Interim Report Quarter 1, 2023
JANUARY 1 – MARCH 31, 2023
(compared with the corresponding period a year ago)
- Net sales increased 25.1% to SEK 42,926m (34,301)
- Sales growth, including organic sales growth and acquisitions, amounted to 17.2%, of which volume accounted for
-2.6%, price/mix for 18.6% and acquisitions for 1.2%.
- Operating profit before amortization of acquisition-related intangible assets (EBITA) increased to SEK 4,445m (1,663)
- Adjusted EBITA increased to SEK 4,358m (2,826) and the adjusted EBITA margin to 10.2% (8.2)
- Profit for the period increased to SEK 2,703m (521)
- Earnings per share increased to SEK 3.79 (0.44) and adjusted earnings per share to SEK 3.97 (2.72)
- Cash flow from current operations amounted to SEK 849m (1,070)
- Return on capital employed increased to 12.9% (5.3) and the adjusted return on capital employed to 12.7% (9.0)
- Essity is initiating a strategic review of its ownership of Vinda and the Consumer Tissue Private Label Europe business
Strong start to the year for both sales and profitability
Essity’s sales and profitability performed positively in the first quarter, primarily due to attractive customer offerings and higher sales prices to compensate for the cost increase. As part of our efforts to increase the company’s long-term value creation, we have decided to initiate a strategic review of our ownership of Vinda and the Consumer Tissue Private Label Europe business with the aim of reducing Consumer Tissue’s share of the company’s total sales.
Higher sales and profitability
Essity’s sales growth amounted to just over 17% for the first quarter of 2023, compared with the corresponding period of 2022. Sales prices were higher and the product mix better in all business areas. Volumes declined somewhat on account of the company’s prioritization of higher profitability ahead of volume. Furthermore, volumes were negatively impacted by ongoing efforts to exit the Russian market and the discontinuation of the baby diaper business in Latin America. Adjusted EBITA increased by 54% and the adjusted EBITA margin by 2 percentage points to 10.2%. Profit for the period increased to approximately SEK 2.7bn and earnings per share to SEK 3.79.
Essity continuously evaluates the product portfolios within the company’s three business areas, Health & Medical, Consumer Goods and Professional Hygiene, to achieve increased long-term value creation. In line with this, Essity is initiating a strategic review of the company’s ownership of Vinda and the Consumer Tissue Private Label Europe business, with the aim of reducing Consumer Tissue’s share of the company’s total sales. The strategic review includes exploring different options and may result in divestments, although no such decisions have yet been taken.
Important step toward net zero emissions
During the first quarter of the year, Essity announced several important steps toward net zero emissions. We are first to produce tissue in a CO2-free production process using renewable hydrogen and to produce high-quality tissue from agricultural waste. We have also entered an exclusive partnership to develop a new tissue making process with the aim of significantly reducing energy consumption, CO2 emissions and water consumption. Essity has been included in S&P Global Sustainability Yearbook and been awarded a place on CDP’s 2022 Supplier Engagement Leaderboard.
On the path toward achieving return target
The company’s adjusted return on capital employed increased to 12.7% for the first quarter of 2023. 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 more than 17% by 2025.
President and CEO
In 2023, interim reports will be published on July 20 and October 26. The year-end report for 2023 will be published on January 25, 2024.
INVITATION TO PRESENTATION OF THE INTERIM REPORT FOR QUARTER 1, 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.
Date: Thursday, April 27, 2023
Time: 09:00 CET
Link to web presentation: https://essity.videosync.fi/2023-04-27
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".
Stockholm April 27, 2023
Essity Aktiebolag (publ)
President and CEO
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
This 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 April 27, 2023.