SCA Capital Market Day 2011 Presentation

8/3/2019 SCA Capital Market Day 2011 Presentation

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CMD 2011

SCACapital Market Day 2011Jan Johansson, President and CEO

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Macro and economic outlookUncertainty rules

CMD 2011

Measures to stabilize debt markets in the

Eurozone

Markets fear over the Euro Inflation in China wasreported at 6.4 percent

in June of 2011

Standard & Poors decision to downgrades

USs credit rating to AA+

2


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33

Forest Products

Packaging Tissue

Personal Care

36%

24%

16% 24%

SCA GroupSales split 2010

Sales split

CMD 2011


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0%

20%

40%

60%

80%

100%

2000 2010

4

% of net sales

Hygiene products(Personal Care and Tissue)

Packaging andForest Products

46%60%

40%54%

2000 2010

Increasing hygiene sales

CMD 20114


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5

Leading market positionsGlobal and regional

Europe

Tissue: 1Corrugated board: 2

Baby diapers: 2Incontinence care: 1Privately owned forests: 1Solid-wood products: 2

Australia

Feminine care: 1Incontinence care: 1

Tissue: 2

Mexico

Incontinence care: 1Tissue: 2Feminine care: 1

Baby diapers: 3 GlobalIncontinence care: 1

AFH tissue: 2ColombiaIncontinence care: 1Feminine care: 1Tissue: 1

North America

AFH tissue: 3Incontinence care: 3

CMD 20115


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Packaging and Publication papersEuropean market

CMD 2011

10%

20%

5%

5%4%

56%

Corrugated board

SCA

Mondi

Other6%

32%

17%10%

6%

29%

Publication papers

SCA

Stora EnsoNorske Skog

Other

Saica

DS Smith

Smurfit Kappa UPM (incl. Myllykoski)

Holmen

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Incontinence careMarket shares

CMD 2011

41%

13%8%

5%4%

29%

SCA

HartmannOntex

Other

TZMO

Artzana

19%

20%

18%6%

5%

32%

SCA

Hypermarcas

KC

Other

Panalex

Biopapel

20%

27%26%

11%

10%6%

KC

FQP

Other

SCA

Covedien

Med

25%

9%

7%

7%6%

46%

SCA

KC

Other

FQP

UnicharmHartmann

7 CMD 2011

North America

Latin America

Europe

Global


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Baby diapers and Feminine careMarket shares

CMD 2011

12%

55%12%

10%

2%9%

7%

62%8%

6%5%

12%

SCA

KC

Other

Hypermarcas

P&G

TQ

SCA

P&G

KC

Other

Ontex

Hyga8%

50%17%

6%4%

15%

Other SCA

P&GJ&J

Ontex

TZMO

35%

28%

20%

12%

2%3%

Other

SCA

P&G

J&J

CMPC

KC

Europe

Latin America*

8

* Market share in SCAs markets

Baby diapers*

Baby diapers Feminine care

Feminine care*


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Consumer tissueMarket shares

8%

17%

11%

8%

2%

54%

CMD 2011

25%

12%

11%8%8%

36%

18%

42%12%

10%

4%14%

SCA

KC

GP

Other

P&G

Sofidel

KC

Sofidel

SCA

Other

GP

Wepa

KC

SCAOther

Manpa y Brika

Kruger

CMPC

9


Europe

Latin America* Global


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AFH tissueMarket shares

16%

18%

16%

3%2%

45%

CMD 2011

19%

15%

11%7%4%

44%20%

30%

21%

7%

4%

18%

18%

47%9%

5%

4%

17%

SCA

KC

GP

Other

MetsDuni

SCA

KCCMPC

Other

Kruger

Fapsa

SCA

KC

Other

GP

Cascades

Bay West

SCA

KC

Mets

GP

Other

Bay West

10


Latin America*

North America Europe

Global


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Cost reductions in allbusiness areas of closeto SEK 1bn***

Cash flow from currentoperations SEK 7.4bn***

Efficiency programs inPackaging and ForestProducts

Supply Chainexcellence and assetutilization programs inTissue Europe

Restructuring programin baby diapers inEurope

New tissue plant inMexico

New personal careplant in Russia

Further tissueinvestments inKostheim and Sovetsk

Investment in Bollstasawmill

Personal Care Thin baby diaper

Tena Ultra thins

Strong Tena valueassortment

Tissue Tork Xpressnap Caf,

Tork Performance

Tempo ice, ZooBoxes

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.OlsenRenewables to constructwind farms

