Interim Report Third Quarter 2021
JANUARY 1 – SEPTEMBER 30, 2021
(compared with the corresponding period a year ago)
- Organic net sales increased 1.6% and were negatively impacted by the COVID-19 pandemic and related restrictions and lockdowns. Net sales declined 3.5% to SEK 87,641m (90,796). Sales growth was strong for the third quarter of 2021 and organic net sales increased by 7.4% compared with the third quarter of 2020.
- Market shares increased for approximately 70% of branded sales in the retail trade for the most recent 12-month period
- E-commerce sales increased organically by 16.3% to approximately 14% of net sales, corresponding to approximately SEK 12bn.
- In emerging markets, which accounted for 38% of net sales, organic net sales increased 8.2%.
- Operating profit before amortization of acquisition-related intangible assets (EBITA) decreased 16% to SEK 11,047m (13,177)
- Adjusted EBITA decreased 20% to SEK 10,603m (13,234)
- Adjusted EBITA margin decreased 2.5 percentage points to 12.1% (14.6)
- Adjusted return on capital employed decreased 2.3 percentage points to 13.4% (15.7)
- Profit for the period was SEK 7,592m (8,718)
- Earnings per share were SEK 9.45 (10.80)
- Cash flow from current operations was SEK 4,744m (8,560)
- Essity has decided on new business areas from January 1, 2022. The business areas will be Health & Medical, Consumer Goods and Professional Hygiene. As a consequence of its higher growth ambitions, Essity has also decided on a new sales growth target of more than 5%, which includes both organic sales growth and acquisitions.
SUMMARY OF THIRD QUARTER OF 2021
Sales growth was strong in the third quarter and organic net sales rose 7.4% compared with the corresponding period a year ago, of which volume accounted for 4.2% and price/mix for 3.2%. Sales growth, including organic sales growth and acquisitions, amounted to 9.7%. Sales were positively impacted by more favorable market conditions and growing awareness of the importance of hygiene and health. Essity’s organic net sales increased 1.9% compared with the third quarter of 2019. Personal Care and Professional Hygiene noted highly favorable organic sales growth during the third quarter of 2021 compared with the third quarter of 2020. Medical Solutions demonstrated strong growth and organic net sales rose 9.7%, with good growth in all product segments.
Organic net sales in mature markets increased 5.9%. In emerging markets, which accounted for 36% of net sales, organic net sales increased 10.2%.
During the quarter Essity has:
- Launched innovations that contribute to improved well-being and increased sustainability in all product categories under leading brands such as TENA, Tork, Jobst, Libero, Plenty, Saba, Tempo and Zewa.
- Increased market shares for approximately 70% of branded sales in the retail trade for the most recent 12-month period
- Increased e-commerce sales organically by 21.7% to about 14% of net sales
- Implemented price increases and prepared further increases to offset higher costs for raw materials, energy and distribution
- Achieved continuous costs savings of SEK 219m. The Manufacturing Roadmap program extends until 2025 and is expected to contribute to Essity’s total annual cost savings of SEK 500-1,000m.
- Finalized the acquisitions of the Australian hygiene company Asaleo Care and the Colombian hygiene company Productos Familia S.A.
- Continued the company’s active sustainability efforts and commenced tissue production in Mannheim, Germany, based on pulp from wheat straw that will initially be used in tissue products for the German retail market under Essity’s market-leading brand for household towels and toilet paper, Zewa. Also invested in the world’s first tissue machine running a fully geothermal steam drying process at the production facility in Kawerau, New Zealand.
- Continued the process to establish the Consumer Tissue Private Label Europe division in the Consumer Tissue business area. Work is proceeding on schedule and is expected to be completed at the end of the year. The division’s scope has been expanded. The division will include approximately 1,900 employees and seven production facilities in Belgium, France, Germany and Italy. Proforma net sales for the first nine months of 2021 amounted to approximately SEK 5bn.
After the end of the quarter Essity has:
- Decided on new business areas from January 1, 2022. The business areas will be Health & Medical, Consumer Goods and Professional Hygiene. As a consequence of its higher growth ambitions, Essity has also decided on a new sales growth target of more than 5%, which includes both organic sales growth and acquisitions.
The Group’s adjusted gross margin for the third quarter of 2021 decreased by 3.7 percentage points year on year to 28.7%. The gross margin was positively impacted by higher volumes, higher prices, an improved mix and cost savings. Higher raw material, energy and distribution costs reduced the margin by 6.7 percentage points. The Group’s adjusted EBITA margin decreased 2.9 percentage points to 11.5%. Sales costs, excluding marketing costs, decreased in absolute terms and as a share of net sales. Investments in growth increased marketing costs in absolute terms but decreased as a share of net sales. Adjusted EBITA, excluding exchange rate effects, decreased 11%. The adjusted return on capital employed was 12.3%. Earnings per share increased 21% to SEK 3.90.
The Year-end Report for 2021 will be published on January 26, 2022. Essity’s Annual Report for 2021 will be published during the week starting February 28, 2022. In 2022, interim reports will be published on April 28, July 21 and October 27.
CAPITAL MARKETS DAY 2021
Essity will arrange a capital markets day on November 3, 2021.
ANNUAL GENERAL MEETING
Essity’s Annual General Meeting will be held in Stockholm on March 24, 2022.
INVITATION TO PRESENTATION OF THE THIRD-QUARTER REPORT FOR 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, October 22, 2021
Time: 9:00 a.m. CET
Link to web presentation: https://essity.videosync.fi/2021-10-22-q3
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. 9798955.
Stockholm, October 22, 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 report has not been reviewed by the company’s auditors.
This information is such information 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 October 22, 2021.
Karl Stoltz, Media Relations Manager, +46 (0)8 788 51 55