Essity Delivers Solid Results and New Strategy Insights
Solid Performance Highlights for Essity in Q1 2025
Essity has recently reported a solid performance indicating higher sales and strong cash flow for the first quarter of 2025.
Quarter 1 Overview
In the reported quarter, Essity experienced a net sales increase of 0.4%, reaching SEK 34,976 million compared to SEK 34,850 million in the previous year. The company recorded an organic sales growth of 2.1%, where prices/mix contributed entirely to this growth. Despite facing some challenges, EBITA rose by 4% to SEK 4,718 million, demonstrating the effectiveness of Essity's strategies.
Furthermore, EBITA margin, excluding IAC, was noted at 13.5%, a slight decrease from the 14.0% of the prior year, indicating stable profitability amidst changing market conditions. Notably, the return on capital employed (ROCE) improved to 16.7%, showcasing Essity's strong operational efficiency.
Profit for the period from total operations was reported at SEK 3,083 million, representing a decrease from previous levels, yet the earnings per share for continuing operations rose to SEK 4.43, reflecting the company’s resilience.
CEO's Insights on Business Performance
Magnus Groth, President and CEO of Essity, shared his insights regarding the company’s performance.
"Essity started the year positively with organic sales growth across all business sectors, exhibiting stable profitability and robust cash flow. In challenging market conditions, our strength is highlighted by proximity to our customers, allowing us to provide essential hygiene and health solutions."
Sales Growth Across Business Areas
All of Essity's business segments reported encouraging organic sales growth for the first quarter of 2025 compared to 2024, with price increases serving as the primary growth driver. Both Health & Medical and Consumer Goods sectors recorded volume increases. However, Professional Hygiene saw a decline in volumes, primarily linked to reduced demand in certain regions.
During this period, the company achieved a product superiority rating exceeding 70%, meaning that more than 70% of customers recognize Essity's products as the best in the market. This milestone reflects the success of recent product launches.
Financial Stability and Cash Flow
While earnings (EBITA excluding IAC) saw a slight decline primarily due to higher costs, increased sales prices played a crucial role in sustaining earnings levels. Cash flow remained strong throughout the period, reinforced by efficient operations, showcasing the company’s sound financial standing.
New Share Buyback Program Announcement
Essity has initiated a new share buyback program.
The previous share buyback effort, launched in June of the prior year, culminated in the repurchase of about 10 million shares for SEK 3 billion. The Annual General Meeting resolved to cancel some own shares, and following this, a new share buyback program totalling SEK 3 billion was approved, effective from April 24, 2025. This is part of Essity's ongoing capital allocation strategy.
Strategic Outlook in Changing Market Conditions
Essity is preparing for potential challenges posed by trade tariffs.
With operations in around 150 countries, the company anticipates that shifts in trade tariffs will have minimal effects on business performance. Essity's production facilities are strategically located near customer bases, aiding in quick responses to any market changes.
Despite these challenges, Essity is committed to optimizing its production and supply chains to mitigate any impacts and enhance operational effectiveness.
Looking Ahead with Optimism
Essity aims to further accelerate profitable growth through value-driven innovation and efficiency improvements, combined with a commitment to sustainability. This ongoing strategy positions the company for continued success in the evolving market landscape.
President and CEO Magnus Groth remains optimistic about the prospective developments and is confident in Essity's capacity to meet future demands effectively.
Frequently Asked Questions
What were Essity's net sales for Q1 2025?
Essity reported net sales of SEK 34,976 million for the first quarter of 2025.
What drove the organic sales growth for Essity?
The organic sales growth of 2.1% for Essity was largely attributed to price increases.
What is the new share buyback program's value?
Essity announced a new share buyback program worth SEK 3 billion, starting on April 24, 2025.
How did trade tariffs impact Essity?
Essity expects only limited impacts from changing trade tariffs, supported by their production strategy.
What is Essity's commitment moving forward?
Essity is focused on accelerating profitable growth through innovation, efficiency, and sustainability initiatives.
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