Essity B Stock

Good morning, everyone, and welcome to Essity's Third Quarter Results Webcast. With us here today, we have our CEO, Ulrika Kolsrud; and our CFO, Fredrik Rystedt. Ulrika and Fredrik will take us through the events and the financials of the quarter. After that, we will move into Q&A. [Operator Instructions]

With that, let's get started. I'll hand over to our CEO, Ulrika, please.

Thank you, Sandra, and good morning and also from my side, welcome to this webcast. So the third quarter can be -- or it was characterized by resilience and a stable performance in a quite challenging market. We continued with the volume-led growth momentum in our higher-margin categories and segments, such as incontinence care, health care, incontinence care retail, Feminine Care, Wound Care and also our premium products in Professional Hygiene. On the other hand, we had declining sales and volumes in the areas where we see a contracting market, and that led to stable volumes overall for the group.

As expected, we experienced higher costs in the quarter following the situation in Middle East. And to compensate for that, we implemented price increases and prices were higher sequentially Q3 versus Q2 across all our four business areas. During the quarter, we also continued with our efforts to shift our portfolio towards our higher margin and higher-yielding categories and segments.

So we progressed our strategic review of Consumer Tissue according to plan, and we also announced yet another acquisition in Feminine Care. And I will come back to that acquisition in a few minutes. But before doing so, let's zoom in on Health & Medical.

In Health & Medical, we continued to grow both the incontinence care part of our business and the medical part of our business, driven by higher prices and stable volumes. I would say the highlight from a category perspective was the continued good growth in Wound Care and the highlight from a geographical perspective was the continued good growth in North America. Then when we talk products, I would say the highlight is always the new innovation that we bring to market. And in this quarter, we enhanced our JOBST offering to lymphedema patients.

We extended the JOBST Elvarex Soft ready-to-wear assortment with new styles, new sizes and new body part options. And for those of you now who know our assortment very well and who know how to treat lymphedema, you might think isn't custom-made the better option. And yes, many patients that have that have lymphedema. For them, custom-made compression garments is part of the treatment. However, it can take some time before you get an appointment with the lymph therapist, until you then get assessed and measured and get your custom-made compression garments. And that is where the ready-to-wear assortment plays an important role. So that provides the patients with compression therapy in an early stage of their treatment journey.

And for us, that means that we attract consumers to the JOBST brand at an early stage. And we do this now by leveraging a strong technology platform that we already have, JOBST, Elvarex Soft. Also in Feminine Care, we make use of a strong technology platform that we already have by rolling out the smart protect technology to our Night segment in Latin America. And I talked about the smart protect technology in another webcast. I will not repeat myself on that. But what I want to highlight is with this rollout, we strengthen our superiority further in the strategically very important and fast-growing night segment in Latin America.

We're already a strong market leader here with over 60% market share. And talking market shares, the investments that we do to drive market shares across our Personal Care categories, are paying off. We saw increasing market shares across the 3 categories for our branded business in Personal Care. For incontinence care and for Feminine Care, that also translated into higher growth, volume and sales growth. For Baby Care, however, where we had the declining volumes and sales in our retailer brand part of the business that did not play out in higher volumes and sales, but lower on a total scale.

Then if we look at the geographical perspective, what stood out in the quarter, what's the performance we have in Latin America and North America for Personal Care as a total. There is a lot of activity, a high activity level in those 2 geographies, which reflects their strategic importance. And if we start by turning our eyes to Latin America, this is where we announced Feminine Care acquisition, more precisely the acquisition of the brands o.b., Sempre Livre and Carefree in Brazil.

And this is supporting our strategy to grow and expand our higher-margin categories in attractive geographies. As you know from before, Feminine Care is really a category that we want to expand geographically. It's a category where we have higher margins and also where we have a proven success recipe and a very strong track record. That is true, not the least in Latin America, where we already have a leading position for example, in Mexico and Colombia.

Then Brazil is certainly an attractive market. It's actually the fourth largest Feminine Care market in the world and growing at 4% roughly. It's also a market that we know very well. We have good presence there already with Professional Hygiene, with Medical Solutions and also with incontinence care. In fact, we are market leaders in incontinence care with our TENA brand.

And we are market leaders, thanks to a very strong position in the pharmacy channel. Now when we get access to the retail channel, which this acquisition provides, we expect to be able to accelerate our growth in TENA even further. So this is a very exciting acquisition, and we expect the transaction to be closed by Q2 '27 and really look forward now to integrate this business and take it to the next level.

Then if we move to North America. There, of course, since we closed that business in the beginning of this year, we are one step ahead when it comes to the integration. We continued the integration of the Feminine Care acquisition in North America during this quarter, and we are improving our margins step by step. As you might recall, one of the benefits with this acquisition that we talked about was that in the U.S., this means that we will double our sales in Personal Care. And that gives us the scale to look at a more effective go-to-market model.

And in the third quarter now, we have implemented the new sales model, which is moving us towards a more direct sales model and also then we're taking more ownership of our commercial execution.

We've done this transition without any business disruptions and it puts us in a better position, stronger position to build a deeper relationship with the retailers and to build our distribution and in-store visibility. And I would say that TENA certainly deserves more shelf space. And the evidence of that is the strong performance and higher market shares that we have online, which tells you something about the consumer pull that is out there in the market for TENA.

And I cannot help myself, but take this opportunity to show you some advertising that we do for TENA in the U.S. And that is advertising that demonstrates our product benefits, but also helps to create that consumer oull that I talked about. So the first ad that you see here promotes our TENA sensitive care pads that have a 5 in 1 skin comfort formula. We have seen in consumer research that we've done locally that skin irritation is a real issue for users of bladder protection.

So for us, with TENA, we see that the combination of having the trusted protection that we have with TENA and caring for sensitive skin is a very is a very good way of differentiating the TENA brand and a very relevant way of doing so. And that is exactly what you see in this advertising. Then looking at men that suffer from incontinence. Here, we offer superior products that are disposable, but we also offer attractive washable products. And whatever the user prefer, we make sure that there are no more dribble dramas.

Now moving to Consumer Tissue. Here, we had declining volumes and sales in the quarter, and we see that in Europe, the market is contracting somewhat. And also on top of that, we had some deliberate volume reductions coming from a restructuring that we did in Latin America. We were exiting 2 smaller production sites and moving production into a more efficient footprint and also by that, also stepping out of some low-value volumes.

Besides that, the strong focus in Consumer Tissue is, of course, this quarter as previous quarter and as following quarter price adjustments. We experienced higher costs in the quarter, and we implemented price increases. Looking at pricing in this quarter then compared to same quarter last year, there is still a lower price effect, but that is coming from price adjustments done in previous quarters. As I said initially, sequentially, we are increasing price in Consumer Tissue. And we'll continue to work on those price adjustments.

And while we do so, it's, of course, important to continue to invest in innovation and our long-term competitiveness. And we did this also this quarter. What you see on the picture there is that we took the Regio assortment to the next level of softness. But we also extended our moist toilet paper assortment and actually brought this product that we put on the market in the quarter. And here, what we have learned from research is that consumers, when they use moist toilet paper, they use 2 or 3 sheets. And with this product, you need just 1 sheet. One is enough. It is the largest and thickest moist toilet paper sheet that is available on the market and it dissolves faster.

Now moist [ toilet paper ] is -- or moist toilet paper is still a small part of the Consumer Tissue category, but it's important because it offers the potential to bring value-added growth and differentiation into the consumer tissue category.

Turning to Professional Hygiene. Let's start to talk about a good growth opportunity in this business, and that is the Tork Vision Cleaning. If you remember, I talked about Tork Vision Cleaning in the context of AI last quarter because in this product, we have -- we are using AI in order to help our customers to optimize their cleaning operations.

In fact, we can reduce the time for their cleaning operations by up to 25% with Tork Vision Cleaning. And we are continuously expanding this offer and the presence of this offer. We are now in 38 airports around the world and adding on more and more. We're also increasing the presence in other channels like health care, in stadiums and also in the industrial sector. Quite recently, we acquired a customer, BMW factory, a big one in the U.S. And here, we have 3,500 devices, connected devices, in their manufacturing sites. So it's big.

All of this very encouraging data. But I think the most important thing is that 50% of our Tork Vision Cleaning customers are new to Tork. So it's an excellent vehicle to attract new customers to the brand. So the growth of the Tork Vision Cleaning was obviously then a highlight of the quarter. Another highlight in the quarter is that we continue to grow the strategic segments in Professional Hygiene.

On the other hand, we had lower sales in the more commoditized base assortment that is more exposed to changes in the market environment. And overall then, that led to a volume drop for Professional Hygiene as a total. A volume drop that we anticipate to be temporary as we continue to adapt our assortment to changing market environment, continue to expand our channel presence and acquire new customers.

And with that, I hand over to our CFO, Fredrik.

Thank you, Ulrika. And I will not, actually, demonstrate any products, at least not this time. I will demonstrate a few numbers that relates to what Ulrika was talking about. So if you -- if I start with net sales, you can see that our net sales increased with about SEK 1.5 billion or 4.1% in comparison to Q3 of 2025. And out of that currency was 2.5%. And the acquisition -- the Feminine acquisition we've made in North America is close to 2%. So as you can see, the organic sales growth is slightly negative minus 0.3%.

So turning to volume. Overall, volumes were stable for the group, but we had a bit more challenging environment in the third quarter, and that was especially the case for Consumer Tissue and to a degree, Baby and parts of Professional Hygiene. So if I start with Health & Medical, volumes were generally stable, but it was an unusually -- you could say quiet quarter for Health & Medical. We saw a good growth in incontinence and also Wound Care, and that continues out of -- for many quarters and a bit slower in Compression and Orthopedics. And as I think Ulrika alluded to a bit, this is something we see as hopefully more temporary.

If I then turn to Personal Care, this was another quarter of good growth and especially so for incontinence and for Feminine products and in Feminine products, not least for leakproof apparel. So it continues to be quite strong. Whilst in Baby, it is a challenging environment, both from a competitive standpoint, but of course, that is driven by continued low birth rate. So we continue to work with our Nordic assortment, good market share growth there. And -- but overall, of course, from a volume perspective, quite challenging for Baby.

Looking at Consumer Tissue then, we had -- and we have talked about that a tough quarter, but we were quite impacted by the factory footprint optimization that we did in Latin America. So out of the volume decline of about 1.9%, 1.2% related to that Latin American restructuring. So underlying, of course, it looks slightly better than what you would see in the numbers.

Professional Hygiene, finally, from a volume perspective, negative by 0.6%, and this is all base products. So strategic products, as we talked about, that is actually continue to improve. And pretty similar to what we think or what we saw in Health & Medical, we believe this is also, as Ulrika alluded to, a bit of phasing. And in the case of Professional Hygiene also relating to destocking, particularly on the North American market on the back of consolidation in the distribution part of the market. So we anticipate better volumes as we go forward.

Just some really short words on price/mix. You can see that the net impact there is minus 0.2%, and this is 0.5% negative on price and positive 0.3% in terms of mix. So that's good. Mix is positive. And price as before, that comes from price concessions that we did previously in Q4 of 2025 and Q1 of 2026. Sequentially, we have an increase of prices for all business areas, and we will continue to see that also going forward.

So turning to margins, we contracted our margins with about 150 basis points for the group as a whole. And this is all driven by higher COGS. I'll come back to that impact, but it's very, very significant. In the previous quarter, in Q2, you will probably remember that we talked about the acquisition of the Feminine business and the impact of that, and we experienced some cost issues and inflexibility when it comes to the TSA agreement relating to that acquisition in Q2. So we had quite substantial impact on our margin. We have taken a lot of actions related to that. So we are now back on track when it comes to the business case. So we're quite pleased with the development in that acquisition. It still has a negative impact but it's quite marginal in comparison to what we saw in Q2.

Now looking at the gross profit margin, you can see it's down by 170 basis points. And actually, in fact, I mentioned COGS before, the impact from COGS is 190 basis points, and this is pretty much in every area. We see raw material up and we also see basically energy having a quite negative impact despite the fact that we have very significant savings. So SEK 180 million, very much in line with our full year estimate. So we're happy about the performance in terms of productivity gains, but clearly, COGS is not developing where it should be.

Now if you look at the rest of gross profit, we have some impact -- positive impact actually from volume. And as I alluded to before, a negative impact from price. So all in all, of course, a big impact from COGS, as I mentioned. When it comes to A&P, basically pretty much on the same level as last year in percentage of sales. And when it comes to SG&A, you can see we have a fairly good contribution there to our margin of 20 basis points. And this is, in fact, pretty much all of it coming from the cost saving program that we are very much in the execution phase of and actually nearly completing that execution phase. So this is quite a good performance generally from SG&A and that cost savings program.

So this is pretty much the description of Q3, but let me give you a little bit of insight into Q4 and what we expect when it comes to various cost items. So I'll start with COGS and you have seen now that we've had some very significant cost increases we expect a significantly higher COGS also in Q4, and this is related to Q4 of 2025, but we also see significantly higher costs sequentially and of course, this comes from also, again, raw material and also energy.

So this is the COGS part. When it comes to SG&A, we expect SG&A, excluding A&P to be roughly on the same level or actually even slightly lower than what you've seen in Q4 of 2025 and actually also sequentially. So this is, again, a result of the cost saving program. And you see that the savings is roughly about SEK 150 million or slightly more than SEK 150 million for this quarter, and we expect the savings in Q4 to be even bigger than what you see in this quarter. And if you look at, of course, the program as a whole, we expect that to actually deliver in line or more than what we have promised. We'll come back to that at a later stage.

So that is basically the forecast when it comes to SG&A, excluding A&P. And when it comes to A&P finally, we expect that to be slightly higher than what you have seen this quarter. You might have seen from our report that the items affecting comparability is slightly higher than usual or a lot higher than usual in this quarter. So close to SEK 1.1 billion. And if you look at the full year, it's a bit above SEK 1.8 billion.

So I thought I'd just have -- give you a couple of insights into that big number. And the restructuring cost or SG&A savings program is about SEK 450 million and if you look at the combined impact so far this year of that, it's slightly above SEK 1 billion. So you can conclude from that, that we have taken most of the cost now relating to that restructuring program or the cost saving program.

Ulrika mentioned the factory footprint optimization, manufacturing footprint optimization in Latin America we have taken cost of approximately about SEK 500 million for that in the third quarter. Roughly about half or slightly below half of that relates to cash and the annual savings that will materialize or have already actually started to materialize and coming in the coming year is roughly about SEK 150 million, SEK 160 million or $70 million. So the cash impact, SEK 23 million and the annual saving roughly about USD 70 million. And the rest is basically other mainly relating to the acquisition of the Brazilian entity apart, some smaller amount to the Feminine acquisition and of course, also the Consumer Tissue strategic review.

So turning then to our cash flow. You can see we had a really good cash flow quarter, so SEK 5.8 billion in total. And this is, of course, the result of continued strong cash surplus, but it's also working capital in having performed a lot better. You will remember perhaps that we have set an ambition to improve our working capital level as a percentage of net sales, and we actually did that if you compare to previous quarters.

Some of you may have actually looked in the report, and you've seen that the percentage of sales increase compared to last year has increased a lot. And it has actually working capital is a higher percentage of net sales, but this has to do with our energy hedging. Some of you are aware of the fact that we hedge energy cost. And as energy increases in price, then our derivatives becomes worth more, and this is what you see in the working capital line. So if you actually adjust for that, the working capital is roughly about the same.

So turning then to our balance sheet. You can see here that our net debt is SEK 25 billion. So net debt to EBITDA is 1.0. So it's a very strong balance sheet. And this is, of course, despite the fact that we have acquired the Feminine business in North America. And it's also despite quite significant share buyback and an increased dividend.

So of course, the main reason, needless to say is our strong cash flow. But you -- something we talked about already in Q2 we have something we refer to as IFRS revaluation that has actually impacted net debt quite significantly this year. And the impact, if you just take the full year roughly about SEK 5.4 billion. And then the question might be what is it? Well, it's basically the surplus value in all our pension obligations.

So over the past years, or year, I should say, interest rates have gone up, which takes down the debt and the asset management that we have had has performed quite well. So in average, the asset surplus has grown quite a lot and it's now approximately in total SEK 7.6 billion. We still have a very strong balance sheet. But if you were to adjust for this our net debt-to-EBITDA ratio would be roughly about 1.3%.

So with that, I leave over to you.

Thank you. And I'll just -- you did the clicking. That was good. Now we did it twice. But I would just like to summarize the quarter with the fact that we delivered stable volumes resilient profitability and a strong cash flow. And looking at priorities moving forward then, to compensate the cost increases with price increases remains, of course, a top priority. And our ambition clearly is to do that while also protecting and growing market shares. Then, of course, with the cost pressure that we are experiencing, it's more important than ever to control and restrain costs and spending.

And as you heard from Fredrik, our cost-saving program is delivering very well, and we will make sure to get that to the finishing line and also continue to deliver on our COGS savings. Then another top priority is, of course, the portfolio initiatives that we have is the integration of our Feminine Care acquisitions and the strategic review of Consumer Tissue. And beyond those priorities, we will take further actions to accelerate progress and returns. Thank you for listening.

Thank you, Ulrika. Thank you, Fredrik. We will now turn to Q&A. So a chance for you to interact directly with us [Operator Instructions]

And we already have a good list of people calling in. And the first name I find here on my list is Aron Adamski, from Goldman Sachs.

I have the first one on EBITDA, it has been more resilient than consensus has anticipated. So I wondered if you view the 13% margin as sustainable given the expected sequential step-up in COGS that you commented about? And also, should we expect any material Latin America or any other adjustments going forward?

And then my second question is on pricing. I was wondering if you could give us a sense around the magnitude of the price increases being implemented and your expectations for the volume elasticities? And specifically in Consumer Tissue, I was wondering if the production overcapacity and low-cost imports that we're hearing about in Europe, if that affects in any way your pricing discussions?

Thank you, Aron.

That was many questions. But let's start -- I mean, when it comes to the margin, I mean, we don't guide on a margin perspective as such. But I'm sure Fredrik can talk a bit about what we expect when it comes to COGS.

Then when it comes to pricing, of course, what you see in the numbers is that we compensate parts of the cost increases, but what happens also is that once we compensate with pricing, then it's a moving target because then there are new cost increases, and we go back and adjust our prices again. So we have, as you know, in Consumer Tissue, it takes roughly 2 quarters to compensate. But then again, there are new cost increases that we have to compensate. So we will continue with those efforts, announcing and negotiating new price increases.

The Latin American part, I'm not sure I caught the question there, but I think it was about if we can expect more restructuring costs from that. Here, we have -- I mean now we have concluded on that initiative. So that is more or less finalized, right, Fredrik?

Yes.

Did you want to comment on the COGS?

Not more than what I have said. I mean, and this is quite observable that we've seen a significant increase in not least oil-based material, but it's also packaging and distribution and pretty much all material. And the origin of this is, of course, the Middle East crisis and then we see additional impact from energy cost. So as I said earlier that we do expect significantly higher COGS, both year-on-year and sequentially. So I don't think I can add much more than that. We will compensate part of it through good cost savings. So we're doing well there, I think. We're quite happy about that. But overall, the impact will be very significant.

Thank you, Aron. So we will then move to the next question, which comes from Andrei Condrea from UBS.

Two from me, please. I mean, the first one, could you help us unpack as usual, the COGS increase into raw materials distribution and the other components? And secondly, just a point of clarification on Consumer Tissue. 120 basis points of the volume decline also was linked to the LatAm restructuring because you exited low-cost products? Should we expect this to persist over the coming quarters? Or do you expect an acceleration in other parts of your portfolio?

Yes, I can start there. You wanted the -- I can -- I'm not sure if this is really helpful, but I'll be happy to give you. So if you take COGS, in general, it increased by about SEK 660 million, if that's your question. And energy was SEK 245 million of that give and take. And then you have a bit over, well, close to SEK 420 million in pure raw material and then distribution, I think your question was the SEK 75 million. So that's kind of the total. And then we got, as I alluded to in my presentation about SEK 180 million or so in savings and the rest is others. So if that was your question, those are the different components.

The manufacturing road map. The optimization of manufacturing, will that impact on volumes continue to have an impact throughout the year?

Well, yes, it will because we executed on that factory footprint optimization. So what we did was we actually shut down a couple of plants, as Ulrika alluded to. And at the same time, we actually then stopped selling some volumes that was less profitable. And the volume impact in the quarter versus last the same quarter of 2025 was 1.2% volume. And that is actually going to be there. You'll see exactly the same impact pretty much in Q4, Q1 and Q2 of 2027. So we'll still have that impact.

But again, from -- just to be clear that from a profitability standpoint, it's quite profitable. So we'll see an uptick from that.

Thank you, Andrei. So let's then move to Niklas Ekman from Carnegie. [Operator Instructions]

So let's move to Niklas at DNB Carnegie.

I want to come back to the COGS guidance here because after Q2, you warned a much higher cost. And I think we were all surprised at the magnitude we saw here in Q3 that it was a lot smaller than anticipated. So is there any way that you can kind of elaborate a bit on the future cost increases? Is -- are you expecting a significant further increase? And were you surprised that there wasn't a bigger magnitude in this quarter to start with?

I don't know what you think, Niklas, but I think SEK 658 million in COGS is a very -- I mean, 190 basis points in COGS impact, and that's including our savings. To me, that's very significant. I don't think we've had a lot of quarters with that kind of increase. And the increase was basically also -- I mean if you look at -- this was year-on-year SEK 658 million, as I mentioned, right. But if you look at sequential COGS, it was SEK 510 million just in 1 quarter. So to me, that's very significant. I'm not sure exactly Niklas, as what you expected. But to me, that was very significant.

Now you're asking what's the number for Q4. And I can't tell you that. But of course, if I say it's significant also from a sequential perspective, then you would expect a fairly high number and year-on-year then, of course, much higher than what you see this quarter.

Thank you, Niklas, for the question. Let's then move to Karel Zoete from Kepler.

I have a question on your momentum in the North American market and then in particular for the consumer business, but also your H&M business. What are you seeing in this market?

When we look at that, if we start with the Personal Care business. I mean, first, we have the Feminine Care acquisition that is progressing according to plan when it comes to our sales development. We talked already now in the presentation about the improvement when it comes to margin, but I think it's good to emphasize also that sales is progressing as we expected.

Then we also have the leakproof apparel in North America that is doing very well. It's a fast-growing segment, and that is why we want to have a strong presence there. So we see that happening as well. And then we have our TENA business, our incontinence business, where we are a challenger in the market. So there is a big potential for us to win market shares and grow. And we have a very strong plan in place in order to do so, and that plan is yielding results. And not the least, as I mentioned, we are growing our presence in online.

And now when we are changing our go-to-market model, we believe that will help us also to accelerate in brick-and-mortar going forward. Then when it comes to Health & Medical there, you might remember that we did an acquisition in Wound Care, Hydrofera some years ago. That is -- that the strategic rationale for that was to support our overall growth in Wound Care, and that is exactly what we see in North America. And also generally speaking there in Health & Medical, we have a good momentum on the back of having a strong portfolio and an efficient commercial execution.

Appreciate your question, Karel. Let's then take the next question, which comes from Oskar Lindstrom at Danske Bank.

Yes. Health & Medical organic growth slowed. What drove the slowdown? And when could we expect growth to recover here in this key segment? If you could expand a little bit on that, that would be very helpful.

Yes. When it comes to Inco, you might remember that we talked already last quarter about that. We had a strong growth momentum in Inco Health Care, but we also had some preloadings. So that is actually what played out. So it was a very strong growth in Q2, as you might remember. And some of that was preloading. But nevertheless, in incontinence products, we continue to grow. So that shows that the underlying performance is there.

So that is on that side. Then when it comes to Medical, we continue to have a very growth momentum, as I said, in the Wound Care space, where it's a bit slower in Orthopedics and Compression therapy. Then operationally, there are some different factors that are impacting the phasing. So to Fredrik's point earlier, we expect the volume growth to come back also on the Medical side.

In Q4 already or...

That's what we anticipate. Of course, it's difficult to guarantee anything like that and say, but this is -- since the phasing issues, we believe so.

Thank you, Oskar. So then let's move back to Andrei Condrea from UBS. You had another question.

Yes. Following on from Oskar's question. Could you help us quantify if possible the impact you've seen from the phasing in the Compression and Orthopedics, but also in Professional Hygiene because you mentioned you're seeing there some phasing and destocking driven by the consolidation in distribution.

I don't think we can quantify that or are able to quantify that in any...

No, it's very difficult. I mean there are so many factors that impacts volume. It's a perception that we see some destocking. We picked that up from many. So we see that in Professional Hygiene. And we believe there's a phasing, but the exact magnitude is very difficult to say.

Now next question comes from Misha Omanad from BNP Paribas.

I have one. How have your conversations been ongoing with the activist investor? Has there been any interesting suggestions from their side that you are considering now?

Well, first, just to be clear on this, of course, what -- where we have most of our conversations is with the Board. And Cevian not present in the Board at this point in time. Then of course, we meet with you guys, whether it's investors or it's future investors on an ongoing basis, especially in relation to the quarterly results. So we met with Cevian after the Q2 results, and we'll meet again after the Q3 results. But that is more in discussing the quarter results. They have -- as you might have seen, what they have expressed from our earlier conversations, is that they support the strategy that we have, including the various initiatives that we have.

Thank you, Misha. Now we have another question from Aron Adamski from Goldman Sachs.

I was just wondering if you could please discuss the expected impact of the recent tariff escalation between the U.S. and Canada, I believe in the past that has impacted your Professional Hygiene business. So I was wondering if you can discuss the expected impact on margins on an absolute basis from the fourth quarter going forward?

Yes. It's hard to tell exactly, Aron, but I think it's roughly in line with what we saw last time. So approximately about 60 basis points if you look at Professional Hygiene, give and take, in 2030, something or a bit more maybe Professional Hygiene and [ 20%, 30% ] basis points for the group as a whole. But I think this is always difficult to predict because it depends on exactly what we do as well, how much do we sell to Canada from the United States, et cetera, but roughly thereabout.

Now I can't see any more questions. [Operator Instructions] All the questions are answered.

Now we have a new question here from Antoine Prevot, Bank of America.

On A&P, at the CMD, assume that you were talking about kind of like increasing A&P spend more towards like 5.3%, 5.7% of sales. But so far, it remains bit below that. Anything you can maybe comment a bit on your plans regarding the spending there or any kind of the weaker consumer backdrop, maybe changing your thinking around your previous comment on the level of spending?

We still have the ambition to increase A&P. And I think there are 2 factors to this. One is, of course, that we are redirecting our A&P to where it makes the most -- gets the most return on investment. And we can see a lot of good effects from the marketing investments that we have. And that is, especially, for example, in Personal Care that I talked about already that the marketing investments that we have done are playing out very good. And that is part of the reason why we are gaining market shares across the 3 categories.

Then as you know, I mean we have the cost-saving program in SG&A where our intention is to free up more funds so that we can invest in A&P going forward. Now that, of course, we have to do in a responsible way. And at the point in time that we are right now, it's also a weaker market, which means that you don't get the same return on investment on in certain specific A&P elements. So then we have to face it in a commercially smart way. So basically, that's our thinking.

