Breaking Barriers to Well-being
Annual and Sustainability Report 2022
Essity is a leading global hygiene and health company. With brands such as TENA, TENA for Men, Knix, TOM Organic, Libresse, Bodyform, Saba, Nosotras and Modibodi, Essity is a global market leader in the fast-growing leakproof apparel segment. The cover image shows TENA Silhouette Washable Absorbent Underwear.
Essity in brief
Essity is a leading global hygiene and health company. We are dedicated to improving well-being through our products and services. Sales are conducted in approximately 150 countries under the leading global brands TENA and Tork, and other strong brands, such as Actimove, JOBST, Knix, Leukoplast, Libero, Libresse, Lotus, Modibodi, Nosotras, Saba, Tempo, TOM Organic, Vinda and Zewa. Essity is listed on Nasdaq Stockholm.
Business areas
Health & Medical
0%
of net sales
2022
Consumer Goods
0%
of net sales
2022
Professional Hygiene
0%
of net sales
2022
Brands:
Key figures
Sales in approximately
0
Net sales, SEKm
0
Employees, approximately1)
0
Adjusted EBITA, SEKm2)
0
Adjusted return on capital employed2)
0.0%
Sales growth3)
0.0%
1) Relates to average number of part-time and full-time employees during the year and calculated as an average over five quarters.
2) Excluding items affecting comparability.
3) Including organic sales growth and acquisitions.
Net sales split
By region
By business area
Consumer Goods, 61%
Professional Hygiene, 23%
By country
Key events
Three new attractive business areas
As of January 1, 2022, Essity has new business areas: Health & Medical, Consumer Goods and Professional Hygiene. The business areas are aligned with the company’s customer and sales channels and will lead to an expansion of the offerings to new and adjacent categories as well as extended service content on the basis of customer and consumer needs.
A new Group organization was introduced as of December 31, 2022 entailing that Essity has four business units aligned with the company’s business areas. The business units are Consumer Goods EMEA, Consumer Goods Americas, Health & Medical and Professional Hygiene. In parallel, the Global Digital & Business Services unit was established.
Acquisition of company in wiping and cleaning products
In line with Essity’s strategy to grow in wiping and cleaning products in Professional Hygiene, the US company Legacy Converting, Inc. was acquired.
Significant price increases to offset cost inflation
Essity has raised its prices in all business areas as a result of higher raw material, energy and distribution costs.
Further efficiency improvements were achieved through the Manufacturing Roadmap program. The company is continuing to work at a high pace with efficiency improvement and energy saving measures as well as raw material rationalization.
Successful innovation and increased e-commerce sales
Focusing on higher customer and consumer value and reduced environmental impact, Essity launched several successful innovations during the year. Examples include toilet paper from wheat straw under the Zewa brand and a climate-smart diaper under the Libero brand. The Issviva brand has been launched as an innovative global e-commerce platform that provides knowledge and solutions for women experiencing menopause.
In 2022, Essity’s e-commerce sales grew 20% to approximately SEK 23bn, corresponding to approximately 15% of net sales.
A turbulent world
2022 was dominated by the war in Ukraine and the resulting human suffering. Essity has made donations to the UNHCR and other international and local organizations. Work is ongoing to exit the Russian market and the company’s assets in Russia have been impaired by approximately SEK 1.7bn.
World-leader in leakproof apparel through acquisitions
Essity acquired 80% of the Canadian company Knix Wear Inc., a leading provider of leakproof apparel for periods and incontinence. The company has a strong presence in the USA and Canada and mainly conducts online sales direct to consumers. Furthermore, the Australian company Modibodi was acquired, a leader in leakproof apparel in Australia, New Zealand and the UK.
Through these acquisitions, Essity is the global market leader within leakproof apparel1), the fastest growing product segment in Intimate Hygiene, which includes Feminine Care and Incontinence Products.
1) Estimate based on market data compiled by Essity.
Sustainability awards
Essity has received several awards for the company’s sustainability, for example, it was named one of the world’s most sustainable companies by Corporate Knights – its Global 100 list represents the top 1% of companies in the world in terms of sustainability performance. In addition, Essity has been included in S&P Global’s Sustainability Yearbook 2023 as one of the 100 most sustainable companies.
The non-profit environmental organization CDP has recognized Essity for its leadership in sustainability and Essity was awarded a place on CDP’s A list for its work in combating deforestation. Essity was also recognized as a Supplier Engagement Leader by CDP for its successful work with suppliers in the fight against climate change.
Leader once again in diversity
In the UK business daily Financial Times’ annual ranking of diversity work in European companies, Essity was named Diversity Leader for the second consecutive year.
Partnerships and collaboration for greater well-being
Essity has broadened its partnership with the United Nations Foundation by committing to their #EqualEverywhere initiative to accelerate progress toward achievement of the Sustainable Development Goal of gender equality. A new agreement has been signed between Essity and UNICEF in Mexico to educate and drive awareness of the importance of good hand hygiene and to break taboos around menstruation through the “Hygiene is our right” partnership.
