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A-Brands

Essity's Profit Drops As Input And Distribution Costs Bite

Hygiene products group Essity has reported a bigger-than-expected drop in fourth-quarter profit and said it planned to raise prices further in the face of record high costs for raw material, energy and distribution.

Following a strong third quarter, operating profit at the world's second-biggest maker of consumer tissue fell  in Q4 by 34% from a year earlier to SEK 2.75 billion (€260 million).

This was despite an 11% rise in sales. Five analysts polled by Refinitiv had on average forecast a SEK 3.33 billion profit.

Essity, which is also the global leader in hygiene products for businesses and in incontinence products, announced plans to raise prices in all product categories and markets this year to compensate for the substantially higher costs.

Price Increases

"We have taken strong actions to address the significant challenges in our operating environment during the year," chief executive Magnus Groth said in a statement. "We implemented price increases in all business areas and further price increases will be implemented in 2022 to offset the strong cost inflation."

The timing and size of the planned price increases would be managed locally, Essity added.

Essity, a rival to Procter & Gamble and Kimberly-Clark, proposed a dividend of SEK 7 per share for 2021, up 4% from the year before.

"We will implement further price increases in 2022. We are continuing to deliver in line with our strategy for profitable growth and increased shareholder value," Groth added. "Through innovation, digitalisation, sustainability initiatives and efficiency improvements, we are increasing the company’s competitiveness."

News by Reuters, edited by ESM. For more A-Brands news, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.

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