SCA‘s President and CEO, Magnus Groth, said that for the full year 2015, SCA had organic sales growth of 5% and operating profit, excluding items affecting comparability, rose 10% compared with 2014. His comments follow:
The Board of Directors proposes an increase in the dividend by 9.5%, to SEK 5.75 per share. 2015 was an eventful year. We continued the work with our strategic priorities profitable growth, innovation and efficiency. Our successful innovation work resulted in approximately thirty innovations and product launches and the efficiency improvement measures continued with undiminished strength across the value chain. To further intensify the focus on the Group’s two main operations, we took the decision to initiate a dividing of the Group into two divisions: a Hygiene division and a Forest Products division. During the year the decision was made to further enhance SCA’s hygiene organization. This change took effect on January 1, 2016. We decided to invest in increased capacity at the Östrand pulp mill in Sweden and in a new production plant for incontinence products in Brazil.
The acquisition of Wausau Paper Corp., a North American Away-from-Home tissue company, is a good strategic fit and strengthens our presence in North America. Wausau Paper’s product portfolio complements SCA’s offerings in North America and gives us access to premium tissue in the region. In Asia we are strengthening our collaboration with Vinda by divesting our business in Southeast Asia, Taiwan and South Korea for integration with Vinda. SCA is the majority shareholder in Vinda, one of China’s largest hygiene companies. The transaction enables us to leverage our joint strengths to build a leading Asian hygiene business.
We have also continued to address areas with weak profitability. Due to declining global demand for publication papers and weak profitability, one newsprint machine at Ortviken paper mill in Sweden was closed, and as a result of weak market positions and insufficient profitability the baby diaper markets in Brazil and South Africa have been left. As part of the cost-savings program related to the acquisition of Georgia-Pacific’s European tissue operations, during the year we closed a tissue production plant in France. The program was concluded at year-end, but we continue to see opportunities for efficiency improvement measures.
Consolidated net sales for the fourth quarter of 2015 increased by 6% compared with the same period a year ago. Organic sales growth was 4%. In emerging markets, which accounted for 32% of sales, organic sales growth was 11%, and in mature markets organic sales growth was 2%.
Consolidated operating profit for the fourth quarter of 2015, excluding items affecting comparability and currency translation effects, rose 5% compared with the same period a year ago. The increase is mainly attributable to a better price/mix, higher volumes and cost savings. Raw material costs increased by SEK 529m, mainly due to the stronger U.S. dollar. The operating margin, excluding items affecting comparability, was unchanged at 11.9%. Operating cash flow increased by 1%. Return on capital employed, excluding items affecting comparability, grew by 1.1 percentage points to 13.1%.
In the picture: Magnus Groth, President and CEO of SCA