Global Tissue News

Essity reports half-year results

They had a “strong performance in a challenging market”

Essity has reported increased market shares in many markets and increased online sales in its half-year results, but added that sales were negatively impacted by Covid-19 and related lockdowns.

Between 1 January – 30 June 2020, net sales decreased 1.0% to SEK62,119m compared with the same period a year ago.

Emerging markets accounted for 36% of net sales and here organic net sales increased 2.3%.

EBITA increased 43% to SEK9,159m and profit for the period increased 38% to SEK6,118m.

In the second quarter of 2020, the group’s net sales declined 11.4% year-on-year.

Emerging markets accounted for 39% of net sales and saw organic net sales increase 0.6%.

Magnus Groth, Essity chief executive and president, told TWM: “To summarise the results of the second quarter, we had a strong performance in a challenging market.

“By strong performance I mean very good margins and strong overall operating profit.

“The challenging environment very much impact the top line, so sales that were down significantly, 11.4% and the big impact was in our Professional Hygiene’s tissue categories, whereas Consumer Tissue did better.”

Online sales grew substantially as a share of net sales after the company increased its market shares in many markets through high delivery and successful product launches, as well as increased activity and strengthened presence in digital sales channels.

Groth added: “We’re seeing a big, big shift in terms of E-Commerce. For Essity as a whole, our online sales increased from 11.5% of sales a year ago in the second quarter of 2019, to 14% this second quarter.

“So a big, big pick up, this is clearly the fastest growing channel. The biggest so far and it’s for both for Personal Hygiene and Consumer Tissue.

“More consumers are using online to order their tissue and towel products, especially in lockdown when they’re working from home.”

Sales were also negatively affected by inventory adjustments following the stockpiling that took place among consumers and distributors in March 2020.

The lockdowns mainly resulted in a temporary reduction in demand in Professional Hygiene and Medical Solutions.

Lower volumes and higher distribution costs for the group and lower prices for the business area Consumer Tissue had a negative impact on the gross margin.

The company added that eventually, the Covid-19 pandemic may lead to increased demand for its hygiene and health products as a result of increased awareness of the importance of hygiene and health.

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