Thank you, Antoine. We have another question from Niklas Ekman, DNB Carnegie.

I just wanted to follow up also on this restructuring of the Consumer Tissue Latin America was this in any way related to the potential divestment of Consumer Tissues, is something that you would have done anyway? And kind of as a follow-up, if you could elaborate a little bit on the overlap between our Consumer Tissue production footprint and the rest of your -- the rest of the group?

So if we start with your first question, it's no and yes, meaning that no, it's not linked to the strategic review. And yes, we would we would do it anyhow. So I mean, we continuously work with looking on how we can optimize our footprint to make sure that we are as competitive as possible and have the best possible cost structure.

So what we now did in Latin America is relevant with whatever the conclusion is of the strategic review. Then as we have talked about before, when we've talked about the strategic review, we have some shared manufacturing between Professional Hygiene and Consumer Tissue. That is part of the assessment that we have done now on how do we disentangle that in the best possible way? And what are the implications of that?

And to be clear, that is an assessment that we have to do in order to understand the value potential of that scenario. And then we can compare that scenario a separation with other scenarios, for example, keeping the Consumer Tissue business in Essity.

Can I just add one thing here, Niklas, since you're still on the line here because it just struck me that when we talked about -- this is another subject, when we talked about the COGS impact in Q4. I mean there has been some questions on that which I think is quite relevant because that's a big thing. I just want to remind that this is, of course, an absolute obvious thing.

I just want to remind everyone that we always compensate for COGS increases or raw material or energy. We always do that. We've done that for the last 50 years as long as we have checked with price and price alone. And of course, we see temporary impact from COGS and we'll see it, of course, we see it in this quarter, obviously.

And we'll -- but over time, and just to remind to everyone, we are always compensating with price and we will do it this time as well. So I just wanted to say that, Niklas, to remind you of that.

I think we are out of questions. I'll give it a few minutes or 1 minute maybe. Any more questions? No.

So let's wrap up. And before we close, I'll hand over back to you Ulrika for final remarks.

Yes, thank you, and thank you all for listening. To go back to where we started this call, it was characterized by resilience and a stable performance in a quite challenging market, which I think says something about the competitiveness of our business. That said, we want more growth, as you know, and our focus is now to really deliver on the priorities and actions that we have in order to accelerate progress and returns.

And I want to leave you with one very positive news that we got the other day, and that is that Essity once again are awarded EcoVadis Platinum. And you might know this is an independent global sustainability rating, where they have assessed 175,000 companies worldwide, and we are among the top 1%, and that's certainly a great recognition of our sustainability performance.

Great. Thank you, Ulrika, and thank you, Fredrik, for the presentations and the answers, and thanks to our audience for listening. If you have any further questions, just reach out to us in the IR team at Essity. Have a good day. Bye for now.

Good morning, everyone, and welcome to this presentation of Essity's Second Quarter 2026 results. Our CEO, Ulrika Kolsrud, will start by presenting the business highlights for the quarter. We will then turn to the financial metrics, presented by our CFO, Fredrik Rystedt.

After the presentations, we will open up the line for questions. [Operator Instructions]

Now, I'm pleased to hand over to our CEO, Ulrika. The floor is yours.

Thank you, Sandra. And also from my side, welcome to this webcast, and good morning, everyone. We delivered positive organic sales growth in the quarter, primarily driven by continued good volume developments. The activities to strengthen our value propositions to increase marketing investments and to make selective price adjustments have paid off, and we are growing in 3 out of our 4 business units, namely in Health & Medical, in Personal Care and in Professional Hygiene. It was a tougher quarter for Consumer Tissue, where we had lower sales.

Then, if we look at our profitability, we continue to have and maintain healthy margins in the quarter, even though they were slightly negatively impacted by the geopolitical environment that is coming with an increased cost inflation. When we look at now going forward, of course, we will compensate that with price increases, and we are already driving price increases, not yet visible in our P&L, while we remain focused on protecting and even growing our market shares.

Looking at our cost savings. We delivered both our cost-saving program in SG&A as well as our COGS savings according to plan in the quarter. We also benefited from the volume development, the positive volume development. So in 2 out of our business units, we strengthened our profit margins in the quarter. And one of them is Health & Medical. Besides the good margin development, we also delivered a good sales development in Health & Medical. We had positive volume developments leading to good sales growth both in Medical Solutions as well as in Incontinence Products. What's especially pleasing to see, I think, is that we had a very good continued volume growth and sales growth in wound care, but also that we're picking up sales in Incontinence Products.

Talking about incontinence products, I wanted to come back to a topic that we have touched on several times before, and that is the financial pressure that is facing health care systems around the world and the work that we do at Essity to encourage policymakers, health care leaders as well as procurement bodies to take a total cost of care approach. This we know from our studies in Incontinence Care Management that, that has benefits both for patients, for staff as well as for the health care financials.

And in this quarter, one of the world's largest health care systems took a step in this direction. It was NHS in the U.K. that introduced a value-based procurement guidance for medical technology, asking their buyers to assess the broader value, including patient outcomes, staff outcomes, supply chain resilience, environmental impact rather than only looking at purchasing price. Of course, positive for us and beneficial for us who have holistic solutions that reduce the burden on patients, staff and the health care system. Now, this will not have an immediate impact on our P&L, but it is very positive for us and others who are working with holistic solutions and continuously invest in innovation.

Talking about investing in innovation, we are innovating across our brands. And in this quarter, in Health & Medical, we launched the next-generation printed Delta-Cast in the orthopedic assortment. Now, for those of you who have ever been in a cast, it's not the most pleasant experience. But we make it a little bit more fun with colors and patterns. And that is actually making a difference, not the least for children who are injured and their well being, then they need to be put in a cast.

And now, we are using a digital printing technology. And with that, we can move beyond the standard 4 colors to millions of colors, and we get the customization to a very different level, to a totally new level. And this digital printing technology that provides not only flexibility, but it's also more cost efficient for us. And I think this is really a golden example of where our innovations are providing both customer benefits and cost efficiency.

We delivered new products or improved products in all our business areas in the quarter. That goes also for Personal Care. In Personal Care, we, for example, improved our TENA Discreet Ultra product, a better shape, which makes sure that the product stays in place and stays in shape during use.

Also, we strengthened the offer that we have in leakproof apparel for men, so we extended the range of boxers, and we sharpened the marketing claims in this assortment.

And then, we rolled out our Secure Protect technology on our feminine hygiene products in Europe and Middle East, Africa. And if you don't remember this, because we already launched it in Latin America a few quarters ago, it's about a new technology for fluid management that is addressing an unmet need in menstrual health, namely handling sudden gushes.

So investing in innovation and also supporting our superior solutions and innovation with marketing, that is really paying off. And also this quarter, we strengthened our market shares in Personal Care. We had a really strong quarter for Incontinence Products, both with good volume growth and sales growth. Also, a very strong quarter for feminine hygiene when it comes to volumes and sales. Then, the margins in feminine was negatively affected by the acquisition in North America, and we are now taking measures to make sure that we move through the transition period as fast as possible so that we improve our profit margins as fast as possible.

When it comes to Baby Care, we followed the same pattern roughly as previous quarters, namely that we were challenged in our retailer brand part of the business, with the lower birth rates as well as with the intense competition. But then, when it comes to our branded businesses in Baby, we're going from strength to strength. So also in this quarter, we grew sales and market share with our Libero business.

Now, before leaving Personal Care, worth to highlight is also that we grew across the different regions in Personal Care. So in Latin America, in North America and in Europe.

And looking then at Consumer Tissue, we had positive development of our branded business in Europe. Otherwise, it was, as I said, a tough quarter, where we had lower volumes and also lower pricing, which is a spillover effect from 2025. Now, of course, we are implementing price increases, as I said originally. We have already implemented, and we continue to do so in order to compensate for the COGS inflation while we stay focused on capturing profitable volumes. And to do that, we are supported by innovations.

And also, in Consumer Tissue, we had an active launch agenda in this quarter. We upgraded our Regio Rinde Más product, which is a lot of times sold piece by piece in Mexico, so roll by roll, which is an important segment in Mexico. And this quarter then, we made this Regio product last even longer, which is exactly what the consumers are asking for in this segment.

We also leveraged our skin health competence that we have in the company to upgrade our Lotus assortment, both in dry toilet tissue as well as in moist toilet tissue. So now, the Lotus comfort sensitive that is really providing gentle care for sensitive skin, which is an attractive positioning to have and something that we are very well placed to exploit.

Now, last, but certainly not least, let's look at Professional Hygiene's performance because we're talking very good performance here. This is the second business area where we strengthened our margins in the quarter. We continue to have good volume growth in Professional Hygiene and sales growth. Strategic products are continuing to outperform the market, and it's also here good to see that we're growing across the regions. We've had some specific focus on North America in the past quarter since there has been some market developments and so on there and especially good to see that we continue to have a good performance also in North America.

North America is, by the way, the region that is probably the most benefiting from the launch that we see in this quarter for Tork. We are upgrading our Tork Mini Jumbo Toilet product, which is basically jumbo rolls in then a very slim dispenser that takes little space. And this is a significant upgrade, and it's a very important product in the North American assortment. So what we're doing is that we make it easier with the dispenser designed to tear off the paper for the user. At the same time, as it's easier for the customer to refill, and for the maintenance, people to refill the dispenser and do that with low waste. So it's a better Tork experience for the user and for the customer.

And speaking about Tork experiences, wherever there is football or soccer, whatever you want to call it, this summer, there is likely to be Tork. Stadiums across places like Mexico City, Vancouver, Philadelphia, Los Angeles, New Jersey, all use Tork to elevate the fan experience. And this is, of course, because they know that Tork understands how to provide superior hygiene solutions in high-traffic venues.

Now, speaking about Tork in high-traffic venues that actually brings me to our progressive adoption of digital solutions and AI because we are using AI to support our customers in high-traffic venues with superior hygiene solutions. We are equipping our Tork Vision Cleaning with AI so that we can optimize cleaning or the customers can optimize cleaning in these high-traffic venues, a very good example of how we integrate AI into our solutions and improve the user experience.

Another relevant example of AI for the quarter, I think, sits in innovation because the innovation I talked about smart protect in Feminine Care that actually hit the market 6 months earlier than what it would have done a few years ago, thanks to the AI-powered digital engineering tools that we are using in our product development. And specifically for the quarter, we also went live with an agentic AI solution in procurement that improves data quality and efficiency in that process.

So these are some examples that are relevant for the quarter specifically. But as we've talked about before, of course, we adopt AI at scale in many different areas across the company and across the value chain. Some of them are in demand and supply planning, in predictive maintenance, in marketing and claims development and not the least in financial services, right, Fredrik?

Yes. Yes. Thank you, Ulrika. Absolutely, we do exactly that. And we use it increasingly as an example in business control applications and in shared services, as you mentioned, for instance, for payables. And this is, of course, just the beginning. So we see great potential as we go forward.

So I will lead you through some of the numbers. Ulrika has talked about the development in general terms, and I'll show you a little bit about the numbers. So if we start with net sales, as you can see, our sales grew with -- about SEK 1 billion, if we compared to the same quarter of last year. And out of this, 0.3% represents organic sales growth and 1.7% is related to the acquisition of the feminine business that we did in North America. And if I start with that acquisition, you can say, generally speaking, the net sales is according to our plans, as is the volume. So roughly performing as we -- as it should in terms of sales.

So if I go to the volume side, you can see that it grew with 1.4%, and that continued the trend that we saw also in the first quarter of this year. And we saw accelerated growth for Health & Medical, for Personal Care and also for Professional Hygiene, as Ulrika mentioned earlier.

And starting with Health & Medical, we actually saw very good growth for both of these entities or areas, so both for incontinence and for medical, and the total volume growth was about 2.5%. We can't rule out a bit of a -- perhaps a bit of a pre-buying trend in the second quarter that happens occasionally. But nevertheless, the momentum in Health & Medical was very strong, and particularly so, for Wound Care continues to do super well in terms of volumes.

Going to Personal Care, by now, we got a little bit used to the trends there. You see that if you look at the overall volume growth, it was 4.3%, so very strong. And as before, very much in Feminine and Incontinence, both of them growing between 6% to 7%. So very, very good.

Now, Ulrika talked about Baby and the market there. The market demand is still challenging, as is the competitive environment. So we grew, and volume growth was good and market share development in the Nordic part of the business, whilst the Continental retailer branded was challenging and negative growth. And overall, we had a growth -- or negative growth of just about 3% or thereabout in the second quarter.

Consumer Tissue, 2.7% of volume decline, and this is a bit, you can say, skewed because the volume increase for our branded sales and decline for our private label. If you look at the total market, it was just the opposite. So branded was actually decreasing much more than what we saw in private label. So we were a bit different. And of course, this is favorable from a mix perspective, but overall, the overall volumes were negative.

And then finally, Professional Hygiene, with a 3% volume growth. So really continuing to have a very, very good volume development that started in Q4 of last year, Q1 and now accelerating in Q2.

So if you look at price and mix here, you can see that it's negative with 1.1%. And this is actually all price, in fact, more is price. So we had a price decline of 1.3%. And this is a consequence of the price concessions that we have done in previous quarters. So if you look at sequential, development of price is largely flat. So this is all about the price concessions that we did primarily in Consumer Tissue, in Baby and also in Professional Hygiene in previous quarters, and this was with a bit of different background. When it comes to Consumer Tissue, it was very much about adapting to the lower pulp prices that came last year. When it comes to Baby and Professional Hygiene, these were deliberate decisions to increase the volumes. So again, related to previous quarters.

So with that, I'll move on to the margin. And as you can see, and we've also stated that in the report, we believe the margin -- given the geopolitical uncertainty and the situation, the margin is resilient. It declined with 30 basis points, but we saw a very good development for Health & Medical, a somewhat better margin also for Professional Hygiene and a decline for Personal Care and Consumer Tissue, but for different reasons.

If we look at -- if you look at Personal Care, it's largely related to the acquisition of the Feminine business in the U.S. And as Ulrika has already mentioned, we have seen unexpectedly a bit higher cost, actually, both for cost and for services. And we are still a bit inflexible due to the setup with the service agreements that we have in place. And so we are working very extensively to integrate the company into our own business, and that's progressing according to plan, but it leaves us a bit inflexible, and it will take some time to restore margins to where they should be.

Now, once again, we are very committed and very strong believers that we will deliver the business plan as we have contemplated or calculated before. So overall, the gross profit margin declined by 70 basis points. As we communicated in Q1, COGS did increase, actually a bit less than we had anticipated due to favorable currency movements, but it did actually increase, and that had a drain on the margin. We had, and I already mentioned it, some price declines in Consumer Tissue, Professional Hygiene and Baby, as I mentioned, that also had a negative impact. And all of this, to a degree, was compensated by a positive mix and volumes, but overall, of course, gross profit was down with 70 basis points.

Now, we've communicated many times that we strive to continue to invest into growth in A&P. We did that also in this quarter, as you can see, and we had a very good development of our SG&A. So again, we have communicated many times around our cost-saving program in SG&A. That is starting to deliver now. So in the quarter, we are having a benefit of about SEK 100 million, and we will gradually see higher numbers here in Q3, and especially so in Q4, and we are very much convinced that we will reach our target of SEK 1 billion or more of savings as a run rate at the end of the year.

So let me just end this section here by giving you a little bit of guidance to what Q3 will look like in terms of cost. So we see significantly higher cost for COGS, and this is no surprise, perhaps, but related to oil-based material on the back of higher oil cost, obviously. And we also see higher energy costs. So overall COGS, we expect that to increase. We also expect a bit higher cost for SG&A, and this is including A&P. So this is the guidance for the cost Q3 versus Q3 of 2025.

So let me go on to some really quick words on cash flow. It was SEK 2.8 billion. So okay. It was a reasonable quarter in terms of cash flow and a very much stronger quarter than we had of the same period of 2025. So cash surplus remains very strong. We had a reasonable performance of working capital. Q2, we always consume working capital. That's just the nature of our business. And if you look at the reports, some of you may have noted that the working capital to sales increased from 10% to 11%. This is actually not due to underlying factors. Underlying, it was relatively stable. It had to do with partly the Edgewell, or the acquisition of the Feminine business.

It had to do with currency movements and a bit of timing. But in relative or underlying terms, working capital was relatively stable. And you know our ambition to, over time, reduce that as we go forward. But overall, operating cash flow quite satisfactory. And this has led to a continuously strong balance sheet. So our net debt-to-EBITDA ratio, despite the acquisition of our Feminine business, remains strong at 1.1 in terms of net debt to EBITDA. And the debt level or net debt level is about the same level as we had in the first quarter.

Now, we have launched, and we started and initiated the sale or share repurchase program, the third actually, on May 12, and we have purchased during this short quarter, so to speak, 2.1 million shares to an amount of roughly SEK 550 million.

And with those words, I'll leave over to you, Ulrika.

Thank you, Fredrik. So to summarize the quarter very quickly, I would say that we delivered volume-driven sales growth and resilient earnings.

Now, going forward, of course, you heard Fredrik talk about the cost development, so needless to say, one of our top priorities is to compensate with price increases, and we've already implemented some that will -- that is not yet visible in our P&L, and we'll continue to compensate for the COGS increase as well, maintaining our focus on also driving profitable volume growth.

Another one of our top priorities is, of course, to continue to execute on our various initiatives. The cost save program that Fredrik talked about as well as now maximizing the leverage of our new organization that we have in place, the integration as quickly as possible of the feminine acquisition in North America and also progressing on the strategic review of our Consumer Tissue business.

Then, if we go beyond the initiatives that we have, we talked in the Capital Markets Day of the different focus areas that we have to improve our performance even further and accelerate our progress towards our targets. And we then maintain the work and activities in this area, specifically investing even further behind our very strong brands and our superior products and reducing costs further in order to free up funds to be able to do exactly that. Also, we are sharpening our innovation agenda. And we do all of this in order to accelerate our progress towards our financial targets, which remains to be that we should grow above 3% organically, on a profit margin of at least 15%.

So with that, I guess we hand over to Q&A.

Yes. Thank you, Ulrika, and thank you, Fredrik. We will now open up the line for questions. [Operator Instructions] Okay, are we ready to get started?

Yes.

Yes. Perfect. So we have the first question from Aron Adamski from Goldman Sachs.

My question, I have one. Could you talk about the performance of Consumer Tissue? And what do you expect for rest of the year? In particular, could you give us a sense of the magnitude of price increases that you have announced so far? When do you expect this to start contributing to organic growth given that there is always an element of the lag? And also, in the context of Q1 performance, how do you expect the non-branded volumes to evolve for rest of the year?

Well, if I start briefly, as I mentioned already, we have already implemented some price increases, and we have agreed on some others that will be visible in our P&L in Q3, but we continue to work with price increases. And of course, it's a quite volatile situation. We don't know exactly how the costs will develop. So this will have to be a continuous work that we do over time.

And when it comes to the volume development, we have -- I think we've mentioned that last quarter that we have secured some volumes in Consumer Tissue in the private label business for the second half of the year.

Fredrik, maybe you want to build on that.

No, I think you said it very well. Aron, we do have a lag, and this is, of course, the same this year, but we always compensate with price. So we will continue with price increases as long as it takes to fully compensate as we always do.

Thank you for your question, Aron. Now, we will move to the next question, and that question comes from Molly Wylenzek from Jefferies. What is your one question today?

Yes. Can I ask about Professional Hygiene and any one-off benefit to the HoReCa business from the World Cup? Or do you expect that this type of volume growth -- very good volume growth, I should say, can continue?

Yes. As we talked about here also, I mean, we've seen our volume growth in Professional Hygiene for several quarters. So that is clearly an underlying performance improvement that we have and that we will maintain or foresee that we will maintain. So of course -- I mean, big events is positive for the Tork business, because people come together, they go to restaurants and to big venues and so on. But that is no different depending on what event it is. So we don't see that, that is -- that, that has any specific effect. Then, of course, we are very proud that Tork is seen as a solution that provides superior hygiene solutions in high-traffic venues, whatever the arrangement is.

Thanks for your question, Molly. I hope you got the answer you wanted. Perfect.

So then, we will move to Johannes Grunselius, [ SB1 Markets ].

It's Johannes here. Yes, I have a question on if you can maybe elaborate and perhaps quantify any pre-buying effect. I think, you mentioned this in the discussions here earlier. But is it possible to say anything about the possibility -- what you think about the effects on pre-buying?

Now, what we said was that we cannot rule out that there is some pre-buying effect on the incontinence care side in Health & Medical, but the quantity of that, we cannot say. We don't know.

Thanks for your question, Johannes. We will now move to Tommy Arlasjo from Handelsbanken.

You said that you expect significantly higher COGS ahead due to oil-based materials and energy, which divisions outside of Consumer Tissue are most exposed to this? And how fast can you offset increases -- with price increases? And do you expect to lose volumes because of it?

Well, if we start with the effect and the exposure, this -- we're talking about oil-based raw materials like superabsorbents and nonwovens and so on. And there, where we have that in our products is especially in Incontinence Care as well as in Baby and some extent in Feminine as well. So that we will see coming on. And the time it takes for us to move on prices is takes -- it's different. It takes 1 to 2 quarters in consumer tissue, and then, it can take longer where the -- where we have the longest time lag for price increases. It's normally in our health care environment, which is regulated and where we have longer-term contracts.

Then, when we work with this, I mean, as Fredrik said, what we do and what we have also shown in our track record is that we always compensate over time with price increases. But what we also do is to work very selectively on this, depending on the category, the market and the cost exposure and to make sure that we continue to drive volume growth while also compensating for the COGS increases. So that is our clear ambition.

Thanks for your question, Tommy. We will now move to the next caller, who is Oskar Lindstrom from Danske Bank.

I'm just curious if you have any more update on the strategic review that you could provide us with, whether it be sort of which options you are currently focusing on or the timing? When can we expect some kind of a commentary from you about the outcome of the strategic review?

Yes. The information is pretty much the same as you heard us talk about in the Capital Markets Day, when we announced this, and that is that we expect this to take some 6 to 12 months considering the complexity and that we want to make this thorough and assessing the different options that we have on the table. So that is still the case.

All right. So no update there.

Thank you for joining Oskar. Now, we will move to Diana Gomes from Bloomberg.

Most of my questions were asked actually. But if we could go back to the price increases that we should see coming through in the first quarter, could you perhaps give us a little bit more detail in which regions the prices that were announced or implemented since the last quarter would be? Because I believe in the first quarter, you mentioned Latin America and Europe.

Yes. And that's pretty much the same. So Latin America, as we talked already previous, we talked about already in Q1, and then, also some in Europe.

So just adding up to that?

Yes.

Next question comes from Niklas Ekman from DNB Carnegie. What is your one question today?

I'd like to ask a little bit on input cost and pulp in particular. The way I see it, I see pulp prices have been rising for 9, 10 months here in Europe. And yet, we don't see any significant signs of this, and you even have lower prices in consumer tissue. And when you talk about the outlook, you're highlighting oil and energy, but you're not talking about pulp. So I'm just curious if this impact is a lot smaller than we seem to think, if there's an element of inventory revaluation and if the effects are just more lagging?

Well, I'm sure Fredrik can provide more information on this, but I just want to comment first on that what you see in pricing in this quarter on consumer tissue is a spillover from earlier when we had lower input costs over a period of time and have adjusted to that. So just to comment on that before then going into the COGS.

Yes. Niklas, I don't think you should interpret our lack of talking about it as it doesn't have an impact. It has a lot of impact, and it does. Actually, specifically, sequentially, it's a bit challenging to talk about year-on-year in this aspect, and I'm sure you actually know that because what happened last year was that pulp actually came down for a couple of quarters, and then, it's gone back up in Q1 and Q2. So if you look at it sequentially between Q1 and Q2, the impact is very significant.

It's a little bit milder due to FX impact, which is favorable. But all -- in all fair comparison, the impact is very significant. And of course, that is driving part of the reduction of the margin. But when you compare it to last year, the Q2 of 2025, then the impact is not so good because first, it went down and then went back up. So of course, when you look at pricing for Consumer Tissue, when we talk about pricing, we have to deal with the sequential impact, and we will have obviously, also a negative sequential pulp impact also in the third quarter. So just to make it very simple, yes, the pulp cost is increasing quite significantly, and it does that in Q2, and it will also be there in Q3.

Perfect. I hope that answers your question then. [Operator Instructions] Let's give it a couple of minutes. Yes, here, we have a question from Antoine Prevot, Bank of America.

So on my end, in Personal Care, could you quantify the impact from the unexpected higher costs you mentioned from the Edgewell acquisition? And is it fair to assume a similar impact for the rest of the year?

Well, if I start with the second question, as I said, we take measures to do the transition as fast as possible so that we can have the same level of flexibility and agility that we have in the rest of our business and thereby address cost increases that come in a different way. So we expect to improve this quickly over time over the rest of the year.

Yes. Maybe I can -- Antoine, I can comment on the impact. Actually, you can see it in the report in the latter part of the tables there. But as I mentioned earlier, most of the impact or actually all of the impact for Personal Care in terms of margin decline is related to that acquisition. So you get a good grip on the impact because it's not related to sales. I also mentioned that in terms of sales, we're pretty much in line with our expectations. And so it's actually a cost issue. And you can see that with the reduction of margin from Personal Care. So that's roughly the impact.

The next question comes from Tom Sykes, Deutsche Bank.

Just I had a question on SG&A, please. And just if you could clarify the remarks you gave. I think you said that SG&A would be up year-on-year in the second half of the year, but it obviously looks like you decreased your SG&A in Q2, and you were decreasing it sequentially. So what's happening when given you're driving SG&A savings, which are accelerating over the course of the year? Why would we then be moving into a point where SG&A is up year-on-year, please?

Yes, it's a good question, Tom. It has to do with basically, you can say 2 things. The first one is that -- you may remember actually, Tom, that if you go back to Q3 of last year, we were coming off of Q2 where SG&A costs actually increased a lot. So we hit the brakes very significantly in Q3. You might remember that you saw a very big decline with everything from consultants to travel to just about everything. So you can say Q3 was very low in terms of SG&A last year. So the first answer to your question is actually comparable.

Then we have -- the second one is actually we got a bit of a phasing in terms of IT costs. So we will have a little bit of higher IT cost in the third quarter. And finally, of course, needless to say, we got a natural inflation into -- to the SG&A. And this is, of course, on top of what we strive to do with A&P because we have communicated many times, we want to continue to fuel growth, and that's exactly what we are going to do also in the third quarter. So against all of this, of course, we estimate the savings to come in from our cost savings program. But if you sum all of this up, we'll see a bit of an increase of SG&A as I told you. So many moving parts, Tom.

Thank you for your question, Tom.

Then, we will continue with the question from Linus Larsson from SEB. Linus, what is your question today?

I'll just have another go at what you're talking about with the third quarter balance between price/mix and COGS. So I think I heard you saying you're expecting significant COGS increase year-on-year in the third quarter. Are you expecting significant price/mix improvement as well in the third quarter?

