Essity sharpens focus on profitable growth, unveiling share buyback program

Essity, the hygiene and health company resulting from the recent divestment of its Vinda subsidiary, unveiled new financial targets recently. The revised goals prioritize profitable growth, leveraging the company’s strong market position.

HIGHER MARGINS EXPECTED

The company also established a new target for EBITDA (Earnings Before Interest, Taxes, and Amortization) margin, excluding items affecting comparability (IAC), of more than 15%. Previously, the company targeted a return on capital employed (ROCE) exceeding 17% by 2025, which translated to an EBITDA margin of approximately 13.5% (excluding IAC).

“Essity is well-positioned and even more ambitious now”, said Magnus Groth, Essity’s president and CEO. “We aim for organic growth exceeding 3% annually, even without Vinda, while achieving higher and more stable margins. Favorable market trends, combined with successful innovations, strong brands, and efficiency initiatives, provide the platform to gain market share and improve profitability”.

SHARE BUYBACK PROGRAM LAUNCHED

The company’s board of directors authorized a share buyback program for Class B shares, valued at SEK 3 billion (approximately USD 338 million) and representing up to 10% of outstanding shares. The program commenced recently and will extends until the 2025 Annual General Meeting. Repurchased shares will be cancelled, with financing coming from post-dividend cash flow from current operations. The company intends for share buybacks to become a recurring capital allocation strategy.

Danske Bank will manage the share buyback program, independently deciding on repurchase dates. Transactions will occur on Nasdaq Stockholm following exchange regulations and relevant European Union market abuse regulations. Repurchased shares will be acquired within the prevailing price range on the exchange.