Half-year Report 2023

JANUARY 1 – JUNE 30, 2023
(compared with the corresponding period a year ago)

• Net sales increased 20.2% to SEK 86,856m (72,230)
• Sales growth, including organic sales growth and acquisitions, amounted to 12.8% of which volume accounted for -3.1%, price/mix for 14.6% and acquisitions for 1.3%.
• Operating profit before amortization of acquisition-related intangible assets (EBITA) increased 101% to SEK 8,660m (4,313)
• Adjusted EBITA increased 51% to SEK 9,059m (5,984) and the adjusted EBITA margin increased 2.1 percentage points to 10.4% (8.3)
• Profit for the period increased 139% to SEK 5,254m (2,194)
• Earnings per share increased to SEK 7.32 (2.55) and adjusted earnings per share increased 46% 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% (9.2) and the adjusted return on capital employed to 11.4% (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% 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% and sales growth, including organic sales growth and acquisitions, amounted to 8.7%. 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% and the adjusted EBITA margin by 2.4 percentage points to 10.7%. 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% and the adjusted EBITA margin to 12.5% 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%. 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% by 2025.
  

Magnus Groth
President and CEO 
 

FUTURE REPORTS

In 2023, an interim report will be published on October 26. The year-end report for 2023 will be published on January 25, 2024.

INVITATION TO PRESENTATION OF THE HALF-YEAR 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, 20 July 2023
Time: 09:00 CET
Link to web presentation: https://essity.videosync.fi/2023-07-20-q2
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”.

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 Finance, +46 (0) 70 511 15 81
Per Lorentz, Vice President Corporate Communications, Group Function Communications, +46 (0) 73 313 30 55 
 
NB:

This information is such that Essity Aktiebolag (publ) is obligated to make public pursuant to the EU Market Abuse Regulation and the 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 Karl Stoltz, Media Relations Director, at 07:00 CET on July 20, 2023.