SCA to Divide Group Into Hygiene and Forest Products Divisions
The enhancement of the organization and the investment in increased pulp production will secure the long-term competitiveness of the businesses." – Magnus Groth, President and CEO, SCA.
Aug. 28, 2015 - SCA is a global hygiene and forest products company with about 85% of its sales derived from its hygiene operations. To further intensify the focus on the Group's two operations, SCA has decided initiate a dividing of the Group into two divisions: a Hygiene division and a Forest Products division.
In relation to the Forest Products division, all forest industry and forest land currently owned by SCA will be merged into one division. A decision has also been made to invest in increased capacity for pulp production in the forest products operation.
"SCA is a global hygiene and forest products company in which we work continuously to enhance the respective operations. The enhancement of the organization and the investment in increased pulp production will secure the long-term competitiveness of the businesses," says Magnus Groth, President and CEO of SCA.
The Forest Products division will encompass all forest industry operations and all forest land currently owned by SCA. The work to realize this consolidation will now begin. There are significant synergies between the forest industry and the ownership of forest land. SCA's forest products operation has a well-integrated supply chain with production facilities concentrated in Northern Sweden in close proximity to its forest holdings.
As of January 1, 2017, the Forest Products division will expand its quarterly financial reporting.
To satisfy the growing demand for pulp, SCA has decided to invest in increased capacity for pulp production at the Ostrand pulp mill in Timra, Sweden. The annual production capacity of bleached sulphate pulp will increase from the current level of approximately 430,000 tons to about 900,000 tons. The investment will amount to about SEK 7.8bn over a three-year period. Production is expected to commence in 2018.
"A cohesive forest products operation in a single division further highlights the value created and optimizes synergies between the forest industry and ownership of forest land. Over time, the investment in Ostrand will increase sales and competitiveness and create a world-class cost position and higher margins," says Magnus Groth, President and CEO of SCA.
ENHANCEMENT OF HYGIENE OPERATION
SCA has also decided to enhance the hygiene operation's organization. On January 1, 2016, the company will implement the following enhancements:
- The operations in AfH tissue and incontinence products in Europe and North America will be reorganized into two business units, Away from Home Professional Care and Incontinence Care. Away from Home Professional Care will be led by Don Lewis, currently President of SCA Americas. Incontinence Care will be led by Margareta Lehmann, currently President of SCA Incontinence Care Europe.
- Latin America will become a new business unit, SCA Latin America, which will be led by Pablo Fuentes, Vice President of SCA Latin America at present.
- Global Hygiene Supply Tissue and Global Hygiene Supply Personal Care are being strengthened through the respective production activities being given direct HR responsibility.
- A project organization is being established and is tasked with optimizing and streamlining logistics flows. The project organization will be led by Sune Lundin, currently President of SCA Away from Home Professional Hygiene Europe. Sune Lundin will continue as a member of the Executive Management Team and report directly to the President and CEO.
"The new organization provides the preconditions for increasing efficiency, the pace of innovation and profitable growth for our global hygiene operations, which currently comprise about 85% of the Group’s sales,” says Magnus Groth, President and CEO of SCA.
The organizational changes have no impact on SCA's external financial reporting structure.