Essity Q3 2023: Driving Success with Profitable Growth

Magnus Groth, President and CEO of Essity, said that in the third quarter of 2023, the company delivered strong results, highlighting a steady increase in net sales and 78% increase in adjusted EBITA to SEK 5.3 billion. In addition, the adjusted EBITA margin experienced sustained growth for four consecutive quarters, reaching 12.2%. As a leader in the ever-expanding global hygiene and healthcare market, Essity is taking additional steps to meet the Group’s objectives, which include sales growth, return and reducing its environmental footprint.

Higher selling prices, a positive product mix, cost savings and lower costs for raw materials, energy and distribution had a positive impact on earnings. All three business areas developed well with higher sales and higher adjusted EBITA margin. Operating cash flow increased 182% to SEK 7.5bn. Adjusted earnings per share increased to SEK 4.90. The adjusted return on capital employed increased to 14.6%, which means we are well on our way to achieving the return target of >17%.

According to the CEO, the company’s strategic review of ownership in Vinda and Consumer Tissue Private Label Europe, with the aim of reducing Consumer Tissue’s share of the company’s total sales, is proceeding according to plan.

 

HIGHER SALES AND INNOVATION

Sales growth, including organic sales growth and acquisitions, amounted to 4.6%. Selling prices were higher and the product mix was better. Volumes were lower, mainly due to the company’s focus on profitable growth and thereby decisions to implement restructuring measures in Professional Hygiene and to exit contracts with insufficient profitability in Incontinence Products Health Care and Baby Care.

The company reported very high organic sales growth for Incontinence Products Retail, Feminine Care and Medical Solutions. The earlier acquisitions of, for example, Knix and Hydrofera, have strengthened its offerings and market positions.

“With improved margins in all of the business areas, we are endeavoring to continue to increase the company’s profitable growth. The pace of innovation is high in all categories and we are investing in marketing and sales for higher growth and market shares. During the quarter, we launched value-creating innovations for customers and consumers under the TENA, JOBST, Actimove, Tempo and Plenty brands,” commented Groth.

SUSTAINABILITY AT THE CORE

Regarding the company’s sustainability goals, the CEO said: “We are striving to achieve our targets in ESG and for net zero emissions by 2050. In France, we have inaugurated the world’s first production line that manufactures tissue from used food and beverage cartons. This means Essity recycles more than half of all sorted and recycled food and beverage cartons in France. During the quarter, we began to use electricity from solar cells in the production at our site in the Netherlands.”