SCA's margins must rise according to CEO

January 1, 2011 by timbercommunity

SCA's CEO Jan Johansson said in an interview in last saturday's Dagens Industri. "Now we have a gap in the margin against Smurfit of about 3%, although we have better facilities. The gap must be closed and done quickly," The company's structure has been improved but still SCA has a business of hygiene and tissue paper and packaging and forest products.

"What I have said is that there are no obvious synergies between the operational aspects of our business. However, there are considerable financial synergies, "all businesses must survive on their own without subsidies from other activities says Jan Johansson to the magazine.

Standard & Poors report about SCA
 

Standard & Poors wrote a report in December 3, 2010 about SCA and give the company the credit rating of BBB+/Stable/A-2.

Strengths:
· Well-diversified earnings base.
· Relatively stable hygiene product markets.
· Good market and cost positions, and a high level of vertical integration.
· Good operating cash flow generation over the cycle

Weaknesses:
· Cyclical markets for publication paper and packaging businesses.
· Exposure to volatile input costs.
· High investment levels.

Margins in the packaging division that are weaker than those of the main peer in this segment according to Standard & Poors, Smurfit Kappa Group PLC (BB-/Stable/--). This is partly due to Smurfit Kappa's high margins in its Latin American businesses, but we see that SCA's packaging margins are still weaker than Smurfit Kappa's European business. Profitability is improving, however, owing to improving market conditions and SCA's rationalization efforts.

Download report:
http://www.sca.gr/Documents/en/Dept_Market/Rating_reports/Standard-and-P...