Essity Capital Markets Day 2026 | Full event

Good morning everyone and welcome to Gothenburg and welcome to Essity's Capital Markets State 2026. It's great to see so many of you here and we also have a strong virtual audience. So a warm welcome to you as well. My name is Sandra Obe. I'm head of investor relations and I will moderate today's session. We are here at our largest office. This is our global center of excellence. Here all our key functions are represented across business areas. We have R&D, we have procurement, we have our commercial teams. Last time we met, we talked about accelerating profitable growth. Since then, we have made solid progress in many areas. Today, we will be taking this further, accelerating progress by sharpening our focus and execution. To tell you about the actions and the key initiatives that we are taking on. We have prepared the following agenda. We will start with our CEO and we will have a short Q&A included here. After that we will turn to our business areas and we will start with health and medical and then move to personal care. After personal care we will have a bit of a longer break. And when you're back, we will continue with consumer tissue and professional hygiene. Then we will take a step back and look at the full picture as our CFO Fredrik Rystedt will take us through the financials. Then we will conclude the day with a Q&A. So I encourage you to take notes through the presentation so you remember all the questions that you're going to ask and we take questions from the room but also from our virtual audience. So please if you're joining online, submit your questions through the platform. After the questions, it's time for R&D tour and the lunch. And for those of us who are going on site visits, the buses will leave from here to Lila and to Falin Bay at 2:00. Are you excited to get started? I am too. Okay, let me welcome our CEO.

But before this is care taking shape. We're going to give you that wow effect. This is curiosity sparking breakthrough. This is hard work in workshops, labs, and factories. And somewhere between planning and doing, this is the result. This is pads, pants, tapes, diapers, napkins, bandages, braces, tissue, towels, wipes, toilet paper, cream, soap, sanitizer, stockings, plasters, casts. This is breaking barriers to well-being, shaping what's next. Hey ladies. Better access, wider participation, stronger public health for parents, nurses, cleaners, and caregivers who keep life moving. This is everyday care. This is smarter care. This is sustainable care. Reducing, preventing, accelerating. This is reach to over a billion people in 150 countries every single day for everybody and everybody. This is Essity.

Thank you Sandra and good morning everyone. Besides what Sandra talked about, this is a place where many of the unique solutions and offerings that we have in our portfolio have been developed over the years. It's also very special for me to welcome you here today since this has been my workplace for many years now. Since I stepped into the role as CEO some time ago, we have made a review of our business, a thorough review to identify improvement opportunities to make sure that we have the best possible conditions for profitable growth. That has resulted in that we have taken some initiatives and for example we have reshaped our organization. So today we are working in a simplified organization decentralized where we have end-to-end accountability. With that we become faster in decision making, faster in execution, and not the least faster in responding to evolving customer and consumer needs. Another initiative that you recognize I think is that we have in connection to our reorganization we have also initiated and are executing on an SG&A cost-saving program and that will free up resources that we intend to invest further in further growth. We have also completed an M&A that is expanding feminine care into North America. And that is also creating a growth platform for personal care, our personal care business in that attractive geography. One other thing that we have done is to really review our optimal portfolio composition to maximize value creation. And what that has resulted in is the initiative to do a strategic review of our consumer tissue business. And let us stay a little while on that. So our consumer tissue business is a very strong, it's a great business in our portfolio. It has strong offers, many unique offers and offerings. It has leading market positions, well-established and strong customer relations and over the years we have improved the performance of this business quite considerably and also when you will listen later on to Fulkar's presentation you will see that we see the potential for further value creation in this business. At the same time as you all know we have the ambition in Essity to drive a portfolio shift where we make sure that a bigger part of our portfolio is with the highest value added and highest return products and categories in order to unlock the full potential of. So the intention, the aim with this strategic review is to create the best possible conditions for both consumer tissue as well as for the group to develop to its full or their full potential. So we will assess different strategic alternatives. What you of course think about then is that one of those alternatives could be a separation. But I want to emphasize that no such decision has been taken. So we will also continue to develop the tissue business, make sure that is as successful and value creating as possible within the Essity portfolio and you will see what those plans and priorities look like when Fulkar presents later today.

Now just a short reminder of what we're talking about when we talk about the consumer tissue business. We're selling toilet paper, hand towels, household towels, napkins, facial tissues, moist toilet papers, and hankies as well. And we do that under strong leading brands like SCA, Kushell, Familia, Reio, and also under strong retailer brands and with private label. Consumer tissue stands for 31% of our net sales. So 45 billion SEK, profit margin 11.9%. And we're talking about some 13,000 employees and 29 production sites. And as I said, leading positions. We are number one in Europe and number two in Latin America. And I think I stop there now, Sandra, because of course later on you will hear much more about the consumer tissue business from Fulkar.

Yes. Perfect. We plan to have a short Q&A now on this specific topic. So we take questions from the floor of course but also from those of you joining online just submit through the platform. I think we have a question already. Wait for the microphone and please introduce yourself and please keep it to one question. Do we have a microphone? Oh, you have a microphone on the floor on the table maybe? No. Thank you.

Hi, Nicholas Ecman here from DMBB Carnegie. Can I ask a little bit when you talk about this strategic review and of course recognizing that you are now starting this process, but can you say anything about the different alternatives that you're considering? Is this a could this be a flotation of the entire business? Could this be a divestment of part of the businesses? And I'm also curious the size of your consumer tissue business is that something that could be sold to a competitor or would that be tricky from a competitive standpoint?

I think as you pointed out, we are just initiating the strategic review and we are looking broadly at different strategic alternatives. So out of those alternatives it could be different types of separation, divestment of a full consumer tissue business, of parts, could also be a spin-off, so different options. And of course when it comes to competition rules and so on, it depends on different markets. It looks very different from market to market.

Have a question here.

Yes. Hello. Johannes Gonzalez SP1 here. So I have a question on the strategic review. Is there sort of a time frame? Are you committed to any sort of time when you need or want to complete the review?

No, we're not committing to a specific time although we will progress as quickly as possible of course and also provide regular updates. Looking at this type of review when we are assessing multiple scenarios, our expectation is that it would take some 6 to 12 months.

Just behind you.

Yes. Good morning. It's Kasut with Kepler. Can you speak about the synergies of consumer tissue on the one end with the retailer side and the assortment in the commercial space and on the other end the integration with the professional business on the production side?

Yeah, you basically answered the question. We have dependencies on the commercial side between consumer tissue and personal care when it comes to our portfolio to retailers, and we have dependencies on the back end in supply chain and in R&D between professional hygiene and consumer tissue. So that we do, and the impact of that will be part of the assessment.

Great. We have a question from Erin. Oh okay perfect. Oscar please.

Oscar Lindström from Danske Bank. Just a question about what is it you're going to do for almost 12 months in this strategic review? Are you already now beginning with a legal separation of these and operational separation of this business, or is it merely a desktop exercise that you're commencing now?

It's merely a desktop exercise. So we will not proceed with any of those separation actions until we have come to a conclusion. So it's doing the assessment as well as planning for what that assessment could turn into. So yes, desktop exercise, but it carries some complexity and it's multiple scenarios, and as I said we will proceed as quickly as we can.

Thank you.

Thanks. Yeah, I just want to follow up on one of the questions about synergies. Is there any risk of dis-synergies when it comes to procurement? And how important is the tissue business in your negotiations with suppliers for things like pulp? And would you then expect to pay higher prices for some of those key inputs for the rest of the business if tissue was no longer part of your business?

I would say that is also part of the assessments in the strategic review. However, also without a consumer tissue business, we will have a big scale when it comes to procurement.

Great. No question from our online audience. Any more questions here? No, I think that's all. Then I hand over to you. Back to you.

