Tissue maker Essity's profit tumbles as input and distribution costs bite

Hygiene products group Essity on Wednesday 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. Operating profit at the world's second-biggest maker of consumer tissue fell 34% from a year earlier to 2.75 billion Swedish crowns ($297 million) despite an 11% rise in sales.

Hygiene products group Essity on Wednesday 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.

Operating profit at the world's second-biggest maker of consumer tissue fell 34% from a year earlier to 2.75 billion Swedish crowns ($297 million) despite an 11% rise in sales. Five analysts polled by Refinitiv had on average forecast a 3.33 billion crown 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.

"We do not expect a decrease in the historically high costs for raw material, energy, and distribution in the near term," Chief Executive Officer Magnus Groth said in a statement. "Price increases are therefore essential to compensate for the higher costs while we continue to increase customer and consumer value through leading innovations and implement efficiency measures to achieve cost savings."

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 7 crowns per share for 2021, up 4% from the year before.

($1 = 9.2543 Swedish crowns)

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