Hello, welcome everyone to SCA's first quarter report for 2015. My name is Joséphine Edwall-Björklund, and I'm head of communication for SCA. Today with us, we have Magnus Groth, our CEO for SCA, and also our CFO, Fredrik Rystedt will join on stage. Magnus will now introduce our report. I hand over to you, Magnus.
Thank you, welcome everyone. Starting with the general market conditions, we continue to see slow growth in hygiene in mature markets and good growth in emerging markets. In Forest Products, we see increasing demand for sawn timber and for kraftliner. While we continue to see declining demand for publication paper. No changes in the general market conditions. Moving over to SCA's performance in the first quarter. We had good growth both in sales and in operating profit, the strong growth in emerging markets, 11%. Actually, growth in mature markets was also quite good, 4%, so well above the underlying market growth. We had a strong cash flow, an improvement with the 37%, higher sales and profits in all our three business areas.
We continue to work with efficiency, this is incredibly important, especially now to offset the increase we have in raw material costs, this is a theme we'll get back to, but the increase year-over-year, so first quarter over first quarter last year, was SEK 721 million, also quarter-over-quarter sequentially, we had a significant increase in raw material costs, most of this is related to the strong USD, since many of our raw materials are denominated in USD. In numbers, sales increased by 15%, then excluding acquisitions and divestments, the exchange rate effects, we had an increase of 6% organically.
Operating profit, likewise, excluding one-time effects, excluding the effect of currencies, also taking out the forest swaps that we had in the first quarter last year, we had an increase of the operating profit of 6% to SEK 2,872,000,000. Operating margin had a slight increase of 10 basis points, earnings per share rose by 15%. As I already mentioned, a strong improvement in cash flow with 37%. Moving over to our strategic priorities, we continue, again, to be consistent with the strategy that we set three years ago, focusing on three areas: efficiency, innovation, and growth. Maybe I'd like you to have a look at this picture of growth because I took it myself in India. Actually this is a mom-and-pop store, which then is a family-owned, very small outlet.
Here is a consumer who is looking at one of our Libero packs and actually buying a full pack. Normally in these types of stores, they buy a single diaper or maybe a two-pack diaper. Really interesting to see the interaction here and why they choose Libero instead of other possible brands. What I want to emphasize when it comes to these three priorities is that they go together, that we need to look at the entire value chain, that when we innovate, we innovate in a way that we make sure that we also improve our efficiencies, our efficiencies in producing the products, but also in logistics and transporting the products. Not only in, of course, creating more consumer value and more customer value.
All this goes together and this is something that we're driving very hard because in the last couple of years, we very much focused on basic savings, cost cutting. Now we need to look at saving and cutting costs in a smarter way, looking at value engineering, material rationalization, reducing the number of suppliers, improving our logistics footprint, and there's still a lot to do in this area. Moving over to innovation, here are some examples. I'd like to focus on toilet tissue today and the innovation we have here, which is a launch all over Europe. It's actually the first time we make a toilet tissue relaunch all over Europe because our toilet tissue positions are based on many acquisitions with many different trademarks.
Again, I think this shows the benefits of scale, because what we're doing for the first time is that when we improve the product quality, we also come with a new design. Now we have the same design. I have some samples here. This is the Swedish toilet tissue that you can buy in the store, and this is the German one. If you check here, it's the same pack design here with its heart here. In this way, of course, we save a lot of time on designing different packs and so on. We also get a more consistent brand building, and it's all based on our brand equity, which is Love Your Skin, in this case, when it comes to toilet tissue. Another example is that, this was a very popular product in France.
It's a 5-ply that we acquired with Georgia-Pacific three years ago. Now we're rolling out this product all over Europe. This again, is the German version that we're just launching now. The benefit the customer claim is that with 5 plies, you only have to take one sheet at a time, instead of taking several sheets at a time. It's some examples of what we're doing. With that, I'd like to hand over to Fredrik to dig more into the details, and then I will come back with the financials for the individual business areas. Please, Fredrik.
