Targets in reach, but tissue looks tough

Essity Aktiebolag (publ): 1 director

A director at Essity Aktiebolag (publ) bought 700,000 shares at 294.783SEK and the significance rating of the trade was 77/100. Is that information sufficient for you to make an investment decision? This report gives details of those trades and adds context and analysis to them such that you can judge whether these trading decisions are ones worth following. Included in the report is a detailed share price chart which plots discretionary trades by all the company's directors over the last two ...

September: Pulp shipments -10% y-o-y

Standing firm against headwinds

Clean EBITA 1% above

Clean EBITA SEK 5.1bn vs. cons SEK 5.06bn — 1% above. Margin 14.1% (vs. 14.7% in Q2) — target is >15%. Pulp prices moving down, while tissue has seen price hikes.

Wood is up and Pulp is down

Q3 preview

August: Pulp shipments -10% y-o-y

Essity (Buy, TP: SEK350.00) - Margin resilience in focus

We forecast sequentially higher raw material costs, only partly offset by lower energy costs, cost savings and underlying volume improvements supported by higher A&P spending, leaving our Q3e adj. EBITA largely in line with consensus. We expect the Q4 and 2025 outlook to be in focus, given most restructuring projects are due to be completed by year-end, as well as its margin resilience, capital allocation and M&A outlook now that multiples have started to normalise. We reiterate our BUY and have...

July: Pulp shipments -4.0% y-o-y

June: Pulp shipments -4.5% y-o-y

Essity (Buy, TP: SEK330.00) - Resilient gross margin

The strong Q2 results were aided by a resilient gross margin (stable QOQ), as cost savings, positive mix effects and price discipline more than offset sequential raw materials headwinds. We also like the return of underlying volumes, which is key to maintaining the strong EBITA margin, in our view. We continue to find the stock attractively valued at a 2025e P/E of c14x. We reiterate our BUY and SEK330 target price.

Breaking headwinds with record earnings

ATH EBITA in Q2 - higher pulp costs for Q3. Tissue prices usually follow pulp - 10% price hikes from peers. Buyback and new targets - share seems undervalued.

Essity (Buy, TP: SEK330.00) - Strong margins

We consider this a positive report for Essity, including better than expected adj. EBITA as margins were strong, with organic growth in line with expectations. We expect consensus 2024–2025e adj. EBITA to come up c3% on the back of the results and believe a positive share price reaction is warranted.

Clean EBITA 12% above - ATH

Liquid packaging board just got a bit more risky

June: Pulp shipments flat y-o-y

Costs push prices higher

A long list of price increases as costs push prices higher. Q2e EBIT likely down q-o-q: higher maintenance costs. Smart to buy when macro is low.

Q2 preview

Essity will report its next quarterly results on 18 July. We reiterate BUY with a TP of SEK 295 (290). Our model indicates a clean EBITA of ~SEK 4.6bn for Q2'24.

Essity (Buy, TP: SEK330.00) - New financial targets and buybacks

Essity this morning announced new annual financial targets, including a maintained organic growth target of >3% annually (despite Vinda having been a positive contributor), an adj. EBITA margin of >15%, above consensus, and a SEK3bn share buyback programme. If we apply a 15% margin to the 2025–2026e consensus sales figures, this implies consensus should come up c8–10%. We expect a positive share price reaction on the new targets and share buyback programme.