Good morning. Welcome to Essity's presentation of the Q3 results. We will start with an overview of the financial highlights and the business highlights, and Ulrika will present the business highlights. Following that, we will have a session with our CFO who will take us through the financials. Ulrika will then present the initiatives that we announced this morning, initiatives launched to accelerate Essity's profitable growth. We will, as usual, end today with a Q&A session where you have the possibility to engage directly with us. To ask a question, you just press star one on your phone. With that, let's dive into the quarterly performance. Ulrika, over to you.
Thank you, Sandra, and welcome also from my side to this presentation of Essity's Q3 results. To summarize the quarter, we continue to deliver positive organic sales growth. We also strengthened our profit margins. We delivered a strong cash flow and a result above SEK 5 billion. Price, volume, and mix all contributed to the 0.9% organic sales growth, with price being the most significant contributor. We had organic sales growth in all our three business areas. Once again, we delivered record high gross profit margins, and this quarter it flowed through down to the bottom. The call to action that we had in July to pull the brakes on our SG&A cost development really made a difference, and we ended up at a profit margin of 14.6%.
Setting aside the quarterly results now for a moment, this quarter has also been about how to set ourselves up for future success. As I shared in the Q2 webcast during my first months in this new role, I have done an extensive review of the business and then, together with the leadership team, worked on what to change, what to improve, what to prioritize in order to accelerate our progress towards our financial targets and towards our vision. As a result of that, I'm today launching two initiatives that will improve our performance. The first one is a reorganization designed to sharpen our focus to become more fast and also more agile. Related to that, the second one is a cost saving program that will reduce our organizational cost. More about that later, but let's now dive into the Q3 results, and we start with Health and Medical.
Q3 n ow for 2025 marks the 18th consecutive quarter of growth for our medical solutions business. We are growing across the three therapy areas. W ound care, compression therapy, and orthopedics. What is very important for future growth and profitable growth in the medical categories is innovation that plays a key role. There are still so many unmet needs, both for health care as well as for patients and consumers to innovate on. One example is for people with wrist fractures. Today, it's difficult for them to keep up with hygiene and keep up with the daily activities of life with the wrist braces that exist commonly in the marketplace. With the launch of Actimove Manus Air, we are solving that problem. This wrist brace that you see now on the page here has a lot of advantages. It's water resistant so that you can wash your hands.
It's food grade resistant so that you can cook and keep up hygiene. It doesn't restrain the movements of the fingers and the hands so you can keep on working if you work by the computer. Also, it has an open design, so if you're a healthcare professional, you can inspect the wound and change wound dressings with the brace on. All of this while providing that stabilization that is needed in order to heal in a fast way. Certainly this innovation is a very good addition to our offer in orthopedics. If we move to incontinence care, in health care, also in incontinence care, we were growing sales and volumes in the quarter. You might remember last quarter, I talked about the challenging market conditions that we had in some markets and that is still the case.
However, we have very strong underlying growth in many other markets that is compensating for this. In times where healthcare funding is under pressure, it's even more relevant to have products and solutions that are saving time for caregivers. With the launch that we had this quarter with TENA, a new product concept, we are addressing exactly that. The TENA ProSkin Stretch Day and Night is a unique product concept that we have put to market now that makes it easier to put on and take off the product. When it's in a closed fashion, then it is just as a TENA pant. You can pull it up and down just like normal underwear, making it easy for the wearer to use the product. The challenge with the pant though, is that it's not so easy for a caregiver to apply the product. This one is reopenable.
You can open and close it. That means that the caregiver can also very easily, easily apply the incontinence protection and that saves time for the caregiver. This is not the only impactful innovation that we are launching in the quarter. We're also launching a new product in the lighter range of our assortment and that is the TENA Discreet Ultra. It's a very discreet product, super discreet to wear, yet it does not compromise on the superior TENA protection. Why is it then important to have a superior product in this part of the assortment? This is where we attract consumers, where we bring consumers into the category. We of course want the women to experience the first little leaks, to choose purpose made products and to choose TENA as their purpose made products. Many consumers do that. They choose TENA.