11 CMD 2011

* 2010 adjusted for exchange rate movements and divestments

** 2010 adjusted for exchange rate movements*** 2010

Strategic focus areas


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Strategic focusYielding results

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0

2000

4000

6000

8000

10000

12000

2008 2009 2010

Operating profit*

* Excluding extraordinary items


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Decreased net debtAnd improved debt payment capacity

%SEKm

0

10

20

30

40

50

0

10 000

20 000

30 000

40 000

50 000

2008 2009 2010 H1 2011

Net debt Debt payment capacity

Net debt decreased SEK 10.4bn

CMD 2011

26%

31%35%

37%


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Meet changing demands and requirements

Create long-term, profitable differentiation

Strengthen market positions

Build stronger brands Drive growth

Innovation for profitable growth


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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-demographicsMiddle East

China Incontinence care products

GrowthSCAs growth markets

CMD 2011


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21%

Mature markets

Emerging markets

% of Hygiene sales in 2010

H1 2011Emerging markets hygiene sales growth:

Personal Care: +9%*

Tissue: +9%*

GrowthHigh growth in Emerging markets

CMD 2011

* Adjusted for exchange rate movements

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Sustainability as a business driver

Reduced costESAVE = SEK 600m in annual cost savings Improved competitive edge

Sustainability credentials generate good businessGreat growth potential through customized offerings in D&E markets

Renewable energy, wind power, biofuelsWorlds largest producer of FSC-certified products

Attract investors23% of investors in SCA shares make sustainability screening

Reduced risk level

Attract top talents

Strengthen the brand

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Financial targetsRemain unchanged

CMD 201118

ROCE* Sales growth**

Personal Care 30% 5-7%

Tissue 13% 3-4%

Packaging 10%

Forest Products 11%

Group 13%

* Return on capital employed, over a business cycle

** Annual organic sales growth

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Strategic focus areas

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SCA PackagingMichael Cronin, President

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SCA Packaging

Net sales of SEK 26.2bn

170 production facilities, including 6containerboard mills

Europes second largest corrugated packagingcompany with 10% market share

13,750 employees

Full-service supplier of packaging solutions

Main customers are the FMCG & manufacturingindustries

Consumer

packaging

20%

Protective packaging 3%

Service 4%

Conventionalcorrugated board69%

Industrial packaging 4%

CMD 2011


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We lifecycle!

Integrated packaging company

SCA Forest & Timber

SCA Packaging

SCA Containerboard

Our Customers

Retailers

SCA Recycling

A complete cradle to cradleloop, from forest to package

and recycle to fibre again

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Strategic priorities

Focus capital on profitable segments

Increase value content

Managing the Cycle& Lowering cost base - Price management

- Eliminate problem businesses- LEAN project

Integrate the business - One Company- Paper Supply Platform

Customer focus - Quality and Service- Innovation

People - Management of change- Leadership

Ongoing priorities

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CMD 2011

1.02

1.02

1.00

1.02

1.06

1.11

1.14

1.17

1.20

0.95

1.00

1.05

1.10

1.15

1.20

1.25

2009-Q2 2009-Q3 2009-Q4 2010-Q1 2010-Q2 2010-Q3 2010-Q4 2011-Q1 2011-Q2

BaseIndexusedQ42

009

Price Corrugated Conventional

Achieved price increases of 21% since Q4 2009

Managing the cycleCorrugated Box Price Recovery

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B i i t ti


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Business integrationPaper supply platform

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Quality Award

Customer FocusQuality & Service

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InnovationStrengthens customer offering

CMD 2011


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SCA Forest ProductsUlf Larsson, President