Yes. Thank you. Then we move on. And as I don't know if you said that Sandra, but of course today during the R&D lab visit and going to the plants and also here today presenting, you will meet many of our highly talented and experienced and highly engaged employees that we have across Essity. And when we come to work every day we do that with a clear purpose and that is to create value. And we do that when it comes to creating value for the consumers and customers that we serve. In fact every day there are more than 1 billion people across 150 countries that use our products and rely on our brands. And when we talk about creating value, we want to make sure to create value for those customers and consumers that we serve, both the ones that rely on us today as well as the ones that we will capture for tomorrow. And by that we will create shareholder value. And we have strong financial fundamentals and a solid financial foundation in order to create shareholder value. Our earnings per share in 2025 was 18.37 SEK, and that is 50% up versus 2021. We again raised our dividends by 6% to 8.75 SEK per share, fully in line with our policy to provide long-term stable and rising dividends. And then we also have launched yet another share buyback program. When it comes to total shareholder return, as you can see on this graph, we are outperforming our peer group. So that says something about our performance in the industry. That said, we have higher ambitions than what we have delivered in the past years. And in order to enhance shareholder value, we intend to sharpen our performance and strengthen our performance and accelerate profitable growth. And we are very well positioned to do exactly that.

We are very well positioned to do exactly that. I wanted to say because here in our portfolio we have the Tena brand, the world leading and recognized expert in incontinence care brand. It offers high quality reliable solutions for all different types of needs across all sales channels. We also have Tork in our portfolio. Another multi-billion dollar brand that also has been able to transform what was once a tissue business to become a holistic system solution business, professional hygiene business. And it's well placed to continue to shape the future. We have Tempo in our portfolio. Tempo that for many is synonymous with hankies. So we hear people say could you please give me a tempo when they mean could you please give me a hanky. The same goes for Leukoplast, another strong brand in our portfolio which many people use generically for medical adhesive tape. So this Leukoplast brand is well recognized for superior fixation properties, good staying power connected with skin integrity. Then we have Saba and Nosortas in our portfolio, winning brands in feminine care in Latin America that are gaining shares every year on already very strong positions. And we have many other global, local, and regional brands that have very strong positions. And this branded portfolio stands for 80% of our business. And we have a number one position in 60% of our market and category combinations in the branded business. And if you include also our second positions, it's as high as 90%. So again, strong positions, leading brands, that makes us well positioned to capture market growth and the markets we're in are growing. We have a market growth exposure of some two to three percent.

I have to click harder. We have a market growth exposure of two to three percent. And that is driven by and supported by very strong global mega trends. The global population is aging as we all know and we see an increased prevalence for chronic conditions. This is increasing demand and driving demand in many of our categories. Worthwhile mentioning is that not all demographic trends are playing to our favor. We have in baby care a declining market since birth rates continue to fall. But you have to remember baby business is roughly 5% of our sales. Incontinence care is roughly 20% of our sales. So it's four times as big. That makes us perfectly placed to really capitalize on the demographic developments. Also what we see is an increased awareness and importance of hygiene driven by the spreading of infectious diseases and also by the increased awareness about the connection between hygiene and health. On top of that, consumers place more and more emphasis on their personal well-being and we see also rising living standards in emerging markets that is driving growth in these markets. So there are certainly a lot of market growth opportunities to capture for us with our brands and positionings. And over the past years we have actively reshaped and managed our portfolio in order to be as aligned as possible with these growth opportunities that we have in the market. So today personal care, health and medical, and professional hygiene and especially the fastest growing segments in these businesses stand for a bigger share of our portfolio, and that of course makes us very well placed to continue to drive profitable growth and accelerate profitable growth.

It makes us well positioned to deliver on our financial targets that I think you all recognize. We aim to grow above 3% organically at a profit margin of 15%. We also have a very strong foundation in place in order to deliver on these ambitions. For one thing we have a very competitive and strong assortment and you will see that later today in the break when you go through our exhibitions. We measure how big a share of our products that is the first choice by consumers and customers. We refer to that as superiority. Super important in order to drive market share growth and pricing power. And as you can see behind me here, it's at a high level and it continues to increase. And that is the result of impactful innovations that we have brought to the market year after year. Every year we bring new products to the market. Could be anything from game-changing concepts to small but meaningful upgrades. All of them contributing to sustained value creation.

And I wanted to take the opportunity now just to share two examples from 2025. One is about raising the bar and one is about adapting to the current market environment. If we take raising the bar first, we launched smart protect on our feminine pads in Latin America in the year. This technology is a new absorption core technology that makes sure that you can capture the liquid that heavy and very rapid flows very quickly. Of course, it makes the consumer feel more confident in their everyday life. It also allows us to move consumers from thicker pads to thinner pads which is good for the consumer's discretion but also for our profitability because normally we have higher profitability on these products. So this is really raising the bar with a new technology. The other example, Cushell simply soft that you see to the right here is a new toilet paper that we launched to adapt to the current market situation. We all know that in 2025 consumers were more hesitant or holding on to their wallets a bit more than they normally do. And then we adjusted our innovation priorities to make sure that we have as competitive assortment as possible across all the different pricing tiers. This is one result of that where we offer the Cushell softness at an everyday price. So addressing the increasing pricing sensitivity among consumers yet not compromising on the brand's quality promise. So two examples from 2025 and we will keep the innovations coming. The ones at the back there who are working with this, we will keep the innovations coming. Because one of the very important key foundations that we have in place that gives us a good platform is our robust innovation engine.

We have a good combination of strong in-house capabilities with also strong external collaborations and partnerships. We have globally organized our R&D so it's scaled to build really deep expertise at the same time. We operate R&D centers across different parts of the world so that we can capture the different consumer insights that are local and also be as quickly as possible to react to specific market needs. A very good combination. What you all know because we have talked about that so many times is that we base our innovations on consumer, customer, and shopper insights. And it's when those insights really are married to or meet a new technology advancement that's when the magic happens. And we have certainly a very good productivity and outcome from our innovation engine. 50% of the sales we have is generated from products that have been put on the market or upgraded within the last 3 years. Many of them are unique and we want to keep it that way. So that's why we have over a thousand patent families covering our portfolio. And then I think the fact that they are margin accretive speaks for itself. That tells us that it's clear evidence that they bring real value to customers and consumers. So you will have the chance to go to the R&D labs later today and then you will get a glimpse of this innovation work that we have. What you will also see then is how we use digital tools and also AI in our product development in order to cut the timing of development, the lead time, as well as costs.

But of course, with that said, leveraging digital solutions and AI is not something that we only do in R&D. It applies across the value chain. Supply chain, of course an obvious area for AI and digitalization. Some examples: transport, demand and supply planning. We base that on AI algorithms. And where we apply intelligent process control, we can reduce our waste by up to 20%. And for those of you who were here one and a half years ago, many I recognize, I think you have a good understanding of the level of digitalization that we have in our supply chain. But we have examples from other parts of the organization as well. If you look at marketing for example, we use AI in claims development. And that is actually improving the productivity of that process by 75%. And then alongside with using digitalization and AI to become more efficient internally, our digital agenda is a lot about winning with customers and consumers. So we are continuously expanding our online presence. In 2025 we increased e-commerce by 13%. And later today you will hear Pablo talk about our Tork omni-channel customer experience platform. Something that is highly appreciated by our Tork customers. What is also very appreciated by our customers is our progress on sustainability.

