Essity Announces Half-Year Report for 2023

Net sales increased 20.2 percent to SEK 86,856m (72,230)
Sales growth, including organic sales growth and acquisitions, amounted to 12.8 percent of which volume accounted for -3.1 percent, price/mix for 14.6 percent and acquisitions for 1.3 percent.
Operating profit before amortization of acquisition-related intangible assets (EBITA) increased 101 percent to SEK 8,660m (4,313)
Adjusted EBITA increased 51 percent to SEK 9,059m (5,984) and the adjusted EBITA margin increased 2.1 percentage points to 10.4 percent (8.3)
Profit for the period increased 139 percent to SEK 5,254m (2,194)
Earnings per share increased to SEK 7.32 (2.55) and adjusted earnings per share increased 46 percent to SEK 8.31 (5.69)
Cash flow from current operations amounted to SEK 1,264m (2,295).
Return on capital employed increased to 10.8 percent (9.2) and the adjusted return on capital employed to 11.4 percent (10.2)
Essity exited the Russian market in July 2023

CEO’s Comments

High sales growth and sharp earnings improvement

Essity performed well in the second quarter with continued high sales growth and higher margins. We are following our plan to achieve our target of a return on capital employed of above 17 percent by 2025. Essity has now completely exited the Russian market and the ongoing strategic review of ownership in Vinda and Consumer Tissue Private Label Europe is proceeding according to plan.

Increase in sales and higher earnings

During the second quarter, net sales increased 15.8 percent and sales growth, including organic sales growth and acquisitions, amounted to 8.7 percent. Sales prices were higher and the product mix was better. The lower volumes are mainly the result of our focus on margin improvement, resulting in us exiting certain volumes with unsatisfactory profitability. Adjusted EBITA increased by 49 percent and the adjusted EBITA margin by 2.4 percentage points to 10.7 percent. The margin was positively impacted by higher selling prices, a better mix and cost savings. Earnings per share increased to SEK 3.53.

Essity has exited Russia

Since the start of Russia’s war against Ukraine, we have been fully focused on exiting Russia. Work commenced in April 2022 and this has now been completed.

Strategic review

During the quarter, a strategic review was initiated of our ownership in the Asian hygiene company Vinda and Consumer Tissue Private Label Europe with the aim of reducing Consumer Tissue’s share of the company’s total sales. The process is proceeding according to plan and various options are being explored that may result in divestments, although no such decisions have yet been taken. Excluding these businesses, Essity’s organic sales growth would have amounted to 8.0 percent and the adjusted EBITA margin to 12.5 percent during the second quarter of 2023.

Sustainable innovations for improved well-being

During the quarter, innovations were launched in all business areas that strengthen our customer and consumer offering and reduce our environmental impact. Our two leading brands, Tork and Libresse, launched Tork Period Care dispenser, which offers feminine care products in public restrooms. We are continuing to build on our globally leading position in leakproof apparel and expanded our offering in Latin America with reusable pads under the Saba and Nosotras brands. Our sustainability work was recognized when we were once again awarded a Platinum medal by EcoVadis.

Progress toward our return target

The adjusted return on capital employed increased to 13.2 percent. We are working in a focused manner – through innovation, value-generating customer offerings, strong brands, efficiency improvements and sustainable, profitable growth – to achieve our target of an adjusted return on capital employed of above 17 percent by 2025.

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