SCA to restructure, take $749 million Q4 charge
STOCKHOLM (Reuters) - Paper and packaging firm SCA <SCAb.ST> said on Wednesday it was restructuring its business, cutting around 1,400 to 1,700 jobs and taking a fourth-quarter charge of 4.9 billion Swedish crowns ($749 million).
The Swedish firm said 3.7 billion crowns was related to impairment charges on non-current assets, while 1.2 billion crowns would be spent on restructuring measures, resulting in a net cash expenditure after some disposals of 700 million.
The full amount would be booked against fourth-quarter results.
"The improvement in operating profit will have full effect after three years, when it will amount to approximately SEK 1.4 billion per year," the firm said in a statement.
The firm, which recruited former Boliden <BOL.ST> Chief Executive Jan Johansson as its top executive this autumn, said it would carry out measures to boost the competitiveness of its tissue business and other parts of the group.
Earlier this year, SCA struck a 4.7 billion crown deal to buy the European tissue business of U.S. consumer goods giant Procter & Gamble <PG.N>. This would result in annual savings of about 700 million crowns, SCA said on Tuesday.
"Growth and profitability will be our priorities over the next few years," Johansson said in a statement.
"The P&G acquisition gives us unique opportunities to develop our brand platform while improving the efficiency of our production structure."
The firm, which has been stung by higher raw material and energy costs in recent quarters, said it would phase out production capacity for 200,000 to 300,000 tons of paper and 80 million square meters of corrugated board to remain competitive in a "changed customer structure."
It also said production adjustments and staff cuts would be made at its Swedish sawmill operations.
In addition to the restructuring measures, the company said it had raised the value of its forest assets by 5.2 billion crowns to 23.3 billion.
"The company has performed a review of forest asset valuations and assessed that timber prices over time will remain at a higher level than was used in earlier appraisals," it said.
(Reporting by Niklas Pollard, editing by Will Waterman)