[PDF]SCA Interim Report Q1 2017

Net sales increased 4% ... Investments in increased marketing activities ... SOP US SOP EU 1) Index based in local currencies...

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Interim Report Q1 2017

Hygiene and Forest Products Business Combined Summary Q1 2017 Net sales increased 4% Adjusted operating profit1) increased 5% AGM decision to split SCA into two listed companies

 SCA, an efficient and well-invested forest products company  Essity, a leading global hygiene and health company Intention to distribute and list SCA Hygiene AB in June 2017 Changed segment reporting as of Q1 2017

1)

Excluding items affecting comparability

April 27, 2017

Interim Report Q1 2017

2

SCA Hygiene AB, The Future Hygiene and Health Company Essity Magnus Groth President and CEO

SCA Hygiene AB, The Future Essity Financial Summary Q1 2017 vs Q1 2016 Organic Sales1)

Adjusted EBITA2)

SEK 25,268m +4.2%

+1.0%

SEK 2,917m +4%3)

Adjusted EBITA Margin2)

EPS

Operating Cash Flow

SEK 2.08

SEK 3,086m +60%

Net Sales

11.5% +20bp

1) Sales which excludes exchange rate effects, acquisitions and divestments 2) Excluding items affecting comparability 3) Excluding items affecting comparability, currency translation effects and acquisitions April 27, 2017

Interim Report Q1 2017

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SCA Hygiene AB, The Future Essity Summary Q1 2017 Significant Initiatives Discontinued hygiene business in India Actions to strengthen supply chain and product offering in Europe and Mexico

Events after the Quarter Completed acquisition of BSN Medical on April 3, 2017 New financial targets

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Interim Report Q1 2017

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SCA Hygiene AB, The Future Essity Adjusted ROCE1)

1) Adjusted

15.5%

15.6%

Q1 2016

Q1 2017

Return on Capital Employed (Adjusted EBITA / Capital Employed) excluding items affecting comparability

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SCA Hygiene AB, The Future Essity Innovations Q1 2017 New Saba Good Night

April 27, 2017

Re-launch of Libero in Russia

TENA Flex with ConfioAir™

Interim Report Q1 2017

TENA Lady Discreet

Familia® pH Balanceado

7

Personal Care Q1 2017 vs Q1 2016 Net Sales

SEK 8,151m

Adjusted EBITA1)

SEK 8,455m 3.8%

SEK 1,228m +26%

Adjusted EBITA Margin1) 14.5% 12.0%

+250bp



Net sales increased 3.8%



Organic sales increased 1.1%



Adjusted EBITA1) increased 26%

SEK 977m

Q1 2016

Q1 2017

Q1 2016

Q1 2017

Q1 2016

Q1 2017

      

Better price/mix Higher volumes Lower raw material costs Cost savings Improved profitability in Incontinence Products in North America Positive effect from exiting Baby Care in Mexico and hygiene business in India Investments in increased marketing activities



Adjusted EBITA margin1) 14.5%



Adjusted ROCE2) 35.4%

1) Excluding

2)

items affecting comparability Adjusted Return on Capital Employed (Adjusted EBITA / Capital Employed) excluding items affecting comparability

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Personal Care Q1 2017 vs Q1 2016  Organic Sales by Region

Organic Sales by Product Segment

+4.5%

+3.1% +1.1%

Total

+2.0%

-0.3%

Mature Emerging Markets Markets

% of Personal Care Net Sales:

Incontinence Products



-4.2%

Baby Care

42%

53%

27%

  

Mature markets

 

Feminine Care

Western Europe Slightly lower sales Incontinence Products showed good growth in Retail but lower sales in Health Care

North America -

Higher sales in Incontinence Products, both in Health Care and Retail

Emerging markets



20%

 

April 27, 2017

Price/mix +0.7% Volume +0.4% Negative impact of approximately 1% related to closures of Baby Care Mexico and hygiene business in India

