Yeah. Good morning, everyone. Thank you very much for joining us. I am delighted to be here with the CEO of Essity, Ulrika Kolsrud. She's gonna give a presentation to start, and then we're gonna go through our Q&A. I will start with some questions, but anyone can then also ask more questions. First, Ulrika will take us through the main drivers of the company at the moment. Thank you.
Thank you so much. Well, actually, this was not the first picture, and I really like my first picture, so can we get the first one up? Yeah, there it is. Why I really want to have this first picture here is because I want to talk about TENA Men, an incontinence product that you see here. Our global leading brand, billion-dollar brand, TENA, that we are very proud of in Essity. TENA Men that you see here on this picture really represents one of the many reasons for Essity being an attractive investment. One out of four men over 40 suffer from some sort of urine incontinence, and less than 10% use purpose-made products. Quite a potential for us as a company.
The potential is high also if you look at incontinence care in general. One out of three women over 35 have some sort of bladder weakness, and also there, over 50% have sometimes used a product that is not specifically developed for the purpose due to embarrassment or lack of knowledge. Overall, less than 50% are using purpose-made products, which leaves a big unmet need in this category. Also the number of people that need incontinence products are continuously increasing because of the growing aging population that we have. Growth in this category is also in certainly value creating. The incontinence care is one of our highest margin, highest yielding categories. Besides that, I would say that this product also very much represents what we are about, providing essential hygiene and health products to improve quality of life.
In fact, we have 1 billion people that use our products. Every day, over 1 billion people use our products. They do that all over the world. We are present in 150 countries. We have 70 production facilities and 36,000 employees all around the world, and a turnover of SEK 138 billion. For those of you who don't know that, we operate now since first of January in four different business areas. We have Health & Medical, Personal Care, Consumer Tissue, and Professional Hygiene. In Health & Medical, we offer holistic solutions for the continuum of care.
We sell wound care products, we sell orthopedics and compression therapy, and not the least, TENA, that I just talked about, that we provide then to the healthcare sector through nursing homes, hospitals, pharmacies, and so on. If we look at Personal Care, also there, TENA incontinence product is part of our portfolio, but then through retailers and online. I would say that the fact that we are present with TENA incontinence product in the different channels, everything from retail to the healthcare sector, is one of our competitive advantages. Other areas that we sell in Personal Care is feminine care and also baby care. When we go to market with Personal Care, then we do that together with Consumer Tissue because that provides scale and relevance with the retailers.
In Consumer Tissue, we have bathroom tissue, we have household tissue, but also hankies and facials. As many of you know, we have actually worked to reduce our exposure in Consumer Tissue as this is the least profitable category that we have and the least profitable business that we have. Professional Hygiene, with Tork as the other global leading billion-dollar brand, is standing for 26% of our sales. I think it's quite fantastic over the years how we have developed this business from being a tissue business to being a provider of holistic hygiene and cleaning solutions.
With Tork dispensers on the wall in, for example, restaurant kitchens, in schools, in the shop flooring industry, and so on, we become part of the infrastructure, and then we have continuous revenue stream from the refills year after year. With this portfolio, we are very well positioned for profitable growth. One of the reasons that we are very well positioned for profitable growth is the different trends, the mega trends that are supporting growth in our categories. I already talked about the growing and aging population, but also there is an increase of prevalence in, for example, incontinence care, but also in lymphedema and lipedema and other indications. Not all demographic trends is, to be fair, going in the right direction for us.
As you all know, there is a declining birth rate, and that is of course impacting our baby business negatively. With that said, 5% of our business is baby and 20% is Inco, so four times as big. We are demographically very well positioned. We also benefit from increasing disposable income in DME markets and from the spread of infectious diseases which brings a lot of focus and attention to hygiene. There is much more awareness of the connection between hygiene and health today than it was some years ago. Generally speaking, I would say in population overall, people put much more attention to well-being, which is also a global mega trend that supports growth in our categories.
The other reason why we are very well-positioned for profitable growth is our leading positions with our very strong brands. I've already mentioned TENA and Tork, but we have many other strong brands, either globally, regionally, or locally. We have for example, Leukoplast and JOBST, and Tempo, Libresse, Nana, Saba, many others. On top of this portfolio, we have the number one or number two position in as much as 90% of our branded business. We aim to continue to strengthen that position even further and drive profitable growth through a very clear strategy. I would say the center of that strategy is innovation. We innovate in order to continue to differentiate so that we can drive market shares and win market shares, but also to drive our pricing power.
