020:1

2020:2

2020:3

2020:4

2021:1

​EBITDA & margin

%

SEKm

35

1,400

1,200

30

1,000

25

800

20

600

15

400

10

200

5

0

0

2020:1

2020:2

2020:3

2020:4

2021:1

Note: EBITDA 2020:3 and 2020:4 excluding the

discontinuation of publication paper

Change in net sales (%)

2021:1

2021:1

vs

vs

2020:1

2020:4

Total

-13

-9

Price/mix

7

6

Volume

4

2

Currency

-3

-1

Divestment

-7

-7

Discontinuation

-14

-9

Operating cash flow

SEKm 1,200

1,000

800

600

400

200

0

2020:1 2020:2 2020:3 2020:4 2021:1

GROUP

SALES AND OPERATING PROFIT

January-March 2021 compared with January-March 2020

Net sales amounted to SEK 4,172m (4,793), a decrease of 13%, of which discontinuations accounted for -14%, divestments for -7%, price/mix for 7%, volume for 4% and currency for -3%. After excluding the negative effect from the discontinuation of publication paper operations and the divestment of Wood Supply UK in the fourth quarter of 2020, sales increased with 8%. Higher selling prices for all product categories and higher delivery volumes had a positive effect on sales, partly offset by negative exchange rate effects.

EBITDA increased to SEK 1,359m (1,030), corresponding to an EBITDA margin of 32.6% (21.5). The change was mainly attributable to higher selling prices in all product categories, which was offset by negative exchange rate effects. The cost of planned maintenance stops amounted to SEK 0m (0).

Operating profit amounted to SEK 1,046m (628).

January-March 2021 compared with October-December 2020

Net sales decreased 9%, of which discontinuations accounted for -9%, divestments for -7%, price/mix for 6%, volume for 2% and currency for -1%, and amounted to SEK 4,172m (4,592). The decrease was mainly attributable to the discontinuation of publication paper operations, divestment of Wood Supply UK in the fourth quarter of 2020 and negative exchange rate effects. Higher selling prices in all product categories and higher delivery volumes had a positive effect on sales.

EBITDA amounted to SEK 1,359m (1,451), corresponding to an EBITDA margin of 32.6% (31.6). The change relates to a seasonally lower share of harvesting from SCA-owned forest and the discontinuation of publication paper operations, which was offset by higher selling prices in all product categories and lower costs for planned maintenance stops of SEK 0m (130).

Operating profit amounted to SEK 1,046m (1,084).

CASH FLOW

January-March 2021 compared with January-March 2020

The operating cash surplus amounted to SEK 1,039m (690). The cash flow effect of changes in working capital was SEK -290m(-146). Restructuring costs amounted to SEK -123m (0) and were related to the discontinuation of publication paper operations. Current capital expenditures, net, totaled SEK -209m(-175). Operating cash flow was SEK 475m (341) (see Note 9, page 18).

Strategic capital expenditures totaled SEK -511m(-189) and mainly relate to the expansion project in Obbola (see page 5). Cash flow for the period was SEK -92m (406) (see page 15).

FINANCING

At March 31, 2021, net debt totaled SEK 7,043m, a decrease during the quarter of SEK 628m. The decrease is mainly due to strong cash flow and the revaluation of pension assets. Net debt in relation to EBITDA, excluding one-off items related to the discontinuation of publication paper operations, amounted to 1.5x compared with 1.7x in the preceding quarter.

At March 31, 2021, gross debt amounted to SEK 10,298m with an average maturity of 4.2 years (including the lease liability). The loan structure consists of bonds and bilateral bank loans. Unutilized credit facilities amounted to approximately SEK 8.9bn at March 31, 2021, of which the largest portion falls due in 2024. In the January-March 2021 period, financial items totaled SEK -28m compared with SEK -24m in the year-earlier period.

TAX

January-March 2021 compared with January-March 2020

The Group's tax expense amounted to SEK 216m (121), corresponding to an effective tax rate of 21.2% (20.1).

SVENSKA CELLULOSA AKTIEBOLAGET SCA (publ), Skepparplatsen 1, 851 88 SUNDSVALL. www.sca.com. Corp. Reg. No. 556012-6293

S C A I n t e r i m r e p o r t - J a n u a r y 1 - M a r c h 3 1 , 2 0 2 1

4

EQUITY

January-March 2021

Total consolidated equity increased by SEK 1,268m during the period, to SEK 73,431m at March 31, 2021. Equity increased due to comprehensive income for the period of SEK 1,267m and other items of SEK 1m.