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R&D

ForestEuropes largest private forest owner

2.6 million hectares

Publication papersNo. 5 in Europe

Pulp Energy

SCA Forest Products

Solid-wood productsNo. 2 in Europe

Distribution and logistics

Sales: SEK 17.1bnEmployees: 4,200

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30

Publication papersStrategic focus

Strongmill concept

Higherproduct value

Strengthenedmarket position

Innovationproducts/processesDeliveries

Maintenanceorganization

Productivity andcost efficiency

Strategy defined

Less exposure tostandard news

Full capacityutilization

Environmentalpositioning

Local presence andgood service

Further strengthencore Europeancustomer base

New R&D agenda

Long term productdevelopment permill

Supplementaryproducts

Upstreamintegration

Productivity andcost efficiency

Priorities

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0

50,000

100,000

150,000

200,000

250,000

300,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

FSC deliveries increased 35% in 2010tonnes

Publication papersDeliveries of FSC-certified paper

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CMD 2011

Solid-wood productsStrategic focus

Asset optimizationprogram

Industrial anddistributionsolutions

GORM start-up

BM Scandinavianexpansion (+60%)

China sales company

BM France

BM UK

JmtlamellRundvik

Munksund

Holmsund

Vilhelmina

BollstaTunadalGll

Tjrnvik

Today

Bollsta 450,000 550,000 m

Tunadal 350,000 500,000 m Closure Stugun

Deliveries

Internal consolidation

Priorities

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0

10

20

30

40

50

60

2004 2005 2006 2007 2008 2009 2010

Value-added products%

38%

52%

Solid-wood productsIncreased share of value-added products

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CMD 2011

PulpStrategic focus

Pulp Today Potential

420,000475,000

800,000

NBSK

CTMP90,000 90,000 90,000

Tonnes/annum

Increased productivity

Lime kiln

Maintenance organization

Deliveries

strand 475,000 tonnes

Priorities

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CMD 2011

ForestStrategic focus

Forest

0

50

100

150

200

250

300

19 47 19 53 1 968 1 976 1984 1996 200 6 201 6 20 26 20 36 2 046 2 056

Million m standing volume

Measured

Today

Forecast Growth

Increased productivity

Purchase from private forestowners >3 million m

Deliveries

Decreased costs

Further increased purchasevolume to cover industryexpansion

Forest growth

Priorities

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ForestA valuable asset

Europes 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 SCAsentire production

If the worlds forests were managed the same way as SCAs that wouldsolve a big part of the climate change problem

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EnergyStrategic focus

Ongoing business

>4 TWh biofuel,potential 12-15 TWh

Peat, prestudy

Strategic partners

Organization

Strategy

Pre-study torrefaction

Wind power Biofuel New energyproducts andprocesses

SCA projects

Land lease

Further investmentsStatkraft joint venture

Statkraft investments, 2.6 TWh

Fred. Olsen Renewables, 2 TWh

Organization

Strategy

Deliveries

Priorities

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CMD 2011

R&D and InnovationsStrategic focus

R&D

R&D Transformation program- Reduce TMP energy consumption

- Next generation publication papers- Bio-refinery mechanical pulp- Composites- Future packaging products- Micro fiber cellulose

Innovation/business development- Process started for higher ambition level

Deliveries

Innovation culture- 72 hour race to innovation

Production system for innovation/business development

Priorities

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SCA Hygiene businessMats Berencreutz, COO Hygiene OperationsChristoph Michalski, President GHC

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40

Strong global and regional brandsTwo 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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L di k i i


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Leading market positionsGlobal and regional

Europe

Tissue: 1Baby diapers: 2

Incontinence care: 1

Australia

Feminine care: 1Incontinence care: 1

Tissue: 2

Mexico

Incontinence care: 1Tissue: 2Feminine care: 1

Baby diapers: 3 GlobalIncontinence care: 1

AFH tissue: 2ColombiaIncontinence care: 1Feminine care: 1Tissue: 1

North America

AFH tissue: 3Incontinence care: 3

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Strategic focus

CMD 201142

Strengthen positions and increase growth inmain markets and emerging markets

Increase the number of global brands

Increase the pace of innovations

Efficiency improvements

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Growth potential for hygiene products

CMD 201143

Global population growth

An aging population

Increased market penetration

Higher disposable income Customers and consumers demand

more comfort and sustainability

Global market size for hygiene products: SEK 675bn

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P l i h


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4444

Population growth 2010-2020Demographics

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

World Children 0-4yrs

Women 15-49yrs

>65 yrs Other

2010 2020

,

+33%

+12%

+2%

+7%

+11%

People, millions

CMD 2011

G h


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GrowthHigh 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 AsiaNorth America

