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http://www.sca.com/ir The presentation of SCA CFO Lennart Persson at the UBS European Conference in London, UK.http://www.facebook.com/SCahttp://www.twitter.com/SCAeverydayhttp://www.youtube.com/SCAeveryday
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15 November 2011
UBS conference Lennart Persson, CFO
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Net sales SEK 107bn
45,000 employees and sales in more than 100 countries
World’s third largest hygiene products company
TEN and Tork leading global brands for incontinence care and Away-From-Home tissue
Europe’s largest private forest owner
Europe’s second largest packaging company
SCA Group A global hygiene products and paper company
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Forest Products
Packaging Tissue
Personal Care
36% 24%
16% 24%
SCA Group Sales split 2010
Sales split
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Leading market positions Global and regional
Europe Tissue: 1 Corrugated board: 2 Baby diapers: 2 Incontinence care: 1 Privately owned forests: 1 Solid-wood products: 2
Australia Feminine care: 1 Incontinence care: 1 Tissue: 2
Mexico Incontinence care: 1 Tissue: 2 Feminine care: 1 Baby diapers: 3 Global
Incontinence care: 1 AFH tissue: 2 Colombia
Incontinence care: 1 Feminine care: 1 Tissue: 1
North America AFH tissue: 3 Incontinence care: 3
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Strong global and regional brands Two global billion EUR brands
North America
Eastern Europe
Asia Pacific
Europe
Latin America
Sales of SEK 65bn, with sales in more than 100 countries
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Cost reductions in all business areas of close to SEK 1bn***
Cash flow from current operations SEK 7.4bn***
Efficiency programs in Packaging and Forest Products
Supply Chain excellence and asset utilization programs in Tissue Europe
Restructuring program in baby diapers in Europe
New tissue plant in Mexico
New personal care plant in Russia
Further tissue investments in Kostheim and Sovetsk
Investment in Bollsta sawmill
Personal Care Thin baby diaper
TENA Ultra thins
Strong TENA value assortment
Tissue Tork Xpressnap Café,
Tork Performance
Tempo ice, Zoo Boxes
Packaging Trueflo
ZeoCool
Forest Products Increased value
added
SCA Group 5%*
Personal Care 2%** Emerging Markets 10%**
Tissue 2%** Emerging Markets 6%**
Packaging 20%*
Forest Products 3%**
Acquisitions:
Mexico- Copamex
Turkey- 95% San Saglik
Turkey- 50% Komili
Brazil – Pro Descart
SCA and Fred.Olsen Renewables to construct wind farms
* 2010 adjusted for exchange rate movements and divestments ** 2010 adjusted for exchange rate movements *** 2010
Strategic focus areas
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Innovation for profitable growth Meet changing demands and requirements Create long-term, profitable differentiation Strengthen market positions Build stronger brands Drive growth
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Global population growth
An aging population
Increased market penetration
Higher disposable income
Customers and consumers demand more comfort and sustainability
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Growth Growth potential for hygiene products
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Growth High potential in markets with low penetration
Usage of hygiene products
Units/capita/year Units/child/year Units/woman/year
Western Europe Eastern Europe Latin America Asia North America
Kg/capita/year
Penetration in mature markets around 35%
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Latin America
South East Asia
Eastern Europe /Russia
Strong SCA positions Good market growth Favourable socio-demographics
Good market growth Favourable socio-demographics
Middle East
China
Incontinence care products
Growth SCA’s growth markets
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Sustainability as a business driver Reduced cost ESAVE = SEK 600m in annual cost savings
Improved competitive edge Sustainability credentials generate good business Great growth potential through customized offerings in D&E markets Renewable energy, wind power, biofuels World’s largest producer of FSC-certified products
Attract investors 23% of investors in SCA shares make sustainability screening
Reduced risk level Attract top talents Strengthen the brand
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Forest A valuable asset Europe’s largest private forest owner – FSC certified Annual net growth of 1% Raw material integration and potential for electricity generation Our forests absorb as much carbon dioxide as is discharged from SCA’s
