Essity: Interim Report Quarter 3 2023

USA - English

• USA - English

STOCKHOLM, Oct. 26, 2023 /PRNewswire/ -- JANUARY 1 – SEPTEMBER 30, 2023 
(compared with the corresponding period a year ago)

• Net sales increased 16.1% to SEK 130,372m (112,339). Sales growth, including organic sales growth and acquisitions, amounted to 9.8%, of which volume accounted for -3.2%, price/mix for 11.9% and acquisitions for 1.1%.

• Operating profit before amortization of acquisition-related intangible assets (EBITA) increased 74% to SEK 12,323m (7,097)

• Adjusted EBITA increased 60% to SEK 14,372m (8,974) and the adjusted EBITA margin increased 3.0 percentage points to 11.0% (8.0)

• Profit for the period increased 81% to SEK 6,905m (3,818)

• Earnings per share increased to SEK 9.58 (4.78) and adjusted earnings per share increased 55% to SEK 13.20 (8.50)

• Operating cash flow increased 75% to SEK 11,755m (6,704)

• Return on capital employed increased to 11.3% (7.7) and the adjusted return on capital employed increased 3.7 percentage points to 12.9% (9.2)

 
CEO'S COMMENTS Strong quarter with high profitable growth

Essity delivered strong earnings for the third quarter of 2023. Net sales continued to increase and adjusted EBITA increased by 78% to SEK 5.3bn. The adjusted EBITA margin was higher for the fourth consecutive quarter and amounted to 12.2%. As leading in the growing global hygiene and health market, we are taking further steps toward achieving our Group targets concerning sales growth, return and a reduced environmental footprint.

Higher selling prices, a positive product mix, cost savings and lower costs for raw materials, energy and distribution had a positive impact on earnings. All three business areas developed well with higher sales and higher adjusted EBITA margin. Operating cash flow increased 182% to SEK 7.5bn. Adjusted earnings per share increased to SEK 4.90. The adjusted return on capital employed increased to 14.6%, which means we are well on our way to achieving the return target of >17%.

Our strategic review of ownership in Vinda and Consumer Tissue Private Label Europe, with the aim of reducing Consumer Tissue's share of the company's total sales, is proceeding according to plan.

Higher sales and innovation

Sales growth, including organic sales growth and acquisitions, amounted to 4.6%. Selling prices were higher and the product mix was better. Volumes were lower, mainly due to the company's focus on profitable growth and thereby decisions to implement restructuring measures in Professional Hygiene and to exit contracts with insufficient profitability in Incontinence Products Health Care and Baby Care. We reported very high organic sales growth for Incontinence Products Retail, Feminine Care and Medical Solutions. The earlier acquisitions of, for example, Knix and Hydrofera, have strengthened our offerings and market positions. With improved margins in all of the business areas, we are endeavoring to continue to increase the company's profitable growth. The pace of innovation is high in all categories and we are investing in marketing and sales for higher growth and market shares. During the quarter, we launched value-creating innovations for customers and consumers under the TENA, JOBST, Actimove, Tempo and Plenty brands.

Sustainability at the core

We are striving to achieve our targets in ESG and for net zero emissions by 2050. In France, we have inaugurated the world's first production line that manufactures tissue from used food and beverage cartons. This means Essity recycles more than half of all sorted and recycled food and beverage cartons in France. During the quarter, we began to use electricity from solar cells in the production at our site in the Netherlands.

Summary

We can look back on another quarter with high sales growth and higher EBITA margin, where all business areas made positive contributions through profitable growth and margin improvements. In line with our strategy, we continued to grow in the categories and sales channels with the fastest market growth and highest returns. At the same time, the decisions regarding restructuring in Professional Hygiene and exiting contracts with insufficient profitability in Incontinence Products Health Care and Baby Care, had a negative impact on the sales growth of approximately 2% during the quarter. However, these decisions have improved the structural margin long-term. Going forward, we expect the markets to normalize and through focus on innovation, leading brands, efficiency and sustainability increase the company's profitable growth.

Magnus Groth
President and CEO
 

FUTURE REPORTS
The year-end report for 2023 will be published on January 25, 2024. Essity's Annual Report for 2023 is intended to be published during the week starting February 26, 2024. In 2024, interim reports will be published on April 25, July 18 and October 24.

ANNUAL GENERAL MEETING
Essity's Annual General Meeting will be held in Stockholm, Sweden, on March 21, 2024.

INVITATION TO PRESENTATION OF THE THIRD QUARTER REPORT FOR 2023
In conjunction with publication, a telephone and web presentation will be held at 09:00 CET, where President and CEO Magnus Groth will present and answer questions.

Presentation:

Date: Thursday, October 26, 2023

Time: 09:00 CET

Link to web presentation: https://essity.videosync.fi/2023-10-26-q3

Telephone: UK: +44 (0) 33 0551 02 00, USA: +1 786 697 35 01, SWE: +46 (0) 8 505 204 24. Please call in well in advance of the start of the presentation. Indicate: "Essity". The presentation of the interim report will also be broadcast live on LinkedIn and X (Twitter).

Stockholm, October 26, 2023
Essity Aktiebolag (publ)

Magnus Groth
President and CEO
 

For further information, please contact:

Fredrik Rystedt, CFO and Executive Vice President, +46 (0) 8 788 51 31

Sandra Åberg, Vice President Investor Relations, Group Function Finance, +46 (0) 70 564 96 89

Per Lorentz, Vice President Corporate Communications, Group Function Communications, +46 (0) 73 313 30 55
 

NB:
This interim report has not been reviewed by the company's auditors.
 
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 Karl Stoltz, Media Relations Director, at 07:00 CET on October 26, 2023.

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