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Investing.com -- Swedish hygiene and health products maker Essity AB (ST:ESSITYa) saw its shares rise about 2% on Thursday after reporting better-than-expected third-quarter profit and announcing a new cost-saving program aimed at boosting growth amid challenging market conditions.
The company reported adjusted EBITA of SEK 5.06 billion ($470 million) for the third quarter, slightly ahead of analyst estimates, while its EBITA margin excluding items affecting comparability improved to 14.6%, up 0.5 percentage points year-over-year. Organic sales growth was 0.9%, with volume accounting for 0.2% and price/mix for 0.7%.
Net sales decreased 4.5% to SEK 34.64 billion compared to the same period last year, though excluding currency effects, sales increased by SEK 322 million. Earnings per share rose to SEK 4.86 from SEK 4.73 a year earlier.
"Our efforts to drive growth and reduce costs have yielded results and the third quarter developed favourably in continued challenging market conditions," said Ulrika Kolsrud, President and CEO of Essity.
The company announced a new cost savings program expected to generate annual savings of approximately SEK 1 billion by the end of 2026, primarily targeting sales and administration costs. This is in addition to Essity’s annual savings in costs of goods sold of SEK 0.5-1 billion.
Essity also unveiled an organizational change to decentralize decision-making and strengthen accountability for each product category, which the company says will enhance customer focus and operational efficiency.
"With the aim of increasing our growth rate, and considering the current economic climate, we are launching a number of measures today to faster achieve the company’s financial targets," Kolsrud added.
Growth remained strong in Incontinence Products Retail, Feminine Care and Medical Solutions segments, while Consumer Tissue experienced negative growth due to lower volumes in Europe. Professional Hygiene, Baby Care, and Incontinence Health Care showed positive volume development compared to the first half of the year.