We see that because our incontinence sales in retail is continuing to grow at a very good rate. This is especially true for the U.S., and you might remember that in the U.S. we are investing to grow and those investments are paying off. In the quarter we could enjoy a 21% growth of incontinence in U.S. retail. In feminine care, we're also continuing to grow in a very good way with high growth rates here. Mexico is an important market for us. We are clear market leaders and we will continue to strengthen our position in Mexico by launching a new night product, Saba Noches. It is a very important segment to be superior in because not only do we provide a good night's sleep for the wearer, but also it's a quality stamp for the brand.
As you can hear, we are continuing to grow strongly in the two higher yielding categories in consumer goods, feminine care and incontinence care. On the other hand, in consumer tissue and in baby, we are declining in consumer tissue. We are suffering in the branded sales from the weaker consumer sentiment. We also see price competitiveness increasing across the consumer tissue business. The good news is that if we look at Mexico, we are growing very well in our Regio brand during the quarter. Now we are really gearing up for the sneezing season, making sure that we have the right hankies on the shelf to be ready for the sales boost that will come during the next quarter. We continue with our efforts to have a high promotional pressure and to focus a lot on the value segment so that we can fuel growth in consumer tissue.
What about baby? You all know that we have had a period where we have had declining volumes on the back of lower birth rates and also very intense competition. We're still declining in baby, but we have improved. I n the quarter w e turned around Libero in the Nordics big time. We had the actions of higher frequency rate of promotions of limited edition. I was going to say that is called wildlife that you see on the picture here. Also stronger marketing campaigns and all of that paid off. The Libero consumers have found their way back to their brand. Another category where we can report a big improvement is in professional hygiene. Here we continue to see a challenging market situation, not the least in the U.S. in the HORECA channel. However, we are improving volumes sequentially in professional hygiene.
That is thanks to the activities that we have done with selective price adjustments, and also more focus on the value segment that we talked about last time. What's also very good to see is that we continue to grow our premium products, so our strategic segments, as we did also previous quarter. This is of course very important for us short term, but it's also important to fuel future profitable growth. Speaking about that, what's super important to fuel future profitable growth is that we really have strong relationships with our customers. What's happening right now in the customer landscape in professional hygiene is that a lot of our distributors are consolidating, and then it's even more important than ever to be the preferred supplier. Therefore, it's so nice to see that one of our customers, Impax, has this quarter named us the best supplier.
With that positive news, I hand over to our CFO, Fredrik Rystedt.
Thank you so much, Ulrika. I will give a little bit of numbers background to what Ulrika just mentioned here. I'll start with our sales and as you've already heard, we are continuing to grow organically with 0.9%, so just under 1%. If you look at the absolute sales number, down by 4.5%. Of course, this is just due to the fact that the Swedish Krona is strengthening. If you actually look at our sales in constant currency, then we actually grew with a bit over SEK 300 million. It's basically a currency impact. Turning back to the organic sales growth of 1%, as you see, the volume growth was 0.2%. This is exactly what it was also in Q2 and similar to what it was also in Q1. We've had this volume growth level now for a few quarters. It is, however, a bit different.
You remember perhaps that we have struggled a bit with Professional Hygiene, with Baby and to a degree also with inco Health care . Those have all three improved this quarter. That improvement has been partly offset by lower volume development in Consumer Tissue. It is a bit different. We are happy to see the improvement in those areas that I mentioned. To give a little bit more flavor, if we start with Health and Medical, generally speaking, volumes picked up actually. It is still challenging when it comes to inco healthcare markets in general. Despite that fact, a bit as we expected, we have picked up volumes and it looks clearly a bit better at this point of time. Medical continues to grow, especially in the wound care and we've seen that growth for so many quarters now.
It's a very, very good and continuous development for Medical in general. It's wound care as I said, but it's also this quarter actually a lot in compression. Good development overall in the volume sense. If I go then to Consumer Goods, geographically we are growing everywhere when it comes to incontinence and feminine. It continues with strong growth in both of those areas. Ulrika mentioned earlier that Baby is looking a bit better and of course this is due to a much better performance in our Nordic branded area with Libero. We've taken market shares there. It's still challenging on the European market for the retailer branded European market for Baby and that will also remain for a few quarters to come most likely. It's looking a lot better.
