SCA’s work on value creation

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Macro trends indicate increased usage of hygiene products

Global prosperity is on the rise, resulting in growing consumer demand for SCA’s products and services. Once people’s most basic needs for food and shelter are met, people begin to prioritize hygiene products. We are also undergoing population growth, which is resulting in greater demand for hygiene products, such as baby diapers, feminine care products and tissue. An aging population is also resulting in an increased need for incontinence products. Market penetration for incontinence products is largely low, thus providing SCA with excellent possibilities for continued growth in both mature and emerging markets. For other hygiene products, the relatively low level of market penetration in emerging markets entails growth potential.

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Profitable growth

To achieve profitable growth, SCA works to grow profitable market positions, improve or exit underperforming positions, broaden its offering of product categories and expand integrated solutions and services. In the digital segment, SCA is investing in increasing the number of digital products and services as well as online sales. SCA is well-positioned to leverage the growth potential existing in both mature and emerging markets. SCA’s long-term goal is to be a leader and strengthen its brand positions in the markets that it serves. SCA’s ambition is to increase the emerging markets’ share of sales and profit. In addition to organic sales growth, SCA sees a potential to also grow through acquisitions. Increasing the hygiene business’s share of the SCA Group has been a strategic step toward reducing the company’s sensitivity to economic fluctuations and thereby ensuring a more long-term stable level of profitability and growth.

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Innovation

SCA’s offerings simplify everyday life for millions of people worldwide. All of this begins and ends with innovation. By maintaining close proximity to our customers, understanding their needs and transforming this knowledge into offerings, SCA makes a difference in people’s everyday lives. Our innovations drive growth and efficiency and are crucial when it comes to building our brands and meeting customer and consumer requirements. SCA introduced approximately 30 innovations and product launches in 2015.

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Strong brands and leading market positions

SCA conducts sales in about 100 countries. In around 90 of these countries, SCA held the number one or two position in at least one hygiene product segment. SCA is the global market leader in incontinence products under the TENA brand and in the Away-from-Home (AfH) tissue segment under the Tork brand. Moreover, SCA has strong regional brands and market positions in baby diapers, feminine care and consumer tissue. SCA is working to establish a strong corporate brand and strengthen the link to our customer and consumer brands.

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Employer branding – SCA as an employer

Talented, innovative and motivated employees are key to SCA’s success. SCA takes a long-term and strategic approach to attracting, developing and retaining the right employees. The second round of the “SCA Go Program!”, designed for newly graduated students, started in 2015. Individual development plans, leadership courses and employee surveys are important aspects of SCA’s efforts toward a value-creating and motivating work environment with dedicated leaders and employees.

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Efficiency

SCA continuously works to improve efficiency to strengthen SCA’s competitiveness, cut costs and improve earnings. Cost and capital efficiency are top priorities in the Group and SCA is clearly focused on improving production and supplier efficiency and better leveraging economies of scale in order to achieve an effective supply chain.

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Sustainability initiatives

SCA’s operations are based on a sustainable business model where value creation for people and nature drives growth and profitability. We believe this approach ensures success both in the short and long term. SCA has set ambitious targets in the areas that are paramount for SCA and our stakeholders, such as in hygiene solutions, health and safety, climate and energy, water and biodiversity. Starting in 2016, the targets for water, health and safety, and fiber sourcing have been updated.

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Creating value for our shareholders

To generate more value for our shareholders in the long-term, SCA has targets for organic sales growth, return on capital employed, capital structure as well as people and nature. These targets drive and govern the operations and are intended to increase shareholder value. SCA’s target for annual organic sales growth for Personal Care is 5–7%, while the target for Tissue is 3–4%. For Forest Products, the target is to grow in line with the market. The Group’s overall profitability target is to achieve a return on capital employed of 13% over a business cycle. The target is 30% for Personal Care, 15% for Tissue and to be in the top quartile of the industry for Forest Products. SCA aims to provide long-term stable and rising dividends to its shareholders.