Hygiene products group Essity is planning further hike prices to tackle high costs for raw material, energy and distribution as the group reported a bigger-than-expected drop in fourth-quarter profit on Wednesday (26).
Operating profit at the world's second-biggest maker of consumer tissue fell 34 per cent from a year earlier to 2.75 billion Swedish crowns ( £221 million) despite an 11 per cent rise in sales. Five analysts polled by Refinitiv had on average forecast a 3.33 billion crown profit.
The Swedish group, which sells consumer tissue such as toilet paper and napkins under a large number of brands including Lotus, Tempo and Vinda, has now announced plans to raise prices in all product categories and markets this year to compensate for the substantially higher costs.
"We do not expect a decrease in the historically high costs for raw material, energy and distribution in the near term," Chief Executive Officer Magnus Groth said in a statement.
"Price increases are therefore essential."
The timing and size of the planned price increases would be managed locally, according to the company, which is also the global leader in hygiene products for businesses with the Tork brand and in incontinence products with TENA.
Groth told analysts and journalists in a conference call he expected most raw material costs to start to stabilizing in the current quarter, while energy would keep rising significantly compared with the fourth quarter.
Essity is a rival to Procter & Gamble and Kimberly-Clark. Its good comprise of personal care and tissue products for use in the home, including leading household brands Bodyform, TENA, Velvet, Plenty and Cushelle.
Brian McLister