Again, Linus, I think we were alluding to this earlier that, of course, it's super difficult for us to comment on pricing-wise an individual quarter, not least for commercial reasons, as I'm sure you will anticipate. But generally speaking, we have a different speed of adaptation for our different categories. So typically, if you look at consumer tissue, we're relatively fast.

If you look at Health & Medical as the other extreme, it takes a bit longer. So over time, we always compensate with price, or any cost increase, we always compensate with price. But of course, it takes time. And depending on what kind of cost is increasing or input cost, it takes different sort of amount of quarters to compensate. But we do everything to increase prices where we can do that.

Okay. I hope that answered your question. Let's then move back to Niklas Ekman, DNB Carnegie, for another question.

Yes, please. I want to switch to volume growth here. Very good volume growth here, both in Q1 and even more so now in Q2, pretty much all businesses except consumer tissue. I'm just curious what do you see here going forward, your ability for this to continue in the quarters ahead despite the COGS compensation that you're talking about with price hikes. Basically, how do you expect to balance this return to volume growth against your need for price hikes?

Well, first, of course, it's the underlying effects that we work a lot with in strengthening our brands and strengthening our value propositions and also increasing our marketing investments. And as we've talked about here, we do the cost-saving program in order to free up more resources to invest behind our superior products. And that will continue to drive a positive volume development. We've also taken the initiatives in order to create even better conditions for accelerating volume growth with the reorganization that makes us faster and more agile and some of the other activities that we have talked about. So this, we will continue with, and that will, of course, continue to fuel volume growth.

Then, as we have also talked about here, when we work with price and volume, we have to be quite surgical to make sure that we compensate for the cost increases while at the same time, keep the momentum in volume development. And that is really the competence and capability of our commercial team to do that in the right way so that we strike the right balance.

Perfect. I hope that answered your question, and thanks for your question, Niklas. We will now move back to Molly from Jefferies.

Can I ask about energy costs within the EBITDA bridge, both for this year -- or this quarter, excuse me, in terms of how much that was an impact about the Q3. I know you're quite hedged on whether that hedge impact will be a...

Yes. If I start with the latter question, our hedge rate for Q3 is roughly about 65% for both electricity and gas. So roughly about that much. If we look at the quarter -- or Q2 then versus Q2 last year, the impact for energy totally was roughly about SEK 40 million negative. So not huge actually, but still -- so a bit negative, and we'll see that, and I already mentioned it, we will see that negative trend also continue as we go into Q3.

Then we will come back Linus Larsson, SEB. Linus, what is your second question?

Thanks a lot for taking a follow-up on COGS, actually. The SEK 90 million that you show in your bridge is, in my mind, surprisingly low figure. I wonder if you could, in any way, dissect that. You mentioned currency. How much was that? And you also mentioned the SEK 160 million on cost savings. But apart from that, any way to explain that, in my mind, relatively low figure, please?

Yes. I mean, you've got some, right? COGS savings, we had a positive SEK 160 million. We had a bit of distribution cost, roughly about SEK 100 million negative. We had, I already mentioned, the energy about SEK 40 million. Raw material was actually quite flat, very negative, as I already explained in terms of pulp in Consumer Tissue, but positive actually in the other areas. So from a net perspective, not a lot. So -- and then we had finally a bit of inflation in our cost generally speaking, so we had a bit of other COGS, so to speak, of a bit over SEK 100 million. So that adds up.

So to be fair, and I mentioned it earlier, we had expected a bigger number. And most of these items, I have mentioned, were pretty much in line with our expectations, but we had -- and of course, that's fully observable, a bit of beneficial currency impact, so dollar versus euro, et cetera. So this was the reason for a bit better cost performance than we had expected.

We will also move back to Aron Adamski from Goldman Sachs. Aron, what is your follow-up question?

I was wondering if you could please remind us how does currency translation impact operating leverage? It looks as though FX could become somewhat more favorable later this year. So I was wondering whether that should provide any benefit to central cost leverage. And related to that, could you share how much of your SG&A cost base is denominated in the Swedish krona?

That was a detailed question.

I am now very much looking at Fredrik to answer.

Yes. I think you actually said translation, or was it transaction? Because translation should normally not have that much of an impact. From time to time, depending on what currencies move back and forth, it actually does have an impact. And in this particular quarter, it actually had a little bit of impact currency-wise. It's not huge, but a little bit. So translation is typically not the issue. It's more transaction.

And you're absolutely spot on, if you have a weaker -- as an example, weaker SEK, then typically, we get a bit of benefit. But to be fair, that's actually -- all of that is very small. It's not going to be material in our P&L. What actually counts much more in -- for our P&L is the development of U.S. dollars versus euros because a lot of the input costs that we buy is denominated in U.S. dollars, but we cannot sell our products in euros. So that's the more important thing. And this is what has actually had an impact during this quarter, Q2.

Thank you, Aron, and thanks, everyone, for your questions. Now, it's time to wrap up. But before we end, I hand back over to Ulrika for final remarks.

Well, thank you, Sandra, and thank you, everyone, for joining us this morning and wrapping up the first half of 2026, where we deliver volume-driven sales growth and resilient earnings. And I wish you a very good summer. I hope that you get some vacation. And if you then passed by an airport or you go to the restaurant or you go to a big stadium and have some fun, then I wish you a fantastic Tork experience.

Yes. Perfect. Thank you, Ulrika, and thank you, Fredrik. Thanks to our audience for watching. If you have any further questions, you know where to find us. If you would like to schedule a meeting, let us know.

With that, enjoy the day, the summer, and bye for now.

Ready to start now, everyone. Pleasure to start the session with Ulrika Kolsrud, the CEO of Essity. Ulrika, good morning, and thank you very much for joining us here in Paris.

So Ulrika, you've been at Essity and SCA before that for over 30 years. And prior to becoming CEO, you were President of the Health and Medical division. When you were made CEO, what was the process you went through to refine the recently announced strategy? And how would you describe currently the strengths of Essity? And which are the areas that Essity hadn't previously optimized?

Well, thank you. That was many questions in one, right? But let's try to take one at a time then. So when I started, obviously being in the company for 30 years, you come in with some perspectives and some views and so on. But I really took the time to take a step back and reassess the full business. So capturing external views, internal views and so on to enrich my own thinking and doing a full assessment of both our strategy and how we execute on our strategy. And speaking then about our strengths, from my perspective, I reconfirmed many of the strengths that we do have.

One being that we have leading brands with very strong positions, which puts us in a very good place to capture the growth opportunities that we have in attractive hygiene and health markets. Another one being that we have superior offers and also that our superiority, meaning how big share of our products that is the first choice among customers and consumers, that KPI that we follow very closely is increasing and is on record levels. So that's very clearly a strength for us as well as our innovation engine and our demonstrated brand-building capabilities, also a strength.

And one that we don't necessarily talk about a lot, which I believe is really a competitive advantage for us is our ability to combine scale benefits with local relevance and do that in a very good way. So many of those advantages and strengths that we have. Also not to forget that we have a very strong balance sheet. So of course, then the financial flexibility to both invest in our own business to give back to shareholders and pursue value-creating M&As if we want to do that.

Also, I would say, from a strategic standpoint, the strategy that we have in place, I found very relevant for what we want to achieve in our financial targets, which also I concluded were ambitious enough and at the same time, realistic. So all of that, all good, right? But then we are not delivering on our financial targets yet. And I think our progress towards our financial targets have been slower than it has to be. So I think there is potential to accelerate that progress towards our financial targets and unlock the full potential of our portfolio.

So my conclusion was that we should take actions in order to accelerate progress and execute in a more focused and disciplined way on our strategy and also take some actions to unlock the full potential of our portfolio. So that is what I've been focused on. Was that answering all the questions?

It was. Sorry, I do hate it when people ask multiple questions at one go and I did exactly the same thing. So I do apologize. So if we -- let's look at some of those near-term actions, which you've taken, which include creating a more decentralized organizational structure, a savings program to generate funds for investment and a review of the portfolio composition. Firstly, on the decentralized structure, in practice, what does that mean sort of compared to before the changes? And what is that due to unlock?

And I think it's -- what we're doing then is that we are basically moving away from our matrix organization that we've had -- and then instead making every business unit or business area leader responsible end-to-end, which drives end-to-end accountability. Also with the 4 different business units that we now have with Health & Medical, Personal Care, Consumer Tissue and Professional Hygiene, we allow each of the businesses to be optimized based on their specific business drivers. And it also enables us to focus most of our efforts in the most attractive categories and segments.

But I think the most important, and we have one of our strengths that I don't think I mentioned was that we have a lot of committed and engaged employees. And I want to unleash the full power of those employees in a more simplified structure. And also, most importantly, we become faster in decision-making, faster in execution and faster in responding to evolving consumer and customer needs. And that is the end-to-end accountability that is the answer to that.

Okay. Fantastic. Thank you. And you mentioned the portfolio composition. One of the outcomes of this process has been the announcement of a strategic review of the Consumer Tissue business. This is approximately 30% of sales and a little under of EBITA. What is the rationale for the strategic review? And why would Essity excluding Consumer Tissue, be better than Essity including Consumer Tissue? And indeed, why would consumer tissue be better as a stand-alone business?

Yes. No. So one of the initiatives or one of the things that I did coming in as new was to really intensify our work with our portfolio and our portfolio composition because we've had for a long period of time, we've had the strategy to shift the portfolio towards our most value-creating and our highest yielding categories and segments. So I think for me, it was more about how can we intensify and work even more with that. And one of the results of that was the strategic review. And it's, I think, important to be clear about that. Consumer Tissue is a strong business, and it's cash generating, and we have improved the business quite considerably over the past years. And looking at the plans that we have ahead, it's also more potential for value creation.

Then we have, to my point, the strategy to shift the portfolio to the most value-added segments and categories and the highest yield segments and categories. And when then you look at that together, the conclusion is that we want to find a way to create the best possible conditions, both for Consumer Tissue as well as for the rest of the company to develop to their full potential. And that is the aim, and that's why we are looking into different options for how to make that happen.

And it's quite simple. If we then look at should we come to a conclusion because no decision is taken, but should we come to the conclusion to separate consumer tissue from the rest, then the big benefit, of course, for the rest of the company would be that we would put all our focus and efforts on these higher-yielding and value-added segments and categories. I mean we want to work -- we want to be in categories where branding and innovation matters a lot, right, where we have high value add. So that would allow us to put full focus on that. And then Consumer Tissue, having quite different fundamentals being capital intense and so on could then be in a situation where you have full focus on the business drivers for Consumer Tissue business?

Thank you very much. That's clear. I think on the industrial logic, I guess people have focused a little bit on if the business is separated, would you see any significant stranded costs at all? Or is there any perceived loss of scale advantages that you'd have in procurement to the smaller group.

Well, I think one thing, and we've talked about the rationale, the commercial rationale for us to have the composition we have today, and that is still true. The fact that we have synergies in the front line when we go together as one sales force with Personal Care and Consumer Tissue. We have some synergies on the back end with Professional Hygiene on the supply chain side. And those, of course, we need to take into account in this assessment. And obviously, if we would proceed with the separation, then we would be a smaller business unless we don't outgrow that again, and we would have to cater for those costs. But that is something we would have to do in that case.

When it comes to procurement specifically, I would say it's a much smaller effect than maybe what people would think because also with the other 3 business units, we have sufficient scale for leverage in procurement. And you should also remember when it comes to purchase of pulp, that in Professional Hygiene, it's a high share of recycled fibers. In consumer tissue, it's a high share of virgin fibers. So there is not that much scale benefit between the 2. So on procurement specifically, I would say it's not any significant impact. But again, all of what I'm talking about now, the details of that is exactly what this analysis and assessment is going to answer.

Okay. Thank you. And looking at the near-term prospects for consumer tissue before we move through the other divisions in the group, the business is 50% owned brands, 30% larger retailer brands and 20% smaller retail private label. What impact of commodity increases do you see at the moment? And what impact on elasticity are you expecting in consumer tissue specifically.

Well, what we see is now following the Middle East crisis is that we have the impacts on energy costs and fuel costs and eventually over time also oil-based raw materials. That is not so much in Consumer Tissue, but a bit on materials, generally speaking. And that will happen as we move along in the year, more over the year, but things happen every day, right? So the quantification of that is not so easy to see at this point in time.

What we will do and what we already do, as we always do is to then compensate those cost increases with price increases. And considering the fact that -- I mean, we are in a different situation now than we were in the last cycle, we have become more agile, not the least within consumer tissue. So we compensate quite quickly with price increases. And we also know that it's -- for consumers, it's not a big -- it's something that is essential. It's not a big part of what -- of your wallet. So there is room for those price increases.

And I mean, I think you've answered a little bit across the group, but you obviously have some productivity measures in place. But should we expect price increases across all the divisions as we move through the year.

Generally speaking, yes. But of course, to a different magnitude and different timing depending on category and markets.

Okay. Thank you. Now moving on to Professional. And I had to double check this because since 2019, your volumes are flat organically in the business, but your EBITA is up by over 40% and your operating margin is up by 320 basis points. So to your point about focusing on higher-yielding categories and parts of the business, how have you managed to increase the operating profit by so much when you haven't seen volume leverage. And I guess, how has the mix changed in that business over time?

Well, it is -- to a big extent, it is mix driven then. I mean, partly this is more organically driven and partly it's deliberate restructuring. So we have taken actions to move out of some low-margin business in the past years, a very conscious decision to do that. And that has, of course, had -- that is the reason why we have not had volume growth as well because we have moved out of those areas. And then we have had underlying volume growth elsewhere, but that you don't see because of this restructuring that we have done. So that is one part and that has then helped the margins.

But then also, we are focusing a lot on the strategic systems. The strategic systems that are more sticky in terms of customer loyalty and so on, but also that has a higher margin and it's important for the future. So that is also an organic mix shift towards more strategic systems.

Okay. And when we think obviously at a higher level of profitability, but you want to be growing volume and the gross profit now. Where is the biggest opportunity in Professional? I mean maybe you've answered it with the systems one. And how would you assess the cyclicality of that business?

Well, the biggest opportunity remains to be in strategic systems if we look at from a portfolio standpoint. That said, now when we have that nice profitability that we were talking about, we are also looking at sustaining the base. So also the areas that is more of our base assortment, we will continue to make sure that, that is staying where it is or at least growing with the market while we really double down -- continue to double down on our strategic systems. Also, there are big opportunities geographically speaking, in D&E markets where the penetration of these type of solutions is still an opportunity for us.

The -- yes, well, we -- you were talking about how cyclic the business is and so on. We are working across different segments. So I mean something we have talked about in the past quarters have been that HoReCa segment in the U.S. has been a bit under pressure because of consumers not going to restaurants and so on. But that is only one segment. And we are also present in the industrial segment and in -- also in public segments, commercial segments and so on. So that diversification is, of course, derisking us when it comes to cyclicity.

Okay. Thank you. So moving on now to Health and Medical. Where here do you see the largest volume or gross profit opportunity? And maybe are there any comments on the tendering environment at all currently?

Well, here, we have opportunities across many areas, but I would say Wound Care is where we have the biggest potential and also where we put a lot of focus. Then in Incontinence Care, I mean, we have a growing aging population and incontinence care is, if you look at both retail and health care channels, it's 20% of our business. There's still so much growth opportunities in this category that we drive across the different sales channels. And then if you look even broader, I would say, a smaller part of our business, but a high potential is to treat lymphedema, which is an underdiagnosed condition that -- where we have fantastic products. So, so many different opportunities, but maybe Wound Care and Incontinence Care are the ones that have the biggest magnitude impact on our performance.

And Wound Care is -- it's a very high operating margin business. Are you comfortable that those margins are sustainable within the...

Yes, I am. For 2 reasons, I would say. One is that even if health care budgets are under pressure and that we face, of course, reimbursement challenges across different categories. And that is something we have done over many, many years, and we are used to operating in that environment. Even if that is the case, when we have differentiated and unique technologies, when we have clinical evidence and we can prove health economic benefits, we will always have some protection against that because that, of course, is something that our customers and our society needs. So that is an important part of it. Also, we have still plenty of opportunities to get leverage from volume in Wound Care in order to also drive margins.

Profitability. Okay. Thank you. So looking now at Personal Care, how does the level of innovation compare to previous years? And this is obviously an area you've been allocating incrementally more A&P. Are you seeing the benefits of that increased A&P spend.

Yes. And I think if we go back to your first question, maybe something to mention is that one of my conclusions when it comes to execution of our strategy is that we have really so much great opportunities to invest behind with the strong brands, with the leading positions, with the superior products that we have and the innovation engine. So that is really something that was important for me when assessing the business that we free up resources so that we can invest behind these opportunities that we have. And that goes across our business, but especially so in Personal Care.

I would say, innovation-wise, it's not that we are investing more in innovation today than what we did a year or 2 years ago, but we are becoming more mindful in prioritization. So fewer, bigger, better. I mean we want to drive innovations that have real impact. And there you go back to the organizational change and unleashing the power of the organization because that's an example of where the organization makes a difference. When you have the innovation as a direct responsibility and accountability of the business unit leader, then you can be more precise in your prioritization. So it's about prioritizing innovation in a more focused way. But then when it comes to A&P, yes, we are increasing our investments because of the attractive opportunities we have to invest behind, and we see the effect of that. So we have good return on investments.

Okay. Fantastic. And you've seen strong growth in inco retail. You obviously mentioned the opportunity in inco, but there's been potentially budgetary pressures in Health and Medical. You're obviously seeing, as I said, the high growth in the retail side. What is really driving that? And that switch of Inco from health care to retail, is that gross margin positive for you as a company?

Well, if we start with the growth, I think what we see and back to this that what's important for us is that we capture the growth from a total category perspective. Whether it ends up in the Health and Medical P&L or in the Personal Care P&L doesn't really matter for us. It's important to drive that. And actually, we have this, I would say, really key competitive advantage that we are present across the channels, gives us scale benefits, but it also means that we can move with where the demand is moving. And in most cases, to your point, the channel shift is going more towards retail. There are some exceptions for that where there is channel shift in the other direction. But in most cases, it is going to retail.

And the reason for that is many. One is that when -- if you look at the starting point of incontinence care and when we drive awareness of incontinence, then it's in the lighter end that, that has an effect. If you have -- if you are in the nursing home and you are incontinent, you will get products. It's not so much about awareness, right? But if you have a lighter issue, then if you're aware of that there are help to be found with some high-quality products that support you, then that drives growth in that end of the area.

So it's not only about the budgetary pressure, but that is, of course, one thing as well, where if there is pressure on the health care budgets, then they cannot fund incontinence products to the same extent, then the demand is still there. So then the consumers or patients or caregivers, they go and buy the products in retail instead or in the pharmacy or online. So that's why you see that shift. But for us -- and that's back to your third point there. For us, that doesn't matter because generally speaking, the margins are quite similar.

Not quite similar. Okay. Fantastic. And how would you characterize the competitive environment in Personal Care currently? And there's obviously large competition that we know about and we'll be attending the conference as well. But from the point of view of smaller brands in maybe Asia, China and emerging markets, are you seeing an emergence of smaller brands at all in the categories you operate.

I think the competitive -- I mean, it is a competitive market, and we have been in that competitive market for decades. So I don't see that there is any major changes in that dynamic. It continues to be competitive. And yes, there are new players coming in, but there have been new players coming in earlier as well. when it comes to Asian suppliers, we see some of that in developing and emerging markets, but it's no big shifts from that perspective.

Okay. So one of the criticisms perhaps has been that whilst the gross margin has improved, the conversion rate of that gross profit into EBITA hasn't increased as much due to rising SG&A costs. You're going through a cost-saving program now, which is targeting SEK 1 billion of cost savings by the end of this year. How much of that do you expect to benefit the EBITA margin? And how much -- and I guess, what are the priorities you have for investment.

Well, our intention is to reinvest those savings into growth opportunities and supporting with A&P could be also selective price adjustments and other sales driving activities. So directly, it would not benefit the profit margin. Indirectly, it will because with growth, we will drive volume and get operating leverage.

Okay. And if we now look at the capital investment and M&A, we've obviously spoken about the strategic review of Consumer Tissue. But what are the areas that you'd like to invest more capital into? And are you likely to push M&A more than perhaps your predecessor.

Well, the -- if I start with what we prioritize, I think it's no difference actually based on where we prioritize organic growth. So it's in the highest yielding segments and most attractive markets. So we will prioritize feminine care, incontinence care, wound care, strategic segments in Professional Hygiene. And from a geographical standpoint, North America remains interesting as well as D&E markets. And we use M&A. I would say, first and foremost, for us, M&A is a vehicle to create scale and presence like with the recent acquisition in North America in feminine.

But also, we see an opportunity to use M&A to gain channel -- expanding channel presence and bring new solutions into our portfolio. So all of the above. The -- when it comes to -- if I would drive this more than my predecessor, I would say we have a very strong balance sheet. And of course, that gives us the financial flexibility. But that doesn't change our approach to M&A. We have an active portfolio and look very actively on identifying targets, on assessing targets. But in the end of the day, it's about value creation. Strategic fit, obviously, but also value creation. So it's not a difference in approach. It could be a difference in if we have the opportunity -- if we find the right opportunities or not, but not in approach. It's very disciplined.

I suppose in addition to that sort of price sensitivity of the parameters, I guess, similar for you there or more holistic about the longer term.

No, but it is the same. Of course, we want to make sure that it's value creative. So then you have to take that into account.

Okay. Thank you. We're coming towards the end of our time now, and we'll also open to the room if there are any questions. But perhaps you could give your views as we come towards the end on overall consumer demand as how you see it as a company? And how are you expecting Essity's portfolio to perform this year in that macro backdrop?

Yes, I wish I had the crystal ball, right? I wish I had the crystal ball. But I think what is important for us is to make sure that we can win in spite of environment. So we are ready to capture the growth when the tide turns, right? But we're also operating in the current environment where consumer demand remains depressed, right, from what's happening around in the world. And how we do that is a lot about making sure that we continue to drive premiumness, but we also make sure that we have an attractive offer in different value segments so that we can meet the demand where it's at.

And for us, I mean, we have -- we are providing essential products that you need every day. So from that standpoint, we are resilient. And also depending on what happens in the world and so on, we -- of course, our operational flexibility is a big advantage that we have local and regional supply chains that we are agile in pricing and so on. So that resilience means a lot in this environment. So irrespective of how the consumer will act in the coming quarters.

Yes. Well, thank you very much indeed for that insight, Ulrika. If anybody has some questions from the floor, then very happy to take them. If not, then we'll close there. But thank you very much, we covered an awful lot of ground quite quickly. So thank you very much indeed for your answers.

Thank you.

Good morning, everyone, and welcome. Welcome to Gothenburg, and welcome to Essity's Capital Markets Day 2026. It's great to see so many of you here. And we also have a strong virtual audience and a warm welcome to you as well. My name is Sandra Aberg. I'm Head of Investor Relations, and I will moderate today's session.

We are here at our largest office. This is our global center of excellence. Here, all our key functions are represented across business areas. We have R&D, we have procurement, we have our commercial teams. Last time we met, we talked about accelerating profitable growth. Since then, we have made solid progress in many areas. Today, we will be taking this further, accelerating progress by sharpening our focus and execution.

To tell you about the actions and the key initiatives that we are taking on, we have prepared the following agenda. We will start with our CEO, Ulrika Kolsrud, and we will have a short Q&A included here. After that, we will turn to our business areas, and we will start with Health & Medical and then move to Personal Care. After Personal Care, we will have a bit of a longer break and when you're back, we will continue with Consumer Tissue and Professional Hygiene. Then we will take a step back and look at the full picture as our CFO, Fredrik Rystedt, will take us through the financials. Then we will conclude the day with a Q&A.

So I encourage you to take notes through the presentations, you remember all the questions that you're going to ask and big questions from the room but also from our virtual audience. So please, if you're joining online, submit your questions through the platform. After the questions, it's time for R&D to work and the lunch. And for those of us who are going on site visits, the buses will leave from here to [indiscernible] and to Falcon Bay at 2:00.

Are you excited to get started? I am, too. Okay, let me welcome our CEO, Ulrika Kolsrud. But before this is Essity.

[Presentation]

Thank you, Sandra, and good morning, everyone. Also from my side, a warm welcome to the Capital Markets Day in Gothenburg. In the Gothenburg office that are considered the heart of Essity. Besides what Sandra talked about, this is a place where many of the unique solutions and offerings that we have in our portfolio have been developed over the years. It's also very special for me to welcome you here today since this is -- has been my workplace for many years.

Now since I stepped into the role as CEO some time ago, we have made a review of our business, a thorough review to identify improvement opportunities to make sure that we have the best possible conditions for profitable growth. That has resulted in that we have taken some initiatives. And it's for one example that we have done is that we have reshaped our organization. So today, we are working in a simplified organization decentralized where we have end-to-end accountability.

With that, we become faster in decision-making, faster in execution and not the least faster in responding to evolving customer and consumer needs. Another initiative that you recognize, I think, is that we have in connection to our reorganization, we have also initiated and are executing on an SG&A cost saving program. And that will free up resources that we intend to invest further in further growth.

We have also completed an M&A, an M&A that is expanding Feminine Care into North America and that is also creating a growth platform for Personal Care, our Personal Care business in that attractive geography. One other thing that we have done is to really review our optimal portfolio composition to maximize value creation. And what that has resulted in is the initiative to do a strategic review of our Consumer Tissue business.

And let us stay a little while on that. So our Consumer Tissue business is very strong. It's a great business in our portfolio. It has strong offers, many unique offers and offerings. It has leading market positions, well-established and strong customer relations. And over the years, we have improved the performance of this business, quite considerably. And also, when you will listen later on to Volker's presentation, you will see that we see the potential for further value creation in this business.

At the same time, as you all know, we have the ambition in Essity to drive a portfolio shift where we make sure that a bigger part of our portfolio is with the highest value-added and highest return products and categories in order to unlock the full potential of Essity. So the intention, the aim with this strategic review is to create the best possible conditions for both Consumer Tissue as well as for the group to develop to its full or their full potential.

So we will assess different strategic alternatives. What you, of course, think about then is that one of those alternatives could be in operation. But I want to emphasize that no such decision has been taken. So we will also continue to develop the Tissue business, make sure that it's as successful and value-creating as possible within the Essity portfolio. And you will see what those plans and priorities look like when Volker presents later today.

Now just a short reminder what we're talking about when we talk about the Consumer Tissue business. We're selling toilet paper, hand house towels, household towels, I was going to say, the household towels is the right word. -- napkins, facial tissues, moist toilet papers and hankies as well. And we do that under strong leading brands like Zeva, Cushelle, Familia, Regio and also under strong retailer brands and with private label.

Consumer Tissue stands for 31% of our net sales, so SEK 45 billion. Profit margin, 11.9%. And we're talking about some 13,000 employees and 29 production sites. And as I said, leading positions. We are #1 in Europe and #2 in Latin America.

