Year-end Report 2022
JANUARY 1 – DECEMBER 31, 2022
(compared with the corresponding period a year ago)
- Net sales increased 28.2% to SEK 156,173m (121,867)
- Sales growth, including organic sales growth and acquisitions, amounted to 17.7%, of which volume accounted for 1.7%, price/mix for 14.0% and acquisitions for 2.0%.
- Acquisition of Legacy Converting Inc, Knix Wear Inc and Modibodi
- Significant price increases of in average 13.3% were implemented to mitigate the significantly higher costs for raw materials, energy and distribution.
- Assets in Russia were impaired by approximately SEK 1.7bn. Work is ongoing to exit the Russian market.
- Operating profit before amortization of acquisition-related intangible assets (EBITA) amounted to SEK 10,887m
- Adjusted EBITA amounted to SEK 13,058m (13,680) and the adjusted EBITA margin amounted to 8.4% (11.2). In the fourth quarter of 2022, adjusted EBITA increased 33% compared with the corresponding period a year ago to SEK 4,084m (3,077) and the adjusted EBITA margin increased to 9.3% (9.0).
- Return on capital employed amounted to 8.1% (12.3). Adjusted return on capital employed was 9.7% (12.0).
- Profit for the period was SEK 6,064m (9,810)
- Earnings per share were SEK 7.93 (12.27) and adjusted earnings per share were SEK 12.28 (12.50)
- Cash flow from current operations amounted to SEK 5,380m (6,894)
- The Board of Directors proposes an increase in the dividend of 4% to SEK 7.25 (7.00) per share
Record growth, significant price increases and acquisitions
“In 2022, Essity achieved record growth and its highest net sales ever. We can see that, despite significant cost inflation, we achieved an operating profit, before depreciation, amortization and impairment, that was in line with 2021. We implemented significant price increases, while volumes were higher for the year.”
Strong sales growth with significant price increases
Essity’s net sales for 2022 amounted to approximately SEK 156bn. Sales growth, including organic sales growth and acquisitions, was strong and amounted to 17.7% and the average price increase was 13.3%. Sales growth was strong in all three business areas: Health & Medical, Consumer Goods and Professional Hygiene, which are all leading in a growing global hygiene and health market. Despite significant price increases, volumes were higher for the year. Work to improve efficiency has progressed at a high pace. Adjusted EBITA amounted to SEK 13,058m and the adjusted EBITA margin to 8.4%.
The adjusted return on capital employed was 9.7%. Earnings per share were SEK 7.93. For the 2022 fiscal year, the Board of Directors proposes an increase in the dividend of 4% to SEK 7.25 per share.
The year was dominated by the war in Ukraine and the resulting human suffering. Essity has made donations to the UNHCR and other international and local organizations. Work is ongoing to exit the Russian market and the company’s assets in Russia have been impaired by approximately SEK 1.7bn.
Fourth quarter 2022 – Higher earnings and adjusted EBITA margin
In the fourth quarter, net sales increased significantly and amounted to approximately SEK 44bn. Further price increases were implemented and averaged 18.4%, an increase of 6% compared with the third quarter 2022. As a result of our successful work to raise prices, adjusted EBITA increased 33% and the adjusted EBITA margin increased 0.3 of a percentage point to 9.3%. Compared with the third quarter of 2022, the adjusted EBITA margin increased 1.8 percentage points. The adjusted return on capital employed increased to 11.4%.
Acquisitions in fast-growing segments
Three companies were acquired, in line with our strategy to grow in segments with strong future growth. The acquisition of the US company Legacy Converting Inc. will broaden Essity’s offering in Professional Hygiene through a stronger position in wiping and cleaning products in the North American market. Two leading companies were acquired in Intimate Hygiene: Knix Wear Inc. and Modibodi. Essity is now a global market leader1) within leakproof apparel, which is the fastest growing product segment in Intimate Hygiene.
A winning offering
We continued to invest in innovation and marketing to increase the share of premium offerings, sustainable solutions and digital offerings. In 2022, Essity’s e-commerce sales increased by 20% to SEK 23bn, corresponding to 15% of net sales. We also increased the company’s direct-to-consumer sales through investments and acquisitions.
1) Estimate based on market data compiled by Essity
Concrete progress in sustainability
Leadership in the area of sustainability is a strategic priority for Essity to increase sales and profitability and to reduce risk in the company while we contribute toward a better world. For example, we have launched toilet paper containing wheat straw-based pulp under the Zewa brand and the Libero Touch climate-smart baby diaper. The company’s carbon emissions under Science Based Targets, Scope 1 and 2, have been reduced by 18% compared with 2016. Essity also received several awards for the company’s sustainability work, for example it was named as one of the world’s most sustainable companies by Corporate Knights, has been included in S&P Global’s Sustainability Yearbook 2022 as one of the top 150 most sustainable companies and CDP recognized Essity for leadership in sustainability, including us on its
A-list for our work to combat deforestation. For the second consecutive year, we were designated a Diversity Leader by the Financial Times in its annual review of diversity work in European companies.
In order to achieve the Group’s long-term targets with respect to growth and return by 2025, Essity is prioritizing innovation, strong brands, efficiency improvements and sustainability. We continue to work with price increases to offset cost inflation. Growth in the fastest growing sales channels and regions as well as in segments with the highest returns will be prioritized to create long-term growth in value for customers, consumers, employees and shareholders.
President and CEO
Essity’s Annual Report for 2022 is intended to be published during the week starting February 27, 2023. In 2023, interim reports will be published on April 27, July 20 and October 26.
ANNUAL GENERAL MEETING
Essity’s Annual General Meeting will be held in Stockholm on March 29, 2023.
INVITATION TO PRESENTATION OF THE YEAR-END REPORT FOR 2022
In conjunction with publication, a telephone and web presentation will be held at 09:00 CET, where President and CEO Magnus Groth will present and answer questions.
Date: Thursday, January 26, 2023
Time: 09:00 CET
Link to Web presentation: https://essity.videosync.fi/2023-01-26
Telephone: UK: +44 (0) 33 055 102 00, USA: +1 212 999 66 59, SWE: +46 8 505 204 24. Please call in well in advance of the start of the presentation. Indicate: "Essity".
The presentation of the year-end report will also be available on LinkedIn and Twitter.
Stockholm January 26, 2023
Essity Aktiebolag (publ)
President and CEO
For further information, please contact:
Fredrik Rystedt, CFO and Executive Vice President, +46 8 788 51 31
Johan Karlsson, Vice President Investor Relations, Group Function Finance, +46 70 511 15 81
Joséphine Edwall Björklund, Chief Communication Officer, Group Function Communications, +46 8 788 52 34
Per Lorentz, Vice President Corporate Communications, Group Function Communications, +46 73 313 30 55
This report has not been reviewed by the company’s auditors.
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 Karl Stoltz, Media Relations Director, at 07:00 CET on January 26, 2023.