Essity Reports 4.1% Q3 Sales Growth as Adjusted EBITA Falls 7%; Brazil Acquisition Advances Feminine Care Strategy

Swedish hygiene and health company Essity Aktiebolag reported higher third-quarter net sales and strong operating cash flow, while profitability came under pressure from rising input costs, weaker organic sales and significant items affecting comparability. The company also advanced its feminine care expansion in Latin America through an agreement to acquire Kenvue’s feminine care business in Brazil.

Net sales for the third quarter of 2026 increased 4.1% to SEK 36,060 million, compared with SEK 34,638 million a year earlier. Organic sales growth was negative 0.3%, reflecting a 0.1% decline in volume and a 0.2% decline in price and mix. EBITA excluding items affecting comparability (IAC) amounted to SEK 4,725 million, down 7% from SEK 5,056 million, while the corresponding margin declined to 13.1% from 14.6%.

Reported EBITA fell to SEK 3,636 million from SEK 5,152 million. Profit for the period declined 30% to SEK 2,346 million, while earnings per share decreased to SEK 3.47 from SEK 4.86. Operating cash flow, however, improved 9% to SEK 5,783 million.

CEO Ulrika Kolsrud described the quarter as one of stability and resilience in a challenging market. She said profitability remained good despite intensifying cost pressures, volumes were stable and Essity strengthened its positions in several strategic segments. The company nevertheless acknowledged that overall sales development remained below its ambitions.

Financial performance: higher revenue, lower underlying profitability

Essity’s reported revenue growth was supported partly by acquisitions and currency translation. The acquisition of its feminine care business in North America contributed 1.9% to consolidated net sales growth, while currency translation contributed 2.5%. Organic growth remained slightly negative as price reductions implemented in previous quarters continued to affect performance.

The gross profit margin declined to 30.0% from 33.5%. Excluding IAC, the margin was 31.7%, compared with 33.4% in the prior-year quarter. Higher raw material and energy costs weighed on the business, although Essity reported approximately SEK 180 million in cost savings in cost of goods sold.

Sales and administration expenses represented 18.6% of net sales, compared with 18.8% a year earlier. Cost savings in sales and administration amounted to approximately SEK 150 million. Marketing expenses accounted for 5.2% of sales, unchanged from the prior-year period.

IAC amounted to negative SEK 1,089 million in the quarter, compared with positive SEK 96 million a year earlier. The company attributed approximately SEK 450 million to its cost-savings programme and approximately SEK 500 million to the optimization of Consumer Tissue production in Latin America.

The adjusted figures show that underlying profitability remained positive, but the decline in EBITA excluding IAC highlights the pressure from costs and pricing even before the impact of exceptional items.

Business-area performance: Personal Care leads growth

Health & Medical

Health & Medical recorded net sales of SEK 7,066 million, up 3% from SEK 6,883 million. Organic sales growth reached 1.2%, primarily driven by higher prices. EBITA excluding IAC increased 3% to SEK 1,302 million, and the adjusted EBITA margin improved slightly to 18.4% from 18.3%.

North America delivered strong growth, while sales were stable in Europe and declined in Latin America. Incontinence Products benefited from both higher volumes and prices, while Medical Solutions recorded good growth in wound care.

Essity also expanded its compression-garment offering with JOBST® Elvarex® Soft ready-to-wear, including five new models and standard sizes intended to help patients find suitable products more quickly.

Personal Care

Personal Care was the strongest growth area among the reported segments. Net sales increased 16% to SEK 9,205 million, supported by acquisitions and currency effects. Organic sales growth was 3.2%, primarily reflecting higher volumes and a favourable product mix, although selling prices were lower.

EBITA excluding IAC increased 12% to SEK 1,241 million. The adjusted margin declined to 13.5% from 14.0%, reflecting lower prices, higher cost of goods sold, sales and marketing expenses, and temporary integration costs related to the North American feminine care acquisition.

Growth was high in North America and Latin America, while sales were stable in Europe. Incontinence Products and Feminine Care recorded strong organic growth and increased market shares. Baby Care volumes were affected by a shrinking market, although the leading Libero brand strengthened its market position.

