Jan 22 (Reuters) - Swedish hygiene products maker Essity reported fourth-quarter core earnings above market expectations on Thursday, citing lower costs, and said it would increase dividend. (
Essity's Price Reductions Impact Lotus Tissue Maker's Q4 Sales
Impact of Essity's Price Cuts on Sales
By Vera Dvorakova
Market Competition and Consumer Behavior
Jan 22 (Reuters) - Essity said on Thursday its product prices were 0.9% lower in the fourth quarter than a year earlier, causing an unexpected decline in the Lotus tissue maker's organic sales which also suffered from slightly weaker volumes.
Financial Performance Overview
Similarly to many other consumer goods companies, the Swedish hygiene product maker is restructuring its operations and battling lower consumer demand as shoppers trade down to cheaper private label goods.
Future Expectations and Dividend Proposals
Competition and price-sensitive consumers impacted organic sales especially in the consumer tissue business, CEO Ulrika Kolsrud said during an earnings call.
Sentiment in the U.S. hotel and restaurant sectors, which Essity supplies, is also at a "quite a weak level" and is expected to remain so in the short term, Kolsrud told Reuters.
Essity, whose consumer brands include Libresse and Tena, reported a 1.1% organic drop in quarterly sales to 34.7 billion Swedish crowns ($3.8 billion). Analysts from J.P. Morgan said the market had expected growth of 0.5%.
Shares of the company, which also supplies hygiene and cleaning products to businesses under the Tork brand, fell 4% by 0900 GMT.
Lower prices of consumer products may knock down like-for-like sales in 2026, even as cost of goods sold continues to decline, J.P. Morgan analysts said in a note to investors.
Essity expects slightly lower cost of goods sold in the first quarter of 2026, helped by savings and a positive currency exchange effect on raw materials, finance chief Fredrik Rystedt said in the call.
Its adjusted operating profit before amortisation (EBITA) rose to 5.12 billion crowns, beating analysts' average forecast of 5.04 billion crowns, LSEG's I/B/E/S data showed.
The board of directors will propose to increase the dividend for 2025 by 6% to 8.75 crowns per share, Essity said.
($1 = 9.0628 Swedish crowns)
(Reporting by Vera Dvorakova in Gdansk; Editing by Milla Nissi-Prussak)
