Essity: Year-end Report 2019
STOCKHOLM, Jan. 22, 2020 /PRNewswire/ -- JANUARY 1 - DECEMBER 31, 2019 (compared with the corresponding period a year ago)
- Net sales increased 8.8% to SEK 128,975m (118,500)
- Organic net sales increased 4.5%
- In emerging markets, which accounted for 37% of net sales, organic net sales increased 9.1%
- Operating profit before amortization of acquisition-related intangible assets (EBITA) increased 31% to SEK 15,127m (11,560)
- Adjusted EBITA increased 22% to SEK 15,840m (12,935)
- Adjusted EBITA margin increased 1.4 percentage points to 12.3% (10.9)
- Profit for the period increased 19% to SEK 10,212m (8,552)
- Earnings per share increased 17% to SEK 13.12 (11.23)
- Adjusted earnings per share increased 10% to SEK 14.69 (13.32)
- Cash flow from current operations increased 108% to SEK 13,208m (6,363)
- The Board of Directors proposes an increase in the dividend of 9% to SEK 6.25 (5.75) per share
SUMMARY OF THE FULL YEAR AND FOURTH QUARTER OF 2019
Both growth and profitability increased for Essity in 2019. The Group's organic net sales rose 4.5%. Adjusted EBITA increased 22% while the adjusted EBITA margin rose 1.4 percentage points to 12.3%. Earnings were positively impacted by implemented price increases, a better product mix, higher volumes, cost savings and lower raw material costs. Stock revaluations due to lower raw material prices and higher distribution costs had a negative impact on earnings. Investments to increase growth resulted in higher sales and marketing costs. The adjusted return on capital employed rose by 1.8 percentage points to 13.8%. Earnings per share increased 17% to SEK 13.12. The Board of Directors proposes an increase in the dividend of 9% to SEK 6.25 per share.
During the year, we increased growth, improved profitability and strengthened our competitiveness for the future through:
- Successful innovations and investments in sales and marketing that strengthened our market positions and brands. Our innovations have enhanced customer and consumer value and reduced the environmental footprint.
- Online sales increased to approximately SEK 13bn, corresponding to about 10% of net sales.
- Price increases and an improved product mix in all business areas.
- Cost savings totaling approximately SEK 1.1bn, of which SEK 456m was related to continuous cost savings and SEK 637m to the Group-wide cost-savings program. The program has been concluded and at the end of 2019, savings amounted to slightly above SEK 900m on an annualized basis.
- An improved cash flow and strengthened balance sheet.
- Activities to improve underperforming market positions continued and resulted in improved profitability in several markets.
- In emerging markets, which accounted for 37% of net sales, organic net sales rose 9.1%. In Latin America, we strengthened our market positions and organic net sales increased 10%. In China, our Asian subsidiary Vinda strengthened its position as market leader in tissue and launched Feminine Care with the Libresse brand. In Asia, organic net sales rose 11%.
- Within our ongoing efforts to contribute to a sustainable and circular society, we established additional sustainability targets for packaging with a special focus on plastic packaging. We also decided to invest in sustainable technology for alternative fiber for tissue production.
- We are working actively breaking barriers and to increase knowledge surrounding hygiene and health and entered an agreement during the year with UNICEF in Mexico concerning education of children and young people in matters relating to hygiene.
The Group's net sales increased 8.3% in the fourth quarter of 2019 compared with the corresponding period a year ago. Organic net sales increased 3.6%, of which volume accounted for 2.3% and price/mix for 1.3%. In emerging markets, which accounted for 37% of net sales, organic net sales increased 6.6%, while the increase in mature markets was 1.9%.
The Group's adjusted EBITA in the fourth quarter of 2019 increased 37% compared with the corresponding period a year ago. Earnings were positively impacted by higher prices, a better product mix, higher volumes, lower raw material and energy costs and cost savings amounting to SEK 206m, of which SEK 202m were related to the cost-savings program. Investments to increase growth and higher costs for incentive programs resulted in increased sales and marketing costs. Higher distribution costs and stock revaluations due to lower raw material prices had a negative impact on earnings. Lower pulp prices have resulted in price pressure in the market for consumer tissue. In the Consumer Tissue business area, we have finalized some negotiations and agreed on price decreases in Europe. The agreed price decreases are on average low single-digits and will have an impact in the first quarter of 2020. The Group's adjusted EBITA margin increased 3.0 percentage points to 14.1%. The adjusted return on capital employed rose 3.7 percentage points to 16.4%. Operating cash flow increased 46%. Earnings per share were SEK 3.87.
Essity's Annual Report for 2019 is intended to be published in the week beginning March 9, 2020. In 2020, interim reports will be published on April 23, July 17 and October 22.
ANNUAL GENERAL MEETING
Essity's Annual General Meeting will be held in Stockholm on April 2, 2020.
INVITATION TO PRESS CONFERENCE OF YEAR-END REPORT FOR 2019
Media and analysts are invited to a press conference at which President and CEO Magnus Groth will present this Year-end Report.
Date: Wednesday, January 22, 2020
Time: 9:00 a.m. CET
Location: Essity's headquarters, Waterfront Building, Klarabergsviadukten 63, Stockholm, Sweden
Link to Web presentation: https://essity.videosync.fi/2020-01-22-q4
The press conference will be webcast at www.essity.com. To participate by telephone, call: +44-(0)207-192-80-00, +1-631-510-74-95 or +46-(0)8-506-921-80. Please call well in advance of the start of the conference. Specify "Essity" or conference ID no. 3561699.
Stockholm, January 22, 2020
Essity Aktiebolag (publ)
President and CEO
This information is such that Essity Aktiebolag (publ) is obligated to make public pursuant to the EU Market Abuse Regulation. This report has been prepared in both Swedish and English versions. In case of variations in the content between the two versions, the Swedish version shall govern. The information was submitted for publication, through the agency of the contact person set out below, at 07:00 CET on January 22, 2020.
For further information, please contact:
CFO and Executive Vice President
Vice President Investor Relations, Group Function Communications
Joséphine Edwall Björklund
Senior Vice President, Group Function Communications
Vice President Corporate Communications, Group Function Communications
Media Relations Manager
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