And I think I'll stop there now Sandra, because, of course, later on, you will hear much more about the Consumer Tissue business from Volker. So let's save that for later.

That's perfect. We plan to have a short Q&A now on this specific topic.

So we take questions from the floor, of course, but also from those of you joining online. I think we have a question already.

Nicklas Skogman here from DM Carnegie. Can I ask a little bit when you talk about the strategic review, and of course, recognizing that you are now starting this process, but can you say anything about the different alternatives that you're considering? Is this -- could this be a flotation of the entire business? Could this be divestment of part of the businesses?

And I'm also curious, the size of your Consumer Tissue business. Is that something that could be sold to a competitor? Or would that be tricky from a competitive standpoint?

I think as you pointed out, I mean, we are just initiating the strategic review. And we are looking broadly at different strategic alternatives. So out of those alternatives, it could be, as I said before, different types of separation, divestment of the full Consumer Tissue business or parts could also be a spin off. So different options. And of course, when it comes to competition rules and so on, it depends on different markets and it looks very different from market to market.

I have a question here.

Johannes Grunselius, SPN here. So I have my question on the strategic review is sort of the time frame. Are you committed to any sort of time when you want to sort of complete the review?

Now we're not committing to a specific time, although we will progress as quickly as possible, of course, and also provide regular updates. Looking at this type of review when we are assessing multiple scenarios, our expectation is that it would take some [indiscernible] In supply chain and in R&D between Professional Hygiene and Consumer Tissue. So that we do. And the impact of that will be part of the assessment.

We have a question from Aaron. Okay. Perfect. Oskar.

Oskar Lindstrom from Danske Bank. Just a question about what is it you're going to do for almost 12 months in this strategic review. Are you already now, for example, beginning with a legal separation of these and operational separation of this business? Or is it merely sort of a desktop exercise, that you're commencing now?

It's merely a desktop exercise. So we will not proceed with any of those separation actions until we have come to a conclusion. So it's doing the assessment, as well as planning for what that assessment could turn into. So yes, desktop exercise. But it's a -- I mean, it carries some complexity, and it's multiple scenarios. And as I said, we will proceed as quickly as we can.

I just want to follow up on one of the questions about synergies. Is there any risk of the synergies when it comes to procurement and how important is the Tissue business in your negotiations with suppliers for things like pulp? And would you then expect to pay higher prices for some of those key inputs for the rest of the business if Tissue was no longer part of your business?

I would say that is also part of the assessment in the strategic review. However, also without -- potentially without Consumer Tissue business, we will have a big scale when it comes to procurement.

Great. No questions from our online audience. Any more questions here? No. I think that's all. Then I hand over to you. Back to you.

Yes, thank you, then we move on. And as -- I don't know if you said that, Sandra, but of course, of course, today, during today, when you do the R&D lab visit and go to the plants and also here today presenting, you will meet many of our highly talented and experienced and highly engaged employees that we have across ST. And we when we come to work every day, we do that with a clear purpose and that is to create value. And we do that when it comes to creating value for the consumers and customers that we serve.

And in fact, every day, there are more than 1 billion people across 150 countries that use our products that rely on our brands. And when we talk about creating value, then, of course, we want to make sure to create value for those customers and consumers that we serve, both the ones that rely on us today as well as the ones that we will capture for tomorrow. And by that, we will create shareholder value.

And we have strong financial fundamentals and a solid financial foundation in order to create shareholder value. Our earnings per share in 2025 was SEK 18.37 and that is 50% up versus 2021. We again raised our dividends by 6% to SEK 8.5 per share, fully in line with our policy to provide long-term stable and rising dividends.

And then we also have launched yet another share buyback program. When it comes to total shareholder return, as you can see on this graph, we are outperforming our peer group. So that says something about our performance in the industry. That said, we have higher ambitions than what we have delivered in the past years. And in order to enhance shareholder value, we intend to sharpen our performance to strengthen our performance and accelerate profitable growth. And we are very well positioned to do exactly that. I wanted to say because here in our portfolio, we have the TENA brand, the world-leading and recognized expert in incontinence care brand.

It offers high-quality, reliable solutions for all different types of needs across all sales channels. We also have Torque in our portfolio, another 1 million - multimillion-dollar brand -- multibillion-dollar brand, I should say, that also has been able to transform what was once the Tissue business to become a holistic system solution business, Professional Hygiene business. And it's well placed to continue to shape the future.

We have Tempo in our portfolio. Tempo that for many is synonymous with hankies. So we hear people say, "Could you please give me a Tempo when they mean? Could you please give me a hanky. The same goes for Leukoplast, another strong brand in our portfolio and which many people use generically for medical adhesive tape. So this Leukoplast brand is well recognized for superior fixation properties, good staying power, connected with skin integrity.

Then we have [indiscernible] and Nosotras in our portfolio, winning brands in Feminine Care in Latin America that are gaining shares every year on already very strong positions. And we have many other global, local and regional brands that have very strong positions. And this branded portfolio stands for 80% of our business and we have a #1 position in 60% of our market and category combinations in the branded business.

And if you include also our second positions, it's as high as 90%. So again, strong positions, leading brands that makes us well positioned to capture market growth and the markets we're in are growing. We have market growth exposure of some 2% to 3%. I have to click harder -- I don't know. We have a market growth exposure of 2% to 3%. And that is driven by very -- being supported by very strong global megatrends.

The global population is aging. As I think we all know, and we see an increased prevalence for chronic conditions. This is increasing demand or driving demand in many of our categories. Worthwhile mentioning is that not all demographic trends is playing to our favor. We have in Baby Care, a declining market since birth rates continue to fall. But then you have to [indiscernible] with our brands and positioning.

And over the past years, we have actively reshaped and managed our portfolio in order to be as aligned as possible with these growth opportunities that we have in the market. So today, Personal Care, Health and Medical and Professional Hygiene and especially the fastest-growing segments in these businesses stand for a bigger share of our portfolio. And that, of course, makes us very well placed to continue to drive profitable growth and accelerate profitable growth. It makes us well positioned to deliver on our financial targets that I think you all recognize, we aim to grow above 3% organically at a profit margin of 15%.

We also have a very strong foundation in place in order to deliver on these ambitions. And for one thing, we have a very competitive and strong assortment. And you will see that later today in the break when you go through our exhibitions. We measure how big share of our products, that is the first choice by consumers and customers. We refer to that as superiority, super important in order to drive market share growth and pricing power.

And as you can see behind me here, it's at a high level and it continues to increase. And that is the result of impactful nations that we have brought to the market year after year. I mean, every year, we bring new products to the market could be anything from game changing game-changing concepts to small but meaningful upgrades, all of them contributing to sustained value creation.

And I wanted to take the opportunity now just to share 2 examples from 2025. One that is about raising the bar and one that is about adapting to the current market environment. And if we take racing the bar first, we launched Smart Protect on our feminine pads in Latin America in the year. This technology is a new absorption core technology that makes sure that you can capture the liquid that heavy and very rapid flows very quickly. Of course, makes the consumer feel more confident in their everyday life, also allows us to move consumers from thicker pads to thinner pads, which is good for the consumer's discretion, but also for our profitability because now we have higher profitability on these products. So this is really raising the bar with the new technology.

The other example, Crushelle Simply Soft that you see to the right here is a new toilet paper that we launched to adapt to the current market situation. We all know that in 2025, consumers were more hesitant or holding on to the wallets a bit more than what they normally do. And then, of course, we adjusted our innovation priorities to make sure that we have as competitive assortment as possible across all the different pricing tiers. And this is one result of that where we then offer the Crushelle softness at an everyday price. So addressing the increasing pricing sensitivity among consumers, yet not compromising on the brand's quality promise.

So two examples from 2025, and we will keep the innovations coming. Ones at the back there, they not who are working with this. We will keep the innovations coming because one of the very important key foundations that we have in place, that gives us a good platform is our robust innovation engine that we have. We have a good combination of strong in-house capabilities with also strong external collaborations and partnerships.

We have globally organized our R&D, so it's scaled to be really deep expertise. At the same time, we operate R&D centers across different parts of the world, so that we can see the different consumer insights that are local and also be as quickly as possible to react to specific market needs, a very good combination.

What you all know because we have talked about that so many times is that we base our innovations on insights, consumer, customer, shopper insights. And it's when those insights really are married to or meet a new technology advancement, that's when the magic happens. And we have certainly a very good productivity and outcome from our innovation engine. 50% of the sales we have is generated from products that have been put on the market or upgraded within the last 3 years.

Many of them are unique, and we want to keep it that way. So that's why we have over 1,000 patent families covering our portfolio. And then I think the margin that they are margin accretive speaks for itself, that tells us that it's a clear evidence that they bring real value to customers and consumers. So you will have the chance to go through -- go to the R&D labs later today. And then you will get a glimpse of this innovation work that we have.

What you will also see then is how we use digital tools and also AI in our product development in order to cut cut the timing of development, the lead time as well as costs. But of course, with that said, leveraging digital solutions on AI is not something that we only do in R&D. It applies across the value chain. Supply chain, of course, an obvious area for AI and digitalization. Some examples in transport demand and supply planning, we base that on AI algorithms. And where we apply intelligent process control, we can reduce our waste by up to 20%. And for those of you who were in [indiscernible] 1.5 year ago, quite many I recognize, you -- I think you have a good understanding of the level of digitalization that we have in our supply chain. But we have examples from other parts of the organization as well.

If you look at marketing, for example, we use AI in claims development. And that is actually improving the productivity of that process by 75%. And then alongside with using digitalization and AI to to become more efficient internally. Our digital agenda is a lot about winning with customers and consumers. So we are continuously expanding our online presence.

So in 2025, we increased e-commerce by 13%. And later today, you will hear Pablo talk about our Tork omnichannel customer experience platform, something that is highly appreciated by our Tork customers. What is also very very appreciated by our customers is our progress on sustainability.

We are committed to our science-based targets, and we are well on our way to deliver on the 35% reduction of CO2 emissions by 2030. And the question is, how do we get there? What is making us progress? Well, one thing is back to innovation actually because we make sure that the vast majority of our innovations have a positive impact on sustainability. Then furthermore, we are working very systematically and structurally to improve our resource efficiency in different energy efficiency programs and material saving programs and so on.

And the big example is actually what you see on this picture. So a teaser for those of you who will go to [indiscernible] later today. This tissue production facility, I would say, is a flagship site for sustainable tissue production. It's the first ever large tissue mill that is operating without any fossil CO2 emissions, using biogas and renewable energy.

This is also very much in the front line when it comes to circularity, high share of recycled fibers, high share of post-consumer recycled plastics in the packaging. So for those of you, you have that are going there, enjoy. We have some internal people here today, and I hope you agree with me that one of the areas that actually actually influences the engagement in our organization is that we are progressing on sustainability. It's important for people also internally.

And we have a very high engagement in our organization. In fact, if you look at employee satisfaction, it's 4 percentage points above benchmark. And this our ability to attract, develop and retain key talents and keep them highly engaged is really a critical success factor for us. So with this, I think I have -- I hope at least that I have given you a good perspective of our strong foundation, our strong platform. Our strong offers our strong innovation capabilities the way we progress on digitalization that we are leading in sustainability and also the fact that we have highly engaged employees. And that is a very strong foundation and something to build on.

But in order to accelerate our growth pace in order to move faster towards our financial targets and to enhance value creation. We also need to change. And we started that change journey with the initiatives that I talked about initially. So we are doing the SG&A cost-saving program in order to free up resources to be able to invest in growth. We have completed the M&A in North America that I talked about. And we are then also operating in a reshaped organization. And now we will leverage that new organization in order to drive performance.

So what you will see today is that we will have clear financial goals per business area. And you will see that there are targeted initiatives and plans in order to reach those goals. Also with the new setup that we have and aligned incentives, we really make sure to drive accountability and delivery. So very important improvements for us and steps to take on our change journey. But we have more to do. And in order to unlock our food potential, I will drive actions in 4 different areas.

One is to continue to lower our cost base. So to keep us competitive, and also to really free up resources so that we can invest in growth. We need to reduce our cost base further. So alongside with the SG&A program that we are running, we will also focus on reducing production costs. And Fredrik will come back and give you more details on the opportunities that we see in this area. Then innovation, we will intensify innovation where it matters the most.

So I talked about our very robust innovation engine, and that it has a high productivity. [indiscernible] to be precise in our prioritization. So to really intensify innovation where it matters the most. Then invest to grow. I've talked about our superior offers. I've talked about our strong brands, our leading positions. We have some fantastic to invest behind. So we have all the reasons to invest more in order to grow more.

To do that, though, we will then need the savings that I was talking about because this is not about compromising on margin, it's about freeing up resources that we can reinvest in growth. And when we do that, we will make sure to prioritize the areas where we have the highest return on investment.

And finally, accelerate the portfolio shift. I talked about that we have a more attractive portfolio today than we had some years ago. But we have more work to do. So we will focus even more on the areas, the categories and segments where we have the highest profitability and the highest potential for profitable growth. And we will do that both in our organic agenda as well as in our inorganic growth.

And that brings me to the M&A strategy where this is very well reflected because the categories that we will focus on when it comes to M&A priorities are the same you've heard before. It is Feminine Care. It's incontinence products, expanding also to Continence Care, it's Wound Care, and its strategic products and segments in Professional Hygiene.

When it comes to geographies, North America remains a key priority as do also D&E markets and geographic white spaces. And first and foremost, we see M&A as a vehicle to expand presence and to build scale, but we also use it to acquire know-how to acquire new innovations, which complements then our in-house innovation and to gain access to new channels.

So with this, I hope that you have a better perspective on how we will now use and leverage the strong platform that we have and what we will do differently and better in order to move us from the 1% growth roughly that we are today towards our target of about 3% organic growth. Then now when we move into the business unit presentations or business area presentations, you will get a better view of where that growth will come from. You will see that our core business still offers plenty of growth opportunities.

So growing the core remains our biggest or largest growth pillar. On top of that, we will expand for more, and you will see in the business area presentations that we have clear priorities for where we want to expand. And of course, we will continue to explore. What was once explorations like our digital solutions in Tork for example, is now a key part of our core business.

As we grow, we will improve or strengthen our profit margins through operating bridge. We will also, by growing the fastest in the highest margin segments, improved profit margin through mix. And in parallel with that, continue to drive savings and efficiency and capture efficiency gains to structurally improve our margins. And I think with that time to look at how all of this comes live, in our different business areas. Personal Care, Health and Medical, Consumer Tissue and Professional Hygiene.

Thank you, Ulrika. Thank you for outlining how we will accelerate our progress and how we will strengthen our value creation in the future. You all will have the opportunity to interact with Ulrika later on today, so take that.

Now we will turn to the business areas, to understand their key initiatives and priorities to accelerate the progress that Ulrika talked about. We will start with Health & Medical, and I'm pleased to introduce to you, Anand Chandarana, President, Health & Medical.

Anand joined Essity in 2020, he has more than 20 years of experience from med tech, and he stepped into his role as President Health & Medal in September last year. Welcome, Anand and Health & Medical.

Good morning, everyone. It's my privilege actually and my pleasure to talk with you this morning about Health & Medical. And Sandra, you may be sound very old with -- given my experience away. I'm the newbie when it comes to the President for Health & Medical. And as I said to you I would like to tell you a little bit more about this beautiful business area and all the prospects we have ahead.

It's a core and resilient part of Essity, is Health & Medical, and it operates in noncyclical reimbursement backed categories. So you can say demand is durable, and it's unrelenting, and I'll talk to you about that in a minute. It's a value-creating portfolio today and we're stepping up the pace to focus our investments in areas where returns and profits and growth are higher over the coming years.

So over the next 15 minutes, I'm going to explain to you who we serve, where we play, why we win? I'll try to convince you of that. And then I'll also talk about the key levers that we're prioritizing to increase value creation over time. So as I said before, Health & Medical is serving high-frequency, high-cost conditions that are under managed today. So demand is structurally strong and our solutions sit in [indiscernible] and care pathways, they're deeply integrated. What that means is that our solutions and our business is sticky.

Our ambition is to be the undisputed leader in preventing and managing the conditions we serve and namely that's Incontinence Care, it's Wound Care, it's Compression Therapy and Orthopedics. In 2025, we delivered through a lot of hard work, amidst headwinds SEK 27.5 billion in net sales, an 18% margin. The sales are split, as you see on the screen, so 58%, lion's share comes from Incontinence Care products. And that is our cash and stability engine.

Wound Care represented 21% of sales, and that is our mix-driven margin expansion engine. We'll learn more about that in a little while. Compression represents 10% of sales and is what I would term a value unlock. We're going to shift focus from one segment of Compression over the coming years to another segment where returns are higher. And Orthopedics represents 11% of sales, and that's our disciplined value extraction cash generation engine. You see the growth of 1% there shown on the screen. That's what we delivered in 2025, and that takes some doing, of course, but that's not something we're satisfied with, and I'll share with you in a moment why our ambitions and expectations are going forward.

The potential is substantial. Our addressable market is somewhere north of EUR 17 billion, and that's growing between 3% and 4% depending on the subcategory. We lead de facto in Incontinent Health Care and in Compression Therapy. In Wound Care, as you see, we're a challenger globally with a strong position in Europe. In Orthopedics, probably what matters to you is that we're, number one, where we choose to play and we would choose to focus, which is fracture management and physiotherapy.

A little bit about the categories and their characteristics. So all categories, as Ulrika already mentioned benefit from tailwinds, and those are specifically aging demographics and unfortunately, the increasing prevalence of chronic conditions. So as I said before, demand is durable, but also, I would say, unrelenting. From a business perspective, that enables us to have stable earnings across cycles. Our solutions happen to be, as I said before, very well integrated, deeply integrated through a lot of hard work and through a lot of trust earned with our customers in care delivery models.

So that leads to high switching costs. And so we have good positions that we can build upon. Now when looking forward, I know this already, Health Care systems around the world are under pressure. Their budgets are under pressure. And in the short term and in the long term, actually, they're asked to do more with less. So what we do here now is we try to counter price pressure which is the manifestation of this pressure that's applied to health systems. We try to counter that with selling the value and ensuring focuses on total cost of care, where we can actually show superiority.

In the medium term, the growing pressure on Health Care systems actually creates care gaps, and we choose in city to see those care gaps as unmet customer needs. And if you can meet those needs with innovation and evidence that proves you can improve outcomes with lower cost. We actually believe there are awards there to be earned.

Winning at scale in these categories, these health and medical categories also requires upfront investment serious upfront investment. And that's like a specialized sales forces, it's in things like clinical evidence, it's market access infrastructure, compliant manufacturing. These are things, of course, advantages that compound over time for us. So we believe this is a positive situation for an incumbent size and scale of Essity.

Now I said to you, I'll explain to you who we serve. And this is our Four key stakeholders. We'd like to group them in this way that we serve and delight simultaneously, by the way, in order to achieve success and then earn the rewards we do.

So on the left-hand side, you see Health Care systems and providers showing that. That can be insurance provider, it can be hospital systems, it can be care homes, nursing homes. These are the systems. And what they care about is overall outcomes, patient outcomes and total cost of care, and that's what we serve them with.

You see the next segment, which is Caregivers, broadly speaking. So that's health care professionals, clinicians, physicians, nurses, but increasingly, it's also family caregivers. And for them, what matters is that we provide intuitive dependable solutions that flow and sit perfectly within their workflows. That's really important to them, and that's what we do.

The third segment you see is patients and consumers. And this could be any one of us, it could be any one of our families. What matters to us and to them is that solutions are easy to access, where they want to buy, they're easy to use and that they do what they say on the tin. It's a very English term, but they do what they're supposed to do to improve well-being.

The last stakeholder group that you see there is trade and channel partners. This could be pharmacists. It could be medical distributors, et cetera. What happens -- what's important for them is that we help them convert demand efficiently and effectively. And that's through the right commercial models and it's through the right service and supply.

Now I can tell you all about how well we serve these customers simultaneously, as I described. That's the kind of the name of the game. But I thought it would be good for you to hear from some of our customers themselves. So let's see what they say.

[Presentation]

I promise you that neither -- none of those customers had said those things under duress. They were very willing to share their positive experience with us. At the end, they are only some of many thousands that we serve every day. And as I said, not only do we need to solve them. We need to solve them simultaneously in order to ensure that we earn the rewards that is our business.

And of course, satisfying and delighting these stakeholders is what earns us the right to grow our business and in order to expand our margins. So over the coming years, our ambition is to have an organic growth somewhere between 3% and 4% and to have, simultaneously, again, margins above 19% EBITDA.

And how will we do that? We're going to do that through better mix. We're going to focus on the higher return segments of our portfolio. We're going to protect our cash engines, as I described earlier on, and that's going to be through disciplined capital allocation and disciplined investment.

I'll talk to you about the levers that we have for our business, and they can really be summarized with these 3. And what I intend to do over the next few minutes is just talk to them individually. So if I take the first lever, this is about expanding leadership in Continence Care. So there are 2 parts of this. The first part is nurturing our core. Our Incontinence products are our core is nurturing the core.

The second part is expanding for more. And there's a little bit of difference between the 2 but they're very linked. So if I go back to nurturing the core, that is about ensuring that our lion's share of our business, 58%, our dependable and foundational value engine is continuing to grow. Growth has been depressed over the last few years, but we're well positioned to turn that around.

Let me give you some examples. 50% of the sales are in Continence Healthcare products goes via tenders. And those tenders are the key to our success. Winning tenders is the game, you could say. And how we win is by shaping tenders so that they are focused not only on price, but they also include consideration of outcomes, total cost of care and things like sustainability. And of course, that's backed and underpinned by having a good product portfolio and the relevant evidence in order to prove that.

This takes years the shaping of tenders takes years. And when you do that successfully, when you've earned the trust of the customers to have those criteria embedded into the specifications, then you win big. So just to give you an example, in 2025, we won or retained business globally around EUR 84 million. And that's with a considerable price premium versus our competitors. So that's a very important thing to know.

Now if I go back to expanding for more, Today, we work on managing incontinence, treating incontinence. Actually, tomorrow, what we will do is expand to prevent and reduce solutions. And that will do 2 things: One, it will increase the relevance of Essity and specifically of TENA, the brand TENA, across the continuum of care, that reinforces the core business. And secondly, it allows us to get into attractive adjacent profit pools.

Research indicates, of course, that we will be able to not only attract or go into those attractive profit pools, we will also be able to reinforce the core business, which is significant and sizable. And so later [indiscernible] the traditional wound care products and we have the Advanced Wound Care products.

Traditional Wound Care is a commoditizing marketplace. Therefore, we are shifting our focus into advanced wound care, over-indexing our investments in innovation, sales force, et cetera, into the advanced segment and specifically the area that is associated with managing and treating infections. Here, we have unique technologies, and fantastic solutions for our customers, and we believe have the right to higher growth going forward.

We backed this focus on Advanced Wound Care with specialist selling, with investments in evidence, so substantiation to prove our value and of course, with selective M&A. And maybe a proof point to share with you is that we've done some of the selective M&A over the last few years. We acquired Bigo Sorbact technology in 2020. And if I look at the growth of dressings with this unique Sorbact technology, which you'll find out more about in the lab tours later, that has grown 17% CAGR, '22 to '25, which is fantastic, and it tells you that we have something on our hands here, which is very interesting and allows us to invest more.

We did another transaction. We acquired the Hydrofera portfolio largely focused in North America and the U.S. And that portfolio has grown, 14% CAGR, '22 to '25 since we've acquired it. So this is what we'll do more of, more investments in specialist sales forces, more investments in evidence, more investment in innovation and selective M&A.

The third lever I'd like to share with you is focusing and leveraging our strong position in Lymphology. Now without getting too technical, Lymphology is about treating diseases related to the lymphatic system. And one of the most common conditions in Lymphology is lymphedema. And this is where people unfortunately suffer from swollen limbs and swollen body. This occurs after cancer treatment. It can be associated with chronic venous disease that can be associated with obesity. It's a really sad condition for people and their saving rates is to use compression garments. And as you heard before from one of our polite customers. It's the Rolls-Royce. JOBST is the Rolls-Royce of compression garment. So we have a fantastic solution here.

Lymphology, as a disease area is underdiagnosed and underpenetrated. So we win when diagnosis improves and reimbursement improves. It's structurally higher margin than other parts of the compression marketplace and that's why we're over-indexing and over focusing on this going forward. One proof point to share with you, when we unlock diagnosis, unlock reimbursement, we can drive growth is what's happened in the U.S. In 2021, there was an act which is called the Lymphedema Treatment Act, which was passed in the U.S. That opened up reimbursement through Medicare or compression garments related to Lymphology. Since then, we have grown our sales 18% CAGR, '22 to '25. So this, of course, now gives us confidence to invest more in this specific space.

Ulrika talked about the M&A priorities earlier on. And unsurprisingly, they match our focus, our 3 levers going forward. So we want to do M&A where it's value creating and has a strategic fit in the Continence Care space, specifically in the adjacencies of prevent and reduce solutions. We want to do M&A in the Wound Care space, specifically Advanced Wound Care with a focus on key geographies to attain scale or to boost our innovation going forward because we have the channel and we have the sales force, of course, that is interfacing with the customers and is trusted.

And in compression, we want to look at adjacencies to expand our lymphology proposition. I hope that makes sense. Lastly, I'd like to leave you with a recap of why we win across the stakeholders that I described before. We earn our place in standards of care by focusing on evidence and outcomes. We launch and deliver solutions that are fit for workflows for caregivers, easy to adopt. We offer reliable service and supply, which is critical in the health care environment in which we operate, and we convert demand efficiently and effectively through channel reach and commercial excellence.

So to conclude, Health & Medical, me, my team of 6,000 are ready to accelerate profitable growth through laser focus and investment in the highest margin, highest growth categories over the coming years. I hope that excites you as much as it excites me.

Thank you very much.

Thank you, Anand. That was a very good presentation. It was very clear. It was also very nice to hear our customers and how they appreciate our solutions and that we actually make a difference in people's lives.

Very good, thank you.

And it was clear to me also the growth levers that you are pulling now.

Before I let you go, I have 2 questions. You talked a lot about mix-led growth. And I know there is a lot of focus on volume growth out here. How do you see the balance between mix and volume going forward?

It's a very good question. I knew you're going to ask me questions. So thank you for that, Sandra. When I talk about mix-led growth, I actually mean driving volume growth, but in the segments where we have the right to win, where the margins and the growth is structurally the highest. So it is still volume growth, but it's focusing on the areas that we want to drive, if that makes sense.

Makes sense, right?

We will not drive volume growth across the portfolio. It doesn't make sense, it's not high-quality growth, and it's not value creating to do that. So we're really focused.

Good. Focus is good. Then if you were to leave us with your 3 key messages from your presentation, what would that be?

Well, I hope that you agree that the prospects of underlying market growth for Health & Medical, number one are strong. And you can see that in the durable. And we are fantastically positioned to win. Number 2 is this mix-led growth. We're only going to focus over index on the areas where we have the right to win and where quality growth is high. And the third thing I wanted to remember as a result of the second point, is that we will, by doing this, reduce our exposure to higher commoditized categories. And that is really important to the future, then we put ourselves in a very good position to continue driving profitablr growth ongoingly. Makes sense?

