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Essity B 288.6 (+5.2 SEK) on 18-Oct-2019 17:29

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Leading market positions in an attractive and growing hygiene and health market
Essity is a leading global hygiene and health company. We have sales in approximately 150 countries and hold the number one or number two position within at least one product category in approximately 90 countries. Shifts in global demographics such as population growth and increased longevity as well as higher disposable income point to continued good growth for hygiene and health products. An aging population and increased prevalence of chronic diseases, such as obesity and diabetes, and greater life expectancy of people with chronic diseases, are expected to increase demand for incontinence products and medical solutions. Market growth for hygiene and health products is also positively impacted by increased awareness of the importance of hygiene to avoid diseases and improve health. Essity holds a strong position in several key emerging markets, such as China, Latin America and Russia. We are the majority shareholder in Vinda, one of China’s largest hygiene companies. Emerging markets accounted for 35% of Essity’s net sales in 2018. The growth potential for hygiene and health products is high in emerging markets where market penetration is significantly lower than in mature markets and where urbanization, higher disposable income, the development of the retail trade and improved access to health care are resulting in increased demand for hygiene and health products.

Strong brands and successful innovations
Essity is the global market leader in incontinence products with the TENA brand and in Professional Hygiene with the Tork brand. We also have strong brands and market positions in the markets for baby care, feminine care, medical solutions and consumer tissue. Essity’s offerings simplify everyday life for hundreds of millions of people worldwide every day. In 2018, we launched important innovations that offer greater value for customers and consumers while also reducing resource consumption. As an important element in our innovation work, we develop market-leading digital products and services in hygiene and health.

Focus on efficiency improvements and cost savings
Essity continuously works to improve efficiency in order to strengthen competitiveness, cut costs and improve earnings. By streamlining the supply chain and leveraging digitalization and economies of scale, a more efficient value chain is achieved. Improved capital efficiency, lower costs and strengthened cash flow are made possible through efficiency improvements and savings measures, as well as the optimization of capital employed. To improve profitability and strengthen the company’s long-term cost efficiency, Essity introduced a Group-wide cost-savings program in September 2018. The program is in addition to the efficiency initiatives already in progress in the company. Changes were also made to the company’s organizational structure and Executive Management Team.

Sustainable business model with profitable growth and strong cash flow
Essity’s sustainable business model creates value for both people and nature. Essity’s objective is to develop products and services that contribute toward a sustainable and circular society where we strive to reduce resource consumption and to offer efficient recycling or composting of our products. In 2018, Essity was included in Dow Jones Sustainability Index and named industry leader in the Household Products sector. Through continuous work to grow profitable market positions, improve or exit underperforming positions, and successful innovations and efficiency improvements, Essity has demonstrated profitable growth and strong cash flow. Between 2014 and 2018, Essity’s net sales increased 34.7%. Organic net sales increased 13.3%, corresponding to an annual increase of 3.2%. During the same period, adjusted EBITA1) increased 36% and the adjusted EBITA margin1) increased from 10.8% to 10.9%. The company has generated strong cash flow and in 2018, operating cash flow amounted to SEK 12,324m.

1)
Excluding items affecting comparability.

Contacts

Johan Karlsson

Vice President Investor Relations

Direct: +46 8 788 51 30

Sandra Åberg

Director Investor Relations

Direct: +46 8 788 51 70