SCA (Svenska Cellulosa Aktiebolaget): Europe's Forest Giant Reinvented

I. Introduction: The Company That Owns 6% of Sweden

Picture this: a single company owns a landmass larger than Belgium—2.7 million hectares of forest sprawling across northern Sweden, stretching from the Baltic coast deep into the sub-Arctic wilderness. Every year, this land produces enough timber to fill hundreds of thousands of trucks, enough renewable energy to power over a million homes, and enough carbon sequestration to offset one-quarter of Sweden's total greenhouse gas emissions.

This is Svenska Cellulosa Aktiebolaget—SCA for short—a Swedish timber, pulp, and paper manufacturer headquartered in Sundsvall with approximately 3,450 employees and a turnover of approximately SEK 20.2 billion (€1.8 billion). Its main products include containerboard, solid-wood products, pulp, and forest-based biofuel. SCA is Europe's largest private owner of forest land.

But here's what makes SCA truly fascinating: The global hygiene product company Essity was part of SCA until 2017. SCA was founded by Ivar Kreuger on 27 November 1929 as a holding company for ten Swedish forest industry companies. Yes, that Ivar Kreuger—"The Match King"—one of history's most audacious fraudsters whose suicide in 1932 triggered a financial scandal that rivaled the Great Crash itself.

The story of SCA is the story of how a company born from financial catastrophe transformed itself repeatedly across nearly a century: from a depression-era holding company, to a pulp giant, to a consumer products conglomerate spanning diapers to tissues, and finally to what it is today—a vertically integrated renewable materials company positioning itself at the center of Europe's green energy transition.

SCA develops, manufactures, and sells forest, wood, pulp, and containerboard products in Sweden, the United States, Germany, the United Kingdom, rest of Europe, Asia, and internationally. It operates through five segments: Forest, Wood, Pulp, Containerboard, and Renewable Energy.

SCA's ambition is that renewable energy will be a long-term value driver. At the end of 2024, the capacity for wind power production on SCA's land was 9.7 TWh per year, equivalent to about 20% of the total wind power production in Sweden.

The question every long-term investor must wrestle with is this: Can a nearly century-old forest company reinvent itself as a renewable energy powerhouse while maintaining the steady cash generation that comes from owning and harvesting two million hectares of productive forest? And perhaps more fundamentally—in an era when everyone claims to be "sustainable," what does it mean to actually own the renewable resource rather than just market it?

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II. The Kreuger Era: Birth from Financial Catastrophe (1929–1932)

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The Swedish Forestry Crisis Sets the Stage

The late 1920s were brutal for Sweden's forestry industry. Forest products were the country's largest export items, but competitive pressures were mounting from multiple directions. The Swedish government's deflationary monetary policy had strengthened the krona, making exports less competitive just as the Soviet Union began dumping cheap timber onto European markets at prices no Western mill could match.

In 1929, SCA was created with Svenska Handelsbanken selling its forestry shares to Kreuger's investment company, Kreuger & Toll, mainly on credit. SCA was designed to be a holding company to sell the pulp produced by its ten subsidiaries in northern Sweden. The companies that made up SCA included Bergvik & Ala, Skönvik, Sund, Travaru Svartvik, Nyhamns Cellulosa, Torpshammars, Björknás Nya Ságverks, Salsakers Ángságs, and Holmsund & Kramfors. The tenth company, Munksund, was added in 1934.

These were no upstart ventures. The ten original companies' histories stretched as far back as the 17th century—sawmills and pulp operations that had shaped the development of northern Sweden for generations.

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Enter Ivar Kreuger: The Match King

To understand SCA's founding, you must understand its founder. Ivar Kreuger was a Swedish civil engineer, financier, entrepreneur and industrialist. In 1908, he co-founded the construction company Kreuger & Toll Byggnads AB, which specialized in new building techniques. By aggressive investments and innovative financial instruments, he built a global match and financial empire. Between the two world wars, he negotiated match monopolies with European, Central American and South American governments, and finally controlled between two thirds and three quarters of worldwide match production, becoming known as the "Match King."

When people in the 1920s spoke of Sweden's second rise to power, they were referring to the glory that Ivar Kreuger achieved. A myth was quickly created around him. For the public, he was an exciting, if secretive person, who spoke little about himself. He gave the impression of being able to hold all the strings of his growing empire in his hand. His capacity seemed immense. Because European ministers and the President of the United States sought his advice and assistance, he also seemed to be a person who met the world's leaders as an equal. The general public in Sweden, and especially the United States, gladly invested large sums of money in Kreuger shares.

At his peak, the Kreuger fortune was estimated at a value of 30 billion Swedish kronor in 1929, equivalent to approximately 100 billion USD in 2000. In the same year the total loans made by Swedish banks were barely 4 billion SEK.