We also innovate to secure we have a good cost position and to reduce our environmental impact. We always do this with the user in mind. It's based on consumer and customer insights, and we're obsessed with having the superior user experience. We are equally obsessed by having the seamless and superior customer experience. It should be easy to do business with Essity. We continuously evolve our go-to-market to make it as effective and efficient as possible. We want our reliable supply and our state-of-the-art services to be a competitive advantage. The other key pillar of our strategy that you see here is that we continuously capture efficiency gains across the value chain, and then we continuously improve our performance in the organization by growing people and by fostering a winning culture.
These four elements that I've talked about so far, they are relevant across our different business areas. We see potential to improve our performance in the four different business areas, and we see potential to grow in the four different business areas. That said, though, the two other pillars here are very important because we deliberately put most of our growth efforts in the areas where we have the highest potential for profitable growth and the clearest right to win, meaning that we prioritize high-yielding segments in attractive geographies. This strategy will take us to our financial targets, which is to grow above 3% organically on a profit margin above 15%. Question is then how are we doing in our delivery to this, to these financial targets?
Well, if we look at fourth quarter 2025, I would summarize that as a stable delivery in a challenging market environment. We reported sales decline. We had a flat volume development, and then we reduced our prices somewhat in order to compensate or react to the lower input costs. That said, we were growing very nicely in the strategic segments. We were growing where it matters the most in incontinence care, in wound care, in our premium products, in professional hygiene. We were winning the relative game. We increased our share of market in 65% of our branded business in retail. We furthermore strengthened our profit margins across the different business areas, leading to a 14.7% profit margin in the quarter.
Another thing that we are very proud of from the fourth quarter is that we again got recognized for our environmental leadership or sustainability leadership. For example, we were awarded with the EcoVadis Platinum Medal, which places us among the top 1% of companies worldwide, what they assess when it comes to sustainability work. Of course, if you look at the full year, we were at 0.9% in organic growth and 14.1% in profit margin. As you can tell then, we are not at our financial targets yet, and we're of course fully committed to deliver on those targets. That's why we took some initiatives in order to further strengthen the conditions or improve the conditions for profitable growth.
A reorganization, a cost-saving program, and an acquisition. Let's start just a few minutes on the reorganization because this is something we do now reshaping our organization. We decentralize decision-making. We secure that we have an end-to-end accountability for the value chain for our business area leaders. By that, we will be faster in decision-making, faster in execution, and not the least, faster in responding to evolving consumer and customer needs. This reorganization also helps us to become even sharper. Sorry, I'm gonna do like this so you can see. Even sharper in prioritizing the segments and categories that are the most attractive in line with our strategy.
We are also having a cost save program focused on SG&A, where we aim to save SEK 1 billion with the run rate at end of 2026. We also strengthen our position for profitable growth for the future by an acquisition, which is good to talk about, especially when we are here in North America, because this was about acquiring Edgewell Feminine Care brands in North America. As many of you know, we have a proven success recipe for feminine care, and now we will reapply that success recipe also in North America. We have expanded our feminine business to this geography by this acquisition. It doesn't stop there.
What's also very important with this is that with this, we are doubling our Personal Care sales in the U.S., then strengthening the growth platform that we have in Personal Care in North America. We have more firepower for any future potential value creating M&A if you look at our balance sheet. We have a very solid financial position, a super strong balance sheet, as you can see here. We also, during the year, have grown our earnings per share. If you look at a time period here, which is 2017-2025, we have a CAGR of 6%, which puts us in the top quartile of companies in our sector, so a very strong performance.
On the back of our solid financial position, our strong financial position, and also the stable result that we had in 2025, our board of directors are proposing an increase of dividend by 6% to SEK 8.75 per share. Now, going into 2026 specifically, we're of course fully committed to continue to drive profitable growth so that we can have a good increase in our dividend also in 2026. We will do that by continuing the positive momentum that we had in 2025 when it comes to winning market share and strengthening our superiority even further.