We are committed to our science-based targets and we are well on our way to deliver on the 35% reduction of CO2 emissions by 2030. The question is how do we get there? What is making us progress? Well, one thing is back to innovation actually because we make sure that the vast majority of our innovations have a positive impact on sustainability. Then furthermore we are working very systematically and structurally to improve our resource efficiency in different energy efficiency programs and materials saving programs and so on. And a good example is actually what you see on this picture. So a teaser for those of you who will go to Lila later today. This tissue production facility I would say is a flagship site for sustainable tissue production. It's the first ever large tissue mill that is operating without any fossil CO2 emissions using biogas and renewable energy. It is also very much in the front line when it comes to circularity. High share of recycled fibers, high share of post-consumer recycled plastics in the packaging. So for those of you that are going there, enjoy. We have some internal people here today and I hope you agree with me that one of the areas that actually influences the engagement in our organization is that we are progressing on sustainability. It's important for people also internally. And we have a very high engagement in our organization. In fact, if you look at employee satisfaction, it's four percentage points above benchmark. And this ability to attract, develop, and retain key talents and keep them highly engaged is really a critical success factor for us. So with this I hope at least that I have given you a good perspective of our strong foundation, our strong platform, our strong offers, our strong innovation capabilities, the way we progress on digitalization, that we are leading in sustainability, and also the fact that we have highly engaged employees. And that is a very strong foundation and something to build on. But in order to accelerate our growth pace, in order to move faster towards our financial targets and to enhance value creation, we also need to change. And we started that change journey with the initiatives that I talked about initially. So we are doing the SG&A cost-saving program in order to free up resources to be able to invest in growth. We have completed the M&A in North America that I talked about and we are now operating in a reshaped organization. And now we will leverage that new organization in order to drive performance. So what you will see today is that we will have clear financial goals per business area. And you will see that there are targeted initiatives and plans in order to reach those goals. Also with the new setup and aligned incentives, we really make sure to drive accountability and delivery. So very important improvements for us and steps to take on our change journey. But we have more to do. And in order to unlock our full potential, I will drive actions in four different areas. One is to continue to lower our cost base. So to keep us competitive and also to really free up resources so that we can invest in growth, we need to reduce our cost base further. So alongside with the SG&A program that we are running, we will also focus on reducing production costs. And Fredrik will come back and give you more details on the opportunities that we see in this area. Then innovation, we will intensify innovation where it matters the most. So I talked about our very robust innovation engine and that it has a high productivity, and that is true. Then of course we want to accelerate market share growth even further. And to do that we need to get even more output of our robust innovation engine by really prioritizing the highest impact innovations.

And now with having innovation integrated into the business units, we will have a better way to be precise in our prioritization. So to really intensify innovation where it matters the most. Then invest to grow. I've talked about our superior offers. I've talked about our strong brands and leading positions. We have something fantastic to invest behind. So we have all the reasons to invest more in order to grow more. To do that though, we will need the savings that I was talking about because this is not about compromising on margin. It's about freeing up resources that we can reinvest in growth. And when we do that, we will make sure to prioritize the areas where we have the highest return on investment. And finally, accelerate the portfolio shift. I talked about that we have a more attractive portfolio today than we had some years ago. But we have more work to do. So we will focus even more on the areas, the categories, and segments where we have the highest profitability and the highest potential for profitable growth. And we will do that both in our organic agenda as well as in our inorganic growth. And that brings me to the M&A strategy where this is very well reflected because the categories that we will focus on when it comes to M&A priorities are the same as you have heard before. It is feminine care, incontinence products expanding also to continent care, wound care, and strategic products and segments in professional hygiene. When it comes to geographies, North America remains a key priority as do also emerging markets and geographic white spaces. And first and foremost, we see M&A as a vehicle to expand presence and to build scale, but we also use it to acquire know-how, to acquire new innovations which complement our in-house innovation, and to gain access to new channels.

So with this I hope that you have a better perspective on how we will now use and leverage the strong platform that we have and what we will do differently and better in order to move us from the 1% growth roughly that we are at today towards our target of above 3% organic growth. Then now when we move into the business unit presentations, you will get a better view of where that growth will come from. You will see that our core business still offers plenty of growth opportunities. So growing the core remains our biggest or largest growth pillar. On top of that, we will expand for more, and you will see in the business area presentations that we have clear priorities for where we want to expand. And of course we will continue to explore what was once explorations like our digital solutions in Tork for example is now a key part of our core business. As we grow we will improve or strengthen our profit margins through operating leverage. We will also by growing the fastest in the highest margin segments improve profit margin through mix, and in parallel with that continue to drive savings and efficiency and capture efficiency gains to structurally improve our margins. And I think with that, it's time to look at how all of this comes alive in our different business areas: personal care, health and medical, consumer tissue, and professional hygiene.

Yes, thank you. Thank you for outlining how we will accelerate our progress and how we will strengthen our value creation in the future. You have the opportunity to interact with later on today. So take that. Now we will turn to the business areas to understand their key initiatives and priorities to accelerate the progress that was talked about. We will start with health and medical and I'm pleased to introduce to you Anand Shandarana, President Health and Medical. Anand joined Essity in 2020. He has more than 20 years of experience from medtech and he stepped into his role as president health and medical in September last year. Welcome Anand and health and medical.

Thank you. Good morning everyone. It's my privilege and my pleasure to talk with you this morning about health and medical. And Sandra, you made me sound very old with giving my experience away. I'm the newbie when it comes to the presidents for health and medical. And as I said to you, I would like to tell you a little bit more about this beautiful business area and all the prospects we have ahead. It's a core and resilient part of Essity, health and medical, and it operates in non-cyclical reimbursement-backed categories. So demand is durable and it's unrelenting. I'll talk to you about that in a minute. It's a value creating portfolio today and we're stepping up the pace to focus our investments in areas where returns and profits and growth are higher over the coming years. So over the next 15 minutes, I'm going to explain to you who we serve, where we play, why we win. I'll try to convince you of that, and then I'll also talk about the key levers that we're prioritizing to increase value creation over time. So as I said before, health and medical is serving high frequency, high cost conditions that are undermanaged today. So demand is structurally strong and our solutions sit in care routines and care pathways. They're deeply integrated. What that means is that our solutions and our business is sticky. Our ambition is to be the undisputed leader in preventing and managing the conditions we serve. Namely that's incontinence care, wound care, compression therapy, and orthopedics. In 2025, we delivered through a lot of hard work amidst headwinds 27.5 billion kroner in net sales, an 18% margin. The sales are split as you see on the screen. So 58% the lion share comes from incontinence care products, and that is our cash and stability engine. Wound care represented 21% of sales and that is our mix-driven margin expansion engine. You'll learn more about that in a little while. Compression represents 10% of sales and is what I would term a value unlock. We're going to shift focus from one segment of compression over the coming years to another segment where returns are higher. And orthopedics represents 11% of sales and that's our disciplined value extraction cash generation engine. You see the growth of 1% shown on the screen. That's what we delivered in 2025. And that takes some doing, but that's not something we're satisfied with. And I'll share with you in a moment what our ambitions and expectations are going forward. The potential is substantial. Our addressable market is somewhere north of 17 billion euros and that's growing between 3 and 4% depending on the subcategory. We lead de facto in incontinence healthcare and in compression therapy. In wound care, as you see, we're a challenger globally with a strong position in Europe. In orthopedics, probably what matters to you is that we're number one where we choose to play and where we choose to focus, which is fracture management and physiotherapy. A little bit about the categories and their characteristics. All categories as Ora already mentioned benefit from tailwinds, specifically aging demographics and unfortunately the increasing prevalence of chronic conditions. So as I said before, demand is durable but also unrelenting. From a business perspective, that enables us to have stable earnings across cycles. Our solutions are well integrated, deeply integrated through a lot of hard work and through a lot of trust earned with our customers in care delivery models. So that leads to high switching costs and so we have good positions that we can build upon.

