Essity Bundle
How does Essity operate and generate revenue?
Essity, a global hygiene and health company, demonstrated strong financial performance in 2024 and early 2025. In 2024, the company achieved record-high profit of SEK 20.3 billion on sales of SEK 146 billion.
Essity's business model is built on providing essential hygiene and health products and solutions to consumers and professionals worldwide. The company's extensive portfolio includes personal care, consumer tissue, and professional hygiene segments, featuring well-known brands.
In the first quarter of 2025, Essity reported net sales of SEK 34,976 million, with organic sales growth of 2.1%, largely due to price increases. This growth was observed across its diverse product categories, including incontinence products like TENA, which are crucial for maintaining dignity and well-being. The company's strategy focuses on profitable growth, innovation, and sustainability, aiming to improve the lives of a billion people daily.
What Are the Key Operations Driving Essity’s Success?
Essity company operations are structured around three core business areas: Personal Care, Consumer Tissue, and Professional Hygiene. These segments allow Essity to deliver essential hygiene and health solutions to a wide range of customers globally, focusing on improving well-being through product performance and comfort.
Core Business Segments
Essity's primary business areas are Personal Care, Consumer Tissue, and Professional Hygiene. These segments cater to diverse customer needs worldwide, offering solutions that promote health and well-being.
Value Proposition Focus
The company's value proposition centers on enhancing well-being through essential hygiene and health products. Emphasis is placed on product quality, comfort, and discretion, particularly in sensitive product categories.
Product Offerings by Segment
Personal Care includes incontinence products, feminine care, and baby care. Consumer Tissue features everyday items like toilet paper and paper towels. Professional Hygiene provides dispensing systems, wiping products, and hand hygiene solutions for businesses.
Global Operational Footprint
Essity operates approximately 70 production sites globally, supported by a robust supply chain and distribution network reaching about 150 countries. This extensive reach ensures product availability across diverse markets.
Operational Excellence and Innovation
Essity's operational strategy is built on an integrated end-to-end supply chain designed for agility and continuous improvement. The company prioritizes innovation driven by consumer insights to maintain leadership positions in its product categories.
- Essity's Global Procurement team manages the sourcing of essential raw materials like pulp and recovered paper.
- Innovation is a key driver, with over 70% of offerings rated as best-in-market by customers in Q1 2025.
- The Manufacturing Roadmap program aims for continuous improvements and cost savings across operations.
- A new automated distribution center in Colombia, launched in May 2025, optimizes dispatch processes by 33% and reduces CO2 emissions by 56%.
- Essity's commitment to sustainability is reflected in efforts to minimize environmental impact throughout its supply chain.
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How Does Essity Make Money?
Essity's primary revenue streams are generated through the sale of its extensive range of hygiene and health products across its distinct business areas. The company's financial performance in 2024 saw net sales reach approximately SEK 146 billion, with profits hitting a record high of SEK 20.3 billion. This demonstrates a strong operational capability and effective market penetration.
Product Family Revenue Contribution
In the first quarter of 2025, Personal Care products were the largest revenue driver, making up 54.2% of net sales. Paper hygiene products followed at 26.1%, with Professional Hygiene contributing 19.7%.
Geographical Sales Distribution
Europe represented the largest market in 2024, accounting for 60.2% of net sales. Latin America and North America followed with 17.5% and 16.9% respectively, indicating a significant global presence.
Monetization Through Premium Offerings
Essity employs a strategy of offering premium products to drive higher margins. This approach is particularly successful in the Health & Medical segment, which has experienced consistent growth.
Tiered Product Strategy
Within its Consumer Goods segment, the company utilizes a tiered product offering. This encourages consumers to opt for higher-margin products in categories such as Feminine Care and Incontinence Retail.
Pricing Discipline and Growth
Essity maintains pricing discipline, as evidenced by a 1.7% price increase contributing to organic sales growth in Q2 2025. This strategy helps offset cost pressures and sustain gross profit margins.
E-commerce Channel Expansion
The company is actively expanding its presence in e-commerce, a channel that typically offers higher profitability. In 2022, e-commerce accounted for approximately 15% of net sales, or SEK 23 billion.
