Essity, a Swedish company known for brands such as Libresse and TENA, has announced plans to increase prices in the coming months to offset rising pulp costs. In a statement after revealing first-quarter earnings above expectations, executive director Magnus Groth highlighted that raw material represented 11% of all costs in 2023. The company has focused efforts on reducing its dependence on fiber, stating in March that it had achieved cut your pulp purchases in half.
“That [custos de celulose e fibra reciclada] It will have an impact in the second quarter and beyond, but we will compensate through price increases,” said the executive.
Although Essity has increased its margins over the past year at the expense of falling volumes, the company has indicated a reversal of that trend. With increased marketing activity, prices were reduced in the first quarter. Analysts warned that the planned increase could result in a loss of sales volumes for the company. “Pricing in consumer goods should be a concern at a time of potential rising costs,” highlighted JP Morgan.
Other companies in the sector are also responding to rising pulp costs. Portuguese tissue paper manufacturer Navigator announced that it will increase prices by 8% to 10% from May.
On expectations for share repurchases or target updates following the sale of its stake in Asian hygiene products company Vinda, Groth said the company will provide an update in the second quarter on its financial targets and capital structure.
On the earnings front, Essity’s adjusted EBITDA for the quarter rose 12% year-on-year to reach SEK 4.9 billion (€420 million), exceeding analysts’ expectations. Margin also increased to 14%, marking the sixth consecutive quarterly increase. Excluding restructuring and terminated contracts, volumes increased 0.6% in the quarter.
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Source
European Supermarket Magazine