You may remember that we had a volume decline of about 4.5% or in that vicinity volume decline in baby in Q2 and a similar decline also in Q1. This quarter it's been about 1% decline, so it looks clearly better. On the other hand, as we have already talked about here, consumer tissue is a bit more down, negative growth, and this is because we have prioritized margin rather than growth in volume. We do continue to see actually a down trading in that market, so volumes not so good in consumer tissue. Finally, professional hygiene looking a lot better. The volume decline is still there, is - 1% roughly, and of course that's a lot better than what we saw in Q1 and Q2, so clearly looking better.
As before, it is a base assortment that is declining and the premium products or strategic products, as we sometimes call them, dispenser base, is continuing to do quite well in terms of growth. Overall mix is actually continuing to behave very, very well in professional hygiene. Turning a bit, and mix as you see, 0.7%. This is basically most of it actually related to price, and you can see from the slide here that consumer goods and professional hygiene both performing well in terms of price performance, and health and medical is slightly down. This is all actually inco. This is selective price declines that we have done. We did talk, and Rick, I mentioned it earlier, that we also have sequentially a little bit lower prices in professional hygiene.
This is deliberate. We wanted to, on top of expanding our value offering in professional hygiene, also grow more generally by selective price decreases. If you look at just sequential price decreases, we also see a little bit of that in professional hygiene, deliberate. That's pretty much it on the volume and organic sales size. Turning to our margin that is improving both sequentially and year on year, we look at decompose the year on year improvement. You can see that a lot of it is coming, of course, from the gross profit margin, and most of it, as we've already talked about, relating to obviously price, to a smaller degree on mix and volume, but a lot of it is price. We also actually have a positive development in our COGS, and this is no surprise.
Raw material is performing better and so is energy, but we also have other cost items. One thing that we have talked about a lot is, of course, the savings that we do. In this particular quarter we had about SEK 115 million or so in savings, which we were happy about. Generally speaking, it has been a tough year when it comes to saving in COGS, and we still aspire to reach our annual target range of about EUR 50 million to EUR 100 million. We're not there. We aspire to get into that range for the full year, but it is challenging, and this is of course due to the relatively low volume development that we have in our production. That makes it a bit more challenging to get to our target range.
A&P not surprising. We've increased the absolute spending level and also as a percentage of sales, and this is a profitable proposition. We know that the return of A&P spend is attractive, which is why we do that. We talked a lot about SG&A previously, and we've also announced measures to actually make the growth rate become much lower. There has been a lot of success there. Clearly, when you look at our SG&A development, it is much better now than we have seen in the previous quarters. The growth in, particularly, IT and personnel cost is lower now. Let me just point out, though, that there is a portion, a smaller portion I should say, of the improvement that relates to lower bonus provisions. The improvement is not, not as strong as you see here.
There is a smaller portion that is due to that. I'll come back to the future in a second. Generally speaking, if you disregard that, underlying performance of SG&A is much lower than the inflation rate. The measures we've taken have clearly paid off. Finally, there's a bit of other here. This is just a one-off in last year a ctually, we had an insurance payment last year, and we didn't have it this year. That's the final part. Overall, a very, very good quarter, I should say, for the group in terms of margin. Basically, you can see year on year that Health and Medical and Professional Hygiene are still slightly down and Consumer Goods up. If you look at it sequentially, which we're happy about, both Health and Medical and Professional Hygiene have turned a little bit and actually now improved.
All in all, a good margin development. Turning to cash flow a bit, just some short comments. Generally speaking, quite a good quarter both in terms of underlying cash generation but also in terms of working capital. We were not so happy about working capital in the second quarter. Much better looking this quarter. When you look at accounts receivables or accounts payables in working capital, the days are roughly about the same. It's still a bit too high when it comes to inventory. We are working our way down to that. Hopefully, we see a good development in working capital also as we go forward. Finally, the balance sheet as a consequence of that strong cash flow generation, we have been able to, in comparison to the six months balance sheet, reduce our net debt by about SEK 3 billion or so.
