Net sales and earnings
Net sales
Essity’s net sales for 2019 increased 8.8% compared with the corresponding period a year ago to SEK 128,975m (118,500). Organic net sales, which exclude exchange rate effects, acquisitions and divestments, increased 4.5%, of which volume accounted for 2.3% and price/mix for 2.2%. Organic net sales increased 2.1% in mature markets and increased 9.1% in emerging markets. Emerging markets accounted for 37% of net sales. Exchange rate effects increased net sales by 4.4%. Acquisitions in Latin America increased net sales by 0.1%. The divestment of the jointly owned company SCA Yildiz in Turkey reduced net sales by 0.2%.
Earnings
Essity’s adjusted operating profit before amortization of acquisition-related intangible assets (adjusted EBITA)1) increased 22% (16% excluding currency translation effects, acquisitions and divestments) in 2019 to SEK 15,840m (12,935). Higher prices, a better product mix, higher volumes, cost savings and lower raw material costs had a positive impact on earnings. Cost savings amounted to SEK 1,093m, of which SEK 637m was related to the Group-wide cost-savings program. Stock revaluations, due to lower raw material prices, and higher distribution costs had a negative impact on earnings. Investments to increase growth resulted in higher sales and marketing costs.
Items affecting comparability amounted to SEK –713m (–1,444) and include costs of SEK –409m related to restructuring costs for the Group-wide cost-savings program. The divestment of the 50% stake in the jointly owned company SCA Yildiz in Turkey resulted in a currency-related loss of SEK –149m that did not affect cash flow or shareholders’ equity. Other costs negatively impacted items affecting comparability by SEK –155m.
Financial items increased to SEK –1,309m (–1,157). The increase is primarily related to higher interest and higher average net debt, mainly due to the new accounting standard for leases.
Adjusted profit before tax1) increased 25% (19% excluding currency translation effects, acquisitions and divestments) and amounted to SEK 13,753m (11,046).
The tax expense, excluding effects of items affecting comparability, was SEK 2,987m (1,490).
Adjusted profit for the period1) increased 13% (7% excluding currency translation effects, acquisitions and divestments) and amounted to SEK 10,766m (9,556).
Profit for the period increased 19% (13% excluding currency translation effects, acquisitions and divestments) to SEK 10,212m (8,552). Earnings per share were SEK 13.12 (11.23). The adjusted earnings per share3) were SEK 14.69 (13.32). Profit for the period in 2018 was positively affected by a decision in a tax case in Sweden that reduced the tax cost by approximately SEK 1.1bn.
Key figures
The Group’s adjusted gross margin1) amounted to 29.5% (28.2) and the adjusted EBITA margin1) was 12.3% (10.9). Adjusted return on capital employed1) was 13.8% (12.0). Adjusted return on equity1) was 18.4% (18.0). The interest coverage ratio increased to 11.0 (9.3).
SEKm |
2019 |
2018 |
2017 |
||||||
|
|||||||||
Net sales |
128,975 |
118,500 |
109,265 |
||||||
Adjusted EBITA1) |
15,840 |
12,935 |
13,405 |
||||||
EBITA |
15,127 |
11,560 |
12,550 |
||||||
Adjusted operating profit1) |
15,062 |
12,203 |
12,845 |
||||||
Items affecting comparability |
–713 |
–1,444 |
–940 |
||||||
Operating profit |
14,349 |
10,759 |
11,905 |
||||||
Financial items |
–1,309 |
–1,157 |
–1,182 |
||||||
Adjusted profit before tax1) |
13,753 |
11,046 |
11,663 |
||||||
Profit before tax |
13,040 |
9,602 |
10,723 |
||||||
Adjusted tax1) 2) |
–2,987 |
–1,490 |
–2,191 |
||||||
Tax2) |
–2,828 |
–1,050 |
–1,938 |
||||||
Adjusted profit for the period1) |
10,766 |
9,556 |
9,472 |
||||||
Profit for the period |
10,212 |
8,552 |
8,785 |
||||||
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 and 2015 corresponded to the number of issued shares in Essity on December 31, 2017 (702.3 million).