Company Reports

We think Essity faces obstacles to amassing brand power in its portfolio. Competition from both branded and private-label offerings in the global personal care and hygiene category, plus low barriers to entry and a lack of switching costs, hampers Essity's ability to form the entrenched retail relationships needed to secure a competitive edge. We assign Essity a no-moat rating.

We think Essity faces obstacles to amassing brand power in its portfolio. Competition from both branded and private-label offerings in the global personal care and hygiene category, plus low barriers to entry and a lack of switching costs, hampers Essity's ability to form the entrenched retail relationships needed to secure a competitive edge. We assign Essity a no-moat rating.

Essity's organic sales growth was 0.3% in the second quarter, with continued positive volume and negative price/mix. The recently acquired feminine care business added 1.7% to sales growth for total increase of 2.6%. Margins remain under pressure. The stock traded 3% lower intraday on July 16.

Essity's organic sales grew 0.4% in the first quarter, driven by volume growth of 1.1%. This marks an acceleration for the company, with EBITA margin also expanding by 40 basis points compared with the same quarter last year. The stock traded 1% higher intraday on April 23.

We think Essity faces obstacles to amassing brand power in its portfolio. Competition from both branded and private-label offerings in the global personal care and hygiene category, plus low barriers to entry and a lack of switching costs, hampers Essity's ability to form the entrenched retail relationships needed to secure a competitive edge. We assign Essity a no-moat rating.

Essity’s organic sales declined by 1.1% in the fourth quarter of 2025 and increased by only 0.9% for the full year. Despite weak volumes, Essity delivered a 230-basis-point expansion in EBITA margin. The stock declined 7% during trading on Jan. 22.

Essity reported third-quarter organic sales growth of 0.9%, mostly price-driven, alongside a nine-month EBITA margin of 14%. The company announced new reorganization and cost-saving initiatives aimed at freeing up funds for reinvestment and supporting progress toward its midterm targets.

Essity reported 1.9% organic sales growth in the second quarter, driven by pricing, with an EBITA margin of 13.7%, a 100-basis-point decline year over year. Reported net sales fell 6.6% due to an 8.5% currency headwind. Shares declined 4% at the market open on July 17.

We think Essity faces obstacles to amassing brand power in its portfolio. Competition from both branded and private-label offerings in the global personal care and hygiene category, plus low barriers to entry and a lack of switching costs, hampers Essity's ability to form the entrenched retail relationships needed to secure a competitive edge. We assign Essity a no-moat rating.

Essity reported first-quarter organic sales growth of 2.1%, entirely price-driven, alongside an EBITA margin of 13.5%, 40 basis points ahead of the fourth quarter of 2024. The company also announced a SEK 3 billion share buyback program. Shares were down 2% at the market open on April 24.

Essity reported fourth-quarter EBITA margin of 13.1%, 20 basis points below the prior year and a substantial sequential worsening compared to the first three quarters. Magnus Groth, president and CEO for the last 10 years, announced his decision to step down in 2025.

No-moat Essity delivered modest results for the third quarter of 2024, with organic sales growth of 1.9% driven by positive volume contribution, slightly negative price and mix effect, and a temporary negative restructuring impact in hygiene products that reduced sales growth by 1.5%. A slight EBITA margin expansion of 20 basis points and strong cash flow generation led to an improved balance sheet, with the net debt/EBITDA ratio dropping to 1.1 times from the 2.0 times reported at the end of 2023. Essity's performance is in line with our expectations, and once restructuring pressure is alleviated, we believe it can return to targeted sales growth of more than 3%. We maintain our fair value estimate of SEK 300.

No-moat Essity reported a record EBITA margin of 14.7% in the second quarter of 2024, up 220 basis points year over year and up 70 basis points compared with the first quarter. This was primarily driven by lower energy and raw material costs as well as a positive volume and portfolio mix impact. The sequential profitability improvement trend of recent quarters is expected to reverse in the second half of the year given that pulp prices are on the rise, once again approaching a peak historical level. This should result in margin pressure in the second half of the year, especially given Essity's usual time lag in passing through cost inflation to customers, which until now has averaged about two quarters. Given this, we don't expect to make a material change to our fair value estimate of SEK 300 after incorporating the strong first-half delivery. The stock was trading around 5% higher at the time of writing, leaving shares relatively fairly valued.

