CEO’s comments

Through continued focus on our strategic priorities profitable growth, innovation and efficiency, we delivered favorable organic sales and earnings growth for the first quarter of 2016. We have introduced ten innovations under the Libero, Libresse, Lotus, TENA and Tork brands, among others.
In January 2016 we completed the acquisition of Wausau Paper Corp., a leading North American manufacturer of Away-from-Home tissue. The integration process has been started, and we expect to achieve annual synergies of approximately USD 40m with full effect in three years. After the end of the quarter, on April 1, we integrated our hygiene business in Southeast Asia, Taiwan and South Korea with Vinda, where SCA is the majority shareholder. Work has now begun on leveraging our joint strengths to build a leading Asian hygiene business.

Essity received high scores for its environmental and social reporting, its work with suppliers, its brand work, its innovations and its climate strategy. “Sustainability covers many areas in which Essity works broadly to increase well-being for more people, while continually reducing our environmental impact. In 2020 and during the COVID-19 pandemic, there has been a great deal of focus on contributing to society by working for a better global standard of hygiene,” says Magnus Groth, President and CEO of Essity. 

Consolidated net sales for the first quarter of 2016 increased by 1% compared with the same period a year ago. Organic sales growth was 3%. In emerging markets, which accounted for 32% of sales, organic sales growth was 9%, while in mature markets organic sales growth was -1%. The hygiene business showed good organic sales growth, which amounted to 6% for Personal Care and 4% for Tissue. Sales for Forest Products decreased by 6%, mainly attributable to lower prices.

Consolidated operating profit for the first quarter of 2016, excluding items affecting comparability, currency translation effects, acquisitions and divestments, rose 13% compared with the same period a year ago. The increase is mainly attributable to higher volumes, a better price/mix, lower energy costs and cost savings. Higher raw material costs had a negative earnings impact. Operating profit for the hygiene business improved mainly as a result of higher volumes, a better price/mix, cost savings and lower energy costs for Tissue. The lower operating profit for Forest Products was mainly attributable to lower prices.

Consolidated operating margin, excluding items affecting comparability, increased by 1.2 percentage points to 11.5%. Operating cash flow increased by 40%. Return on capital employed, excluding items affecting comparability, grew by 1.5 percentage points to 11.9%.