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Essity 3Q results; net sales up 9%

Essity has reported “strong development” in growth and profitability as all business areas reported higher margins in its third quarter interim report.

From 1 January 2019 – 30 September 2019, net sales increased 9% to SEK95,289m, up from SEK87,388m the same time a year earlier.

Organic net sales for the period increased 4.8%.

Emerging markets accounted for 36% of net sales and organic net sales increased 9.8%.

Operating profit before EBITA increased 28% to SEK 10,387m.

The company said the third quarter was characterised by “strong development in terms of growth and profitability” and that “all business areas reported higher margins”.

It said all business areas “demonstrated healthy growth due to implemented price increases, a better mix and higher volumes”.

Growth was strengthened by innovations and investments in sales and marketing activities.

Its online sales continued to perform favourably and totalled SEK9bn for the first nine months of 2019, corresponding to about 10% of total group net sales.

Total cost savings amounted to SEK271m during the quarter, of which SEK179m was related to the group-wide cost-savings programme.

In the consumer tissue division, net sales for the period increased 10.9% to SEK36,635m.

Excluding lower sales of mother reels which the company said was resulting from production closures within the Tissue Roadmap, organic net sales increased 7.2%.

Organic net sales increased 2.2% in mature markets.

Emerging markets accounted for 46% of net sales while acquisitions in Latin America increased net sales by 0.2%.

Adjusted operating profit before adjusted EBITA increased 43% (35% excluding currency translation effects and acquisitions) to SEK3,554m (2,491).

The increase was mainly due to higher prices, a better mix, higher volumes and cost savings.

Higher raw material and energy costs negatively impacted earnings by SEK-268m, corresponding to a negative impact on the adjusted EBITA margin of -0.7% points.

The company said the higher raw material costs were mainly the result of a negative currency transaction effect.