Kg/capita/year

Penetrationin maturemarketsaround 35%

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Extensive customer and consumerdemand for sustainable solutions andeco labelling

Growing sustainability interest in

emerging marketsGreat growth potential with

customized offerings in D&E markets

Sustainability drives innovation

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Driving growth and efficiencies

Corecapabilities

Extract cost toreinvest for

growth

Organizationeffectiveness

Drive Growth Drive Efficiencies

Innovation

Marketing andbrandmanagement

Consumer andcustomer insight

Faster, simplifieddecision making

Clarified ways ofworking

Leaner, moreagile organization

Shift resourceswhere required to

win

CMD 201147

G th


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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-demographicsMiddle East

China Incontinence care products

GrowthSCAs growth markets

CMD 2011


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More Brand, Less Brands

Harmonized positions to leverage: Concepts Technology Best practice

Huge opportunity to accelerate growth and furtherstrengthen efficiencies through improved speed andscale

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Innovation


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InnovationStrengthens market positions and profitability

CMD 2011

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CMD 2011


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SCA Tissue EuropeMagnus Groth, President

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Consumer tissue AFH tissue

No. 1 20% market share


SCA Tissue EuropeSales split

Consumertissue 75%

AFHtissue 25%

53 CMD 2011

Net sales of SEK 26.8bn 9,200 employees


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CMD 2011

Strategic focus

54

Continue to strengthen the Tork brand in AFHtissue and increase growth

Strengthen consumer tissue brands throughcontinued implementation of the brand platform

Launches of innovative products based oncustomer and consumer insight

Efficiency improvements


Capture growth opportunities in Eastern Europe


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CMD 2011

Consumer tissue

Finalized brand migration from P&G deal Strengthened brand positions

Increasing share of branded business

Improved price management Strong growth in Eastern Europe

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During 2011 market share has exceeded 20% (+1% compared to 2010)

AFH tissue

CMD 2011

Increasing market share, especially in HoReCa*

segment

Continued growth in highly profitable premium

segments

Focus on strategic growth regions has paid off

Improved price management

56

* Hotels, Restaurants and Catering

Consumer tissue brand migration


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CMD 201157

Consumer tissue brand migrationStronger brands and more efficient A&P

Focused, differentiated & consumerrelevant mega-brand portfolio

From To

DACH East

Nordic NL

Complicated, region specific,inefficient brand portfolio

57

Innovation


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Increased customer demand, both from consumerand B2B

Increased demand for eco-labelling

90 Tork products received the EU

Eco-label Several tenders secured thanks to green

credentials, i.e. Wembley stadium


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SCA Personal Care EuropeThomas Wulkan, President

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Baby diapers

61

Incontinence care




Personal Care Europe

Feminine care

Incontinencecare 60%

Baby diapers28%

Feminine care12%

Sales split

CMD 2011


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62

Grow TENA to >50%

Grow Libero and Libresse strongholds

Build Retailer brand partnerships with

selected leading retailers

Establish new strongholds in nearby D/Emarkets

Cost, quality and service leadership

62

Strategic priorities

CMD 2011


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Grow TENA to >50%

Drive and shape markets by enhancedinnovation and speed-to-market

Strengthen TENA brand

Accelerate TENA premium growth Growth momentum with TENA Pants

TENA Lady assortment

Modern Inco Care launch

Profitable growth in value segment

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Grow Libero and Libresse strongholds

64

Libero Nordic

Introduce and grow adjacent products

Successful Thin Open diaper launch

Profitable growth for Libero Russia

Focus on prioritized feminine care markets

Market share gains in Scandinavia and France

CMD 201164

Build Retailer brand partnerships


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Build Retailer brand partnershipswith selected leading retailers

Clear strategy

Partnerships with selective non-competing retailers

Fast-follower in Open diapers; Leader in Pants

Dedicated organization Capability to follow the market leader quickly

Strong cost focus

Early successes

Supplier of the year award with Kruidvat Exceptional growth with Mercadona

Won new retailer business and severalnew Pant contracts

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Establish and grow new strongholds


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Establish and grow new strongholdsin nearby growth markets

