UPDATE 1-SCA to cut costs in forest products business

Wed Dec 19, 2012 2:54am EST

* Programme costs 370 mln SEK, books nearly half in Q4

* Sees 1.3 bln SEK annual earnings improvement from 2015

STOCKHOLM Dec 19 (Reuters) - Swedish hygiene and paper product maker SCA has launched a cost-cutting programme in its forest products division in the face of tough economic conditions.

SCA said on Wednesday it hoped to generate annual earnings improvements of 1.3 billion crowns ($197 million) by 2015, at a cost of 370 million.

Measures include previously announced closures and cutbacks at mills and in research and development, streamlined activities and a changed product and market mix.

It said about 200 positions would be affected, most of which had already been announced.

"This will be achieved through improved raw material yield at the sawmills, higher productivity in harvesting activities, an increased share of value-added publication papers and a larger share of container transportation," it said.

Over the past couple of years, SCA has restructured and focused on hygiene products such as nappies and incontinence pads. It sold a packaging unit and bought Georgia-Pacific's European tissue operations.

The rival to Kimberly-Clark Corp and Procter & Gamble said half the 370 million crowns cost will be charged in fourth-quarter results, with the balance being charged in the first half of 2013.

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