Essity net sales up 25% in first quarter

In first quarter of 2023, the multinational Essity recorded a 25.1% increase in net sales to SEK 42,926 million, with a profit of SEK 2,703 million.

Operating profit before amortization of acquisition-related intangible assets (EBITA) increased to SEK 4,445 million from SEK 1,663 million last year, while adjusted EBITA increased to SEK 4,358 million from SEK 2,826 million; and the adjusted EBITA margin to 10.2%. Cash flow from current operations amounted to SEK 849 million.

“Essity’s sales and profitability performed positively in the first quarter, primarily due to attractive customer offerings and higher sales prices to compensate for the cost increase”, said Magnus Growth, President and CEO.

Essity’s sales growth amounted to just over 17% for the first quarter of 2023, compared with the corresponding period of 2022. Sales prices were higher and the product mix better in all business areas. Volumes declined somewhat on account of the company’s prioritization of higher profitability ahead of volume. Furthermore, volumes were negatively impacted by ongoing efforts to exit the Russian market and the discontinuation of the baby diaper business in Latin America.

 

According to the President and CEO, Essity continuously evaluates the product portfolios within the company’s three business areas – Health & Medical, Consumer Goods and Professional Hygiene – to achieve increased long-term value creation.

In line with this, Essity is initiating a strategic review of the company’s ownership of Vinda and the consumer tissue private label Europe business, with the aim of reducing Consumer Tissue’s share of the company’s total sales. The strategic review includes exploring different options and may result in divestments. Although no such decisions have yet been taken.

During the first quarter of the year, Essity announced several important steps toward net zero emissions. “We are first to produce tissue in a CO2-free production process using renewable hydrogen and to produce high-quality tissue from agricultural waste. We have also entered an exclusive partnership to develop a new tissue making process with the aim of significantly reducing energy consumption, CO2 emissions and water consumption”, said Groth.

Essity has been included in S&P Global Sustainability Yearbook and been awarded a place on CDP’s 2022 Supplier Engagement Leaderboard.

According to the CEO, the company’s adjusted return on capital employed increased to 12.7% for the first quarter of 2023. “We are working in a focused manner – through innovation, value-generating customer offerings, strong brands, efficiency improvements and sustainable, profitable growth – to achieve our target of an adjusted return on capital employed of more than 17% by 2025”, concluded Magnus Groth.