JANUARY 1 – MARCH 31, 2019
(compared with the year-earlier period)
- Net sales increased 15% to SEK 5,076m (4,400), mainly related to higher volumes in Pulp and higher selling prices
- EBITDA rose 33% to SEK 1,560m (1,175). The improvement was mainly related to higher selling prices.
- SCA Wood France and the French company ISB merged their wood operations in France, creating a leading supplier of wood products to the French building material sector. In addition to expected long-term synergies, earnings have been positively impacted by approximately SEK 90m from the restructuring in the first quarter.
- EBITDA margin increased to 30.7% (26.7)
- Operating cash flow increased to SEK 626m (591)
- Earnings per share increased to SEK 1.29 (1.00)
COMMENTS ON THE FINANCIAL STATEMENTS
Earnings for the first quarter 2019 improved compared with the preceding quarter as well as the same quarter last year. The improvement in earnings was driven mainly from Paper and Wood. Higher pulp volumes due to the continued ramp up of the expanded pulp mill Östrand also made a positive contribution to earnings.
SCA Wood France and the French company Groupe ISB merged their operations in wood processing and distribution of wood products in France. The merger will result in a leading supplier of wood products to the French building material sector. The combined company will have net sales of approximately SEK 2.7 billion. In addition to expected long-term synergies, earnings have been positively impacted by approximately SEK 90m from the restructuring in the first quarter. SCA’s shareholding in the combined company amounts to 38.5%. See page 5 for more information.
Demand during the quarter was generally stable, but with lower market prices compared with the preceding quarter. After an extended period of price increases, market prices for solid-wood products, pulp and kraftliner decreased somewhat. Prices remain at a relatively good level.
Deliveries of wood increased during the quarter due to the continued ramp up of the expanded pulp mill Östrand. The price of pulpwood increased slightly while the price of timber was unchanged. After the end of the quarter, SCA completed the acquisition of Latvian Forest Company’s forest assets in Latvia comprising some 10,000 hectares. The purchase price was approximately EUR 26m (approximately SEK 270m) on a debt-free basis.
In the Pulp segment, work is continuing to gradually trim the expanded pulp mill Östrand to reach full capacity. Both production and deliveries increased compared with the preceding quarter. Following a strong pulp market in 2018 with several price increases, pulp prices fell in Europe during the first quarter of 2019. The pulp market in China improved after a weaker fourth quarter.
Kraftliner prices fell in the first quarter following several price increases in 2017 and 2018, but remain at a favorable level. Capacity reductions in publication papers have, for the time being, created a better balance between supply and demand. The improved balance resulted in price increases for both uncoated and coated paper during the quarter.