2020 at a glance Key events
Progress in hygiene and health, innovation, e-commerce, digitalization and sustainability strengthens Essity for the future.
The COVID-19 pandemic has had a major impact on people and the global economy. Essity has had three overall priorities during the pandemic: care for our people, contribute to society and secure business success. Essity has worked to promote a better global hygiene and health standard by safeguarding production and deliveries and continuing to develop customer and consumer offerings. For example, we invested in production of face masks and increased hand sanitizer delivery capacity. We support the WHO COVID-19 Solidarity Response Fund and several local initiatives. Our business areas were impacted both negatively and positively. For Professional Hygiene and Personal Care, the lockdowns and restrictions led to a temporary decrease in demand. Demand for Consumer Tissue, however, was positively impacted by the fact that consumers were spending more time at home. Greater awareness of the importance of hygiene and health is positive for Essity.
Higher market shares and increased e-commerce
Essity has gained market shares in many markets due to high delivery reliability and successful product launches, in addition to increased activity and a strengthened presence in digital sales channels. The Group’s e-commerce sales increased to approximately SEK 15bn, corresponding to about 13% of net sales.
Innovations for improved quality of life and reduced environmental impact
During the year, Essity launched several innovations that strengthened its customer and consumer offering, improved its product mix and reduced its environmental impact. Examples include the launch of washable absorbent underwear under the SABA and Nosotras brands, TENA SmartCare, which is a digital solution for continence care, and face masks under the Colhogar, Lotus, Tempo, Zewa and Tork brands.
Two acquisitions and one divestment
Essity acquired 75% of the Swedish medical solutions company ABIGO Medical AB. The company develops, manufactures and markets products including the Sorbact® technology for advanced wound care. ABIGO Medical as a whole is valued at SEK 900m on a debt-free basis. We also strengthened our continence care offering through the acquisition of Novioscan, which develops smart ultrasound technology for monitoring the bladder. The purchase price was approximately SEK 70m on a debt-free basis.
Essity divested its 49% stake in the company Sancella Tunisia, which offers a range of Essity’s products and brands in Tunisia, Algeria, Morocco and Libya. Essity will retain a presence in these markets through license and distribution agreements.
Raised target for adjusted return on capital employed to above 17% by 2025
The target for adjusted return on capital employed was raised to above 17% by 2025. The previous target was above 15% and was achieved in 2020. The raised target will be achieved through the continued execution of Essity’s existing strategy, an accelerated digital transformation and further streamlining of production, logistics and distribution. Other financial targets remain unchanged.
Acceleration of Essity’s digital transformation
Essity’s digital transformation will accelerate in the years ahead through a new digital platform. This will further strengthen the Group’s customer and consumer offerings, generate significant cost savings and reduce the need for working capital. This digital investment is expected to amount to approximately SEK 2.6bn. Of this amount, approximately SEK 1.4bn will comprise costs that will be charged to the 2020–2024 period, and about SEK 1.2bn will comprise capital expenditures. A positive sales and earnings impact is expected gradually from 2022. In the short term, costs are expected to be offset by savings in other areas.
Manufacturing Roadmap launched
The new Manufacturing Roadmap program will optimize and streamline all of Essity’s approximately 60 wholly owned facilities for world-class cost efficiency, quality and service levels. The program also encompasses logistics and distribution. Moreover, the program contributes to Essity’s sustainability target relating to the reduction of carbon emissions in line with the Science Based Targets initiative.
Inclusion in Dow Jones Sustainability Index and in CDP’s A List
Essity was included in the Dow Jones Sustainability Europe Index, one of the world’s most prestigious sustainability indexes, in the Household Products category. Furthermore, Essity was recognized for its leadership in corporate sustainability by global environmental non-profit CDP, securing a place on its prestigious ‘A List’ for the company’s action to tackle deforestation and to source more sustainable commodities.
One of the world’s most sustainable companies
Essity has been recognized as one of the world’s 100 most sustainable companies by Corporate Knights. The list was announced in conjunction with the World Economic Forum Annual Meeting. Corporate Knights has analyzed and compared 8,080 companies with a minimum gross revenue of USD 1bn against global industry peers.
Convening partner to the annual United Nations Foundation’s Global Dialogue
In 2020, Essity was once again a convening partner to the United Nations Foundation’s annual Global Dialogue on the Sustainable Development Goals (SDGs). In conjunction with the meeting, Essity launched the seventh edition of the Hygiene and Health Report compiled in collaboration with UN body Water Supply and Sanitation Collaborative Council (WSSCC). In addition to a speech from Essity’s President, a representative from Essity’s Health and Medical Solutions business unit spoke about anti-microbial resistance.