Now when looking forward, you know this already, healthcare systems around the world are under pressure, their budgets are under pressure, and in the short term and in the long term they're asked to do more with less. So what we do here and now is we try to counter price pressure, which is the manifestation of this pressure applied to health systems. We try to counter that by selling the value and ensuring focus is on total cost of care where we can actually show superiority. In the medium term, the growing pressure on healthcare systems actually creates care gaps, and we at Essity choose to see those care gaps as unmet customer needs. And if you can meet those needs with innovation and evidence that proves you can improve outcomes with lower cost, we believe there are rewards to be earned. Winning at scale in these health and medical categories also requires upfront investment, serious upfront investment. That's in things like specialized sales forces, clinical evidence, market access infrastructure, compliant manufacturing. These are advantages that compound over time for us. So we believe this is a positive situation for an incumbent of the size and scale of Essity. Now I said I'll explain to you who we serve, and these are our four key stakeholders. We'd like to group them in this way: we serve and delight simultaneously in order to achieve success and earn the rewards we do. On the left hand side you see healthcare systems and providers. That can be insurance providers, hospitals, care homes, nursing homes. What they care about is overall outcomes, patient outcomes, and total cost of care. That's what we serve them with. The next segment is caregivers broadly speaking: healthcare professionals, clinicians, physicians, nurses, but increasingly family caregivers. For them, what matters is that we provide intuitive, dependable solutions that flow and sit perfectly within their workflows. That's really important to them and that's what we do. The third segment is patients and consumers. This could be any one of us or our families. What matters to us and to them is that solutions are easy to access where they want to buy, easy to use, and that they do what they say on the tin. They do what they're supposed to do to improve well-being. The last stakeholder group is trade and channel partners: pharmacists, medical distributors, etc. What's important to them is that we help them convert demand efficiently and effectively through the right commercial models and the right service and supply. Now, I can tell you all about how well we serve these customers simultaneously, but I thought it would be good for you to hear from some of our customers themselves. So let's see what they say.

The team approached me and said that they had a wound dressing that would reduce surgical site infections after cesarean and also save us money. And to be honest, I was hugely skeptical. But I am pleased to say that the analysis did demonstrate a significant reduction in surgical site infections up to 38%, reduced the number of women being readmitted into hospitals and reduced antibiotic usage by 30%. And we were able to save nearly £240,000 in one year alone.

I knew that we needed because I had inspected a home that had your program and it was for the first time I was very excited about continence care.

our proposition. We have uh couple of years ago already launched coreless products and they are performing extremely well with high consumer loyalty in bathroom tissue and meanwhile we have launched the first household to also with a coreless proposition and it's in the market. We have launched a couple of new paper packaging also addressing new consumer needs switching from plastic packaging into paper packaging and of course we have on the moist we have a new varieties addressing changes on the consumer landscape. So high focus on our premium segment and of course also on the growth in the segment. But equally important is and was mentioned this in the example of simply soft um on the Cushell proposition. Equally important is that we have increased our exposure to the value tier because for us it's much better to keep a consumer on the brand than to gain it back from a competitor or from a private label. This is an example just to show you an example. We have said that we are stepping up in A&P investment and partly of course we will use the savings we coming for our costsaving program to invest more in A&P in consumer tissue branded business. This is an example from the UK. It's an uh 360 activation of our kitchen towel household to brand plenty and uh we have been doing this you can see this here with Facebook with Tik Tok with Instagram etc. So very very very digital plays a more and more important role for us. But we have also used retail media activation with te the Tesco customer and it pays back. We have a 18% market share in plenty reached with this activity. It's the highest market share which we have more than two years and when you look at Tesco where we have done additional customized activation in store we have even reached a 25% market share. So we see that these additional investments in A&P in media and others are paying back with profitable growth expanding with uh with the um with winning retailer brands. As I said this is a business as a long-term orientation. This is very relationship based what we are doing here. We're working with joint business plans. We are very often the sole supplier to a category. This is also why service levels play an important role. If we do not deliver, they don't have products in the store. It's very quality focused, higher quality aspiration than maybe in some other parts of the segment. And uh also we are leveraging the the sustainability credibilities which SAD of course of course has. So this is a very very nice business and developing very nicely. The third aspect which will drive growth is supply chain efficiency. And I got a lot of questions. So how many sites do we now have in the new organization in the end to end organization? And I think I got also in the break a lot of questions what I think about end to end organization for consumer tissue. For consumer tissue this is a huge business enabler because the nature of our business is a little bit different than the ones which we have with uh with global brands etc. We have more local brands. We have a higher share of retail brand business and personal care. So the closer you are to a customer the more more agility and the more more speed you have and this is why I strongly believe that in your organization having end to end I mean you could say everybody is in the room when you take holistic decisions will be a big performance enabler for the consumer tissue part. So we have 22 um organiz 22 sites supplying consumer tissue products in the integrated supply chain and we have the since 2022 seven sites in the carved out uh consumer tissue private label division. So overall 29 sites the first bullet point here safety first is nothing else than a reconfirmation of a commitment. Whatever we do, the most important thing is safety in our factories. Not only in the factories, but of course working in a in a supply chain be a higher risk. So on this is definitely important. But then as I said earlier, we see the new organization really as an enabler to increase supply chain efficiency because now we are moving from functional mastery in true end to end. And I said to some of you in the break is when I have now my new management team together, I have the category there. I have always the voice of the consumer there. I have the commercials there. I have always the voice of the customer there. But I have also the supply chain there. And this gives us a lot of speed and agility. Operational excellence. So if endtoend organization is the enabler, operation excellence will be the result. And we are focusing on reduction of product cost fix. We know we have improvement potentials when it comes to machine efficiency and especially asset utilization. We also believe that we have further possibilities to improve the manufacturing footprint both in Europe and in Latin America. And last but not least, pulp mix. You know that we are working a lot with pulp mix and pulp prices are raising. So optimizing the pulp mix per contract is also huge value creation. A lot of discussions were also about volatility and uh I was listening carefully to the last uh quarter one report and uh Freddy were presenting and one of you said uh we are noticing a reduced volatility of the consumer tissue margins. Yes. And we did a lot about that. We had a discussion about this as well and we did a lot about that. So what did we do? Number one is we have shorter contract length that gives us faster possibilities to adjust pricing with customers, more open contracts. We have more index contracts. What is an index contracts? Basically, you have um a review of the cost driver clauses every 3 months and you adjust accordingly. Can be good, can be built, so can go up, can go down, but basically you are much more agile with pricing in both directions. And last but not least, we have also made some significant changes in our portfolio, especially in the private label division, which is the most volatile when it comes to to to margin. Um, we have made some mixes. So, we have discontinued some very volatile contracts in order also to smoothen the margins here. So the corridors of uh volatility yes it's still a volatile business but I mean they are much smaller than in the past since 1st of January we have also the virgin fiber purchasing so the pulp buying in the responsibility of the business unit and that gives us also a different possibility because we can better synchronize how we are purchasing fiber and how we are pricing in the marketplace. So the expectation is also here that we come to a further reduction of volatility of the consumer tissue margins. Let me close with this slide. Why not only Anand and Thomas have very interesting businesses. Um I think you see a PU president here with a lot of confidence. I think we have a a business with a lot of strengths. It's a global business. We have the scale. You have seen our market shares. We have a very broad portfolio which also makes you more resilient when the consumer is downtrading or some trends are happening with our size. We have the negoti negotiation power in the procurement side but especially also towards our customers. Our customers are also consolidating and we are doing much more business with trade alliances for example than in the past. You have seen that we have the leading brands. I think we are outperforming definitely our shares in the branded segment are significantly higher than in the other areas. We are leveraging what we call the triple track model having brand retail brand and private label. That means we are one of the really few ones in consumer tissue who can manage an entire category for a retailer. We have the strong relationships. No, we did not pay the the customers. Uh you you heard in the video they're really convinced that the relationship a partnership with SAT is uh is developing a lot of value. And last but not least and convince yourself also when you look at the R&D labs we have the innovation and we have a very very strong sustainability offer which is in a disposable category like consumer tissue very very important. So a lot of confidence for the future a lot of work ahead of us. Thank you.

Thank you, Fu. Clear overview of your global consumer tissue business and the initiatives you're taking for further profitable growth and more stable returns and reducing volatility. All clear. Yes. And very great to hear about the consumers that the customers really appreciate our products and our services.

