SCA Capital Market Day 2011

CMD 2011

SCA Capital Market Day 2011 Jan Johansson, President and CEO

1

Macro and economic outlook Uncertainty rules

CMD 2011

Measures to stabilize debt markets in the Eurozone

Market’s fear over the Euro Inflation in China was reported at 6.4 percent in June of 2011

Standard & Poor’s decision to downgrades US’s credit rating to AA+

2

3 3

Forest Products

Packaging Tissue

Personal Care

36% 24%

16% 24%

SCA Group Sales split 2010

Sales split

CMD 2011

0%

20%

40%

60%

80%

100%

2000 2010

4

% of net sales

Hygiene products (Personal Care and Tissue)

Packaging and Forest Products

46% 60%

40% 54%

2000 2010

Increasing hygiene sales

CMD 2011 4

5

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

CMD 2011 5

Packaging and Publication papers European market

CMD 2011

10%

20%

5% 5%

4%

56%

Corrugated board SCA

Mondi

Other

6%

32%

17% 10%

6%

29%

Publication papers

SCA

Stora Enso Norske Skog

Other

Saica

DS Smith

Smurfit Kappa UPM (incl. Myllykoski)

Holmen

6

Incontinence care Market shares

CMD 2011

41%

13% 8% 5%

4%

29%

SCA

Hartmann Ontex

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 Unicharm

Hartmann

7 CMD 2011

North America

Latin America

Europe

Global

Baby diapers and Feminine care Market 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 Hyga 8%

50% 17%

6% 4%

15%

Other

SCA

P&G J&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*

Consumer tissue Market 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

SCA

Other

Manpa y Brika

Kruger

CMPC

9


Europe

Latin America* Global

AFH tissue Market 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

Metsä Duni

SCA

KC CMPC

Other

Kruger Fapsa

SCA

KC

Other

GP

Cascades

Bay West

SCA

KC

Metsä

GP

Other

Bay West

10


Latin America*

North America Europe

Global

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

11 CMD 2011

* 2010 adjusted for exchange rate movements and divestments ** 2010 adjusted for exchange rate movements *** 2010

Strategic focus areas

Strategic focus Yielding results

12 CMD 2011

0

2000

4000

6000

8000

10000

12000

2008 2009 2010

Operating profit*

* Excluding extraordinary items

13

Decreased net debt And 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%

14 CMD 2011

Meet changing demands and requirements Create long-term, profitable differentiation Strengthen market positions Build stronger brands Drive growth

Innovation for profitable growth

15

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

CMD 2011

16

21%

Mature markets

Emerging markets

% of Hygiene sales in 2010

H1 2011 Emerging markets hygiene sales growth:

Personal Care: +9%*

Tissue: +9%*

Growth High growth in Emerging markets

CMD 2011

* Adjusted for exchange rate movements

16

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

CMD 2011 17

Financial targets Remain unchanged

CMD 2011 18

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

18

Strategic focus areas

CMD 2011 19 19

SCA Packaging Michael Cronin, President

CMD 2011 20

21

SCA Packaging Net sales of SEK 26.2bn

170 production facilities, including 6 containerboard mills

Europe’s second largest corrugated packaging company with 10% market share

13,750 employees

Full-service supplier of packaging solutions

Main customers are the FMCG & manufacturing industries

Consumer

packaging 20%

Protective packaging 3%

Service 4%

Conventional corrugated board 69%

Industrial packaging 4%

CMD 2011

We lifecycle!

Integrated packaging company SCA Forest & Timber

SCA Packaging

SCA Containerboard

Our Customers Retailers

SCA Recycling

A complete ‘cradle to cradle’ loop, from forest to package

and recycle to fibre again

CMD 2011 22

23

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

CMD 2011 23

CMD 2011

1.021.02

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

Base

Inde

x us

ed Q

4 20

09

Price Corrugated Conventional

Achieved price increases of 21% since Q4 2009

Managing the cycle Corrugated Box Price Recovery

24 24

Business integration Paper supply platform

CMD 2011 25

Quality Award

Customer Focus Quality & Service

CMD 2011 26

27

Innovation Strengthens customer offering

CMD 2011

SCA Forest Products Ulf Larsson, President

28 CMD 2011 28

29

R&D

Forest Europe’s largest private forest owner

2.6 million hectares

Publication papers No. 5 in Europe

Pulp

Energy

SCA Forest Products

Solid-wood products No. 2 in Europe

Distribution and logistics

Sales: SEK 17.1bn Employees: 4,200

CMD 2011 29

30

Publication papers Strategic focus

Strong mill concept

Higher product value

Strengthened market position

Innovation products/ processes Deliveries

Maintenance organization

Productivity and cost efficiency

Strategy defined

Less exposure to standard news

Full capacity utilization

Environmental positioning

Local presence and good service

Further strengthen core European customer base

New R&D agenda

Long term product development per mill

Supplementary products

Upstream integration

Productivity and cost efficiency

Priorities

CMD 2011 30

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 2010 tonnes

Publication papers Deliveries of FSC-certified paper

CMD 2011 31

CMD 2011

Solid-wood products Strategic focus

Asset optimization program

Industrial and distribution solutions

GORM start-up

BM Scandinavian expansion (+60%)