Thank you, Magnus. I will start with showing you the development of sales. As you alluded to, Magnus, we grew our sales by 15% in the quarter versus the same quarter last year, and organically with 6%. As you can see on this slide, we increased price mix, and we also increased volume. If you look at the first one, the price and mix, it was actually all over the company largely. We had, for all business areas, growth. Forest, of course, as a consequence, partly of currency, up by 5%. If you take Personal Care, roughly about 2%, and Tissue about 1%. Volume, this is largely an issue for Hygiene. It's pretty much equally distributed between Hygiene and Personal Care. Of course, currency is just translation on the back of largely weaker Swedish krona. Again, a strong sales growth.
If you look at the different regions and mature and D&E markets for us, you can see that mature markets increased by 4%. If we start by Western Europe, we had a good growth in actually Baby and Feminine Protection and Incontinence. Baby diapers, as you will recall, we had a new contract last year, a private retail brand contract, and that is part of that story. We actually also grew in the retail brand side. Feminine Protection, we had significant market investments during the first quarter, and that was part of the reason for the growth. Also Incontinence, despite, and Magnus will come back to that a little later, despite Procter & Gamble launch, we continued to grow at healthy levels also for Incontinence.
Slightly lower growth for Away From Home Tissue, that was largely on the back, as you will recall, we announced a price increase as of 1st of January, and there was a little pre-buying in the fourth quarter. There was a little slower growth in this quarter. Again, Tissue continued to do well. The picture in the U.S. or North America is somewhat more mixed. Lower sales for Incontinence on the back of P&G launch and a good growth for Away From Home Tissue. This is partly a reason of actually a fairly weak quarter last year. You will remember the harsh winter that we suffered from Q1 2014. We didn't have that this year, it was actually much better, of course, also a reasonable quarter this year. Emerging markets, quite strong across the board, particularly so in Latin America and Russia.
This is in Latin America, Feminine Protection products, predominantly also Incontinence. Good performance. Russia, pretty much across the board, also for Tissue. Some of you may have seen Vinda announcing this morning. A very good growth for Vinda, we also continue to grow in Latin America and Russia. A strong performance for both mature and for D&E markets in terms of sales. This is a little bit how the change of profit is distributed and the different factors. One thing that you should really note here is, of course, the very significant impact that Magnus mentioned to the SEK 721 million in raw material. This is actually 27% of our profit in Q1 2014. It's very rare that we have this kind of impact.
This is largely, actually more significant for Personal Care, but Tissue is also a very big portion of the profit for Tissue. Of course, this is on the back of the Dollar strengthening. In fact, if you look at the Tissue, 90% of the increase of raw material comes from the Dollar strengthening. The same figure for Personal Care is about 65%, and if you take the group as a whole, about 80%. Of course, the Dollar impact is very significant in the raw material numbers. As you can see, we compensated in price mix and also volume. If you take the price mix, roughly about SEK 250 of that SEK 550 that you see there is relating to Forest. We also had positive price increases in Personal Care and Tissue. We've increased prices in Latin America.
We've increased prices in Russia, we've also increased, as I said, prices in Away From Home in Europe. A good performance, and mix was also positive across the board. Volume, this is largely hygiene growth on volume. Personal Care, roughly about 5% on average, and 4% for Tissue. That's the composition of this. Currency is, as I said, our foreign results. Finally, just a word on cash flow. Magnus said that operating cash flow increased by 37%. If you include also strategic investments, as you can see here, we increased roughly about 60% in cash flow. It's a good quarter for us in that sense. Most of that comes from the cash surplus. You will note that if you actually look at the operating cash surplus, it is a slightly bigger improvement than what you would see in our EBIT figure.
That, of course, has to do with the fact that last year, Q1, part of our EBIT was related to a Forest swaps capital gain. That SEK 152 million doesn't actually impact cash flow, that's why the operating cash surplus is a slightly bigger improvement than what you would see in our EBIT. We also have higher depreciation this year. Overall, a good performance. If you look at working capital, this is normal seasonal patterns that you would see. We have given a forecast for the year of approximately 6% or 6.5%, perhaps, at the prevailing currency rates, and we're still about at that level. It's slightly lower in the quarter, but that's more of a pacing issue, so we're pretty much in line with our forecast here as well. Magnus?
