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SCA shares down after earnings miss forecasts

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(Globalpost/GlobalPost)

STOCKHOLM (Reuters) - SCA <SCAb.ST>, Europe's biggest hygiene products maker, posted a smaller-than-expected rise in second-quarter core profit amid meager demand growth in the region.

Shares in SCA, whose rivals include Procter & Gamble <PG.N>, were down 4 percent at 1100 GMT, paring their gain so far this year to 18 percent.

Operating profit before restructuring and other costs grew 2 percent from a year ago to 2.2 billion crowns ($328 million) against a forecast for 2.3 billion in a Reuters poll.

The Swedish firm has increased focus in recent years on tissues and baby and adult diapers, for which it sees good long-term growth, and has made a number of acquisitions and divestments to that effect.

SCA, which also banks on rising demand in emerging markets, said demand in its main market Europe was up somewhat for tissue and favorable for incontinence care products, but stable in western Europe for baby diapers.

Demand growth in emerging markets was good, it said, despite slowing economic growth in China. The International Monetary Fund cut its global growth forecast last week due to a slowdown in emerging economies such as China and protracted woes in Europe.

In forest products, which account for a fifth of turnover, profits dived as demand kept falling for publication paper.

SCA is global and European market leader in incontinence products and has made it a priority to grow that business in countries like China, with ageing populations, but also in Europe. Its main incontinence brand is Tena and main baby nappy brand in Europe is Libero.

It sees scope to grow in Europe, notably by taking market shares in the baby diaper segment, as Kimberly-Clark <KMB.N> plans to quit much of the region, while for incontinence diapers there is a vast untapped market, Johansson told Reuters in June.

Savings across the group went according to plan, it said. Savings at its hygiene operations reached an annual rate of 110 million crowns in the quarter. SCA aims at 300 million annually from 2015 onwards.

($1 = 6.5849 Swedish crowns)

(Reporting by Anna Ringstrom; Editing by David Holmes)

http://www.globalpost.com/dispatch/news/thomson-reuters/130718/sca-shares-down-after-earnings-miss-forecasts