JANUARY 1 – MARCH 31, 2021
(compared with the corresponding period a year ago)
SUMMARY OF FIRST QUARTER OF 2021
Improved market conditions resulting from the ongoing vaccination programs are expected to result in increased demand for several of Essity’s product categories. One example of this is the increase in demand in Professional Hygiene in North America in the first two weeks of April 2021. Another example is the recovery in China, where sales were significantly higher during the first quarter of 2021 compared with the first quarter of 2019.
During the first quarter, Essity has continued to position the company for future profitable growth, for example, by:
Entered into an agreement with the Australian hygiene company Asaleo Care to acquire the remaining 63.8% of the shares in the company. Essity is the largest shareholder with a holding of 36.2% of the shares. The acquisition of Asaleo Care will enable profitable growth in Australia, New Zealand and the Pacific region.
After the end of the first quarter:
Entered into an agreement to acquire approximately 44% of the Colombian hygiene company Productos Familia S.A. After closing of the transaction Essity’s ownership in Familia will amount to at least 94%. Essity has been an owner in Familia since 1985, and currently owns 50% of the company. The purchase price amounts to USD 1,540m (approximately SEK 13bn) for 100% of the company on a debt free basis. With the acquisition Essity is building a stronger platform in Latin America.
The Group’s organic net sales in the first quarter of 2021 declined by 9.9% compared with the corresponding period a year ago, of which volume accounted for -8.9% and price mix for -1.0%. The COVID-19 pandemic with the extensive restrictions and lockdowns had a negative impact on sales, primarily within Professional Hygiene and Medical Solutions. Furthermore, the comparative figures were affected by the strong sales growth that resulted from stockpiling in the first quarter of the preceding year by consumers and distributors. Stockpiling in the first quarter of the preceding year explains approximately half of the reduction in organic net sales. Organic net sales in mature markets declined 18.3%. In emerging markets, which accounted for 39% of net sales, organic net sales increased 4.2%.
The Group’s adjusted gross margin for the first quarter of 2021 decreased by 0.6 of a percentage point year on year to 32.2%. The gross margin was positively impacted by lower raw material costs and an improved mix. Lower prices, lower volumes and higher distribution costs had a negative impact on the gross margin.
The Group’s adjusted EBITA margin decreased 2.7 percentage points to 13.1%. The margin was negatively impacted by lower absorption of fixed costs as a result of lower sales. Sales costs decreased in absolute terms but increased as a share of net sales. Investments in growth increased marketing costs in absolute terms and as a percentage of net sales. Adjusted EBITA, excluding exchange rate effects, decreased 24%. Adjusted return on capital employed decreased 4.9 percentage points to 13.5%. Earnings per share amounted to SEK 3.04.
In 2021, interim reports will be published on July 16 and October 22. The 2021 Year-end report will be published on January 26, 2022.
INVITATION TO PRESENTATION OF THE INTERIM REPORT FOR THE FIRST QUARTER OF 2021
In conjunction with publication, a telephone and web presentation will be held where President and CEO Magnus Groth will present the report and answer questions.
Date: Friday, April 23, 2021
Time: 9:00 a.m. CET
Link to web presentation: https://essity.videosync.fi/2021-04-23-q1
To participate by telephone, call: +44 (0)207 192 80 00, +1 631 510 74 95 or +46 (0)8 506 921 80. Please call well in advance of the start of the presentation. Specify “Essity” or conference ID no. 8865436.Stockholm, April 23, 2021
Essity Aktiebolag (publ)
President and CEO
For further information, please contact:
Fredrik Rystedt, CFO and Executive Vice President, +46 (0)8 788 51 31
Johan Karlsson, Vice President Investor Relations, Group Function Communications, +46 (0)8 788 51 30
Joséphine Edwall Björklund, Senior Vice President, Group Function Communications, +46 (0)8 788 52 34
Per Lorentz, Vice President Corporate Communications, Group Function Communications, +46 (0)8 788 52 51
This information is such that Essity Aktiebolag (publ) is obligated to make public pursuant to the EU Market Abuse Regulation. This report has been prepared in both Swedish and English versions. In case of variations in the content between the two versions, the Swedish version shall govern. The information was submitted for publication, through the agency of the contact person set out below, at 7:00 a.m. CET on April 23, 2021.
Karl Stoltz, Media Relations Manager, +46 (0)8 788 51 55