China sales company

BM France

BM UK

Jämtlamell Rundvik

Munksund

Holmsund

Vilhelmina

Bollsta Tunadal

Gällö

Tjärnvik

Today

Bollsta 450,000 550,000 m³

Tunadal 350,000 500,000 m³

Closure Stugun

Deliveries

Internal consolidation

Priorities

32

0

10

20

30

40

50

60

2004 2005 2006 2007 2008 2009 2010

Value-added products %

38%

52%

Solid-wood products Increased share of value-added products

33 CMD 2011

CMD 2011

Pulp Strategic focus

Pulp Today Potential

420,000 475,000

800,000

NBSK

CTMP 90,000 90,000 90,000

Tonnes/ annum

Increased productivity

Lime kiln

Maintenance organization

Deliveries

Östrand 475,000 tonnes

Priorities

34

CMD 2011

Forest Strategic focus

Forest

0

50

100

150

200

250

300

1947 1953 1968 1976 1984 1996 2006 2016 2026 2036 2046 2056

Million m³ standing volume

Measured

Today Forecast

Growth

Increased productivity

Purchase from private forest owners >3 million m³

Deliveries

Decreased costs

Further increased purchase volume to cover industry expansion

Forest growth

Priorities

35

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 If the worlds forests were managed the same way as SCA’s that would

solve a big part of the climate change problem

36 CMD 2011

37

Energy Strategic focus

Ongoing business

>4 TWh biofuel, potential 12-15 TWh

Peat, prestudy

Strategic partners

Organization

Strategy

Pre-study torrefaction

Wind power Biofuel New energy products and processes

SCA projects

Land lease

Further investments Statkraft joint venture

Statkraft investments, 2.6 TWh

Fred. Olsen Renewables, 2 TWh

Organization

Strategy

Deliveries

Priorities

CMD 2011 37

CMD 2011

R&D and Innovations Strategic 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

38

SCA Hygiene business Mats Berencreutz, COO Hygiene Operations Christoph Michalski, President GHC

39 CMD 2011

40

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

40 CMD 2011

41

Leading market positions Global and regional

Europe Tissue: 1 Baby diapers: 2 Incontinence care: 1

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

CMD 2011 41

Strategic focus

CMD 2011 42

Strengthen positions and increase growth in main markets and emerging markets

Increase the number of global brands

Increase the pace of innovations

Efficiency improvements

42

Growth potential for hygiene products

CMD 2011 43

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

43

44 44

Population growth 2010-2020 Demographics

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

45

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%

CMD 2011 45

Sustainability as a business driver

Extensive customer and consumer demand for sustainable solutions and eco labelling Growing sustainability interest in

emerging markets Great growth potential with

customized offerings in D&E markets Sustainability drives innovation

CMD 2011 46

Driving growth and efficiencies

Core capabilities

Extract cost to reinvest for

growth

Organization effectiveness

Drive Growth Drive Efficiencies

Innovation Marketing and

brand management

Consumer and customer insight

Faster, simplified decision making

Clarified ways of working

Leaner, more agile organization

Shift resources where required to win

CMD 2011 47

48

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

CMD 2011

More Brand, Less Brands

Harmonized positions to leverage: Concepts Technology Best practice

Huge opportunity to accelerate growth and further

strengthen efficiencies through improved speed and scale

CMD 2011 49

50

Innovation Strengthens market positions and profitability

CMD 2011

51


CMD 2011

SCA Tissue Europe Magnus Groth, President

52 CMD 2011

Consumer tissue AFH tissue

No. 1 20% market share


SCA Tissue Europe Sales split

Consumer tissue 75%

AFH tissue 25%

53 CMD 2011

Net sales of SEK 26.8bn

9,200 employees

CMD 2011

Strategic focus

54

Continue to strengthen the Tork brand in AFH tissue and increase growth

Strengthen consumer tissue brands through continued implementation of the brand platform

