SCA is one of Europe’s most profitable producers of forest products based on its in-depth customer insight, high innovative ability, efficient production, high value-added products, integration with SCA’s own wood raw material and a sustainability perspective at all levels. Forest Products offers its customers magazine paper, newsprint, pulp, wood components for building construction and furniture manufacturing, customised wood products for the building trade, solid-wood products and biofuel. SCA is Europe’s largest private forest owner.
Production and efficiency
Manufacturing takes place at SCA’s 18 facilities in three countries. Having its own logistics is part of the company’s integration strategy, with loading and unloading terminals in Sweden and on the continent and freight transportation on vessels.
SCA’s forest assets are located in northern Sweden, where the Group has built up an efficient supply system for its own mills and sawmills. The company’s forest holdings are managed on a very long-term basis. Integration of SCA’s own wood raw material is a key aspect of the company’s strategy that contributes to stable cash flow and reliable supplies, and facilitates improved quality and cost control. SCA’s forest holdings are becoming increasingly important as competition for timber raw material in northern Europe intensifies and demand for biomass from the energy sector grows.
Productive, cost-effective production plants – and not necessarily a high market share – are essential for favourable profitability. SCA thus applies what is referred to as the strong-mill concept, which focuses resources on a number of large, high-tech paper and pulp mills and sawmills located in Sweden, Austria and the UK. The concentration of resources and know-how creates a platform for value-building innovation resulting in market-leading product development and manufacturing.
Innovation and product development
Innovation is an integral part of the business area’s strategy to move its operations towards increasingly advanced products in high-value segments and towards more attractive customer offerings. The focus is directed to profitable growth through further processing and customisation in segments with favourable price trends. Efforts in this respect permit Forest Products to move up the value chain and produce products and solutions with higher value and margins. By this means, SCA differentiates itself from the rest of the industry, while also meeting requirements of business partners and customers.
Publication papers are developed continuously to satisfy the needs and requirements of newspapers or magazines in relation to profile and image.
In solid-wood products, SCA develops and further processes purpose-designed products for interiors, carpentry and the building trade. To an ever-increasing degree, products are customised for the next stage in the processing chain and are supported by services and warehousing integrated into the customer’s distribution and sales network.
Development programmes are not solely focused on products, but also focus on the development of business models, service and distribution solutions in close collaboration with SCA’s customers.
Growth
Continuing the work on enhancing efficiency and customer-driven innovation is essential for consolidating positions and improving profitability. The primary focus is on increasing the share of customised publication papers and solid-wood products. Efforts to develop and streamline the value chain, make it more sustainable, and develop new product areas are also important in terms of strengthening competitiveness.
Wood continues to strengthen its position as a material and its favourable environmental and climate- neutral properties have resulted in incentives in several countries to encourage increased wood utilisation. This trend is expected to persist and the supply of materials, rather than demand, will govern market development in wood products.
For the purpose of increasing wood manufacturing and the production of renewable energy, SCA invested in two biofuel boilers, expanded drying capacity and an upgrade of the saw line in Bollsta sawmill in Sweden during the year. These projects are expected to contribute to increased production capacity and lower production costs.
Activities in the SCA Energy business unit, which is tasked with managing and developing SCA’s production of renewable energy, was intensified during the year in conjunction with the formation of the jointly owned company FORSCA AB between SCA and Norwegian firm Fred.Olsen Renewables. The aim of the company is to construct two wind farms with annual output corresponding to 2 TWh on SCA’s land in Västernorrland county in Sweden.
In 2007, Statkraft A/S and SCA formed the jointly owned company Statkraft SCA Vind AB, the aim of which is to establish seven wind farms in the counties of Västernorrland and Jämtland. Construction started during the year on two wind farms that are planned to be operational in 2012 and 2013, with a combined annual output of about 480 GWh.
