SCA Adjusted Profit Tops Estimates, Sees Good Hygiene Growth

Svenska Cellulosa AB, Europe’s biggest tissue maker, posted a smaller-than-expected fall in fourth-quarter adjusted profit and said it sees good demand for its hygiene products, sending shares to their highest level in almost four years.

Net income fell 2 percent to 1.65 billion kronor ($244 million), adjusted for 5.29 billion kronor in items affecting comparability, including a goodwill write-down of about 4 billion kronor for its remaining packaging assets. The average in a Bloomberg survey of 5 analysts’ estimates was for adjusted profit of 1.57 billion kronor.

“We’ve seen no significant effect” on demand from the economy, Chief Executive Officer Jan Johansson told reporters by phone today. “We see no effect like we did in 2008.”

Svenska Cellulosa, also known as SCA, is increasingly moving into the hygiene business, a higher-margin sector than paper and packaging. The maker of Tempo tissues and Libero nursing pads on Jan. 17 agreed to sell most of its packaging operations to DS Smith Plc for 1.1 billion euros ($1.45 billion). Some 80 percent of SCA’s business will be in personal care after the sale is finalized, and the company will use some of the funds to continue acquiring hygiene businesses, Johansson said then.

SCA shares traded 3.4 percent higher at 116.6 kronor at 3:26 p.m. in Stockholm, the biggest rise since Jan. 17, and the stock’s highest price since April 2008.

Kimberly-Clark Corp., the maker of Kleenex tissues, on Jan. 24 reported an 18 percent drop in fourth-quarter profit and said it expects difficult economic conditions this year, particularly in developed markets amid low birth-rates and consumers opting for cheaper brands.

SCA on Nov. 10 agreed to buy Georgia-Pacific LLC’s European tissue operations from Koch Industries Inc. for 1.32 billion euros to add scale and brands like Lotus.

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