SCA Further Strengthens Profitability of Tissue Segment

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SCA, Stockholm, Sweden, at a capital markets day (CMD) in Stockholm, reported that to further strengthen profitability in its hygiene operations, measures are being taken to decrease costs and improve efficiency. The company’s target for return on capital employed (ROCE) has been adjusted from 13% to 15% for tissue and for forest products from 11% to being the top quartile of the sector.

The integration of SCA’s European tissue operations acquired from Georgia-Pacific is progressing in line with or better than planned, and is expected to provide EUR 125 million in annual cost synergies, with the full effect occurring after three years, the company reports.

"Our efficiency program from 2011 goes according to plan and to date we have achieved more than half of the expected annual savings of EUR 80 million. A new efficiency program has been initiated within the hygiene operations to further reduce costs and increase productivity. It will provide annual cost savings of some EUR 300 million, with full impact in 2015. About 1,500 employees are affected and costs are expected to be some EUR 100 million," Jan Johansson, president and CEO, said.

During the past year, SCA notes that it completed a number of major acquisitions and divestments, which has strengthened the company and focused operations on hygiene and forest products. The hygiene operations currently accounts for 80% of SCA’s sales, with the majority in Europe, but with increasing exposure to emerging markets, both via organic growth and acquisitions. Increasing disposable income in emerging markets offers continuing favorable conditions for growth in the hygiene operations, SCA adds.