Interim Report Q2 2016

JANUARY 1 – JUNE 30, 2016 (compared with same period a year ago)

  ·  Net sales amounted to SEK 57,263m (57,177)
  ·  Organic sales growth, which excludes exchange rate effects, acquisitions
and divestments, was 2%
  ·  Operating profit decreased by 8% to SEK 5,348m (5,809)
  ·  Adjusted operating profit, which excludes items affecting comparability,
rose 9% to SEK 6,652m (6,089)
  ·  Adjusted operating margin was 11.6% (10.6%)
  ·  Adjusted profit before tax rose 10% to SEK 6,197m (5,626)
  ·  Items affecting comparability totaled SEK -1,304m (-280), of which SEK
-1,142m (-139) affects cash flow. Items affecting comparability includes a
provision of SEK 1,065m related to ongoing anti-trust cases.
  ·  Taxes include a provision of SEK 1,300m related for ongoing tax cases
  ·  Profit for the period was SEK 2,114m (3,977)
  ·  Earnings per share were SEK 2.84 (5.23)
  ·  Adjusted return on capital employed was 12.4% (11.4%)
  ·  Cash flow from current operations was SEK 4,555m (3,366)

(Table included in attached pdf)

CEO’S COMMENTS
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%.

For further information, please contact:
Fredrik Rystedt, CFO and Executive Vice President, +46 8 788 51 31
Johan Karlsson, Vice President Investor Relations, Group Function
Communications, +46 8 788 51 30
Linda Nyberg, Vice President Media and Online, Group Function Communications,
+46 8 788 51 58
Joséphine Edwall-Björklund, Senior Vice President, Group Function
Communications, +46 8 788 52 34

NB
This information is such that SCA is obligated to make public pursuant to the EU
Market Abuse Regulation or the Swedish Securities Markets Act. This report has
been prepared in both Swedish and English versions. In case of variations in the
content between the two versions, the Swedish version shall govern. The
information was submitted for publication, through the agency of the contact
person set out below, at 12:00 CET on July 19, 2016.

Karl Stoltz, Media Relations Manager, +46 8 788 51 55