Yes, makes sense. Thanks a lot, Anand, an onsightful presentation. Yes. And you will have the opportunity to ask questions to Anand later on today.

Thank you.

So now we will move from Health & Medical to Personal Care from patients and health care to consumers and retail. At the same time, a clear connection with the TENA brand, which we serve across channels.

I'm pleased to introduce to you, Tuomas Yrjola, President, Personal Care. Many of you met him at our last Capital Markets Day when he was leading innovation and brand. Since January 1, he is now heading our Personal Care division. Welcome to Tuomas and Personal Care.

Thank you for the applause. Thank you, Sandra. Good morning, everyone. Good to see many of you. I agree with Anand, Anand said Health & Medical is a beautiful business. But I have good news for you because Personal Care is also a beautiful business. And in my first 4 months running it end-to-end, it just has confirmed to me that we'll make it even more beautiful. So that's what I'm going to talk to you today is, first of all, explain to you why I believe it's beautiful, but also where the opportunity lies and how we're going to really accelerate growth in Personal Care, especially now in this new setup.

So I'll start with what is Personal Care. We obviously serve consumers from all the way through every life stage from the first second babies born were there all the way to the -- as we take care of the elderly ones at home. So you're very well aware of this via 3 categories: Baby Care, Feminine Care as well as Incontinence Care.

If you look at how does the business split in terms of size, what you'll notice is, in fact, 80% -- close to 80% of Personal Care sales is Feminine and Inco, maybe represents about 20% of our business. And if you look back over the years, what you'd see is that we've grown Feminine Care significantly. So Feminicare used to be the smallest part of our portfolio, and it's become actually the biggest part as we've driven so much share growth across markets year after year in over 80% of our sales, we keep growing share on Feminine Care.

We've obviously accelerated a lot our Inco business at the back of consumers moving also from the Health Care channel into retail. And on Baby, we've just strengthened the positions where we've continued to play. I think the other thing that is very interesting to look at is our geographical diversification. So when you look at it, we've got about half of our business in Europe and over half comes out of Americas, you'll see Latin America plays a significant role, which is still fast-growing area, obviously, as the categories still develop. And increasingly, obviously, North America plays a big role for us, especially after the acquisition of Edgewell, and now North America is already 9% of our sales.

Now that's the sales today. But if you look at the opportunity we have ahead, it's significant because Personal Care market is over $17 billion in sales where we play, and there's a lot of tailwinds in terms of growth and we expect the market to grow between 2% to 3%.

Now if you look at the growth within those categories, such as Incontinence, you'd see high single-digit growth as obviously the penetration an aging place into our favor. Now if you look at our positions, we've got very strong positions. If you start with on Incontinence, where we're #1 in Europe. We're #1 in LatAm. We're a challenger. We're #4 in North America. But if you actually double click on it, when you look at Canada, we just became the #1 brand. So we came from #2 to #1. So now we're leaders in Canada. And I'll talk about what we're doing in U.S. where we're a challenger, but we're growing double digit there, and we have a good formula to accelerate growth.

Feminine Care similar. We have very clear leadership positions across Latin America, #1 there. We're #3 in Europe. And again, thanks to the Edgewell acquisition, now we're #3 in North America on Feminine Care as well, which gives us a great platform for further growth. On Baby Care, we're very focused on where we compete. So Baby Care, we're focused on Europe. We've got, obviously, a very strong position here in Nordic with Libresse, which is an outright market leader in all the Nordic countries. And then we have selected a few retailer brand customers where we have very long-term partnerships in Europe that gives us scale and this overall #2 position in the European market.

Ulrika talked about the strength of our brands and in Personal Care, we're very pleased to have a portfolio of leading brands, 10 obviously, the global #1. We've got on Feminine Care lots of locally relevant brands. We call them the V brands. And the whole idea there is that they're locally very relevant where we're driving global scale in terms of how we've platformed the product, the design, the advertising as well as innovation program.

And then we obviously have a lot of local, very strong brand category combinations. I already mentioned Libresse. And obviously, you've got brands that we've acquired and added to the portfolio, such as multi-body or [indiscernible] which help us serve a different demographic, for example, like in the category of leakproof. What this gives us is a portfolio where 90% of our sales, we're either #1 or #2. It gives us real relevance with our retailers because we are the ones who drive category value, we drive category growth. And the retailers are very dependent on the partnership with us as we grow these categories further.

Now if you look at Personal Care categories, what makes Personal Care attractive for a company like us? Why are we so excited about Personal Care? The first thing is that if you look at the usage of the category, it's very repeating, right? So it's not cyclical. Once you're in these categories, it's a daily use product, which drives a lot of loyalty and repeat. So the demand is not cyclical.

The other thing is the growth is driven by penetration demographics. We've proven that in all these categories with innovation, you can create value, you can drive premiumization. And most importantly, these are categories that are used in intimate moments where product performance matters. So the cost of a product failing is significant, and therefore, the consumer is looking for always the best performance and the brand that provides this drives a lot of trust and loyalty in the relationship.

I'm sure there's a lot of parents out there who either have babies or have had babies. You'll remember, if the diaper leaks at night, while the whole family is peacefully at sleep, the cost of that moment of disrupting sleeve or product not performing, you always remember that and then you start to question the choice of the product. That won't happen to you when you use a Libresse product, but that's because we're so focused on delivering, again, superior performance and building that trust. And this means that brands in these categories have a very high share of the sales compared to many other FMCGs.

Right. So how are we going to accelerate this? So what does the future look like? So you saw last year, we grew 3%, but our intent is to accelerate top line a lot more. So we believe we can grow this business between 5% to 6% in terms of top line. And when you look at our EBITDA margin, we expect that to grow above [indiscernible] Fueling this successful recipe we've got on TENA as well as on Feminine. So that's where the majority of the growth is going to come from. We're going to continue to innovate and drive superiority on our product assortment that's going to drive a lot of mix.

And obviously, we're going to win with digital, whether it's in the way we engage with consumers like with the Libresse club or with winning in e-commerce channels. And then on top of this growing core, we're going to really expand for more, which is more places. North America is a big part of it. More users, [indiscernible], we talked about it, some of you who were involved that gives further upside and then new formats, which is the leakproof category.

Right. So what is the growth recipe on TENA and Feminine? Ulrika talked about how we've driven the superiority or preference of our products. And this is what it looks like for TENA. So if you go a few years back, we actually had part of our assortment, which was not competitive versus the market. So we put all our focus on how do we really ensure that majority of our assortment is consumer preferred. We made our products much more discrete, higher performing, more modern, more famine or more masculine in the case of men.

And now you see that over 70% of our assortment is consumer preferred. So what does that lead to once you have that? What we're starting to see in terms of the data is once consumers use TENA, the repeat level we're seeing is significantly higher than competition. That's thanks to the superiority that we have on the assortment.

The other thing we worked very hard on is how do we step change the creative -- the performance of our advertising. And now when we look at how our advertising performs in the market, what you'll see is that the cut through versus composition is significantly higher. This creates a positive cycle because we've got winning advertising that drives trial, once people try our products, it leads to higher repeat. Again, this is high gross margin business, and that creates the flywheel, which we are continuously fueling.

Fem Care, very similar and a good example of how we're driving feminine is we're driving a lot of premiumization. We're focusing on unmet consumer needs. In this case, this is our latest launch, which is our premium product called the ULTIMATE, where we discovered the Consumer segment, who is very dissatisfied, especially when the heavy flow that I want a product that truly performs for that. So we designed our best products to meet that need. It's premium because the expectation is also higher. And what we're now seeing in the markets where we've launched is we're building significant share in the premium assortment.

[indiscernible] While we're kind of breaking the taboos as part of our brand building. And this combination is really part of the success recipe that that makes us win both on TENA and Feminine. So beyond product and advertising, what's really important is that we win in the way we engage with our consumers, and that's obviously increasingly or only almost through digital. And I think a great example of our digital capability is the Libresse Club here in the Nordic region.

So you might not know that, by 80% of any new parent who has a baby in the Nordic market is part of our loyalty club. So we have over 1.2 million parents in that database. So it's the biggest baby club or community in Nordic market. What this allows us to do is, obviously, we track and we connect with our consumers already from pregnancy. So even before the baby is born, which allows us to guide the consumer through the journey of all the stages in the baby's development from newborn, all the way to toddler.

What it also allows us to do is obviously to recommend our products, drive mix and it drives a lot of stickiness and repeat. What it also creates this very high return on investment because we can target our messaging one-to-one instead of going via mass media. So all this is really relevant. It's not only relevant for baby in the way we win in the region because we own this relationship one to one, but obviously, it gives us great capability and insight in terms of how to do this in more places across our categories, which have very similar dynamics.

Speaking of digital, the other part where we're really focused on in our categories is to accelerate and win even more on e-commerce. I think a great example of that is the biggest e-commerce market in the world, which is U.S. were especially on TENA we've been very focused on being digital first, winning in e-commerce first to prove our right to win in the North American market, specifically in the U.S. market.

So we put a team in place, great capabilities in place. We made sure that we've got the right assortment for e-commerce, right logistics setup, right communication and the result is starting to speak for itself. So what we're seeing in Amazon and in e-commerce is we have 4x higher share, so which proves to us that the U.S. consumer like TENA, they want to buy TENA once we make it available. What this allows us to do now is to start having discussions also on how do we expand, obviously, our distribution and offering in the brick-and-mortar world.

So as it proves to us that we can do it with Amazon, we can do it in 1 of the most competitive markets in the world, which is U.S., gives us great confidence that we can do this everywhere reapply the e-commerce learnings that we're generating in the U.S. market. So this is obviously a big part of our grow more in the North America strategy.

So one part is fuel the momentum we've got on TENA, not only on Amazon, but expanding, obviously, the distribution. And now we have a great opportunity to do that as we've acquired the Edgewell Feminine business which gives us a platform of go to [indiscernible]

Speaking of penetration, the other area where we see significant upside is the whole leakproof category. We're obviously very early getting into it, acquiring the leading brands that have built this category, whether it's Nicks, that originated from Canada, strongly in the U.S. market, or [indiscernible], which originated in Australia, both creating, building a category, new category over the last 10 years, building penetration. And they're very set up to win because they're very omnichannel, digital first started in D2C, now becoming more and more omnichannel.

And the opportunity we see now is to replicate that in more places. So building this category and equally driving further scale between these different businesses because we operated them separately in the past to preserve the business model. But now we're creating one leakproof platform as part of this new organization. which gives great opportunity to see how do we drive further synergies in sourcing, in innovation, how we go to market as well as how we distribute. So we see great upside in fueling this growth even further.

So I talked a lot about organic growth, the core as well as the more. But on top of that, we're obviously very focused on M&As in Personal Care. Recall like the company-level priorities and for personal care, when you look at it, Feminine Care, obviously, we want to continue to look for opportunities to geographically expand. Again, the Edgewell is a good example of doing that. You've seen that geographically, we're not yet everywhere, but everywhere where we play, we win. So we want to win in more places.

Anand talked about the move to Continence Care, which means that on TENA we want to look for opportunities to also work on prevention or reduction of incontinence and through that, expand our brand to the full continuum of care. And then obviously, we're looking for adjacent categories to expand our footprint in retail, give us further scale and that will be in places where we could either leverage our existing brands and expand our offering or leverage our go-to-market or other capabilities, such as innovation or brand building.

So with this, I hope you've understood why I believe it's a beautiful business, and we're going to make it even more beautiful. Personal Care is really a business which has high margins. I dare to say we're very good at it. but we can get even better. So therefore, we see significant opportunities to accelerate. We've got the brand portfolio where we're leading. We've got the capability of innovation how to drive superior products, which again, in these categories, truly matters. And those of you in the room will take you to the lab. So you'll see firsthand the people and the capability who are behind all this great work. And we've got strong geographical diversification. So we're placed in the right places to really fuel the growth and take Personal Care to next level. Thank you.

Thank you, Tuomas, for the presentation. At least you convince me that this is a very beautiful business.

Great, I've got one.

Before the break, I just have one question for you. I know you're meeting up with your leadership team later today and tomorrow. What are your main priorities? What will you be discussing?

We're going to talk profitable growth. So keep fueling growth. We were pleased, as a new team, we've got great new team in place. We're pleased with quarter 1. We need to obviously repeat. So we're excited about growth, continue to invest. We've got great innovation plans, great advertising going. So that's a big part. Obviously, Edgewell integration, a big priority. And then just leverage this new setup to really fuel it further.

Good luck.

Thank you.

Thank you, Tuomas. Now we will have a break. For those of you joining us online, we will be back at, let's see, here 11:15. See you then.

[Break]

Great. So welcome back from the break. I hope you took the chance to recharge, explore the demos and connect with the team. Now we will turn to Consumer Tissue.

I'm pleased to introduce to you, Volker Zoller President, Consumer Tissue. He will talk about his business and initiatives to drive profitable growth and stable returns. Welcome Volker and Consumer Tissue.

So thank you, Sandra. So welcome to public category, which is a little bit more in the focus than usually. As most of you know, Consumer Tissue category is the business unit where we are producing sustainable [indiscernible] the market is structured. Around about 2/3 sits in the Tissue category. Almost 1/4 is Household towel and napkins, more than 10% is hankies and facials and the remaining 2% is moist toilet paper.

Looking at financials, 2025, we had sales of roughly SEK 43 billion which is 31% of the group. You have seen this on an earlier slide. We had a relatively flattish top line development. Volumes roughly 0.5% down, mix, 0.5% down pricing, slightly more than 1% up. We delivered an EBITDA of more than SEK 5 billion, which is approximately 27% of the group profit. So not under fair share. And then that was the clear priority for 2025. We saw a margin improvement from 9.9% in 2024 to 11.9% in 2025.

From a geographical point of view, roughly 80% -- almost 80% of our business is in Europe. Almost 20% of our business is in Latin America, and the remaining 2% are in New Zealand. Let's have a look at the characteristics of the Consumer Tissue. First of all, it's a very good news. It's a resilient demand. Our consumers are every day in touch with our products. And actually, when you think a little bit about there are very, very few categories where the consumer is in touch every day with you.

The second one, which is also good news. It's a very important category for our retail customers. Why? It's a destination category. It's a traffic builder. It's highly promoted. You bring shoppers into the shop they buy, of course, also other stuff. So very, very relevant category for our customers. There's relatively high entry barriers because it's capital intensive. Sometimes we don't like it, sometimes we like it. And you need a lot of technical know-how for the ones of you going to delay it afterwards, you will see that. It's almost an art to produce a high-quality tissue paper.

And last but not least, we are always talking or very often talking about a commoditized category. But then you are looking a little bit geographically, but also to the segments, you find pockets of growth, and you find areas but you also have a very good profitability. The addressable -- we go, the addressable market we are in is estimated it will be something like EUR 18 billion, is approximately 26% of the [indiscernible]. The market growth has slowed down a little bit recently, but it's estimated to grow between in [indiscernible] different by geography in the coming 5 years. We are enjoying very strong market positions, very strong #1 position in Europe, market share of approximately 25% [indiscernible] and market position in Latin America with a market share of approximately 20% and equally a #2 market position in New Zealand with a market share of 35%.

We are talking very often about the consumer tissue category. In reality, round about 50% of our business, we are doing with our own brands, brands we have [indiscernible] this is also where the majority of our innovation goes to. But then we have another 30%, which we call retail brand business. These are long-lasting strategic relationships with selective retail customers, we are working with joint business plans, very in term oriented. And here, you have a little bit different dynamics. I will come back to this in a minute.

Then there's another 20%, which is more the tender-driven more price-focused sector, [indiscernible] we are winning market share in 55% of our markets. I will deep dive a little bit on the Retail Brand business. I will talk about the supply chain efficiency, which when you look at our P&L structure is absolutely crucial reducing the volatility of our margins.

Let me start with talking about the branded business. I get very often the question in this Woka world, how is the consumer doing? How is the consumer feeling? We do not have one consumer. We have multiple consumers. We have very, very loyal brand buyers. They want to have the best product. This is why superiority is very, very important for us. And also in an accelerated by the rising energy prices, we have a more value focus. I would not call it a down-trading shopper, but a more value-focused shopper.

And if you want to stay relevant with your entire business, you have to focus on both -- basically on both segments. And this is a shift we have done in the strategy that we have a higher penetration, meanwhile also what we call the good tier. You see on the left side here in the premium tier [indiscernible] varieties addressing changes in the consumer landscape. So high focus on our premium segment and of course, also on the growth in this segment. But equally important is and as Ulrika was mentioned this the example of Simply Soft, under the Crushelle proposition. Equally important is that we have increased our exposure to the value tier because for us, it's much better to keep a consumer on the brand than to gain it back from a competitor or from a private label.

This is an example, just to show you an example. We have said that we are stepping up in A&P investment and partly, of course, we will use the savings were coming from our cost saving program to invest more in A&P and Consumer Tissue branded business. This is an example from the U.K. It's a 360 activation of our Kitchen Towel, Household Towel brand, Plenti. And we have been doing this. You can see this year with Facebook, we've talked with Instagram, et cetera, so very, very, very digital. There is a more and more important role for us, but we have also used retail media activation with the Tesco customer, and it pays back.

We have an 18% market share in Plenti, reached with this activity. It's the highest market share, which we have more than 2 years. And when you look at Tesco, where we have done additional customized activation in store, we have even reached a 25% market share. So we see that this additional investments in A&P, India and others are paying back with profitable growth. Expanding with the winning retailer brands. As I said, this is a business as a long-term orientation. This is very relationship-based. What we are doing here, we are working with joint business plans, we are very often the sole supplier to a category. This is also why service levels play an important role. If we do not deliver, they don't have products in the store.

It's very quality focused, higher quality aspiration than maybe in some other parts of the segment. And also, we are reaching the sustainability credibilities, which Essity, of course, has. So this is a very, very nice business. and developing very nicely.

The third part, I was expecting a movie actually. Do we have a movie?

[Presentation]

This gives you a little bit of flavor how important [indiscernible] only a relationship but also what they are really focusing on, continuous product development. It's not so much about innovation. It's really product development, service, high quality, et cetera.

The third aspect, which will drive growth is supply chain efficiency. And I got a lot of questions, so how many sites do we now have in the new organization, in the end-trend organization. And I think [indiscernible] a lot of questions what I think about end-to-end organization for consumer tissue. For consumer tissue this is a huge business enabler because the nature of our business is a little bit different than the ones which we have with global brands, et cetera. We have more local brands. We have a higher share of retail brand business and personal care. So the closer you are to a customer, [indiscernible] more agility and the more speed you have. And this is why I strongly believe that a new organization, having end-to-end, I mean, you could say everybody is in the room when you take holistic decisions will be a big performance enabler for the consumer tissue part.

So we have 22 sites supplying consumer tissue products in the integrated supply chain. And we have since 2022, 7 sites in the cast out consumer [indiscernible] private label. So overall, it's 29 sites. The first bullet point here says the first is nothing else than a reconfirmation of a commitment. Whatever we do, the most important thing is safety in our factories, not only in the factories, but of course, working in the supply chain, we have a higher risk one. This is definitely important. But then as I said earlier, we see the new organization really as an enabler to increase supply chain efficiency because now we are moving from functional mastery into end-to-end and I said to some of you in the break is, when I have now my new management team together, I have the category there. I have always the voice of the consumer there. I have the commercials there. I have always the voice of the customer there, but I have also the supply chain there and this gives us a lot of speed and agility.

Operational excellence. So if end-to-end organization is the enabler, operational excellence will be the result. And we are focusing on reduction of product [indiscernible] we know we have improvement potential when it comes to machine efficiency and especially asset utilization. We also believe that we have further possibilities to improve the manufacturing footprint both in Europe and in Latin America.

And last but not least, pulp mix. You know that we are working a lot with pulp mix and pulp prices are raising. So optimizing the pulp mix per contract is also huge value creation.

A lot of discussions were also about volatility, and I was listening carefully to the last quarter one report. Ulrika and [ Fredrik ] presenting and one of you said that we are noticing a reduced volatility of the consumer tissue margins. And we did a lot about that. We had a discussion about it. And you did a lot about it.

So what did we do? Number one is we have showed our contract length. That gives us faster possibilities to adjust pricing with customers, more open contracts. We have more index contracts. What is the index contracts. Basically, you have a review of the cost driver clauses every 3 months, and you adjust accordingly. It can be good, it can be bad so it can go up, it can go down. But basically, you are much more agile with pricing in both directions. And last but not least, we have also made some significant changes in our portfolio, especially in the private label division, which is the most volatile when it comes to margin. We have made some mixes. So we have discontinued some very volatile contracts in order also to smoothen the margins here. So the corridor of volatility, yes, it's still a volatile business, but I mean they are much smaller than in the past.

Since first of January, we have also the virgin fiber purchasing so the pulp buying and the responsibility of the business unit. And that gives us also a different possibility because we can better synchronize how we are purchasing fiber and how we are pricing it in the marketplace. So the expectation is also here that we come to a further reduction of volatility of the consumer tissue margin.

Let me close with this slide. While not only [indiscernible] have very interesting businesses. I think you see a new president here with a lot of confidence. I think we have a business with a lot of strength. It's a global business. We have the scale. You have seen our market shares. We have a very broad portfolio, which also makes you more resilient when the consumer is down trading or some trends are happening. With our size, we have the negotiation power in the procurement side and especially also towards our customers. Our customers are also consolidating, and we are doing much more business with trade alliances, for example, than in the past. We have seen that we have the leading brands. I think we are outperforming definitely. Our shares in the branded segment are significantly higher than any other areas. We are leveraging what we call the triple track model, I think brand, retail brand and private label. That means we are one of the really few ones in consumer tissue who can manage an entire category for a retailer. We have the strong relationships. No, we did not pay the customers. You heard [indiscernible]. They're really convinced that the relationship, the partners with [indiscernible] is developing a lot of value. And last but not least, and convince yourself also when you look at the R&D list, we have the innovation, and we have a very, very strong sustainability offer, which is in the [indiscernible] category like consumer tissue, very, very important.

So a lot of confidence for the future, a lot of work ahead of us. Thank you.

Thank you, Volker. Clear overview of your global consumer tissue business and the initiatives you're taking for further profitable growth and more stable returns and reducing volatility. All clear. Yes. And very great to hear about the consumers that the customers really appreciate our products and our services.

Yes, they do. I think we have -- when you look at some segments, I mean [indiscernible] mentioned, the [indiscernible] brand as [indiscernible]. And we have others where we have the superiority with our [indiscernible] with the highest absorbency and we have [indiscernible] would never take any other product than an Essity product. So superior is driving, of course, shopper and consumer loyalty.

And you also explained to us the advantages with the end-to-end organization. That was clear. [indiscernible] to leverage that?

Yes, I think -- I hope it was very clear. Of course, we are coming from, as I said, functional mastery, we were optimizing very much our silos. Now we have an end-to-end organization where my management team has also know, for example, the innovation part and the supply chain part and a lot of commercial decisions, which we are taking have a very strong impact on the supply chain. And when you are further away in your functional silos, then you hear very late what it has been happening there. And now we are in one room, and you can literally [ stay ] in one room and we have a much more holistic and a much faster decision-making and [indiscernible] in consumer tissue is crucial to succeed, it's absolutely crucial. So I feel extremely comfortable with the new organization with the new end-to-end organization, having really supply chain innovation and the commercial in one room and taking decisions together.

Good to hear. I have a more short-term question that I know is a question for many. If we now look at the current cost environment, how are you managing this?

What a surprise, I caught this in other brakes. I said no, we talk about the coming years. We talk about the future. You want to talk about the next quarter. So I mean, obviously, you can see what is happening in the marketplace, pulp prices are increasing since October last year. Now, of course, with the situation [indiscernible] energy prices are rising as well. We had offset a lot with cost saving activities, but we have reached, of course, the level where price increases are not avoidable, and we are in the middle of implementing price increases to mitigate that. So this is where we are right now. So a lot of activity of our customers. The understanding of the customers is pretty big because everybody sees what's ongoing in the world. So this is, of course, now short term, our task implementing necessary price increases to recover the margins and [indiscernible] confident.

Yes, we always compensate input cost increases with price increase on our products.

Yes.

Thank you very much, Volker. You have the chance to ask Volker more questions during the Q&A. Thank you for now. Next on the agenda is Professional Hygiene. I am pleased to introduce to you, Pablo Fuentes, President, Professional Hygiene. Pablo will take us through his business and how he is driving volume growth with his leading Tork brand. Welcome Pablo [indiscernible] Hygiene.

Hi. Good afternoon. Happy to be here with all of you, and we are going to talk about our beautiful Professional Hygiene business as well. I think this picture that you see here is -- represents our business in a really good way. This is our big serve dispenser that we launched a few years back, it's highly innovative, highly differentiated protected by many patents, and it's been very successful in high-traffic areas. It delivers high lows, continuous delivery of product, and it makes a big difference for our customers. And the great thing about this dispenser is that it only works with Tork products. It's a system. So we sell dispenser and we refill. It's a system sell. So if you think about it, it's like Gillette with a razor refills or an expresso with a coffee capsule, coffee machine, it's a system selling that, of course, adds value to our customer but it's also profitable for us. So in our business, we like to say that these are cash generation machines. And we have 30 million dispensers around the world that we're constantly refiling with Tork products, right? So we have 30 million cash generation machines around the world. So this is, I think, a great business model for us.

And 1.5 years ago in Barcelona in the last Capital Market Day, you may remember that we talked about tissue refills being our core. And then we had these adjacencies, soap, sanitizer, wiping and cleaning. Now we are shifting our strategy, and we are focusing on the full portfolio of our core. Of course, we shift this because we are aiming for higher growth all across.

And as we shift our strategy, we shift also our innovation approach to the whole portfolio and our go-to-market approach towards the whole portfolio so that we grow all across in a good way. 84% of our business is tissue, but we have this fast-growing wiping and cleaning and soap sanitizer. And again, we focus now on the full portfolio. It's a full solution selling. Europe and North America is still an important part of our business, but we have a fast-growing and profitable emerging market base in Lat Am, Middle East, India and Africa, that is also very important for us. We are the #1 global professional hygiene company and the #1 brand globally in professional hygiene. And of course, this gives us tremendous scale benefits. If you think about R&D, innovation, go to market, access to global customers. We get really good benefits of our global scale. We also focus on one brand, and we invest to create brand equity, brand power that fully translates into purchase intent in the B2B world, with the #1 global brand in Professional Hygiene.

In terms of some of the dynamics in the category, this is a stable nondiscretionary category. It has these recurring dynamics that I was explaining with the cash generation machines, right? You have a system and you're recurring selling refills. It's a stable category, but with the rising hygiene standards that Ulrika was talking about. Our differentiated systems actually make a difference. It actually addresses some of the rising hygiene standards. Emerging markets is still a low penetration in terms of these professional hygiene systems, and we see high growth through penetration and of course, innovation as you hopefully saw understand and you will see later on in the lab, makes a difference. It actually makes a difference to our customers and the performance in their businesses.