SCA was Europe's largest forestry company, a position that it would maintain until the mid-1980s. At the time of its formation, it accounted for almost a third of Sweden's total pulp exports.

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The Catastrophic Collapse

The Wall Street Crash of 1929 began to expose the fragility of Kreuger's empire. What emerged after his death was one of history's great financial frauds.

After Kreuger's 1932 suicide, forensic auditors discovered that Kreuger had operated a giant pyramid scheme. His accounts were ridden with fictitious assets, the truth hidden in a maze of over 400 subsidiary companies. Swedish Match's deficits exceeded Sweden's national debt.

John Kenneth Galbraith wrote "Boiler-room operators, peddlers of stocks in the imaginary Canadian mines, mutual-fund managers whose genius and imagination are unconstrained by integrity, as well as less exotic larcenists, should read about Kreuger. He was the Leonardo of their craft."

For SCA, the consequences were devastating. The forest company SCA, founded by Kreuger in 1929 and to which K & T over a couple of years paid as much as 100 Million kronor was valued to merely 4 Million kronor after the crash—a 96% collapse in value almost overnight.

The value of SCA's share capital dropped from SKr100 million to SKr4 million and Handelsbanken assumed control of SCA by purchasing its shares from the bankrupt investment company. Lacking experience in managing industrial concerns, Handelsbanken then sold most of its interest in SCA in 1934 to the Swedish industrialist Axel Wenner-Gren, the founder of the household appliance company Electrolux.

Kreuger's death precipitated the Kreuger Crash which hit investors and companies worldwide. In 1933 and 1934, the U.S. Congress passed several security reform legislations that were meant to prevent a repeat of the Kreuger Crash. These bills were largely successful in their mission and the American financial industry did not witness frauds of the same magnitude until the Enron scandal and Bernard Madoff's Ponzi scheme.

For investors, the Kreuger founding represents a critical lesson that remains relevant today: even companies with substantial underlying assets can be structured in ways that destroy value. SCA's forests were real. The trees were real. The pulp mills existed. But the financial engineering that created the company nearly destroyed it. Only the fundamental value of the underlying assets—the forests themselves—allowed the company to survive and eventually thrive.

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III. Building the Industrial Foundation (1932–1974)

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From Holding Company to Operating Business

The decades following the Kreuger crash were years of quiet consolidation and gradual transformation. SCA had to evolve from a loose confederation of pulp sellers into an actual operating company.

Founded in 1929 by the famed Swedish financier Ivar Kreuger, SCA initially served as a marketing organization for pulp producers in northern Sweden. After transforming itself from a holding company into an integrated forestry concern in 1954, SCA gradually expanded into the areas of newsprint and linerboard over the next two decades.

SCA was taken public with a listing on the Stockholm Stock Exchange in 1950.

The Östrand pulp mill became the centerpiece of SCA's industrial ambitions. Located in Timrå, Sweden, the facility had been conceived even before Kreuger's downfall as Europe's largest and most modern cellulose plant. Through decades of investment and expansion, it would become a world leader in bleached softwood kraft pulp production.

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The Handelsbanken Connection

Following Kreuger's bankruptcy in 1932, the company came to be controlled by the bank Handelsbanken, who along with associated funds and companies continue to control SCA.

This ownership structure created something unusual: a major industrial company with extraordinarily patient capital. In the winter of 1943/1944, Handelsbanken formed a holding company for the companies owned by the bank after the financial problems of the 1920s and 1930s, as part of a plan to phase out the bank's ownership of these companies, which included L. M. Ericsson. The company was named Industrivärden ("The Industry Host" or "Industry Values"), and after the bank's shareholders had been given the opportunity to acquire shares in the holding company, it was listed on the Stockholm Stock Exchange in 1945.

Industrivärden was founded by Handelsbanken in 1944 to manage the shareholdings taken over by the bank during the economic crises of the 1920s and '30s. Since then, the portfolio has continuously evolved to capitalize on opportunities in companies with favorable development potential.

Today, Industrivärden is the largest owner of SCA with 10.73% of the capital and 29.59% of the votes—and recently increased its stake to 11.75 percent of the capital and 29.57 percent of the votes.

This ownership structure—controlled by an investment company that itself has roots in the Kreuger collapse—gives SCA a strategic advantage that few competitors enjoy: genuine long-term thinking. When your controlling shareholders measure time in decades rather than quarters, you can make investments that wouldn't pass muster at companies focused on short-term earnings.

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Forest Growth as a Core Competency

By 1979, when it celebrated its 50th anniversary, SCA's activities covered all segments of the forestry industry, from raw materials to consumer products. It was Europe's largest private forest owner with 1.7 million hectares of forest land, equivalent to half the size of Switzerland, which provided 60% of the company's timber needs, a high level of self-sufficiency by international standards. Its six mills, which produced 1.3 million tons of pulp and 1.1 million tons of paper, were powered by the company's own hydroelectric stations.

