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Higher raw material costs affects SCA's first quarter result

April 26 2010  SCA's operating profit decreased during the first quarter of 2010, mainly due to higher costs for pulp and recycled paper. Net profit for the period, excluding restructuring costs, increased however to 1,259 million Kronor, compared to 1,119 million the corresponding period last year.

SCA's net sales decreased by six percent (excluding exchange rate effects, net sales increased by one percent) to 26,722 million Kronor (28,327). Profit before tax, excluding restructuring costs, rose 16 percent (excluding exchange rate effects, 20 percent) to 1,748 million Kronor (1,511). Restructuring costs in business area Packaging amounted to 244 million Kronor (0).Profit for the period, excluding restructuring costs, increased to 1,259 million Kronor (1,119). Earnings per share were 1.53 Kronor (1.58). Cash flow from current operations was 1,148 million Kronor (1,640).SCA's net debt decreased by 9,129 million Kronor, to 38,713 million Kronor. The debt repayment capacity rose to 35 percent (25 percent).For business area Personal Care, operating profit improved by five percent (excluding exchange rate effects, by nine percent), mainly due to higher volumes and lower raw material costs. Operating profit for Tissue decreased by 18 percent (excluding exchange rate effects, by 13 percent) compared with the same period a year ago, mainly due to higher raw material costs and lower prices.For business area Packaging, operating profit increased to 192 million Kronor (81). According to Jan Johansson, CEO of SCA, the improvement is mainly attributable to savings achieved from the restructuring program, better capacity utilization and higher prices."Sharply higher raw material costs for pulp and recycled paper have an adverse impact on earnings. 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," Jan Johansson said."Demand for SCA's hygiene products remains stable, with favourable growth in prioritized emerging markets. In Packaging, market demand is expected to rise. The publication papers market in Europe is showing signs of a slight recovery, but from a low level," Johansson added.

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