Essity (ESSITY) Q3 2024 earnings summary

Executive summary

• Achieved profitable growth in Q3 2024 with higher volumes and market share gains across all business areas, supported by strong EBITA, record-high cash flow, and a solid financial position.

• Maintained good pricing discipline and delivered sequentially higher prices, with all business areas contributing to profitability through higher volumes, favorable product mix, and efficiency improvements.

• Net-zero emissions target validated by the Science Based Targets initiative, reinforcing sustainability commitments.

• The divestment of Vinda significantly reduced net debt and boosted profit for the period.

Financial highlights

• Organic sales growth reached 1.9%, or 3.4% excluding restructuring, with net sales at SEK 36,274m and volume up 2.0%.

• EBITA excluding items affecting comparability (IAC) was SEK 5,097m, down 1% year-over-year but up 6% excluding currency effects; EBITA margin excl. IAC increased to 14.1%.

• Return on capital employed (ROCE) excl. IAC at 17.7%, up year-over-year.

• Operating cash flow grew 7% to SEK 6,453m, with record high cash flow and positive working capital development.

• Net debt/EBITDA excl. IAC improved to 1.11, reflecting a strong balance sheet.

Outlook and guidance

• Expect continued positive price development in Consumer Tissue in Q4, with CapEx guidance slightly above SEK 7.5 billion and a step-up expected in Q4.

• Cost savings in Q4 anticipated to be lower than in Q3 due to seasonality and higher energy costs.

• Restructuring impact in Professional Hygiene to persist in Q4 but at a reduced level.

• Focus remains on innovation, leading brands, sustainability, and efficiency to drive future growth.