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SCA's hygiene operations show favourable growth
30
Jan '09
Svenska Cellulosa Aktiebolaget SCA released the results from January 1 to Devember 21, 2008. (compared with corresponding period a year ago)

• Net sales rose 4% to SEK 110,449m (105,913)
• Profit before tax was SEK 6,237m (8,237)
• Profit for the period was SEK 5,598m (7,161)
• Earnings per share were SEK 7.94 (10.16)
• Operating cash flow was SEK 3,810m (4,508)
• The Board of Directors proposes a dividend of SEK 3.50 per share (4.40)

CEO'S COMMENTS
Net sales rose 4% compared with the same period a year ago. Operating profit for the fourth quarter amounted to SEK 1,838m (preceding year 2,591 excluding items affecting comparability), and was SEK 8,554m for the full year (preceding year 9,847 excluding items affecting comparability). Profit before tax was SEK 1,150m (excluding items affecting comparability 2,042) for the fourth quarter and SEK 6,237m (excluding items affecting comparability 7,937) for the full year.

SCA's hygiene operations are showing favourable growth compared with a year ago and are showing considerable resilience to the economic downturn. However, in the packaging operations in particular, earnings have fallen, and the negative trend became accentuated at the end of the fourth quarter. Our Forest Products business posted a poorer result than a year ago, mainly due to weak development for solid-wood products, although earnings for the unit improved somewhat during the fourth quarter compared with the third quarter.

In the hygiene operations, Tissue showed a strong improvement in sales and operating profit compared with a year ago, driven by acquisitions and price increases. SCA's positions in consumer tissue have developed well. The Away-From-Home segment (AFH) remains stable. Development for Personal Care is favourable, with growth of 6%. Our most important segment, incontinence care with the world-leading Tena-brand, grew 7% during the year and 11% during the fourth quarter. Margins came under pressure during the year due to the technological shift in baby diaper production and higher raw material costs.

In our packaging operations, we increasingly saw the effects of the recession during the latter part of the fourth quarter. The industry is struggling with a deteriorating demand scenario and high producer inventories. As a result, pressure is rising on prices for containerboard (liner) as well as corrugated board. Earnings deteriorated significantly compared with the preceding year and quarter. To address these problems, SCA streamlined its production and cut production of liner during the year by a total of 149,000 tonnes, including 92,000 tonnes during the fourth quarter.

Our overriding priorities in 2009 will be to improve cash flow in part by cutting back on capital expenditures and in part by cutting costs and reducing working capital.

For 2009 we expect our hygiene operations to show continued favourable development. If the negative demand balance continues in our packaging operations, we see the risk of an earnings decline. The forest products business is expected to show stable performance in 2009.

Against the backdrop of the above and of the major uncertainty about the economy and within the financial systems, combined with lower earnings, the Board proposes a dividend of SEK 3.50 per share for 2008.

Svenska Cellulosa Aktiebolaget SCA


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