Essity, the Swedish health and hygiene company, has published its report for 2023 with its highest ever profit and growth ambitions for the future. The data is from January 1 to December 31, 2023, compared to the same period last year.
In 2023, Essity’s net sales increased by 12.1% to SEK 147.147 billion. Sales growth, including organic growth and acquisitions, was 6.7%, with volume accounting for -3.7%, price/mix 9.5% and acquisitions 0.9%.
The high growth in sales occurred in all of the company’s business areas. In Health and Medicine, decisive price increases led to a sharp rise in margin. For the Professional Hygiene sector, restructuring measures in North America and Europe increased the structural margin by approximately 2%. In Consumer Goods, the strong growth in the retail volume of incontinence and feminine care products continued.
In addition, in 2023 Essity was also successful with the Baby Care trend, which showed a strong improvement. In the Tissue sector, price increases produced higher and more stable margins. The company’s adjusted Ebita was SEK 18,898 billion and the adjusted Ebita margin increased by 3.6% to 12.8%.
The adjusted return on capital employed was 16.4%. For the fiscal year 2023, the Board of Directors proposes an increase in the dividend of 7% to SEK 7.75 per share.
STRONG FOURTH QUARTER
In the fourth quarter, sales growth, including organic sales growth and acquisitions, was -0.7%. Volumes were lower, mainly due to the focus on profitable growth and the decisions at the beginning of the year to carry out restructuring measures and terminate contracts with insufficient profitability.
The decisions improved Essity’s structural margin in the long term and, excluding these measures, volumes increased by 1.2%. Adjusted Ebita increased by 18% and margin by 2.1 percentage points to 13.3%. The company’s efforts to increase productivity and achieve more efficient use of resources led to savings in the cost of goods sold of SEK 377 million in the fourth quarter of the year.
Meanwhile, Essity invested in future volume growth and higher market shares by stepping up sales and marketing activities. To this end, the company launched innovations in all business areas, which improved its offerings to customers and consumers and increased its market shares during the quarter.
Essity has continued to develop in the categories and sales channels with the highest growth and market return. The previous acquisitions of, for example, Knix, Hydrofera and Legacy, have strengthened the offerings and contributed to high growth.
“We are committed to accepting Isola Castle Ltd’s offer for all of Vinda’s shares. It represents a very attractive offer for Essity and our shareholders, and also provides a product portfolio with higher and more stable returns. Consumer Tissue’s share of net sales in 2023 will decrease from 41% to 33%,” Essity said in the report.
A MORE SUSTAINABLE FUTURE
By providing hygiene and health solutions to billions of people every day around the world, Essity considers that it has a substantial opportunity to influence society and the environment.
In this regard, the company has taken some additional steps with the aim of reaching zero net greenhouse gas emissions by 2050 and, for the Science-Based Targets, Scope 1 and 2, the decrease is 26% for the period 2016-2023.
Essity was named one of the world’s most sustainable companies by Corporate Knights for its inclusion in the Global 100 list, representing the top 1% of companies in the world in terms of sustainability performance. “For the third year running, we have been named a Diversity Leader by the Financial Times and included in the S&P Global Sustainability Yearbook for the second year running,” the company added.
FOCUS ON PROFITABLE GROWTH IN 2024
After many measures in 2023 and structurally improved profitability, Essity believes it has a solid platform for profitable growth in 2024.