SCA’s strategy is based on the Group’s fundamental strength factors: customer and consumer insight, regional presence, global strength and sustainable development.
The business stands on two pillars, the Hygiene businesses and Packaging/Forest Products, with varying strategic prerequisites. The overriding strategy is to shift the balance toward the hygiene operation to reduce the cyclical impact and ensure long-term and more stable profitability, expansion and dividend growth.
Hygiene business
The Group’s strategy in the short and medium term is to develop its already leading positions and strong profitability in Europe and in North and Latin America:
- Further strengthen Tena, SCA’s brand for incontinence care, through continued growth in the premium range and strengthen presence in the economy segment.
- The leading positions in baby diapers in selected regions in Europe shall be strengthened through continued consumer-driven innovation and communication. Efficiency with respect to production and sale of baby diapers to retailer’ brands shall be enhanced to boost profitability.
- Increased profitability and presence within feminine care in selected markets in Europe shall be achieved through product and range development.
- Strengthen established brands through range expansion.
- Continue strong profitability and organic growth for consumer tissue, raise margins through innovation, better product mix, distribution and marketing. SCA’s share of brands shall steadily increase at the same time as retailers’ brands shall be developed.
- Strengthen the position in the AFH-tissue segment, number one in Europe and number three in the US, through the global brand Tork. Innovation and increasing the share of system solutions are prioritised.
The rapidly growing markets outside Europe and the US currently account for about 25% of hygiene sales – a share that will increase in the years ahead.
- The strong position in several countries in Latin America, Southeast Asia as well as Russia and Eastern Europe will be prioritised in the medium-term perspective.
- To promote organic growth, SCA is investing in production, but selective acquisitions, such as Algodonera Aconcagua in Argentina in 2009, add to total growth.
- In 2009, SCA commenced large-scale testing in China of incontinence care products. SCA also owns a minority share in the Chinese tissue company Vinda.
Packaging and Forest Products
In the packaging industry, overcapacity and weak demand remain a general problem.
- Through restructuring, cost and efficiency measures, SCA shall increase the operation’s profitability. In 2009, substantial capacity reductions and productivity improvements were implemented at some 50 sites. On full implementation, the programme will yield annual savings of more than SEK 1bn.
- Review of the supply and market structure. Several projects are under way to identify more synergies within and between the corrugated board and containerboard operations. The focus on innovation and product development continues. Furthermore, SCA shall increase the share of products with higher value content and strengthen the service offering to customers.
- SCA’s publication paper production shall be focused on profitable segments in magazine paper.
- Several investment decisions enable increased pulp production and a higher degree of self-sufficiency based on raw materials from the Group’s forest holding.
- SCA’s forest holding secures about half of the Group’s timber needs and enables efficient raw material integration and cost control.
- To complement the forest operation, SCA conducts an extensive sawmill operation. The sawmill business is being progressively consolidated and the product offering is being upgraded to products with an increasing degree of value addition and customisation.
- The forest products business is also developing several important strategic initiatives to commercialise such renewable energy as wind power and biofuel.