Essity : Presentation Interim Report Q3 2020

October 22, 2020 at 04:40 am EDT

Interim Report Third Quarter 2020

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.

October 22, 2020

Interim Report Third Quarter 2020

Summary

Target raised for adjusted return on capital employed1) to above 17% by 2025
Continued execution of existing strategy with focus on profitable growth and acquisitions
Acceleration of digital transformation with new digital platform
Launch of Manufacturing Roadmap program
The Board of Directors is proposing a dividend of SEK 6.25 per share

1) Excluding items affecting comparability

October 22, 2020

Interim Report Third Quarter 2020

Summary

Q3 2020 vs Q3 2019

Strong underlying business performance in a challenging environment
Sales impacted by COVID-19 and related lockdowns
Online sales increased
Successful innovations
Adjusted EBITA margin improvement

Net sales which excludes exchange rate effects, acquisitions and divestments
Excluding items affecting comparability

4 October 22, 2020

	Organic
Net Sales	Net Sales1)

SEK

28,677m	x%
-5.1%
-11.9%
Operating	Earnings
Cash Flow	per Share
SEK	SEK
3,069m	3.22
-39%	-9%

Interim Report Third Quarter 2020

Adjusted

EBITA2)

SEK

4,119m

-1%

Adjusted

ROCE2)

14.7%

+40bps

Adjusted

EBITA Margin2)

14.4%

+160bps

Adjusted

ROE2)

16.5%

-360bps

Net Sales
Q3 2020 vs Q3 2019
			-11.9%



			Organic Net Sales1) -5.1%
SEK 32,565m	-5.1%	0.0%		+0.2%	-7.0%

SEK 28,677m

Net Sales	Volume	Price/Mix	Acquisitions	Currency	Net	Sales
Q3 2019					Q3	2020

Net sales which excludes exchange rate effects, acquisitions and divestments

October 22, 2020

Interim Report Third Quarter 2020

Adjusted EBITA Margin1)

Q3 2020 vs Q3 2019

		+160bps


+240bps	-40bps	-40bps
14.4%

12.8%

Lower raw material costs
COGS savings

Adjusted EBITA Margin	Impact Gross	A&P	SG&A	Adjusted EBITA Margin
Q3 2019	Profit Margin		(excl A&P)	Q3 2020

Excluding items affecting comparability

October 22, 2020

Interim Report Third Quarter 2020

Positive Long-term Development

Net Sales and Organic Net Sales Growth1)

33,68633,712

32,565

32,068

31,11230,656

29,72129,647

28,664

7.8%

28,407 28,677

28,020

+5.9%

27,178

+3.4%

+3.3%

+4.3%

+3.9%

+3.6%

+2.3%+1.6%

+1.8%+1.8%

-5.1%

-9.3%

2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 2020

Net Sales, SEKm		Organic Net Sales Growth, %

Organic net sales which excludes exchange rate effects, acquisitions and divestments
Excluding items affecting comparability

Adjusted EBITA and EBITA margin2)

15.8%

			14.1% 5,333	14.4%

				13.3%
12.6% 12.6%			12.8% 4,742

12.2%
	11.1% 11.3%	11.6%	4,176	4,119
	11.1%		3,782
3,619		3,732

	10.2% 3,451 10.4%
3,437 3,432	3,349
	3,190
	3,119
	3,016

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 2020

Adjusted EBITA, SEKm		Adjusted EBITA margin, %

October 22, 2020

Interim Report Third Quarter 2020

Target Raised for Adjusted ROCE1)

Target raised for adjusted return on capital employed (adjusted ROCE)1) to above 17% by 2025
─ Adjusted ROCE1) of 15.7% for the last 12 months
Other financial targets remain unchanged

Adjusted ROCE1) for the Group

15.7%

13.8%

12.0%

2018

2019

Last 12 months

1) Excluding items affecting comparability

October 22, 2020

Interim Report Third Quarter 2020

Accelerating Our Digital Transformation

Enhancing Customer and Consumer Value

Automation in all parts of the value chain, simplification and economies of scale
Greater visibility and predictability based on high-quality data collection and advanced analytics
Significant cost savings and working capital reduction
Digital investment of approx SEK 2.6bn
- Of which costs of SEK 1.4bn during 2020-2024 and CAPEX of SEK 1.2bn
- Positive impact on sales and earnings is expected gradually from 2022
- In the short term, the costs are expected to be offset by savings in other areas

October 22, 2020

Interim Report Third Quarter 2020

Manufacturing Roadmap Program

Includes Manufacturing, Logistics and Distribution

Optimizes and streamlines Essity's approximately 60 wholly-owned facilities
World-classcost efficiency, quality and service levels
Contributes to reduction of carbon emissions in line with the Science Based Targets initiative

October 22, 2020

Interim Report Third Quarter 2020

Innovations

Launched in Q3

October 22, 2020

Interim Report Third Quarter 2020

Washable Absorbent Underwear

Feminine Care

Launched in Latin America

October 22, 2020

Interim Report Third Quarter 2020

Face Masks

New Product Offering

Launched in retail in Europe with leading brands
Launched in Professional Hygiene with globally leading brand Tork
Production in Europe and Latin America

October 22, 2020

Interim Report Third Quarter 2020

TENA SmartCare

Digital Solutions Improving and Facilitating For Users, Relatives and Caregivers

SmartCare Home

SmartCare Professional

October 22, 2020

Interim Report Third Quarter 2020

Personal Care

Q3 2020 vs Q3 2019

Organic net sales decreased 1.5%
─ Volume -3.2% and price/mix +1.7%
Sales negatively impacted by COVID-19 and related lockdowns
Significant sales improvement for Medical Solutions compared to Q2 2020
Higher prices, better mix and cost savings
Lower raw material costs
Lower volumes and higher distribution costs
Sales and marketing costs higher as % of net sales
Exit of Baby Care in Russia and North Africa

