Essity warns of further consumer tissue price hikes in 2Q results

Essity has reported increased net sales in its second quarter results but said that following “sharp” raw material price increases it was likely to implement further price hikes in its consumer tissue segment.

Group net sales for the quarter increased 5.6% to SEK 29,721m compared with the same period a year ago.

Pre-tax profit increased 15% to SEK 2,840m while the group’s adjusted EBITA declined 3%.

In its consumer tissue division, the company said volumes decreased due to restructuring measures within the scope of Tissue Roadmap, “entailing lower sales of mother reels and lower volumes in emerging markets due to price increases”.

Net sales for the segment increased 5.7% to SEK 22,119m. The increase was mainly attributable to Asia and Europe.

Magnus Groth, president and chief executive, said raw material prices – mainly pulp prices – have “increased sharply”.

“The market price for pulp is about 35% higher compared with the corresponding period a year ago,” he said.

“There was also a significant increase in the market price for oil-based raw materials. In total, higher raw material costs had a negative impact of SEK 1,144m on the group’s earnings for the quarter, which corresponds to a negative impact on the adjusted EBITA margin of -4.0 percentage points.

“The achieved price increases in consumer tissue did not offset the higher raw material costs and the intention is therefore to implement further price increases.”

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