Essity (ESSITY) Q1 2025 earnings summary

Executive summary

• Achieved solid Q1 2025 performance with higher sales and strong cash flow across all business areas, driven by higher prices, product innovation, and launches in high-margin categories, despite increased COGS and SG&A costs.

• Product superiority reached 71% of branded sales, reflecting strong customer preference and expected further improvement.

• Continued focus on efficient supply chain, local manufacturing, and sustainability, with uncertainty persisting in global macroeconomic conditions and consumer sentiment.

• Announced and launched a SEK 3 billion share buyback program, aiming for recurring capital allocation alongside organic growth and stable dividends.

• Profit for the period from continuing operations increased 24% to SEK 3,083m; EPS from continuing operations rose to SEK 4.43.

Financial highlights

• Organic sales growth of 2.1% year-over-year in Q1 2025, with all business areas contributing; Health & Medical up 1.7%, Consumer Goods up 2.9%, Professional Hygiene up 0.7%.

• Group volume was flat overall, with strong pricing (+2.1%) driving total growth to 0.4% year-over-year.

• EBITA excluding items affecting comparability (IAC) at SEK 4,706m; EBITA margin excl. IAC at 13.5%, down 0.5pp year-over-year.

• Net debt reduced to SEK 26,774m, with net debt/EBITDA excl. IAC at 1.02 as of Q1 2025.

• Strong operating cash flow, with SEK 3,765m reported in Q1 2025.

Outlook and guidance

• Expectation of stable COGS sequentially into Q2, with energy costs lower and raw materials largely flat.

• Committed to SEK 500 million–1 billion in cost savings for the year, with a slow start but acceleration expected in coming quarters.

• Focus remains on accelerating profitable volume growth, especially in Professional Hygiene and Baby Care, and delivering on strategic targets.

• Ongoing focus on value-creating innovation and recurring share buybacks as part of capital allocation.

• Limited impact expected from recent trade tariffs due to local production footprint and USMCA agreement.