Excluding items affecting comparability

Net Sales	Adjusted EBITA1)	Adjusted EBITA Margin1)
SEK 12,216m	SEK 1,739mSEK 1,805m	16.2%
14.2%
SEK 11,115m
-9%	+4%	+200
bps

Q3 2019

Q3 2020

Q3 2019

Q3 2020

Q3 2019

Q3 2020

Organic Net Sales

By Region

By Product Segment

+0.1%

-1.5%	-2.3%	-0.3%	-0.3%	-2.8%

		-4.5%

Total	Mature	Emerging	Incontinence Medical	Baby	Feminine
	Markets	Markets	Products	Solutions	Care	Care
% of Personal
Care Net Sales:	66%	34%	45%	19%	19%	17%

October 22, 2020

Interim Report Third Quarter 2020

Consumer Tissue

Q3 2020 vs Q3 2019

Organic net sales increased 2.0%
─ Volume +4.6% and price/mix -2.6%
Higher volumes, better mix and cost savings
Lower raw material and energy costs
Lower prices including higher promotional levels
Sales and marketing costs stable as % of net sales

Excluding items affecting comparability

16 October 22, 2020

Net Sales	Adjusted EBITA1)	Adjusted EBITA Margin1)
	SEK 1,894m		16.3%
SEK 12,220m		+44%

SEK 11,634m	SEK 1,319m		+550


-5%			10.8%	bps

Q3 2019

Q3 2020

Q3 2019

Q3 2020

Q3 2019

Q3 2020

Organic Net Sales By Region

+2.0%	+3.4%
+0.9%

Total	Mature	Emerging
	Markets	Markets
% of Consumer
Tissue Net Sales:	55%	45%

Interim Report Third Quarter 2020

Professional Hygiene

Q3 2020 vs Q3 2019

Organic net sales decreased 21.4%
─ Volume -22.6% and price/mix +1.2%
Sales negatively impacted by COVID-19 and related lockdowns and destocking
Higher sales of dispensers and skin care
Increase of supply capacity for hand sanitizers
Better mix and cost savings
Stable raw material costs
Lower volumes leading to lower fixed cost absorption

Excluding items affecting comparability

Net Sales		Adjusted EBITA1)		Adjusted EBITA Margin1)
			SEK 1,288m
SEK 8,131m					15.8%

	SEK 5,930m
	-27%			SEK 634m			10.7%
						-510
				-51%
							bps

Q3 2019	Q3 2020		Q3 2201919	Q3 2202020		Q3 2019	Q3 2020
	Q3	Q3

Organic Net Sales By Region

	-17.2%
-21.4%	-22.7%

	Mature	Emerging
Total	Markets	Markets
% of Professional
Hygiene Net Sales:	80%	20%

October 22, 2020

Interim Report Third Quarter 2020

Professional Hygiene

Focus Areas

Shift Segment Focus		Drive Services &		Accelerate
	Solutions		E-commerce

Accelerate Skin Care		Recover HoReCa		Convert Air Dryers

New Product

Launches

Campaign Cost Reduction

Innovation

October 22, 2020

Interim Report Third Quarter 2020

COVID-19 Impacts on Visitors

Examples Based on Tork EasyCube® Data for Commercial Buildings

Airports		Department Store

Office Buildings		Shopping and Entertainment Center

October 22, 2020

Interim Report Third Quarter 2020

Increased Awareness of Hygiene and Health

Leveraging Our Leading Solutions

Tork EasyCube® Data:

Overall Consumption Per Visitor

Jul-Sep 2020 vs Jul-Sep 2019

Skin Care	Hand Towels	Toilet Tissue
+53%	+11%	-11%

October 22, 2020

Interim Report Third Quarter 2020

Increased Awareness of Hygiene and Health

Converting Air Dryer Customers to Tork PeakServe

October 22, 2020

Interim Report Third Quarter 2020

Summary

Target raised for adjusted return on capital employed1) to above 17% by 2025
Acceleration of digital transformation with new digital platform
Launch of Manufacturing Roadmap program
Strong underlying business performance in a challenging environment
The Board of Directors is proposing a dividend of SEK 6.25 per share

1) Excluding items affecting comparability

October 22, 2020

Interim Report Third Quarter 2020

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Essity AB (publ) published this content on 22 October 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 22 October 2020 08:39:02 UTC

1st Jan change

Capi.

ESSITY AB

+1.28%

16.07B

PROCTER & GAMBLE COMPANY

+6.90%

369B

UNILEVER PLC

-0.79%

116B

HINDUSTAN UNILEVER LIMITED

-16.84%

62.37B

ESTEE LAUDER

-1.46%

49.48B

KENVUE INC.

-9.56%

36.9B

BEIERSDORF

-0.07%

32.33B

GODREJ CONSUMER PRODUCTS LIMITED

+2.79%

14.39B

DABUR INDIA LIMITED

-9.57%

10.67B

COLGATE-PALMOLIVE (INDIA) LIMITED

+5.41%

8.78B

Market Closed - Nasdaq Stockholm Other stock markets 11:29:50 2024-04-18 am EDT			5-day change	1st Jan Change
253.2 ^SEK	+0.68%		+0.12%	+1.28%

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