Sales and earnings
Net sales
Essity’s net sales for 2017 increased 8.0% compared with the preceding year and amounted to SEK 109,265m (101,238). Organic sales, which exclude exchange rate effects, acquisitions and divestments, increased 1.2%, of which volume accounted for 0.8% and price/mix for 0.4%. Organic sales decreased 1.0% in mature markets and increased 5.3% in emerging markets. Emerging markets accounted for 35% of net sales. Exchange rate effects increased net sales by 0.4%. The acquisitions of BSN medical and Wausau Paper Corp. increased net sales by 6.4%.
Earnings
Essity’s adjusted operating profit before amortization of acquisition-related intangible assets (EBITA)1) for 2017, rose 12% (1% excluding currency translation effects and acquisitions) to SEK 13,405m (11,992). Higher volumes, better price/mix, cost savings of SEK 1,231m, the acquisitions of BSN medical and Wausau Paper Corp., and the closures of the Baby Care business in Mexico and the hygiene business in India increased earnings. Higher raw material costs had a negative earnings effect of SEK 1,671m. The acquisition of BSN medical increased profit by 10%.
Items affecting comparability amounted to SEK –940m (–2,825) and include costs of approximately SEK –550m attributable to the split of SCA into two listed companies, which is mainly related to foreign tax of a non-recurring nature on non-current assets outside Sweden. Furthermore, the amount includes restructuring costs of about SEK –75m for the closure of a tissue machine in the UK, and approximately SEK –255m for the closure of a tissue production plant in the US. Items affecting comparability also include integration costs and transaction costs related to the acquisition of BSN medical and inventory valuation in connection with the acquisition balance totaling approximately SEK –435m. A release of a provision relating to a competition case in Poland had a positive impact of about SEK 265m. Other revenue impacted items affecting comparability positively by about SEK 110m.
Financial items increased to SEK –1,182m (–835). The increase is primarily due to higher average net debt. Lower interest had a positive impact on financial items during the period.
Adjusted profit before tax1) rose 6% (declined 5% excluding currency translation effects and acquisitions) to SEK 11,663m (10,998).
The tax expense, excluding effects of items affecting comparability, was SEK 2,191m (4,355). The decrease is primarily related to the tax provision of approximately SEK 1.3bn made in the first six months of 2016. The tax reform in the US entailed a positive non-recurring tax effect of SEK 550m for the fourth quarter and the full year of 2017.
Adjusted profit for the period1) rose 43% (32% excluding currency translation effects and acquisitions) to SEK 9,472m (6,643).
Profit for the period rose 107% (96% excluding currency translation effects and acquisitions) to SEK 8,785m (4,242). Earnings per share were SEK 11.56(5.413)). Adjusted earnings per share2) were SEK 13.09 (8.993)).
Key figures
The Group’s adjusted gross margin1) amounted to 29.6% (28.4) and the adjusted EBITA margin1) was 12.3% (11.8). Adjusted return on capital employed1)was 14.9% (16.4). Adjusted return on equity1) was 21.3% (14.5). The interest coverage ratio was 10.1 (10.8).
1) Excluding items affecting comparability.
2) Excluding items affecting comparability and amortization of acquisition-related intangible assets.
3) Indicative earnings per share on the assumption that the number of issued shares in Essity as of December 31, 2016 corresponded to the number of issued shares in Essity on December 31, 2017 (702.3 million).
SEKm |
2017 |
2016 |
2015 |
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|
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Net sales |
109,265 |
101,238 |
98,519 |
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Adjusted EBITA1) |
13,405 |
11,992 |
10,603 |
||||||||
EBITA |
12,550 |
9,347 |
10,311 |
||||||||
Adjusted operating profit1) |
12,845 |
11,833 |
10,470 |
||||||||
Items affecting comparability2) |
–940 |
–2,825 |
–786 |
||||||||
Operating profit |
11,905 |
9,008 |
9,684 |
||||||||
Financial items3) |
–1,182 |
–835 |
–828 |
||||||||
Profit before tax |
10,723 |
8,173 |
8,856 |
||||||||
Adjusted profit before tax1) |
11,663 |
10,998 |
9,642 |
||||||||
Tax4) |
–1,938 |
–3,931 |
–2,278 |
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Profit for the period |
8,785 |
4,242 |
6,578 |
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Net sales, share of Group
Adjusted EBITA1) and adjusted EBITA margin1)
1) Excluding items affecting comparability.
Adjusted earnings per share1)
1) Excluding items affecting comparability and amortization of acquisition-related intangible assets.
2) Indicative earnings per share on the assumption that the number of issued shares in Essity as of December 31, 2016, 2015 and 2014 corresponded to the number of issued shares in Essity on December 31, 2017 (702.3 million).