Year-end Report 2021

JANUARY 1 – DECEMBER 31, 2021
 
(compared with the corresponding period a year ago)

• Sales growth, including organic sales growth and acquisitions, amounted to 4.5%, of which organic sales growth amounted to 3.3%. Net sales increased 0.1% to SEK 121,867m (121,752). Sales growth, including organic sales growth and acquisitions, was strong for the fourth quarter of 2021 and amounted to 10.3%, of which organic sales growth amounted to 8.0%.
• Price increases have been implemented and further price increases will be implemented during 2022
• Six acquisitions completed: Australian hygiene company Asaleo Care, increased shareholding by 45.8% to 95.8% in Latin American hygiene company Familia and four acquisitions in Medical Solutions.
• Market shares increased for approximately 70% of branded sales in the retail trade
• E-commerce sales increased organically by 15.9% to approximately 14% of net sales, corresponding to approximately SEK 17bn.  
• In emerging markets, which accounted for 38% of net sales, organic sales growth amounted 8.8%.
• Operating profit before amortization of acquisition-related intangible assets (EBITA) decreased 20% to SEK 14,051m (17,567)
• Adjusted EBITA amounted to SEK 13,680m (17,626)
• Adjusted EBITA margin amounted to 11.2% (14.5). Higher costs for raw materials, energy and distribution had a negative impact of 4.8 percentage points on the margin.
• Adjusted return on capital employed amounted to 12.0% (15.7)
• Profit for the period was SEK 9,810m (11,747)
• Earnings per share were SEK 12.27 (14.56)
• Cash flow from current operations was SEK 6,894m (11,175)
• The Board of Directors proposes an increase in the dividend of 4% to SEK 7.00 (6.75) per share

 
CEO’S COMMENTS

Strong sales growth and focus on price increases

Net sales for 2021 amounted to approximately SEK 122bn. Sales growth, including organic sales growth and acquisitions, amounted to 4.5%, of which organic sales growth amounted to 3.3%. All business areas demonstrated organic sales growth. We continued to capture market shares and reported strong e-commerce growth. We implemented price increases and further price increases will be implemented in 2022 to offset the strong cost inflation.

Full-year 2021
Net sales for 2021 amounted to approximately SEK 122bn. Sales growth, including organic sales growth and acquisitions, amounted to 4.5%, of which organic sales growth amounted to 3.3%. All business areas demonstrated organic sales growth. Medical Solutions and Feminine Care reported strong organic sales growth of 10.8% and 10.0%, respectively. Sales were negatively impacted by the COVID-19 pandemic and the related lockdowns and restrictions, primarily within Professional Hygiene. At the same time, our hygiene and health solutions are more important than ever, and we can see a rapid increase in sales when societies re-open and restrictions are lifted. The Group’s organic sales growth amounted to 1.3% compared with full-year 2019.

Due to the significant cost inflation, adjusted EBITA fell 22% to SEK 13,680m. The adjusted EBITA margin declined 3.3 percentage points to 11.2%. Higher costs for raw materials, energy and distribution reduced the margin by 4.8 percentage points. Higher volumes, higher selling prices, a better mix and efficiency improvements had a positive impact on earnings. Cost savings amounted to SEK 698m. The adjusted return on capital employed was 12.0%. Earnings per share were SEK 12.27. The Board of Directors proposes an increase in the dividend of 4% to
SEK 7.00 per share for the 2021 fiscal year.

Emerging markets’ share of Essity’s net sales and profitability has risen over time, supported by favorable market trends, a higher share of premium products, strong brands and a broadening of our offerings. In 2021, emerging markets accounted for 38% of net sales and organic sales growth was 8.8%. The adjusted EBITA margin in emerging markets was 10.5%.

We have taken strong actions to address the significant challenges in our operating environment during the year. We implemented price increases in all business areas and further price increases will be implemented in 2022 to offset the strong cost inflation. Manufacturing Roadmap delivered substantial cost savings and reduced our environmental impact.