Thank you, Fredrik. Something then about our three business areas again, something of a repetition, but anyway, focusing now on Personal Care. In this part of the business, we had an organic sales growth of 6%, which is then a mix of price mix 2% and volume 4%. Strong growth in emerging markets, as you can also see here at the bottom of the slide. 10% when it comes to Personal Care categories. When you look at the different categories growth, you can see the fantastic, phenomenal 16% in Feminine, which is very much based on the boost plans that we have been talking about now for a year. We're actually putting more A&P behind our Feminine category, and we're seeing the results now. This is also linked to the product launches that we've done over the last couple of years.
Also baby diapers, partly because of now fully delivering on this big European retailer brand contracts, but we have a very good performance also in our branded business. In Sweden, we are well over 60% now in market share, which we haven't been for over five years. We've been around 55, but I think we have a recipe that's working also now on our branded products in the Nordic market. Operating profit also increased 6% on higher volumes, higher price mix, and cost efficiencies. The higher raw material costs here, out of the SEK 710, almost half of it is relating to Personal Care, so that shows the huge influence on Personal Care. I know there will be questions here, but what about the benefits of the lower oil prices, since we have a lot of oil-based products in Personal Care?
There's a delay, today we see the benefits in the oil-based products coming late Q2 and then second half of the year, primarily. We also invested, as already mentioned, behind the feminine incontinence products with a fight against Procter & Gamble's incontinence launch, and also based on our opening of our first manufacturing facility in India to support that growth, which is moving according to plan in a good way. Tissue, sales growth 18%, and Vinda, our company in China, actually grew over 20% in the quarter, which was very promising considering what you read about China kind of slowing down slightly. As you can see here, the organic sales growth of 5% is based on improvement in price mix also for tissue and a volume improvement of 4%. Operating profit up 12%. Again, higher volumes, higher price mix, and cost savings.
As we already mentioned now, but it is a theme, the higher raw material costs basically coming from the dollar strengthening. When you look at it quarter-over-quarter, we also have a significant difference. We already mentioned that quarter-over-quarter compared to last year, it was SEK 721 million of higher raw material costs. If we compare Q1 to Q4, it was actually SEK 277 million of increasing raw material costs. This has also continued from the fourth quarter into the first quarter. Looking then down at the bottom here, you can see again the growth of 14% in emerging markets, but actually 4% in mature markets is also very good. That consumer tissue is the big growth this time. In Away From Home tissue, that's 2%.
We have a strong growth in the Americas, which are picking up. A slower growth in Europe, again, due to pre-buying end of last year in Europe in anticipation of a price increase that we did from 1st of January. Finally, Forest Products, sales growth of 8%, price mix, volume and currency, strong growth for kraftliner and pulp. Operating profit increased 56%, which is, of course, amazing. This is very much currency related. In Forest Products, we have a very strong positive impact of this. Higher prices, lower energy costs, and continued cost savings here as well. A positive development. With that, I'd like to summarize the first quarter. Good growth in both sales and operating profit, strong growth in emerging markets, cash flow, and the highest sales and profits comes from all the three business areas.
The global environment, not much change during the first quarter. Again, low growth in mature markets, good growth in emerging markets, continued increasing raw material costs due to the dollar and a competitive market environment. Looking forward, we continue with this, which is, of course, keeping the momentum in the business, which is incredibly important, and our other priority, which we're also working with, there's a note in the report, which is then to work with our confidence building, especially here in Sweden, and we have decided then to hand back one of the company planes, which is on a lease that expires next year in about, I think, October next year. Since we're not using it, we are handing that back prematurely. Those are two priorities that we are driving very clearly forward.
I'm very happy to see that we are keeping the momentum in the business in a very good way, and that everybody's focusing on their plans and delivering to those plans. Thank you for listening.
Okay. Thank you, Magnus. With this, we open up for Q&A. Start with you.
