Half-year Report 2018
JANUARY 1 – JUNE 30, 2018
(compared with the corresponding period a year ago)
- Net sales increased 8.1% to SEK 57,741m (53,423)
- Organic net sales, which exclude exchange rate effects, acquisitions and divestments, increased 2.8%
- Operating profit before amortization of acquisition-related intangible assets (EBITA) increased 9% to
SEK 6,080m (5,557)
- Adjusted operating profit before amortization of acquisition-related intangible assets (adjusted EBITA) increased 2% to SEK 6,468m (6,354)
- Higher raw material costs had a negative impact of SEK 1,898m on earnings
- Adjusted EBITA margin decreased 0.7 percentage points to 11.2% (11.9)
- Adjusted profit before tax decreased 1% to SEK 5,529m (5,566)
- Profit for the period increased 10% to SEK 3,857m (3,497)
- Earnings per share increased 11% to SEK 4.98 (4.47)
- Adjusted earnings per share increased 1% to SEK 5.68 (5.60)
- Cash flow from current operations decreased 13% to SEK 3,033m (3,487)
SUMMARY OF SECOND QUARTER OF 2018
The Group’s net sales increased 5.6% and the earnings per share increased 21% for the second quarter of 2018 compared with the corresponding period a year ago. During the quarter, six innovations were launched that strengthened Essity’s customer and consumer offering. To increase efficiency within Consumer Tissue, further restructuring measures were decided, as a part of Tissue Roadmap.
Organic net sales increased 2.3%, of which volume accounted for -0.1% and price/mix for 2.4%. Volumes increased in Personal Care and Professional Hygiene. In Consumer Tissue volumes decreased due to restructuring measures within the scope of Tissue Roadmap, entailing lower sales of mother reels and lower volumes in emerging markets due to price increases. In emerging markets, which accounted for 35% of net sales, organic net sales increased 4.0% while the increase in mature markets was 1.4%.
The Group’s adjusted EBITA in the second quarter of 2018 declined 3% compared with the corresponding period a year ago. Earnings were positively impacted by a better price/mix in all business areas, higher volumes and cost savings. The cost savings continued at a high pace and amounted to SEK 355m. Raw material prices have increased sharply. The market price for pulp is about 35% higher compared with the corresponding period a year ago. There was also a significant increase in the market price for oil-based raw materials. In total, higher raw material costs had a negative impact of SEK 1,144m on the Group’s earnings for the quarter, which corresponds to a negative impact on the adjusted EBITA margin of -4.0 percentage points. The achieved price increases in Consumer Tissue did not offset the higher raw material costs and the intention is therefore to implement further price increases. The Group’s adjusted EBITA margin decreased 0.9 percentage points to 11.3%. The adjusted return on capital employed was 12.3%, and adjusted return on equity was 15.9%. Operating cash flow increased 6%.
INVITATION TO PRESS CONFERENCE ON THE HALF-YEAR REPORT 2018
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, July 19, 2018
Location: Essity’s headquarters, Waterfront Building, Klarabergsviadukten 63, Stockholm, Sweden
The presentation will be webcast at www.essity.com. To participate by telephone, call: +44 (0) 203 009 57 10, +1 866 869 23 21 or +46 8 506 921 85. Specify “Essity” or conference ID no. 5288956.
Link to webcast: https://essity.videosync.fi/2018-07-19-q2
Stockholm, July 19, 2018
Essity Aktiebolag (publ)
President and CEO
For further information, please contact:
Fredrik Rystedt, CFO and Executive Vice President, +46 8 788 51 31
Johan Karlsson, Vice President Investor Relations, Group Function Communications, +46 8 788 51 30
Joséphine Edwall-Björklund, Senior Vice President, Group Function Communications, +46 8 788 52 34
Media Relations, Group Function Communications, +46 8 788 52 20
This information is such information that Essity Aktiebolag (publ) is obligated to make public pursuant to the EU Market Abuse Regulation and the Swedish Securities Markets Act. 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 7:00 a.m. CET on July 19, 2018. This interim report was reviewed by the company’s auditors.
Henrik Sjöström, Media Relations Manager, +46 8 788 51 36