Hygiene products maker Essity suffered an 11% drop in second-quarter sales, hit by coronavirus lockdowns and adverse effects of bulk-buying in the early stages of the crisis, the Swedish company reported on Monday.
The group had warned in April of slower sales ahead as distributors and households use up hoarded stocks of toilet paper and other products, with demand from businesses also slowing as people travel less and work more from home.
"Sales were negatively affected by the COVID-19 pandemic and related lockdowns as well as inventory adjustments following the stockpiling that took place among consumers and distributors in March," it said in its second-quarter report.
Though sales dropped to 28.4 billion crowns ($3.1 billion), operating profit grew slightly more than expected, rising 13% to 3.64 billion crowns on the back of efficiency measures and lower pulp and energy costs. First-quarter operating profit had spiked 82%, helped by the bulk-buying.
Essity is the world's second-biggest maker of consumer tissue toilet paper and handkerchiefs with brands such as Lotus, Edet, Tempo and Vinda. It is the global leader in hygiene products for businesses under the Tork brand and in incontinence products with TENA.
Increased Market Share
The rival to Procter & Gamble and Kimberly-Clark said it had increased its market share in a number countries during the pandemic, without citing specific markets or size of increases. Essity cited delivery reliability, successful product launches and increased activity and strengthened presence in digital sales channels.
CEO Magnus Groth told analysts and media in a conference call that big market players had been able to perform better than smaller players during the pandemic.
"Eventually, the COVID-19 pandemic may lead to increased demand for the company's leading hygiene and health products as a result of increased awareness of the importance of hygiene and health," it said.
Essity's shares were little changed in early trade and are down 2% this year.