SCA's Third Kraftliner Hike — and the Buyback Answer That Wasn't
A 31% EBITDA margin built on a court-ordered tariff refund and storm-felled logs, while the CEO declines to add anything on what to do with the cash
SCA-A.ST · Earnings Call · 2026-10-23
A good quarter with a borrowed tailwind
SCA's third quarter looks, on the surface, like the trough-and-turn management has been promising for six quarters: net sales up 5% to SEK 5.2 billion, EBITDA of SEK 1.63 billion at a 31% margin, EBIT just above SEK 1 billion, net profit of SEK 772 million or SEK 1.1 per share, and net debt of SEK 11 billion against equity of SEK 102 billion — a net debt-to-equity ratio of just 10.4%. Ulf Larsson opened with the obvious caveat: “Market conditions were mixed between the segments during the third quarter.” — Ulf Larsson, President and CEO · 2026-10-23 What he did not lead with is where a chunk of the flat year-on-year EBITDA actually came from. Of the SEK 42 million of "lower cost of planned maintenance stops and tariff repayments" that Andreas Ewertz credited in the EBITDA bridge, SEK 15 million landed in Pulp and SEK 27 million in Containerboard. That is a literal refund of US import duties a court ruled unlawful — not an operating improvement:The repayment of tariffs is the single freshest item in SCA's quarterly keyword set — and it is not unique to SCA. Tariff refund was the highest-ranked keyword in the entire market in the second quarter of 2026, and it has since shown up across reporters as varied as Sartorius (customer compensation) and LIGHT.AS (a direct benefit line). SCA is riding a broad wave — of retroactive accounting, not of demand.For the tariffs on Pulp and Containerboard, I mean they were said by the court in the U.S. that they're not legal. Then we asked for refunds. We got those tariff we paid last year and part of this year back.
Kraftliner is the one thing genuinely tightening
The real operating story is Containerboard. Sales rose 12%, EBITDA rose 130% to SEK 446 million, and the margin reached 23% on the back of a third price increase this year: EUR 60 per tonne on brown kraftliner and EUR 40 on white at the start of the quarter, then a further round — EUR 80 brown, EUR 60 white kraftliner — that is not yet in the P&L. Behind it sits a supply hole in the US of three to four million tonnes, a number management has now repeated verbatim two quarters running, and a Kraftliner-Testliner spread that has drifted from roughly EUR 280 a tonne a year ago to EUR 300 today. But here is the tension. Asked a year ago about the same dynamic, Larsson used a specific phrase; he used it again in April, and he used it again this week: “I guess it's a chicken race. We have seen many conversions, and we have the latest one announced yesterday in U.K., which is maybe a little bit surprising, at least for me.” — Ulf Larsson, President and Chief Executive Officer (CEO) · 2026-07-22 A year of "third price increase" headlines and the structural argument has not moved: kraftliner is balanced, testliner is drowning, and the producers who could arbitrage the gap are choosing to defend European share rather than chase price. Meanwhile PKG, reporting in the same window, flagged additional containerboard supply as a live end-market headwind. SCA's premium is real; its durability is a customer-behaviour bet, and Larsson himself concedes that "if they can substitute, they will substitute."Calamity wood: the quiet subsidy
The Wood segment tells the more interesting story. EBITDA margin fell from 15% to 8% year on year on lower volumes and still-high sawlog costs — but sequentially it improved to SEK 170 million, because sawlog and pulpwood costs fell around 5% in the quarter, with another 4–5% guided for the fourth. The reason is a new entry in SCA's vocabulary: calamity wood, the storm-felled timber from last winter that is still being processed. “We also -- for the moment being, we have a small, maybe surplus of logs in the market, and that is also, of course, related to what happened here almost 1 year ago.” — Ulf Larsson, President and CEO · 2026-10-23 That is a genuine, temporary input-cost gift that management is quietly harvesting — but with two catches. First, it cuts both ways internally: the Forest segment's EBITDA fell 23% year on year precisely because the wood it sells is worth less, which is the structural irony of an integrated model that is 50% self-sufficient in fibre. Second, the gift has a shelf life, and Larsson would only say that Q1 2027 looks "fairly flat, but it's a bit too early to say." Analysts pushed twice on when the calamity overhang clears; they got a shrug both times. Energy is the same coin. Fuel prices from the Middle East conflict cut Forest and Industrial results, while the liquid biofuels business monetised the same move — Renewable Energy delivered a 42% EBITDA margin on SEK 201 million, the best segment in the group. Forty percent self-sufficiency is a real hedge, but it is a hedge, not a growth engine.The question that got a one-word answer
For five consecutive calls, analysts have asked SCA what it will do with the cash once strategic capex rolls off. The answers have migrated from "that's a question for the Board" to "we're focused on the ramp-up." This quarter, the ramp-up is finally over — current capex guided to about SEK 1.4 billion, strategic below SEK 400 million — and Pallav Mittal of Barclays asked the question plainly: deleveraging, or returns?“No.” — Ulf Larsson, President and CEO · 2026-10-23 That silence is the most informative thing on the call. The last big project, Obbola, is still not at design capacity — a further year is needed to reach 700,000 tonnes, against a SEK 800 million to SEK 1 billion full-ramp EBITDA guide first given in mid-2025 — so there is a defensible reason to wait. But with a SEK 70 billion market capitalisation sitting against SEK 105 billion of forest assets and SEK 102 billion of book equity, the discount that every buyback question has been circling is not being addressed, and the once-prominent forest transaction debate has faded to a line about "still very few transactions." The verdict. This was a stable quarter dressed in improvement: flat EBITDA, a court-ordered refund, a storm-driven log discount and a kraftliner price that peers are already describing as a supply threat. Containerboard is the only engine actually accelerating — but it has been accelerating, in management's own words, through a chicken race for twelve months. What changed this quarter is not the market. It is that the excuse for not answering the capital allocation question has run out.Once we have those cash flow, I mean, we'll have to look at how to spend that cash flow. Ulf, if you want to add anything?