During the quarter, Essity highlighted upgraded Saba Ultra Thin Night Pads, featuring SmartProtect™ absorption technology, a wider absorbent core and a softer topsheet.

Consumer Tissue

Consumer Tissue continued to face difficult trading conditions. Net sales declined 1% to SEK 10,541 million, while organic sales fell 3.0%. Lower volumes—primarily linked to production-footprint optimization in Latin America—and lower prices from earlier adjustments weighed on performance.

EBITA excluding IAC fell 27% to SEK 908 million, and the adjusted margin dropped to 8.6% from 11.7%. Higher cost of goods sold was the principal pressure, with lower prices and volumes also contributing. Sales and administration costs were lower, and currency translation had a positive SEK 39 million effect on earnings.

Prices improved compared with the second quarter, reflecting ongoing price increases. Essity also upgraded Regio Luxury Almond Touch with its Ultimate Touch™ features, targeting the premium tissue segment.

Professional Hygiene

Professional Hygiene reported net sales of SEK 9,257 million, up 1% year on year. Organic sales declined 1.1%, reflecting lower prices and weaker volumes in the base assortment. The product mix remained favourable as premium products accounted for a larger share of sales.

EBITA excluding IAC decreased 6% to SEK 1,575 million, and the adjusted margin fell to 17.0% from 18.3%. Lower selling prices and higher costs of goods sold affected profitability, partly offset by lower sales and administration costs. Currency translation contributed a positive SEK 32 million to earnings.

Sales declined in North America and Europe but remained stable in Latin America. Essity continued to develop its digital hygiene offering, including Tork Vision Cleaning, which uses connected dispensers, people-counting and real-time analytics to help customers manage cleaning resources and product availability.

First nine months: modest sales growth but weaker earnings

For January–September 2026, Essity reported net sales of SEK 104,298 million, compared with SEK 103,799 million in the corresponding period of 2025. Organic sales growth was 0.1%. Higher volumes in Health & Medical, Personal Care and Professional Hygiene largely compensated for lower prices, particularly in Consumer Tissue.

EBITA declined 16% to SEK 12,189 million from SEK 14,498 million. EBITA excluding IAC decreased 3% to SEK 14,013 million, and the adjusted EBITA margin fell to 13.4% from 13.9%. Profit for the period decreased to SEK 7,940 million from SEK 9,494 million.

Cost savings in cost of goods sold amounted to approximately SEK 460 million during the nine-month period. Savings in sales and administration costs were also reported, although the overall cost base remained under pressure.

Performance varied significantly across the portfolio. Personal Care net sales increased 11% to SEK 26,200 million and adjusted EBITA rose 6% to SEK 3,634 million. Health & Medical sales were broadly stable at SEK 20,483 million, while adjusted EBITA increased 4% to SEK 3,805 million. Professional Hygiene sales declined 2% to SEK 26,523 million, with adjusted EBITA down 3% to SEK 4,459 million. Consumer Tissue sales fell 5% to SEK 31,099 million, and adjusted EBITA declined 20% to SEK 3,008 million.

Cash flow strengthens; net debt declines from year-end

Operating cash flow increased to SEK 5,783 million in the third quarter from SEK 5,324 million a year earlier. Essity attributed the improvement primarily to more favourable working-capital developments, partly offset by higher restructuring payments.

Cash flow from current operations amounted to SEK 4,738 million, compared with SEK 4,082 million. Net cash flow was SEK 3,621 million, against SEK 2,933 million in the prior-year quarter.

At September 30, 2026, net debt stood at SEK 24,952 million, down SEK 1,591 million from December 31, 2025. The decrease was mainly associated with the revaluation of pension assets and obligations. The net debt-to-EBITDA ratio excluding IAC was 0.98, compared with 1.03 at the end of 2025 and 1.18 a year earlier.

Working capital increased to SEK 15,304 million, representing 10.6% of net sales, compared with 9.2% a year earlier. Interest-bearing gross debt was SEK 35,208 million at quarter-end, and the average debt maturity was 2.6 years.