We really are everywhere. We are focused on adding value to our end customers. We get relationship insights on our end customers, and we are quite visible. Of course, very cool, our recent acquisition of the Camp Nou, which is, as you know, were the Barcelona football team plays. So if you ever go there, you will see Tork. But more importantly, I hope when you flow into Gothenburg or when you fly out today, you will see our beautiful Tork dispensers in the airport. They're supporting the performance of the airport. And they are connected with our Tork [ vision ] cleaning to create cleaning routines for facility management. So hopefully, you will all see that in the airport.

We have a stronghold in the washroom. We have a strong washroom portfolio of products and this allows us to be present across the different segments in the B2B environment. While we leverage our strong washroom expertise, we also aim to grow outside of the washroom. For example, in the food service area, we are very strong with those dispensers that you have in your tables. It's an Xpressnap, which is the world's #1 napkin dispenser, the world's #1. And it's very important in the food service area. And we're also strong in whiting and cleaning in, for example, kitchens in the restaurant and in industrial and in commercial applications. So we have a really broad presence across the segments and a really deep understanding of the dynamics and the needs of these different segments in the B2B world.

In terms of our go-to-market, We, of course, are very focused on adding value to our end customers, to the airports, to the stadiums, to the offices, to the industries. And then with our sales force, we work with distribution partners with other stakeholders like facility management because they help us amplify our business, our presence, our selling approach to grow more. Then, of course, we have a strong sales force that we are constantly challenged to be more agile, more flexible because we also have a channel shift from off-line to online, and we really need to be, as Ulrika was explaining, omnichannel. We need to be present across all the channels to really capture growth, and our sales force needs to have this flexibility, the agility, the capabilities, the training. So we're constantly challenged on developing our sales force to create growth opportunities for us. We are well positioned to deliver on our targets. We aim to grow 2% to 3%. And then, of course, do this while we have more than 18% EBIT margin. And we will achieve this target with a very clear growth model. 60% of our business is this fantastic strategic products that you saw in the stand. These are highly differentiated. We have been growing twice the market, and we will accelerate and continue growing twice the market with our strategic segments. And where we are shifting our strategies in the 40% base assortment. You may remember in the past, we focused on improving profitability. We even did some restructuring of the business. But now we have a profitable base assortment. It's good products supported by our Tork brand and the focus is to grow in line with the market. So with this growth model, it's how we will continue developing the business.

Now how are we going to grow or continue growing and accelerating twice the market in strategic products? Through innovation and R&D investment. We have this approach of global platforms, global product platform, global technology platform. So one platform, for example, could be PeakServe, if we pick one. PeakServe will see everywhere around the world, emerging mature markets. And of course, we leverage R&D technology in this platform and then we can also manufacture and roll out in a seamless way globally by keeping a few global platforms. So PeakServe is one platform. Xpressnap that you have on your tables is a global platform. We have soap sanitizer platform. We have this smart one, which is a fantastic toilet paper system that reduces 40% usage. That's another global platform, both mature and emerging markets.

In terms of the base portfolio, as I mentioned, is now profitable and the focus we're having in terms of our go-to-market is to expand our customer base to those customers that fit well with this base assortment. Of course, this is a competitive marketplace. So we need to be super good in productivity in our value chain. So we are highly focused. And now with the new end-to-end model we have in the company, it allows us to seamlessly work on reinvesting what we do in productivity to stay competitive commercially, pricing, promotion wise with this portfolio. And then we also launched some volume fighters to drive growth, and we want to grow in line with the market, of course, watching out profitability as well in this 40% of our business.

Washroom, as I mentioned before, is our stronghold. And the shift in our strategy that we are doing now in our go-to-market with our sales force, with our distribution partners is that the best for our end customers is to have a full bundled solution with one brand one product integrated in the washroom. So in this picture, just to take as an example, this could be one washroom where you see PeakServe, high-traffic, very differentiated dispenser. You will see a toilet paper cordless differentiated dispenser. Soap, sanitizer, [ hair care ], you will see our period care dispenser, where we synergize with [indiscernible] Personal Care fem care business. And all of these, we have [ hair care ], by the way as well. And all of this is connected with our Tork vision cleaning. When we connect the dispensers, we have these apps and algorithms to optimize cleaning routines for facility management companies. This can save up to 20% labor cost for facility management companies and eliminate run outs. Run outs is a big issue in an airport or in a restaurant if there is no paper in the dispensers. So through data, through insights, through traffic patterns, we actually optimize cleaning routines. We also have Tork paper circle where we recycle back to the factories, actually [indiscernible] you will see that later today. We recycle back to the factory our products, because most of our products are made of recycled fiber. So this is actually good for us and good from a sustainability perspective for our customers.

Outside of the washroom, we also think about food service as a bundle as well. Imagine if you go to a restaurant, then you see the full bundle of Tork products in the washroom, you see our Xpressnap dispenser in the table top. And if you go to the kitchen, you will see our wipers, which are purposely made for cleaning kitchen, for cleaning the table top, use of some of those products, I hope, in the stand. So we sell a full bundle of products to food service, and we have an expertise in food service.

We are also aiming to grow faster in industrial applications. And it's the same through the washroom stronghold, we sell outside of the washroom whiting and cleaning that is purposely made for industrial cleaning and we also have even now some soaps purposely made for cleaning in wash stations, in the machines, for example. And we have some products that are also on the stand.

So we go outside of the washroom towards these applications to continue driving growth. We also see e-commerce as an important growth opportunity for us. What we have learned and what we have found with e-commerce is that we attract a new customer pool that was a white space for us. And this is a small, medium businesses that actually access the category, learn about the category and buy the category online. And now we have created a purpose-made portfolio of products for e-commerce. We have a dedicated sales force. And for example, with Amazon, which is an important partner with us, we have grown actually very successful in both North America and Europe and we have a global partnership with them to develop B2B with Amazon, among other e-commerce customers that we have.

Emerging markets is another important building block for us. We have a strong presence in Latin America. We are building a presence in Middle East, India and Africa. We use our strategic portfolio, again, with these global platforms that we roll out to these markets and you will see us in many places, we were just in the break talking about the Dubai Airport, among many other places, of course, where you will see our fantastic Tork business in emerging markets and we want to double the size or double the sales in the next 5 years in emerging markets.

So now I will show you a quick video. It's Lyreco, an important customer for us in Europe, and how we drive with them omnichannel and sustainability. So let's see the video.

[Presentation]

Thank you. I hope this shows some of what I was talking about in terms of the omnichannel approach in the market. And in terms of our M&A priorities, we see 4 different opportunities. One opportunity is how do we strengthen our Washroom bundle that I was talking about. The other opportunity is how do we strengthen surface cleaning as we go outside of the washroom into surface cleaning in the different areas that I was explaining. Another opportunity that we see is we have a very strong go-to-market in B2B. How can we add some categories, perhaps first as adjacencies to synergize with our strong go-to-market. And then, of course, geographical expansion in line with our growth aspiration.

So I hope with this short presentation, you get a good sense that we are really gearing up for volume growth and that we have a great solid business going forward.

Thank you, Pablo. It's so impressive to see the global reach of torque, and thank you for sharing all your growth initiatives, initiatives that actually paid off already in Q1, right? Yes. Keep on going. As you focus on volume growth, how do you then manage volume versus margins going forward?

Yes. I think we are well positioned today. Of course, with a 60% that is strategic to grow -- continue growing and accelerating at least twice the market, it's a profitable proposition, it's differentiated. And then the base assortment, we have worked really hard and now we are in a good position of profitability to drive also growth in line with the market. So it's profitable growth.

Now we move into the final session before our Q&A starts. But before that, let us show you how Essity shapes the future of hygiene and health.

[Presentation]

So now is when we bring it all together. I'm pleased to introduce our CFO, Fredrik Rystedt who will take us through how our progress actually chose in financial terms and how we are moving towards our targets. Fredrik, great to have you here. Please go ahead.

Thank you. So you have heard my colleague to talk about all these beautiful businesses and equally beautiful initiatives to generate profitable growth in the future. And what I will actually do is to put some consolidated numbers to all of what you have heard. Now I'm going to actually start about -- talk about the history. Now I can see that most of you think that the future is so much more interesting than the history. But nevertheless, it's important to recognize what has been delivered in order to also provide a bit of credibility to the future journey. And bear with me, I'll come back to the future in just a few minutes.

So starting with what we have achieved in the past couple of years when it comes to margin and return. So as you can see, we've improved our operating margin with nearly 300 basis points and our return on capital employed with nearly 500 basis points. And of course, this has trickled in, as Erica said in her initial comment, into a steadily increasing earnings per share.

Now most of this improvement has been driven by gross margin increase. So a very significant one. And your question, I can see that on your face is how is that even possible? Now first and foremost, we've done many things. We've addressed underperformers. You know that, we've talked about that a lot. And at this current moment, we don't have any material unit in the company not creating value. So we've worked very hard with addressing underperformers. We've worked with premiumization, innovation. We've worked with efficiency. We've become much more price agile. And last but not least, we have worked with our portfolio to optimize that and grow businesses with high returns.

And of course, one thing that is quite actually interesting, I think, is that many people tend to tell us that we are a volatile company. You heard actually Volker talk about this before. We get that a lot. You're a volatile company and you're actually more volatile than your competitors. And this just isn't so. So if you look at the volatility in two different periods. And on the left-hand side here, you see the volatility between 2018 and 2023. You can see it was 1.9 -- or 190 basis points. This is the standard deviation in our EBITA margin. And then you can see the volatility in the last couple of years. So these are numbers that you saw, among others, but not just in consumer tissue but the entire group. So we have reduced volatility quite considerably. The way this has been done is, of course, price agility and less dependency on input material that is moving a lot, but also premiumization many other things. And if you actually compare to our competitors, you'll see that our volatility is actually lower, and it has been also in previous years. So it just isn't -- so we are not a particularly volatile company. Now you may wonder what companies are actually hiding behind -- which companies did we choose which are hiding behind these numbers. These are the absolute biggest companies that you would find in the sectors we're in.

So in fact, we are not a volatile company. Now we have worked a lot with margin, profitability but we've also generated quite considerable cash flow. So as you can see, our operating cash flow has been steadily very high, and this has led to a continuous reduction of our net debt. It's not only the operating cash flow, it's also divestment, as you know, but we now have the strongest balance sheet that we have ever had with a leverage ratio, net debt to EBITDA of roughly about one point. so. And this has allowed us to continuously generate a stable and, of course, also increasing dividend, as you can see. And of course, this year was no exception. And you are also aware that we have recently introduced new tool when it comes to shareholder repatriation, so a share buyback program. And we're now into our third year with a program size of SEK 3 billion, as we've also had in the is a couple of years.

Now the Capital Market Day today and you -- of course, you've noticed that is about growth. it's about, of course, organic sales growth. So let me talk about that for a few moments. So if you look back 5 years, you can see we've generated a healthy 6% in organic sales growth. It's a good number. And I think what is -- what we're actually more proud over is where that growth has actually come from. So if you look at this slide on Personal Care there, you can see that we've generated the organic sales growth in Personal Care, where the return is absolutely highest in [indiscernible] retail and in family -- and if you look at Professional Hygiene, you heard Pablo previously talked about our trust or our ambition to continue to grow strategic products, and this is where the return is the highest we've done exactly that also in the past.

Health & Medical consistently high profitability and good growth in both areas. So consumer tissue is a bit different. Here, you can see the highest return actually in Consumer Tissue is the branded segment. And that's where we've seen the lease growth. retailer branded is also a good return, and that is compensated. But the reason this has been the case is, of course, down trading that we have seen in the last several years.

Now great picture, I think, but there is one little thing that is quite obvious, and that is a lot of this growth has come from price. And we have an aspiration and so many initiatives to achieve growth through volume, and this is what you have also heard.

Now when it comes to the future, you've seen all my colleagues here illustrate and of course, Ulrika, the group target and the goals that we have for each of our business areas. And the way we are intending to achieve that is, of course, obviously, through innovation, it's winning in the right attractive segments and in the right product areas. And of course, we are willing to put some money behind that in terms of A&P spend where additional SG&A where that brings additional sales. I'll come back to that. But before that, when it comes to margins, same thing here, we have defined the goals for the business areas, all leading up to the target for the group of more than 15%. Pricing discipline will remain very key as will mix. And of course, we have defined all sorts of savings program that I will talk about in a few minutes.

Now one thing that is very clear is that in the priority of growth and margin, what we intend to do is to secure that we get to the growth rate that we want to get to and through that growth rate also generate operating leverage and thereby going to our higher margin aspiration. So growth first, we add sustained margins and then reaching the margin target, if that makes sense.

Now you've heard of all of these initiatives. I will only talk about 3 things that are common to all our business areas. Obviously, we will, and we have already, but we will also, going forward, increase our A&P spend with 30 basis points or more than that, approximately when we look at our future plans. And we will, of course, protect our margins through being mindful of costs. The cost-saving program, both in terms of COGS, but also in terms of SG&A.

Let me talk about these 3 components a bit and actually start with the cost or the COGS. You heard us talk about this quite a long time, many different initiatives in the field of COGS. But one thing that has actually happened is when you come to fixed production costs, that has actually increased quite considerably in the last several years. You can see that you don't have the numbers here, but you can see on the shape of the graph there, fixed production cost has increased. Why is that? Well, obviously, we've seen quite some salary inflation over the last several years. And we have seen very little, if any, production volume growth in our business. And as you can understand, that means that the fixed production cost has actually increased per unit. Now this is not sustainable. So we have defined a number of different initiatives to secure that we come down in this field and become much more competitive. And of course, this will also trickle into the overall cost savings that we are paying for of SEK 0.5 billion to SEK 1 billion per year. We will continue with everything else that we have done in this field. So we still remain with that target savings but of course, we are -- and it's not if, when we also do the improvements in the fixed production costs, the quality of the savings will increase as we go forward.

You've heard about the savings program that we had launched in terms of SG&A. And is on the back of the organizational change, we have set our targets that we will reach SEK 1 billion in cost savings at the end of 2026 as a run rate. And this is, of course, on the back of creating a leaner and more efficient organization, and this also brings lower personnel costs. So this is something that we have embarked on. We are well into that program, and we will deliver at the end of the year as we have promised. And of course, we're also entertaining lots of other cost-saving initiatives like lower travel, like being more efficient using consultants and many, many other things. And of course, part of this or most of it, we are using to secure that we get additional growth. And this is basically what I already mentioned, we will increase our spending in A&P with 30 basis points and more in the future years. Now it's not a surprise that most of the spending we have in relates to the retailer and the branded products that we have for the retail segment. So feminine, incontinence and of course, also baby and it's not a perhaps a big surprise that these areas will receive most of the money. But to be fair, and you've heard that from my colleagues, we will increase A&P spend in all of our areas as we go forward to fuel the growth that we would like to reach.

Now to sum all of this up, when it comes to margins, this is the path that you will see going forward for us to reach -- so the path to reaching our overall margin target is very simply a sum of what I've just been talking about. Innovation is very key, will remain very key. COG savings, as I've just talked about, SG&A savings. Now the A&P investments that we were just discussing or I was just discussing, clearly takes a bit of margin space. And then the operating leverage will do the rest. This is not just something I make up. This is -- it says illustrative, and it is, of course, obviously, because you don't have any numbers on it. But what you see in front of us are the concrete plans that we are working on to actually achieve.

Now we don't have ambitions only in the field of margin and only in the field of growth. We are also looking at our balance sheet. If you look back a little bit in recent years, you have noticed perhaps that our working capital has actually increased a bit. So if you look historically, we've been at about 6%, 7%, and in the recent couple of years, about 8%, 9%. Now why is that? Well, there are many reasons. But one of them is that there is a structurally higher working capital. As an example, you've got regulated payments, regulations in various European countries, just as an example. So there are structural reasons for the increase but we can do better. And we have identified a set of activities that actually will take working capital down. So if you take inventory, not least partly as a consequence of the new organization, much better volume forecast not building inventory that we really don't need. And we've also multiple activities for accounts receivables and accounts payables. So there are concrete activities behind the ambitions that you see.

Now if you look at cash conversion, we've actually been doing quite well. I showed you earlier that we had generated a lot of operating cash in the past, and we aim to do that also as -- if we go forward. Now you can see that we've been occasionally low, occasionally much higher, but we should sustainably over time, be at approximately 90% or there above in terms of cash conversion.

Now if I look at the balance sheet, perhaps from a more holistic perspective, how do we actually allocate our cash flow? Well, first and foremost, we want to invest in our own business, we want to do capital expenditure that provides value. And you may wonder why is that? I'll show you that in the next couple of slides. But for now, I'll just say that this is the first priority. Now after that, having done that, our net cash flow after financial net after taxes, the first priority there is dividend, and we have a policy stating that we want to achieve stable and rising dividends. And as I showed earlier, that's exactly what we have done. So that's the priority.

We want to continue to amortize our debt. If we don't do any M&A, we would typically plan for a continuous amortization of our debt. And what is left of the net cash flow is available for share buybacks, and you've seen us done exactly that.

Now M&A, you heard Ulrika talk about it and my colleagues as well. And we intend to continue to do that. And if we do that, of course, needless to say, we will then amortize less or not at all. And we are prepared to also increase our leverage ratio. So under normal circumstances, we should be about around -- between 0 to 2. We're currently about 1. And under, you can say, extraordinary circumstances, we can go according to our capital restriction or capital policy up to 3.0.

So the question is, why is it such a great thing to invest in our own business. I showed you earlier, and you might have noticed that we have a return on capital employed of roughly about 17%. It's really high but if you actually look at that or decompose that number a bit, you will detect that we have a significant amount of acquisition-related intangibles. So we -- that's just a consequence of the many acquisitions that we've made in the past. If you actually look at our operating return without those and you can see that our return is approximately 35%. So we have an amazing return in all our business areas and in average of 35%. Don't worry now. We are, of course, always targeting to yield a good return on all our assets. The only reason I'm showing you this is just to illustrate what a fantastic return we actually have on the capital that we have invested into our company. And we also have very, very high IRRs typically on the CapEx that we do. And these are some examples to what you see there to the ride. So if you go and take a look at the future, what we actually aim to do is to increase our capital expenditure a bit. We have been historically, if you look back many years, we've been above 5%, 5% to 6% maybe are in that ballpark. And then in the last 5 years, partly due to COVID, partly due to hyperinflation, we've been much lower. And we intend, due to the fact that we are able to generate very significant returns partly because we believe that we can grow quite considerably, we will most likely or we will increase our capital expenditure to a level of about 6% or there above. So this is a change where we want to invest more into our own business.

Now if you look at that graph to the right, you can see where does our investment go? And it's not a surprise that if you compare it to the size of the asset base, most of it goes to the high-returning parts like feminine like [indiscernible] is exactly the same as we have on A&P. And we also invest in [indiscernible] Healthcare and Medical and much less on consumer tissue and in the paper-making parts of special hygiene. We see a potential to improve both margin growth and result in return if we invest a bit more, not least actually in Professional Hygiene.

Now this is the full story. But of course, none of this would not -- would work if our people all of us at Essity, wouldn't understand how to behave also from a financial steering point of view. So we educate our people in value creation. We educate what drives value, what is the role of growth? How does it work when you increase margin? What does that do to value? We actually educate both online, and we also have courses for all our managers and most of the employees of the Essity Group. But education and knowledge is not only -- it's not enough. We also need to make sure that we incentivize people in the correct way. We've got multiple programs and of course, like sales bonuses or similar, but we have two main programs for the management of the company for all our management the short-term incentive program and the long-term incentive program.

So if I start with the STI, it's actually based on 3 main KPIs, organic sales growth, as you can see, EBITDA margin and operating cash flow, all of them very, very centric for value creation. We basically have different weights depending on where you happen to be in your performance. So typically, a unit with a very high return will have much more weight for organic sales growth. And if you have too low return, then, of course, we got much higher weight on either cash flow or EBIT margin or both. And we complement these with special types of KPIs like cost savings or innovation, KPIs or similar. So very efficient and very much tied into the interest of the company and hopefully also the interest of all of you. We have a long-term incentive program. It's based on [ 280% ] TSR and to [ 220% ] on sustainability and the 80% is, of course, if we do better than our peers, we get rewarded. If we do not do better, then we don't get rewarded and if we are on the trajectory to fulfill silo-based targets, we get rewarded. Otherwise, we don't. And of course, all of the reward gets invested into the Essity share. So we have a similar interest as you all. With those words, thank you very much.

Thank you, Fredrik. Thank you for a good walk-through of how our progress actually how it looks in financial terms but also what it takes.

The fantastic businesses and [indiscernible]. Yes.

And also what it takes going forward Yes. I'm sure there are many questions for you, but we will address those in a short while. So thanks for now.

That actually ends today's presentations. I hope that you found the presentations and the day valuable and interesting and I like to have a clear view now of how Essity is moving faster towards its target. I will now invite the presenters to join me here on stage for a Q&A.

Perfect. All set. Yes. Well done. Clear the chairs. Okay. So we will take questions now from the room but also those of you joining online, please submit your questions through the platform. We will address as many questions as possible, of course.

Yes. We have a first question from Niklas.

Niklas Ekman from DNB Carnegie. Can I start on the topic of input costs. If you can just elaborate a little bit on what kind of magnitude you're seeing just to put this in perspective. We can obviously see what's happening with pulp. We can see what's happening with oil and natural gas, but it's still maybe a little bit challenging to see from the outside exactly how the mix of this impact. How would you put this in context to say the cost increases you saw maybe 2 years ago compared to what you saw the massive increases you saw 4 years ago? And also how you -- how much better prepared do you think you are today? You elaborated a bit on this in the presentation here before. But yes, that's my first question.

Yes, maybe I can start. I think you have so much more to bring. But I can start. I think two things. I mean, we're sensitive for, obviously, as many others in terms of energy as an example. And in terms of oil-based products like plastic and [indiscernible], superabsorbents and things. We have a lot of laggy impact. So of course, it takes a bit of time.

I think it's difficult to answer your question exactly how much because to be fair, we actually change this by the day. So it's not easy to answer. But of course, the magnitude is much less, Niklas, than it was 2, 3, 4 years ago. And from where I'm sitting, I think we're so much better prepared this time than we were last time. We're much more agile, not just us. It's also other competitors, it's also retailers and others. So I think we're much more agile, generally speaking.

I think one thing, and Sandra, you mentioned it actually earlier, we have compensated, and we look back 30, 40 years, we've always compensated headwinds in terms of costs with pricing. But with that, and we -- I have no doubt that we'll do it this time as well. So of course, we're used to it, but it's never nice when these things happen. But I'm sure [indiscernible] or Pablo or...

Would you like to add something...

I can start. I think you cannot compare this to 2022. 2022, it came as a shock overnight. The magnitude of change was much, much bigger, and we had applied different models. I think we believe it's a more sustainable cost change at the moment. It's why you have to also apply different ways of increasing prices like something we work very much in '22 with surcharges. This is most probably not appropriate tool right now but you cannot compare with 2022. And then now, of course, pulp and energy for consumers tissue comes together, which makes the need for price increases quite obvious.

But I think with all the educational stuff we did with our retail customers in 2022 is a much better understanding. They are really thought on high price impact and on pricing, energy was something very new because it didn't play -- I mean, we didn't have this volatility in the past. So I think with all the things which we discussed with our retail customers, the understanding there today about energy prices in the market, I think there's a much bigger, better starting point in [indiscernible] prices right now.

Can I also -- is it okay if I follow-up?

Okay. Yes.

Just a quick follow-up. Are you seeing in terms of price increases, are you seeing the same kind of action from your competitors? Or is there any risk that you end up raising prices and competitors don't and you end up at a disadvantage?

No. I mean, of course, I cannot tell you it is like this, but when you follow the public information, when you follow the news, competitors are very similar price increase at the moment because we look at the cost structure and then look, I mean, tissue is our pulp, the global market. Energy prices are also usually moving more or less in the same direction. So I would assume every tissue supplier has a need to increase prices at this time. But again, [indiscernible].

Yes, I'll maybe go one step further in that we're actually now seeing competitors move in the health and medical categories on price. And some of them don't have the scale that we do to sustain, so they have to move faster and harder. So now I would say we are doing the same thing.

We have a question here. Yes.

It's Warren Ackerman at Barclays. I'm a little bit surprised that there hasn't been more discussion on AI today, obviously, past approaches for consumers is changing radically, digitizing supply chains, returns on marketing spend, winning in data is going to be a key battleground for FMCG companies in the next decade. I'd love to hear a little bit from the panel where you are in terms of AI. Your competitors are going very, very fast, is changing every day.

And then for Fredrik, in terms of cost, in terms of savings, are we at peak head count now? Are we going to start seeing that G&A line coming down as you replace people with computers?

I can start on AI because I shared some examples earlier today on typical applications that we have for AI that was just scratching the surface to give some examples. So I would say, across our value chain, we are applying digital tools, including AI in order to become more efficient and also looking at how we can use that in our go-to-market in a good way. So that is clearly something we focus on. And maybe you guys want to share some examples from your respective areas. I know [indiscernible], for example, the work we do on marketing with continent at scale and so on, I think is an interesting example.

Yes. So obviously, AI gives a lot of opportunities. I mean one is on the speed and the cost of developing communication assets. So we're applying a lot. I mean some of it we've moved, in fact, into in-house, and we're able to obviously reduce a lot of the cost and speed that it takes to develop assets. But also like the example I gave on the [indiscernible] club is a good example where we have masses of first-party data, which obviously we're then able to use our AI algorithms in terms of creating customized content based on the data and individual consumer that we serve versus going with mass marketing, communication, which gives us a lot of first-hand experience on how to be data-based and leverage again data better. The lead proof companies that we've acquired have what most of them have started with a direct-to-consumer approach, which also gives us a lot of new capability and experience again in how to drive digital first businesses. So I think we have quite a few, not only experimentations but concrete things going on. And you'll see when we do the tour, you'll see also how we leverage AI in terms of product development. So how do we design products, leveraging AI versus the more traditional older tools. So those would be some of the key areas.

[indiscernible] you had an example?

First of all, it's a good observation that we didn't talk about it so much on the stage, but please don't let that reflect how much we talk about it behind the scenes. I can reassure you with that. If Ulrika talked about across the full value chain, [indiscernible] I can give you a good couple of examples of where we use it operationally. So we use AI and customer services for order processing. What was done by manual people before is being processed by AI, and it's fabulous and it saves time and actually, it's extremely accurate. We're also using AI to train our salespeople. Virtual training materials and these things are very impressive, supporting our salespeople on how to handle objections, how to handle indifference, very important when it comes to price increases. We're also helping our sales managers on how to coach their employees too. So many things in the back end and as well as all of the full organization, leveraging AI tools in office suites like Microsoft, for example, to improve our efficiency and effectiveness. It's a big movement. It's happening rapidly.