Six acquisitions were completed during the year, including the Australian hygiene company Asaleo Care as well as an increase in our shareholding by 45.8% to 95.8% in the Latin American hygiene company Familia. In Medical Solutions, we strengthened our presence in advanced wound care and orthopedics in the US through the acquisitions of Hydrofera as well as AquaCast Liner and the sports tape brands Coach, Elastikon and Zonas. In addition, we finalized the acquisition of the remaining shares in ABIGO Medical AB in advanced wound care.

During the year, we launched innovations with a focus on greater well-being, sustainability and digitalization, helping us to increase our market shares for approximately 70% of branded sales in the retail trade. E-commerce sales amounted to approximately SEK 17bn, corresponding to about 14% of net sales, and organic sales growth was 15.9%.

We have raised our sustainability ambitions and have, for example, committed to achieving net zero emissions of greenhouse gases by 2050. Between 2016 and 2021, we reduced our carbon emissions under Science Based Targets, Scope 1 and 2, by 15%.

Essity was awarded a place on the global non-profit environmental organization CDP’s A List for our work in combating deforestation, and was also recognized for our leadership in relation to climate change. Through the Consumer Goods Forum and its Forest Positive Coalition of Action, we work together with other companies and organizations to address deforestation and promote biological diversity.

We promote increased diversity, equal opportunities and inclusion in Essity’s corporate culture, and we presented a new Group target for increased diversity during the year. During the COVID-19 pandemic, Essity has followed three priorities: care for our people, contribute to society and continue to secure business success.

Fourth quarter 2021
Sales growth, including organic sales growth and acquisitions, amounted to 10.3%, of which organic sales growth was 8.0%. All business areas demonstrated strong organic sales growth. The organic sales growth amounted to 7.5% compared with the fourth quarter of 2019. Adjusted EBITA decreased 30%. The adjusted EBITA margin decreased 5.2 percentage points to 9.0%. Higher costs for raw materials, energy and distribution reduced the margin by 10.4 percentage points. Higher volumes, higher selling prices, a better mix and cost savings had a positive impact on earnings. Cost savings amounted to SEK 228m. Earnings per share were SEK 2.82.

Looking ahead
We will implement further price increases in 2022. We are continuing to deliver in line with our strategy for profitable growth and increased shareholder value. Through innovation, digitalization, sustainability initiatives and efficiency improvements, we are increasing the company’s competitiveness. Our new target for sales growth of more than 5% includes both organic sales growth and acquisitions. We are prioritizing to grow in the categories with the highest profitability.

Magnus Groth
President and CEO

 
FUTURE REPORTS
Essity’s Annual Report for 2021 will be published during the week starting February 28, 2022. In 2022, interim reports will be published on April 28, July 21 and October 27.

ANNUAL GENERAL MEETING
Essity’s Annual General Meeting will be held in Stockholm on March 24, 2022.

INVITATION TO PRESENTATION OF THE YEAR-END REPORT 2021
In conjunction with publication, a telephone and web presentation will be held where President and CEO Magnus Groth will present the report and answer questions.

Presentation
Date: Wednesday, January 26, 2022
Time: 9:00 a.m. CET
Link to web presentation: https://essity.videosync.fi/2022-01-26-q4
To participate by telephone, call: +44 333 300 08 04, +1 631 913 14 22 or +46 (0) 8 566 426 51. Please call well in advance of the start of the presentation. State pin code 70624732#.
The presentation can also be followed on LinkedIn and Twitter.
 

For further information, please contact:
Fredrik Rystedt, CFO and Executive Vice President, +46 (0)8 788 51 31
Johan Karlsson, Vice President Investor Relations, Group Function Communications, +46 (0) 70 511 15 81
Joséphine Edwall Björklund, Senior Vice President, Group Function Communications, +46 (0) 8 788 52 34
Per Lorentz, Vice President Corporate Communications, Group Function Communications, +46 (0) 73 313 30 55

 
NB:

This report has not been reviewed by the company’s auditors.

This information is such information 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 7:00 a.m. CET on January 26, 2022.