Of course, our net debt to EBITDA ratio is now down to 1.2. I think this is perhaps a good opportunity to give you a little bit about the flavor for what we expect for Q4. Again, we don't give that much of a forecast, but let me just give you a little bit. S tarting with COGS p erhaps we expect that COGS will actually, from a year-on-year perspective compared to Q4 of 2024, be lower this quarter coming up in 2025. The reason is mainly driven by input cost, and particularly so pulp costs. We expect COGS to be lower. When it comes to A&P, we also expect it to be flat to higher compared to last year. Q4 versus Q4, we expect to spend more in A&P. As I said, this is a good return on those investments.
Finally, when it comes to SG&A, it is worth mentioning that we will have, also in comparison Q4 to Q4, a fairly low growth rate. Clearly, we will retain that lower growth rate than we have had in the previous year. Just worth noting that from a sequential standpoint, Q4 SG&A excluding A&P is always much higher. Sequentially, you should expect higher cost, but year-on-year, quite a low growth rate. Finally, just a reminder, we have our financial targets. They remain intact: more than 3% in organic sales growth and more than 15% in EBIT margin excluding items affecting comparability. As you know, as you've seen here in Q3, we're close to our margin target and of course we have some work to do when it comes to annual organic sales growth, and that Ulrika, I guess you will talk more about.
Yes, thank you Fredrik. The question then of course is how to deliver on those financial targets. You all know this, but I think it's worth repeating. We will deliver on our targets by prioritizing the categories, segments, market and channel combinations that have the highest potential for profitable growth and where we have a clear right to win. We will deliver on our financial targets, not the least by delivering differentiated innovations that are driving market share, development and pricing power. Also by having the most effective and efficient go to market, it should be easy to do business with Essity. Also to really find efficiency savings across our full value chain and not the least to continue to grow our people and to continue to build that winning culture that we have.
Now I've said before that this strategy is highly relevant and is something that we continue to execute on. My focus has been how do we accelerate the execution on this strategy because I see significant potential for us to fuel growth and improve our performance. For example, we could unlock the full potential of our portfolio by sharpening our focus on the most attractive categories and segments. Also I see opportunities for unleashing the full power of our organization by creating more end-to-end accountabilities by decentralizing decision making and reducing our operational complexity in the organization. By freeing up resources to reinvest in A&P and in our growth initiatives, we could drive profitable growth more forcefully and also be more competitive. Those are the reasons why we are now launching two initiatives.
The first one is the reorganization to become faster, to become more agile and also to sharpen our focus. What we will do is that we will create four new business units that are global and based on our product categories. They will have the full P&L responsibility and also have the end-to-end accountability. That is what is different from before. Those four business units will be Health and Medical, Personal Care, Consumer Tissue and Professional Hygiene. Consequently, we will start reporting financially in these segments as from 1st of January 2026. The benefits with doing this are that we are decentralizing decision making, we are cutting out duplication and we are becoming more consumer and customer centric. By that, we will be faster in our decisions, we will be faster in our execution, and we will be faster in responding to evolving consumer and customer needs.
We will furthermore sharpen our focus on the most attractive categories and segments. What I've explained now is how this organization will become more effective, but it will also drive efficiency since we are simplifying the structure. Those efficiency gains are the key component of the cost saving program that we're also launching. This cost saving program is expected to generate a saving of SEK 1 billion and have full effect in the run rate by end of 2026. It's primarily SG&A we're talking about, and that is on top of the COGS saving program that Fredrik was alluding to before. That is generating SEK 0.5 billion to SEK 1 billion annually. Market A&P investments are excluded. In fact, it's important that we at least maintain both A&P as well as R&D investments in order to fuel growth.
We want to reinvest the savings that we generate into our growth opportunities in higher yielding areas where we also have a proven track record of high return on investments. With these two measures, we will unleash the full power of the organization, we will free up resources that we can invest in profitable growth, and we will unlock the full potential of Essity's product portfolio. Now let's summarize the quarter before we move into Q&A. In the quarter, as you have heard, we delivered positive organic sales growth. We strengthened our profit margins, had a good cash flow, and delivered a profit above SEK 5 billion. We also launched two measures to improve performance and fuel growth.
Needless to say, looking forward, two of our key priorities will be to implement this organizational change as well as to achieve the SG&A and COGS savings that we have been talking about. In parallel with that, of course, a priority is for us to continue with our efforts to drive volume growth and profitable volume growth in a challenging market environment with the ambition to perform while we transform. Thank you.