Yes. I can add to what Anand was saying in the B2B landscape but first, I think we were discussing in some of the workflows, customer service, but other workflows that we have in our transactional processes we already have concrete cases of AI driving productivity. And when it comes to our go-to-market in the B2B landscape, the sales force part specially a small customer that is very costly for us to serve with physical sales force. We are starting to implement some AI tools that actually deliver a more efficient cost to serve with this type of customers. So it's early days, but we are, of course, testing and learning.

I think we are not talking about AI because it has become so normal for us. I mean it's everywhere. I mean marketing, content management, when you look at net revenue management tools in sales, for example, if you go to a factory, predictive maintenance, it's present in all areas. So for us, it's a norm.

And you happen to sit next to our new Chief Digital Officer. So [indiscernible] later on. You can catch him and talk more about this. Okay. I will interact with a question from our virtual audience. Niklas [indiscernible] he asks, and this is a question for you, Fredrik mostly because it's on your presentation. In order to reach your 3% organic revenue growth, and 60% EBITA margin target, is it required to increase CapEx sales from 5% to 6%? Or should the increase in CapEx compared to sales by 100 basis points [indiscernible] in a faster growth and higher margins than stated in the target.

I think it's a great question. I don't understand the question fully, but of course, we -- both the estimate on CapEx and the [ 3 and the 15 ], if I take all of them, they're consistent with each other. But of course, it's a bit about faster execution, getting to the [ 15 and to the 3 ] in a faster way and paving the way for the future. But generally speaking, as a general answer to this question, all 3 of those things are consistent with each other.

Okay. Let's hope he's happy with that answer. Then we also have a question from Charles Eden from UBS. And this is regarding the strategic review that we announced yesterday, how much overlap is there in the production footprint between Consumer Tissue and Professional Hygiene. Is there a significant number of sites which share production of these two product categories? Or are they largely already separated? Who would like -- Would like to start?

[indiscernible] in Consumer Tissue. We have seen it early on, we have 22 factories. I think we have very dedicated factories like in [indiscernible] for example, or [indiscernible] dedicated factories. And then we have a couple of factories which have a 90-10 relations. So very dedicated, and they're actually very, very few actually too which are very, very mixed and one of them you might see in the afternoon today [indiscernible] this one, it's actually our most shared factory between Consumer Tissue and Professional Hygiene. So the majority of the Consumer Tissue factory, which uses a minor part, less than 10% of Professional Hygiene products.

Okay. Thanks for that answer. Any more questions from channel, please? Sir, you have a microphone already. Go ahead, Oskar.

Oskar Lindstrom from Danske Bank. And today, we heard about your ambitions to increase growth, both sort of price mix and innovations, but also volumes. But you didn't really talk about the fastest-growing market in the world, which is Asia where you actually exited a large business a couple of years now. Have you any thoughts about at least selectively reentering the Asian market in order to achieve the volume growth targets? Is that something that could drive growth?

I can start. And just to be clear, we have presence in Asia with Health & Medical. So our medical solutions is present in many markets. For example, Indonesia, it's a very strong market for us when it comes to Wound Care. But then we have the fact that we have licensed our brands in the other areas to Vinda. So that continues to be operated through our different ownership. That license agreement is in place until beginning '27, and then there is a discussion about renewal or not. Depending on the outcome of that discussion, we will see what happens then. But today, we cannot enter with the other brands in Asia.

Now Karel, let's give her a microphone over here, please.

Regarding M&A, you shared some examples on the Wound Care side. But after a string of acquisitions, we didn't see a lot over the last couple of years. Market growth has slowed. So what has been hindering to more frequently add interesting assets?

You mean specifically in Wound Care?

Yes, exactly and in general, are there also opportunities to larger deals in H&M?

Very good question and someone that excites me. So let me put it like this. First of all, M&A in the wound care space is attractive, and I think it's important, we want to add scale and innovation to our portfolio, but it's not essential to achieve the growth and the margins that we talked about. So I think that's the first thing I would like to, at least, clarify. We had a couple of transactions at the beginning of this decade. We have ambitions to do more, but they need to be strategically correct we need to be able to see the synergies that we expect. They have to be value creating. So we're quite choiceful. We're happy to be patient, I would say. And then, of course, from a pure transaction perspective, we also need to be very mindful of our multiple as a company and ensuring that we can actually do the transactions, creating value for our investors and stakeholders. That's what I would say. Ulrika, anything?

No, nothing to add. I think that aside, generally speaking. And I would say the same thing that Volker did with AI. The fact that we had a few years with not that many acquisitions does not reflect a low activity level. So this is something we work very actively with to scout for the right M&As and to also then assess them. And there are opportunities that are interesting. At the same time, it has to be value creating. We are very disciplined in that. I always look at what is the most value creating, it's organic growth or inorganic growth?

Yes, we are kissing many frogs hoping to find our prince or princess, big and small frogs to your question specifically, but we're happy to be patient.

Johannes Grunselius, [ SB1 ] I have a question maybe to you, Fredrik or -- and the panel, if you can also answer it maybe. But CapEx will then increase. You are excited about that. It means likely a SEK 1.5 billion or something when you step up in the ratio of CapEx to sales, but could you give examples of what kind of investments you are looking at? What's changed there? And also sort of give us an idea of the time lag before the investment starts paying off in revenues and earnings?

Yes, I can do that. I think it's quite clear from what you've heard. And again, you'll hear more from my colleagues, but it's quite clear that we have very high growth ambitions as an example for incontinence. And of course, building capacity to cover that growth is something that's quite crucial to do. So capacity investments is quite key. You also noticed perhaps from that slide I showed that and I mentioned it as well that the CapEx investments in capacity investments in Professional Hygiene has been quite low over the last several years. And this is another example with the excellent profitability and the growth prospects that Pablo talked about earlier. This is an example of an area which we can really, really see creating value as we go forward. So here just a couple of examples, but mainly then capacity related.

Now you were asking about what kind of return prospects or pay back or whichever way you put it, it depends a lot. If you do a major capacity in investment in, for instance, Professional Hygiene, then, of course, building time for such a CapEx is quite long and it takes quite some time to actually get the money back, so to speak, but the return is very attractive and if you do a relatively cheap, I shouldn't say cheap, but at least less expensive in feminine care that the payback is much faster. So it varies a bit. But I don't know if you want to comment some more.

Nothing to add.

It doesn't look that way, no?

We agree.

Good. Aron, please.

Yes. Aron Adamski, Goldman Sachs. I wanted to follow up on the Consumer Tissue and Personal Care. In terms of your go-to-market strategy, how does the work impact [indiscernible] since the split into the two units from consumer goods previously. Are you going together to retailers? Or is it run separately, if you could give us some more color on that.

Yes. I mean one precondition when we decided for the end-to-end organization was we are keeping one face to the customer. So the reality is that we have a share for Personal Care, Consumer Tissue sales force. So we have one organization and that gives us the leverage and also the power to negotiate on high level with our customers. And basically, the organization is receiving orders from two buses. This is simplified what we are going to do. So Tuomas is heading the Personal Care part. I'm heading the Consumer Tissue part, and then we have the commercial part of our organization, shared and the rest, dedicated.

Okay. [indiscernible] is a different story.

[indiscernible] is carved out because CT, so consumer tissue exclusively reporting to myself. And the other exception is that we have the 7 factories of the BLT reporting to the line -- to the General Manager of the Private [indiscernible] division. This is why in my slide, I have shown 7 plus 22, 22 are in the integrated supply chain, if a person reporting to myself, also dedicated end-to-end [ and the 7 ] out source basically cast out in the private [indiscernible].

I think maybe to build on this on actually another part of our go-to-market, which is when we look at incontinence care, we have talked about here that we are present with incontinence care across the different channels. And it's so important to have both the consumer perspective and the customer perspective. So here, we are working with one consumer perspective to follow the consumer journey because it's one brand and the consumer is sometimes moving between channels and that is the strength that we have. At the same time, we utilize the fact that we are experts in health care selling and experts in retail selling. So therefore, it's a split business between Personal Care and Health and Medical. So of course, when designing an organization, these things are important to consider where we really have the benefits of going together with the setup we have and where it's important to split.

Maybe one build is that we also have markets in Personal Care or markets where we don't have Consumer Tissue, but we only have Personal Care, where we have a dedicated, obviously, sales force focused on that. One example is in Australia or, for example, in North America, also in Nordic markets, Consumer Tissue tends to play a smaller role from a branded point of view in certain countries. So we do have the experience of all sort of markets where we go, purely on Personal Care.

Tom, please?

Tom Sykes from Deutsche Bank. Just to initially follow-up on Warren's question because I think you kind of avoided one part of it, which is we're going to see a wave of the agentic AI coming. So the procurement is going to get a lot tougher. So why is your AI on the cost side and hoping to generate growth better than the AI that's going to come from procurement because they've got a data advantage, it seems like at the moment because they're looking at the data of a lot of suppliers, not just the data of one supplier. And then another question was...

It can wait, and answer that question first, please. Anyone?

Not sure I understood fully.

Could you rephrase the question?

Yes. I guess Well, firstly, are you beginning to see AI used by your customers. So the larger grocery retailers, et cetera, are they using AI, both in assessing the commodity costs and the market growth opportunity to limit or increase pricing or affect your pricing? And as that gets rolled out more systematically, do you think that your productivity initiatives are going to be able to offset that? Or indeed, do you even see it as deflation rate at all?

No, I think -- and I understand it because you say procurement, I was thinking sourcing procurement, but then let's hear about what is happening at the customer side.

I mean, our customers, our more sophisticated retail customers are leveraging AI, definitely. And you are right that negotiations have really professionalized over the years. So basically, it's very data-driven [indiscernible] but I think this is not really influencing how we are acting with our customers. We come very well prepared. I don't think there will be any impact. But you're right, the retail negotiations have professionalized a lot over the last year.

Then maybe to mention, of course, we have talked a lot about expanding our online presence. And of course, e-commerce is a very important sales channel for us. And there, we make sure that we have and that we are well equipped in order to meet the development of AI in that sales channel specifically. That goes across the businesses.

Yes, maybe just to add. I mean I think if the onus, of course, if that develops from the buyer standpoint and it should and it will, that puts the onus on us to differentiate our value proposition even more so that we cannot just be compared side by side with others. Certainly on the health and medical side, that's something that we look at. How can we truly differentiate our value propositions to deliver total value to the customer so that we're not seen side-by-side versus somebody else. But it's, of course, a point that we're thinking about.

Sure. And then just another question was on the margin bridge. It looked like a little -- around half of that was coming from operational leverage. And just to be clear, that meant volume leverage, I guess, what is the level of volume leverage you think you need to get half the at least, I guess, 90 basis points? And is that something that you think you're going to get over the next 12 months when we're likely to be facing price increases, I guess?

Sure, I'll take. Yes, I think the short answer is it's consistent in the sense that what you saw in the past is consistent, of course, with the 13% and -- sorry, the 15% and the 3%. So I mean we got fixed cost of roughly about 37%, 38%. So you can calculate the growth that it actually takes. It's not a 12-month journey. The targets that we have set is not defined in terms of time, it's, of course, within a reasonable planning horizon. So it's within our planning, but it's not 12 months, Tom.

Any more questions? Yes, Nicklas.

Nicklas Skogman, Nordea. Fredrik, you argue that margin -- [ asset ] margins are not as volatile as somewhat or some portray them to be. So is margin volatility then not a reason for why you're considering a potential spinoff with this strategic review?

Would you like to comment, Ulrika?

But I think it is, of course, looking at the total portfolio and see how can we improve our composition in the best possible way, taking the best possible conditions for both Consumer Tissue and the group to develop to its full potential. And there, the characteristics of the business, all the characteristics of the business are taken into account and how much they are taking into account is after the assessment.

Okay. And related to that, if it's not higher margin volatility than peers, what do you think explains the valuation discount for Essity compared to some peers?

That is a question I get occasionally and I'm always actually quite surprised because I should ask you, you're the investors, so I can't give you that answer. But I'm sure there are many here that can provide you with an explanation, perhaps.

Well, I think it is the margin volatility.

Then that's great. That's good news because we don't have any. So that's good news.

We have time for one more question. Nicklas, you've already asked a question, is there anyone else that has not had a chance? Good. Then you go ahead.

Okay. Can I follow up with a question on the Consumer Tissue and the evaluation process here. And coming back to the private label Europe business, when that was evaluated, it became completely separate. And earlier today, you talked about how initially in the next 6, 12 months, this was going to be more of a desktop exercise. So I guess my question is, at the end of these 6 to 12 months, are we going to see this business being completely separated or not?

Well, I -- first and foremost, that was not [indiscernible] in this specific position when we had the [indiscernible] discussion as such. So that was probably a different type of strategic review. What I can refer to is what we're doing now. And what we're doing now is to assess the different strategic alternatives that we could have at the table and also preparing for any potential outcome of that. But we should not proceed with any of those type of the actions before we have a conclusion.

perfect. That concludes today's Q&A. Now I hand over to you, Ulrika, to the summary of the day.

Yes. You can seat it if you want to here. It's nice to have you here. So thank you for listening. And don't -- I mean you have a lot of exciting things to look at before we close the day. But just to conclude on the hours that we've had together now. Now you have met some of our teams, part of the 36,000 people that we have across the business. And I hope that you have felt how immensely proud we are to work in a global leading hygiene and health company that makes a difference in people's lives. That improves quality of life, that improves well being for over 1 billion people every day. We're immensely proud for that. As excited as we are also I hope you felt how excited we are about continuing to develop our beautiful businesses and increase and enhance our shareholder value.

Now the people that sit up here, I think are excellent representatives for one of our key competitive advantages because I wanted to take the opportunity to reiterate our competitive advantages. And one of those is actually the winning culture and the highly engaged and talented people that we have in the organization. What they also embody together is the unique set of the capabilities that we have in the company that sets us apart and that we will leverage even more going forward. And what I'm talking about then is our deep expertise that we have in B2B and in B2C and the deep expertise that we have in med tech and in fast-moving consumer goods.

What I have also have come across during the past two hours has been the proven capabilities and strong capabilities that we have in brand building as well as in innovation. And I think one thing that is really a critical success factor in those areas is our ability to scale where it matters, yet being highly locally relevant. I think this is really one of our superpowers, our ability to combine scale with local relevance. And on that note, we have a high share of local and regional supply chains. And that has actually proven to be a strong competitive advantage in the market environment that we're in with a lot of geopolitical uncertainty.

Then last but not least, Fredrik, you have talked about our strong balance sheet and that is, of course, also a competitive advantage that we have. The fact that we have the financial flexibility to continue to invest in our business to pursue value-creating M&As and then also provide good returns to our shareholders. Now our strategy is something that you recognize from before. It's totally consistent with how we have worked before. What is different is the way we execute on that strategy.

So we've talked to today about how we will take even more decisive actions when it comes to lowering our cost base, both to the SG&A cost save program, but also through focus now on production costs. That will free up resources and enable us to finance more behind our brands and behind our superior solutions. So we will invest more to grow more while protecting our profit margins. Then also what we will do is to accelerate the portfolio shift so that we focus even more on the most attractive parts of our business. And we will do that too, more focus on those areas in our organic growth, but also to proceed on our M&A agenda. And I hope that you guys are as excited as we are about what lies ahead for Essity on our path towards our vision to be the undisputed global leader in hygiene and health. Thank you.

Thank you, Ulrika, and thanks to all of you for joining us here in Gothenburg, and thanks to you joining us online. We appreciate your time and your engagement.

Good morning, and welcome to Essity's presentation of the Q1 2026 results. Here to take us through the highlights of the quarter, we have our CEO, Ulrika Kolsrud, and our CFO, Fredrik Rystedt. After their presentation, you have the opportunity to engage directly with us. [Operator Instructions]

Now enough of me, let's get started. Ulrika, please take us through the quarter.

Thank you, Sandra. And also from my side, welcome to this webcast. We started the year with organic sales growth coming from volume growth, and we continued to win the relative game, strengthening market shares in our branded business in retail. We furthermore strengthened our profit margins and delivered a strong cash flow. Then besides these solid results, we had 3 major events in the quarter, the decision to launch a new share buyback program of SEK 3 billion well in line with our ambition to have share buybacks as a reoccurring part of our capital allocation. We also completed our Feminine Care acquisition in North America, now more than doubling our Personal Care sales in the U.S. And we have the organizational change, meaning that we now report in our 4 new business units, Health & Medical, Personal Care, Consumer Tissue and Professional Hygiene.

And let's start with Health & Medical, where we continued on our track record of consecutive growth in Medical Solutions. We were especially pleased in the quarter with the continued good growth in Wound Care across geographies. Q1 was, however, a weaker sales quarter for Incontinence Care in Health Care. Given the financial pressure that we see in health care systems and also the lower input costs that we have had, we held on to prices very well. So margins and profit delivery was as high as ever. However, the sales performance was different from market to market. And one region that performed very well in the quarter was North America. And we also supported the business going forward to grow even further in North America by upgrading the TENA ProSkin Briefs assortment.

We now equip this with our latest and greatest technology when it comes to -- or technologies, I would say, when it comes to leakage security, dryness, fit and comfort. And we know that these products are highly preferred among professional caregivers. We also performed very well in incontinence care in North America in our retail channel. And actually, the good growth momentum and continued good growth momentum of incontinence care in retail was one of the key highlights in our Personal Care results. Two other key highlights were that we strengthened our share of market in 60% of our branded business and also the good growth in Feminine Care.

I want to stay for a while on Feminine Care because we had some exciting developments in this category in the quarter. For one thing, as I mentioned, we completed the acquisition of the OB, Playtex, Carefree and Stayfree in North America. Now we start the integration, and it's now that the real work is starting. So our first priority is to secure business continuity to guarantee that we have uninterrupted customer execution, supply and operations during this transition period. Our second priority is to engage with in top-to-top customer meetings to now present the combined portfolio that we have and that we can offer from Essity. And then in parallel with this, we continue to work on supply chain, on branding and on innovation. So to capture synergies in supply chain to combine the 2 innovation portfolios to accelerate proven platforms and to apply our proven Essity brand-building capabilities and assets in a globally scaled and locally relevant way.

The other event, I would say, or exciting development in the quarter in Feminine Care was in our leakproof apparel. So as you can see here behind me on the slide, leakproof apparel was contributing positively to the growth in Feminine Care. And this is one fast-growing segment within Feminine Care, and we have taken action to make sure that we capture the growth in this segment. So we have, for example, reduced our production and product costs in order to enable a competitive pricing in a more challenging consumer environment. We have also improved our efficiency in consumer acquisition in the D2C channel and broadened our distribution. Then with the new organization that we have put in place, we are consolidating our efforts to make sure that we drive learnings and synergies for our full portfolio in this area.

Now innovation is as important for leakproof apparel as it is for all our other categories and segments. And in the quarter, we upgraded with a specific range for teens. And this is a super important target group for this segment and for feminine care in general because this is where we generate trial and get capture consumers at the point of market entry. These products are then specifically or tailored to the teen body. Also, they come with a day and a night variant, and they come with a Smart Protect concept. And some of you might remember that I talked about Smart Protect technology last quarter and that we equipped our [indiscernible] disposable feminine pads with this technology. Now we are reapplying this concept onto also leakproof apparel, which I think is a good example of how we can reapply strong concepts, of course, with the technical solutions that is fit for purpose that now secures that we have instant absorption and a good spreading of the liquid in the product.

Continuing on innovation, we also launched an upgraded Libero offer in the quarter. More precisely, we made our soft Libero touch product even softer. And we know that this is highly appreciated by parents who really want soft products for the soft and delicate skin of their babies. So we have high reasons to believe that this will continue to support the very good momentum that we already have in this business because Libero had again a very strong quarter. We strengthened market shares and we increased volumes.

When it comes to our retailer brand business in Baby, however, it was weaker. So overall, for Baby, we had a slight decline of organic sales. The other category where we're declining organic sales in the quarter was in Consumer Tissue. And that is the result of lower volumes and lower sales prices in Europe specifically. Latin America was doing good. Also, the good news is that we continue to perform very well in our branded business in Consumer Tissue, gaining market shares and growing volumes. And we will continue to support that profitable growth in our branded business on Consumer Tissue and by also continuing with our innovation agenda. In the quarter, we launched Zewa Wisch&Weg Smart. And what that is, is that we are reapplying our coreless technology on to household towels as well. So now we will have less waste in the kitchen moving forward.

This is, first and foremost, of course, to bring convenience to our consumers, but it's also an innovation that is supporting our sustainability agenda. And that brings me to another initiative on our sustainability agenda in the quarter. Because in the quarter, we inaugurated a new biomass boiler in Kunheim factory in France. This is the second one. We have one in Le Theil since before. And I think this is a very good example of how we translate our net zero ambition into tangible industrial execution at the site level. And with this boiler, we are then covering for 70% of the steam needs at the plant. We are more than half our natural gas dependency in that plant and reducing carbon footprint by 40% or more than 40% in the paper machine. And this is also highly appreciated by our customers, which we could see also because we had a customer joining us in the inauguration. And in these times, I think it's worthwhile to mention that this is not only about sustainability by reducing our dependency on natural gas, of course, we also become more long-term cost resilient.

Last but certainly not least, let's turn to Professional Hygiene. I have talked the past quarters about our strong development in strategic segments that we grow very nicely in strategic segments, which is important for us. And we continue with this positive development also in this quarter. A good example of that is that we grew Tork PeakServe more than 10%. We also grew Tork Skincare 5%. This quarter, we reported volume growth for the total Professional Hygiene as well. And that shows that the activities that we have put in place in order to fuel volume growth are starting to pay off. That's not the least true in North America, where we have gained some contracts in the fast food channel, but also work more expansive in the other channels beyond HoReCa. Then we were helped a bit by a stabilized market also in HoReCa in North America.

And now to talk about the financial performance of Professional Hygiene and our other 3 business units, I hand over to Fredrik. Over to you.

Thank you, Ulrika. I will do my best to do exactly that. And I will start with our sales. And as you can see on the slide, we declined our sales with 5.1%. And this is, of course, just due to currency translation on the back of a stronger Swedish krona. In constant currency or using the same currency rate, we increased our sales with about SEK 0.5 billion or 1.5%. And as you can see on the slide or this bridge, 1.1% of that comes from the acquisition of the Feminine Care business in North America and the other 0.4% is related to organic sales growth. Now just to comment a little bit, it's really a bit premature perhaps to comment on the Feminine Care business from a financial standpoint. It's included as of February 2. So we've had very short experience from owning it. But so far, if you look at the full quarter, so to speak, also the period that we didn't own it, sales was roughly about comparable in comparison to last year. So, so far, as expected, pretty much.

Now if I turn to volume, then you can see that we grew here with 1.1%. And we were particularly happy actually to see Professional Hygiene growing with close to 2% or 1.9%. And this is of quite a number of quarters with negative volume development for Professional Hygiene. This has been on the back of deliberate restructuring, but it's also been challenging markets. And as Ulrika mentioned, we see a bit of improvement in actually Southern Europe and North America on the market side, but we also see some good results of the initiatives. So again, a good development. And Personal Care, with 3.5% volume growth coming from a very strong or I should say, yet another very strong growth quarter for incontinence, good for feminine. And in fact, if you remember perhaps the previous few quarters that we've had relating to baby, where you see 4% to 5% of volume decline for baby, we have a much, much better situation this quarter with about 1% volume decline for that specific category.

Now this is much better than before, and it's on the back of good performance in the northern part or our branded part in the Nordics, whilst the rest of the business pretty much performed in line with market. So a better situation for baby in general. When it comes to -- then to Consumer Tissue. Finally, we had a slight volume decline, so minus roughly about 0.5%. And this is, of course, just on mainly coming from the non-branded business, whilst as Ulrika mentioned earlier, the branded business actually performed super well, both from a market share perspective, but also positive volume growth.

Turning to price/mix. This is all -- or I should say, mainly coming from Consumer Tissue, where we have deliberately lowered prices on the back of lower COGS. We also have -- and we reported on that before, we have selectively lowered some prices for certain SKUs in Professional Hygiene to get more growth in that area. But if you look at the combined price/mix for Professional Hygiene, it is actually slightly positive because we have a continued strong growth in our strategic products. So mix is actually bigger than the price decline.

I'll go there from sales, I'll go to our margin development. And it's clear we have increased our margin with roughly 40 basis points. And all of our business areas with the exception of Consumer Tissue strengthened the margin or at least about the same margin. So a good development pretty much across the group. You can see here that there is a negative contribution margin-wise from the Feminine acquisition. And we -- if you look at that negative contribution for the group, it's roughly about 10 basis points and bigger for Personal Care. So if you look at the Personal Care margin, it has an impact of minus 70 basis points. Now we have -- if you look at the Feminine business in North America that we acquired, it has a positive operating margin, but it's very low as expected and the low margin has to do with, of course, transition costs plus service agreements that we have. And over the next 12 months, we are gradually going to take over both administration, sales and all of the other things and gradually, of course, also improve profit. So very much with the Feminine acquisition as expected.

Now turning to gross profit. You can see that this is the source basically of our increase or our improved margin with 60 basis points. I already talked about volume price/mix. So of course, that contributes positively, but a lot of the improvement comes from overall lower COGS, and this is mainly related to currency actually, FX or positive currency impact, but we also have good savings. So typically, savings in COGS is quite low during the first quarter. And this quarter, we have SEK 130 million roughly in savings. So we're quite pleased with that number. So overall, 60 basis points in improved margin. We have talked a lot about investing more into growth. And of course, part of that exercise is more investments into A&P. And as you can see, we continue to invest more both from an absolute perspective, but actually also as a percentage of sales. And we compensated that partly with lower SG&A. So very much in line with our plans.

Now you may think that this is possibly a consequence of our cost savings program. That's not the case. As we have reported earlier, pretty much all of those savings will appear late in the year, so more towards the third and fourth quarter and full run rate, as we have talked about at the end of the year. So savings is not really compensating so much at this point. This is other types of efficiency gains like low travel, like similar types of actions. So all in all, this was the increase of the 40 basis points.

Now let me just take as a final remark on -- when it comes to margin, let me just give you a bit of an outlook for Q2. It's always -- we are in an uncertain environment. And of course, on the back of the geopolitical situation, we do expect COGS to be higher if we look at the Q2 of '26 versus Q2 of '25, so higher COGS. We also expect higher SG&A, and this is partly -- or this is all of it, I should say, due to salary -- just common salary inflation and a bit of higher IT cost. We will have a little bit of savings in compensating for that from the cost saving program. But as I said, it will be small also in Q2.

Good. So turning then to the cash flow. So seasonally quite strong, SEK 4.4 billion. And if we look at our net cash flow or I should say, cash flow after finance net and taxes, SEK 3 billion. So it was a good start to the year from a cash flow perspective. And with a reasonable, I should say, working capital performance. We just -- we still think we've got more mileage to put it that way, in our working capital performance, but we were reasonably okay, I think, in the first quarter. And as partly as a consequence of that, we continue to strengthen our balance sheet even further. Now you might have expected our balance sheet to -- or net debt, I should say, perhaps to increase a little bit since we did actually acquire the Edgewell Feminine business in the quarter.

