Interim Interim Repor eport Thir hird Quar Quarter ter 2019 2019
This presentation may contain forward-looking statements. Such statements are based on our current expectations and are subject to certain risks and uncertainties that could negatively affect our business. Please read our most recent annual and sustainability report for a better understanding of these risks and uncertainties. 2 October 25, 2019 Interim Report Q3 2019
Summary Summar Organic ganic Adjus Adjusted ted Adjusted Adjus ted Q3 2019 vs Q3 2018 Net S et Sales ales Net S et Sales ales 1) EBI BITA 2) EBI BITA A Mar argin gin 2) 2) 2) ▪ Strong organic net sales growth and higher adjusted EBITA margin in all business areas SEK SEK SEK SEK 12 12.8% .8% +5.9% +5.9% 32,565 32 ,565m 4,17 4,176m 6m x% x% ▪ +260 +2 60 bps bps Higher prices, better mix, higher volumes +9.8% +9 .8% +38% +38% and cost savings in all business areas ▪ Lower raw material and energy costs but Oper perating ting Ear arnings nings Adjus Adjusted ted Adjusted Adjus ted negative impact from stock revaluation Cas Cash h Flo low per S per Shar hare ROCE CE 2) ROE 2) ▪ EPS increased 150% to SEK 3.53 SEK SEK +73% +73% 3.53 3.53 14.3% 14.3% 20.1% 20.1% +150% +150% 1) Net sales which excludes exchange rate effects, acquisitions and divestments 2) Excluding items affecting comparability 3 October 25, 2019 Interim Report Q3 2019
Incr Increased Sales and Pr eased Sales and Profits ofits Adjusted EBITA 2) Net Sales 32,565 32,068 4,176 SEKm SEKm 31,112 3,732 30,656 3,619 3,437 3,432 3,451 3,349 29,721 29,647 3,190 3,119 3,016 28,664 28,155 28,020 27,178 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 Organic Net Sales 1) Adjusted EBITA Margin 2) -0.1% +1.8% +1.8% +3.4% +2.3% +1.6% +3.3% +4.3% +3.9% +5.9% 12.2% 12.6% 12.6% 11.1% 11.3% 10.2% 11.1% 10.4% 11.6% 12.8% 1) Excluding exchange rate effects, acquisitions and divestments 2) Excluding items affecting comparability 4 October 25, 2019 Interim Report Q3 2019
Net Net Sales Sales Q3 2019 vs Q3 2018 +9.8% Organic Net Sales 1) +5.9% SEK 32,565m +4.3% -0.4% +3.8% +2.1% SEK 29,647m Net Sales Price/Mix Volume Divestment Currency Net Sales Q3 2018 Q3 2019 1) Net sales which excludes exchange rate effects, acquisitions and divestments 5 October 25, 2019 Interim Report Q3 2019
Adjust Adjusted ed EBIT EBITA 1) 1) Q3 2019 vs Q3 2018 +38% SEK +179m SEK -773m SEK +92m SEK +57m SEK +409m SEK 4,176m SEK +215m SEK +367m SEK +614m SEK 3,016m Organic Adjusted EBITA +31% 2) ▪ Higher sales and marketing costs ▪ Stock revaluation ▪ Higher distribution costs Adjusted Price/Mix Volume Raw Material Energy Cost Savings Cost-savings Other Currency Adjusted 1) 1) EBITA COGS Program EBITA Q3 2018 Q3 2019 1) Excluding items affecting comparability 2) Excluding items affecting comparability, currency translation effects and acquisitions 6 October 25, 2019 Interim Report Q3 2019
Raw Ma Raw Material terial De Development elopment Paper for Recycling 1) Market Pulp in USD, Europe 150 150 125 125 100 100 75 75 50 Fluff NBSK EUCA SOP US SOP EU Oil-based Raw Materials 2) Energy Prices 3) 150 210 185 125 160 135 100 110 85 75 60 Electricity, EUR Natural Gas, EUR Polypropylene, EUR Propylene, EUR Source: Fastmarkets RISI, Fastmarkets FOEX, VDP, Macrobond, Epexspot, ICIS Index 100 = July 2017 1) Sorted Office Paper. Index in local currencies. EU refers to Germany 2) Polypropylene major feedstock of non-woven material, Propylene major feedstock of SAP material 3) Electricity Germany. Natural Gas, TTF Index 7 October 25, 2019 Interim Report Q3 2019
COGS COGS Sa Savings vings SEK 92m in Q3 2019 ▪ Lower COGS savings in Q3 2019 due to temporarily higher production and distribution costs mainly due to disruptions related to ─ Start-up of new production capacity ─ Higher pace of product launches ─ Higher demand -40 bps ▪ Changed ambition for COGS savings 2019: SEK 600-700m ▪ Savings from ─ Tissue Roadmap ─ Operational efficiency improvements ─ Material rationalization ─ Sourcing savings 8 October 25, 2019 Interim Report Q3 2019
