JANUARY 1 – SEPTEMBER 30, 2018
(compared with the corresponding period a year ago)
SUMMARY OF THIRD QUARTER OF 2018
The Group’s net sales increased 9.1% for the third quarter of 2018 compared with the corresponding period a year ago and earnings per share amounted to SEK 1.41.
The third quarter of 2018 was challenging as the negative impact from raw material and energy costs has accelerated further. On the whole, these factors negatively impacted our margins in the short term, despite higher selling prices, a better mix and costs savings in all business areas.
To increase profitability, we are implementing measures in several areas:
Organic net sales, excluding the lower sales of mother reels, increased 2.5%, of which volume accounted for -0.1% and price/mix for 2.6%. Including the lower sales of mother reels, organic sales increased 1.6%, of which volume accounted for -1.0% and price/mix for 2.6%. Organic net sales was positively impacted by higher prices and a better mix in all business areas. In emerging markets, which accounted for 35% of net sales, organic net sales increased 4.3% while the decrease in mature markets was 0.1%.
The Group’s adjusted EBITA in the third quarter of 2018 declined 12% compared with the corresponding period a year ago. Earnings were positively impacted by higher prices and a better mix in all business areas, higher volumes and cost savings amounting to SEK 180m. Our work to achieve cost savings continued but the high level of cost savings in the year-earlier period impacted the reported increase in the quarter. Higher raw material and energy costs had a negative impact of SEK -1,418m on earnings, which corresponds to a negative impact on the adjusted EBITA margin of -5.1 percentage points. The market price for pulp is about 30% higher compared with the corresponding period a year ago. The market price of oil-based raw materials has also increased significantly. Furthermore, higher distribution costs had a negative impact on earnings. The Group’s adjusted EBITA margin decreased 2.4 percentage points to 10.2%. The adjusted return on capital employed was 11.0%, and adjusted return on equity was 13.7%. Operating cash flow increased 4%.
Essity has been included in the Dow Jones Sustainability Index, one of the world’s most prestigious sustainability indices. Essity has qualified for inclusion in both the Dow Jones Sustainability World Index and the Dow Jones Sustainability Europe Index, and has also been named industry leader in the Household Products sector.
INVITATION TO PRESS CONFERENCE ON INTERIM REPORT Q3 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, Monday, October 29, 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) 207 192 80 00, +1 631 510 74 95 or +46 8 506 921 80. Specify “Essity” or conference ID no. 6358697.
Link to webcast: https://essity.videosync.fi/2018-10-29-q3
Stockholm, October 29, 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
Per Lorentz, Vice President Corporate Communications, +46 8 788 52 51
This information is such information 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 7:00 a.m. CET on October 29, 2018. This interim report was not reviewed by the company’s auditors.
Karl Stoltz, Media Relations Manager, +46 8 788 51 55