Essity launches cost reduction programme as raw material costs hit margins

Essity has targeted its long-term cost efficiencies after announcing a group-wide cost-savings programme.

The group said its margin was “negatively impacted in the first half of 2018 by significantly higher raw material costs”.

It added that during the third quarter of 2018, the negative impact of “sharply increasing costs for pulp, oil-based raw materials and energy, have accelerated further”.

The programme is expected to generate annual cost savings of approximately SEK800m, with full effect at the end of 2019.

It is being implemented in all parts of the group to reduce the cost base related to cost of goods sold and sales, general and administration costs.

This will include headcount reductions and reduced costs for projects, consultants and travel. Personnel changes will be subject to customary consultations.

It is in addition to the efficiency initiatives already in progress in the group, including the “Tissue Roadmap” and “Cure or Kill”.
Magnus Groth, president and chief executive of Essity, said: “Sharply increasing raw material costs and higher energy prices are affecting our margins in the short term.

“We are implementing this savings programme to increase profitability and strengthen our competitiveness. At the same time, we are continuing to invest in innovation and our strong brands.”

Visit Us On LinkedinVisit Us On TwitterVisit Us On FacebookVisit Us On YoutubeCheck Our Feed