We will of course make sure that we now materialize all of those savings that we are planning for in SG&A in our savings program, but also not to forget the saving program that we have in COGS, where we aim to save between SEK 500 million and SEK 1 billion. Of course, we will successfully integrate the Edgewell feminine care business to strengthen our growth platform here in North America, and not the least leverage the organizational change that we are doing right now to unleash the full power of our fantastic organization that we have across geographies and functions. With that, I think I leave open for questions.
Perfect. Thank you so much.
Either from you or from the audience.
Yes. I think I will kick it off, but if anyone wants to ask any questions at any point, just please raise your hand and we will take your questions as well. Thank you very much for the presentation. Great, a great performance versus some of the other companies in the sector at the moment. I'm gonna start with a question on the Middle East exposure.
because that's obviously something that is on everyone's mind at the moment. What is your exposure to the region in terms of sales and do you have any manufacturing facilities there?
Well, actually, there are so many things to consider when it comes to the situation, and our first priority is the safety of our people. We do not have any major manufacturing sites there, but we have an office in Dubai and we have other people in the region, and they are all safe. That's important of course. Secondly, when it comes to your question on sales in the region, it's less than 1% of our turnover, so we have a very limited exposure from that standpoint. Also, when it comes to our supply chain, it's a very limited exposure. We're not so dependent on that route. We see some delays in flows, but not any major disruption.
Where we have the impact is on the increasing costs for gas and fuel and so on, that is affecting our cost of goods sold. There is a time delay or time lag with that effect. We are also, when it comes to gas, very well hedged. If we look at Q1, we have 8% hedging, and if you look at the full year, 2026 up above 50% hedging. What we are affected by a bit quicker is the transportation costs where we have contracts that are index-based, so there the fuel cost is impacting us. That said, it's a very small part of our cost of goods sold.
For this, as well as for all these raw materials that are likely to increase in cost, we do as we always do. We of course compensate with price increases, and this is not something that are impacting only us, but everyone in the sector of course. We will use the agility that we have when it comes to pricing and compensate with price increases.
In terms of the hedging, would you change your hedging to have more cover for the full year or are you?
We already have a plan in place for that. That is the numbers I just shared.
Okay. Great. Thank you. Now, I was assuming if you could accelerate it, like do more because of the Middle East.
That is not necessarily what we have in plan right now at least.
Okay. Thank you. In the strategy, you announced the Q3, the SEK 1 billion of cost savings. What drove the decision, and why was, you know, the timing at the Q3? What was the context of that?
Yes. I see your question, it's quite an easy answer. I mean, I stepped into the role in June, and then for me, even if I've been in the company for many, many years, of course it was important to take a step back and listen both to external voices and internal voices on what we need to change in order to accelerate profitable growth. Basically, when I'd done that assessment, I, together with the executive management team, decided on two actions that we needed to take. One of them was the reorganization, and the other one was the cost save program. Because we want to, as I don't think I mentioned that, but our intention is to reinvest the majority of those savings to fuel profitable growth. It's all about accelerating that profitable growth.
Thank you. On that change of the organization, h ow fast do you think you could start to see the impact of the changes? Also, what do you think are the main benefits of splitting consumer goods again?
We already see some benefits from that organization. You could already now see that we are taking more business and commercial-led decisions when you have the full end-to-end accountability. It's also very easy for us to see every business now delivering on their own merits. We already see that positive effect to some extent, although I expect the full effect of that to come gradually as we move along. When it comes to splitting consumer goods, there are two I would say benefits with that. One is that when looking at the organization in order for us to create this end-to-end accountability that I wanted to achieve, this was the way we have to make it category-based for that to work.
For innovation and for supply chain and so on to be part of the integrated part of the business area, that was the way we then need to set up, having it category-led. Besides that, it's also a big benefit of us then creating even sharper focus on the most attractive categories and segments. Personal Care gets more attention by now being a separate business unit. Also within Consumer Tissue, the very profitable segments that we have, like moist toilet paper, hankies, facials, and so on, gets more attention within Consumer Tissue. Many benefits.
That's very good. In terms of the portfolio optimization, do you think you could revisit the disposal of the Consumer Tissue private label in Europe?
