Essity Capital Markets Day 2026 - Group & Financial

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 one 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 Essity. 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 it 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 what we're talking about when we talk about the consumer tissue business. We're selling toilet paper, household towels, napkins, facial tissues, moist toilet papers, and hankies as well. And we do that under strong leading brands like SCA, Kushell, Familia, Regio, 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. So let's save that for later.

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 Eman 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, I mean we are just initiating this strategic review and we are looking broadly at different strategic alternatives. So out of those alternatives, it could be as I said before 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, and it looks very different from market to market. I have a question here.

Yes. Hello, Johannes Gonzalez SP1 here. Um, so I have a question on the strategic review. Is it sort of the timeframe? Are you committed to any sort of time when you need 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 that would take some six to 12 months. Just behind you.

Yes, good morning. It's Kasut with Kepler Frame. 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've basically answered the question. I mean 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.

Uh Oscar Lindström from Danske Bank. Uh just a question about what is it you're going to do for almost 12 months in this strategic review? Are you already now for example beginning with a legal separation and operational separation of this business, or is it merely sort of 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. Yes,

Thanks. Yeah, I just want to follow up on one of the questions about synergies. Um, is there any risk of the 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 potentially 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. 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 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. And in fact, every day there are more than 1 billion people across 150 countries that use our products, that rely on our brands. And when we talk about creating value, then of course 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, strengthen our performance, and accelerate profitable growth. And we are very well positioned to do exactly that. Yeah, did I not click? No. Okay. We are very well positioned to do exactly that. I wanted to say because here in our portfolio we have the Tiena 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, I should say, 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 Nos 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 2 to 3%. I have to click harder. Now we have a market growth exposure of 2 to 3%, and that is driven by very strong global megatrends. The global population is aging, as we all know, and we see an increased prevalence for chronic conditions. This is 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 then 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. And 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 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. I mean, 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 that is about raising the bar and one that 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, heavy and very rapid flows, very quickly. Of course, makes the consumer feel more confident in their everyday life. 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, Kushell 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 what they normally do. And then of course we adjusted our innovation priorities to make sure that we have as competitive an assortment as possible across all the different pricing tiers, and this is one result of that where we then offer the Kushell 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, they nod 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 that we have. 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 insights, 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 margin that they are margin accretive speaks for itself. That tells us that it's a 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: in 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, quite many I recognize you, 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. So 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, 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. Then 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 who 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 also 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 that we have 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, our 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 then 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, it's incontinence products expanding also to incontinence care, it's wound care, and its 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 complements 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 or business area 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. Now, we move into the final session before our Q&A starts. But before that, let us show you how Essity 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 Essity, we understand 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 for everybody and everybody. So now is when we bring it all together. I'm pleased to introduce our CFO Fredrik Rystedt who will take us through how our progress actually shows in financial terms and how we are moving towards our targets. Fredrik, great to have you here. Please go ahead.

Thank you, Fredrik. Thank you for a good walk through of how our progress actually looks in financial terms and also what it takes. Fantastic businesses in national terms. 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.