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 pricing discipline and efficiency improvements.

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

• Record high cash flow and a strong balance sheet, with net debt to EBITA ratio at 1.1, further reduced by the Vinda divestment.

• 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 of 1.9% year-over-year, or 3.4% excluding restructuring; volume up 2.0%.

• EBITA margin excl. IAC at 14.1%, up 20bps year-over-year; ROCE excl. IAC at 17.7%.

• Operating cash flow grew 7% to SEK 6,453m, with positive working capital development and lower CapEx in Q3.

• SEK 1.1 billion in cost savings year-to-date, mainly from procurement and efficiency improvements.

• Earnings per share (total operations) increased to SEK 4.73 (2.26).

Outlook and guidance

• Expect continued profitable growth, focusing on scaling Health & Medical and accelerating high-margin Consumer Goods categories.

• Price increases in Consumer Tissue to positively impact Q4; COGS expected to rise in Q4 due to higher energy and lower production volumes.

• CapEx guidance for the year remains slightly above SEK 7.5 billion, with a step-up expected in Q4.

• Cost savings in Q4 expected to be lower than in Q3.

• Deeper operational insights to be shared at the Capital Markets Day in December.