Svenska Cellulosa Aktiebolaget SCA (publ)

Reported Q2 figures: net sales decreased 4% to SEK 5.15 billion; EBITDA decreased 36% to SEK 1.3 billion; EBIT was SEK 724 million; financial items were SEK -90 million; net profit was SEK 523 million, or SEK 0.74 per share. Ulf Larsson said SCA reached SEK 1.3 billion in EBITDA and a 25% EBITDA margin; Andreas Ewertz also said operating cash flow was SEK 446 million in Q2 and SEK 1 billion for the first half. Balance sheet items included working capital of SEK 5.1 billion, capital employed of SEK 112 billion, net debt of SEK 11 billion, and net debt to equity of 11%. Forward commentary: management expects pulpwood and sawlog costs to decline by roughly another 3%-5% in Q3 and further in Q4; solid wood selling prices are expected to be close to unchanged in Q3; containerboard price increases should flow through mainly in Q3 and Q4; Q3 is expected to be somewhat stronger than Q2, but the company did not give formal numerical guidance.

Ulf Larsson’s tone was cautiously constructive but still grounded in a weak macro backdrop. He said the market is “still, in general, rather weak,” but argued SCA may have “reached the bottom now,” with improvements coming from containerboard pricing, lower raw material costs, and a strong renewable energy result. He emphasized cash flow as the main focus while large investment projects wind down.

Andreas Ewertz focused on the mechanics behind the quarter: lower prices, currency headwinds, maintenance costs, and raw materials pulled EBITDA down to SEK 1.3 billion. He cited Q2 segment EBITDA of SEK 866 million in Forest, SEK 89 million in Wood, SEK 107 million in Pulp, SEK 135 million in Containerboard, and SEK 217 million in Renewable Energy, with the latter at a 42% margin. He also said wood costs fell 2%-3% in Q2 versus Q1 and should fall another 3%-5% in Q3, while net debt was SEK 11 billion and the company is almost done with its major investment projects.

Analysts pressed on whether Q3 would be stronger, and management said yes, modestly, with better order inflow in containerboard and a more balanced wood market, though pulp was still described as sideways. Questions also focused on whether SCA would cut more capacity in pulp or consider buybacks; management said it has no curtailment plans at Östrand, does curtail CTMP as needed, and is focused on ramping up investments and cash flow rather than buybacks. On capital allocation and forest ownership, management said it is not considering being a net seller of Swedish forest land, preferring to sell non-core pieces far from industry and buy closer to its mills.