#Sweden #Stockholm #Essity #Hygiene Products #Ulrika Kolsrud

Essity's Second Quarter 2025 Report: Adapting Amidst Market Challenges

Essity, the leading global hygiene and health company, has released its Interim Report for the second quarter of 2025, revealing a decrease in net sales but a positive outlook on organic growth. This quarter has been particularly challenging, marked by a 6.6% decline in net sales, totaling SEK 34,185 million, down from SEK 36,617 million in the previous year. However, excluding currency translation effects, net sales saw a slight increase of SEK 699 million.

Performance Overview

Despite the decrease in top-line revenue, Essity achieved an organic sales growth of 1.9%. This growth was driven primarily by an increase in pricing and product mix, which accounted for 1.7%, while volume growth only contributed 0.2%. While EBITA (Earnings Before Interest, Taxes, and Amortization) saw a decline of 12% to SEK 4,628 million, the figures tell a more comprehensive story when considering the broader market context. The reduction in EBITA excluding items affecting comparability (IAC) fell by 13% to SEK 4,693 million, with a corresponding EBITA margin of 13.7%.

Viewed through the lens of Return on Capital Employed (ROCE), the numbers also reflect a dip, with figures reported at 16.7%, down from 17.9% year-over-year on a reported basis. Additionally, profit for the period amounted to SEK 3,053 million, translating to earnings per share of SEK 4.39.

CEO Ulrika Kolsrud's Vision

In her first report since stepping up as CEO on June 1, 2025, Ulrika Kolsrud expressed optimism about the company's trajectory despite the economic headwinds. Kolsrud emphasized that the ongoing weak economy demands a focus on customer engagement and the strengthening of Essity's product offerings to better cater to various market segments.

“Despite our current challenges, we are committed to enhancing our portfolio with improved value propositions to appeal to cost-sensitive consumers,” Kolsrud stated. “Our continued efforts in marketing and customer engagement are designed to stimulate organic growth.”

Kolsrud also highlighted the strong performance in some categories, with incontinence products and feminine care showing notably healthy growth, diverging from the tough conditions faced in the Baby Care sector, where low birth rates and heavy competition prevail. However, the professional hygiene and healthcare segments experienced sluggish demand due to lower activity in hospitality sectors and mixed conditions in some markets.

Financial Resilience

Amidst these challenges, Essity's management noted a sequential improvement in its gross margins compared to the second quarter of 2024. Higher sales prices managed to offset increasing costs due to trade tariffs, although diminished volume growth led to reduced cost coverage overall. Currency translation also had a negative effect on both sales and profit margins.

Management is actively working on initiatives to reduce operational costs and enhance efficiency. Efforts to promote profitable volume growth include launching new product segments, such as upgrades to Cushelle Simply Soft and Lotus Comfort, aimed at capturing price-sensitive consumers. The company's strategy remains dual-faceted, aiming for growth in more profitable niche categories while bolstering market presence in emerging sectors.

Future Prospects

The overarching message from Essity remains clear: their commitment to improving lives through hygiene and health solutions is unwavering, with ambitions to reach a broader consumer base. Presently, Essity impacts 1 billion lives daily across 150 countries, a number Kolsrud aims to expand further.

In response to the current landscape and growing competition, Kolsrud encourages a culture of customer focus and competitive improvement throughout the organization. “I see significant potential in Essity, and I am looking forward to driving its profitable growth alongside our dedicated team,” she concluded.

Upcoming Presentations

Investors and stakeholders are invited to join Kolsrud and Executive Vice President and CFO Fredrik Rystedt for a detailed presentation of the interim report through a live webcast scheduled for July 17, 2025, at 09:00 CET. Subsequently, the presentation will be available for viewing at a later time.

In conclusion, while this quarter presented significant hurdles, both Essity's robust product lineup and dedicated leadership under Kolsrud signal an optimistic road ahead for one of the world’s foremost hygiene and health companies.