Swedish hygiene products maker Essity raised its core profit margin target and reiterated its core sales target after divestment of Hong Kong-listed subsidiary Vinda.
Essity's sale of its 51.6% stake in Vinda for about SEK 16 billion (€1.42 billion) was completed in March.
An Essity statement said the company is now aiming for an operating profit margin before amortisation (EBITA) and items affecting comparability of more than 15% on annual sales growth before acquisitions of more than 3%.
It previously targeted an EBITA margin excluding one-offs of around 13.5% and sales growth of more than 5%, with organic sales growth of more than 3%.
'Emphasis On Profitable Growth'
'The new targets are an increase in ambition with an emphasis on profitable growth,' the company said.
Magnus Groth, president and CEO of Essity, added, “Favourable market trends combined with Essity’s successful innovations, strong brands and efficiency initiatives provide us with the platform to gain market shares and improve the company’s profitability.”
The company added that although acquisitions are no longer included in the sales target, they remain part of the company’s strategy.
In January 2024, it reported fourth-quarter core earnings below market expectations, but said it was able to improve margins year-on-year despite lower volumes in the quarter.
Adjusted earnings before interest, taxes and amortisation (EBITA) amounted to SEK 4.86 billion (€430 million) for the last three months of 2023, missing an LSEG poll estimate of SEK 5.22 billion (€460 million). This was up from SEK 4.11 billion (€360 million) a year earlier, restated after the agreed sale of its Vinda stake.
Adjusted EBITA margin rose to 13.3% from 11.2% in the fourth quarter of 2022, its fifth consecutive margin increase.
