Essity has reported a net sales increase up 28.2% y-o-y to SEK112,339m in its third quarter results as it announces it will make further price increases to offset inflation.
Sales growth for the 1 January – 30 September period, including organic sales growth and acquisitions, amounted to 18.4%.
EBITA amounted to SEK 7,097m, down from SEK11,047m in the same period a year ago.
Higher costs for raw materials, energy and distribution had a negative impact of 12.5% on the margin.
However, the margin was positively impacted by higher selling prices, higher volumes and a better mix.
Return on capital employed amounted to 7.7% (13.8). Adjusted return on capital employed amounted to 9.2% (13.4).
However, profit for the period was SEK3,818m, down year-on-year from S3K7,592m.
Magnus Groth, Essity President and Chief Executive, said: “Essity’s net sales reached new record levels in the third quarter.
“Significant price increases were implemented, and further increases will be carried out.
We raised prices for our leading hygiene and health solutions by an average of 14.5% compared to the same period a year ago at the same time as we reported higher volumes in all business areas.
“Our price increases are offsetting the high-cost inflation with a delay of approximately two quarters.
“We are continuing to invest in innovation and expansion of our offerings to promote a higher quality of life for customers and consumers with more climate-smart offerings, strong brands and increased e-commerce sales.”
He added that cost inflation worsened further in the third quarter, with costs for raw materials, energy and distribution having a negative impact of 12.7% on the adjusted EBITA margin.
“We are addressing this through comprehensive price increases and energy price surcharges that will have an additional effect in the fourth quarter and in 2023.
“Despite significant price increases, we noted higher volumes in all three business areas. We are continuing to work at a high pace with efficiency improvements, energy saving measures and raw material rationalisations.”
Groth added the business is continually working on decreasing its products’ environmental footprint and meeting consumer demands for products that are “better for the user and the planet.”
During the quarter, Essity launched a “climate-smart” baby diaper under its brand Libero.
It consists of two parts: a washable textile diaper cover and an absorbent disposable insert. Online sales increased by nearly 20% in the third quarter and amounted to approximately SEK5.7bn.
A new group organisation will be effective from year-end 2022 entailing that Essity will have four business units in line with the company’s business areas – Professional Hygiene, Health & Medical, Consumer Goods EMEA and Consumer Goods Americas.
In parallel, a global unit, Digital & Business Services, will be established.
“Through a focus on innovation, strong brands, efficiency improvements, digitalisation and sustainability, we are strengthening Essity’s competitiveness in leading hygiene and health solutions in an attractive and growing market.
“We are managing cost inflation through price increases,” he added.
The company also completed acquisitions of leakproof apparel businesses Knix and Modibodi, while its assets in Russia were impaired by approximately SEK1.7bn.
Work is ongoing to exit the Russian tissue market.