Thank you, Ulrika. Thank you, Fredrik. We will now move into questions. P ress star one on your phone if you have a question. Please try to limit your questions to one at a time because that will give Ulrika and Fredrik the possibility to give you the best answers. Are you ready to start with questions?
Yes.
Let's move into questions. We have a first question from Aron Adamski . Good morning, Aron.
Hi, good morning, Sandra, Ulrika, Fredrik. Thanks for taking my question. My first question is on the divergence between lower COGS picture and the prices, which are higher. In that context, it would be great to hear why your expectations for pricing across your biggest categories over the next couple of quarters. Also, are you currently seeing any pressures from retailers to roll back prices or maybe the competitive pressures accelerating?
If I start, I could say that as I mentioned, when it comes to consumer tissue, there is a high price competition across that business, and of course also in other parts of our business it's a high price competition. We always look at ways to balance, of course, volume growth with having a good pricing performance. We've talked before in Q2, but also this quarter about the selective price adjustments that we do in professional hygiene, which is to fuel growth and to adapt to the market situation that we have t here. A nything you want to add, Fredrik?
No, not really. I mean we didn't specifically talk about sequential price movement now in our presentation here, but we've seen a bit of price decline sequentially in inco Healthcare and Professional Hygiene and Baby, as you alluded to. These are deliberate b asically, I think it's fair to say we also saw a very, very tiny price sequential decline in Consumer Tissue. Exactly as you say, of course there is more room for that potentially when pulp comes down even further. Again, it's very difficult to discount. We always try to maintain a very solid price management, so it's difficult to comment in advance.
I hope that answered your question, Aron. Did it?
Yes, that's perfect. Thank you.
Thank you, Aron. Now it's time for Oskar Lindström, Danske Bank to ask a question. Hi, Oscar.
Hi, good morning. A couple of questions for me. First off, on the cost savings. O f the $1 billion, how much should we expect to sort of drop down to the bottom line or EBIT, and how much will be reinvested in increased A&P spending? That's my first question. Should I go on with the others?
Let me answer that one first because as I said, primarily we are going to reinvest that saving into profitable growth, and then you will see the effect on margin as we grow volumes, and then we'll have the operating leverage of margin.
Right. About the timing here, should we expect a sort of reinvestment into A&P to sort of come at the same time as the cost savings are being implemented or before, or what's the timing going to look like? Essentially what I'm looking for is, is this going to have a positive or negative impact on EBIT margins during 2026?
If I start with the way we will work with this is that as the savings materialize, we will then have freed up resources that we can reinvest. It will coincide to some extent. Fredrik, do you want to comment on margin development in light of that?
No. I think one thing, Oscar, maybe just to remind you is that we've always said that what will bring our margins higher is basically operating leverage. It's volume. What we are now doing is using the freed up, as Ulrika just said, we are using the funds that we free up to fuel volume growth and that volume growth in its turn will enhance margin. That's the plan. It's not our intention to boost, if you say, the margin with the cost saving program, but rather to reinvest it as the savings occur. Does that make sense?
Yes. Thank you. Just a final question on the sort of balance between lower end private label and your own branded or higher end branded products. In a lot of other consumer segments, we've seen this deteriorating from the producers' perspective in that consumers have down traded. You've also mentioned this in the past. How is that developing? Are you seeing any, you know, is it worsening or the same signs of an improvement?
I would say if we talk, I mean we're talking consumer tissue here, it's pretty much the same. We see that there is a down trading and that is what we see in our branded businesses is declining and the private label market is increasing. I don't see any major movements. It's quite similar to what it's been.
Right, thank you. Those were my questions.
Thank you, Oscar, for your questions. To ask a question, please press star one on your phone. As I can see, Patrick Folan from Barclays, you have a question. Please go ahead.
Hey, good morning. Thanks for taking my questions. I just joined, so I'm sorry if I'm repeating a question that's already asked. Two for me on Health and Medical. Can you maybe walk through any kind of contracts that were gained or lost during the period and maybe how you see the outlook for the segment HORECA, considering your experience there and more specifically looking at the reorganization and the change in structure, I mean what was behind the decision to strip out Personal Care and Tissue from the Consumer Goods unit? Is there more focus trying to go into certain segments or is it just trying to have more disciplined cost strategy in terms of how you allocate resources? Thank you.
