Bloomberg News

Svenska Cellulosa Net Misses Estimates as Materials Costs Gain

April 26, 2010

Svenska Cellulosa AB (SCAB), Europe’s biggest tissue maker, reported a first-quarter profit that missed analysts’ estimates, weighed down by higher raw-material costs.

Net income fell to 1.07 billion kronor ($149 million) from 1.11 billion kronor a year earlier, the Stockholm-based company said in a statement. Analysts surveyed by Bloomberg predicted 1.27 billion kronor. Sales declined 5.7 percent to 26.7 billion kronor, below the 27.8 billion kronor average estimate.

“Sharply higher raw-material costs for pulp and recycled paper have an adverse impact on earnings,” SCA Chief Executive Officer Jan Johansson said in the statement. “To address this, SCA is now carrying out price increases along with cost-cutting activities. The effects of these will be felt gradually during the second half of the year.”

Europe is showing signs of a slow recovery, leaving Asia to drive earnings, SCA said. The diaper and tissue manufacturer is one of the companies affected by the ongoing strike by Swedish paper workers. Work has stopped at one of its kraftliner mills, and the strike may be expanded tonight to a second of SCA’s mills unless a wage accord is reached today.

To contact the reporter on this story: Ola Kinnander in Stockholm at okinnander@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net.


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