Handelsbanken consumer seminar - SCA presentation by Mats Berencreutz

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http://www.sca.com/ir Mats Berencreutz, Executive Vice President at SCA, hold a presentation at the Handelsbanken consumer seminar in Stockholm, December 2, 2011. The presentation focused on increased sales of hygiene products, strategic focus areas, sustainability, innovation, growth potential for hygiene products and the binding offer for Georgia Pacific’s European tissue operations.

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Handelsbanken consumer seminar - SCA presentation by Mats Berencreutz

  1. 1. Handelsbanken consumer seminar Mats Berencreutz, Executive Vice President1 2 December 2011
  2. 2. SCA GroupA global hygiene products and paper company Net sales SEK 107bn 45,000 employees and sales in more than 100 countries World’s third largest hygiene products company TEN and Tork leading global brands for incontinence care and Away-From-Home tissue Europe’s largest private forest owner Europe’s second largest packaging company2 2 December 2011
  3. 3. SCA GroupSales split 2010 Forest Products Sales split Personal Care 16% 24% 24% 36% Packaging Tissue3 2 December 2011
  4. 4. Increasing hygiene sales % of net sales 100% 80% 54% 40% 60% 40% 60% 20% 46% 0% 2000 2000 2010 2010 Packaging and Hygiene products Forest Products (Personal Care and Tissue)4 2 December 2011
  5. 5. Leading market positions Global and regionalNorth AmericaAFH tissue: 3 EuropeIncontinence care: 3 Tissue: 1 Baby diapers: 2 Incontinence care: 1MexicoIncontinence care: 1Tissue: 2Feminine care: 1Baby diapers: 3 Global Incontinence care: 1 Colombia AFH tissue: 2 Australia Incontinence care: 1 Feminine care: 1 Feminine care: 1 Tissue: 1 Incontinence care: 1 Tissue: 2 5 2 December 2011
  6. 6. Strong global and regional brands Two global billion EUR brands Eastern Europe Europe North America Asia Pacific Latin America Sales of SEK 65bn, with sales in more than 100 countries6 2 December 2011
  7. 7. Strategic focus areas7 2 December 2011
  8. 8. Sustainability as a business driver Reduced cost  ESAVE = SEK 600m in annual cost savings Improved competitive edge  Sustainability credentials generate good business  Great growth potential through customized offerings in D&E markets  Renewable energy, wind power, biofuels  World’s largest producer of FSC-certified products Attract investors  23% of investors in SCA shares make sustainability screening Reduced risk level Attract top talents Strengthen the brand8 2 December 2011
  9. 9. Innovation for profitable growth  Meet changing demands and requirements  Create long-term, profitable differentiation  Strengthen market positions  Build stronger brands  Drive growth9 2 December 2011
  10. 10. Hygiene businessStrategic focus Strengthen positions and increase growth in main markets and emerging markets Increase the number of global brands Increase the pace of innovations Efficiency improvements10 2 December 2011
  11. 11. Growth potential for hygiene products Global population growth An aging population Increased market penetration Higher disposable income Customers and consumers demand more comfort and sustainability11 2 December 2011
  12. 12. Growth High potential in markets with low penetration Usage of hygiene products Units/capita/year Units/child/year Units/woman/year Kg/capita/yearPenetrationin maturemarketsaround 35% North America Western Europe Eastern Europe Latin America Asia 12 2 December 2011
  13. 13. Population growth 2010-2020Demographics People, millions 8 000 +12% 2010 2020 7 000 6 000 5 000 +11% 4 000 , 3 000 2 000 +7% 1 000 +2% +33% 0 World Children 0-4 Women 15-49 >65 yrs Other yrs yrs13 2 December 2011
  14. 14. GrowthSCA’s growth markets Latin America  Strong SCA positions South East Asia  Good market growth  Favourable socio-demographics Eastern Europe /Russia  Good market growth Middle East  Favourable socio-demographics China  Incontinence care products14 2 December 2011
  15. 15. GrowthHigh growth in Emerging markets9M 2011Emerging markets hygiene sales growth: Personal Care: +12%* Tissue: +10%* % of Hygiene sales in 2010 Emerging markets 21% Mature markets * Adjusted for exchange rate movements15 2 December 2011
  16. 16. Growth Acquisitions strengthen Emerging markets presence Algodonera Copamex San Saglik, 95% Pro Descart Aconcagua  No. 3 in baby diapers  No. 2 in incontinence  No. 2 in incontinence No. 3 in feminine care care products care products Smaller positions in  Smaller position in baby diapers and baby diapers incontinence care products Komili, 50%  No. 4 position in baby diapers and feminine care 16 2 December 2011
  17. 17. Binding offer for Georgia-Pacific’sEuropean tissue operations Offered price: EUR 1.32bn Already in year one the transaction is estimated to contribute to an increase of earnings per share and cash flow With fully realized synergies earnings per share are expected to increase with approx. SEK 1.70 Georgia-Pacific´s acceptance of this offer is subject to consultations with works councils where appropriate The transaction will be subject to customary consultation with employee representatives and will also be subject to approval by relevant competition authorities17 2 December 2011
  18. 18. Binding offer for Georgia-Pacific’s European tissue operations  Creates a leading European tissue company  Strengthens our product offering and geographic reach in Europe  Enhances our presence in key markets  Good strategic fit in AFH tissue  Substantial synergies  Increased share of branded sales in our consumer tissue portfolio18 2 December 2011
  19. 19. Georgia-Pacific’s European tissue operations Sales: EUR 1.25bn*  Consumer tissue, approx. 60%  AFH tissue, approx. 30%  Personal care, approx. 5% EBIT margins on similar level as SCA’s tissue business Market positions  Consumer tissue, 11% market share  AFH tissue, 10% market share Well-known Lotus brand for AFH tissue and consumer tissue Approx. 5,000 employees 15 manufacturing sites in 7 countries 670,000 tonnes annual tissue capacity* Italy and Turkey are not included in the binding offer 19 2 December 2011
  20. 20. Substantial synergies Increased supply chain efficiency  Optimization of logistics  More efficient sourcing Improved SG&A and A&P efficiency  Annual synergies: EUR 125m  Improves Tissue EBIT margins by 2-2.5 percentage points  Full effect in 3 years after closing  Related costs: EUR 130m20 2 December 2011
  21. 21. Enhances SCA’s presenceIn both Consumer tissue and AFH tissue European Consumer tissue market 25% SCA SCA and GP 35% European AFH tissue market SCA and GP SCA 19% 30%21 2 December 2011
  22. 22. Increased share of branded sales In Consumer tissue SCA’s Consumer tissue sales SCA SCA and GP Retailers’ Branded brands BrandedRetailers’ 40% 50% brands 22 2 December 2011
  23. 23. Q&A23 2 December 2011
  24. 24. IR Contacts: Johan Karlsson, VP Investor Relations Jessica Ölvestad, Manager Investor Relations Tel: +46 8 788 51 30 Tel: +46 8 788 52 82 Email: ir@sca.com Website: www.sca.com24 2 December 2011

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