Svenska Cellulosa Aktiebolaget SCA (publ)

SCA reported second-quarter net sales of SEK 5.15 billion, down 4% year over year, as lower prices and negative currency effects were only partly offset by higher volumes. EBITDA declined 36% to SEK 1.3 billion and the EBITDA margin was 25%; EBIT was SEK 724 million, financial items were SEK -90 million, and net profit was SEK 523 million, or SEK 0.74 per share. By segment, Forest EBITDA was SEK 866 million, Wood was SEK 89 million, Pulp was SEK 107 million, Containerboard was SEK 135 million, and Renewable Energy was SEK 217 million. For the balance sheet, operating cash flow was SEK 446 million in the quarter, net debt was SEK 11 billion, working capital was SEK 5.1 billion, and net debt to equity was 11%. Looking ahead, management expects Q3 to be a little stronger than Q2, wood raw materials to fall by roughly 3%-5% in Q3 and further in Q4, Containerboard price increases to be reflected in H2, and solid wood prices to be close to unchanged in the next quarter.

Ulf Larsson said market conditions were mixed, but emphasized that Q2 likely represented the bottom and that SCA is now focused on cash flow and ramping up its large investment projects. He was cautiously positive on Q3, pointing to better order inflow in Containerboard, some pulp capacity closures/curtailments, and a more balanced solid wood market. He also stressed that SCA will not be a net seller of forest land in Sweden and views forest ownership as increasingly strategic over the long term.

Andreas Ewertz said the quarter was hit by lower prices, currency, planned maintenance, and higher raw material costs. He quantified Q2 net sales at SEK 5.15 billion, EBITDA at SEK 1.3 billion, EBIT at SEK 724 million, net profit at SEK 523 million, and operating cash flow at SEK 446 million; the forest asset was SEK 104 billion and capital employed was SEK 112 billion. On costs, he said wood costs fell 2%-3% in Q2 versus Q1 and should decline another 3%-5% in Q3, while chemicals are expected to be fairly flat and oil costs remain volatile; he also noted the company is nearly finished with its large ongoing investment projects.

Analysts pressed on whether Q3 would improve, and management said it expects Q3 to be a bit stronger than Q2, though it avoids formal forecasts. Questions focused on Containerboard capacity additions, pulp closures, and whether SCA might do its own curtailments or buybacks; management said Containerboard is strong, pulp is sideways, and there are no plans for curtailments at the efficient Östrand mill. On capital allocation, management said the priority is cash flow and ramping up existing investments rather than buybacks for now.