CEO's message
Record growth, successful innovations and acquisitions
Every day, we reach more than one billion people with Essity’s leading hygiene and health solutions with strong brands such as TENA, Tork, Leukoplast, Tempo, Libresse and Libero. In 2022, Essity reported record growth and achieved its highest ever net sales. Operating profit before depreciation, amortization and impairment was in line with 2021, despite the strong cost inflation. Through successful innovations and acquisitions, we have strengthened and expanded our offerings for the benefit of customers and consumers around the world.
Magnus Groth
President and CEO
Strategy
Health & Medical
Comprehensive health and medical solutions along the continuum of care
Consumer Goods
Personal and home hygiene for all stages of life
Professional Hygiene
Hygiene management solutions for a broad set of commercial applications
Strategic priorities:
Building innovative brands for customers and consumers
Growing positions in East Asia, Latin America and the USA
World-class operational efficiency and service excellence
Leading in the fastest growing sales channels
Committed to sustainable solutions and net zero emissions by 2050
Winning with people and culture
We aim to retain and strengthen our product category leadership and to build number one or two market positions by launching innovations based on customer and consumer insights that boost sales and build leading brands.
Essity strives to increase the company’s share of sales and earnings in emerging markets, mainly in East Asia and Latin America, where the use of hygiene and health solutions is significantly lower than in mature markets. In addition, Essity continues to see significant growth opportunities in the USA for all three business areas.
Essity drives world-class efficiency and service excellence in all aspects of the business and has an agile organization that focuses on continuous improvements and cost savings. One initiative is the Manufacturing Roadmap program, which was launched in 2020 and aims to optimize the production structure, improve productivity and deliver raw material and energy savings.
In 2022, Essity’s e-commerce sales grew 20% to SEK 23bn, corresponding to approximately 15% of the company’s net sales. The rise in e-commerce sales also offers higher profitability with a better product mix as a result of increased sales of premium products and own brands.
Sustainability is integrated into Essity’s strategy and a priority for long-term profitable growth. We are committed to reducing our climate impact, protecting biodiversity, contributing to a circular society, and achieving net zero emissions by 2050.
Essity’s offers attractive, inclusive, and sustainable workplaces with committed employees that help break barriers to well-being in a unique corporate culture.
Financial targets and outcomes
Annual sales growth1)
Target:
>0%
Outcome 2022:
0%
In 2022, sales growth, including organic sales growth and acquisitions, amounted to 17.7%, of which volume accounted for 1.7%, price/mix for 14.0% and acquisitions 2.0%.
1) Including organic sales growth and acquisitions.
Adjusted return on capital employed1)
Target by 2025:
>0%
Outcome 2022:
0%
In 2022, return was negatively impacted by significant cost inflation, mainly for raw materials, energy and distribution. Earnings were positively impacted by significantly higher selling prices, higher volumes and a better mix.
1) Excluding items affecting comparability.
Capital Structure Policy
Target:
Maintain a solid investment grade rating
Outcome 2022:
Solid investment grade rating
Net debt amounted to SEK 62,869m. Net debt in relation to adjusted EBITDA1) amounted to 3.08.
1) Excluding items affecting comparability.
Dividend policy
Target:
Long-term stable and rising dividends
Outcome 2022:
01)SEK
The Board of Directors proposes an increase in the dividend of 4% compared with 2021 to SEK 7.25 per share for the 2022 fiscal year.
1) Board of Directors’ dividend proposal.
Sustainability targets and outcomes
Business areas
Essity is active in an attractive hygiene and health market with leading market positions and strong brands in the company’s three business areas: Health & Medical, Consumer Goods and Professional Hygiene. Within the respective business areas’ customer and sales channels, we are broadening our solutions for improved well-being for customers and consumers and investing in long-term, rising value creation.
Brands:
- Including organic sales growth and acquisitions.
- Excluding exchange rate effects, acquisitions and divestments.
- Excluding items affecting comparability.
Comprehensive health and medical solutions along the continuum of care
The Health & Medical business area comprises the categories Incontinence Products Health Care and Medical Solutions that are sold to family caregivers, professional caregivers, patients and consumers via pharmacies, medical device stores, hospitals, distributors, care institutions and e-commerce.
24239
Net sales, SEKm
0
Sales growth1)
0
Organic sales growth2)
0
Adjusted EBITA margin3)
0
Adjusted return on capital employed3)
- Including organic sales growth and acquisitions.
- Excluding exchange rate effects, acquisitions and divestments.
- Excluding items affecting comparability.
Net sales by region
North America, 18%
Asia, 8%
Latin America, 5%
Other, 7%
Net sales by product category
Medical Solutions, 41%
Brands:
- Including organic sales growth and acquisitions.
- Excluding exchange rate effects, acquisitions and divestments.
- Excluding items affecting comparability.
Personal and home hygiene for all stages of life
The Consumer Goods business area includes the categories Incontinence Products Retail, Baby Care, Feminine Care and Consumer Tissue, which are sold via the retail trade and e-commerce sales.
