A comparative study on the investment pattern of Stora Enso, UPM and SCA during 1999 - 2008
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School of Chemical Engineering | Master's thesis
Paperi- ja painatustekniikka
129 s. + liitt. 154
AbstractThe Nordic forest industry is undergoing a transformative period. The work analyzes and compares the capital expenditure pattern of three prominent Nordic pulp and paper companies, Stora Enso, UPM and SCA (Svenska Cellulosa Aktiebolaget) based on the data collected from their annual reports during 1999-2008. For each company, the analysis focused on the following:. 1. Total capital expenditure and its distribution by geographic region and product segment. 2. Strategic capital expenditure and its share of total capital expenditure and distribution by geographic region and product segment. Strategic capital expenditure was defined as capital expenditure on projects separately and individually mentioned at least once in an annual report of the company concerned. Individual projects with capital expenditure values in excess of EURO 100 million or SEK 1000 million, being important part of strategic capital expenditure, were identified and analyzed separately to gain additional viewpoints on strategic capital expenditure Such projects were considered as star projects'. The associated activities such as acquisitions, joint ventures, divestments, and closures are also broadly analyzed Stora Enso, among the three, had the highest amount of total capital expenditure during 1999-2008 at EURO 8585 million, followed by SCA (EURO 6612 million) and UPM (EURO 6413 million). The total capital expenditure measured as a percentage of the sale of the company concerned were very close to each other, being 6.9 %, 6.6 % and 6.8 % respectively for Stora Enso, UPM and SCA for the decade Due to the insufficiency of data available, it was not possible to make a detailed comparison on the geographical spread of the total capita expenditure among the companies. It appears that Stora Enso and UPM clearly focused on Nordic Countries whereas SCA distributed its total capital expenditure more evenly among Nordic Countries, Continental Europe and North America By product segment, Stora Enso focused its total capital expenditure on three segments, Publication Paper Packaging Board and Fine Paper in that order, as these together made 80 % of total capital expenditure. UPM concentrated clearly on Publication Paper, as this segment constituted 56 % of total capital expenditure followed by Fine Paper at 23 %. SCA's focus was on its two key divisions, Hygiene Products and Packaging, making 50 % and 30 % respectively of the company's total capital expenditure. The strategic capital component of the total capital expenditure was highest for UPM (58 %), followed by Stora Enso (38 %) and SCA (21 %) Thus, UPM had the highest degree of focus, followed by Stora Enso and SCA. In SCA's case, the key segments of Hygiene Products and Packaging, being converting businesses requiring small investment projects, explain the low percentage. Stora Enso and UPM had Nordic Countries as the leading location of their strategic investments (56 % and 50 % of their respective strategic capital expenditure). In case of SCA, it was North America (37 %), but followed closely by Continental Europe (24 %) and Nordic Countries (20 %), creating a more even distribution. The share of star projects out of strategic capital expenditure in Stora Enso's case was 54 %, in UPM 38 % and in SCA 75 %. SCA had a high degree of focus among its strategic projects. The companies' investment strategies were also briefly analyzed based on the framework of the positioning school of strategy.
Thesis advisorDiesen, Magnus
Stora Enso, UPM, SCA, investment analysis