Thank you. Patrick, if I start with the first question, I think if you look at Health and Medical, it's a lot of contracts, especially on the medical side, but also on the inco side it's a lot of contracts. We don't necessarily talk about all those individual contracts and what we have gained and lost and so on over time. I think in the incontinence care healthcare arena, it's quite stable when it comes to our contract base. In Health and Medical, as you can see, we are continuing to grow. We are growing with new contracts and taking new business as well as with growth within those contracts that we have. If we move to the organization, there is the intention, as you heard me, or maybe you didn't hear, explain, you said you came on a bit late. We want to create this end-to-end accountability.
To do so we want to work with the different product categories more separated because that allows us to have that end-to-end accountability where the Business Unit and the P&L is responsible for innovation, marketing, supply chain, and sales. That is one reason. Another reason is that it allows us to focus on the most attractive categories and segments. Both that personal care comes more in the limelight and that will drive performance and focus on personal care. Also, in consumer tissue, it allows us to focus more on the most attractive segments within that category. I would say thirdly is that personal care and consumer tissue are businesses that have quite different character. By running them separately, we can optimize the way we work based on the specific business drivers in those two businesses.
Okay, clear. Just a follow up on that. In terms of the benchmarking exercise for the SG&A kind of cost program, how did you guys arrive at that kind of $1 billion number?
Sorry, I can try and answer that, Patrick. Two things. We looked at the reorganization, if we start in that end, and we looked at what kind of savings potential that organizational change actually brought with it. That was a starting point. We also looked at our other buckets of SG&A and we looked at where we could optimize that spend. As an example, our IT spend as we go forward, you will perhaps remember that we've had a very, very significant increase of our IT spending for various reasons over the course of a couple of years. We now feel it's appropriate to actually reduce as an example. There are many different things that have gone into that analysis, but the main part is actually related to the reorganization that we have described here today.
Thank you, Patrick. I hope you have your answers to your questions. Now we will move to Niklas Ekman , DNB Carnegie. Hi, Niklas.
Thank you. Can I ask you about use of funds here? You are now generating cash flow in the range of SEK 12 billion, maybe SEK 13 billion. You have dividends that are slightly below SEK 6 billion and buybacks of SEK 3 billion. You're essentially now improving your balance sheet significantly. Can you elaborate a little bit on your thoughts here on M&A potential? Are you saving for future M&A potential? Is there scope to increase either the dividends or buybacks, or what are your thoughts here on the use of bonds?
If we start with the dividends, we stay with our policy to increase our dividends over year and stay true to that. We see buybacks as a recurring way to allocate capital, so that we will continue with as well. The good thing is that we have, as you say, a strong balance sheet. We can both invest in organic growth and deleverage, and we can have the funds to invest in an M&A should we find something that is value creating. You want to add anything.
Just how is that market now, and the potential for you to do M&A, also considering the valuation of your own shares at the moment?
I think we talked about that last quarter as well. Of course, we want to be careful in making sure that our M&As that we potentially do are value creating. There has to be the synergies to bridge that gap between the valuation of a potential acquisition and our own valuation.
Very clear. Thank you. Can I also ask about U.S. tariffs? That was not a big, but still an issue in the Q2 results. What is it looking like now? How is it impacting you?
I can take that. Niklas, we have had this quarter, Q3, $110 million roughly, and we are looking at a lower number, about $70 million in Q4. The reason for the difference between these numbers is simply that the Canadian government has actually taken out the tariffs on our exports from the U.S. to Canada. This is the difference. As I said, Q3, $110 million, roughly about $70 million in Q4.
Thank you, Niklas, for your questions. Thank you, Niklas. The next question comes from Antoine Prevot , Bank of America. Hi, Antoine.
Thank you. Good morning everyone. Quick question for me on Latin America. I mean, continue to be strong compared to maybe some of the parts or deposits which have been a bit weaker there. Anything specific you want to flag, it's you meaning continue to gain market share there and you expect that to continue in the coming quarters. Thank you.