The key insight here: since the late 1940s, SCA's standing timber volume has increased by more than 70%, while growth and the sustainable harvesting level have more than doubled. This isn't just forest ownership—it's forest cultivation and enhancement as a systematic industrial competency.

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IV. The Consumer Products Pivot (1975–2010)

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Bo Rydin and the Mölnlycke Acquisition

The 1970s marked a fundamental strategic shift for SCA—one that would define the company for the next four decades and ultimately lead to the 2017 split.

The appointment of Bo Rydin as SCA president in 1972 marked the beginning of a new period for the company. In 1974 Rydin decided to diversify the company into value-added fiber-based products. A year later SCA purchased Mölnlycke, which had been founded in 1849 as a Swedish spinning and weaving business but had been transformed into a manufacturer of disposable hygienic products in the 1950s.

Bo Göran Rydin (born May 7, 1932) was one of Sweden's most influential business leaders, above all through his work at SCA, where he served as CEO between 1973 and 1988, and subsequently as chairman of the board and honorary chairman. During his career, he also held key positions in companies such as Skanska and Industrivärden, where he was chairman of the board, as well as Volvo and Handelsbanken, where he was vice chairman.

SCA took the first step towards becoming a consumer goods company with the acquisition of the Swedish personal care company Mölnlycke. This acquisition boosted the Group's sales by 40% and resulted in tissue, diapers, feminine hygiene and incontinence products being included in the product portfolio.

The strategic logic was compelling: pulp is a commodity, subject to brutal price swings that can erase profits overnight. But disposable hygiene products—diapers, feminine care, incontinence products, tissues—offered stable demand, brand value, and margins that commodity pulp never could.

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The European Acquisition Spree

In 1975 SCA acquired Mölnlycke, a leading western European producer of disposable hygiene products, and in 1990 SCA acquired transport packaging company Reedpack. In 1995 the Germany-based paper and packaging company PWA was acquired.

In 1995, SCA acquired a majority stake in the German company Papierwerke Waldhof Aschaffenburg (PWA), thereby becoming Europe's largest forest-based hygiene products company.

In 2001 the division Wisconsin Tissue of the United States company Georgia-Pacific Tissue was acquired. In 2004 SCA acquired the tissue and hygiene products businesses of Carter Holt Harvey from International Paper. In 2007, Procter & Gamble sold their European tissue business to SCA for €512 million ($672 million). In 2007 SCA acquired its first minority share in the Asian tissue company Vinda.

By the end of this acquisition spree, SCA had transformed itself into something quite different from its origins: a global hygiene and tissue company with brands like TENA (incontinence), Tork (professional hygiene), and various regional tissue brands, while still owning Europe's largest private forest holdings.

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Forest Expansion Continues

Even as consumer products became the growth engine, SCA continued building its forest base. In 2003, SCA acquired Graninge's forests and sawmills, resulting in an increase of approximately 400,000 hectares of forest holdings.

But the conglomerate model was creating complexity. By the mid-2010s, SCA was managing two fundamentally different businesses: a capital-light, brand-driven consumer products company competing with Procter & Gamble and Kimberly-Clark, and a capital-intensive, cyclical forest products operation. The synergies that seemed obvious in the 1970s had diminished as both businesses matured.

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V. The Great Unbundling: The Essity Spin-Off (2015–2017)

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Why Split?

In August 2015 it was announced that SCA's hygiene operations and forest operations were to be divided into two different divisions. A year later, 24 August 2016, the company announced that it intended to split SCA into two separately listed companies.

The split reflects global market trends. By the end of 2016, 86% of the company was focused on hygiene and health, with 14% in forest products, and "synergies between the operations have diminished over time," the company said.

The arithmetic was stark: a company where 86% of revenue came from consumer products, but investor attention was constantly divided between two entirely different investment theses. Consumer products investors wanted growth, brand investment, and emerging market expansion. Forest investors wanted steady dividends, inflation protection, and exposure to renewable materials.

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Creating Essity

Essity AB is a Swedish multinational company specializing in hygiene and health products headquartered in Stockholm, Sweden. Established in 2017 through a spin-off from the forest products company Svenska Cellulosa Aktiebolaget (SCA), Essity operates in approximately 150 countries and serves more than one billion people worldwide with its range of products. Essity's name is derived from the words "essentials" and "necessity," reflecting its focus on essential hygiene and health products.

"I am pleased that the shareholders support the Board's proposal regarding two separate listed companies. This will increase value for shareholders in the long-term through increased focus, customer value, development opportunities and enables each company to successfully realize its strategies."

