Interim Report Q3 2016


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

  · Net sales totaled SEK 86,417m (86,276)
  · Organic sales growth, which excludes exchange rate effects, acquisitions and
divestments, was 2%
  · Operating profit rose 22% to SEK 8,290m (6,796)
  · Adjusted operating profit, excluding items affecting comparability, rose 8%
to SEK 10,304m (9,560)
  · The adjusted operating margin was 11.9% (11.1%)
  · Adjusted profit before tax rose 9% to SEK 9,674m (8,864)
  · Items affecting comparability totaled SEK -2,014m (-2,764), of which SEK
-1,468m (-1,154) affects cash flow. Items affecting comparability include a
provision of approximately SEK 1,075m related to ongoing anti-trust cases.
  · Profit for the period was SEK 4,429m (4,545)
  · Earnings per share were SEK 5.94 (5.94)
  · The adjusted return on capital employed was 12.5% (11.7%)
  · Cash flow from current operations was SEK 7,593m (6,944)
  · Work initiated to propose to the 2017 Annual General Meeting to decide on a
split of the SCA Group into two listed companies: hygiene and forest products

(Table included in attached pdf)

CEO’S COMMENTS
Organic sales growth during the third quarter of 2016 was affected by a
challenging market situation for hygiene products and capacity reductions.
Adjusted operating profit, excluding currency translation effects, acquisitions
and divestments, showed continued favorable growth, and the adjusted operating
margin rose.
During the quarter, work was initiated to propose to the Annual General Meeting
2017 to decide on a split of the SCA Group into two listed companies: hygiene
and forest products.
Four innovations were launched during the quarter, in consumer tissue under the
Tempo brand, in feminine care under the Nosotras brand, and in AfH tissue and
incontinence products under the two globally leading brands Tork and TENA,
respectively. During the quarter the decision was made to implement
restructuring measures in the tissue production operation in France. The
restructuring measures are aligned with the strategy to improve production
efficiency in order to drive cost and capital efficiency and further increase
value creation in the Tissue business area. As part of the work on addressing
weak market positions with inadequate profitability, after the end of the
quarter the decision was made to close the baby diaper business in Mexico.

During the quarter, the strategic framework was further developed. SCA’s vision
is to be dedicated to improving well-being through leading hygiene and health
solutions. Within SCA we have the knowledge, experience, products and solutions
as well as the commitment to help improve hygiene standards worldwide. In
September, in partnership with the UN’s Water Supply and Sanitation
Collaborative Council, we launched the Hygiene Matters 2016/17 report, which
focuses on taboos and stereotypes around incontinence and menstruation. The
report is also closely coupled to the UN’s Sustainable Development Goals.
Consolidated net sales for the third quarter of 2016 were level with the same
period a year ago. Organic sales growth was 0%. In emerging markets, which
accounted for 31% of net sales, organic sales growth was 4%, while in mature
markets it was -2%. For Personal Care, organic sales growth was 0%. Growth was
negatively affected by the baby diaper operations, where organic sales growth
was -7% mainly associated with lower sales in Russia, Latin America, the Middle
East and Africa resulting from increased competition, among other things. For
Tissue, organic sales growth was 1%. For Forest Products, organic sales growth
was -3%, mainly owing to the closure of a publication paper machine during the
fourth quarter of 2015.
The Group’s adjusted operating profit for the third quarter of 2016, excluding
currency translation effects, acquisitions and divestments, rose 7% compared
with the same period a year ago. The increase is mainly related to higher
volumes, cost savings and lower raw material costs. The selling costs were
higher, and investments were made in increased marketing activities. Exchange
rate effects, mainly the weaker British pound, had a negative effect on
earnings. The Group’s adjusted operating margin increased by 0.6 percentage
points to 12.5%. Operating cash flow increased by 10%. The adjusted return on
capital employed was level with the same period a year ago, at 12.8%.


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 08:00 CET on October 27, 2016. This interim report has
not been reviewed by the company’s auditors.
Karl Stoltz, Media Relations Manager, +46 8 788 51 55

Attachments

10271101.pdf