SCA is exposed to a number of risks that could exert a greater or lesser material impact on the Group. These risks are generally defined as factors that impact SCA’s ability to achieve established targets for the Group. This applies to both financial targets and targets in other areas.
Many of the risks described could have a positive or negative impact on the Group. This implies that if risk develops in a favourable manner or if risk management is successful in counteracting the risk, target fulfilment could exceed expectations. From this perspective, risk could also entail opportunities for SCA. Examples include the GDP trend and the economic situation, the cost of input goods, customer and consumer behaviours, and movements in market prices.
SCA’s structure and value chain
SCA’s structure and geographically dispersed business entails in itself a certain degree of risk reduction. SCA conducts operations in four business areas that deliver to entirely, or partially, different customer segments and end-users. The various businesses are also affected to a somewhat different degree by the business cycle and general economic prosperity. The competitive situation also varies for the different businesses. SCA’s products are sold through many different channels and distribution paths.
The operation has a large geographical spread. Sales are conducted in more than 100 countries and manufacturing is pursued at about 250 production units in some 40 countries. Sales are often based on local manufacturing.
SCA’s structure also means that the raw material flows are, to a certain degree, integrated – from forest land to the finished consumer products. In 2010, 50% of SCA’s wood raw materials requirements were sourced from the Group’s own forests. The wood fibre is used for SCA’s production of market pulp, containerboard and publication papers, in sawmill operations, and for the manufacture of tissue. Forest waste from SCA’s activities is used in biofuel operations. The energy generated in the production process is used internally or sold.
The market pulp is subsequently used in the production of mainly tissue and personal care products. In 2010, some 41% of the pulp requirement was satisfied by the Group’s own pulp production. SCA is also a major player in the recovered fibre market and in 2010 collected 36% of the Group’s total recovered paper requirement. This was primarily used in tissue and packaging operations, but SCA’s publishing papers business also used the collected recovered fibre.