Svenska Cellulosa: Strategic Assets, But Too Expensive For Me

2025-02-12 10:30:00 ET

Summary

• Svenska Cellulosa's vertical integration and self-sufficiency in wood and electricity are key strengths, supporting its high valuation despite challenging market conditions in 2024.
• Despite a 20% revenue increase in Q4 2024, higher operating expenses led to only 1% EBITDA growth, highlighting margin pressures.
• The company reported an underlying net free cash flow of 2.15B SEK, translating to approximately 3 SEK/share, with a free cash flow yield of just around 3% excluding growth capex.
• Svenska Cellulosa continues its tradition of annual dividend increases, demonstrating resilience and commitment to shareholders, despite a relatively weak performance in 2024.

Introduction

Svenska Cellulosa ( OTCPK:SVCBF ) ( OTCPK:SCABY ) is a leading European wood producer that owns almost 3 million hectares of forest land as well as five sawmills in Sweden. Additionally, the company owns two pulp plants in Sweden with a combined capacity of 1.2 million tonnes per year with the pulp used in the production of tissue, packaging, hygiene products and newspapers. And as Europe’s largest kraftliner producer, it's currently ramping up its production rate to 1.14 million tonnes per year, a level that should be achieved sometime next year....

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