Essity (0RQD) FY Conference Transcript

Essity FY Conference Summary Company Overview - Company: Essity - CEO: Ulrika Kolsrud - Annual Net Sales: SEK 146 billion - Employees: 36,000 across 150 countries - Manufacturing Sites: 70 Key Business Segments 1. Consumer Goods: Personal and home hygiene solutions, with a focus on higher-yielding segments like feminine hygiene and incontinence care, reducing dependency on lower-margin consumer tissue products [4][6] 2. Health and Medical: Highest profit margins, includes incontinence care under the TENA brand, and other categories like wound care and orthopedics [6][8] 3. Professional Hygiene: Represents 26% of sales, with the Tork brand providing hygiene solutions for commercial applications [7][8] Market Dynamics - Incontinence Care: Significant growth potential as 1 in 4 men over 40 experience urine leakage, with only 5% to 7% using purpose-made products [4] - Feminine Hygiene: Positive market share growth in regions like the UK, Australia, and Mexico [25] - Baby Care: Facing challenges due to declining birth rates [10] - Economic Climate: Limited impact on demand for essential hygiene products despite economic pressures; growth opportunities in developing and emerging (D&E) regions [10][11] Financial Targets - Organic Growth Target: Above 3% with a profit margin of 15% [11][53] - Market Growth Rates: Global average of 2% to 3%, with higher rates in health and medical segments [11] Strategic Focus - Innovation: Key to differentiation, market share gains, and sustainability [12][13] - Customer Centricity: Elevating focus on customer needs and experiences [12][22] - Efficiency Gains: Continuous improvement across the value chain [13] Recent Innovations - TENA Men Product: Facelift and new claims to capture growth potential [5] - Coreless Toilet Paper Technology: Reduces waste and enhances user experience [15] - Tork Sensor-Based Dispenser: Increased battery life from one year to six years [14] Challenges and Responses - Volume Growth: Flattish volume growth and increasing costs noted; focus on accelerating volume growth and reducing costs [18] - Price Sensitivity: Incontinence care remains less impacted by price sensitivity due to brand trust [32][33] - Public Funding Pressure: Addressing challenges in public funding for healthcare while promoting holistic solutions [30][40] Competitive Landscape - Joint Venture Impact: The JV between Suzano and Kimberly-Clark viewed as a rational competitor, with no major negative impact expected [28] - Market Share Stability: Gaining or stabilizing market share in most categories, with challenges noted in baby care [25] Future Outlook - Geographical Expansion: Focus on increasing presence in the U.S. and D&E markets [23] - M&A Strategy: Ambition to grow both organically and inorganically, particularly in wound care [42][44] - Sustainability Recognition: Acknowledged for efforts in sustainability, enhancing brand reputation [16][17] Conclusion - Vision: Commitment to becoming the undisputed global leader in hygiene and health, with a focus on profitable growth and stability [53][55]