• Sales: SEK146 billion for 2024.
• Operating Profit: Over SEK20 billion, a record high.
• EBITA Margin: 14% for the year.
• Return on Capital Employed (ROCE): 17.6%.
• Earnings Per Share (EPS): Up 10% year-over-year.
• Proposed Dividend: SEK8.25, a 6.5% increase.
• Organic Sales Growth: 1.8% for the year, 5% in Q4.
• Health and Medical Organic Sales Growth: 5.6% in Q4.
• Consumer Goods Organic Sales Growth: 4.5% in Q4.
• Professional Hygiene Organic Sales Growth: 5.1% in Q4, excluding restructuring.
• Operating Cash Flow: Strong for the year, with temporary impacts in Q4.
• Net Debt: Just under SEK31 billion.
• Leverage Ratio: 1.2.

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Release Date: January 23, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Essity AB (ETTYF) achieved a record operating profit in 2024, surpassing SEK20 billion for the first time.
• The company reported strong cash flow generation and maintained a solid balance sheet.
• Essity AB (ETTYF) saw a turnaround in market shares, with improving market shares year over year.
• The company announced a proposed dividend increase to SEK8.25, reflecting a 6.5% rise due to strong performance.
• Essity AB (ETTYF) has ambitious sustainability targets, with significant progress in reducing greenhouse gas emissions by 27% since 2016.

Negative Points

• Net sales were slightly down due to the divestment of Russia and the strengthening of the Swedish krona.
• Consumer Tissue margins were negatively impacted by the strong appreciation of the dollar in the fourth quarter.
• Distribution and energy costs did not decrease as expected, affecting profitability.
• Operating cash flow in Q4 was lower than typical due to high accounts receivable from strong sales at the end of the quarter.
• The company faced challenges in the Consumer Goods segment, with lower margins primarily related to currency fluctuations and cost pressures.

Q & A Highlights

Q: Can you discuss the need for price increases due to USD cost inflation and your market share performance in the consumer tissue division in Europe? A: We saw volume growth in both private label and branded products, with a slight skew towards private label. We entered Q4 with price increases in consumer tissue, which we believed were sufficient to cover higher pulp prices, not accounting for the dollar impact. We are managing pricing at a local level to restore and increase margins.

Q: Could you provide an outlook on cost components for Q1, particularly energy and pulp? A: We expect COGS to be somewhat lower in Q1, driven by a decrease in pulp prices. Energy costs are expected to be higher due to seasonal factors and pricing, but overall, COGS should be lower than in Q4.

Q: How did the product recalls in baby care impact your numbers, and will there be any effect in Q1? A: The recall was specific to Q4 and was temporary. We expect growth in the baby care category in 2025, but it's difficult to comment on individual quarters.

Q: Can you elaborate on the professional hygiene volumes and the restructuring impact? A: We have reached a healthy underlying margin in professional hygiene. The restructuring impact is minimal in Q1, and we expect the underlying performance to remain strong.

Q: What are your plans for share buybacks following the AGM? A: We will announce our plans for the recurring share buyback program after the AGM, as it requires a decision by the AGM each year.

Q: How are you managing production volumes in light of energy costs and demand? A: We have limited flexibility in adjusting production due to the nature of our products. We ran our mills at high capacity last year due to strong demand, and we expect to continue meeting high demand levels.

Q: Can you provide more insight into the growth in your medical and health business? A: We are seeing growth across all therapy areas, particularly in advanced wound care and compression, aided by organizational changes and new reimbursement schemes in the US. We are also seeing strong growth in North and Latin America.

Q: What is your CapEx budget for 2025, and how are you planning marketing investments? A: We expect CapEx to be between SEK8 billion and SEK8.5 billion, primarily for capacity investments. Marketing investments will increase as a percentage of sales, and digital investments will remain elevated.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.