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UNEMPLOYMENT

SCA to slash 1,500 jobs in cost-cutting bid

Swedish hygiene and forestry products company SCA (Svenska Cellulosa Aktiebolaget) is cutting 1,500 jobs in a bid to save billions of kronor, the company revealed in Stockholm on Monday.

SCA to slash 1,500 jobs in cost-cutting bid

“A new efficiency programme has been initiated within the hygiene operations to further reduce costs and increase productivity,” SCA President and CEO Jan Johansson said in a statement.

“It will provide annual cost savings of some €300 million, with full impact in 2015. About 1,500 employees are affected and costs are expected to amount to €100 million.”

Spokesman for SCA, Petter Tiger, wasn’t able to say exactly where the cuts would be made:

“We will be looking at every division,” Tiger told the TT news agency, without being able to disclose how many of the company’s workers in Sweden will be affected.

Currently SCA has some 37,000 employees. The 1,500 redundancies in the hygiene operations mean that 4 percent of the overall work force will be cut.

26,000 of the 37,000 employees are currently working within hygiene product manufacturing. It is still unclear how many of the redundancies will affect workers in Sweden.

The cuts in the hygiene operations are made despite strong third quarter sales, profits and profitability.

Since launching the efficiency programme in 2011, the company has achieved more than half of the expected annual savings of €80 million.

During the past year, SCA completed a number of major acquisitions and divestments. The hygiene operations currently account for 80 percent of SCA’s sales, with the majority in Europe.

The company nevertheless plans to retain its previous targets of a 13 percent return on capital employed over a business cycle, a debt/equity ratio of 0.70 and a debt-payment capacity of 35 percent.

The dividend policy is to pay out one-third of cash flow from current operations, the company said.

Founded in 1929 by Swedish industrialist Ivar Kreuger, better known as the “Match King”, SCA is one of the world’s largest forestry and packing products firms, as well as Europe’s largest private owner of forest land.

TT/Rebecca Martin

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EUROPEAN UNION

Sweden heads for economic slowdown EU warns

The European Union has warned that Sweden's economy is facing a marked slowdown, with unemployment set to rise above seven percent as companies cut back on investment.

Sweden heads for economic slowdown EU warns
Jobseekers entering an office of the Swedish Public Employment Service back in 2016, when the economy was booming. Photo: Jessica Gow/TT
The August 2019 economic forecast from the European Commission's Directorate-General for Economic and Financial Affairs sees the rate of growth of Sweden's real GDP dropping to one percent next year.
 
This is slower than what is expected for all but four of the other 28 European Union members, and well below the brisk  four percent rate the country enjoyed back in 2015. 
 
“Sweden’s economy is clearly slowing down. Domestic demand and investment in particular are weak,” the report read, blaming the insipid domestic demand on a decline in investment in the housing market following years of strong growth. 
 
The slowing economy had also pushed Swedish manufacturers to hold back on investments in equipment, exacerbating the decline. 
 
The authors pointed out that planned government spending would do little to pick up the slack. 
 
“In spite of sizeable spending needs for schools, health care and welfare services linked to demographic developments, general government consumption is set to moderate in 2019 and 2020,” the report read. 
 
“Costs linked to migration should decrease, whereas new defence and health care expenses, priorities of the 2019 budget, are partially compensated by cutbacks on, among other items, labour market and environmental measures.” 
 
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While the report predicted that growth would start to pick up again in 2021, it warned that this recovery could be knocked off course by bad news internationally. 
 
“As the Swedish business cycle is closely aligned to that of its main trading partners, a deterioration of the external environment would weigh on the export sector,” it read. 
 
Real GDP in Germany and Belgium was also predicted to grow by just 1 percent in 2020, while Italy was expected to see a still more anaemic 0.04 percent growth rate. Every other EU country was predicted to grow faster, with Romania seeing the fastest growth at 3.6 percent. 
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