Before completing the split, SCA positioned Essity for continued growth. In December 2016 SCA announced the acquisition of BSN Medical, a company specializing in the areas of Compression Therapy, Wound Care and Orthopaedics. The purchase price amounted to €2740 million and included brands such as Jobst, Leukoplast, Cutimed, Delta Cast and Actimove.

After the spin-off, Essity is now a leading global hygiene and health company that develops, produces and sells personal care and tissue products, while SCA will continue to focus on its pulp and paper manufacturing business. The spin-off was completed and the shares of Essity began trading on Nasdaq Stockholm on June 15, 2017.

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The "Ugly Duckling" Thesis

In principal, the new consumer company clearly looks as the more attractive part of the old SCA in comparison with the capital-intensive forest, pulp and paper part.

The conventional wisdom was clear: Essity—with its brands, recurring revenue, and growth markets in emerging economies—was the jewel. SCA, left with forests and mills, was the less glamorous remainder.

As the consumer business is faster growing and less capital-intensive, in theory, SCA forest should be the ugly duck. However at around 72 SEK for the SCA forest share (market cap 48 bn, net debt 5 bn) and the projected 3.3 bn SEK EBITDA for the forest group, SCA forest trades at around 14.5x EV/EBITDA. Compared to peer company Holmen which trades at around 11.6x EV/EBITDA, SCA forest doesn't look cheap.

The "new" forest product company SCA is moving the headquarters of its forest products business back to Sundsvall. The company has come full circle.

What the market perhaps underestimated was the strategic flexibility that would come with focus, and the value of those 2.6 million hectares in an era increasingly obsessed with sustainability, carbon sequestration, and renewable materials.

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VI. The Strategic Reinvestment Era (2015–2020)

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Project Helios: The SEK 7.8 Billion Bet

Even before the Essity split was complete, SCA was placing the largest industrial investment in Swedish history outside of the auto sector.

In 2015 the board of SCA made the decision to invest SEK 7.8 billion in the Östrand pulp mill. The investment known as Project Helios is SCA's largest and remains one of the largest industrial investments ever made in Sweden.

"When we started this project, we wanted to create a pulp mill that would be the brightest star in the heavens," says SCA Östrand's Helios Project President, Ingela Ekebro. "We had an internal competition to find a name, and one name jumped out clearly, 'Helios' the ancient Greek name for the sun, the brightest star in our solar system." The name Helios is indeed fitting – the project has been immense in its scope and scale – the aim was to more than double the capacity of Östrand's softwood kraft pulp mill from 430,000 tonnes a year to 900,000 tonnes.

The company invested SEK 7.8 billion in Östrand pulp mill in Timrå, Sweden under project name "Helios". The new factory, which started up in June 2018, will be world-class in terms of product quality, environment and competitiveness. It is one of the largest industrial investments ever in Sweden.

On February 14, 2019, the new SCA Östrand pulp mill was officially inaugurated by Sweden's King Carl XVI Gustaf. The project, which represents the biggest industrial investment ever made in northern Sweden, has resulted in a state-of-the-art pulp mill. In addition to the King, the opening celebration included representatives of the Swedish government, international pulp customers, SCA's owners.

The project exemplified counter-cyclical investing: committing massive capital during a period when many questioned the future of traditional forest products. Now, with Helios completed, Östrand's production capacity has doubled to 900,000 tonnes of bleached softwood pulp per year, with the future possibility to expand to one million tonnes.

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The Managed Exit from Print Paper

While investing billions in pulp capacity, SCA was simultaneously executing an orderly retreat from publication paper—a segment being destroyed by digital media.

SCA's CEO stated: "Our pulp customers want us to grow with them in product segments such as packaging board and hygiene products, segments with healthy growth. In line with our strategy, we have gradually reduced our exposure to publication paper. We now initiate negotiations to leave this product segment completely." Currently, SCA produces coated and uncoated publication paper on three paper machines at Ortviken paper mill with annual sales of approximately SEK 4bn. Demand for publication paper in Western Europe has declined by approximately 5% per year since 2008. During the coronavirus pandemic, demand for publication paper decreased by a further 30-40%.

Publication paper production started at Ortviken in 1958 with the production of newsprint. Ortviken grew first as a producer of newsprint and then coated publication papers for magazines and commercial print and has produced up to 800,000 tonnes per annum and was one of the world's largest mills for publication paper production.

SCA is now investing SEK 1.45 billion in the production of thermomechanical pulp, CTMP. Production at the new plant will be increased from the current 90,000 tonnes to 300,000 tons.

The decision to close an 800,000-tonne publication paper mill while simultaneously investing SEK 1.45 billion in CTMP production illustrates SCA's strategic discipline: don't fight declining markets, but redeploy assets into growing ones.

