Essity has recorded its “highest profit ever and strong platform for growth” as net sales increase to SEK147bn in its year-end results.
Operating profit before EBITA during the period increased 68% to SEK16,607m.
Magnus Groth, Essity President and Chief Executive, said that having offset cost inflation through price increases and improved the structural profitability, the business has increased its focus during the fourth quarter on volume growth and market shares.
Isola Castle – a company indirectly wholly owned by Limited (APRIL) – has also announced that it will make a pre-conditional public offer for the shares in Vinda, entailing a shift for Essity toward a product portfolio with a higher margin and lower volatility.
Essity has said it supports the offer and has signed an irrevocable undertaking to accept the offer in respect of all of its 51.59% shareholding in Vinda.
Groth said: “We have undertaken to accept the offer from Isola Castle in respect of all shares in Vinda.
“It represents a very attractive offer for Essity and our shareholders, and also provides a product portfolio with higher and more stable returns.”
Consumer Tissue’s share of net sales in 2023 will decrease from 41% to 33%.
Groth added: “We can look back at a year with high sales growth and a significantly higher EBITA margin, where all business areas made positive contributions through profitable growth and margin improvements.
“Measures aimed at structurally improving profitability have had an effect. For Professional Hygiene, restructuring measures in North America and Europe increased the structural margin by approximately 2%.
“In Consumer Goods, the strong volume growth for Incontinence Products Retail and Feminine Care continued.
“Moreover, in 2023 we successfully reversed the trend for Baby Care, which is now demonstrating a strong improvement.
“For Consumer Tissue, price increases have yielded higher and more stable margins.”
For the fourth quarter, sales growth, including organic sales growth and acquisitions, was -0.7%.
Volumes were lower, which Groth said was mainly due to the focus on profitable growth and decisions earlier in the year to carry out restructuring measures and exit contracts with insufficient profitability.
“Our efforts to increase productivity and achieve a more efficient use of resources have led to savings in cost of goods sold of SEK377m in the fourth quarter.
“Meanwhile, we have invested for future volume growth and higher market shares by intensifying sales and marketing activities.
“We have launched innovations in all business areas that improved customer and consumer offerings and increased our market shares during the quarter.”
Essity receives CDP’s A List for sustainability
The company has also taken further steps toward net zero emissions of greenhouse gas emissions by 2050 and for Science Based Targets, Scope 1 and 2, the decrease is -26% for the 2016-2023 period.
Essity has been named one of the world’s most sustainable companies by Corporate Knights by its inclusion in the Global 100 list representing the top 1% of companies in the world in terms of sustainability performance.
It has also again been awarded a place on CDP’s ‘A List’ for its leadership in corporate transparency and performance on forests by international non-profit environmental organisation CDP.
Based on data reported through CDP’s 2023 Forests questionnaire, Essity is one of a small number of companies that achieved an ‘A’ – out of over 21,000 companies scored.
Groth added: “Responsible fibre sourcing and forest management is central to Essity to prevent deforestation.
“ We are also innovating to use less wood fibre investing in alternative fibres.
“In Mannheim, Germany, Essity has the first production facility in the world that uses wheat pulp on a large scale to produce tissue.
“A breakthrough innovation that makes us less dependent on wood fibre and reduces our impact on the environment.”