SWEDEN
SCA focusing on cash flow to boost position

In response to the recession and global financial turmoil, SCA is adapting its nearterm plans, the company announced in December. "Most important is to reverse the Group's cash flow trend and to continue strengthening SCA's successful positions in hygiene markets around the world. This applies not least for SCA's home market in Europe, which accounts for 80% of consolidated sales and 85% of operating profit."

At a Capital Market Day held in Stockholm, SCA's CEO Jan Johansson presented his and the management's views of the company's development in 2009 and 2010. SCA's plans for the years ahead are focused in three areas: reduced costs and higher cash flow; capital efficiency; and innovation.

"Our action plan for the years immediately ahead addresses lower growth and tougher times," said Johansson. "Parts of our business are sensitive to economic swings and will continue to be adversely affected. In these businesses we are concentrating our efforts to improve cash flow and increase the efficiency of our plants.

"At the same time, through continued innovation and investments in product development we have favourable prospects to strengthen our key positions in the hygiene market, which is more resilient to economic swings. The European market is the most important for us, and we will prioritize harder among our emerging markets".

In view of its ambition to strengthen the Group's cash flow, in the years immediately ahead, SCA will wait and see with further expansion in markets in which it does not already have an established position. However, incontinence care products will have continued global priority.

"Our goal is for the Group to deliver a 13% return on capital employed. We will achieve this within a 3-4 year period, provided that the economy recovers toward the end of 2010," said Johansson.

Brand portfolio to be streamlined
Among other actions to achieve the goals outlined above, the Group is to streamline its brand portfolio for tissue products in Europe. The current excessively fragmented flora will be successively consolidated to fewer brands that are more distinctly segmented. These measures are intended to result in increased profitability for SCA's European tissue operations.

"Streamlining is a logical step to take and has a fundamental aim: to increase profitability," says Mats Berencreutz, president of SCA Tissue Europe. "It involves creating a more distinct, simpler brand portfolio for the European market to build even stronger brands." The streamlining action now being taken is a logical progression of SCA's strategic acquisition of P&G's European tissue business in 2007. The consolidation will result in a simpler and more distinct line of brands in the consumer segment and coordination gains for SCA. This effort is expected to stretch over three to five years, with the aim of creating pan- European brands for SCA's tissue products.

The world market for consumer tissue amounts to more than SEK 290bn, with Europe accounting for one fourth. SCA is Europe's largest supplier, with a market share of 26% and it currently markets tissue products to European consumers under 12 different regional brands. About 40% of sales are carried out under the SCA brand, while the remaining products are sold under retailers' brands. This also means that our brand strategy will streamline SCA's tissue products in Europe into two categories. One category targets personal hygiene, such as toilet paper, while the other is aimed at object hygiene, that is, such products as kitchen rolls.

"The differentiated approach provides a clear segmentation that facilitates a further broadening of the product offering. This will make it simpler under each brand to successively add products with new functions," says Berencreutz.

SCA Edet PM5 boosts output with TissueFlex V3

A new daily production record of 102 tons/day has been set after a 15-day run on PM5 at SCA Edet, Sweden, with Voith Paper Fabrics' TissueFlex V3 on the yankee pick-up position. This was achieved on 9-10 October 2008. The previous record was 99 tons/day set on 2 June 2002.

PM 5 is a Beloit suction-press-roll machine operating up to 1100 m/min with a trim width of 3.41 m that produces 16- 39 g/m2 tissue and kitchen towel. A fast start-up was clear with this felt and maximum production was achieved throughout the running period, some 200- 400 kg/h higher than previous levels.


RUSSIA
MetsÄ Tissue continues expansion in Russia

The positive development of the Russian economy, a modern retail trade and the demand for higher standards of comfort have encouraged Metsä Tissue to expand the company's business from exports to local production. "The start-up of local converting operations near Moscow is an important strategic step for Metsä Tissue - we also aim to develop our brands and business further in Russia," comments Hannu Kottonen, CEO.

The inaugurated converting plant consists presently of two production lines. The first line, dedicated for the Awayfrom- Home products, was started in May 2008 and was quickly followed by the installation of the second line for the company's consumer products. The first consumer products were converted on the new line in August.

Thanks to local converting in Russia, today Metsä Tissue manufactures most of its products locally under the brands Lambi, Mola and Katrin. The brands stand as a guarantee for high quality and reliability - something the Russian consumers are already familiar with. In practice, local converting also means enhanced product availability, shorter transport distances and thus a smaller environmental footprint.

Metsä Tissue's export business to Russia began at the beginning of the 1990s and in 2006 Metsä Tissue LLC was Metsä Tissue LLC consists of a sales office in Moscow as well as warehousing, distribution and converting operations in Naro-Fominsk, 70 km from Moscow. The company employs about 70 people and aims to increase the number of employees in the near future.

Both the Lambi and Mola brands are aimed towards consumer sectors with a product family including bathroom tissues, household towels, tissue handkerchiefs and facial tissues. Lambi is the market leader in the premium segment in the Nordic countries and has a strong market position in Russia. Mola represents good quality for mainstream consumer segments offering a wide product family for every household.

Katrin, the well-known Away-from- Home brand, meets specific hygiene, health and comfort demands from professional hygiene requirements in the health care, industrial, food service and office sectors to public washrooms.

Through its dispensing systems, compatible tissue papers and hand towels, air fresheners and waste bins, Katrin can meet any Away-from-Home need. The brand has a unique "Less is More" concept for saving work, costs and, of course, the environment.