-

 58%

Organic sales increased 1.1%

Interim Report Q1 2017

Latin America +3% -

Good growth for Incontinence Products and Feminine Care Lower sales in Baby Care mainly due to exiting Baby Care in Mexico

Russia -24% Asia +1%

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Consumer Tissue Q1 2017 vs Q1 2016 Net Sales SEK 10,238m

Adjusted EBITA1)

SEK 10,473m +2.3%

SEK 1,078m

SEK 1,151m

Adjusted EBITA Margin1)

10.5%

+7%

Q1 2016

Q1 2017

Q1 2016

Q1 2017

11.0%



Net sales increased 2.3%



Organic sales increased 0.6%



Adjusted EBITA1) increased 7%

+50bp

Q1 2016

    

Q1 2017

Higher volumes Lower raw material costs Cost savings Lower prices Higher energy costs



Adjusted EBITA margin1) 11.0%



Adjusted ROCE2) 11.4%

1) Excluding 2)

items affecting comparability Adjusted Return on Capital Employed (Adjusted EBITA / Capital Employed) excluding items affecting comparability

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Consumer Tissue Q1 2017 vs Q1 2016 

 

Organic Sales by Region

+5.2% +0.6%

-1.6%

Total

Mature Markets

Emerging Markets

56%

44%

% of Consumer Tissue Net Sales:

April 27, 2017

Organic sales increased 0.6%



Volume +0.9%

Mature markets





Price/mix -0.3%

Western Europe - Lower sales due to lower sales of retail branded products and mother reels

Emerging markets

  

Asia +5% Latin America +6% Russia +14%

Interim Report Q1 2017

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Professional Hygiene Q1 2017 vs Q1 2016 Net Sales

SEK 5,876m

Adjusted EBITA1)

13.2%

SEK 6,383m 8.6%

Adjusted EBITA Margin1)

11.3% SEK 777m

SEK 720m



Net sales increased 8.6%



Organic sales increased 2.1%



Adjusted EBITA profit1) decreased 7%

-190bp



-7% Q1 2016

Q1 2017

Q1 2016

Q1 2017

Q1 2016

    

Q1 2017

Higher raw material costs mainly due to significantly higher recovered paper prices Higher selling costs Better price/mix Higher volumes Cost savings Acquisition of Wausau Paper Corp.



Adjusted EBITA margin1) 11.3%



Adjusted ROCE2) 13.7%

1) Excluding 2)

items affecting comparability Adjusted Return on Capital Employed (Adjusted EBITA / Capital Employed) excluding items affecting comparability

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Professional Hygiene Q1 2017 vs Q1 2016 

Organic sales increased 2.1%

 

Organic Sales by Region +13.2%

 0.0% Total % of Professional Hygiene Net Sales:

April 27, 2017

Mature Markets

Emerging Markets

83%

17%



Volume +1.2%

Mature markets



+2.1%

Price/mix +0.9%

Higher sales in Western Europe compensated for lower sales in North America

Emerging markets

  

Asia +22% Latin America +12% Russia 0%

Interim Report Q1 2017

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SCA AB, The Future Forest Products Company SCA Ulf Larsson Executive Vice President President Forest Products

SCA AB, The Future Forest Products Company Summary Q1 2017 Net sales increased 5% Adjusted EBITDA and EBITDA margin decreased Negative impact from revaluation related to the fair value measurement of electricity certificates Higher costs related to Östrand pulp mill expansion

Investment in increased pulp capacity in Östrand progressing according to plan Since start of project approximately SEK 3.1bn has been invested of the total estimated investment of approximately SEK 7.8bn

Committed credit facilities totaling SEK 9.5bn

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SCA AB, The Future Forest Products Company Financial Summary Q1 2017 vs Q1 2016 Net Sales

Adjusted EBITDA1)

SEK 3,969m +5%

SEK 807m -1%

Adjusted EBITDA Margin1)

20.3% -110bp

1) 2)

EPS2)

Operating Cash Flow

SEK 0.52

SEK 85m -89%

Excluding items affecting comparability Continuing operations

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Forest Q1 2017 vs Q1 2016 Net Sales SEK 1,187 m

