Investing.com — Essity ( ST: ) on Thursday reported fourth-quarter results that missed expectations as higher raw material costs and currency fluctuations offset sales and price improvements.
Shares of the Sweden-based company were down 5.3% at 04:23 ET (09:23 GMT).
The personal and home care product maker’s fourth-quarter EBITA was SEK 4,969 million, 4% below consensus estimates of SEK 5,167 million.
This reflected an EBITA margin of 13.1%, down 20 basis points year-on-year, compared to consensus expectations of 13.7%.
Organic sales growth in the quarter was 3.9%, narrowly beating consensus of 3.6%. This was driven by volume growth of 1.7% and price/mix improvement of 2.2%.
However, these gains were insufficient to offset the impact of higher raw material costs, exacerbated by a stronger US dollar at the end of the quarter.
The FMCG division underperformed significantly, recording EBITA of SEK 2,245 million, well below the consensus estimate of SEK 2,418 million.
EBITA margin for the division was 11%, compared to consensus of 11.7%. FMCG organic growth was 4.5%, largely led by volume of 4.3%, with price/mix contributing just 0.2%.
Subcategories showed mixed results: incontinence products grew by 11.2%, women’s care by 3.4%, while baby care fell by 1.6%. Consumer goods recorded growth of 4.3%, led by volumes, and prices returned to positive territory.
“While prices continued to improve sequentially, this was not enough to cover the larger decline in raw materials experienced in the fourth quarter (exacerbated by the late strengthening of the US dollar),” Jefferies analysts said in a note.
The professional hygiene segment performed better, beating expectations with EBITA of SEK 1,817 million and a margin of 18.3%, compared to the consensus of SEK 1,753 million and a margin of 17.5%.
Organic growth was 1.4%, with price/mix growth of 7.4%, although volumes were down 6%, partly due to a 3.7 percentage point restructuring impact.
Health and Medical (TASE:) reported results in line with forecasts, achieving EBITA of SEK 1,361 million and a margin of 18.3%, close to the consensus of SEK 1,352 million and 18.4%.
Organic growth was 5.6%, driven by volume growth of 4.9% and a modest price/mix contribution of 0.7%.
Subcategories included incontinence products, which were up 4.4%, and medical solutions, which were up 7.2% on higher volumes.
Essity announced that CEO Magnus Groth will step down from his position in 2025. Groth has been CEO for ten years and has been with the company for fourteen years.
Groth will remain in his position until a successor is named, and the search process is ongoing.