Yes. Hi, this is Stellan Hafström with Nordea. I had two questions. First on the raw material situation and what you can do in terms of pricing, if you can give any flavor on what you're seeing going forward in all of the business and maybe in consumer tissue in particular.
We already increased prices primarily in Latin America and in Russia and other emerging markets. What we are working with now is increasing tissue prices in Europe, which takes longer. I expect that we will see price increases in the second half of the year also in Europe.
Thanks. Also a question on incontinence care, if you can give some flavor on recent developments, maybe particularly in Europe, what you see.
In Europe, the trend continues that we see a much higher growth of the entire category, and we believe this is because of the increased advertising and promotion that both we and Procter & Gamble are doing now, fighting it out. When it comes to Procter's market share, it remains under 10%. It's leveling off there, which is, of course, encouraging for us. Actually, what we see now is because they launched almost a year ago, and when that happened, we said that maybe the volume growth is due to also pre-buying or the customers filling the cupboards with products. We know now that this is an increased penetration. Actually, more consumers are using more incontinence products.
Thanks.
Linus?
Yes. Thank you very much. Linus Larsson with SEB. Just following up on the margins, which were the lowest they had been for quite a few quarters now in both Personal Care and in Tissue. Just to understand where we are in that cycle, you've told us pretty clearly what the reasons behind are. What was the raw material cost increase sequentially in both those two divisions?
Yeah. Overall in Hygiene, sequentially, it was, as I mentioned, SEK 277 million. The split, I'm not sure about. Do you have that split?
Yeah. Personal Care is about SEK 45 million sequentially, the rest is largely Tissue.
Okay, great. Just coming back to what you said about price on a total basis for Tissue as a whole, Q2 on Q1, what kind of expectation do you have there?
I think you should expect an effect primarily in the second half of the year because those negotiations are ongoing into the second quarter.
Great. You've also said that one of your key priorities is to keep the pace up, given everything that has happened in-
Yeah
the group recently. What does that mean in terms of M&A activity? Is that a valid comment also for your acquisitive growth agenda?
Yeah. Of course, we don't comment on acquisitions, but we're continuing as we've done before, of course, in looking at different opportunities. As we stated before, we look primarily into emerging markets. Opportunities. Also especially in the Personal Care categories. That's where we are looking for M&A opportunities as before. No change.
No change. Okay. Thank you very much.
We have a question here, Sobhit.
Thank you. Mikael Almquist, Kepler Cheuvreux. Could you give us some update on the situation with Vinda now that you are sort of putting your Personal Care products into that company.
Could you sort of basically tell us how that is progressing?
I would say it's progressing very well in cooperation between SCA and Vinda. These categories are new to Vinda, but of course, Vinda has the distribution network, the sales force to go to market and so on. We're not yet seeing it in increased sales in Personal Care, so that's not part of the growth that you see here in Personal Care in the first quarter. I think, we have good plans and we have a good momentum and good cooperation there.
Thank you.
Any more questions from the floor? No? We open up from the telephone. Operator, do we have any questions?
Thank you. We do have questions on the phone lines. Your first question comes from the line of Céline Pannuti. Please ask your question.
Yes, good morning. I have a few question if you do not mind. Coming back on the raw material question, can you give an idea of, with the SEK 700 million extra costs you see in Q1, what should we be looking for in the coming quarter? If you give us an idea of the magnitude coming through. That's my first question.
Thank you, Céline. I will hand over to Fredrik.
Yeah, good morning, Céline.
Good morning.
I'll try and answer. Let me start by a couple of different things. We mentioned last quarter that we purchased raw material in dollar-denominated raw material for approximately $13 billion. Of course, that impact will be there also in Q2 because it's likely that Dollar EUR, as an example, will be lower in Q2 2015 than it was in 2014. That's not easy, but it's possible to calculate. The other factor is, of course, raw material related to oil. Of course, we've seen that decline and as Magnus alluded to, we'll see much more of that impact in Q2 and even more so in Q3 and Q4. If you sum that up a little bit, what you would expect for Personal Care is if you compare to last year, raw material costs, you will see Personal Care being flat to maybe slightly up.