SEK 1,312m

+11%

Adjusted EBITDA1) SEK 293m

SEK 325m

Adjusted EBITDA Margin1) 24.7%



Increase mainly related to higher volumes

24.7% 0bp

+11%

 Q1 2016

Q1 2017

Q1 2016

Q1 2017

Q1 2016

Q1 2017

Adjusted EBITDA1) increased 11% Higher harvesting of own forest Lower harvesting costs



1)

Net sales increased 11%

Adjusted EBITDA margin1) 24.7%

Excluding items affecting comparability

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Wood Q1 2017 vs Q1 2016 Net Sales SEK 1,264 m

Adjusted EBITDA1)

SEK 1,364m +8% SEK 87m

Adjusted EBITDA Margin1)

SEK 145m +67%



Price/mix +9% Volume 0%

10.6% +370bp 6.9%

Currency -1%

 Q1 2016

Q1 2017

Q1 2016

Q1 2017

Q1 2016

Net sales increased 8%

Q1 2017

Adjusted EBITDA1) increased 67% Higher prices Higher raw material costs

Price development in SEK vs local currencies Solid Wood Products

110

Higher distribution costs



105

Adjusted EBITDA margin1) 10.6%

100 95 90 85

Q1 2015

Q1 2017 Price index in SEK

1)

Price index in local currency

Excluding items affecting comparability

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Pulp Q1 2017 vs Q1 2016 Net Sales

SEK 600 m

SEK 641m

Adjusted EBITDA1)

Adjusted EBITDA Margin1)

SEK 163m

Volume +4% Currency +3%

16.3% -1090bp

 Q1 2016

Q1 2017

Q1 2016

Q1 2017

Q1 2016

Q1 2017

Price development in SEK vs local currencies NBSK Pulp

110

Net sales increased 7% Price/mix 0%

27.2% SEK 104m -36%

+7%



Adjusted EBITDA1) decreased 36% Revaluation related to the fair value measurement of electricity certificates of approximately SEK 25m

Higher costs related to pulp mill expansion project of approximately SEK 15m

105 100



95

Adjusted EBITDA margin1) 16.3%

90 85 Q1 2015

Q1 2017

Price index in SEK 1)

Price index in local currency

Excluding items affecting comparability

April 27, 2017

Interim Report Q1 2017

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Paper Q1 2017 vs Q1 2016 Net Sales SEK 1,998 m

SEK 2,046m +2%

Q1 2016

Q1 2017

Adjusted EBITDA1)

Adjusted EBITDA Margin1)



Price/mix -3%

15.2% SEK 303m

Q1 2016

Q1 2017

Volume +4%

13.1% -210bp

SEK 268m -12%

Currency +1%

 Q1 2016

Publication Paper

Higher energy and raw material costs Revaluation related to the fair value measurement of electricity certificates of approximately SEK 15m

105

105

100

100

95

95

90

90

Higher volumes Positive currency effects



Adjusted EBITDA margin1) 13.1%

85

85 Q1 2015

Q1 2017

Price Index in SEK 1)

Kraftliner

110

Adjusted EBITDA1) decreased 12% Lower prices

Q1 2017

Price development in SEK vs local currencies 110

Net sales increased 2%

Q1 2015

Q1 2017

Price Index in local currency

Excluding items affecting comparability

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Fredrik Rystedt Executive Vice President and CFO

April 27, 2017

Interim Report Q1 2017

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SCA Hygiene AB, The Future Essity Net Sales Q1 2017 vs. Q1 2016 SEK 24,248m

+0.3%

+0.7%

+2.6%

+0.6%

Currency

Acquisition

SEK 25,268m

+4.2%

Net Sales Q1 2016

Price/Mix

Volume

Net Sales Q1 2017

Organic sales increased 1.0% Price/Mix +0.3% Volume +0.7% April 27, 2017

Interim Report Q1 2017

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SCA Hygiene AB, The Future Essity Adjusted EBITA1) Q1 2017 vs. Q1 2016 SEK +214m