CURRENCY EXPOSURE AND CURRENCY HEDGING

About 85% of SCA's sales are priced in currencies other than SEK, primarily EUR, USD and GBP. Most purchasing is conducted in SEK, but some purchasing is carried out in foreign currencies.

To reduce the risk of a weaker SEK, all balance sheet items in foreign currency are hedged, as well as major decided and contracted expenses in foreign currency for investments in fixed assets. In addition, a share of expected future net flows in the main currencies is hedged and, in some cases, for special order flows.

The company has hedged about 55% of the expected net EUR exposure until the end of the third quarter of 2021, as well as approximately 25% for the fourth quarter of 2021 and 10% for the first quarter of 2022, at the average EUR/SEK exchange rate of 10.44. The company has hedged about 55% of the expected net USD exposure until the end of the third quarter of 2021, as well as approximately 25% for the fourth quarter of 2021 and 10% for the first quarter of 2022, at the average USD/SEK exchange rate of 8.80. The company has hedged about 20% of the expected net GBP exposure until the end of the third quarter of 2021, as well as approximately 15% for the fourth quarter of 2021 and 5% for the first quarter of 2022, at the average GBP/SEK exchange rate of 11.74.

PLANNED MAINTENANCE STOPS

No planned maintenance stops were carried out in the first quarter of 2021.

The estimated effect of the planned maintenance stops on earnings, calculated as the total of the direct cost of the maintenance and the effect from lower fixed cost coverage from reduced production during the stops, is shown in the table below.

Actual 2020

SEKm

2020:1

2020:2

2020:3

2020:4

Total

Pulp

0

0

20

130

150

Containerboard

0

68

42

0

110

Total

0

68

62

130

260

Actual

Forecast 2021

SEKm

2021:1

2021:2

2021:3

2021:4

Total

Pulp

0

0

20

130

150

Containerboard

0

0

150

0

150

Total

0

0

170

130

300

SVENSKA CELLULOSA AKTIEBOLAGET SCA (publ), Skepparplatsen 1, 851 88 SUNDSVALL. www.sca.com. Corp. Reg. No. 556012-6293

S C A I n t e r i m r e p o r t - J a n u a r y 1 - M a r c h 3 1 , 2 0 2 1

5

KEY EVENTS

Changes at the Ortviken site

The publication paper market has been structurally declining for a long time and has had an accelerated negative trend since the outbreak of Covid-19. SCA decided in September 2020 to discontinue publication paper operations consisting of three paper machines at the Ortviken site. The paper machines were permanently closed in January and February of this year.

From the first quarter of 2021, the Paper segment consists only of kraftliner and has changed name to the Containerboard segment. The sale of the remaining inventory of publication paper following the discontinuation is recognized in Other as of January 1, 2021. Costs related to the maintenance of the Ortviken site between the discontinuation of the publication paper production and the start of CTMP production (see below) are expected to be SEK 20-30m per quarter and will be recognized in Other.

INVESTMENTS

SCA invests in increased CTMP capacity

SCA is investing SEK 1.45bn to achieve an annual production volume of 300,000 tonnes of chemically pre-treated mechanical pulp (CTMP) at the Ortviken site, where some existing infrastructure and mechanical equipment will be utilized. The investment is recognized as a strategic investment and will begin in 2021. Production is expected to start at the new facility at the beginning of 2023.

SCA invests in the Obbola kraftliner mill

SCA is building a new paper machine for the production of kraftliner at the 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 will be approximately SEK 7.5bn over a five-year period and is recognized as a strategic investment. The investment includes environmental investments of approximately SEK 1bn, which, for example, will reduce oil consumption by 8,000 cubic meters per year and improve the water treatment capacity. The project is progressing on time and on budget. Production is expected to start at the new facility at the beginning of 2023.

SVENSKA CELLULOSA AKTIEBOLAGET SCA (publ), Skepparplatsen 1, 851 88 SUNDSVALL. www.sca.com. Corp. Reg. No. 556012-6293

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SCA - Svenska Cellulosa AB published this content on 30 April 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 April 2021 07:47:02 UTC.