entire production
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Summary – 9M 2011 vs 9M 2010 Sales increased 6%*
Hygiene business Higher volumes and prices Good growth in emerging markets
• Personal care, 12%** • Tissue, 10%**
Packaging and Forest Products Packaging volumes increased 3%***
• Corrugated prices increased12% Publication paper volumes increased 1% Solid-wood product volumes increased 7%
EBIT decreased 1%**** Higher prices and volumes Cost savings Raw material costs increased SEK 3.1bn Negative currency impact, SEK 700m
Profit before tax decreased 2%**** Cash flow from current operations: SEK 4,397m
* Adjusted for exchange rate movements and divestments ** Adjusted for exchange rate movements *** Excluding divestments **** Excluding restructuring costs and adjusted for exchange rate movements
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Summary - Q3 2011 vs. Q2 2011
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Group Sales increased 1%
Higher prices EBIT increased 13%*
Higher prices Raw material costs increased SEK 280m
Profit before tax increased 11%*
Business areas Personal Care, EBIT increased 18%*
Higher prices and volumes Higher raw material costs
Tissue, EBIT increased 21%* Higher volumes Higher prices and changed product mix
Packaging, EBIT increased 14%* Higher prices Lower volumes
Forest Products, EBIT flat* Higher prices Higher raw material costs
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* Excluding restructuring costs
Restructuring program
Total cost SEK 1,400m
SEK 500m
Cash expenditure SEK 900m
Write down
Annual EBIT savings SEK 700m Gradual impact during 2012 - 2013
Headcount reduction approximately 2,000 employees
Q3 2011 costs SEK 350m
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Outlook 2011
Uncertainty in global economy. So far no negative impact on our business.
Slight price decreases on raw material.
Price increases in parts of our Hygiene business.
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Offered price: EUR 1.32bn
Already in year one the transaction is estimated to contribute to an increase of earnings per share and cash flow
With fully realized synergies earnings per share are expected to increase with approx. SEK 1.70
Georgia-Pacific´s acceptance of this offer is subject to consultations with works councils where appropriate
The transaction will be subject to customary consultation with employee representatives and will also be subject to approval by relevant competition authorities
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Binding offer for Georgia-Pacific’s European tissue operations
Binding offer for Georgia-Pacific’s European tissue operations
Creates a leading European tissue company
Strengthens our product offering and geographic reach in Europe
Enhances our presence in key markets
Good strategic fit in AFH tissue
Substantial synergies
Increased share of branded sales in our consumer tissue portfolio
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Sales: EUR 1.25bn* Consumer tissue, approx. 60% AFH tissue, approx. 30% Personal care, approx. 5%
EBIT margins on similar level as SCA’s tissue business Market positions
Consumer tissue, 11% market share AFH tissue, 10% market share
Well-known Lotus brand for AFH tissue and consumer tissue
Approx. 5,000 employees
15 manufacturing sites in 7 countries
670,000 tonnes annual tissue capacity
Georgia-Pacific’s European tissue operations
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* Italy and Turkey are not included in the binding offer
Substantial synergies
Annual synergies: EUR 125m
Improves Tissue EBIT margins by 2-2.5 percentage points
Full effect in 3 years after closing
Related costs: EUR 130m
Increased supply chain efficiency Optimization of logistics
More efficient sourcing
Improved SG&A and A&P efficiency
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25%
Enhances SCA’s presence In both Consumer tissue and AFH tissue
35%
European Consumer tissue market
European AFH tissue market
SCA
SCA and GP
19% 30% SCA
SCA and GP
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Increased share of branded sales In Consumer tissue
SCA’s Consumer tissue sales
40% 50%
Branded
Branded
SCA
SCA and GP
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Retailers’ brands
Retailers’ brands
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Q & A
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Johan Karlsson, VP Investor Relations Tel: +46 8 788 51 30
Jessica Ölvestad, Manager Investor Relations Tel: +46 8 788 52 82
IR Contacts:
Email: [email protected] Website: www.sca.com