We think Essity faces obstacles to amassing brand power in its portfolio. Competition from both branded and private-label offerings in the global personal care and hygiene category, plus low barriers to entry and a lack of switching costs, hampers Essity's ability to form the entrenched retail relationships needed to secure a competitive edge. We assign Essity a no-moat rating.

No-moat Essity posted first-quarter 2024 results that were largely in line with our expectations for the full year and we’re leaving our fair value estimate unchanged at SEK 300. The company delivered an EBITA margin of 14% in the first quarter of 2024, up 220 basis points year over year and up 70 basis points compared with the fourth quarter of 2023. This was mainly attributed to lower costs for raw materials and energy, offset somewhat by lower pricing and increased advertising and promotional spending. Pricing turned negative in the first quarter, down 3%, primarily as a result of lower prices in the commoditized consumer tissue business. Still, according to management, this is the result of some carryover price declines from last year, which should be phased out in coming quarters. Further, pulp prices have been trending higher lately, which might result in further price increases for the consumer tissue business in the second half of the year.

We think Essity faces obstacles to amassing brand power in its portfolio. Competition from both branded and private-label offerings in the global personal-care and hygiene category, plus low barriers to entry and a lack of switching costs, hampers Essity's ability to form the entrenched retail relationships needed to secure a competitive edge. We assign Essity a no-moat rating.

No-moat Essity reported disappointing fourth-quarter 2023 results, with negative 0.7% organic sales growth and a sequential EBITA margin deterioration to 13.3% from 13.9% in the third quarter. These results indicate to us that pricing actions are running out of steam, only delivering 0.7% to top-line growth after two years of significant contributions, while volumes were slow to recover (negative 1.4% in the quarter). We believe Essity has done a good job passing through the significant cost inflation it experienced through pricing and recovering profitability levels toward a preinflation norm, but its lack of brand power in a large part of the portfolio is making it more difficult to maintain volumes at these higher prices. Shares were down around 3% intraday, likely reflecting concerns about the slowdown in growth. Despite these short-term concerns, we are increasing our fair value estimate by 7% to SEK 300 after reflecting in our model that the recently announced sale of Essity’s 51.59% share in Hong Kong-listed Vinda that Essity fully consolidated in its results is now reflected as discontinued operations. We believe the sale is the right decision for Essity, given that it will reduce its exposure to a commoditized, low-margin business and allow management to focus on higher-margin and faster-growing segments such as incontinence and feminine care. With this, we expect longer-term growth to accelerate and Essity to have a higher likelihood of securing a competitive edge over time. Still, we don’t expect to upgrade Essity’s moat rating in light of this transaction, especially given the finalization of the strategic review of its consumer tissue private label Europe business, which has resulted in Essity maintaining ownership of the most commoditized and volatile part of its portfolio. With this, the entire consumer tissue business remains a considerable share of the portfolio (down to 33%, from 41%, of net sales after the Vinda deconsolidation).

No-moat Essity delivered solid third-quarter results, including a substantial sequential improvement in EBITA margin to 12.2% from 10.7%. This is the fourth consecutive quarter of margin improvement, with Essity well on track to reach pre-inflation margin levels and even surpass them as it leaves behind the peaks in input cost inflation and continues to engage in methodical portfolio management. Organic sales growth in the quarter tracked our forecast, but net sales continued to benefit from a significant currency tailwind as a result of the weak Swedish krona. Incorporating the third-quarter results into our model and increasing our 2023 adjusted operating margin forecast to 11.2% from 10.6% leads us to increase our fair value estimate to SEK 280 per share from SEK 260.

We think Essity faces obstacles to amassing brand power in its portfolio. Competition from both branded and private-label offerings in the global personal-care and hygiene category, plus low barriers to entry and a lack of switching costs, hampers Essity's ability to form the entrenched retail relationships needed to secure a competitive edge. We assign Essity a no-moat rating.

No-moat Essity’s second-quarter results disappointed investors, with the share price falling by around 10% in early trading. The adjusted EBIT of SEK 4.4 billion reported for the second quarter was below FactSet consensus of SEK 4.8 billion, hit by salary inflation and higher marketing costs in the consumer goods segment. Our full-year forecast was already lower than consensus; therefore, the update does not affect our fair value estimate of SEK 260. We view shares as fairly valued at this time.