Essity reports Q3 volume decline despite margin beat

Essity AB posted third-quarter results that showed weaker-than-expected volumes alongside a stronger margin performance, with organic sales declining 0.3% against analyst expectations of 1.2% growth.

The Swedish hygiene and health company reported volumes fell 0.1% in the quarter, missing the consensus estimate of 1.3% growth. Pricing and mix declined 0.2%, contrary to expectations of a 0.3% increase, despite previously announced price increases in Consumer Tissue.

EBITA reached SEK4,725 million, representing a margin of 13.1%, approximately 90 basis points above the consensus estimate of 12.2%.

The result was 7% ahead of analyst expectations of SEK4,414 million. Earnings per share came in at SEK4.92, 17% above the consensus forecast of SEK4.21.

Three of the company’s four divisions reported volumes below expectations. Personal Care was the only division to meet forecasts, posting organic sales growth of 3.2% against expectations of 3.3%.

The division’s EBITA of SEK1,241 million exceeded the consensus estimate of SEK1,028 million. Within Personal Care, Incontinence Retail grew 5.1% and Feminine Care increased 5.6%, while Baby Care declined 3.9%.

Consumer Tissue organic sales fell 3.0%, worse than the expected 1.0% decline. The division reported EBITA of SEK908 million, above the consensus of SEK857 million. The negative pricing reflected price reduction measures implemented since the fourth quarter of last year.

Professional Hygiene organic sales declined 1.1%, missing expectations of 2.1% growth. EBITA reached SEK1,575 million, slightly below the consensus estimate of SEK1,588 million.

Health and Medical posted organic sales growth of 1.2%, close to the 1.3% consensus. EBITA of SEK1,302 million exceeded expectations of SEK1,236 million.