Capitalize on growth opportunities in Middle Eastand North Africa

Expanded footprint in prioritized growth markets

Komili, Turkey

San Saglik, Turkey

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Innovation


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CMD 2011


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Increased customer demand, both from consumer and B2B

Increased demand for eco-labelling

Community-related activities for improved brand awareness

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SCA AmericasSune Lundin, President

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70

North AmericaMexico and

Central America

SCA Americas

South America AFHtissue 47%

Babydiapers 4%

Incontinencecare 21%

Consumertissue 18%

Femininecare 10%

Sales split

Incontinence care AFH tissue

Incontinence care Baby diapers Feminine care Tissue


CMD 2011


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North America


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CMD 2011

North AmericaStrong SCA market positions

> Worlds largest market for incontinence care products (USD 2.7bn)

and Away from Home tissue (USD 5bn)> 90% B2B focus for SCA> Strong market positions

7171

Latin America


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Latin AmericaStrong market growth

CMD 201172

> Fast growing markets> 90% B2C focus for SCA> Strong brands> Unique strength in growing Traditional Trade channel

72

Sales & distribution


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Sales & distributionCustomers

CMD 20117373


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Strategic Focus

CMD 201174

Leading innovations strengthen market positions andprofitability

Geographic and category expansion

Increased value added sales


74

Leading Innovations


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Leading InnovationsStrengthens market positions and profitability

Tork Xpressnap TENA Stretch NosotrasDoubles

75 CMD 2011

Geographic & category expansion


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Geographic & category expansionLatin American acquisitions strengthens presence

76

Algodonera Aconcagua No. 3 in feminine care

Smaller positions in baby diapersand incontinence care products

Copamex

No. 3 in baby diapers

Pro Descart

No. 2 in incontinence care products

Smaller position in baby diapers

CMD 2011

Increased value added sales


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0%

20%

40%

60%

80%

100%

2005 2010

Drives profitability for AFH tissue North America

77

9%

29%

CMD 2011


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Growth potential in Latin America in low income segments Smaller packs, local distribution and economy products

Cooperation with Wal-Marts Bodega Aurrera stores inMexico

Customers view SCAs strong sustainability position as a

competitive advantage SCA offers Ecologo and Green Seal certified Tork

products made of 100% recycled fiber

Unique Go Green partnership with Philadelphia Eagles,

NFLs greenest football team

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SCA Asia PacificUlf Sderstrm, President

CMD 201179


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Hygiene Australasia Hygiene North AsiaHygiene Central

& South Asia


Incontinence care Tissue

Incontinence care Baby diapers Feminine care

SCA Asia Pacific

AFH tissue16%

Babydiapers 23%

Consumertissue 36%

FeminineCare 10%

IncontinenceCare 15%

Sales split

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CMD 2011

Strategic focus

81

Geographic and category expansion Capture growth opportunities in prioritized emerging markets

Innovation drives penetration, growth and profitability

Sustainability creates a competitive advantage

Capitalize on strong brand portfolio

Asia Pacific


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By 203060% oftheglobal populationabove 65 will be in Asia Pacific

Asia PacificIntimate Health and Elderly Care

Source: SMV, SCA, 2010

TENA Undisputed global leader in Inco

82 CMD 2011

Innovation


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8383 CMD 2011


S i bili b i d i


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Growth potential in low income segments Single packs, economy segment

TENA launch and incontinence care trainingof 5,000 nurses in China

TENA launch in the economy segment inVietnam in 2011

Several tenders secured thanks to greencredentials, i.e. Starbucks in China andScott base in Antarctica

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CMD 2011

SCAJan Johansson, President and CEO

85

S


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86 CMD 2011

Short-term

No impact from debt crisis

Good demand in all Business areas

Raw material prices slightly down

Price increases

Long-term

Strengthen positions in main markets and increase growth inemerging markets

Increased pace of innovations

Fewer local brands and increased number of global brands

Continued efficiency improvements

Summary


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Johan Karlsson, VP Investor RelationsTel: +46 8 788 51 30

Jessica lvestad, Manager Investor RelationsTel: +46 8 788 52 82

IR Contacts:

Email: [email protected] Website: www.sca.com
mailto:[email protected]:[email protected]

SCA Capital Market Day 2011 Presentation

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Transcript of SCA Capital Market Day 2011 Presentation