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1. Company Snapshot

1.a. Company Description

Essity AB (publ) develops, produces, and sells hygiene and health products and services worldwide.It offers health and medical products, including incontinence products, wound care, compression therapy, orthopedics, skincare products, and digital solutions with sensor technology.It operates in Personal Care, Consumer Tissue, Professional Hygiene, and Other segments.


The company also provides consumer goods, such as incontinence products, pads, diapers, wet wipes, skincare products, intimate soaps, washable absorbent underwear, menstrual cups, toilet papers, household towels, handkerchiefs, facial tissues, and napkins; and professional hygiene products that consist of toilet papers, paper hand towels, napkins, hand soaps, hand lotions, hand sanitizers, dispensers, and cleaning and wiping products.In addition, it offers digital solutions, such as Internet of Things sensor technology enabling data-driven cleaning, as well as related service and maintenance to companies and office buildings, universities, healthcare facilities, industries, restaurants, hotels, stadiums, and other public venues.The company markets its health and medical products under the TENA, Leukoplast, Cutimed, JOBST, Actimove, and Delta-Castbrands brands through pharmacies, medical devices stores, hospitals, distributors, and care institutions, as well as e-commerce; consumer goods products under the Libero, Libresse, Nosotras, Saba, TOM Organic, Lotus, Regio, Tempo, and Vinda brands through retail trade and online; and professional hygiene products under the TORK brand through distributors and online.


It serves in Europe, North America, Latin America, Asia, and internationally.Essity AB (publ) was founded in 1849 and is headquartered in Stockholm, Sweden.

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1.b. Last Insights on ESSITY

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1.c. Company Highlights

2. Essity's Q3 Results: Strong Performance Amidst Challenging Market

Essity reported a continued positive organic sales growth of 0.9% in Q3, driven by Health and Medical, Consumer Goods, and Professional Hygiene, with a profit margin of 14.6%. Earnings per share (EPS) came in at 4.86, beating analyst estimates of 4.69. The company's gross profit margin improved due to price, mix, and volume, as well as a positive development in COGS. Sales were down 4.5% due to the strengthening Swedish krona, but grew by over SEK 300 million in constant currency.

Publication Date: Oct -24

📋 Highlights
  • Organic Sales Growth:: 0.9% growth driven by price, volume, and mix, with Health and Medical, Consumer Goods, and Professional Hygiene as key contributors.
  • Incontinence & Feminine Care Growth:: 21% surge in U.S. retail incontinence sales, highlighting strong demand in Care segments.
  • COGS Savings & Margin Expansion:: EUR 115M savings in Q3, with annual COGS savings targeting EUR 50M–100M, boosting gross profit margin to 14.6%.
  • Reorganization & Efficiency Gains:: SEK 1B savings by 2026 from restructuring into four business units (Health & Medical, Personal Care, etc.) to enhance agility and focus.
  • Cash Flow & Debt Reduction:: SEK 3B net debt reduction, 1.2x net debt-to-EBITDA ratio, and profit exceeding SEK 5B, reflecting strong liquidity and financial stability.

Segment Performance

The company's Health and Medical segment continued to drive growth, with Medical Solutions growing for the 18th consecutive quarter. The launch of new products, such as Actimove Manus Air and TENA Pro skin stretch day and night, contributed to the growth. Incontinence and feminine care also saw strong growth, with a 21% growth in incontinence in U.S. retail. Consumer Tissue declined, but the private label business remained value-creating despite lower volumes and high price competition.

Cost Savings and Reinvestment

The company reported savings of around EUR 115 million in COGS and expects to reach its annual target range of EUR 50 million to EUR 100 million. The cost savings will be reinvested into profitable growth, mainly in A&P. The company expects to see the effect on margin as they grow volumes and achieve operating leverage. The reorganization into four new business units is expected to drive efficiency gains and cost savings of SEK 1 billion by the end of 2026.

Outlook and Valuation

Essity expects lower COGS in Q4 compared to Q4 2024, driven by input cost reductions. The company's financial targets include more than 3% organic sales growth and over 15% EBIT margin. With a current P/E Ratio of 15.06 and EV/EBITDA of 8.67, the market seems to have priced in a moderate growth expectation. Analysts estimate next year's revenue growth at 1.8%. The company's strong balance sheet and cash flow generation provide flexibility for organic growth, deleveraging, and potential M&A opportunities.

