[PDF]Interim Report Q2 2017

─ Investments in increased marketing activities ... 2017 Interim Report Q2 2017 Net sales Organic sales1) vs Q2 2016 ... SOP US SOP EU 50 75 100 125 1...

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Interim Report Q2 2017

This presentation may contain forward-looking statements. Such statements are based on our current expectations and are subject to certain risks and uncertainties that could negatively affect our business. Please read our most recent annual report for a better understanding of these risks and uncertainties.

2 July 18, 2017

Interim Report Q2 2017

Magnus Groth, President and CEO

3 July 18, 2017

Interim Report Q2 2017

Summary Q2 2017 ▪ Essity listed on Nasdaq Stockholm on June 15, 2017 ▪ Acquisition of BSN medical completed ─ Excellent strategic fit supporting our vision ─ Combining hygiene and health for improved well-being ▪ Closure of Professional Hygiene production plant in North America ▪ 18 innovations launched in all categories ─ Brands such as Jobst, Libero, Libresse, Lotus, Nana, Tempo, TENA and Tork

4 July 18, 2017

Interim Report Q2 2017

Financial Summary Q2 2017 vs Q2 2016 Net Sales

Adjusted EBITA2)

Adjusted EBITA Margin2)

SEK 28,155m +12.7%

SEK 3,437m +17%

12.2% +40bp

Organic Sales1)

Organic Adjusted EBITA

Operating Cash Flow

-0.1% x%

0%3)

SEK 2,412m -20%

1) Sales which excludes exchange rate effects, acquisitions and divestments 2) Excluding items affecting comparability 3) Excluding items affecting comparability, currency translation effects and acquisitions

5 July 18, 2017

Interim Report Q2 2017

Financial Summary Q2 2017 vs Q2 2016

1) 2)

Adjusted ROCE1)

EPS

Adjusted EPS2)

13.7% SEK x

SEK 2.39

SEK 3.06x

Adjusted Return on Capital Employed calculated on annualized Q2 2017 Adjusted EBITA (excluding items affecting comparability) / Capital Employed as per June 30, 2017 Excluding items affecting comparability and amortization of acquisition related intangible assets

6 July 18, 2017

Interim Report Q2 2017

SEK

Innovations Q2 2017 ▪ 18 innovations launched in all categories ─ Brands such as Jobst, Libero, Libresse, Lotus, Nana, TENA, Lotus, Tempo and Tork

7 July 18, 2017

Interim Report Q2 2017

Personal Care

Net Sales

Adjusted EBITA1)

14.9%

SEK 10,851m

Q2 2017 vs Q2 2016

SEK 8,427m

Adjusted EBITA Margin1)

SEK 1,614m

+28.8% SEK 1,073m

12.7%

+220bp

Q2 2016

Q2 2017

+50%

▪ Net sales increased 28.8% ▪ Organic sales decreased 0.1% ▪ Adjusted ─ ─ ─ ─ ─ ─ ─

Q2 2016

EBITA1)

increased 50%

Acquisition of BSN medical Higher volumes Cost savings Improved profitability in Incontinence Products in North America Positive effect from exiting Baby Care in Mexico and hygiene business in India Higher raw material costs Investments in increased marketing activities

▪ Adjusted EBITA margin1) 14.9% ▪ Adjusted ROCE2) 24.2%

1) Excluding items affecting comparability 2) Adjusted Return on Capital Employed (Adjusted EBITA / Capital Employed) excluding items affecting comparability

8 July 18, 2017

Interim Report Q2 2017

Q2 2017

Q2 2016

Q2 2017

Organic Sales

Personal Care

By Region

By Product Segment

Q2 2017 vs Q2 2016 ▪ Organic sales decreased 0.1% ─ ─ ─

-0.1%

Price/mix -0.5% Volume +0.4% Negative impact of ~1% related to closures of Baby Care Mexico and hygiene business in India

Total

▪ Mature markets ─

Western Europe ─ Good growth for Baby Care and higher sales for Feminine Care ─ Flat sales for Incontinence Products ─