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VII. The Renewable Energy Transformation (2013–Present)

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Wind Power: From Landlord to Energy Producer

SCA's land—stretching across northern Sweden with its sparse population and powerful winds—turned out to be ideally positioned for another transformation: renewable energy generation.

At the end of 2023, 9.0 TWh of wind power was produced on SCA's land. SCA has the long-term ambition to become one of Sweden's leading suppliers of fossil-free electricity produced by wind power. At the end of 2023, 9.0 TWh of wind power was produced on SCA's land. SCA has the long-term ambition to become one of Sweden's leading suppliers of fossil-free electricity produced by wind power.

By 2024, this position had strengthened further: At the end of 2024, the capacity for wind power production on SCA's land was 9.7 TWh per year, equivalent to about 20% of the total wind power production in Sweden.

On October 20, 2023, SCA and Arise entered into a cooperation agreement for the design of wind power on SCA's land in Sweden. Together with Arise, SCA has identified six possible project areas for wind power with a potential of around 1000 MW in total. The goal is to realize the projects in collaboration and thereby take another step in meeting the increased demand for renewable electricity in northern Sweden.

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Biofuels: From Byproduct Seller to Energy Producer

The pivot into biofuels represents an even more dramatic evolution. Tall oil—a byproduct of the kraft pulp production process—had traditionally been sold as a chemical feedstock. SCA decided to move up the value chain.

SCA and St1 have entered a joint venture to produce and sell liquid biofuels. SCA will supply tall oil to the joint venture and will invest approximately SEK 0.6 billion in the company. SCA and St1 will be equal shareholders of the joint venture, which will itself have a 50% share in the St1 Gothenburg Biorefinery, which is now making an investment in a biorefinery with total capacity of 200,000 tonnes of liquid biofuels, estimated to a total investment cost of SEK 2.5 billion. The new biorefinery will be operational in Q2 2023.

CEO Ulf Larsson stated: "In line with our communicated long-term strategy, we will now with the joint venture with St1 go from being a supplier of tall oil to the chemical and fuel industries to becoming active in the further refining of our renewable raw materials."

The Gothenburg Biorefinery, a joint venture between St1 and SCA, has officially opened on 10 April. Inaugurated by Minister of Energy and Business Ebba Busch, the plant marks an important milestone in the journey towards more sustainable energy production. Swedish Minister for Energy, Business and Industry, explains how important the biorefinery is for both Sweden and the EU.

The fuels produced in the Gothenburg biorefinery reduce road and air traffic emissions by approximately 500,000 tons of carbon dioxide annually compared to their fossil equivalent.

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Renewable Energy as a Business Segment

SCA is organized in five business areas: Forest, Wood, Containerboard, Pulp and Renewable Energy. The supporting unit is Sourcing & Logistics.

Creating Renewable Energy as a distinct business segment in 2023 wasn't merely an accounting change—it signaled that SCA views energy as a core business rather than a byproduct. In 2024, the total climate benefit from SCA's forests and manufacturing industries amounted to 12.3 million tonnes of CO2eq. SCA is also one of Europe's leading producers of renewable bioenergy, which helps to mitigate climate change.

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VIII. The Modern SCA: Today's Business Model

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Five Integrated Business Segments

Today's SCA operates as a vertically integrated value chain built around its forest holdings:

With 2.7 million hectares of forest, SCA is Europe's largest private forest owner. Our business model is to sustainably create the highest possible value in, and from, this unique resource.

Two thirds of the revenue for forest owners come from sawmills. This is why SCA has created a competitive sawmill industry that acts as an economic engine of the forest business and creates the conditions for a competitive fiber-based industry. Most of the wood that is unsuitable for use in solid-wood products is used to make pulp. A pulp mill also produces green chemicals, green electricity, heating and raw materials for biofuels, for example. SCA produces containerboard – paper for transport packaging. Integrated paper mills also produce green chemicals, green electricity, heating and raw material for biofuels. From the raw materials that are not used for solid-wood products, paper, or pulp, SCA produces energy, green electricity, biofuels and green chemicals. SCA's forests offer favorable sites for wind power production.

Additionally, SCA is exploring more opportunities to replace fossil-based materials with renewable resources from the forest. Throughout history, SCA has built a well-invested value chain that maximizes the value of each tree.

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Baltic Expansion

SCA is no longer exclusively Swedish. SCA is Europe's largest private forest owner with 2.7 million hectares of land in northern Sweden and in Estonia, Latvia and Lithuania. Our responsible and active management of the forests increases growth and harvesting potential. We wish to expand our forest holdings and have an ongoing program in Estonia, Latvia and Lithuania to acquire 100,000 hectares of forest land. Approximately 70% of the program is completed.

