Hygiene product maker Essity reported second-quarter core profit above expectations on lower costs and price discipline, it was reported on Thursday.
The Swedish tissue maker saw volumes rise in almost all of its categories in the quarter.
Sales volumes in Q2 rose by 0.4% compared to a year previously, reversing a trend after six consecutive quarters of losses.
The company’s chief executive Magnus Groth said in an interview with Reuters, “We have growing or stable market share almost everywhere.”
Groth added that Essity has regained lost ground from private label brands and some branded rivals.
Volumes grew 3.2% in consumer goods as well as health and medical segments, but declined 6.9% for its professional hygiene business that was restructured last year.
However, the professional hygiene business was up excluding restructuring charges.
The group’s price mix, a metric that reflects how much it sold its products for, fell by 1.3%.
Prices
Consumer goods companies have been increasing prices since the pandemic to combat higher costs, but premium brands are under pressure due to budget-conscious shoppers seeking better value from unbranded products.
Groth said Essity is looking to raise prices for tissue paper to combat higher pulp prices.
He said a reason for the stable results in the consumer goods business is Essity’s “new agility” in pricing.
Victoria Nice, an analyst from Bernstein, said the benefit from cost of goods sold (COGS) in the quarter has likely surprised investors given the move up in pulp prices.
Analysts have said pulp costs have been up around 20% on average so far this year.
Essity sees a sequential rise in pulp prices driving third-quarter COGS significantly higher, which might be “slightly negative” in year-on-year comparisons, chief financial officer Fredrik Rystedt said during an analyst call.
In the second quarter, comparison was not a major factor.
Essity has halved its exposure to pulp since the sale of its stake in China-based Vinda 33.1HK in March.
The maker of Tork and Libresse brands posted adjusted earnings before interest, tax and amortisation (EBITA) of 5.40 billion crowns for the quarter ending in June.
This was above 4.62 billion crowns a year ago.
Analysts were expecting EBITA of 4.79 billion crowns, according to data from the London Stock Exchange Group.
The company said it reported its highest operating profit to date in the quarter, sending its shares up about 4% in early trading.
