SCA Posts Profit as Georgia-Pacific Deal Boosts Sales
Svenska Cellulosa AB (SCAB), the maker of Tempo tissues and Libero diapers, returned to a profit in the fourth quarter as the acquisition of Georgia-Pacific LLC’s European business boosted consumer-hygiene sales.
Net income was 2.09 billion kronor ($324 million), Europe’s biggest tissue maker said in a statement. That compares with an estimate for 2.11 billion kronor by nine analysts in a Bloomberg survey. A year earlier, SCA posted a 3.43 billion-kronor net loss after writing down the value of some assets. Sales rose 12 percent to 23.4 billion kronor.
SCA has increased its focus on consumer-hygiene products to skirt most of the decline that has gripped the Nordic paper industry in the past few years. In January last year, SCA divested its packaging operations to DS Smith. In November 2011, it bought Georgia-Pacific’s European tissue business from Koch Industries Inc., adding brands such as Lotus.
“The sale of SCA’s packaging business reduces our cyclical exposure and gives us greater financial opportunities to grow our hygiene business,” Chief Executive Officer Jan Johansson said in the statement. “The Georgia-Pacific acquisition boosts our competitive strength in the European tissue market and complements our market positions.”
The stability of the tissue business, a strong balance sheet and a debt level under the target contributed to the decision to propose an increased dividend payout to 4.50 kronor a share from 4.20 kronor, Johansson said today in an interview in Stockholm.
SCA’s shares rose as much as 3.2 percent in Stockholm trading, the biggest intraday gain since Oct. 18.
The tissue-paper maker is still eying acquisitions globally and has as much as 9 billion kronor to spend, Johansson said. The company isn’t interested in buying any of Kimberly-Clark Corp. (KMB)’s assets in Europe, he said. The Dallas, Texas-based company said Oct. 24 it would exit the diaper business in Western and Central Europe, except for Italy, as well as some lower-margin businesses, mostly in consumer tissues. SCA will decide by summer how to capitalize on the withdrawal, Johansson said.
SCA said in November that it planned to cut 1,500 jobs, mainly in Europe, to save 300 million euros ($400 million) annually by 2015. SCA has also said it will cut expenses and increase efficiency at its forest-product operations to boost earnings by 1.3 billion kronor annually from 2015.
“The efficiency programs are proceeding according to plan,” Johansson said.
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