Strategic Growth Priorities
Essity's strategic focus for 2024-2025 centers on prioritizing growth in its most profitable categories and fastest-growing sales channels. This includes enhancing its market presence in North America and Latin America, aligning with its overall Marketing Strategy of Essity.
- Focus on high-return categories.
- Expansion in fast-growing sales channels like e-commerce.
- Increased presence in North America and Latin America.
- Leveraging premium product offerings for margin enhancement.
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Which Strategic Decisions Have Shaped Essity’s Business Model?
Essity has undergone significant strategic realignments, including the divestment of its Vinda subsidiary, to sharpen its focus on high-return categories. This strategic move underpins its updated financial targets for 2024, projecting over 3% annual organic sales growth and an EBITA margin exceeding 15%.
Portfolio Refinement and Financial Ambitions
The divestment of Vinda allowed Essity to concentrate on core strengths, leading to more ambitious financial goals. The company aims for over 3% organic sales growth and an EBITA margin above 15% in 2024.
Shareholder Returns and Operational Efficiency
A share buyback program of SEK 3 billion commenced in April 2025, supported by strong cash flow. Essity also achieved SEK 1.5 billion in cost savings in 2024 through efficiency programs.
Strategic Growth Pillars and Innovation
Key priorities include brand building, expansion in East Asia, Latin America, and the USA, and enhancing operational efficiency. The launch of a new automated distribution center in Colombia in May 2025 exemplifies this focus.
Competitive Strengths and Market Leadership
Essity's competitive edge is built on strong brands like TENA and Tork, continuous innovation, and a vast global distribution network reaching approximately 150 countries.
Essity's Enduring Competitive Advantages
Essity's market dominance is significantly bolstered by its leading brands and a commitment to innovation, with over 70% of its offerings rated as best in market as of Q1 2025. Its global reach and sustainability efforts further solidify its position.
- Strong brand recognition with global market leaders TENA and Tork.
- Continuous product innovation, such as TENA Proskin Pants and Cutimed Sorbion dressings.
- Extensive global distribution network covering approximately 150 countries.
- Commitment to sustainability, including validated net-zero emissions targets by 2050.
- Adaptability to market trends, including e-commerce growth and digital transformation.
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How Is Essity Positioning Itself for Continued Success?
Essity maintains a robust global standing in the hygiene and health sector, notably leading in incontinence care with its TENA brand and professional hygiene solutions under the Tork brand. The company ranks as number 1 or 2 in 90% of its branded sales, underscoring its significant market influence. With operations spanning approximately 150 countries and net sales reaching SEK 146 billion in 2024, Essity showcases extensive scale and worldwide reach.
Industry Position and Market Leadership
Essity is a dominant force in the hygiene and health industry, holding top market positions in key segments like incontinence products and professional hygiene. Its strong brand recognition, exemplified by TENA and Tork, fosters significant customer loyalty and supports its global market presence.
Key Risks and Challenges
The company navigates intense competition, particularly from private labels in European consumer tissue markets. Evolving consumer demands for sustainability and the growth of e-commerce also present ongoing challenges, alongside inherent risks from supply chain volatility and fluctuating raw material costs.
Future Outlook and Strategic Growth
Essity is focused on profitable growth, targeting over 3% annual organic sales growth and an EBITA margin exceeding 15%. Strategic priorities include expanding in high-return segments, e-commerce channels, and key geographic regions like North America and Latin America.
Sustainability and Innovation Focus
A commitment to sustainability is central to Essity's future, with goals for net-zero emissions by 2050 and significant reductions in Scope 1, 2, and 3 emissions by 2030. The company prioritizes sustainable innovations, aiming for over 50% of new products to offer environmental or social benefits annually.
Essity's Forward-Looking Strategy
Essity's leadership, including the upcoming CEO transition, emphasizes continued cost reduction, accelerated growth, and leveraging innovation to enhance revenue generation. This strategic direction aims to sustain and expand the company's market leadership and financial performance.
- Targeting over 3% annual organic sales growth.
- Aiming for an EBITA margin exceeding 15%.
- Expanding presence in North America and Latin America.
- Achieving net-zero greenhouse gas emissions by 2050.
- Focusing on innovations with social and/or environmental improvements.
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