Growth Initiatives

Essity is optimistic about its growth platforms and believes it can accelerate growth in those areas, driving margin improvement through operating leverage and mix improvement. The company is launching initiatives to fuel profitable growth, including marketing its attractive offer, adding new innovations and upgrades, and promotions. The reorganization is expected to drive efficiency gains and cost savings, enabling the company to reinvest in growth areas.

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.39%)

6. Segments

Consumer Goods

Expected Growth: 4.3%

Strong demand for hygiene and health products drives growth, supported by Essity’s innovative product offerings, expanding product portfolios, and increasing awareness of personal health and wellness.

Professional Hygiene

Expected Growth: 4.5%

Essity's Professional Hygiene segment is driven by increasing focus on infection prevention, growth in healthcare and away-from-home markets, and rising demand for tissue and hygiene products.

Health & Medical

Expected Growth: 4.5%

Growing demand for incontinence products among aging population, increasing awareness of compression therapy, and advancements in orthopedic devices drive segment growth.

Other

Expected Growth: 4.5%

Essity AB’s Other segment, comprising businesses that don’t fit into other reportable segments, is expected to grow driven by increasing demand for specialty products, expansion into emerging markets, and strategic acquisitions.

7. Detailed Products

Incontinence Products

Essity's incontinence products are designed to provide comfort, security, and dignity to individuals with incontinence issues.

Feminine Hygiene Products

Essity's feminine hygiene products are designed to provide comfort, protection, and discretion for women during their menstrual cycles.

Baby Care Products

Essity's baby care products are designed to provide gentle, effective, and safe care for babies' delicate skin.

Medical Solutions

Essity's medical solutions are designed to provide innovative, high-quality products for healthcare professionals and patients.

Wound Care Products

Essity's wound care products are designed to provide effective, gentle, and safe care for wounds.

Compression Therapy Products

Essity's compression therapy products are designed to provide effective, comfortable, and safe compression therapy for patients.

8. Essity AB (publ)'s Porter Forces

Forces Ranking

Threat Of Substitutes

Essity AB (publ) operates in a market with moderate threat of substitutes, as consumers have some alternatives to its products, but they are not easily substitutable.

Bargaining Power Of Customers

Essity AB (publ) has a diverse customer base, which reduces the bargaining power of individual customers, giving the company an upper hand in negotiations.

Bargaining Power Of Suppliers

Essity AB (publ) has a moderate bargaining power over its suppliers, as it is a large company with significant purchasing power, but suppliers also have some bargaining power due to the specialized nature of some of the products.

Threat Of New Entrants

The threat of new entrants is low for Essity AB (publ) due to the high barriers to entry, including significant capital requirements, regulatory hurdles, and the need for specialized expertise.

Intensity Of Rivalry

The intensity of rivalry in the industry is high, with several established players competing for market share, leading to a competitive pricing environment and high marketing expenditures.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 44.87%
Debt Cost 3.95%
Equity Weight 55.13%
Equity Cost 4.77%
WACC 4.40%
Leverage 81.38%

11. Quality Control: Essity AB (publ) passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Reckitt Benckiser

A-Score: 6.0/10

Value: 1.3

Growth: 5.4

Quality: 5.2

Yield: 6.2

Momentum: 9.0

Volatility: 9.0

1-Year Total Return ->

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Stock-Card
Henkel

A-Score: 5.6/10

Value: 6.0

Growth: 4.1

Quality: 6.9

Yield: 5.0

Momentum: 1.5

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
Essity

A-Score: 5.5/10

Value: 5.1

Growth: 5.4

Quality: 5.7

Yield: 6.2

Momentum: 0.5

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
L'Oréal

A-Score: 5.0/10

Value: 2.0

Growth: 5.9

Quality: 7.8

Yield: 3.1

Momentum: 3.0

Volatility: 8.0

1-Year Total Return ->

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Stock-Card
Unilever

A-Score: 4.9/10

Value: 2.0

Growth: 4.4

Quality: 5.0

Yield: 6.2

Momentum: 2.0

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
Beiersdorf

A-Score: 4.1/10

Value: 2.1

Growth: 5.4

Quality: 6.4

Yield: 1.2

Momentum: 0.5

Volatility: 9.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

261.4$

Current Price

261.4$

Potential

-0.00%

Expected Cash-Flows