Yeah, they do. I think we have a when you look at some segments I mean was mentioning the tempo brand as one example there's an extremely high shopper loyalty and we have others where we have the superiority with our T8 and kitchen towel with the highest absorbency and we have shoppers they would never take any other product than uh than the Nessie product so superiority is driving of course shop consumer loyalty

and you also explained to us the advantages with the end-to-end organization that was clear you continue to leverage that.

Yeah, I think I hope it it was very clear. Of course, we are coming from as I said functional mastery. You know, we were optimizing very much our silos. Now we have an end-to-end organization where my management team has also now for example the innovation part and the supply chain part and a lot of commercial decisions which we are taking have an very strong impact on the supply chain and you know when you are further away in your functional silos then you hear very late what has been happening there and now we are in one room and you can literally say in one room and you have a much more holistic and a much faster um decision making and agility and speed in consumer tissue is crucial to succeed. It's absolutely crucial. So I feel extremely comfortable with the new organization with the new end-to-end organization having really supply chain innovation and a commercial in one room and uh taking decisions together.

Good to hear. I have a more short-term question that I know is a question from many. If we now look at the current cost environment, how are you managing this?

What a surprise. I got this in older breaks. I said, 'No, we talk about the coming years, we talk about the future. You want to talk about the next quarter? Yes. Now I mean obviously you you can see you can see what is happening in the marketplace. Prices are increasing since October last year. Um now of course with the situation macropolitical situation energy prices are raising as well. We have offset a lot with costsaving activities. Uh but we have reached of course a level where price increases are not avoidable and we are in the middle of implementing price increases to mitigate that. So this is where we are right now. So a lot of activity those our customers the understanding of the customers is is pretty big because everybody sees what's ongoing in the world. So this is of course now short-term our task to implement the necessary price increases to recover the margins and

you see me with confidence.

Yes. We always compensate input cost increases with price increases on our products. Yes. Yeah.

Thank you very much Faulker. You have the chance to ask Ful more questions during the Q&A. Thank you for now. Thank you.

Great.

Next on the agenda is professional hygiene. I am pleased to introduce to you Pablo Fuentes, president professional hygiene. Pablo will take us through his business and how he's driving volume growth with his leading torque brand. Welcome F Pablo and professional hygiene.

Hi, good afternoon. Happy to be here with all of you and we are going to talk about our beautiful professional hygien business as well. Uh I think this picture that you see here is represents our business in a in a really good way. This is our Pixerf dispenser that we launched a few years back. It's highly innovative, highly differentiated, protected by many patents and it's been very successful in in hightra areas. It delivers high load continuous delivery of product and it makes a big difference for for our customers. And the great thing about this dispenser is that it only works with Torque products. It's a it's a system. So we sell dispenser and refill. It's a system cell. So if you think about it, it's like Gillette with a razor refills or an espresso with a coffee capsule coffee machine. It's a system selling that of course adds value to our customer, but it's also profitable for us. So in our business we like to say that these are cash generation machines and we have 30 million dispensers around the world that we're constantly refilling with torque products right so we have 30 million cash generation machines around the world so this is a I think great business model for us and um a year and a half ago in Barcelona in the last capital market day you may remember that we talked about tissue refills being our core and then we had these adjacencies soap sanitizer wiping and cleaning. Now we are shifting our strategy and we are focusing on the full portfolio as our core. Of course, we shift this because we're aiming for higher growth all across. And as we shift our strategy, we shift also our innovation approach to the whole portfolio and our go-to market approach towards the whole portfolio so that we grow all across in a good way. 84% of our business is is tissue, but we have this fast growing wiping and cleaning and soap sanitizer. And again we focus now on the full portfolio. It's a full solution selling. Um Europe and North America is still an important part of our business but we have a fast growing and profitable emerging market base in Latam, Middle East, India and Africa. That is also very important for us. We are the number one global professional hygiene company and the number one brand globally in professional hygiene. And of course this gives us tremendous scale benefits. If you think about R&D, innovation, go to market, access to global customers. We get really good benefits of our global scale. We also focus on one brand and we invest to create brand equity, brand power that truly translates into purchase intent in the B2B world with the number one global brand in professional hygiene. In terms of some of the dynamics in the category, this is a stable non-discretionary category. It has these recurring dynamics that I was explaining with the cash generation machines, right? And you have a system and you're recurrenly selling refills. It's a stable category, but with the rising hygiene standards that was talking about, our differentiated systems actually make a difference. It actually addresses some of the rising hygiene standards. Emerging markets is still a low penetration in terms of these professional hygiene systems and we see high growth through penetration and of course innovation as you hopefully saw understand and you will see later on in the lab h makes a difference. It actually makes a difference to our customers and the performance in their businesses. We really are everywhere. We are focused on adding value to our end customers. We get relationship insights on our end customers and we are quite visible of course very cool our recent acquisition of the camp new which is as as you know where the Barcelona football team plays. So if you ever go there you will see torque. But more importantly I hope when you flew in to Gothberg or when you fly out today you will see our beautiful torque dispensers in the airport. they are there supporting the performance of the airport and they are connected with our torque vision cleaning uh to create a cleaning routines uh for facility management. So hopefully you will all see that in the airport now it's not moving. There we are. We have a strong hold in the washroom. We have a strong washroom portfolio of products and this allows us to be present across the different segments in the B2B environment. While we leverage our strong washroom expertise, we also aim to grow outside of the washroom. For example, in the food service area, we are very strong with those dispensers that you have in your tables. It's a express nap, which is the world's number one napkin dispenser. the world's number one and it's a very important in the food service area and we're also strong in wiping and cleaning in for example kitchens in the restaurant and in industrial and in commercial applications. So we have a really broad presence across the segments and a really deep understanding of the dynamics and the needs of these different segments in the B2B world. In terms of our go-to market, we of course are very focused on adding value to our end customer to the airports, to the stadiums, to the offices, to the industries. And then with our salesforce, we work with distribution partners with other stakeholders like facility management because they help us amplify our business, our presence, our selling approach to grow more. Then of course we have a a strong salesforce that we are constantly challenged to be more agile, more flexible because we also have a channel shift from offline to online and we really need to be as Urika was explaining omni channel. We need to be present across all the channels to really capture growth and our salesforce needs to have this flexibility, the agility, the capabilities, the training. So we're constantly challenged and developing our sales force to create growth opportunities for us. We are well positioned to deliver on our targets. We aim to grow two to 3% and then of course do this while we have more than 18% EBIT margin and we will achieve these targets with a very clear growth model. 60% of our business is this uh fantastic strategic products that you saw on the stand. These are highly differentiated. We have been growing twice the market and we will accelerate and continue growing twice the market with our strategic segments and where we are shifting our strategy in the four 40% base assortment. You may remember in the past we focus on improving profitability. We even did some uh restructuring of the the business. But now we have a profitable base assortment. It's good products supported by our toque brand and the focus is to grow in line with the market. So with this growth model, it's how we will continue developing the business. Now how are we going to grow or continue growing and accelerating twice the market in strategic products through innovation and R&D investment? We we have this approach of global platforms, global product platform, global technology platform. So one platform for example could be Psurf. If you pick one Pixer you will see everywhere around the world emerging mature markets and of course we leverage R&D technology in this platform and then we can also manufacture and roll out in a seamless way globally by keeping few global platforms. So Perf is one platform. um Expressa that you have on your tables is a global platform. We have soap sanitizer platform. We have this smart one which is a fantastic toilet paper system that reduces 40% usage. That's another global platform. both mature and emerging markets. In terms of the base portfolio, as I mentioned, is now profitable and the the focus we're having in terms of our go-to market is to expand our customer base to those customers that fit well with this base assortment. Of course, this is a competitive marketplace, so we need to be super good in productivity in our value chain. So we are highly focused and now with a new end-to-end model we have in the company it allows us to seamlessly work on reinvesting what we do in productivity to stay competitive commercially pricing promotion wise with this portfolio and then we also launched some volume fighters to drive growth and we want to grow in line with the market of course watching out profitability as well in this 40% of our business washroom as I mentioned before is our stronghold and the the shift in our strategy that we are doing now in in our goto market with our salesforce with our distribution partners is that the best for our end customers is to have a full bundle solution with one brand one product integrated in the washroom. So in this picture just to take as an example this could be one washroom where you see pix surf hight traffic very differentiated dispenser. You will see a toilet paper coreless differentiated uh dispenser soap sanitizer air. You will see our period care dispenser where we synergize with Thomas's personal care fare business. And all of these h we have by the way as well. H and all of this is connected with our torque vision cleaning. When we connect the dispensers, we have these apps and algorithms to optimize cleaning routines for facility management companies. This can save up to 20% labor cost for facility management companies and eliminate runouts. Runouts is a big issue in an airport or in a restaurant if there's no paper in the dispenser. So through data through insights through traffic patterns we actually optimize cleaning routines. We al also have torque paper circle where we re recycle back to the factories actually in Leela that you will see that later today we recycle back to the factory our products because most of our products are made of recycled fiber. So this is actually good for us and good from a sustainability perspective for our customers. Outside of the washroom, we also think about food service as a bundle as well. Imagine if you go to a restaurant, then you see the full bundle of uh torque products in the washroom. You see our express nap dispenser in the tabletop. And if you go to the kitchen, you will see our wipers which are purposely made for cleaning kitchen, for cleaning the tabletop. You saw some of those products, I hope, in the stands. So we sell a full bundle of products to food service and we have an expertise in food service. We are also aiming to grow faster in industrial applications and it's the same through the washroom stronghold. We sell outside of the washroom wiping and cleaning that is purposely made for industrial cleaning and we also have even now some soaps purposely made for cleaning in wash stations in the machines for example. And you we have some products that also on the stands. So we go outside of the washroom towards these applications to continue driving growth. We also see e-commerce as a an important growth opportunity for us. What we have learned that what we have found with e-commerce is that we attract a new customer pool. That was a wide space for us. And this is a small medium businesses that actually access the category, learn about the category and buy the category online. And now we have created a purpose-made portfolio of products for e-commerce. We have a dedicated salesforce and for example with Amazon which is an important partner with us. We have grown actually very successful in both North America and Europe. And we have a global partnership with them to develop B2B with Amazon among other e e-commerce customers that we have. Emerging markets is another important building block for us. We are we have a strong presence in Latin America. We are building a presence in Middle East, India and Africa. We use our strategic forfolio again with these global platforms that we roll out to these markets and you will see us in many places. We were just in the break talking about the Dubai airport among many other places of course where you will see our fantastic torque business in emerging markets and we want to double the size or double the sales in the next five years in emerging markets. So now I will show you a quick video. It's a Lureco an important customer for us in Europe and how we drive with them omni channel and sustainability. So, let's see the video. Nope.