Cost Cost-sa savings vings Pr Prog ogram am SEK 179m in Q3 2019 Reduction of SG&A as % of Sales ▪ Main impact in SG&A costs ▪ Expected annual cost savings of approx SEK 900m with 17.6% full effect at the end of 2019 17.2% -40 bps ▪ End of Q3 2019 annualized run-rate cost savings SEK 799m ▪ Headcount reduction of approx. 880 positions out of 1,000 ▪ Ambition for cost savings 2019: SEK 600m Q3 2018 Q3 2019 9 October 25, 2019 Interim Report Q3 2019
Impr Improving Ev ving Ever eryday Lif day Life thr e through I ough Inno nnova vations tions 10 October 25, 2019 Interim Report Q3 2019
Per ersonal Car sonal Care Adjusted EBITA 1) Adjusted EBITA Margin 1) Net Sales SEK 12,216m 14.2% 13.7% SEK 11,408m SEK 1,739m SEK 1,565m +7.1% Q3 2019 vs Q3 2018 +50 +11% bps ▪ Organic net sales increased 4.5% ─ Volume +3.3% and price/mix +1.2% Q3 2018 Q3 2019 Q3 2018 Q3 2019 Q3 2018 Q3 2019 ▪ Higher prices, better mix, higher volumes and cost savings ▪ Raw material and energy headwinds with negative impact of -100 bps on adjusted EBITA margin Organic Net Sales By Region By Product Segment ▪ Higher distribution costs +10.7% ▪ Investments in growth and costs related to implementation of +6.9% +5.9% +4.5% Medical Device Regulation increased sales and marketing +3.3% costs +1.5% -0.5% ▪ Exit of open baby diapers in Russia Total Mature Emerging Incontinence Medical Baby Feminine Markets Markets Products Solutions Care Care % of Personal Care Net Sales: 63% 37% 44% 19% 19% 18% 1) Excluding items affecting comparability 11 October 25, 2019 Interim Report Q3 2019
Consu Consumer mer Tissue Tissue Net Sales Adjusted EBITA 1) Adjusted EBITA Margin 1) SEK 1,319m 10.8% SEK 12,220m Q3 2019 vs Q3 2018 +108% +500 +12% SEK 10,912m bps 5.8% SEK 635m ▪ Organic net sales increased 8.1% ─ Volume +4.9% and price/mix +3.2% Q3 2018 Q3 2019 Q3 2018 Q3 2019 Q3 2018 Q3 2019 ▪ Higher prices, better mix, higher volumes and cost savings ▪ Lower raw material and energy costs but negative impact from stock revaluation Organic Net Sales By Region +12.8% ▪ Higher distribution costs +8.1% ▪ Investments in growth with higher sales and marketing costs +4.3% Total Mature Emerging Markets Markets % of Consumer Tissue Net Sales: 54% 46% 1) Excluding items affecting comparability 12 October 25, 2019 Interim Report Q3 2019
Prof Pr ofessional essional Hygiene Hygiene Net Sales Adjusted EBITA 1) Adjusted EBITA Margin 1) SEK 8,131m SEK 1,288m SEK 7,309m +11.3% Q3 2019 vs Q3 2018 15.8% +33% SEK 970m 13.3% +250 ▪ Organic net sales increased 5.0% bps ─ Volume +3.2% and price/mix +1.8% Q3 2018 Q3 2019 Q3 2018 Q3 2018 Q3 2019 Q3 2019 Q3 2018 Q3 2019 ▪ Higher prices, better mix, higher volumes and cost savings ▪ Lower raw material and energy costs but negative Organic Net Sales By Region impact from stock revaluation +8.1% ▪ Investments in growth with higher sales costs +5.0% +4.4% Total Mature Emerging Markets Markets % of Professional Hygiene Net Sales: 80% 20% 1) Excluding items affecting comparability 13 October 25, 2019 Interim Report Q3 2019
Continuing Continuing the Digita the Digital l Jour ourney ney Clean hands save SEK 9bn lives in healthcare Essity with the Tork brand launches in online sales 9M 2019 Virtual Reality app for Hand Hygiene education Approx 10% of Group Net Sales 14 October 25, 2019 Interim Report Q3 2019
Summar Summary Q3 2019 ▪ Strong organic sales growth and improved profitability in all business areas ▪ EPS increased 150% to SEK 3.53 ▪ Continued high innovation pace improving well-being and strengthening our brands ▪ Investments in growth with higher sales and marketing costs but lower as % of sales ▪ Continued cost and efficiency focus 15 October 25, 2019 Interim Report Q3 2019
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