Well, when we work, as I shared here in the strategy, when we work with our portfolio optimization, we proactively work to prioritize the categories and segments and areas where that are most attractive. That is the model that we have. I would not rule out that we revisit. When it comes to the private label division, I would not rule out that we revisit that at any point in time because we continuously look at our full portfolio and business to see what makes sense to do. That said, again, our focus is to drive performance in each and every business and to work proactively to grow faster in the most attractive areas, and then support with the acquisitions like we did now with the Edgewell acquisition.
Thank you. If we go into more detail into the volume dynamics. You had four consecutive quarters of flattish volume growth. How do you see the different categories performing in terms of market share? With those volumes? Yeah. What would you say in terms of categories and geographies?
Well, first maybe to comment on this with the flat volume growth which we of course are not satisfied with. We should remember that part of that before has been about the restructuring that we did also in Professional Hygiene. Underlying, we've had some volume growth in that. Of course we want to have more profitable volume growth. If we look at the dynamics, what I think is important, what we believe is very important is that we grow where it matters the most. We grow in the segments and areas that are the most attractive, that have the higher yield, so that we drive the mix element. Also we are winning the relative game where it matters the most.
That is important I think as a base for that discussion. I can elaborate a bit more. If we look maybe at the areas where we have not performed as well, one is in the Consumer Tissue private label division, where we have not grown volumes with the market. That is because we have been mindful of maintaining our profit margins so that this is a value-creating part of our business. If you look at the branded business of Consumer Tissue, however, we have been growing and strengthening our market share. We have baby that I was alluding to before. We are impacted by the declining birth rates and a very fierce competition.
At the same time, if you look at our branded business in Libero in the Nordics, that is, there we have grown and also strengthened our market share. Then if we talk Professional Hygiene, here we have a base assortment where we have not been growing in line with market. So that we are correcting by making sure that we launch volume fighters that have the right price positioning and the right pack count to be successful. More importantly, we have been growing well above the market in our strategic systems, which is the future, right? Again, the same thing, right? That we are growing where it matters the most.
Incontinence care, feminine care, wound care, our highest yielding categories, we have continued to grow.
Well, that's the most important thing.
Yes.
In terms of year to date, have you seen the same momentum on those key categories that are helpful for the profitability in terms of the market share?
I mean, this is too early to say. I mean, we'll have to come back to that once we have reported the Q1 results. I have no reason to see that something major will change.
Okay. To keep accelerating, you know, or to get an acceleration on the volumes, how are you reinvesting the SG&A savings?
Yeah. Well, that will follow our normal investment plan, I would say. First to grow is of course the strategy that we talked about. Secondly is to make sure that we are competitive in all different value segments. We work a lot with innovation now in the value tier part of the assortment, and the volume fighters I mentioned, but also with some selective price adjustments. Also important is that we, for feminine care and incontinence care specifically, we invest in A&P.
I talked about innovation before, and we have a very high share of our portfolio, higher than ever, that is preferred by our consumers over other alternatives, which makes it a perfect time to reinvest in A&P in order to create awareness and drive profitable growth in these areas. That is also part of our plan. The savings that we then generate through our cost saving program, we will be building into to further enhance that investment program.
Great. Thank you. In terms of this year, in terms of the organic sales growth, I mean, you have a medium-term target of growing organic sales growth by 3%. For this year, obviously we have some input cost increasing s uddenly, more than anyone expected. How do you see kind of the combination of volume, pricing and mix evolving?
Yeah. We don't give guidance on a full year basis, so I cannot answer that in any detail. What I can say is that we are fully committed to drive volume growth to a bigger extent than what we were able to do in 2025. That is where we have focus and of course goes without saying that should be profitable volume growth. Considering what I just said about our strategy, you should also expect that we will have mix improvements.
Thank you. In terms of going back to the market share, 'cause I guess, you know, between volume market share, you know this is a key driver for t he share price. What percentage of your country and category combinations do you think will be leading to an increase of market share volume improvement?
Well, if we look at Q4, we have 65% of our country category combinations then in the branded business in retail that we're growing market share. Of course we aim to be at or at least that level as we move forward. That is what we aim for, really winning market share. Well, what we don't really know because we don't have external data is of course in our B2B business. If we talk wound care or incontinence in healthcare or Tork, then we don't have the same level of external data to rely on. We have reason to believe that we are growing in line with or better than the market in those as well, where it matters the most.
