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SCA 2Q sales rise 5%

August 31, 2011

SCA's net sales for the second quarter rose 5% and operating profit rose 2%, compared with the first quarter of 2011.

Jan Johansson, CEO for SCA, attributes the earnings improvement to higher volumes and prices.

"During the year we have raised our own prices, continued to carry out cost-cutting measures and stepped up the pace of new product launches," the CEO says. "Compared with the first half of 2010, raw material costs have risen by more than SEK 2 billion. We have succeeded in compensating for this through our own price increases and cost cutting. The strengthening of the Swedish krona has entailed a decrease in operating profit by SEK 600 million. All business areas have been affected. During the first half of 2011, profit was not affected by restructuring costs."

With the global market for incontinence care products showing continued growth, Johannsson said demand for tissue was stable in Western Europe and North America during the first half of 2011, compared with a year ago. And he added that emerging markets are showing continued favorable growth, and the company has recently completed machinery investments.

"To capitalize on the favorable growth in the Russian market and further strengthen SCA's market-leading position, a decision was made to invest approximately SEK 1.2 billion in a second tissue machine in Sovetsk, Russia. The new tissue machine has annual capacity of 60,000 tons, with production start planned for 2013," Johansson said, adding that the investment is part of the strategy to grow in emerging markets and to increase the share of sales of SCA's own brands.

SCA also recently added tissue machinery in Germany. "A decision was made to invest approximately SEK 1.1 billion in a new tissue machine in Kostheim, Germany, to meet increased demand primarily for AFH tissue products. The new tissue machine will have annual capacity of 60,000 tons, with production start planned for 2013," Johansson says.

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