Swedish hygiene products maker Essity reported bigger-than-expected fourth-quarter earnings, supported by increases in its product prices, and said it would raise rates further in 2023 and expected the hikes to offset costs.
The world's second-biggest maker of consumer tissue has been trying to pass on higher material and energy costs to clients through continued price increases in the previous quarters.
The Swedish group, which sells consumer tissue such as toilet paper and napkins under a large number of brands including Lotus, Tempo and Vinda, said it had hiked its prices by a further 13.3% on average in the final quarter of 2022.
Essity's quarterly adjusted earnings before interest, taxes and amortisation (EBITA) rose to SEK 4.08 billion (€370 million) from SEK 3.08 billion a year earlier.
Five analysts polled by Refinitiv had forecast an adjusted EBITA of SEK 3.64 billion on average.
The producer of Tork also "achieved its highest net sales ever", chief executive Magnus Groth said in a statement, with a yearly increase of 28% to SEK 43.83 billion (€3.93 billion) in the quarter.
"We can see that, despite significant cost inflation, we achieved an operating profit, before depreciation, amortisation and impairment, that was in line with 2021," Groth added. "We implemented significant price increases, while volumes were higher for the year.”
The company said price increases had offset the impact of higher raw material and energy costs, as well as lower volumes, on its gross margin that increased to 25.2%.
Essity's board plans to propose a dividend of SEK 7.25 per share for 2022, representing an increase of 4% from the prior year.