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Essity's Q1 2025 Interim Report

On April 24, 2025, Essity unveiled its interim results for the first quarter, revealing positive growth that highlights the company's resilience in the current market climate. The net sales saw a modest rise of 0.4%, amounting to SEK 34,976 million compared to SEK 34,850 million in the same quarter the previous year. This growth, which reached an organic sales increase of 2.1%, demonstrates the sustained demand for Essity's hygiene and health products.

Key Financial Highlights

The report indicates solid profitability metrics, with the Earnings Before Interest, Taxes, and Amortization (EBITA) rising by 4% to SEK 4,718 million. This figure reflects the company’s strong pricing strategies, potentially counteracting rising costs. However, it’s worth mentioning that the EBITA excluding Items Affecting Comparability (IAC) saw a reduction of 4% compared to a year earlier due to increasing costs associated with goods sold.

Despite these challenges, the EBITA margin excluding IAC slightly declined to 13.5%, down from 14.0% in 2024, yet it showed an uptick compared to the last quarter. The Return on Capital Employed (ROCE) also saw a positive shift, now at 16.7%, signaling efficient use of capital in recent activities.

Insights from the CEO

Magnus Groth, Essity's CEO, expressed optimism about the results, noting that each of Essity's business areas reported organic sales growth. This was particularly evident in Health & Medical and Consumer Goods, where demand was robust, although Professional Hygiene experienced a downturn due to weakened demand in North America. Groth emphasized the importance of maintaining production close to customers, allowing the company to promptly deliver essential products amidst ongoing global challenges.

The company reported achieving product superiority above 70%, indicating that consumers regard more than 70% of its offerings as superior in the market. This unprecedented level reflects the successful outcome of recent product launches, which have bolstered the brand's reputation.

Strong Cash Flow

Cash flow remained exceptionally strong during this quarter, attributed to high earnings performances. Essity's financial situation continues to be robust, enabling ongoing investments and strategic initiatives.

The first quarter also saw the completion of a previous buyback program, with around 10 million shares repurchased for SEK 3 billion. Following the Annual General Meeting in March 2025, Essity announced a new share buyback program worth SEK 3 billion set to commence on April 24, indicating confidence in the company's financial health and commitment to returning value to shareholders.

Navigating Trade Tariffs

Essity operates in approximately 150 countries and anticipates that recent changes in trade tariffs will pose limited challenges due to its geographically diverse production footprint, which includes around 70 facilities worldwide. The company is proactive in reviewing and optimizing its production and supply chain to mitigate any potential obstacles.

Looking Forward

As the year advances, Essity remains focused on its goal of enhancing profitable growth through innovative solutions, strengthened brand performances, and effective efficiency measures while advancing its sustainability efforts. The company’s commitment to meeting consumer needs with superior hygiene products reflects its dedication to improving lives every day.

For further details, stakeholders are invited to a live webcast presentation led by President and CEO Magnus Groth, along with CFO Fredrik Rystedt, scheduled for 0900 CET on April 24, 2025. The link to the presentation and contact details for inquiries have been provided by the company in its release.

In conclusion, Essity's Q1 2025 results highlight a strategic approach to navigating a challenging economic environment with a clear emphasis on sustaining innovation, profitability, and stakeholder value.