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Essity Beats Q1 Forecasts As It Favours Profit Over Volumes

By Donna Ahern
Essity Beats Q1 Forecasts As It Favours Profit Over Volumes

Swedish hygiene products maker Essity on Thursday reported first-quarter earnings above market expectations, helped by continued price increases and better product mix across all of its business areas, but flagged lower volumes.

"Volumes declined somewhat on account of the company's prioritisation of higher profitability ahead of volume," Magnus Groth, chief executive, said in an earnings statement.

Price Increases

Like several other consumer goods companies, Essity has been raising its prices to brave the heightened energy costs coupled with high raw material prices.

In Essity's case, the price mix was more than sufficient to offset the raw material and energy costs, Jefferies said in a note.


Essity shares rose 1.8% to 308.5 crowns per share by 7:01 GMT.

On Wednesday, the world's second-biggest maker of consumer tissue said it had initiated a strategic review of its 51.59% stake in China-based Vinda 331.KH and Consumer Tissue Private Label Europe business.

Strategic Review

Credit Suisse views the strategic review as a chance for Essity to reduce volatility in earnings and increase its returns, as it can accelerate the tissue maker's strategy move towards higher value-added categories.

The review could help the group move away from the commoditised consumer tissue business that in China faces rising excess supply, which does not allow Essity to take strategic pricing action, Credit Suisse added.


Essity's adjusted earnings before interest, taxes and amortisation (EBITA) rose year-on-year to 4.36 billion Swedish crowns ($423.00 million) in the quarter, beating the Refinitiv estimate of 4.03 billion crowns.

Read More: Essity Beats Q4 Profit Estimate On Price Hikes

News by Reuters, edited by Donna Ahern, Checkout. For more A-brand news, click here. Click subscribe to sign up for the Checkout print edition.

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