SCA: Interim report Q2 2016
The second quarter of 2016 showed continued good organic growth in adjusted operating profit compared with the same period a year ago.
The Group has introduced seven innovations in consumer tissue, among other areas, under the Lotus, Okay, Plenty and Zewa brands, and in Away-from-Home tissue and incontinence products under our globally leading brands Tork and TENA, respectively. The efficiency improvement work has continued with undiminished strength across the value chain. During the second quarter of 2016 SCA decided to close a tissue production plant in Spain. This is aligned with long-term strategy to optimize the geographic production footprint in order to drive cost and capital efficiency and further increase value creation in Tissue.
On April 1 this year hygiene operations in Southeast Asia, Taiwan and South Korea were integrated with Vinda, in which SCA is the majority shareholder.
The Group has reserved SEK 964m for ongoing antitrust cases in Chile, Colombia, Poland, Spain and Hungary and is working intensively to minimize the risks for unethical behavior in operations, among other things through employee training in competition law.
About the second quarter of 2016
Consolidated net sales for the second quarter of 2016 were level with the same period a year ago. Organic sales growth was 2%. In emerging markets, which accounted for 31% of net sales, organic sales growth was 6%, while in mature markets it was 0%. The hygiene operations showed good organic sales growth as a result of higher volumes and a better price/mix, amounting to 5% for Personal Care and 3% for Tissue. Organic sales growth for Forest Products was -7%, mainly owing to lower volumes and lower prices.
The Group’s adjusted operating profit for the second quarter of 2016, excluding currency translation effects, acquisitions and divestments, rose 9% compared with the same period a year ago. The increase is mainly related to higher volumes, a better price/mix, cost savings, and lower energy and raw material costs. Adjusted operating profit for the hygiene operations rose mainly as a result of a better price/mix, higher volumes, cost savings, and lower energy and raw material costs in Tissue. The lower adjusted operating profit for Forest Products is mainly attributable to lower prices and lower volumes. The Group’s adjusted operating margin increased by 0.7 percentage points to 11.7%. Operating cash flow increased by 21%. The adjusted return on capital employed increased by 0.5 percentage point to 12.1%.