Well, 65% is a pretty good number.
Yes, it is.
When they had reported a couple of weeks ago, they said 30%.
Yeah.
Were they gaining share or stable. 65%, it's a great number.
It is. Especially I think in an environment where there is a weaker consumer sentiment.
Right.
It's more important than ever to stay focused on winning the relative game and staying focused on winning where it matters the most.
Going to that point of the, you know, consumer sentiment or consumer being under pressure, in many countries, especially the low income. In terms of the innovation, which type of innovation are you doing on the more affordable end of the spectrum? Can you give us some examples of that?
Well, one example that I was alluding to was this with volume fighters in Tork. That's not really innovation, it's more about adapting our assortment to make sure that we are as attractive as possible in each of the value segments. One good example I think is something we launched during 2025, which was Cushelle Simply Soft in consumer tissue in the U.K. specifically. That was one of the drivers behind us growing market share in our tissue business, the branded tissue business in the U.K. It's not the only factor, but it's a contributing factor of course these innovations. That is a good example.
Thank you. Going back to input cost, right? I know over the years you've been able to pass through price increases faster and faster. What is your view at the moment, you know, with the latest developments on input costs and oil? How do you see, you know, how pricing can progress?
Well, I don't see it differently than any other time. I think, given that this is something that affect the full sector, I think we will of course knock on the doors of our customers and talk about price increases. We will use the capabilities that we have built in being as agile as we are now when it comes to pricing.
Those conversations happening already?
I would say that probably because I would say, yes, conversations are probably happening. Now, I cannot say for sure, but as I talked about before, there is also time lag in those cost increases. It's of course more easy to have those conversations once the price increases, cost increases already become a fact. Is when the real discussions start.
Great. Then in the Professional Hygiene side, you exited some low-margin businesses in the last 12-18 months. Basically they were like around a 10% headwind to your volumes there. Are you rethinking about, you know, whether to chase this lower margin business again because of the, you know, market growth being a bit more sluggish? Especially for example, with the HoReCa customers. What are you thinking of doing in professional?
No, I mean, we exited those segments because we didn't see the path to profitability, and that has not changed.
Okay.
We don't see the path to profitability. Of course we want to have an assortment that is attractive in all value segments and so on, so that we can drive growth. In the end of the day, if it's not a healthy profit margin and we don't see a path towards a healthy profit margin, then it's not for us. No.
In baby care in Europe, I mean, you mentioned in the presentation that the organic sales have been declining. We have a lower birth rate, but how confident do you feel in this category structurally? In a medium- to long-term, would you want to continue to be exposed? You think you can, you know, outperform other players?
Yes. Yes. No, but yes, I fully understand the question because of course, as you say, the declining birth rates. Structurally it's not as attractive a category. There are some other factors that makes it attractive. One is that it is a very high engagement category. Where of course, the Libero brand that we have, for example, matters and where innovation matters. Also, it's a very highly strategically important category for the retailers because it drives traffic of parents with children into the stores. There are also some fundamentals that are positive.
For us it's also the benefit of scale. We have the benefit of scale in the go-to-market with retailers because of having baby in our portfolio. Also, there are many synergies for us in R&D and manufacturing between baby and incontinence care and feminine care. One thing is then the structural attractiveness, but the other thing is then how attractive is it for us.
Therefore, I think it has a place in our portfolio also, mid-term, and as far as I can see, long-term as well. We are also, as I said, with Libero for example, in the Nordics, we are winning the relative game, and doing well. We will continue to focus on winning the relative game. That said, it's important also to say this is not a category, to your point, that we look to expand. We will do good where we're at, but we don't look to expand it.
I just wanted to touch on one of the points that you made. I mean, it is a very important traffic driver for the for the retailers. Does it help you in your negotiations then when you know, negotiate with them other areas like feminine or the incontinence or even tissue? Is this something that helps you?
Yes, it does. I think it does look different from market to market. In some markets we have two categories, in other markets we have four categories, and the importance of scale and multi-portfolio is different from market to market. In many places, yes, it does help, both from a scale perspective, but also from a relevance perspective.
Thank you. Now I'm gonna move to cash returns. On the share buyback side, I mean, you have a very strong balance sheet leverage is only around one times, and you have a share buyback of around SEK 3 billion, and the share price now is relatively low. Would you consider potentially increasing the share buyback level that you have currently?
