SCA's CEO Says Company Had Solid Second Quarter in 2016
"The second quarter of 2016 showed continued good organic growth in adjusted operating profit compared with the same period a year ago." – Magnus Groth, President and CEO, SCA.
June 19, 2016 - SCA's President and CEO, Magnus Groth, commenting on the company's second quarter performance noted that SCA had another solid quarter with strong organic growth in adjusted operating profit primarily coming from the hygiene part of the business.
"The second quarter of 2016 showed continued good organic growth in adjusted operating profit compared with the same period a year ago. We have introduced seven innovations in consumer tissue, among other areas, under the Lotus, Okay, Plenty and Zewa brands, and in Away-from-Home tissue and incontinence products under our globally leading brands Tork and TENA, respectively. Our efficiency improvement work has continued with undiminished strength across the value chain. During the second quarter of 2016 we decided to close a tissue production plant in Spain. This is aligned with our long-term strategy to optimize our geographic production footprint in order to drive cost and capital efficiency and further increase value creation in Tissue.
"On April 1 this year our hygiene operations in Southeast Asia, Taiwan and South Korea were integrated with Vinda, in which we are the majority shareholder. Work is now under way on leveraging our joint strengths to build a leading Asian hygiene business.
"During the second quarter of 2016 we made a provision of SEK 1.3 billion for ongoing tax cases in Sweden and Austria. Recently announced judgments in similar cases indicate a change in practice, and we therefore now consider it appropriate to make a provision in the financial statements for the second quarter of 2016. We have also reserved SEK 964m for ongoing antitrust cases in Chile, Colombia, Poland, Spain and Hungary. I want to stress that we do not tolerate any form of collusion with competitors. We are working intensively to minimize the risks for unethical behavior in our operations, among other things through employee training in competition law. We have also implemented SCA's Code of Conduct in all of our jointly owned companies.
"Consolidated net sales for the second quarter of 2016 were level with the same period a year ago. Organic sales growth was 2%. In emerging markets, which accounted for 31% of net sales, organic sales growth was 6%, while in mature markets it was 0%. The hygiene operations showed good organic sales growth as a result of higher volumes and a better price/mix, amounting to 5% for Personal Care and 3% for Tissue. Organic sales growth for Forest Products was -7%, mainly owing to lower volumes and lower prices.
"The Group's adjusted operating profit for the second quarter of 2016, excluding currency translation effects, acquisitions and divestments, rose 9% compared with the same period a year ago. The increase is mainly related to higher volumes, a better price/mix, cost savings, and lower energy and raw material costs. Adjusted operating profit for the hygiene operations rose mainly as a result of a better price/mix, higher volumes, cost savings, and lower energy and raw material costs in Tissue. The lower adjusted operating profit for Forest Products is mainly attributable to lower prices and lower volumes. The Group's adjusted operating margin increased by 0.7 percentage points to 11.7%. Operating cash flow increased by 21%. The adjusted return on capital employed increased by 0.5 percentage point to 12.1%."
With headquarters in Stockholm, Sweden, SCA is a leading global hygiene and forest products company. The Group develops and produces sustainable personal care, tissue and forest products. To learn more, please visit: www.sca.com.