April 23 (Reuters) - Swedish hygiene products maker Essity reported first-quarter core earnings slightly above market expectations on Thursday, helped by higher volumes that offset lower product
Essity plans price hikes to offset energy costs after small profit beat in Q1
Essity's Q1 Performance and Strategic Response to Rising Costs
By Vera Dvorakova
April 23 (Reuters) - Hygiene products maker Essity reported slightly better than expected first-quarter core earnings on Thursday, as higher volumes offset lower prices, and said it planned to hike prices to offset rising energy costs.
Restructuring and Market Challenges
Similarly to other consumer goods companies, the Swedish tissue maker has been restructuring its operations and tempering prices to balance rising costs and lower consumer demand since the COVID-19 pandemic.
Impact of Global Events on Supply Chain
The war in the Middle East has added another layer to this puzzle with soaring fuel prices and supply chain disruptions. Brazilian pulp giant Suzano said earlier it expected global prices for toilet paper, tissues and diapers to rise in the event of a prolonged conflict.
Essity's Pricing and Cost Management Strategy
"We are preparing for price increases to compensate for increasing energy costs," CEO Ulrika Kolsrud told Reuters. The Tork brand owner's product prices were 0.7% lower in the first quarter than a year ago.
Cost of fuel in transportation was the only immediate impact from the war in the quarter, she said, adding that increases in raw material costs would have a time lag of four to five months.
Energy Costs and Hedging Measures
Essity expects higher energy costs also in the second quarter and possibly later this year, though the near-term impact should be limited thanks to hedging, Kolsrud said.
The company is about 60% hedged for the rest of 2026 on energy and raw materials, finance chief Fredrik Rystedt said in a conference call. Cost of goods sold is expected to rise in the second quarter compared to a year earlier, he added.
Workforce Reduction and Savings Programme
Kolsrud said Essity planned to cut roughly 800 positions globally as part of a savings programme launched in October.
Financial Results and Shareholder Actions
The company's adjusted earnings before interest, taxes and amortisation (EBITA) fell 2% to 4.6 billion Swedish crowns ($498 million) in the first quarter, a touch above analysts' average forecast according to LSEG's I/B/E/S data.
Essity has also decided on a share buyback of 3 billion crowns, it said on Wednesday.
($1 = 9.2387 Swedish crowns)
(Reporting by Vera Dvorakova; Editing by Milla Nissi-Prussak)