SCA is Europe's largest private forest owner with 2.6 million hectares of forest land in Northern Sweden and approximately 70,000 hectares in the Baltics. We have a long tradition of caring for and cultivating the forest and have a great responsibility for how we carry out our forestry measures.

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Current Financial Performance

In 2024 SCA demonstrated its ability to maintain strong profitability, despite a weaker economic climate and global uncertainty. The company delivered an EBITDA margin of 35 percent for the full year, with net sales of 20,232 MSEK and an EBITDA of 7,143 MSEK. Earnings per stock amounted to 5.18 SEK. This strength was enabled by efficient industrial operations and a high degree of self-sufficiency in strategically important areas such as wood raw material, energy and logistics.

In a challenging market, SCA reported an EBITDA margin of 35.3% (37.6) for 2024. SCA's competitive advantage lies in the combination of a well-invested and thereby competitive industrial business and a high rate of self-sufficiency in strategically important areas such as wood raw material, energy and logistics. A steady increase in harvesting from SCA-owned forest according to plan has contributed to the result and offset the effects of rising global raw material costs. This strength enables SCA to deliver strong earnings even in a weaker economy and in an uncertain international situation.

The carrying amount of SCA's forest assets was in line with the preceding year and amounted to SEK 107.3bn (107.5). SCA bases its valuation of forest assets on forest transactions in the areas where SCA owns forest. The three-year average market price used in valuation of SCA's Swedish forest assets was SEK 388/m3fo at December 31, 2024, compared with SEK 395/m3fo in the year-earlier period. The price decrease was offset by higher standing volume from continued net growth in SCA's forests.

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IX. Leadership: Ulf Larsson and the Forestry DNA

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A CEO Who Grew Up in the Forest

Ulf Larsson holds a B.Sc. Forestry and has been an employee of the SCA Group 1992. He has served as President of the Forest Products business area since 2008, which following the now completed distribution, comprises the forest products company SCA.

Ulf Larsson started at SCA in 1992. Ulf has a BSc Forestry, Swedish University of Agricultural Sciences, Umeå, Sweden. He has held several leading positions within SCA Forest Products.

Larsson's background—a forestry degree, three decades with the company, deep operational experience—reflects SCA's return to its roots after the Essity spin-off. Unlike the consumer products executives who ran the combined company, Larsson speaks the language of timber yields, rotation periods, and pulp markets.

SCA's President and CEO, Ulf Larsson, has been awarded Fastmarkets Forest Products' prestigious "European CEO of the Year" 2023 award. In the motivation, a number of factors are highlighted in which the jury considers SCA to stand out in a positive way. "It is with pride that I can say that 2022 was a very good year for the company. We delivered our best financial result and the whole team contributed to us completing large investment projects ahead of schedule," says Ulf Larsson. Fastmarkets Forest Products, the leading information provider for the global forest industry, has announced that Ulf Larsson, President and CEO of SCA, has been named European CEO of the Year 2023.

"If you look in the rearview mirror, the company has had a very satisfying journey that gives us a good starting position to deliver also in the future. A key factor is our systematic work with the forest at our core and to strive to create maximum value in our integrated and well-invested value chain. This is how we can continue to develop our sustainable forestry with efficient industries that provide the world with climate-smart renewable materials and products. This in a time where the pressure to phase out fossil products increases every year," says Ulf Larsson.

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X. Playbook: Business & Strategic Lessons

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1. The Power of the Split

The Essity spin-off stands as a masterclass in corporate restructuring. When SCA split in 2017, the conventional wisdom suggested the "boring" forest company would languish while the consumer products glamour story would soar. Reality proved more nuanced.

Both companies benefited from focus. Essity has continued building its hygiene and medical solutions businesses, most recently announcing in November 2025 its acquisition of Edgewell Personal Care's feminine care business for $340 million. SCA has invested massively in pulp, containerboard, and renewable energy—investments that might have been harder to justify in a conglomerate balancing consumer marketing budgets.

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2. Asset Leverage Without Asset Sales

SCA's wind power strategy exemplifies a sophisticated approach to asset monetization. Rather than selling forest land for wind farm development, SCA leases the land while maintaining ownership. This generates ongoing revenue from lease payments and, increasingly, from equity stakes in wind projects—all while the underlying forest continues to grow and sequester carbon.

The lesson: owning irreplaceable assets creates optionality. As new uses for land emerge (wind power, data centers, battery storage), SCA can capture that value without surrendering the underlying resource.

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3. Vertical Integration in a Fragmented World

SCA's competitive advantages include a high degree of self-sufficiency, where approximately half of the wood raw material in 2024 were sourced from own forests and wood chips from own sawmills. SCA also operates an extensive transport network including its own vessels and terminals which contribute to security, stability and strong profitability.

One explanation could be that SCA has lower wood prices from the forest in its area and take a lot from its own forests. The difference between SCA and several of the competing companies is SCA's lower costs for raw materials.