Essity continued its SEK 3 billion share-buyback programme, announced in April 2026. During the third quarter, it repurchased 4,101,510 Class B shares for SEK 1,117 million. By September 30, its holdings of own shares totalled 7,458,875, equivalent to 1.1% of all shares. The repurchased shares are expected to be cancelled. The programme is intended to be financed from cash flow from current operations after the ordinary dividend and may continue as a recurring part of capital allocation.

Brazil acquisition expands feminine care presence

Essity entered into an agreement to acquire Kenvue’s feminine care business in Brazil, including the brands Carefree, Sempre Livre and o.b. The transaction is expected to close in the second quarter of 2027, subject to regulatory approval.

The acquisition is intended to strengthen Essity’s position in feminine care in Latin America. Brazil represents a significant opportunity in hygiene and health, and Essity already has a leading position in incontinence products through TENA.

The transaction follows Essity’s earlier expansion in feminine care in North America and aligns with its strategy to invest in attractive categories where it sees potential for profitable growth.

Strategic review of Consumer Tissue continues

Essity said its strategic review of Consumer Tissue was progressing according to plan. The company has assessed the conditions for a potential separation and is evaluating the value-creation potential of different alternatives: separating Consumer Tissue or retaining it within Essity.

The company said the objective is to identify the alternative that offers the best opportunity for both Consumer Tissue and Essity to realize their potential and maximize long-term value creation. No final decision was announced in the report.

The review comes as Consumer Tissue continues to experience weaker organic sales and profitability compared with other parts of the group.

Cost efficiency, pricing and product innovation remain priorities

Management said cost savings were being delivered according to plan and that price increases were being pursued to offset higher costs. Selling prices were higher in the third quarter than in the second quarter across all business areas.

Essity’s stated priorities include accelerating profitable growth, improving efficiency, investing in areas with the strongest growth potential and developing its product portfolio. Marketing and customer-offering investments were also described as beginning to yield results.

New and upgraded products during the quarter included JOBST® Elvarex® Soft ready-to-wear compression garments, Saba Ultra Thin Night Pads with SmartProtect™ technology, and the upgraded Regio Luxury Almond Touch tissue range. Tork Vision Cleaning continued to represent the company’s data-driven approach to professional hygiene services.

Sustainability progress and leadership developments

Essity reported that its absolute greenhouse gas emissions for Scope 1 and 2 were 30% below the 2016 baseline on a last-12-month basis through the first nine months of 2026. Its stated 2030 target is a 35% reduction against 2016.

The company also reported that 76% of its sustainable innovations in the first nine months of 2026 led to social and/or environmental improvements, compared with its annual target of more than 50%. The corresponding figures were 80% in 2025, 87% in 2024, 85% in 2023 and 68% in 2022.

On leadership, Essity appointed Andreas Mattsson as Chief Legal Officer and member of the Executive Management Team, effective January 1, 2027. He will succeed Mikael Schmidt, who plans to retire at the end of 2026, and will also be responsible for compliance and risk management.

CFO and Executive Vice President Fredrik Rystedt informed the company of his wish to retire during 2027 after more than nine years in the role. The process of appointing a successor is ongoing, and Rystedt is expected to remain in his position until a successor is appointed and an orderly handover is completed.

Outlook: focus on profitable growth and offsetting cost pressures

The interim report does not provide a quantified earnings or sales forecast for the fourth quarter. Instead, management emphasized its priorities: converting strong market positions into profitable growth, offsetting higher input costs through pricing and efficiency improvements, and directing investment toward the strongest opportunities.

The company’s next steps include progressing the Brazil feminine care acquisition, continuing the strategic review of Consumer Tissue, delivering cost savings and improving performance in categories facing price and volume pressure.

Essity’s third-quarter results present a mixed picture: revenue increased and cash generation strengthened, but organic sales growth remained slightly negative and adjusted profitability weakened. Personal Care and Health & Medical provided important areas of resilience, while Consumer Tissue remained a key challenge. The company’s ability to improve pricing, manage costs and execute its portfolio strategy will be central to its stated ambition of accelerating profitable growth.

About the report: Essity Aktiebolag (publ) published its interim report for the third quarter of 2026 on October 22, 2026. The report was signed by President and CEO Ulrika Kolsrud. Essity stated that the report had not been reviewed by the company’s auditors.