Essity: Interim Report Q1 2019

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Apr 25, 2019, 01:21 ET

STOCKHOLM, April 25, 2019 /PRNewswire/ -- JANUARY 1 – MARCH 31, 2019
(compared with the corresponding period a year ago)

Net sales increased 9.4% to SEK 30,656m (28,020)
Organic net sales increased 4.3%
Organic net sales increased 5.1%, excluding the lower sales of mother reels due to production closures
In emerging markets, which accounted for 37% of net sales, organic net sales increased 9.1%
Operating profit before amortization of acquisition-related intangible assets (EBITA) increased 9% to SEK 3,002m (2,760)
Adjusted EBITA increased 2% to SEK 3,190m (3,119)
Adjusted EBITA margin was 10.4% (11.1)
Higher raw material and energy costs had a negative impact of SEK 1,017m on earnings
Profit for the period increased 12% to SEK 1,929m (1,726)
Earnings per share increased 20% to SEK 2.49 (2.08)
Adjusted earnings per share increased 10% to SEK 2.86 (2.61)
Cash flow from current operations increased to SEK 2,434m (1,247)

SUMMARY OF THE FIRST QUARTER OF 2019

We have continued our activities to increase profitability and implemented further efficiency improvements that have yielded significant costs savings. Our digital initiatives across all parts of the business have helped to enhance efficiency, quality and our offering to customers and consumers. In addition, we carried out price increases in all business areas. We continued to invest in our strong brands and launched innovations that have further reinforced our customer and consumer offering and improved the product mix. For example, within Incontinence Products, we launched TENA Silhouette and within Feminine Care, we launched intimate care products under the Bodyform brand. Our targeted efforts to build a winning corporate culture are yielding results and Essity has been named Sweden's most attractive employer in 2019 by Randstad.

The Group's net sales increased 9.4% in the first quarter of 2019 compared with the corresponding period a year ago. Organic net sales, excluding the lower sales of mother reels, increased 5.1%. Including the lower sales of mother reels, organic net sales increased 4.3%, of which volume accounted for 1.1% and price/mix for 3.2%. Organic net sales was positively impacted by higher volumes and prices and a better product mix in all business areas. In emerging markets, which accounted for 37% of net sales, organic net sales increased 9.1%, while the increase in mature markets was 1.8%.

The Group's adjusted EBITA in the first quarter of 2019 increased 2% compared with the corresponding period a year ago. Earnings were positively impacted by higher volumes, higher prices, a better product mix and cost savings. Cost savings amounted to SEK 295m, of which SEK 109m was related to the Group-wide cost-savings program. The program is proceeding according to plan and at the end of the first quarter of 2019, the annual rate of savings was approximately SEK 530m. Higher raw material and energy costs had a negative impact of SEK -1,017m on earnings, which corresponds to a negative impact on the adjusted EBITA margin of -3.5 percentage points. Furthermore, higher distribution costs had a negative impact on earnings. The Group's adjusted EBITA margin decreased 0.7 percentage points to 10.4%. The adjusted return on capital employed was 11.3%. Operating cash flow increased 10%. Earnings per share increased 20% to SEK 2.49.

INVITATION TO PRESS CONFERENCE ON INTERIM REPORT Q1 2019
Media and analysts are invited to a press conference, where this interim report will be presented by Magnus Groth, President and CEO.

Time: 9:00 a.m. CET, Thursday, April 25, 2019
Location: Essity's headquarters, Waterfront Building, Klarabergsviadukten 63, Stockholm, Sweden

The press conference will be webcasted live at www.essity.com. To participate by telephone, call: +44 (0) 207-192-80-00, +1-631-510-74-95 or +46-8-506-921-80. Please call well in advance of the start of the conference. Specify "Essity" or conference ID no. 2778769. Link to webcast: https://essity.videosync.fi/2019-04-25-q1

Essity Aktiebolag (publ)

Magnus Groth
President and CEO

NB:
This information is such that Essity Aktiebolag (publ) is obligated to make public pursuant to the EU Market Abuse Regulation. This report has been prepared in both Swedish and English versions. In case of variations in the content between the two versions, the Swedish version shall govern. The information was submitted for publication, through the agency of the contact person set out below, at 07:00 CET on April 25, 2019. This interim report has not been reviewed by the company's auditors.

For further information, please contact:
Fredrik Rystedt
CFO and Executive Vice President
+46 (0) 8-788-51-31

Johan Karlsson
Vice President Investor Relations
Group Function Communications
+46 (0) 8-788-51-30

Joséphine Edwall-Björklund
Senior Vice President, Group Function Communications
+46 (0) 8-788-52-34

Per Lorentz
Vice President Corporate Communications
Group Function Communications
+46 (0) 8-788-52-51