Essity (ESSITY) Q2 2024 earnings summary

Executive summary

• Achieved record-high EBITA and margins across all business areas in Q2 2024, with strong underlying volume growth and robust cash flow.

• EBITA reached SEK 5,237m, up 27% year-over-year, and profit for the period rose 31% to SEK 3,333m.

• Net sales declined 1.2% to SEK 36,617m, with organic sales down 0.9% due to restructuring, but underlying volume growth was strong.

• Launched a SEK 3 billion share buyback program, with over SEK 100 million repurchased by quarter-end.

• Set new financial targets: annual organic sales growth above 3% and EBITA margin (excluding IAC) above 15%.

Financial highlights

• EBITA (excluding IAC) increased 17% to SEK 5,398m; EBITA margin at 14.7% (up 2.2pp year-over-year).

• Earnings per share rose 37% year-over-year to SEK 4.72.

• Return on capital employed (ROCE) excluding IAC reached 18.5%.

• Operating cash flow increased 14% to SEK 3,239m.

• Net debt/EBITDA improved to 1.26, with net debt at SEK 33,214m as of H1 2024.

Outlook and guidance

• Targets annual organic sales growth above 3% and EBITA margin (excl. IAC) above 15%.

• Share buybacks to become a recurring part of capital allocation.

• Price increases in consumer tissue to offset higher input costs will mainly impact Q4, with some effect in Q3.

• Full-year CapEx expected between SEK 7–8 billion.

• COGS savings for the year will exceed SEK 1 billion, though pace will slow in H2.