Navigating changes in the pulp, paper and packaging industry with Ulf Larsson, SCA
We spoke to the winner of our Forest Products European CEO of the Year award on the energy challenges, sustainability initiatives, mill project updates and future plans
Ulf Larsson, president and CEO of SCA, has won Fastmarkets Forest Products’ European CEO of the Year award for 2023. We caught up with Larsson to discuss both his achievements and the challenges he has faced at the helm of the company since 2017, as well as his views on market dynamics and SCA’s progress in implementing two major investments side by side.
What do you see as SCA’s most significant achievement during your tenure as CEO?
The most important things we’ve done include entirely winding down our printing paper business and making extensive investments to increase capacity, mainly in pulp and containerboard. We have also delivered strong results and created great value from the forest despite periodically challenging environments, for instance, the global pandemic and, more recently, the war in Europe.
What are some of SCA’s initiatives in sustainability and what opportunities do you see?
The forest, with its circular and renewable raw materials, will continue to be the focus of how we build our business. At the same time, if used actively and sustainably, these resources are an extremely important tool for creating climate benefits because growing forests bind carbon through photosynthesis. In addition, forest fibers provide excellent opportunities to replace fossil materials and fuels with renewable ones. As Europe’s largest private landowner, we also have a unique opportunity to contribute to electrification by taking a greater role in wind power. We have already started on this and plan to continue. Already, 20% of Sweden’s installed wind power capacity is on SCA land.
What’s your take on the energy situation in Sweden? What have you done to secure your energy supply?
Like much of the EU, Sweden faces a particularly challenging energy situation. As a business, we’ve worked for many years to be self-sufficient in terms of our electricity supply, which is certainly a key advantage today. However, we see that the situation as a whole undermines competitiveness and that by investing in our own wind farms, for example, we combine a great business opportunity with improving competitiveness.
This is a way for us to develop our energy business and at the same time, help improve the electricity supply in northern Sweden. We would like to do more in terms of wind power, but this is also dependent on political decisions creating better regulatory structures to make it possible to build new wind farms and upgrade existing wind farms more efficiently and quickly. Parallel to this, our focus in the coming years will be on delivering on existing strategic investment projects.
Can you give us an update on the ramp-up of the new Obbola and Ortviken pulp mill projects?
Just like a couple of our other projects, the Obbola project is slightly ahead of schedule and that’s of course very positive. We’re now in a ramp-up process and we’re gradually increasing production. Our intention is to formally inaugurate the new facility at the beginning of the summer.
The Ortviken investment has also been completed faster than planned and will be inaugurated in the spring. Just as in Obbola, a ramp-up process is underway to optimize the facility and gradually increase production.
Your Östrand pulp mill has had some operational challenges. Has the situation stabilized? How is the investment in the mill progressing?
Unplanned production stoppages [like the 10- to 15-day stop in December due to recovery boiler problems] are unfortunate, but they are hard to completely avoid, and I think this stoppage has been handled appropriately and systematically. A problem sometimes arising is part of the nature of the industry, so it’s important to be able to solve problems and draw conclusions on which to base preventive work. The investment presented in February 2022 was in a powerful gas boiler that will provide a slight increase in production capacity, cost savings and also improve the living environment in the immediate area. This project continues as previously announced, so it should come online in the summer of 2023.
What is your view on the wave of conversions of graphic paper mills to containerboard production?
We’ve discontinued printing paper production ourselves, and although it’s always sad to take such decisions, it was logical and right. The market was shrinking year after year and it was clear to us that the business was no longer profitable. We saw an opportunity to use the raw materials for something that creates more value, better profitability and has a future in its own right, and invest in it, which we’ve done.
Do you have any plans to integrate further down the value chain, such as acquiring corrugated packaging plants?
Our business is based to a large extent on our forests and our ability to create maximum value from each tree, which we are also very good at. This in turn means that we prioritize doing what we can do better than others. So, we’re very selective about how far along the value chain we’re prepared to go. There are currently no plans to enter new product categories.
What are your expectations for the kraftliner market in 2023?
Demand decreased towards the end of 2022, and it’s always difficult to try to draw conclusions about the future, especially given the current state of the world. We’re well prepared regardless of how the market develops, and we’re now putting a lot of focus on gradually increasing the production of kraftliner in Obbola with our new paper machine, which will be the largest in the world to date. We’re well prepared for the future.
What was the biggest challenge you faced in 2022? And what will this be for 2023?
You can’t ignore Russia’s war of aggression in Ukraine; in addition to the terrible human suffering, it has created enormous global uncertainty, an energy crisis and surging inflation. Although we were able to manage these effects as a business, the war impacts our customers and the economy as a whole, so it has certainly been challenging. I hope we’ll see peace in 2023 of course, but unfortunately that isn’t anything we can take for granted. In terms of our own business, we’re focused on working with the things we can influence, including delivering on planned and soon-to-be-completed major investments in pulp, containerboard, wood and energy.
Ulf Larsson will be presented the European CEO of the Year award at Fastmarkets Forest Products Europe Conference 2023. Find out more about the event and explore our list of events in 2023.