Talk with a strong omni channel approach has been a valued VL partner of Liico since 2021, making SAT one of our top five partners across a total supplier base of over 3,000. Ultimately, Lero and SAT, we share similar values with a massive mutual focus on sustainability as a key enabler. 98% of our sales now come from sustainable products, which is one of the highest of any partner and something we should all be really, really proud of. Since 2018, by working together, we've grown our mutual business from 25 million to 57.5 million euro through a strong collaboration, but ultimately a marketleading joint business plan built on trust. Lifting and shifting our collaboration will be the way that we get to 100 million, if not higher, by the end of 2026 and 2027. Let's lead forward together. A great working day delivered for everybody and everybody. Have a great forum and thanks for the opportunity.

Thank you. I hope uh this shows some of what I was talking about in terms of the omni channel approach in the market. And in terms of our M&A priorities, we see four different opportunities. One opportunity is how do we strengthen our washroom bundle that I was talking about. The other opportunity is how do we strengthen surface cleaning as we go outside of the washroom into surface cleaning in the different areas that I was explaining. Another opportunity that we see is we have a very strong go-to market in B2B. How can we add some categories perhaps first as adjacencies to synergize with our strong goto market and then of course geographical expansion in line with our growth aspiration. So I hope you with this uh short presentation you get a good sense that we are really gearing up for volume growth and that we have a great uh solid business going forward. Thank you.

Thank you Pablo. So impressive to see the global reach of Torque and thank you for sharing all your growth initiatives. Initiatives that actually paid off already in Q1, right? Yes. Keep on going.

Thank you.

As you focus on volume growth, how do you then manage volume versus margins going forward?

Yeah, I think we are well positioned today of course with the 60% that is the strategic to grow continue growing and accelerating at least twice the market. It's it's a profitable proposition. is differentiated and then the base assortment we have worked really hard and now we are in a good position of profitability to drive also growth in line with the market. So it's profitable growth.

Thank you so much.

Thank you.

Thank you.

Now we move into the final session before our Q&A starts. But before that let us show you how SD shapes the future of hygiene and health.

The world is changing fast. Populations are aging. Cities are growing denser. Expectations for comfort, care, and contribution continue to rise. Hygiene and health now shape everyday life and collective progress. At SC, we reach over a billion people every day, understanding needs before they scale. From early signals and emerging behaviors to the pressures shaping tomorrow's standards, we transform insight into sustainable alternatives, clinical knowledge into more effective care, and hygiene solutions into stronger business outcomes. As operations become faster and more adaptive, we shape what's next. A resilient, efficient, human- centered future, creating impact by turning essentials into confidence. Innovating for the future by turning trends into real solutions. Leading sustainably by turning smart design into progress. So people thrive, businesses accelerate, and society keeps moving. essity for everybody and everybody.

So now is when we bring it all together. I'm pleased to introduce our CFO Frederick Christet who will take us through how our progress actually shows in financial terms and how we are moving towards our targets. Frederick, great to have you here. Please go ahead.

Thank you, Frederick. Thank you for a good walkthrough of how our progress actually looks in financial terms and also what it takes. Fantastic businesses in national terms. Yeah. Yes. And also what it takes going forward. Yes. I'm sure there are many questions for you, but we will address those in a short while. So thanks for now.

Perfect. That actually ends today's presentations. I hope that you found the presentations and the day valuable and interesting, and that you have a clear view now of how Essity is moving faster towards its target. I will now invite the presenters to join me here on stage for a Q&A. No. Okay. I can't do that. I can't count. Perfect. All set. Yes. Well done to carry the chairs. I mean, okay. So, we will take questions now from the room, but also those of you joining online, please submit your questions through the platform. We will address as many questions as possible, of course.

Yes, we have a first question from Nicholas.

Yes, Nicholas Yakman from DMB Carnegie. Uh, can I start on the topic of input costs? Uh, if you can just elaborate a little bit on what kind of magnitude you're seeing, just to put this in perspective. We can obviously see what's happening with pulp, we can see what's happening with oil, natural gas, but it's still maybe a little bit challenging to see from the outside exactly how the mix of this impacts. How would you put this in context to say the cost increases you saw maybe two years ago compared to what you saw the massive increases you saw four years ago, and also how you are how much better prepared you think you are today? You elaborated a bit on this in the presentation here before, but yeah, that's my first question.

Would you like to add something?

No, I can start. I think you cannot compare this to 2022. You know, 2022 it came as a shock overnight. The magnitude of change was much, much, much bigger, and we had also applied different models. I think we believe it's more a sustainable cost change at the moment. This is why you have to also apply different ways of increasing prices. For example, we worked very much in 2022 with surcharges. This is most probably not an appropriate tool right now. But you cannot compare it with 2022. And now of course pulp and energy for consumer tissue comes together, which makes the need for price increases quite obvious. But I think with all the educational stuff we did with our retail customers in 2022, there's a much better understanding. You know, they are really taught on pulp price impact and on pricing. Energy was something very new because it didn't play, I mean we didn't have this volatility in the past. So I think with all the things which we discussed with our retail customers, the understanding they have today about energy prices and the market, I think there was a much bigger, better starting point to implement prices now.