In an era when supply chain disruptions have devastated countless businesses, SCA's vertical integration—from seedling to sawmill to pulp mill to shipping—provides insulation that competitors cannot easily replicate.

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4. The Century-Long Ownership Approach

As Europe's largest private forest owner with more than two million hectares of forest, we feel an enormous sense of responsibility toward people and nature. The trees we plant will grow for nearly a century before they are harvested. A long-term approach and sustainable profitability are not simply part of our business strategy, they are part of our soul.

Forest companies operate on fundamentally different time horizons than most businesses. A tree planted today will be harvested in 70-100 years. This biological reality shapes everything about how SCA thinks about investment, sustainability, and value creation.

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XI. Porter's Five Forces & Competitive Analysis

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Threat of New Entrants: Very Low

Building a forest products company comparable to SCA would require: - Acquiring millions of hectares of productive forest (limited supply, especially in politically stable jurisdictions) - Investing billions in pulp mills, sawmills, and containerboard facilities - Developing logistics networks including dedicated shipping capacity - Building relationships with industrial customers over decades

The capital requirements alone are prohibitive. More fundamentally, the forest land itself cannot be replicated—it takes 70-100 years to grow a harvestable tree. The three largest private forest companies, Svenska Cellulosa AB (SCA, the largest private forest owner in Europe), Stora Enso, and Holmen, own nearly 19% (5.3 million hectares) of the Swedish forestland.

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Bargaining Power of Suppliers: Low

SCA's vertical integration significantly reduces supplier power. The company sources approximately half its wood from its own forests, produces its own energy, and operates its own shipping fleet. Where external suppliers are used, they typically face multiple potential customers in a competitive market.

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Bargaining Power of Buyers: Moderate

Pulp, containerboard, and wood products are commodities with global pricing. Customers can and do switch between suppliers based on price and availability. However, SCA's Östrand mill—producing 900,000 tonnes annually of NBSK pulp—is large enough to be a critical supplier for major tissue and packaging customers. Long-term relationships and quality consistency provide some pricing power.

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Threat of Substitutes: Variable by Segment

For containerboard (packaging paper), the threat is moderate—plastic packaging exists but faces increasing regulatory and consumer pressure. For pulp, substitutes are limited for many applications. For wood products, alternatives like steel and concrete exist but are more carbon-intensive, making wood increasingly attractive as building codes evolve.

The renewable energy business faces substitutes from other energy sources, but SCA's combination of wind power and biofuels targets hard-to-decarbonize segments like aviation fuel.

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Industry Rivalry: High

Stora Enso is the most similar to SCA. UPM and Holmen are also similar to SCA. SCA's top 29 competitors are Stora Enso, UPM, Holmen, Mondi, Sappi, Weyerhaeuser, and others.

SCA's competitors within NBSK pulp production include, for example, Mercer International, Metsä Fiber, Stora Enso, Södra and UPM. SCA's competitors within solid-wood products include, for example, Holmen, Moelven, Setra, Stora Enso, Södra and Vida. SCA's competitors within NBSK pulp production include, for example, Mercer International, Metsä Fiber, Stora Enso, Södra and UPM. SCA's competitors within publication papers include, for example, Holmen, Stora Enso and UPM and for kraftliner International Paper, Mondi, Smurfit Kappa and Stora Enso.

Nordic forest companies compete intensely, but consolidation and rationalization have improved industry discipline. SCA's focus on premium products and its low-cost position from forest ownership provide advantages within this competitive landscape.

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XII. Hamilton Helmer's 7 Powers Framework

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Scale Economies

SCA's Östrand pulp mill is the world's largest softwood kraft pulp production line. Scale in pulp production translates directly to lower unit costs. Similarly, the company's 2.7 million hectares of forest provide scale in raw material sourcing that competitors cannot easily match.

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Network Effects

Limited direct network effects exist in commodity production. However, SCA's logistics network—including dedicated vessels and port facilities—creates network-like benefits as volume increases efficiency.

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Counter-Positioning

SCA's full vertical integration, combined with its renewable energy pivot, represents a counter-positioned strategy that competitors would find costly to replicate. Companies like Stora Enso and UPM are pursuing similar strategies, but the capital investment required to match SCA's integrated position is substantial.

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Switching Costs

For commodity products like pulp, switching costs are low. However, for containerboard and specialty products, quality consistency and supply reliability create some customer stickiness. Long-term supply agreements, particularly in renewable energy, create meaningful switching costs.

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Branding

Unlike Essity, SCA does not compete on consumer brands. Its brand power is primarily B2B—a reputation for quality, reliability, and sustainability that matters to industrial customers but doesn't command significant price premiums.

