Essity Half-Year Report 2022: Net Sales up 27.8 percent From Year Ago to SEK 72.2 billion

Net sales increased 27.8 percent to SEK 72,230m (56,496)
Sales growth, including organic sales growth and acquisitions, amounted to 19.0 percent. Organic sales growth, excluding exchange rate effects, acquisitions and divestments, was 16.3 percent, of which volume accounted for 5.5 percent and price/mix for 10.8 percent.
Price increases were implemented and further increases will be carried out in the second half of 2022
The company’s assets in Russia have been impaired by approximately SEK 1.6bn. Furthermore, work has been initiated to exit the Russian market.
Operating profit before amortization of acquisition-related intangible assets (EBITA) amounted to SEK 4,313m(6,937)
Adjusted EBITA amounted to SEK 5,984m (7,017) and the adjusted EBITA margin amounted to 8.3 percent (12.4). Higher costs for raw materials, energy and distribution had a negative impact of 12.4 percentage points on the margin. The margin was positively impacted by higher volumes, higher selling prices and a better mix.
Return on capital employed amounted to 9.2 percent (14.0). Adjusted return on capital employed amounted to 10.2 percent (14.1).
Profit for the period was SEK 2,194m (4,627)
Earnings per share were SEK 2.55 (5.56) and adjusted earnings per share were SEK 5.69 (6.03)
Cash flow from current operations increased to SEK 2,295m (1,741)
On July 7 and 8, 2022, the acquisitions of Knix and Modibodi were announced, two leading companies in leakproof apparel

Record growth and higher sequential profit

Magnus Groth, president and CEO, says:

“In a turbulent world, Essity stands strong. We have further strengthened the company through significant price increases, successful product launches, increased productivity and leading sustainability work. In July, we announced the acquisition of two companies in leakproof apparel to become the fastest growing company in Intimate Hygiene.

During the second quarter of 2022, net sales increased 31 percent to approximately SEK 38bn. Sales growth, including organic sales growth and acquisitions, amounted to 20.6 percent. We implemented significant price increases, while we had higher volumes in all business areas. Price elasticity in our categories is low and our brands are strong. Essity’s market shares increased for approximately 50 percent of branded sales in the retail trade over the past 12 months. This was the result of long-term investments in innovation, digitalization and marketing. E-commerce sales increased organically by 25 percent to about 15 percent of net sales. Organic sales growth for the Group was 17.8 percent, of which price/mix accounted for 14.1 percent and volume for 3.7 percent. Further price increases will be carried out in the second half of 2022.

Adjusted EBITA decreased 7 percent compared with the corresponding period of 2021 but increased 12 percent compared with the first quarter of 2022. Adjusted EBITA amounted to SEK 3,158m and EBITA to SEK 2,650m. The adjusted EBITA margin decreased 3.5 percentage points to 8.3 percent, which was an improvement compared with the first quarter of 2022. Raw material, energy and distribution costs continued to rise in the second quarter, negatively impacting the adjusted EBITA margin by 12.8 percentage points. We offset a large share of this through significantly higher selling prices, a better mix and higher volumes. We also continued to improve productivity through increased efficiency in our production facilities, material rationalizations and digitalization of processes. Our efficiency efforts are continuing at a high pace but the reported cost savings were negatively impacted by high cost inflation and the net outcome for the quarter is therefore negative. Sales and marketing costs were higher during the quarter but decreased as a share of net sales. The adjusted return on capital employed was 9.6 percent. Adjusted earnings per share increased to SEK 2.97 and earnings per share amounted to SEK 2.11. Cash flow from current operations amounted to SEK 1,225m.

In July, we announced the acquisition of two companies. Knix and Modibodi are leading companies in leakproof apparel, which is the fastest growing product segment in Intimate Hygiene as consumers choose more comfortable, discrete, reliable and sustainable solutions for periods and incontinence. Through the acquisitions, Essity will become the global market leader within leakproof apparel* and builds the fastest growing company in Intimate Hygiene.”

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