94841
Net sales, SEKm
0%
Sales growth1)
0%
Organic sales growth2)
0%
Adjusted EBITA margin3)
0%
Adjusted return on capital employed3)
- Including organic sales growth and acquisitions.
- Excluding exchange rate effects, acquisitions and divestments.
- Excluding items affecting comparability.
Net sales by region
Asia, 24%
Latin America, 19%
North America, 2%
Other, 2%
Net sales by product category
Feminine Care, 12%
Incontinence Products Retail, 11%
Baby Care, 9%
Brand:
- Including organic sales growth and acquisitions.
- Excluding exchange rate effects, acquisitions and divestments.
- Excluding items affecting comparability.
Hygiene management solutions for a broad set of commercial applications
The Professional Hygiene business area comprises the categories Tissue, Services & Solutions and Wiping & Cleaning as well as Soaps & Sanitizers that are sold to companies and office buildings, universities, healthcare facilities, industries, restaurants, hotels, stadiums and other public venues – direct to the end-customer, e-commerce or via distributors.
35114
Net sales, SEKm
0.0%
Sales growth1)
0%
Organic sales growth2)
0%
Adjusted EBITA margin3)
0%
Adjusted return on capital employed3)
- Including organic sales growth and acquisitions.
- Excluding exchange rate effects, acquisitions and divestments.
- Excluding items affecting comparability.
Net sales by region
North America, 40%
Latin America, 7%
Asia, 5%
Other, 4%
Sustainability
Sustainability is and has been high on our agenda for many years. Essity improves the well-being of people through its leading hygiene and health solutions. We are committed to reducing our environmental impact, reduce waste and providing circular solutions, and protecting and restoring biodiversity.
As a leading global hygiene and health company, Essity plays an important role in contributing to the achievement of the UN Sustainable Development Goals. We focus on goals 3, 5, 6, 12, 13 and 15, as this is where we have our expertise and can make the greatest contribution. Essity supports the UN Global Compact and works to overcome global challenges through cooperation and partnerships.
Hygiene and Health
Every day, millions of people refrain from going to work or school or taking part in social events because of hygiene and health-related concerns. With Essity’s expertise and solutions, we work to disseminate knowledge, create awareness and empower people to address hygiene barriers.
Diversity, equity, and inclusion
At Essity, we create change together. Our employees are the core of the company. We are determined to ensure an inclusive work environment for all, to achieve gender balance in senior positions, and accelerate representation of under-represented groups.
Business Ethics and Human Rights
Conducting Essity’s business in a socially responsible way is part of our corporate DNA. We have a zero-tolerance approach to unethical business behavior and violations of human rights in the value chains where we exercise control.
Occupational health and safety
Health and safety also has the highest priority. Everyone working at our production facilities and offices, or visiting Essity, should be safe and secure.
Product safety and transparency
We never compromise on the safety or quality of our products. To ensure this throughout a product’s life cycle, we have extensive requirements and procedures in place, which our internal experts continuously improve in accordance with rules and regulations.
Forest and fiber
Nature consideration and protection of biodiversity through responsible forestry is a priority for Essity. As a global purchaser of both fresh and recycled wood-based fiber materials, we are dependent on healthy and resilient forests.
Greenhouse gas emissions
Emissions and pollution have a negative impact on biodiversity. Reducing greenhouse gas emissions and the carbon footprint of our operations has been a major focus for Essity for many years. The company has committed to achieve net zero emissions of greenhouse gases by 2050 and has Science Based Targets for Scope 1, 2 and 3, encompassing both our own operations and our suppliers’ value chain.
Plastics
Essity aims to reduce and replace primary fossil-based plastics in our products and minimize the waste in our production and after use. By developing smarter designs, new services, and innovating to find alternative materials, we ensure less use of primary fossil plastic in general, less single-use plastic in particular, while also reducing the environmental impact through the product life cycle.
Waste and recycling
Essity has integrated circularity in the company’s business model, from responsible raw material procurement, more resource-efficient production with a smaller climate footprint, to circular solutions that enable customers and consumers to minimize waste.
Water use
Water shortages and contaminated water have a negative impact on people, societies and the environment, and unsustainable water use could lead to the loss of biodiversity. This also affects Essity’s operations. Water risks differ around the world, and we assess risks and impacts individually for our tissue production facilities, both from a geographic and an operating perspective.
We have set ambitious targets to reduce our greenhouse gas emissions across our value chain by 2030 and to reach net zero by 2050. We strive for gender balanced leadership and are committed to sustainable innovations.
Science Based Targets
Target 2030:
Scope 1 and 2 -35%
Scope 3 -18%
Outcome 2022:
Scope 1 and 2 -18%
Scope 3 -10%1)
1) Outcome in 2021
Gender distribution at management levels
Target 2025:
40/60%
Outcome 2022:
32/68%
Sustainable innovations
Share that yielded social and/or environmental improvements
Target:
>50%
Outcome 2022:
68%
Global climate change is one of the defining challenges of our time. As one of the world’s leading hygiene and health companies, Essity has joined the Business Ambition for 1.5 degrees and is committed to achieve net zero emissions by 2050.