Yeah, when it comes to capital allocation and the balance sheet, first and foremost, what's very important for us is to maintain that strong balance sheet. That is very important for us. Our first priority, having that secured, is to support our organic growth as well as to make sure that we have stable and rising dividends as we have had now year after year. We plan to continue to have rising dividends. That's our first priority.
We want to have the room to maneuver when it comes to M&A. As we had last year, we see room for share buyback program also going forward. In the notice to AGM that we have now in a few weeks, there is a proposal on the next round of share buyback program. If that get approved, then it's the board decision on the level of share buyback. When they decide on that, they look rather on cash flow than on the share price as such.
Mm-hmm. Okay. It helps, right? On the point of M&A, under your leadership. Do you have more appetite to do more deals? One question, and then the second, what are the white spaces where you would focus?
Well, if we start with the focus, I shared when I presented here where we want to focus on growth. We have the same priorities when it comes to inorganic growth as we do for organic growth. What's relevant from an M&A perspective is incontinence care, it's feminine care, it's wound care, and also the strategic parts of professional hygiene.
That's where we focus the most. From a geographical standpoint, I don't want to exclude anything, but North America remains an attractive geography for us. DME markets is important to us. There are a lot of potential areas for acquisitions. We have a very big appetite for profitable growth, and thereby also very big appetite for M&As. What I see maybe is also, I mean, first and foremost, M&As is there to build scale quickly, to expand our presence quickly. I see also that innovation can be helpful. I say innovation again.
Acquisitions.
That is because acquisitions can be important.
Acquisitions that lead you to innovation.
also for innovation.
Sure.
Is what I wanna say. Acquisition can also help with innovation and bring innovation to the company as a complement to our own in-house R&D efforts. There are many opportunities. I think good to highlight also is that even if we now have such a strong balance sheet that we do and have the room for M&A, and we have so many areas where we see and have a big appetite for M&A, we are very disciplined, so the M&A has to be value creating.
Great. Thank you very much. Just checking if there's any questions. Please.
Thank you. Some companies are already thinking about AI and how they can achieve cost savings internally. Many companies would think that over the years, they would have to have a CAGR of employees over time as the sales would go up. In this environment, you could theoretically have -10% over your next planning period and then do something with the cost savings. Have you thought about basically that optionality for you?
It would be a way to obviously invest back into your business or give you better margins, improve returns, et cetera. I know it's controversial because, you know, in Europe you've got unions, so you have to be very careful kind of how you approach it. Do you see that opportunity? Is this something that Essity is it gonna take advantage of? Like, what are you doing with AI? How much are you spending? What are your use cases so far?
Yeah. Yeah, I understand the question. When we go back to our strategy, I had one important pillar, which was to capture efficiency gains across the value chain. One way of capturing those efficiency gains, which is part of our strategy, is to have digital transformation. Digital transformation is automation. It's different digital tools, where AI is one of those tools. Yes, we are certainly working with AI in order to become more efficient. We've done that for quite some time. What our model of doing so is, I would say, top-down and bottom-up, because our experience is that it's super important that we increase the capabilities for AI across the organization. We really stimulate and welcome initiatives that happen in the organization.
At the same time, we need to be very mindful of investing where it matters the most. Therefore, we also have a top-down approach where we have an AI council where we capture all of the ideas and we have some areas where we put specific focus and make sure that we channel the bigger investments into those areas. It's also about, of course, avoiding any risks and having the right partnerships and so on. That is our approach, top-down and bottom-up and driving AI initiatives that way. I would say we apply AI in most areas actually to different degrees. In production it's in our planning, in our operational planning, also in R&D.
For any of you who want to join our Capital Markets Day on the seventh of May outside of Gothenburg, in Sweden, then we will show you how we apply AI in R&D. Please join us for that. Also in marketing quite a lot. For example, you can use AI in claims generation. We are doing that as an integrated part of our efficiency improvements. Have we set any specific ambition or target for what that would generate in terms of savings? No, not at this point. We work with it project by project in this way.
Any other? Otherwise, I will just thank Ulrika for her presentation and all these answers to our questions. Thank you so much for coming to the conference.
Thank you.
Thank you.
Thank you for listening.