PM 36 in Mariestad rebuilt and running Metsä Tissue's investment in PM 36 at Mariestad mill in Sweden has been realized by finalizing the three week long rebuilding project. The project included two main areas - the rebuild of the former and stock preparation as well as the total rebuild of the machine's electrical infrastructure.

"One of the main targets of the investment was to improve product quality and now, as the production has started on the modernized machine, it is clear that the target has been reached. The other reached targets of the investment were to increase the production capacity as well as to reduce energy consumption" comments Lars Warvne, SVP Technology and Operations.

All and all the investments into modernization of the paper machine have resulted not only in the form of improved product quality and reduced costs but also as a step towards more sustainable way to operate.

SCA Personal Care breaks new ground in Russia

Construction of a brand new Personal Care factory in the Russian town of Veniov has begun with a groundbreaking ceremony held at the greenfield site in late November.

The Veniov factory will be SCA's first Personal Care production plant in Russia, but already SCA's third hygiene manufacturing facility in the country. The other two hygiene plants are tissue mills located in the neighbouring Russian town of Sovetsk (where the first construction phase of a brand new tissue mill was recently completed) and in Svetogorsk.

"Our goal is to leverage the growing ability of Russian consumers to purchase and use personal hygiene and health care products," explained Annika Nordin, VP Product Supply Personal Care Europe, at the event.

She continued: "Russia is currently behind Western Europe and America in terms of consumption of such products, but market demand is rising quickly, which is why local production in this market segment has high potential for the business."

The groundbreaking ceremony kicked off with SCA Personal Care Veniov plant manager Andrey Kudryashov revealing an architectural model of the future Veniov factory and describing the setup of the new manufacturing site to government representatives from Russia's Tula Region and Veniov District.

Several special guests - including the Governor of the Tula Region, Vyacheslav D. Dudka - were then invited to affix a commemorative plaque onto a granite stone erected at the construction site. Following the traditional Russian custom, a priest was also present to bless the construction site.

"SCA's sales of hygiene products in Russia have increased tremendously over the past years, and there is a lot of growth potential for both our personal care brands TENA, Libero and Libresse, as well as our tissue brands Tork and Zewa. Establishing a strong production base in Russia will further strengthen our market position by helping us to build an efficient and competitive business," concluded Nordin.

The SCA Personal Care Veniov factory will produce baby diapers and incontinence care products, and the first phase of construction is expected to be completed by the turn of the year 2009- 10.

Converting plant starts up
SCA has also started up a converting line at its plant in Sovetsk in the Tula region, where it is building a new 30,000 ton/yr tissue mill. The Fabio Perini unit will make kitchen towels, toilet paper and tissues under the Zewa brand.

"The opening of the tissue converting operation of the SCA Sovetsk factory signifies our commitment to investing in key growth areas such as Russia," Mats Berencreutz, president of SCA Tissue Europe, said in a statement.

The project is part of a €90 million investment including the new machine from PMT, which trims at 2.8 m wide and will run at 1800 m/min when it starts up in the next quarter. A second converting line is also due within a few months.


UKRAINE
Dnepropetrovsk starts used tissue PM5

Dnepropetrovsk Paper Mill has started commercial production on a second-hand tissue machine at its plant in Dnepropetrovsk, Ukraine. The 24,000 ton/yr unit, PM 5, is expected to reach its design capacity by March 2009.

The firm was also mulling over ordering a tissue converting line from the Italian supplier Fabio Perini. A spokesperson said this would depend on the firm's financial results. He was unable to say when the firm would acquire the unit. "We have not dropped our plans [to install a converting line]. But we have to wait and see how the financial crisis will impact our business," he added. The plant houses two other machines, PM 1 and PM 2, which make a total of 30,000 tons/yr of paper and board. News from RISI (www.risiinfo.com)

ITALY
Cartiera Lucchese finalizes Fato takeover

In late November, Cartiera Lucchese officially completed its acquisition of the two plants belonging to the former Fato Italia srl, Lucchese reports.

The acquisition process started in October 2007 through the Italian legal system, when Lucchese leased the production facilities and brands owned by Fato. These have been managed by a new company, Fato Professional, controlled 100% by Lucchese.

In the past 13 months the company has agreed on the bankruptcy settlement and has at the same time relaunched Fato's production facilities and marketing activities, "reaffirming the position of excellence the Fato brand has always had in the table decoration products market, in which it was one of the leading Italian producers of coloured and decorated tablecloths and napkins," Lucchese announced.

The company has "exploited all the possible production a n d m a r k e t i n g synergies derived from the integration of Fato into the Cartiera Lucchese Group, obtaining significant results in terms of product development, marketing organization, job levels and sales.

"The recent definitive acquisition of the productive assets will permit the group to go ahead with various investment projects, as well as the logistical and production reorganization and integration within the group;" The aim is to reaffirm the company's presence on the Italian and export markets. Cartiera Lucchese Group, is a multinational organization with seven plants including Fato, which makes 280,000 tons/yr of paper with a sales value of €320 million.


PORTUGAL
Renova launches tissue in tubes

Renoa, the Portuguese company that launched the first black toilet paper, has launched tissues packed in tubes. The company says the new product is "easy to open, made for daily use, with a smooth touch resembling Oriental silk and artistically packed... designed to be part of modern environments.

"One can display it in every modern home, business or social environment that requires combining tissues with a fine sense of aesthetics," the company has announced.