I do not want to necessarily comment on the coming quarters because we don't know how that will play out. What we can say is that we are doing well in what is a quite challenging market now in Latin America where the consumer sentiment is changing and so on. We are growing very nicely. We talked earlier this morning about the feminine brands, for example, that is doing very well. Also in our consumer tissue business, we are growing in, for example, Mexico. Our incontinence business is growing very well in Latin America. Overall, it's looking good for us in Latin America. Perfect.
Just to follow up, I mean, is it more like innovations led to market share, or is there something else there?
Sorry, Antoine, can you repeat your question?
Sorry. Is it just what's driving this different strong performance in Latin America and the different categories it defines? Have you launched new product there or what has been kind of like expecting that?
It's a combination, as in many cases. If we look at consumer tissue, we've had quite good promotional season that has helped to boost growth in that category s pecifically. I n feminine, as I shared, we have a new launch and we have a very strong offer that we continue to invest behind and we get the payoff from those investments. In most cases, it's a combination of really marketing our attractive offer, adding on new innovations and upgrades to fuel growth, and then also promotions.
Thank you, Antoine, for your questions. Let's now move to Charles Eden, UBS. Good morning, Charles.
Hi, morning, Sandra. I just want to clarify your comments because I think there is perhaps an incorrect interpretation this morning looking at how the share price has developed d uring the call. Y ou said the cost savings are not going to improve the margin of the group, which one could conclude means your cost of business is going up and that we need to spend more just to stand still. Am I correct? What you're trying to say is you will reinvest these $1 billion cost savings into the business with the aim of driving superior volume growth and market share gains, and then these factors should contribute to stronger margins over time as opposed to just kind of cut costs to drive the margin improvement. Is that the right way to look at it? I think maybe that's been misinterpreted.
Exactly.
Okay, thank you. I think people have sort of interpreted you saying we need to spend more just to stay where we are on the margins, and that's not what you're trying to say, r ight? You're trying to say look, we want to drive it through market share gains to push the margin higher rather than we have to spend more to stand still.
Exactly.
Okay, thanks for the clarification.
Thank you.
Thank you for clarifying for us. Very helpful.
Thank you, Charles. I think that we have another question from Aron Adamski, Goldman Sachs. Is that right, Aron?
Yes. I had the two very quick follow ups. Firstly on baby care. I think clearly the business performance improved sequentially, but it's still below the midterm outlook that I think you laid out at the CMD last year. I was just wondering since your targets were formed initially, do you think there has been any fundamental shift in the category fundamentals, specifically in Europe, that could perhaps make the initial goals more difficult to achieve in the longer term? The second follow up is very quick, just on consumer tissue. Sorry if you mentioned it already, how is your private label business performing both on volume and pricing? Is that still a significantly accretive part to this category? Thank you.
If I start with the first one, I'm not so sure about the time horizon here, what we are referring to. Generally speaking, I could say that we do see the lower birth rates, and that is something that continues to develop. That has an impact on the fundamentals of the category when it comes to the weaker climate that we see and that some consumers are more price sensitive. That is more of a temporary situation, so we expect that to change over time. With the private label division, I mean that is still a value creating part of our business even if we now have lower volumes in that business in the third quarter. As we said, it's a high price competition in this category.
We mentioned it earlier, Antoine, that we have maintained a margin protective stance a bit. We have been eager to do that. Of course, with high price competition it is a bit challenging on the volume side. Once again, this is more, you can say, normal fluctuations in that business. Nothing dramatic.
Understood. Thank you.
Thank you, Aron. I think that we are out of questions, or do we have any more questions? Just press Star one. I will give you a few seconds to do that. No, I think we're out of questions. That means that we can wrap up. Any closing remarks, Ulrika, before we end?
Yes, I think we are leaving a positive quarter behind us now, and we are launching initiatives that will fuel our profitable growth going forward. On the previous discussion that we had, I think it's important to point that out that we have a lot of belief in our growth platforms that we have and looking forward to freeing up resources so that we can continue to accelerate growth in those areas. That will drive also margin improvement by operating leverage and mix improvement. That I want to leave you with, and thank you for listening.
Thank you, Ulrika, and thank you, Fredrik. Thank you to our audience for listening in. If you have any further questions, you know where to find us. Have a good rest of the day. Bye.