Sequentially for Personal Care related to Q1, it's likely that prices will be lower. If you take Tissue, it's of course a more challenging picture. Prices will remain or costs will remain higher in comparison to Q2 also last year, and also sequentially. That gives you a rough picture, but again, the $13 billion gives you a good view and as I think we also talked about, we purchased roughly about $7 billion in oil-related products per year. Of course, there is a positive impact from oil having come down.
Okay. Thank you very much. That's very helpful. My next question is on the volume, which were quite good in the quarter. Now you were as well some easy comp, because of Away From Home in the U.S., I think, as well, Russia last year was an easy comp on volume. Question is, anything that is material enough for you to flag and whether in fact you see a better momentum in general in volume and whether that kind of level should be expected to continue in the coming quarters?
I can comment on that and then you can correct me, Fredrik. I think we see a good momentum when it comes to volume. No major changes, even though volumes were very high in some areas in the first quarter of course. We see that we have a good volume development in most categories.
Okay. In Away From Home in the U.S., I think you flagged that to be a good performance. Can you talk about what is the underlying market doing? I think there were some issue with pricing in the previous quarter. Beyond the easy comp, what are you seeing in the marketplace?
Yeah, I think approximately a year ago, first we had the winter storms, and then we actually had a change, negative price mix effect in the Away From Home market in the U.S. and that is gradually recovering. We're gradually seeing improved volumes, but also improved price mix in the U.S.
Okay, thank you. Finally my last question. You mentioned efficiency, and to be smart about the way you do look at innovation and in an integrated way. Is there a bit more meat on the bone, or indication you could give us for us to get a sense of magnitude of what to expect from the savings?
I think that the expected savings that I see in the estimates and the market reports are quite accurate, which means that we have maybe a slightly slower pace of savings in the first quarter than we expect going forward.
Okay. Thank you.
Thanks.
Operator, I suggest you just take all of the rest questions that you have online.
Thank you. Your next question comes from the line of Riccardo Ramaiazzi. Please ask your question.
Hi, it's Peter Testa. Maybe just to follow on from a couple of Celine's questions, please. Just to help us make our calculation, when you look at the effect of inventory, as it delays the raw mat/FX increase coming through, can you give us some guidance as to how we should think about the inventory cycle delaying the impact coming through on a sequential basis, please? How many months and how long we should when we're doing our moving averages?
Fredrik?
Yeah, I can try and do that. I'm not sure I can enlighten you that much more. The inventory is not really the main issue. It's actually the delay in the contract. If you take, for instance, fluff pulp, the delay between the actual price decreases is roughly about 70 days. Typically for quarter two in 2015, we would negotiate the price in mid Q1, so February would actually define the prices for Q2. If you take oil-based material, you will understand we negotiate the price roughly four to six months in advance. This is why you would see the oil price come down towards the latter part of last year, and you see the impact towards Q2 or the latter part of this year. It's not about really the inventory cycle or turnover that much.
It's much more related to the cycle times of the markets and the negotiation of contracts.
Okay. Would the inventory cycle have any impact on how FX earns its way through on raw mat? Because you would hold, for example, raw mat and work in process and maybe finished goods through the chain at an FX rate of December and January and so on.
Yes.
You think about the lag.
Yeah. Yes, that's true, Peter. You will have exactly that impact. That impact is relatively short because the actual throughput time or inventory turnover is relatively quick, as you can see from our balance sheet. It's rather quick and typically within any given quarter.
Right. Okay. Just on prices, can you give us some understanding as to how sequentially prices work through Q1 versus Q4 and the extent to which you think, based upon prices achieved at the end of the quarter, you have some momentum going into Q2?
I don't think we can give that much more guidance actually, more than what we have given.
Right. Okay. Specifically on cost savings, can you just say what the cost-saving impact was in Q1, please, year-over-year?
Do we publish that?
Yeah.
I know the number.
Yeah. We don't normally typically publish the number exactly. We have done that in accordance with the different programs, and as you will recall, both the Improve program and Perform to Grow has now expired, so we don't do that. If I just anyway allude to it, we have roughly the same efficiency gain as we had Q1 of last year. We continue in line with our aspiration to save roughly at the same pace, and we've done that also this quarter.