Can I, is it okay if I follow up?

Okay. Yes.

And just a quick follow-up. Are you seeing in terms of price increases, are you seeing the same kind of action from your competitors, or is there any risk that you end up raising prices and competitors don't and you end up at a disadvantage?

I you want to go? No, you go.

No, I mean of course I cannot tell you it is like this, but when you follow the public information, when you follow the news, competitors are out with very similar price increases at the moment because, I mean, look at the cost structure and then look, I mean, tissue is or pulp is a global market. Energy prices are also usually moving more or less in the same direction. So I would assume every tissue supplier has a need to increase prices at this time. But again, guessing.

Now we have a question here. Yes.

Yeah. Hi, it's Warren Akaman at Barclays. Um, I've been a little bit surprised that there hasn't been more discussion on AI today. Obviously, path to purchase for consumers is changing radically, digitizing supply chains, returns on marketing spend. You know, winning in data is going to be a key battleground for all FMCG companies in the next decade. I'd love to hear a little bit from the panel where you are in terms of AI. Your competitors are going very, very fast. It's changing every day. And then for Frederick in terms of cost, you know, in terms of savings, are we at peak headcount now? Are we going to start seeing that G&A line coming down as you replace people with computers? Thank you.

I can start on AI because I shared some examples earlier today on typical applications that we have for AI. That was just scratching the surface to give some examples. So I would say across our value chain, we are applying digital tools including AI in order to become more efficient and also looking at how we can use that in our go to markets in a good way. So that is clearly something we focus on. And maybe you guys want to share some examples from your respective areas. I know Thomas, for example, the work we do on marketing with content at scale and so on, I think is an interesting example.

Yeah. So obviously AI gives a lot of opportunities. I mean one is on the speed and the cost of developing communication assets. So we're applying a lot. I mean, some of it we've moved in fact into in-house, and we're able to obviously reduce a lot of the cost and speed that it takes to develop assets, but also like the example I gave on the Libero club. It's a good example where we have masses of first-party data which obviously we're then able to use our AI algorithms in terms of creating customized content based on the data of an individual consumer that we serve versus going with mass marketing communication, which gives us a lot of firsthand experience on how to be data-based and leverage again data better. The leakproof companies that we've acquired have most of them started with a direct to consumer approach, which also gives us a lot of new capability and experience again in how to drive digital first businesses. So I think we have quite a few not only experimentations but concrete things going on, and you'll see when we do the tour you'll see also how we leverage AI in terms of product development. So how do we design products leveraging AI versus the more traditional older tools? So those would be some of the key areas.

Anand, you had an example.

It was a good first of all, it was a good observation that we didn't talk about so much on the stage, but please don't let that reflect how much we talk about it behind the scenes. I can reassure you of that. We talk about it across the full value chain. If I give you a good couple of examples of where we use it operationally. So we use AI in customer services for order processing. What was done by manual people before is being processed by AI, and it's fabulous and it saves time and actually it's extremely accurate. We're also using AI to train our salespeople, virtual training materials, and these things are very impressive. Supporting our salespeople on how to handle objections, how to handle indifference, very important when it comes to price increases, but also helping our sales managers on how to coach their employees too. So many things at the back end, as well as all of you know, the full organization leveraging AI tools in office suites like Microsoft, for example, to improve our efficiency and effectiveness. It's a big movement. It's happening rapidly.

Okay.

Yeah. I can add to what Anand was saying in the B2B landscape. First, I think we were discussing in some of the workflows, customer service, but other workflows that we have in our transactional processes, we already have concrete cases of AI driving productivity. And when it comes to our go to market in the B2B landscape, the Salesforce part, especially with small customers, that is very costly for us to serve with physical Salesforce. We are starting to implement some AI tools that actually deliver us a more efficient cost to serve with this type of customers. So it's early days but we are of course testing and learning.

I think we are not talking about AI because it has become so normal for us. I mean we have it everywhere, you know, marketing, content management, when you look at net revenue management tools, in sales, for example, if you go to a factory, predictive maintenance, it's present in all areas. So for us it's so normal.

And you happen to sit next to our new chief digital officer. So in the break later on you can catch him and talk more about this.

Okay, I will interrupt with a question from our virtual audience. Nicholas Antman at Incentive. He asks, and this is a question for you, Frederick, mostly because it's on your presentation. In order to reach your 3% organic revenue growth and 15% EBITA margin target, is it required to increase capex sales from 5% to 6% or should the increase in capex compared to sales by 100 basis points result in a faster growth and higher margins than stated in the targets?

Uh then we also have a question from Charles Eden from UBS, and this is regarding the strategic review that we announced yesterday. How much overlap is there in the production footprint between consumer tissue and professional hygiene? Is there a significant number of sites which share production of these two product categories or are they largely already separated?

Who would like to, would you like to start or? We have in consumer tissue, you have seen it early on, we have 22 factories. I think we have very dedicated factories, like in Shia for example, or cost time on the other, professional hygiene dedicated factories, and then we have a couple of factories which have a 90-10 relation, so very dedicated. And we have actually very, very few, actually two, which are very, very mixed, and one of them you might see in the afternoon. The day is ICS is actually our most shared factory between consumer tissue and professional hygiene. So the majority of the consumer tissue factories produce a minor part, less than 10%, of professional hygiene products.

Okay, thanks for that answer. Any more questions from Carol? Please? Oh no, you have a microphone already. Go ahead, Oscar.

Oscar Lindstone from Donskank. And today we heard about your ambitions to increase growth both sort of price mix and innovations but also volumes. But you didn't really talk about the fastest growing market in the world, which is Asia, where you actually exited a large business a couple of years now. Have you any thoughts about at least selectively re-entering the Asian market in order to achieve the volume growth targets? Is that something that could drive growth?

All right. Thank you. Thank you, Oscar. Now Carol here, we have a microphone over here, please.

Thank you, Lisa. Um, yes, thank you. Um, regarding M&A, and you shared some examples on the wound care side, but after a string of acquisitions we didn't see a lot over the last couple of years. Market growth has slowed. So, yeah, what has been hindering Essity to more frequently add interesting assets?

Nothing to add. I think that applies generally speaking, and I would say the same thing as folk did with AI. The fact that we had a few years with not that many acquisitions does not reflect a low activity level. So this is something we work very actively with to scout for the right M&As and to assess them. And there are opportunities that are interesting. At the same time, it has to be value creating. We are very disciplined in that and always look at what is the most value creating: is it organic growth or inorganic growth? Yeah, we are kissing many frogs, hoping to find our prince or princess, big and small frogs, to your question specifically, but we're happy to be patient.

Thanks.

All right, Johannes Gonzalez again, SP1.

Um, I have a question maybe to you, Frederick, or and the panel if you can also answer it maybe. But capex will then increase. You're excited about that. It means like a 1.5 billion or something when you step up in the ratio of capex to sales. But could you give you know examples of what kind of investments you are looking at? What's a change there? And also sort of give us an idea of the time lag before the investment starts paying off in revenues and earnings.

Nothing to add. Doesn't look that way now. Okay, we agree, Frederick. That's fine. It's good. Erin, please.

Yeah, I'm skeptical sex. Um, I wanted to follow up on the consumer tissue and personal care. In terms of your go-to market strategy, how does it work in practice ever since the split into the two units from consumer goods previously? Are you going together to retailers or is it run separately? If you could give us some more on that.

I mean one precondition when we decided for the end to end organization was we are keeping one face to the customer. So the reality is that we have a shared personal care, consumer tissue, sales force. So we have one organization and that gives us the leverage and also the power to negotiate on eye level with our customers. And basically the organization is receiving orders from two bosses. This is simplified what we are going to do. So Thomas is heading the personal care part, I'm heading the consumer tissue part, and then we have the commercial part of our organization shared and the rest dedicated.

