Hygiene production growth explosion

Wednesday 12 October 2016

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Soap, wet wipes and services will be big success factors for one of the companies when forest products group SCA is split in two. But first the annual shareholders’ meeting next year has to vote “yes” to separating forest from hygiene.

SCA has successfully created value for many years by following fibres from forest to nappy. Acquiring and selling companies has also been a contributing factor in the group’s sales of SEK 115 billion and its headcount of 44,000 employees.

But the Board of Directors, backed by the principal owners, wants the group to be split into two independent, listed companies.

“The forest division is growing well, but hygiene is expanding a great deal faster,” said SCA’s President and CEO Magnus Groth at an IVA seminar organised by the Business Executives Council.

Hygiene products now account for 86 percent of sales. And the company has divested its traditional manufacturing of fine and printing paper.

But the forest company, which will retain the SCA name, will still be a big company.

SCA-owned forests occupy 6 percent of Sweden’s land and demand for forest products is strong. There is still confidence in the future as evidenced, for example, by the almost SEK 8 million the company is currently is investing in the Östrand pulp factory in Timrå.

The new hygiene company, of which Magnus Grow will take the helm as CEO, will be a global industry leader right from the start.

“Half a billion people use an SCA product of some kind on a daily basis. Our focus is consumer products. We have 23 percent of the global market for incontinence protection and almost the same percentage in bulk tissue consumption.”

The future hygiene company is continuing to invest heavily in twenty or so markets. China and Russia are among them. And it has plans for each individual market.

“We’re going to expand and win. That’s for sure. Many of our brands can increase their market share everywhere. But growth always has to be profitable.”

Soap and wet wipes are among the hygiene products that are growing the fastest globally. As are services linked to tissue products, for example, tissue paper dispensers fitted with sensors that tell us when they need to be replenished.

“Growth here is explosive,” says Magnus Groth who, incidentally, couldn’t tell us the name of new hygiene company. It hasn’t got one yet. On the other hand, it has been decided that the head office location will be Stockholm and the remaining part of SCA will still be based in Sundsvall.

Author: Pär Rönnberg