Investing.com -- Essity (ST:ESSITYb) on Thursday reported fourth-quarter results that fell short of expectations as higher raw material costs and currency fluctuations offset sales and pricing improvements.
Shares of the Swedish-based company were down 5.3% at 04:23 ET (09:23 GMT).
The personal and home hygiene products maker’s Q4 EBITA came in at SEK 4,969 million, 4% below consensus estimates of SEK 5,167 million.
This reflected an EBITA margin of 13.1%, down 20 basis points year-on-year, compared to the consensus expectation of 13.7%.
Organic sales growth for the quarter was 3.9%, narrowly exceeding the consensus of 3.6%. This was driven by a 1.7% increase in volumes and a 2.2% improvement in price/mix.
However, these gains were insufficient to counteract the impact of higher raw material costs, exacerbated by a stronger US dollar late in the quarter.
The Consumer Goods division underperformed significantly, reporting an EBITA of SEK 2,245 million, well below the consensus estimate of SEK 2,418 million.
The EBITA margin for the division was 11%, compared to the consensus of 11.7%. Organic growth in Consumer Goods was 4.5%, largely volume-driven at 4.3%, with price/mix contributing just 0.2%.
Subcategories showed mixed performance: incontinence products grew by 11.2%, feminine care by 3.4%, while baby care declined by 1.6%. Consumer tissue recorded 4.3% growth, led by volumes, with pricing returning to positive territory.
“While pricing continued to improve sequentially, it was not enough to cover the bigger raw material inflection experienced in Q4 (made worse by late strength in the US$),” said analysts at Jefferies in a note.
The Professional Hygiene segment performed better, exceeding expectations with an EBITA of SEK 1,817 million and a margin of 18.3%, compared to the consensus of SEK 1,753 million and a margin of 17.5%.
Organic growth was 1.4%, with price/mix up 7.4%, although volumes declined by 6%, partly due to a 3.7-percentage-point restructuring impact.
Health and Medical (TASE:PMCN) reported results in line with forecasts, delivering an EBITA of SEK 1,361 million and a margin of 18.3%, close to the consensus of SEK 1,352 million and 18.4%.
Organic growth was 5.6%, driven by a 4.9% increase in volumes and a modest 0.7% contribution from price/mix.
Subcategories included incontinence products, which grew by 4.4%, and medical solutions, which rose by 7.2% on higher volumes.
Essity announced that CEO Magnus Groth will resign from his position in 2025. Groth has served as CEO for ten years and has been with the company for fourteen years
Groth will remain in his position until a successor is appointed, and the search process is underway.