Interim Report Third Quarter 2019
October 25, 2019 Interim Report Q3 20192
This presentation may contain forward-looking statements. Such
statements are based on our current expectations and are subject
to certain risks and uncertainties that could negatively affect our
business. Please read our most recent annual and sustainability
report for a better understanding of these risks and uncertainties.
Q3 2019 vs Q3 2018
Summary
Interim Report Q3 20193 October 25, 2019
1) Net sales which excludes exchange rate effects, acquisitions and divestments2) Excluding items affecting comparability
▪ Strong organic net sales growth and higher
adjusted EBITA margin in all business areas
▪ Higher prices, better mix, higher volumes
and cost savings in all business areas
▪ Lower raw material and energy costs but
negative impact from stock revaluation
▪ EPS increased 150% to SEK 3.53
Adjusted
EBITA Margin2)Net Sales
Adjusted
EBITA2)
Organic
Net Sales1)
x%
Adjusted
ROCE2)
Adjusted
ROE2)
Operating
Cash Flow
Earnings
per Share
SEK
32,565m
+9.8%
+5.9%SEK
4,176m
+38%
12.8%
+260 bps
20.1%14.3%
SEK
3.53
+150%
+73%
3,437 3,4323,619
3,1193,349
3,016
3,451
3,190
3,732
4,176
Q22017
Q32017
Q42017
Q12018
Q22018
Q32018
Q42018
Q12019
Q22019
Q32019
28,155
27,178
28,664
28,020
29,721 29,647
31,11230,656
32,06832,565
Q22017
Q32017
Q42017
Q12018
Q22018
Q32018
Q42018
Q12019
Q22019
Q32019
Increased Sales and Profits
1) Excluding exchange rate effects, acquisitions and divestments2) Excluding items affecting comparability
SEKm
-0.1%
October 25, 2019 Interim Report Q3 2019
12.2%
4
12.6% 12.6% 11.1% 11.3% 10.2% 11.1% 10.4% 11.6%
Adjusted EBITA2)
SEKm
Net Sales
Adjusted EBITA Margin2)
+1.8% +1.8% +3.4% +2.3% +1.6% +3.3% +4.3% +3.9%
Organic Net Sales1)
+5.9% 12.8%
Net Sales
Interim Report Q3 2019October 25, 20195
Q3 2019 vs Q3 2018
Net SalesQ3 2018
Price/Mix Volume Divestment Currency Net SalesQ3 2019
+2.1%
+4.3%
+3.8%
+9.8%
Organic Net Sales1) +5.9%
SEK 29,647m
SEK 32,565m
1) Net sales which excludes exchange rate effects, acquisitions and divestments
-0.4%
Adjusted EBITA1)
Q3 2019 vs Q3 2018
Interim Report Q3 2019October 25, 20196
AdjustedEBITA
Q3 2018
Price/Mix Volume Raw Material Energy Cost SavingsCOGS
Cost-savingsProgram
Other Currency AdjustedEBITA
Q3 2019
Organic Adjusted EBITA +31%2)SEK 3,016m
+38%
SEK +614m
SEK +367m
SEK +409m SEK +57m SEK +92mSEK -773m
SEK +215mSEK 4,176m
1) 1)
1) Excluding items affecting comparability2) Excluding items affecting comparability, currency translation effects and acquisitions
SEK +179m
▪ Higher sales and marketing costs
▪ Stock revaluation
▪ Higher distribution costs
Raw Material Development
Interim Report Q3 2019October 25, 20197
75
100
125
150
Polypropylene, EUR Propylene, EUR
75
100
125
150
Fluff NBSK EUCA
50
75
100
125
150
SOP US SOP EU
Source: Fastmarkets RISI, Fastmarkets FOEX, VDP, Macrobond, Epexspot, ICIS
Oil-based Raw Materials2)
Market Pulp in USD, Europe Paper for Recycling1)
Index 100 = July 2017 1) Sorted Office Paper. Index in local currencies. EU refers to Germany 2) Polypropylene major feedstock of non-woven material, Propylene major feedstock of SAP material 3) Electricity Germany. Natural Gas, TTF Index
60
85
110
135
160
185
210
Electricity, EUR Natural Gas, EUR
Energy Prices3)
COGS Savings
▪ Lower COGS savings in Q3 2019 due to temporarily higher
production and distribution costs mainly due to disruptions
related to
─ Start-up of new production capacity
─ Higher pace of product launches
─ Higher demand
▪ Changed ambition for COGS savings 2019: SEK 600-700m
▪ Savings from
─ Tissue Roadmap