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Cornered Resource

This is SCA's most powerful moat. SCA is Europe's largest private owner of forest land and manages a total of around 2.6 million hectares in northern Sweden, of which two million hectares of productive forest land, which corresponds to up to nine percent of Sweden's total productive forest land.

Forest land in northern Europe is scarce, politically secure, and irreplaceable. You cannot manufacture more of it. The 70-100 year growth cycle for trees means new forest capacity takes generations to develop. This is a true cornered resource.

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Process Power

SCA has developed process advantages in forest management, pulp production, and logistics through nearly a century of continuous operation. The company's ability to maintain 35%+ EBITDA margins in cyclical commodity markets reflects accumulated operational expertise.

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XIII. Bull and Bear Cases

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Bull Case: The Carbon Capture Play

• Forest appreciation: Forest land values have compounded at approximately 10% annually since 1956 according to SCA. If carbon pricing becomes more stringent, forests become not just productive assets but also carbon sinks with potentially monetizable credits.

• Renewable energy growth: With 20% of Swedish wind power on its land and growing, SCA could become a major clean energy company while maintaining its forest products business.

• Self-sufficiency moat: In a world of supply chain disruptions, SCA's control of raw materials, energy, and logistics provides stability that commands premium valuations.

• Baltic expansion: The ongoing 100,000-hectare forest acquisition program in the Baltics extends SCA's land position at more attractive prices than Swedish forest.

• Packaging tailwinds: E-commerce growth drives containerboard demand while plastic substitution provides structural support for fiber-based packaging.

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Bear Case: Cyclicality and Stranded Assets

• Pulp price volatility: Pulp is a global commodity subject to dramatic price swings. A prolonged downturn in pulp prices could pressure margins significantly despite SCA's cost advantages.

• Construction exposure: Wood products depend heavily on construction activity. European housing slowdowns or a prolonged building recession would hurt the sawmill business.

• Environmental regulation risk: While SCA emphasizes sustainable forestry, changing regulations or environmental certification requirements could constrain harvesting or increase costs.

• Currency exposure: With significant exports and global pricing, SCA faces substantial currency risk that can amplify or offset operational performance.

• Capital intensity: Despite strong margins, SCA's business requires continuous capital investment in mills, equipment, and forest management. Poor capital allocation could destroy value.

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XIV. Key Performance Indicators (KPIs) to Track

For long-term fundamental investors, three metrics matter most for SCA:

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1. EBITDA Margin

In a challenging market, SCA reported an EBITDA margin of 35.3% (37.6) for 2024.

EBITDA margin captures SCA's ability to translate revenue into cash flow, reflecting both pricing power and cost control. The company has maintained margins consistently above 35% even in weak markets, demonstrating the value of its self-sufficiency. Watch for margin compression below 30% as a warning sign of structural problems.

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2. Standing Timber Volume Growth

Forest assets represent 50%+ of SCA's total value. Net growth in standing timber volume—which has increased 70%+ since the 1940s while harvesting levels doubled—indicates whether the forest base is being managed sustainably. Declining timber volumes would signal either over-harvesting or forest health problems.

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3. Renewable Energy Revenue as % of Total

As SCA positions itself as a renewable energy company, tracking the growth of this segment relative to traditional forest products indicates whether the strategic pivot is succeeding. Currently small, renewable energy revenue should grow meaningfully over the next decade if the strategy is working.

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XV. Conclusion: The Hundred-Year View

SCA's story arc—from Kreuger's fraud to Handelsbanken's patient capital to the Mölnlycke diversification to the Essity split to the renewable energy pivot—illustrates how truly long-term thinking can compound value across generations.

The company's current positioning is compelling: Europe's largest private forest owner, with world-class pulp production, a growing renewable energy business, and a 35%+ EBITDA margin even in challenging markets. The ownership structure—dominated by Industrivärden and ultimately traceable back to the Kreuger crash—provides the patient capital needed to think in tree-rotation timescales rather than quarterly earnings beats.

Together, we are following our conviction that the forest will play a valuable role in creating a sustainable future for all of us. When the forest grows, we grow.

The essential question for investors is whether you believe the world is moving toward or away from renewable materials, sustainable energy, and carbon-conscious business models. If the answer is toward—and regulatory trends, consumer preferences, and climate science all suggest it is—then owning Europe's largest private forest becomes an increasingly valuable position.

SCA is not a growth stock in the conventional sense. It's a company that has survived and thrived across nearly a century by adapting its business model to changing circumstances while never losing sight of its foundational asset: the forest itself. For investors with equally long time horizons, that combination of adaptability and permanence offers a compelling proposition.

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Ownership Disclosure: This analysis is for informational purposes only and does not constitute investment advice. The author has no position in SCA or Essity securities. Investors should conduct their own due diligence before making investment decisions.