SEK 2,744m

SEK +52m

SEK +99m

SEK -38m

SEK -26m

SEK +64m

SEK +22m

Currency

Acquisition

SEK -214m SEK 2,917m

+6%

Adjusted EBITA Q1 2016

1)

Price/Mix

Volume

Raw Material

Energy

Cost Savings

Other

Adjusted EBITA Q1 2017

Excluding items affecting comparability

April 27, 2017

Interim Report Q1 2017

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Raw Material Development Market Pulp – Europe

Recovered Paper1) Index 100 = January 2016

150

100

100

50

50 Jan-16

Mar-16

May-16

SOP US

1)

Index 100 = January 2016

150

Jul-16

Sep-16

Nov-16

Jan-17

Mar-17

Jan-16

Mar-16

May-16

Fluff

SOP EU

Jul-16

Sep-16

NBSK

Nov-16

Jan-17

Mar-17

EUCA

Index based in local currencies April 27, 2017

Interim Report Q1 2017

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SCA Hygiene AB, The Future Essity Cash Flow Q1 2017 vs Q1 2016 Q1 2017 SEKm Operating cash surplus

Q1 2016 SEKm

4,146

3,900

Change in working capital

-253

-1,071

Restructuring costs and other operating cash flow

-211

-231

Capital expenditures (including strategic)

-852

-1,086

2,830

1,512

Operating cash flow including strategic capital expenditures

April 27, 2017

Interim Report Q1 2017

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SCA Hygiene AB, The Future Essity Items Affecting Comparability Q1 2017 Q1 2017 SEKm Costs related to the split of the SCA Group into two listed companies

-460

Restructuring costs related to closure of tissue machine in the UK

-80

Wausau Paper Corp.

-30

Release of provision related to anti-trust case in Poland

+265

Other

-104

Total items affecting comparability

-409

April 27, 2017

Interim Report Q1 2017

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SCA Hygiene AB, The Future Essity New Group Financial Targets

Annual Organic Sales Growth1)

Adjusted Return on Capital Employed2)

˃3%

˃15%

Capital structure policy and dividend policy unchanged

1)

Excluding exchange rate effects, acquisitions and divestments EBITA / Capital Employed

2) Adjusted

January 26, 2017

Year-end Report 2016

27

SCA AB, The Future Forest Products Company Net Sales Q1 2017 vs. Q1 2016

SEK 3,793m

+2%

+3%

0%

SEK 3,969m

+5%

Net Sales Q1 2016

April 27, 2017

Price/Mix

Volume

Interim Report Q1 2017

Currency

Net Sales Q1 2017

28

SCA AB, The Future Forest Products Company Adjusted EBITDA1) Q1 2017 vs. Q1 2016

SEK 813m

SEK +38m

SEK +16m

SEK -39m

SEK -10m

SEK +28m

SEK -39m

Currency

Other

SEK 807m

-1%

Adjusted EBITDA Q1 2016

1)

Price/Mix

Volume

Raw Material

Energy

Adjusted EBITDA Q1 2017

Excluding items affecting comparability

April 27, 2017

Interim Report Q1 2017

29

SCA AB, The Future Forest Products Company Cash Flow Q1 2017 vs. Q1 2016 Q1 2017 SEKm

Q1 2016 SEKm

574

514

-354

349

-9

10

Capital expenditures (including strategic)

-641

-461

Operating cash flow including strategic capital expenditures

-430

412

Operating cash surplus Change in working capital Restructuring costs and other operating cash flow

April 27, 2017

Interim Report Q1 2017

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Magnus Groth President and CEO

April 27, 2017

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32

Q&A

April 27, 2017

Interim Report Q1 2017

33

This presentation may contain forward-looking statements. Such statements are based on our current expectations and are subject to certain risks and uncertainties that could negatively affect our business. Please read our most recent annual report for a better understanding of these risks and uncertainties.

April 27, 2017

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