Svenska Cellulosa AB :SVCBY-US: Earnings Analysis: Q4, 2016 By the Numbers : March 21, 2017

Svenska Cellulosa AB reports financial results for the quarter ended December 31, 2016.

We analyze the earnings along side the following peers of Svenska Cellulosa AB – Kimberly-Clark Corporation, Procter & Gamble Company, Unicharm Corporation and WestBond Enterprises Corporation (KMB-US, PG-US, UNCHF-US and WBE-CA) that have also reported for this period.


  • Summary numbers: Revenues of USD 3,390.95 million, Net Earnings of USD 153.43 million.
  • Gross margins widened from 26.40% to 26.94% compared to the same period last year, operating (EBITDA) margins now 15.19% from 16.67%.
  • Year-on-year change in operating cash flow of 7.06% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Narrowing of operating margins contributed to decline in earnings.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2016-12-31 2016-09-30 2016-06-30 2016-03-31 2015-12-31
Relevant Numbers (Quarterly)
Revenues (mil) 3390.95 3406.35 3513.59 3347.43 3398.26
Revenue Growth (%YOY) -0.22 -0.71 0.96 0.69 -6.33
Earnings (mil) 153.43 254.01 9.18 228.33 330.82
Earnings Growth (%YOY) -53.62 329.17 -96.08 12.62 73.49
Net Margin (%) 4.52 7.46 0.26 6.82 9.73
EPS 0.22 0.36 0.01 0.33 0.47
Return on Equity (%) 7.04 11.78 0.41 9.95 14.8
Return on Assets (%) 3.29 5.37 0.19 4.86 7.24

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Market Share Versus Profits

Revenues History
Earnings History

SVCBY-US‘s change in revenue this period compared to the same period last year of -0.22% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that SVCBY-US is holding onto its market share. Also, for comparison purposes, revenues changed by -0.45% and earnings by -39.60% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s earnings declined year-on-year largely because of the increases in operating costs. Its operating margins (EBITDA margins) went from 16.67% to 15.19%. This decline in earnings would have been worse except for the fact that the company showed improvement in gross margins, from 26.40% to 26.94%. For comparison, gross margins were 26.51% and EBITDA margins 17.33% in the immediate last period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

SVCBY-US‘s change in operating cash flow of 7.06% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings


The company’s decline in earnings has been influenced by the following factors: (1) Decline in operating margins (EBIT margins) from 11.70% to 9.89% and (2) one-time items that contributed to a decrease in pretax margins from 13.21% to 8.59%

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

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Company Profile

Svenska Cellulosa AB engages in the development and production of hygiene and forest products. It operates through the following segments: Personal Care, Tissue, and Forest Products. The Personal Care segment area includes incontinence care products, baby diapers, and feminine care products. The Tissue segment area comprises consumer tissue and Away-From-Home (AFH) tissue for hospitals, large workplaces, restaurants and hotels. The Forest Products segment area sells publication papers, packaging papers, pulp, solid-wood products and renewable energy. The company was founded in 1929 and is headquartered in Stockholm, Sweden.

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