Essity profitability lifts despite sales decline, directors eye higher dividend

Essity has released its Q4 and 2025 full-year financial reports, revealing it ended the year with higher profitability than the year before and a proposed a higher dividend. Currency headwinds and pricing adjustments hit the company’s Q4 sales. Still, the Swedish consumer goods company increased its EBITA margin and reported increased market shares across most of its retail business. 

Fourth quarter net sales fell 8.2% to US$3.83 billion, while organic sales declined 1.1% — driven by 0.2% lower volumes and 0.9% lower average prices.

Full-year net sales also dropped 4.8% to US$15.31 billion, down from US$16.09 billion in 2024. Essity’s full-year organic sales growth remained positive at 0.9%. The figure represents price and mix, with volumes unaffected. 

For the full year, Essity’s EBITA excluding items affecting comparability (IAC) fell 4% to US$2.16 billion, down from US$2.25 billion. However, without currency translation effects, EBITA excluding IAC increased 3% corresponding to US$65 million.

“Even though we are proud of our strong performance in 2025, given the market situation, we have a clear ambition to accelerate our progress toward our financial targets,” says Ulrika Kolsrud, president and CEO of Essity. 

Financial performance

Essity attributes its organic sales decline mainly to lower sales prices in Consumer Goods and Professional Hygiene. However, the company says volumes and product mix were “relatively stable” at the group level.

According to its report, Essity’s margins improved as its costs fell. Its Q4 gross margin excluding IAC rose to 33.7% from 31.9%. The company says lower energy and raw material costs benefited its product prices and reported saving approximately US$21 million in cost of goods sold during the quarter.

“Strong product launches, selective price adjustments, and intensified marketing activities yielded higher market shares during [Q4] for more than 65% of our branded sales in the retail trade,” the company says.

Its Q4 EBITA rose 9% to US$553 million, up from US$507 million. Moreover, profit for the period increased to US$356 million, up from US$320 million.

Essity’s feminine care business includes menstrual products sold under brands such as Libresse.Essity’s board of directors also proposed a 6% increase in its dividend to SEK 8.75 (US$0.97) per share, up from SEK 8.25 (US$0.91) the year before, signalling confidence about its cash generation and financial position.

The company’s profit for the full year on total operations fell to US$1.41 billion, from US$2.33 billion. According to the report, the decline mainly reflects Essity’s 2024 one-off profit gain of US$996 million from discontinued operations. The profit was generated when the company divested its stake in its former Asian hygiene business, Vinda International Holdings, which did not repeat in 2025.

Looking ahead

Despite some declining figures, the company’s management maintains a positive outlook. Essity reported seeing growth in several strategic segments throughout the year, highlighting brands such as Tena for men, Hydrofera wound care, and Saba night towels. It also updated some of its feminine care offerings, including a thinner version of its Invisible Day Pad range.

“During the year, we strengthened our customer and consumer offerings with relevant innovations, made an acquisition, and took action to further enhance Essity’s competitiveness and increase our market shares,” Kolsrud says.

The company’s CEO refers to an agreement Essity entered into with Edgewell in November last year, to acquire its feminine care business in North America. The deal includes the Carefree, Stayfree, Ob brands, and Playtex. The acquisition is expected to close in the first quarter of 2026, the report says.

The company also made moves to improve its competitiveness. It introduced a new organizational plan that took effect on January 1 this year and targets four business areas, including Health and Medical, Personal Care, Consumer Tissue, and Professional Hygiene.

Essity also launched a cost-savings program in Q4 last year to “create better conditions for profitable growth.” The program targets sales and administrative costs, excluding marketing. It is expected to generate annual savings of around US$111 million, with full effect by the end of 2026.

Essity says the restructuring costs related to the program will also amount to around US$111 million, and will mainly affect 2026 as the changes are implemented. The company plans to reinvest the annual savings into profitable volume growth.