Okay. Is there anything you can say on the programs, program-specific, just update?
Yeah. The remaining program is the Georgia-Pacific integration, where we have now achieved SEK 90 million out of the synergy savings that will end up at SEK 125 million by the end of next year, 2016. We are on plan, and we expect to achieve the full savings according to plan.
Okay. Last question on product launches. Can you give any sense as to how you think the phasing of product launch impact will come through this year based upon your declared plans?
We have a good funnel for innovations this year. The sales increase from innovations typically has a six to nine-month delay after the initial launch because you have a rollout and then you need customer acceptance. You do all the advertising and promotion and so on. The sales improvements that we see this year based on innovation is coming from launches we did basically last year, last fall.
Yeah.
Yeah.
Okay. Thank you.
Thanks.
Thank you. Your next question comes from the line of Karthik Swamy. Please ask your question.
My questions have been answered. Thank you very much.
Your next question comes from the line of Oskar Lindström. Please ask your question.
Yes, hello. I'd like to look a little bit at the organic growth in Europe, which was, yes, you had some maybe easy comps in some markets, but it was fairly strong at 4%. You allude to the Fem Care segment being one of the drivers here. This organic growth rate that we saw in mature markets in Q1, is that a pace that we should expect it to continue at for the rest of this year? Have you changed something to increase the pace sort of sustainably?
I don't think that we can state that clearly because you also have to remember that we don't promote or market the full 12 months in any category. Typically, you have a program where you do advertising and promotion maybe seven to nine months Depending on the category, you also have quarters where you don't do as much. There could be variations between quarters, which are then explained by this phenomena. Overall, I think we have a good growth momentum also in Europe.
All right. Well, thank you.
Do we have any more questions operator?
Yes. Your next question comes from the line of Ian Simpson. Please ask your question.
Thank you very much, good morning, gentlemen. You talked about sort of moving away from basic cost programs to trying to build operating efficiency into innovation and kind of looking holistically throughout the whole business. Are you able to give any more color? I understand your reticence to give numbers, but just a few examples of the sort of things that you're doing just to help us better understand what that consists of. Thank you very much.
Yeah. I mentioned some examples, I think initially one is, actually the products I just showed here earlier, the toilet tissue that I showed, we have a new embossing technique, called [NetFip], that actually increases the bulk and softness of the toilet tissue, but with a lower grammage. There's value engineering. We actually use less pulp in the same toilet roll, but with a perceived increased softness and bulk, so thickness. That's one example. Another example is that we can be better at designing, for instance, folding a diaper, so when it is in a pack, the packs fit perfectly to the pallet in the truck and not to 95%. Then, of course, immediately you improve the logistic costs by just having better truck fill. Those are examples of designing for cost efficiency.
Another one is that every time we innovate, we also understand can we use this using fewer raw materials, fewer suppliers, fewer base sheets than we had before instead of adding new specifications and new base sheets. That's another example.
Thank you very much. Just one follow-up, if I may. Your growth in Russia was 27% in Personal Care, and 15% in Tissue. Are you able to sort of decompose that at all into price and volume? Would we be right in thinking that all or more than all of that was price? Were volumes down in Russia? Thank you very much.
I don't have the exact number. Maybe you have it, volumes are also up, actually.
It's both. It's actually both price is a significant portion of it, we continue to grow actually volume-wise in all of the categories.
Thank you very much.
Thank you. Your next question comes from the line of Kari Ryynänen. Please ask your question.
Yes. Thank you, Kari Ryynänen, Handelsbanken. First, a clarification. This raw material headwind of SEK 700-plus million that you saw in Q1, did you say that 80% of that was FX and 20% then the underlying local currency prices for raw materials?
Yes.
Did I get that right?
Yes.
Okay, thank you. More a strategic question on feminine care. You are showing good organic growth, but you're still pretty small in that category. What would be the benefits of being larger player in this category? Are you happy with growing organically, or is this one of your key focus areas when it comes to acquisitions in emerging markets and maybe Europe as well?