─ Operational efficiency improvements
─ Material rationalization
─ Sourcing savings
SEK 92m in Q3 2019
Interim Report Q3 2019October 25, 20198
-40 bps
Q3 2018 Q3 2019
Cost-savings ProgramSEK 179m in Q3 2019
Interim Report Q3 2019October 25, 20199
▪ Main impact in SG&A costs
▪ Expected annual cost savings of approx SEK 900m with
full effect at the end of 2019
▪ End of Q3 2019 annualized run-rate cost savings SEK 799m
▪ Headcount reduction of approx. 880 positions out of 1,000
▪ Ambition for cost savings 2019: SEK 600m
17.6% 17.2%
Reduction of SG&A as % of Sales
-40 bps
Personal Care
▪ Organic net sales increased 4.5%
─ Volume +3.3% and price/mix +1.2%
▪ Higher prices, better mix, higher volumes and cost savings
▪ Raw material and energy headwinds with negative impact of
-100 bps on adjusted EBITA margin
▪ Higher distribution costs
▪ Investments in growth and costs related to implementation of
Medical Device Regulation increased sales and marketing
costs
▪ Exit of open baby diapers in Russia
Q3 2019 vs Q3 2018
Interim Report Q3 2019October 25, 201911
SEK 12,216mSEK 11,408m
Q3 2018 Q3 2019 Q3 2018 Q3 2019 Q3 2018 Q3 2019
SEK 1,739mSEK 1,565m
Net Sales Adjusted EBITA1) Adjusted EBITA Margin1)
+11%+7.1% +50
bps
13.7% 14.2%
+4.5%
Total Mature
Markets
Incontinence
Products
By Region By Product Segment
Emerging
Markets
+3.3%
+5.9%
-0.5%
+10.7%
Baby
Care
Feminine
Care% of Personal
Care Net Sales: 63% 37% 44% 19% 18%19%
+1.5%
+6.9%
Medical
Solutions
Organic Net Sales
1) Excluding items affecting comparability
Consumer Tissue
▪ Organic net sales increased 8.1%
─ Volume +4.9% and price/mix +3.2%
▪ Higher prices, better mix, higher volumes and cost savings
▪ Lower raw material and energy costs but negative impact
from stock revaluation
▪ Higher distribution costs
▪ Investments in growth with higher sales and marketing
costs
Q3 2019 vs Q3 2018
Interim Report Q3 2019October 25, 201912
SEK 12,220m
SEK 10,912m
SEK 1,319m
SEK 635m
Net Sales Adjusted EBITA1) Adjusted EBITA Margin1)
+12% +500
bps5.8%
10.8%
Q3 2018 Q3 2019 Q3 2018 Q3 2019 Q3 2018 Q3 2019
+8.1%
Total Mature
Markets
Organic Net Sales By Region
Emerging
Markets
+4.3%
% of Consumer
Tissue Net Sales: 54% 46%
+12.8%
+108%
1) Excluding items affecting comparability
Professional Hygiene
▪ Organic net sales increased 5.0%
─ Volume +3.2% and price/mix +1.8%
▪ Higher prices, better mix, higher volumes and cost
savings
▪ Lower raw material and energy costs but negative
impact from stock revaluation
▪ Investments in growth with higher sales costs
Q3 2019 vs Q3 2018
Interim Report Q3 2019October 25, 201913
Q3 2018 Q3 2019
SEK 8,131m
SEK 7,309m
Net Sales Adjusted EBITA1) Adjusted EBITA Margin1)
+33%
+11.3%
+250
bps
15.8%13.3%
SEK 970m
SEK 1,288m
Q3 2018 Q3 2019
+5.0%+4.4%
% of Professional
Hygiene Net Sales:
+8.1%
Total Mature
Markets
Emerging
Markets
80% 20%
Organic Net Sales By Region
1) Excluding items affecting comparability
Q3 2018 Q3 2019 Q3 2018 Q3 2019
Continuing the Digital Journey
Interim Report Q3 2019October 25, 201914
Essity with the Tork brand launches
Virtual Reality app for Hand Hygiene education
Clean hands save
lives in healthcareSEK 9bnin online sales 9M 2019
Approx 10% of Group Net Sales
Summary
▪ Strong organic sales growth and improved
profitability in all business areas
▪ EPS increased 150% to SEK 3.53
▪ Continued high innovation pace improving
well-being and strengthening our brands
▪ Investments in growth with higher sales and
marketing costs but lower as % of sales
▪ Continued cost and efficiency focus
Interim Report Q3 2019October 25, 201915
Q3 2019