Essity lags Q4 forecasts as higher costs offset volume and price growth

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Finance

Posted By Global Banking and Finance Review

Posted on January 23, 2025

Essity lags Q4 forecasts as higher costs offset volume and price growth

By Agata Rybska

(Reuters) -Swedish hygiene products maker Essity reported fourth-quarter core earnings below market expectations on Thursday, as high raw material costs in its consumer tissue business and strong U.S. dollar hurt margins despite positive volume and price mix development.

Essity's adjusted operating profit before amortisation (EBITA) rose 2% to 4.97 billion Swedish crowns ($451.6 million) in the quarter, missing analysts' average estimate of 5.26 billion crowns, LSEG's IBES data showed.

Quarterly adjusted EBITA margin fell to 13.1% from 13.3% a year earlier.

"The rapid and sharp strengthening of the USD increased costs, which has not yet been fully offset," CEO Magnus Groth said in the earnings statement.

Essity on Wednesday said Groth would leave his position in 2025, after nearly ten years in the role.

The group, which sells toilet paper and napkins under brands such as Lotus, Velvet and Tempo, managed to raise its price mix, a metric reflecting how much it sold its products for, by 2.2% in the fourth quarter compared to a year earlier.

Its volumes increased by 1.7% in the same period, marking the first time since the third quarter of 2022 that its sales growth was driven by both positive price and volume growth.

Essity proposed a dividend of 8.25 crowns per share for 2024, a 6.5% increase from the 7.75 crowns per share it paid for 2023.

($1 = 11.0052 Swedish crowns)

(Reporting by Agata Rybska in Gdansk; Editing by Milla Nissi)

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