As I stated, Personal Care is a focus area for acquisitions. Feminine is part of that. Of course, if you have a nationwide marketing campaign, and you have 30% market share instead of 15, then the cost per liner or per towel is half for that marketing campaign. The scale benefits are huge in marketing and in other areas.
Finally, Incontinence. Now that you have had about a year to study Procter & Gamble's market entry, are you happy with your product portfolio, how your products are positioned, and that you're still pretty much 100% focused on the brand TENA? Do you see maybe you should diversify in the same way that Procter & Gamble is doing?
We will continue to focus on TENA, and we have a good product range, but of course we are working to continuously adapt and improve the product range to really mitigate and meet Procter in the different markets.
Thank you very much.
Thank you. Your next question comes from the line of Cole Hathorn. Please ask your question.
Morning. I have two questions on the Forest Products division. Firstly, could you give us an update on how successful your EUR 40 a tonne kraftliner price increase has been? Secondly, what are you thinking about for the kraftliner mills strategically now as kind of taking over the CEO role? Would you be thinking about finding them a new home if you were offered a good price?
First of all, the kraftliner prices, we are achieving not all of it, but more than half of it, to give you an estimate. When it comes to the strategy, we have a long and successful strategy of being a hygiene and Forest Products company, and we stick to that strategy.
No plans at the moment to divest any of the kraftliner-
We stick to our strategy.
Sure. Thank you.
Thank you. Your next question comes from the line of Robert Goldsmid. Please ask your question.
Good morning. Two questions if I may. Coming back to Western Europe, in particular, diapers. You've discussed a strong result driven both by own brand and branded. You clearly mentioned the contract win a year ago as driving own brand. I just wanted to see if you're also taking share within own brand or if the share gains are principally related to the branded portion of the business. Second question would be with respect to the significant number of launches that we've seen in the quarter, can you just give some color on the phasing of the A&P? I would presume to support the launches you would have had a heavier weighting of A&P in Q1, which, obviously, might settle down as we go through the rest of the year. Thank you.
Starting with the branded business, the Libero business, which we have in the Nordics, in Russia, and some Eastern countries. We are actually gaining market share in most of these markets under our own brand, Libero, including Russia. I think we found a marketing formula that works. When it comes to the retailer brands or private label, which we are offering in other countries, in Central Europe and in the U.K. Actually, most of our customers there are also gaining market share. It is not only that this one contract is now being fully delivered, it is also that we have a good modern product offering. I think we were actually voted the best diaper in Spain here just a few days ago, which is not under our own brand, but under our customer's brand. It shows that the product is very competitive.
In the second question, about A&P. We had slightly higher A&P in the first quarter, maybe than you will see in the coming quarters, but we will see a slightly higher A&P this year than last year. I think that gives you a range.
Okay. Thank you.
Thanks.
Thank you. Your next question comes from the line of William Huston. Please ask your question.
Hi. Two questions from me, please. One on the capacity closures in tissue that have been announced in France. Could you just talk briefly around those? What the kind of timescale is there, whether that's it for capacity closures, or you would expect any more? Secondly, on the diaper lines in Spain, are those both up and running now?
You talked about selling the capacity in the Polish mill, which is freed up. Could you just talk about whether that's fully done now as well, please? Thank you very much.
Okay. We haven't announced any capacity closures in France, but we are in union negotiations and we are not in a position to announce anything before those union negotiations are finalized. Those union negotiations are progressing according to plan. This is, of course, an important part of our Georgia-Pacific integration and Georgia-Pacific synergy program. That's that. When it comes to the two baby lines in Valls in Spain, both are up and running. The second line is still on its running in-curve, but according to plan. Thirdly, we actually have a very good capacity utilization in all our Personal Care mills now in Europe. We have a high-capacity utilization all over. We needed those two lines in Spain.
Brilliant. Thank you very much.
Thank you. Your next question comes from the line of [Eric Seoguen]. Please ask your question. No, we seem to have no more questions. I see this on my computer here in the front. With this, do you have any final conclusion, Magnus? We are done.
We're done. Thank you very much for listening.