% of Personal Care Net Sales:

Good growth in Retail but lower sales in Health Care

North America ─ Higher sales in Incontinence Products

▪ Emerging markets ─

─ ─

Latin America 0% ─ Good growth for Incontinence Products and Feminine Care ─ Lower sales in Baby Care mainly due to exiting Baby Care in Mexico Russia -19% Asia -5%

1) Not included in Personal Care’s organic sales for Q2 2017

9 July 18, 2017

Interim Report Q2 2017

+1.1%

-1.8%

Mature Markets

Emerging Markets

63%

37%

+1.4%

+2.0% -4.8%

Incontinence Baby Products Care

42%

22%

-0.7%1)

Feminine Medical Care Solutions

16%

20%

Medical Solutions BSN medical acquisition ▪ BSN medical consolidated from Q2 2017 ─

Included in Personal Care under category Medical Solutions

▪ Successful start of integration ─

Organizational changes implemented



Joint strategy for combined business unit delivered

▪ Q2 2017 organic sales1) decreased 0.7% ─

Negative impact from lower number of invoicing days

▪ Adjusted EBITA margin2) 17.1%

Q2 2017

SEKm

Net sales

2,096 -0.7%



Integration cost impact -1.5%



Venezuela business impact -1.0%

Organic sales1) vs Q2 2016



Negative impact from lower absorption of fixed cost due to lower sales

Adjusted EBITA2) Adjusted EBITA margin2)

1) Sales which excludes exchange rate effects, acquisitions and divestments. Not included in Essity’s reported organic sales for Q2 2017. 2) Excluding items affecting comparability

10 July 18, 2017

Interim Report Q2 2017

359 17.1%

Consumer Tissue Q2 2017 vs Q2 2016

Net Sales

Adjusted EBITA1)

SEK 10,449m SEK 10,043m +4.1%

10.7% SEK 1,072m

Q2 2016

▪ Adjusted EBITA1) decreased 6% ─

Higher raw material and energy costs



Higher volumes



Cost savings

▪ Adjusted EBITA margin1) 9.7%

▪ Adjusted ROCE2) 9.8%

1) Excluding items affecting comparability 2) Adjusted Return on Capital Employed (Adjusted EBITA / Capital Employed) excluding items affecting comparability

11 July 18, 2017

9.7% -100bp

SEK 1,010m -6%

▪ Net sales increased 4.1% ▪ Organic sales increased 0.1%

Adjusted EBITA Margin1)

Interim Report Q2 2017

Q2 2017

Q2 2016

Q2 2017

Q2 2016

Q2 2017

Organic Sales By Region

Consumer Tissue

+3.8%

Q2 2017 vs Q2 2016 +0.1%

-2.5%

Total

Mature Markets

Emerging Markets

56%

44%

▪ Organic sales increased 0.1% ─ ─

Price/mix +0.1% Volume 0.0%

▪ Mature markets ─

% of Consumer Tissue Net Sales:

Western Europe ─ Lower sales due to lower prices and lower sales of mother reels

▪ Emerging markets ─ ─ ─

Asia +5% Latin America +3% Russia +8%

12 July 18, 2017

Interim Report Q2 2017

Professional Hygiene Q2 2017 vs Q2 2016

Net Sales

Adjusted EBITA1)

SEK 6,866m SEK 6,471m +6.1%

SEK 940m SEK 917m

Adjusted EBITA Margin1) 14.5%

13.4%

-110bp

-2%

▪ Net sales increased 6.1% ▪ Organic sales increased 0.8%

Q2 2016

▪ Adjusted EBITA1) decreased 2% ─

Higher raw material costs mainly due to significantly higher recovered paper prices



Lower volumes



Higher energy costs



Better price/mix



Cost savings

▪ Adjusted EBITA margin1) 13.4%

▪ Adjusted ROCE2) 17.8%

1) Excluding items affecting comparability 2) Adjusted Return on Capital Employed (Adjusted EBITA / Capital Employed) excluding items affecting comparability