The CTLD is carved out because CT, so consumer tissue exclusively reporting to myself, and the other exception is that we have the seven factories of the CTLD reporting to the line manager, to the general manager of the private label division. This is why on my slide I have shown seven plus 22. 22 are in the integrated supply chain with a person reporting to myself also dedicated end to end, and the seven are basically carved out in the private label division.

I think maybe maybe to build on this, on another part of our go to market, which is when we look at incontinence care, we have talked about here that we are present with incontinence care across the different channels, and it's so important to have both the consumer perspective and the customer perspective. So here we are working with one consumer perspective to follow the consumer journey because it's one brand and the consumer is sometimes moving between channels, and that is a strength that we have. At the same time, we utilize the fact that we are experts in health care selling and experts in retail selling. So therefore it's a split business between personal care and health and medical. So of course when designing an organization, these things are important to consider where we really have the benefits of going together with the setup we have and where it's important to split.

Maybe one build is that we also have markets in personal care where we don't have consumer tissue, but we only have personal care, where we have a dedicated Salesforce focused on that. One example is in Australia, or for example in North America. Also in Nordic markets, consumer tissue tends to play a smaller role from a brand point of view in certain countries. So we do have experience of also markets where we go purely on personal care.

Please.

Yeah, thanks. Tom Sikes from Deutsche Bank. Just to initially follow up on Warren's question because I think you kind of avoided one part of it, which is we're going to see a wave of agentic AI coming. So the procurement is going to get a lot tougher. So why is your AI on the cost side and hoping to generate growth better than the AI that's going to come from procurement because they've got a data advantage it seems like at the moment because they're looking at the data of a lot of suppliers, not just the data of one supplier. And then another question which is...

We can wait and answer that question first please. Anyone?

Not sure I understood fully. Would you rephrase the question?

Yeah. Yeah, I guess. Well, firstly, are you beginning to see AI used by your customers? So the larger grocery retailers, etc. Are they using AI both in assessing the commodity costs and the market growth opportunity to limit or increase pricing or affect your pricing? And as that gets rolled out more systematically, do you think that your productivity initiatives are going to be able to offset that, or indeed do you even see it as deflationary at all?

Now I think, and I understand because you said procurement, I was thinking sourcing procurement, but then let's hear about what is happening at the customer side. I mean our customers, our more sophisticated retail customers are leveraging AI definitely, and you are right that negotiations have really professionalized over the years. So basically it's very data-driven, but I think this is not really influencing how we are acting with our customers. We come very well prepared. I don't think there will be any impact, but you're right, the retail negotiations have professionalized a lot over the last years.

Then maybe to mention, of course we have talked a lot about expanding our online presence, and of course e-commerce is a very important sales channel for us, and there we make sure that we are well equipped in order to meet the development of AI in that sales channel specifically.

That goes across the businesses. Yeah, maybe just to add, I mean I think the onus, of course, if that develops from the buyer side, and it should and it will, that puts the onus on us to differentiate our value propositions even more so that we cannot just be compared side by side with others. Certainly on the health and medical side, that's something we look at. How can we truly differentiate our value propositions to deliver total value to the customer so that we're not seen side by side versus somebody else. But it's a point that we're thinking about.

Sure. And then just another question was on the margin bridge. It looked like a little around half of it was coming from operational leverage, and just to be clear that that meant volume leverage I guess. So what is the level of volume leverage do you think you need to get half the, at least 90 basis points, and is that something that you think you're going to get over the next 12 months when we're likely to be facing price increases?

Okay. Thank you, Tom.

Any more questions? Yes, Nicholas.

Thank you, Nicholas Kman. Nura. Frederick, you argue that margins as it is, margins are not as volatile as some want them or some portray them to be. So is margin volatility then not a reason for why you're considering a potential spin-off with this strategic review?

But I think it is of course looking at the total portfolio and see how can we improve our composition in the best possible way, creating the best possible conditions for both consumer tissue and the group to develop to its full potential. And there the characteristics of the business, all the characteristics of the business are taken into account, and how much they are taken into account is up to the assessment.

Okay. And related to that, if it's not the higher margin volatility than peers, what do you think explains the valuation discount for Essity compared to some peers?

Well, I think it is the margin volatility. So

We have time now for one more question. Nicholas, you've already asked the question. Is there anyone else that has not had a chance? No good. Then you go ahead.

Okay. Can I follow up with a question on the consumer tissue and the evaluation process here, and coming back to the private label Europe business, when that was evaluated, it became completely separated. And earlier today you talked about how initially in the next 6 to 12 months this was going to be more of a desktop exercise. So I guess my question is, at the end of these 6 to 12 months, are we going to see this business being completely separated or not?

Okay. Thank you. Perfect. That concludes today's Q&A. Now I hand over to you for a summary of the day. Yes. And you can sit if you want to here. It's nice to have you here.

So, thank you for listening, and don't, I mean you have a lot of exciting things to look at before we close the day. But just to conclude on the hours that we've had together now. Now you have met some of our teams, part of the 36,000 people that we have across the business, and I hope that you have felt how immensely proud we are to work in a global leading hygiene and health company that makes a difference in people's lives, that improves quality of life, that improves well-being for over a billion people every day. We're immensely proud for that. As excited as we are, also I hope you felt how excited we are about continuing to develop our beautiful businesses and increase and enhance our shareholder value. Now, the people that sit up here, I think, are excellent representatives for one of our key competitive advantages, because I wanted to take the opportunity to reiterate our competitive advantages. And one of those is actually the winning culture and the highly engaged and talented people that we have in the organization. What they also embody together is the unique set of capabilities that we have in the company that sets us apart and that we will leverage even more going forward. And what I'm talking about then is our deep expertise that we have in B2B and in B2C, and the deep expertise that we have in medtech and in fast-moving consumer goods. What I hope also have come across during the two past hours has been the proven capabilities and strong capabilities that we have in brand building as well as in innovation. And I think one thing that is really a critical success factor in those areas is our ability to scale where it matters yet being highly locally relevant. I think this is really one of our superpowers, our ability to combine scale with local relevance. And on that note, we have a high share of local and regional supply chains, and that has actually proven to be a strong competitive advantage in the market environment that we're in with a lot of geopolitical uncertainty. Then, last but not least, Frederick, you've talked about our strong balance sheet, and that is of course also a competitive advantage. We have the financial flexibility to continue to invest in our business, to pursue value creating M&A, and then also provide good returns to our shareholders. Now, our strategy is something that you recognize from before. It's totally consistent with how we have worked before. What is different is the way we execute on that strategy. So we've talked today about how we will take even more decisive actions when it comes to lowering our cost base, both through the SDNA cost program but also through focus now on production costs. That will free up resources and enable us to finance more investment behind our brands and behind our superior solutions. So we will invest more to grow more while protecting our profit margins. Then also what we will do is to accelerate the portfolio shift so that we focus even more on the most attractive parts of our business, and we will do that through more focus on those areas in our organic growth, but also to proceed on our M&A agenda. And I hope that you guys are as excited as we are about what lies ahead for Essity on our path towards our vision to be the undisputed global leader in hygiene and health. Thank you.

So, what's next?

Thank you, Uria, and thanks to all of you for joining us here in Gothenburg, and thanks to you joining us online. We appreciate your time and your engagement.

This is where it begins. I'm sourcing fiber. I'm delivering fiber. I'm testing. I'm making pants. B, tissue, diapers, dressings, wipes, soap, paper towels, toilet paper. I'm turning needs into solutions with new technologies. Same. Over here, too. I'm engineering smart solutions. I prevent infection. I teach mental health. I'm selling. Me, too. So, this is accessible here, here, here, here, here, and here. These are the people who helped me get here. So, this is made possible. So, this is made better. So, 1 billion people are cared for every day.