Svenska Cellulosa Aktiebolaget SCA (publ) – Annual report – 31 December 2016
A2. USE OF NON-INTERNATIONAL FINANCIAL REPORTING STANDARDS (“IFRS”) PERFORMANCE MEASURES
Guidelines concerning non-IFRS performance measures for companies with securities listed on a regulated market in the EU have been issued by the ESMA (The European Securities and Markets Authority). These guidelines are to be applied to alternative performance measures (APM) applied as of July 3, 2016.
The Annual Report refers to a number of non-IFRS performance measures used to assist investors and company management to analyze the company’s operations. A description of the various non-IFRS performance measures used as a complement to the financial information reported according to IFRS is presented below.
The Board of Directors of SCA has established that the Group’s overall profitability target is to achieve a return on capital employed of 13% over a business cycle. The target is 30% for Personal Care, 15% for Tissue and to be in the top quartile of the industry for Forest Products. The growth target for Personal Care is annual organic sales growth of 5–7%, while the target for Tissue is 3–4%. For Forest Products, the target is to grow in line with the market.
It is important that SCA maintains an effective capital structure, while at the same time ensuring long-term access to loan financing. Cash flow in relation to net debt is to be taken into consideration in the target to maintain a solid investment grade rating.
A number of financial performance measures and how these are used to analyze the company’s objective are described below.
B2. OPERATING EXPENSES (extract)