13 July 18, 2017

Interim Report Q2 2017

Q2 2017

Q2 2016

Q2 2017

Q2 2016

Q2 2017

Organic Sales By Region

Professional Hygiene

+15.7%

Q2 2017 vs Q2 2016 ▪ Organic sales increased 0.8% ─ ─

▪ Mature markets ─ ─

+0.8%

Price/mix +2.6% Volume -1.8%

Lower sales in Western Europe and North America due to lower volumes Positive price/mix in both regions

Total % of Professional Hygiene Net Sales:

▪ Emerging markets ─ ─ ─

Asia +28% Latin America +12% Russia +10%

14 July 18, 2017

Interim Report Q2 2017

-1.8% Mature Markets

Emerging Markets

83%

17%

Fredrik Rystedt, Executive Vice President and CFO

15 July 18, 2017

Interim Report Q2 2017

Net Sales Q2 2017 vs Q2 2016 +12.7%

Organic Sales -0.1%

16 July 18, 2017

SEK 24,983m

+0.5%

-0.6%

Net Sales Q2 2016

Price/Mix

Volume

+4.4%

SEK 28,155m

Currency

Net Sales Q2 2017

+8.4%

Acquisition

Interim Report Q2 2017

Adjusted EBITA1) Q2 2017 vs Q2 2016 +17% Organic Adjusted EBITA 0% SEK +359m SEK 2,939m

SEK +141m

SEK +32m

SEK +135m SEK 3,437m

SEK -441m SEK +319m

SEK +24m

Cost Savings

Other

SEK -71m

Adjusted EBITA Q2 2016

Price/Mix

Volume

Raw Material

Energy

1) Excluding items affecting comparability

17 July 18, 2017

Interim Report Q2 2017

Acquisition

Currency

Adjusted EBITA Q2 2017

SOP US 1)

SOP EU

Interim Report Q2 2017

NBSK

EUCA

Jun-17

May-17

Apr-17

Mar-17

Jan-17

Dec-16

Nov-16

Oct-16

Sep-16

Aug-16

Jul-16

Jun-16 Fluff

Index based in local currencies

18 July 18, 2017

May-16

Jun-17

May-17

Apr-17

Mar-17

Feb-17

Jan-17

Dec-16

Nov-16

Oct-16

50

Sep-16

50

Aug-16

75

Jul-16

75

Jun-16

100

May-16

100

Apr-16

125

Mar-16

125

Feb-16

150

Jan-16

150

Apr-16

Index 100 = January 2016

Mar-16

Index 100 = January 2016

Feb-16

Market Pulp – Europe

Jan-16

Recovered Paper1)

Feb-17

Raw Material Development

Cash Flow Q2 2017 vs Q2 2016 Q2 2017 SEKm

Q2 2016 SEKm

4,686

4,114

Change in working capital

-873

-76

Restructuring costs and other operating cash flow

-358

-173

-1,517

-1,291

1,938

2,574

Operating cash surplus

Capital expenditures (including strategic)

Operating cash flow including strategic capital expenditures

19 July 18, 2017

Interim Report Q2 2017

Items Affecting Comparability Q2 2017 Q2 2017 SEKm

Costs related to the split of the SCA Group into two listed companies

20 July 18, 2017

-40

Restructuring costs related to closure of Professional Hygiene plant in the US

-255

BSN medical, including integration and transaction costs and revaluation effects pertaining to inventory valuation in connection acquisition balance

-290

Other

+109

Total items affecting comparability

-476

Interim Report Q2 2017

Magnus Groth, President and CEO

21 July 18, 2017

Interim Report Q2 2017

Summary Q2 2017 ▪ Essity listed on Nasdaq Stockholm on June 15, 2017 ▪ Acquisition of BSN medical completed ─ Excellent strategic fit supporting our vision ─ Combining hygiene and health for improved well-being ▪ Closure of Professional Hygiene production plant in North America ▪ 18 innovations launched in all categories ─ Brands such as Jobst, Libero, Libresse, Lotus, Nana, Tempo, TENA and Tork

22 July 18, 2017

Interim Report Q2 2017

Q&A