SCA's Third Quarter Results: Strong Performance with a 22% Increase in Sales

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SCA's Third Quarter Results: Strong Performance with a 22% Increase in Sales

SCA (Svenska Cellulosa Aktiebolaget) delivered a strong performance in the third quarter of 2024. CEO Ulf Larsson emphasized that sales increased by 22% to 5.2 billion SEK, while EBITDA grew by 42% to 2 billion SEK. The company's EBITDA margin reached 38%; despite challenges in the renewable energy segment and maintenance costs, high prices and volumes in various segments provided significant contributions. The net profit for the quarter was approximately 1.1 billion SEK, or 1.52 SEK per share. SCA's leverage ratio was reported at a low level of 1.6%, with a net debt/equity ratio of 11%.

Key Points

  • Total sales rose by 22% to 5.2 billion SEK.
  • EBITDA increased by 42% to 2 billion SEK, resulting in an EBITDA margin of 38%.
  • Sales in the wood segment grew by 23%, and EBITDA surged by 79%.
  • Pulp sales increased by 27%, while EBITDA rose by over 200%.
  • Sales and EBITDA for containerboard increased by 15% and 26%, respectively.
  • EBITDA in the renewable energy segment fell by 36%.
  • Net profit was approximately 1.1 billion SEK or 1.52 SEK per share.
  • Prices increased by 19%, while volumes rose by 4% year-over-year.
  • Operating cash flow for the quarter was 708 million SEK.
  • The long-term outlook for forest land values remains positive.

Company Outlook

Management anticipates a balanced market with stable prices in the fourth quarter. Seasonal declines in delivery volumes are expected. The decline in interest rates is viewed positively for long-term forest land values.

Negative Aspects

  • EBITDA in the renewable energy segment decreased by 36%.
  • Net profit was affected by maintenance shutdowns and rising raw material costs.
  • There are concerns about a more restrictive policy environment for forest management.
  • A slight decline in Baltic forest land prices indicates cautious purchasing strategies.

Positive Aspects

  • Strong performance with significant EBITDA increases in the wood and pulp segments.
  • Robust demand for forest products supports stable market conditions.
  • Strategic investments, such as the new Obbola facility, are expected to contribute positively in the long term.
  • Active forest management aims to optimize growth and carbon sequestration.

Underperforming Areas

  • In the forest segment, net sales and EBITDA declined due to low deliveries.
  • The renewable energy, tall oil, and biofuels segments faced weaker market prices.

Highlights from Q&A Section

  • SCA will continue to actively manage forests despite potential restrictive policies.
  • The company will be open to acquisitions if land prices in the Baltic countries become more attractive.
  • Interest was shown in Stora's forest land sale if it can be managed by SCA.
  • Stable wood prices are expected in the fourth quarter, with no significant changes anticipated compared to the third quarter.

SCA's third-quarter results reflect a company that has successfully navigated market challenges and benefited from strategic investments. Focused on effective resource management and exploring growth opportunities, SCA is well-positioned to maintain its strong performance in the global market. The next quarterly report, providing further updates on the company's progress, will be released in January.