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SCA’s NZ assets make money in 2013 after many restructures

The New Zealand toilet paper, nappy and tampon business Sweden's Svenska Cellulosa Aktiebolaget (SCA) has owned in various structures for the past decade is now making profits on annual turnover of about $250 million.

The business SCA purchased from Carter Holt Harvey for $1 billion in 2004 to give it a leading position in Australasia is now Asaleo Care, which debuted on the ASX on July 3.

The float allowed private equity firm Pacific Equity Partnership to exit a three-year-long relationship with SCA, which retains 32.5 percent. At the A$1.65 initial public offer price the float was worth A$656 million and the business was valued at A$996 million.

There wasn't much information in the Australian prospectus about the large New Zealand business but accounts for PEPSCANZ Ltd filed to the New Zealand Companies Office reveal profits and no more big write-offs by the maker of Sorbent and Purex toilet paper, Treasures nappies and Libra tampons.

PEPSCANZ reported a bottom line profit of $27.47 million in the year to Dec. 31, 2013 compared to a loss of $44.57 million the previous year when there was an $82.3 million writedown. Turnover was $247.6 million in 2013, down from $255.5 million in 2012.

In 2011 SCA put its Australian and New Zealand assets into a partnership with PEP to "enable more efficient financing" and "increase the pace of development" of the business.

SCA received approximately SEK 3,200 million Swedish Krona for half the business and swallowed a 654 million krona writedown. There were also years of writedowns in the accounts of the New Zealand unit.

Asaleo shares debuted at a small premium to the offer price and were at A$1.76 on Wednesday.

The paper business has a long history in New Zealand, starting as Caxton in the 1890s and becoming part of Carter Holt, which went on to purchase Bowater's tissue assets in Australia.

The company's Kawerau paper mill was an advanced paper mill in its early days.

It has a capacity of approximately 58,750 tonnes per annum on its two paper machines, and about 62,600 tonnes per annum on its eight converting, three folder and five toilet converter machines, according to the prospectus.

(BusinessDesk)