SCA bets on emerging markets growth, zooms in on efficiency (updated)

Vinda International Holdings

19/05/2016 10:36

(Adds background, detail) 
    STOCKHOLM, May 19 (Reuters) - SCA  SCAb.ST , maker of toilet 
paper and napkins, on Thursday predicted annual demand growth of 
1-2 percent in hygiene products in mature markets and 5-7 
percent growth in emerging markets between 2015 to 2020.   
    SCA, the world's largest maker of incontinence care 
products, has been expanding its hygiene operations to around 85 
percent of sales and has cut back its paper and other wood 
products businesses through a series of acquisitions and sales. 
    The bulk of SCA's business is in Europe, but it is betting 
on mainly on emerging markets for future growth because rising 
incomes support the outlook for hygiene products. Ageing 
populations also contribute to a strong outlook for demand for 
incontinence care products. 
    It has already cut costs across the company and plans to do 
more. 
    "The markets and categories where SCA operates are growing 
and we have a successful strategy in place for value creation," 
Chief Executive Magnus Groth said ahead of investor 
presentations in Stockholm.  
    "We also see opportunities for further efficiency 
enhancement," he said in a statement.  
    Groth told Reuters last year that SCA, which is present in 
around 100 countries, was planning to focus on fewer emerging 
markets including China, India, Russia and Brazil, and pull out 
of others.  urn:newsml:reuters.com:*:nL5N0ZF0RI 
    Groth on Thursday told investors the company was still 
looking into which smaller emerging markets to possibly exit. 
 urn:newsml:reuters.com:*:nFWN18F0UD 
    The world's second biggest maker of consumer tissue such as 
toilet paper and napkins last year began efforts to boost 
efficiency in its hygiene operations' logistics flows, and 
announced organisational tweaks designed to boost efficiency and 
innovation as it faces increasing competition in Europe. 
 urn:newsml:reuters.com:*:nL5N11311G  
    "Innovation is a top priority when it comes to ... 
strengthening the company's market positions and brands, and 
driving profitable growth," Groth said. 
    He told investors the supply chain was where he primarily 
saw opportunities to improve efficiency. 
    SCA, which competes with Procter & Gamble  PG.N  and 
Kimberly-Clark  KMB.N  on Thursday for the first time gave a 
breakdown of sales for its newly created hygiene products units. 
 urn:newsml:reuters.com:*:nFWN17V07B 
    SCA Consumer Goods accounted for 30 percent, SCA 
Away-from-Home Professional Hygiene 19 percent, SCA Incontinence 
Care 13 percent, SCA Latin America 10 percent and SCA Middle 
East, India and Africa 2 percent.  
    Asian firm Vinda  3331.HK , of which SCA owns 51 percent and 
to which it recently sold its own southeast Asia operations, 
accounted for 12 percent. 
   Groth, a company veteran, took on the job as CEO in March 
last year. SCA reported first-quarter results on April 28. 
 urn:newsml:reuters.com:*:nFWN17V07B 
 
 (Reporting by Anna Ringstrom. Editing by Jane Merriman) 
 ((anna.ringstrom@thomsonreuters.com; +46 8 700 1134; Reuters 
Messaging: 
anna.ringstrom.thomsonreuters.com@thomsonreuters.net)) 
 
Keywords: SCA OUTLOOK/