Essity FY 2020 Results: Adjusted EBITA up 11 Percent

Highest adjusted EBITA and highest adjusted EBITA margin ever
Target raised for adjusted return on capital employed to above 17% by 2025
Net sales declined 5.6% to SEK 121,752m (128,975)
Organic net sales declined 1.9%
Sales were negatively impacted by the COVID-19 pandemic and related lockdowns
In emerging markets, which accounted for 37% of net sales, organic net sales increased 2.6%
Operating profit before amortization of acquisition-related intangible assets (EBITA) increased 16% to SEK 17,567m (15,127)
Adjusted EBITA increased 11% to SEK 17,626m (15,840)
Adjusted EBITA margin increased 2.2 percentage points to 14.5% (12.3)
Adjusted return on capital employed increased 1.9 percentage points to 15.7% (13.8)
Profit for the period increased 15% to SEK 11,747m (10,212)

The COVID-19 pandemic has had a major impact on people and the global economy. Vaccinations have started and market conditions are gradually improving. Increased awareness of hygiene and health is positive for Essity. The COVID-19 pandemic and related lockdowns and restrictions had a negative effect on Essity's sales which mainly impacted Professional Hygiene and Medical Solutions. Despite this, profitability has developed positively. In 2020, Essity achieved its highest adjusted EBITA and the highest adjusted EBITA margin ever. The target for adjusted return on capital employed was raised to above 17percent by 2025.

During the year, Essity has:

Increased its market shares in many markets
Increased online sales to approximately SEK 15bn for the full year. Online accounted for 15percent of net sales in the fourth quarter.
Accelerated the digital transformation and launched digital solutions, such as TENA SmartCare
Broadened its offering with face masks and expanded supply capacity for hand sanitizer
Improved underlying growth in Medical Solutions. Organic net sales for Wound Care increased 6.4percent in the fourth quarter.
Increased organic net sales in emerging markets by 2.6 percent and the adjusted EBITA margin by 2.7 percentage points to 12.9 percent
Achieved continuous cost savings of SEK 1,056m and launched the Manufacturing Roadmap
Acquired the MedTech companies ABIGO Medical AB and Novioscan
Made a non-binding indicative proposal for the acquisition of additional shares in Asaleo Care Limited
Significantly strengthened the balance sheet and financial position, which enable a higher rate of acquisitions.
Qualified for the Dow Jones Sustainability Europe Index
Reduced its carbon emissions by 11percent according to Essity's Science Based Targets, Scope 1 and 2

In 2020, organic net sales declined 1.9 percent. The adjusted gross margin increased 3.0 percentage points to 32.5 percent. Adjusted EBITA increased 11 percent and the adjusted EBITA marginal increased 2.2 percentage points to 14.5 percent. Adjusted return on capital employed increased 1.9 percentage points to 15.7 percent. Earnings per share increased 11 percent to SEK 14.56.

The group's organic net sales declined 0.5 percent in the fourth quarter of 2020. The COVID-19 pandemic and related lockdowns and restrictions had a negative effect on Essity's sales which mainly impacted Professional Hygiene and Medical Solutions. Organic net sales for retail increased 5.4 percent. The group's organic net sales in mature markets declined 5.1 percent. In emerging markets, which accounted for 39 percent of net sales, organic net sales increased 6.5 percent. The adjusted gross margin increased 1.0 percentage point to 32.7 percent. Adjusted EBITA, excluding exchange rate effects, increased 2 percent. The group's adjusted EBITA margin increased 0.1 of a percentage point to 14.2 percent. Adjusted return on capital employed increased 0.3 of a percentage point to 16.1 percent. Earnings per share amounted to SEK 3.76.

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