Launches of innovative products based on customer and consumer insight

Efficiency improvements Sustainability as a business driver Capture growth opportunities in Eastern Europe

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

55

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

CMD 2011 57

Consumer tissue brand migration Stronger brands and more efficient A&P

Focused, differentiated & consumer relevant mega-brand portfolio

From … … To

DACH East

Nordic NL

Complicated, region specific, inefficient brand portfolio

57

58 CMD 2011


Increased customer demand, both from consumer and 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


59 CMD 2011 59

SCA Personal Care Europe Thomas Wulkan, President

60 CMD 2011 CMD 2011

Baby diapers

61

Incontinence care




Personal Care Europe

Feminine care

Incontinence care 60%

Baby diapers 28%

Feminine care 12%

Sales split

CMD 2011


5,300 employees

61

62

Grow TENA to >50%

Grow Libero and Libresse strongholds

Build Retailer brand partnerships with selected leading retailers

Establish new strongholds in nearby D/E markets

Cost, quality and service leadership

62

Strategic priorities

CMD 2011

Grow TENA to >50%

Drive and shape markets by enhanced innovation 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

63 CMD 2011 63

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 2011 64

Build Retailer brand partnerships with 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 several

new Pant contracts

65 CMD 2011 65

Establish and grow new strongholds in nearby growth markets

Capitalize on growth opportunities in Middle East and North Africa

Expanded footprint in prioritized growth markets

Komili, Turkey

San Saglik, Turkey

66 CMD 2011 66

67


CMD 2011

Increased customer demand, both from consumer and B2B

Increased demand for eco-labelling

Community-related activities for improved brand awareness

CMD 2011


68

SCA Americas Sune Lundin, President

CMD 2011 69

70

North America Mexico and Central America

SCA Americas

South America AFH

tissue 47%

Baby diapers 4%

Incontinence care 21%

Consumer tissue 18%

Feminine care 10%

Sales split

Incontinence care AFH tissue

Incontinence care Baby diapers Feminine care Tissue


CMD 2011


7,900 employees

70

CMD 2011

North America Strong SCA market positions

> World’s largest market for incontinence care products (USD 2.7bn) and Away from Home tissue (USD 5bn) > 90% B2B focus for SCA > Strong market positions

71 71

Latin America Strong market growth

CMD 2011 72

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

72

Sales & distribution Customers

CMD 2011 73 73

Strategic Focus

CMD 2011 74

Leading innovations strengthen market positions and profitability

Geographic and category expansion

Increased value added sales


74

Leading Innovations Strengthens market positions and profitability

Tork Xpressnap TENA Stretch Nosotras Doubles

75 CMD 2011

Geographic & category expansion Latin American acquisitions strengthens presence

76

Algodonera Aconcagua No. 3 in feminine care

Smaller positions in baby diapers and incontinence care products

Copamex No. 3 in baby diapers

Pro Descart No. 2 in incontinence care products

Smaller position in baby diapers

CMD 2011

0%

20%

40%

60%

80%

100%

2005 2010

Increased value added sales Drives profitability for AFH tissue North America

77

9%

29%

CMD 2011

Growth potential in Latin America in low income segments Smaller packs, local distribution and economy products Cooperation with Wal-Mart’s Bodega Aurrera stores in

Mexico Customers view SCA’s 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, NFL’s greenest football team

CMD 2011 78


78

SCA Asia Pacific Ulf Söderström, President

CMD 2011 79

Hygiene Australasia Hygiene North Asia Hygiene Central

& South Asia


Incontinence care Tissue

Incontinence care Baby diapers Feminine care

SCA Asia Pacific

AFH tissue 16%

Baby diapers 23%

Consumer tissue 36%

Feminine Care 10%

Incontinence Care 15%

Sales split

80 CMD 2011


3,200 employees

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

By 2030 60% of the

global population

above 65 will be in Asia Pacific

Asia Pacific Intimate Health and Elderly Care

Source: SMV, SCA, 2010

TENA – Undisputed global leader in Inco

82 CMD 2011

83 83 CMD 2011


Growth potential in low income segments Single packs, economy segment

TENA launch and incontinence care training of 5,000 nurses in China TENA launch in the economy segment in

Vietnam in 2011 Several tenders secured thanks to green

credentials, i.e. Starbucks in China and Scott base in Antarctica

84 CMD 2011


CMD 2011

SCA Jan Johansson, President and CEO

85

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 in emerging markets

Increased pace of innovations

Fewer local brands and increased number of global brands

Continued efficiency improvements

Summary

87 CMD 2011

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

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SCA Capital Market Day 2011

Investor Relations

Transcript of SCA Capital Market Day 2011