And so that was, of course, a negative drain in terms of debt with approximately about SEK 3 billion, and that was fully compensated by the cash flow. But we also had a couple of other things like share buybacks of SEK 600 million and some currency impact. But we also had one thing that was quite special for the quarter, which was a reduction of our debt in our pension liabilities of a bit over SEK 3 billion. So that contributed quite a lot to that lower net debt. And all in all, as you can see, the net debt is now SEK 24.5 billion with a net debt-to-EBITDA ratio of 0.96 or 1.0 as it says on this slide.

Finally, and Ulrika has already mentioned it, so let me just give the technical details around the share buyback program, SEK 3 billion, and it will start May 11, 2026, and it will go on up until the most 2027, the AGM. And you have said it, the ambition is to continue share buybacks as a recurring part of our capital allocation.

And with those words, I'll leave over to you.

Thank you, Fredrik. And to summarize the quarter then, we delivered volume growth. We strengthened our market shares. We strengthened our profit margins. We completed our M&A. We also strengthened our balance sheet and launched or decided on a new share buyback program. Then moving forward, we will continue our efforts to accelerate profitable growth. And important focus for us is to continue to grow market shares, supported by innovation. And when we talk innovation, it's both about raising the bar and improving differentiation in our premium assortments as well as to secure that we are competitive across the different price tiers, and we are steering our innovation agenda accordingly. Then, of course, we continue to execute our SG&A cost saving program in order to be able to reinvest in growth initiatives. And we also continue to save -- to drive savings in COGS.

Now of course, looking at the situation now that we have that Fredrik talked about that we expect to have some higher costs in the coming quarters, starting with fuel and energy, we have to rebalance our pricing. As you heard from Fredrik, we are -- we have had now selective price adjustments. We are adapting to a lower input cost, but also then to fuel growth. And needless to say, that has to be rebalanced as we move forward. So we will, as we always do, compensate cost increases with price increases over time. Then the other priority that we have that we have talked about here is also then to integrate our acquisition. And we have the ambition to do that as fast as possible, so full speed ahead or you could also say off to the moon. And actually, in the quarter, we were on the back side of the moon with parts of our portfolio, namely the jobs, the compression therapy.

We have a long-standing contract as an official supplier of compression therapy garments with NASA. And the fact that Astronauts are relying on JOBST, I think, is really -- it really underscores Essity's expertise in compression garments and that we have a good performance also under very challenging conditions. So as the fantastic Artemis II crew ventured around the moon and really push boundaries for what's possible, we at Essity are very proud to be a small but meaningful part of journeys like this, helping people to perform at their very best on earth and beyond.

Thank you, Ulrika. Thank you, Fredrik. Interesting. Great products off to the moon. Now we are ready to take your questions. [Operator Instructions].

And we have a good lineup of questions already. Are you ready to start to open up for questions?

We are.

Perfect. Our first question comes from Aron Adamski from Goldman Sachs.

I was keen to hear your thoughts on margins. I think consensus currently projects about 13.8% EBITDA margin for 2026, which would be broadly similar to what you have done in Q1. But as you said during the presentation, COGS was still a tailwind in this quarter. So given the acceleration we've seen in pulp, I think some petrochemicals have also moved higher and also the FX backdrop, do you feel comfortable with that market expectation? And then the second question, very brief on finance costs, which were lower than expected. How should we think about the level of these expenses for the remainder of the year?

I look at Fredrik.

Yes. I mean, Aron, thanks for the questions. First of all, if you look at the margin outlook, we -- as you very well know, we just don't give that. We can only refer to, of course, our long-term financial target when it comes to margins of more than 15%. So over the longer term, of course, our margin aspirations is quite clearly spelled out. When it look -- when you look at the short term, of course, it's always more tricky to talk about and we just don't give that forecast. Generally, we strive, of course, to continue to improve. The geopolitical situation, as Ulrika very clearly explained, is a bit tricky. And of course, exactly how that will play out is difficult to say. So we can't really give much more. I don't know if you want to add something. And then when it comes to finance net, they were a little bit lower. You should actually expect lower cost as we go forward on the back of net debt, but we also see actually a bit higher interest rates. So if anything, more stable and slightly higher if you go forward.

I hope that's perfect.

That's very clear. Can I just ask a very quick follow-up related to the delay, is there any sort of time lag effect that we should consider between your COGS stepping up in Q2 versus Q1? And then are you able to surcharge that immediately on to customers? Or is there a little bit of a lag effect like we've seen in the past?

If I start, I mean, there are different cost elements that have a different lag effect. So if you take the oil-based raw materials, that has a lag effect of 4 to 5 months before it is shown up in our P&L and you have everything in between there. And we have already in -- for example, in Latin America, we have already raised prices. And in some parts in Europe, we have also announced price increases. And in some parts, we are working on finding the best way now to make sure that we continue to fuel volume growth while we compensate for cost increases to come. So we are doing all of these different elements.

Let's move to the next caller, Niklas Ekman, DNB Carnegie.

Can I ask about volumes, very strong in this quarter after, as you said, there's been a couple of quarters with flat or declining volumes. Was there any impact of phasing in this quarter, either relating to the weak Q4 or if there's been any pre-buying ahead of Q2 that's impacted that number?

Not that we are aware of, no pre-buying.

Okay. Very good. And just following up, when I look at the input costs, I have pulp prices for your grades up more than 20% in the last 6 months. Oil is up almost 50% in the last couple of weeks, energy costs up almost 20%. Do you recognize these figures? And how worried are we? I assume that this will not be so much an impact for Q2, but far more so for H2. And I'm just wondering, given the kind of weak consumer environment we've seen in the last few quarters, how able or how receptive the market is to price hikes? If you could elaborate a little bit on this.

Maybe you start with the first part and I answer the second.

Yes. I'll be happy to try. I mean we -- it's exactly as you say. If you look at the numbers you were quoting there, they're observable market numbers. So from that perspective, you're right. And of course, we also know that these things tend to change every day. So I can't really have a view on what the numbers will be eventually. We talked about the lag impact. So exactly to your point, there is not going to be everything in the books of the second quarter, it will be more in the third and the fourth quarter. So that's the point. When it comes to the ability to price, let me just say -- repeat maybe, and then I'll leave it to you, Ulrika, that we always compensate, and you know that, Niklas, we always compensate in the longer run because the price elasticity from a consumer standpoint of what we do is quite low. So of course, our products are needed. But again, of course, there is a time lag, but I guess.

No, that is exactly it. And I think we have proven in previous situations that we have pricing power. And that is, of course, important when we move into this type of situation. And again, I talk a lot about innovations, but there is a reason for that. And it's not only about driving growth. It's also about securing our pricing power moving forward. So to have strong assortments gives us a good foundation for being price agile. So otherwise, it's exactly as Fredrik said.

And just a quick follow-up there because I note that in the last 2.5, 3 years, your margins have been a lot more stable compared to what they were, say 4, 5 years ago when there was significant margin volatility. Is this at least to some extent, a reflection of you pushing forward cost increases more quickly than you have in the past? Or are there other dynamics behind the more stable margin?

Well, maybe starting with mentioning 3 of them. One is that we have become more agile in our pricing. So we have a higher operational flexibility, and therefore, we have worked really with making sure that we can compensate with price as quickly as possible. And we have done that both in, for example, Consumer Tissue as well as in Health & Medical, where we have a more regulated environment with longer contracts. So we've increased our agility across the different business units when it comes to pricing.

Then secondly, we have reduced our volatility by reducing our exposure to changes in pulp cost and energy by, for example, divesting Vinda that we did now a few years ago or a year ago. So that is 2 things. And then thirdly, I would come back to this with superiority and how important innovation is. As we talked about last quarter, we had record high levels of superiority, and we are continuously strengthening our assortment and that helps then the pricing power as well.

Let's move to [ Johannes Grunselius ] at [ SVB ] Markets.

It's Johannes here. Yes, I have a question on your attempts to hike prices. You said you've been successful in Latin America. You're now announcing in Europe. Can you elaborate a bit on what type of price hike we are talking about the magnitude and which products? Is it like across the board? So to give some color on that would be very helpful.

The color that I can give on that is that it looks very different depending both on assortment, business unit as well as geography that we're talking about. But overall, we -- as you probably know, we are fastest in compensating with prices in our Consumer Tissue business. So that is also where we have materialized or have announced price increases. at this point in time. Whereas, as I mentioned, in the more regulated area, it takes a bit longer time. So there is other mechanisms, so to speak.

Yes. So the magnitude in the product categories where you hike prices the most, can you just give an indication what magnitude we're talking about?

We don't do that, Johannes, for commercial reasons as you -- I'm sure you appreciate. But as we have discussed many times, we will adjust as much as it takes to restore profitability, and we've always done that. So this is not just something we say. I think we have actually showed that in various forums that over time, we have always compensated. So we are able to do that with the pricing power. This is, of course, not just us. This is the sectors we're in, if you like. But of course, particularly for us, this has been a reality. So we will do it this time as well. So -- and of course, giving you an exact number is incredibly difficult given not least that things do change. We just don't know exactly what kind of impacts we will face in the next few quarters. So it's very much about kind of doing as much as it is relevant, so to speak.

Next up is Oskar Lindstrom, Danske Bank.

Very good to hear about the price increases already being announced and in some cases, already pushed through. I wanted to ask you about volume growth in this quarter and the outlook for next quarter. We saw that it was, to a large extent, driven by the Personal Care business area. Is there any reason why we should expect this not to continue going into Q2? Was there some one-off effect or that you had a special push in this quarter that's not going to be repeated in Q2 or in coming quarters?

The short answer is no. I mean this was the result of our continuous efforts and operations.

Excellent. I'm going to stick to one question. That's fine.

Thank you for giving you such a short answer on that one question.

Then we will move to Charles Eden from UBS.

So just a couple of things for me on the raw materials, please. Firstly, can you just remind us the sensitivity, for example, when we look at, say, propylene for watching superabsorbents or polypropylene for nonwoven. Clearly, there's a sensitivity that means that what you're paying is not the same magnitude of moves we're seeing in those 2 derivatives. Could you just remind us those, please? And then just secondly, in terms of hedging, just remind us in terms of policy on energy and the raw material hedging that you've got in place for both Q2 and then, I guess, for the rest of '26.

Yes.

I look at you.

Right. Yes, I'm not sure how to answer your question. Let me just say that about -- if you look at our operating expenses, Charles, it's about SEK 120 billion, just to kind of use a number. And of that, if you look at the plastic products, which I believe that was what you were asking, it's about a bit over 10%. So you get approximately the sensitivity there. Now I mean, oil-based products or plastics is, of course, sensitive to oil, but not fully because you got processing costs.

So if you actually try and make some sort of estimate as to what happens to the oil or plastic products, the cost of that, depending on what happens to oil, a rule of thumb is that roughly about 2.5% or a bit less actually than a bit over 2%, you can say, of the oil price actually flows through to the plastic products. So this gives you a rule of thumb. But of course, it's not an exact science because if you have a sharp spike, as an example, in some of these raw materials like oil, then, of course, the impact will be very, very little. If you have a prolonged period, then gradually cost of plastic products will also go up. So it's a bit difficult to give you an exact answer to your question, Charles, more than that.

And on energy?

In energy and maybe also raw material, I think you asked. And if you look at the hedging, if you look at the rest of the year, it's about 60% we're hedged and the rest is open to spot price movement. We typically don't hedge really raw material other than energy. So we're openly exposed to pulp and to plastic materials or other types of input costs. And of course, there is a, you can say, implicit hedge through the lag impact that we talked earlier, but there are no physical hedging of any kind of any raw material. So energy is that's where we hedge.

That's helpful. And I appreciate it's maybe a question for your procurement team more than you. But I guess given the volatility, and we don't know quite how long or the severity of the fluctuations in oil in respect to derivatives. But is it fair that I guess it's in no one's interest for prices to shoot up 40, down 40, up 40. Is there a sort of degree of smoothing of this price with your suppliers? Or really, is it sort of you take what you see in terms of the price? I'm just trying to understand the dynamics of how this works in real world rather than perhaps behind the spreadsheet.

Maybe, Fredrik, you can talk to that later. But one thing is that we have, of course, different tools when it comes to our pricing as well. I mean there's everything from surcharges to lowering our promotional efforts to having list price changes and other tools as well. So it's also about using our toolbox when it comes to pricing in a smart way in order to exactly, as you say, to not raise prices permanently when that might not be the -- what is the right thing to do in order to balance volume and margin in a good way. So there, we have a lot of tools in our toolbox.

Yes. I don't have anything to add. I think your question was also relating to if we make arrangements with our suppliers as to smoothing of the price. And I think that's generally not the case. But to be fair, I actually don't really know exactly that. I can't give you an exact answer there. I can check that for you, Charles.

Now we have a question from Diana Gomes from Bloomberg.

Just I believe, a follow-up from Charles' question. I'm not sure if I understood correctly in terms of the arrangements with suppliers on your comments. For the pulp and other raw materials that you are not hedging, for instance, I'm assuming there are some type of fixed contracts that you would have with your suppliers. Could you give us some more color in terms of the time lines of those, for instance? And related to that, there are reports of some potential concerns or constraints on supply of materials such as plastic packaging. Are you seeing any pressure on that side already?

When it comes to contracts, as Fredrik said, I mean, we do not really talk about the details of our contracts, both I would say we don't necessarily have all the details of it, but also it's for commercial reasons. Then when it comes to supply, we have so far not seen -- we've not had any disruptions, and we have not had any indications of disruptions either or shortages either at this point in time. But of course, it's something that we follow very closely.

And if I could squeeze just one follow-up on the cost savings. You pointed to the fact that it was higher in the first quarter than typically is. Should we see that as a more structural change in terms of the phasing of the cost savings through the year? And it seems that there could be some sequential impact from that when we come into the second quarter with less of a buffer from the cost savings. So just to understand a little bit more on the margin impact as we go through the year.

Yes. Thanks, Diana. No, you shouldn't interpret it in that way. We have given an outlook for the year as -- and we're talking about just to be super clear now on the productivity or COGS savings. So not the SG&A savings, but COGS savings. My comments were relating to that. And I mentioned that we had in the first quarter savings of SEK 130 million. Typically, we have a bit of lower cost savings in the first quarter. And of course -- so we felt good with that number. This is not a change to our outlook for the year, which is in the range of SEK 500 million to SEK 1 billion for the full year. So again, a good start and our outlook for the year or our estimates or aspirations for the year of SEK 500 million to SEK 2 billion remains.

Now we have a new question from Aron Adamski.

I was just wondering, you mentioned the leverage was lower than we all expected. And so in the context of your balance sheet being quite healthy, I was wondering how do you assess the current M&A landscape out there in your priority categories? And are there any interesting assets that you're currently in the process of looking at? And should we expect any both on acquisitions and also over the next 12 months or so?

But we always have a very active M&A agenda. So we continuously look for opportunities and assess opportunities, and that we continue to do. And our priorities when it comes to acquisitions is in the areas that we've talked about before, Incontinence Care, Wound Care, Feminine Care and strategic segments in Professional Hygiene. And I think the acquisition that we now completed in the quarter is a very good example of being an acquisition in Feminine Care also in an attractive geography in North America. So that work continues. And as you say, we have a strong balance sheet. So we have the opportunity to, of course, act on M&As when they are value creating.

We will move to Mikheil Omanadze from BNP Paribas.

One question from me, please. I wanted to ask about volumes. I know you don't guide as such, but if I were to think directionally, are there any factors in the comp that you would call out for Q2 and the remainder of the year? And also, would you say it is fair to start factoring in some negative elasticities as you start taking pricing actions?

No specific factors. And of course, our ambition is to compensate with the cost increases with price increases while fueling volume growth. So that is our clear ambition. That's what we work for.

Perfect. Are you happy with that answer? Or do you have a follow-up question to that?

No follow-up questions.

Okay, perfect. [Operator Instructions]. I think that we have actually answered all the questions now. Let's give you a few seconds to ask questions if you like. But I think we're done with questions. Thanks a lot for your questions. Then before we end, I would like to hand back over to you, Ulrika, for closing remarks.

Yes. Well, thank you all for joining this webcast and for a lot of questions here. And again, we start the year with volume growth, with strengthened profit margins and not the least with winning the relative game with strengthening our market shares, which is very important. And our work, as you saw here in short-term priorities, it's about continuing to accelerate profitable growth through our different initiatives that we have. Now we talked more about the near-term priorities in this call. I hope that you want to hear about our mid- and long-term priorities and initiatives as well. And to do so, please join us in our Capital Market Day on the 7th of May in Gothenburg. Looking forward to seeing you there.

Good morning, everyone. Thank you very much for joining us. I am delighted to be here with the CEO of Essity, Ulrika Kolsrud. He's going to give a presentation to start, and then we're going to go through a Q&A. I will start with some questions, but anyone can then also ask more questions. But first, Ulrika will take us through the main drivers of the company at the moment. Thank you.

Thank you so much. So well, actually, this was not the first picture, and I really like my first picture. So can we get the first one up? Yes, there it is. And why I really want to have this first picture here is because I want to talk about TENA Men and Incontinence Products that you see here. Our global leading brand, billion dollar brand, TENA, that we are very proud of in Essity. And TENA Men that you see here on this picture really represents one of the many reasons for Essity being an attractive investment. 1 out of 4 men over 40 suffer from some sort of urine incontinence and less than 10% use purpose-made products, quite a potential for us as a company.

And the potential is high also if you look at incontinence care in general. So 1 out of 3 women over 35 have some sort of bladder weakness. And also there, over 50% have sometimes used a product that is not specifically developed for the purpose due to embarrassment or lack of knowledge. So overall, less than 50% are using purpose-made products, which leaves a big unmet need in this category. And also the number of people that need incontinence products are continuously increasing because of the growing aging population that we have. Then growth in this category is also certainly value creating. The incontinence care is one of our highest margin and highest yielding categories.

Besides that, I would say that this product also very much represents what we are about, providing essential hygiene and health products to improve quality of life. In fact, we have 1 billion people that use our products. So every day, over 1 billion people use our products. And they do that all over the world. We are present in 150 countries. We have 70 production facilities and 36,000 employees all around the world and a turnover of SEK 138 billion. For those of you who don't know that we operate now since 1st of January in 4 different business areas. We have Health & Medical, Personal Care, Consumer Tissue and Professional Hygiene.

And in Health & Medical, we offer holistic solutions for the continuum of care. We sell wound care products. We sell orthopedics and compression therapy and not the least, TENA that I just talked about that we provide them to the health care sector through nursing homes, hospitals, pharmacies and so on. Then if we look at Personal Care, also there, TENA Incontinence Product is part of our portfolio, but then through retailers and online. And I would say that the fact that we are present with TENA Incontinence Products in the different channels, everything from retail to the health care sector is one of our competitive advantages. Other areas that we sell in Personal Care is Feminine Care and also Baby Care.

And when we go to market with Personal Care, then we do that together with Consumer Tissue because that provides scale and relevance with the retailers. In Consumer Tissue, we have bathroom tissue, we have household tissue, but also hankeys and facials. And as you -- many of you know, we have actually worked to reduce our exposure in Consumer Tissue as this is the least profitable category that we have and the least profitable business that we have. Professional Hygiene with Tork as the other global leading billion-dollar brand is standing for 26% of our sales. And I think it's quite fantastic over the years how we have developed this business from being a tissue business to being a provider of holistic hygiene and cleaning solutions with Tork dispensers on the wall in, for example, restaurant kitchens, in schools, on the shop flooring industry and so on, we become part of the infrastructure. And then we have continuous revenue stream from the refills year after year.

So with this portfolio, we are very well positioned for profitable growth. And one of the reasons that we are very well positioned for profitable growth is the different trends, the megatrends that are supporting growth in our categories. I already talked about the growing and aging population, but also there is an increase of prevalence in, for example, incontinence care, but also in lymphedema and lipedema and other indications. Not all demographic trends is, to be fair, is going in the right direction for us. As you all know, there is a declining birth rate, and that is, of course, impacting our Baby business negatively.

With that said, 5% of our business is Baby and 20% is Inco, so 4x as big. So we are demographically very well positioned. We also benefit from increasing disposable income in D&E markets and from the spread of infectious diseases, which brings a lot of focus and attention to hygiene. And there is much more awareness of the connection between hygiene and health today than it was some years ago. And generally speaking, I would say, in population overall, people put much more attention to well-being, which is also a global megatrend that supports growth in our categories.

The other reason why we are very well positioned for profitable growth is our leading positions with our very strong brands. I've already mentioned TENA and Tork, but we have many other strong brands either globally, regionally or locally. We have, for example, Leukoplast and JOBST and Tempo, Libresse, Nana, Saba, many others. And over then this portfolio, we have the #1 or #2 position in as much as 90% of our branded business. And we aim to continue to strengthen that position even further and drive profitable growth through a very clear strategy. And I would say the center of that strategy is innovation.

We innovate in order to continue to differentiate so that we can drive market shares and win market shares, but also to drive our pricing power. We also innovate to secure we have a good cost position and to reduce our environmental impact. And we always do this with the user in mind. It's based on consumer and customer insights, and we are obsessed with having the superior user experience. We are equally obsessed by having the seamless and superior customer experience. It should be easy to do business with Essity. And we continuously evolve our go-to-market to make it as effective and efficient as possible. And we want our reliable supply and our state-of-the-art services to be a competitive advantage. The other key pillar of our strategy that you see here is that we continuously capture efficiency gains across the value chain, and then we continuously improve our performance in the organization by growing people and by fostering a winning culture.

Now these 4 elements that I've talked about so far, they are relevant across our different business areas. We see potential to improve our performance in the 4 different business areas, and we see potential to grow in the 4 different business areas. That said, though, the 2 other pillars here are very important because we deliberately put most of our growth efforts in the areas where we have the highest potential for profitable growth and the clearest right to win, meaning that we prioritize high-yielding segments in attractive geographies.

And this strategy will take us to our financial targets, which is to grow above 3% organically on a profit margin above 15%. Now question is then how are we doing in our delivery to these financial targets? Well, if we look at fourth quarter 2025, I would summarize that as a stable delivery in a challenging market environment. We reported sales decline. We had a flat volume development, and then we reduced our prices somewhat in order to compensate or react to the lower input costs. That said, we were growing very nicely in the strategic segments. So we were growing where it matters the most in incontinence care, in wound care, in our premium products in Professional Hygiene. And also, we were winning the relative game. So we increased our share of market in 65% of our branded business in retail.

We furthermore strengthened our profit margins across the different business areas, leading to a 14.7% profit margin in the quarter. Another thing that we are very proud of from the fourth quarter is that we again got recognized for our environmental leadership or sustainability leadership. For example, we were awarded with the EcoVadis Platinum Medal, which places us among the top 1% of companies worldwide, what they assess when it comes to sustainability work. Then, of course, if you look at the full year, we were at 0.9% in organic growth and 14.1% in profit margin. But as you can tell then, we are not at our financial targets yet, and we're, of course, fully committed to deliver on those targets. And that's why we took some initiatives in order to further strengthen the conditions or improve the conditions for profitable growth, a reorganization, a cost-saving program and an acquisition.

And let's start just a few minutes on the reorganization because this is something we do now reshaping our organization. We decentralized decision-making. We secure that we have an end-to-end accountability for the value chain for our business area leaders. And by that, we will be faster in decision-making, faster in execution and not the least, faster in responding to evolving consumer and customer needs. This reorganization also helps us to become even sharper -- sorry, I'm going to do like this, so you can see, even sharper in prioritizing the segments and categories that are the most attractive in line with our strategy.

We are also having a cost save program focused on SG&A, where we aim to save SEK 1 billion with the run rate at end of 2026. Then we also strengthen our position for profitable growth for the future by an acquisition, which is good to talk about, especially when we are here in North America because this was about acquiring Edgewell Feminine Care brands in North America. And we have -- as many of you know, we have a proven success recipe for Feminine Care. And now we will reapply that success recipe also in North America. So we have expanded our feminine business to this geography by this acquisition.

But it doesn't stop there. What's also very important with this is that with this, we are doubling our Personal Care sales in the U.S., then strengthening the growth platform that we have in Personal Care in North America. And we have more firepower for any future potential value-creating M&A if you look at our balance sheet. We have a very solid financial position, a super strong balance sheet, as you can see here. We also, during the year, have grown our earnings per share. So if you look at a time period here, which is '17 to '25, we have a CAGR of 6%, which puts us in the top quartile of companies in our sector. So a very strong performance.

And on the back of our solid financial position, our strong financial position and also the stable result that we had in 2025, our Board of Directors are proposing an increase of dividend to -- by 6% to SEK 8.75 per share. Now going into 2026, specifically, we're, of course, fully committed to continue to drive profitable growth so that we can have a good increase in our dividend also in '26. And we will do that by continuing the positive momentum that we had in 2025 when it comes to winning market share and strengthening our superiority even further.

We will, of course, make sure that we now materialize all of those savings that we are planning for in SG&A in our savings program, but also not to forget the saving program that we have in COGS, where we aim to save between SEK 500 million and SEK 1 billion. And of course, we will successfully integrate the Edgewell Feminine Care business to strengthen our growth platform here in North America and not the least, leverage the organizational change that we are doing right now to unleash the full power of our fantastic organization that we have across geographies and functions.

And with that, I think I leave open for questions either from you or from the audience.

Perfect. Yes. I think I will kick it off, but if anyone wants to ask any questions at any point, just please raise your hand, and we will take your questions as well. So thank you very much for the presentation. A great performance versus some of the other companies in the sector at the moment. But I'm going to start with a question on the Middle East exposure because that's obviously something that is on everyone's mind at the moment. So what is your exposure to the region in terms of sales? And do you have any manufacturing facilities there?

Well, actually, there are so many things to consider when it comes to the situation. And our first priority is the safety of our people. We do not have any major manufacturing sites there, but we have an office in Dubai, and we have other people in the region, and they are all safe. So that's important, of course. Then secondly, when it comes to your question on sales in the region, it's less than 1% of our turnover. So we have a very limited exposure from that standpoint. Also, when it comes to our supply chain, it's a very limited exposure. We're not so dependent on that route. So we see some delays in flows, but not any major disruption.

So where we have the impact is on the increasing costs for gas and fuel and so on, that is affecting our cost of goods sold. But there is a time delay or time lag with that effect. And we are also -- when it comes to gas, we are very well hedged. So if we look at Q1, we have 80% hedging. And if you look at the full year '26, up above 50% hedging. What we are affected by a bit quicker is transportation costs where we have contracts that are index-based. So there, the fuel cost is impacting us. That said, it's a small -- very small part of our cost of goods sold. And for this as well as for all these raw materials that are likely to increase in costs, we do as we always do. We, of course, compensate with price increases. And this is not something that are impacting only us, but everyone in the sector, of course. So we will use the agility that we have when it comes to pricing and compensate with price increases.

And in terms of the hedging, would you change your hedging to have more cover for the full year or...

We already have a plan in place for that. So that is the numbers I just shared.

Great. I was assuming if you could accelerate it like do more because of the Middle East.

That is not necessarily what we have in time right now at least.

Okay. And then the strategy, you announced at the Q3 SEK 1 billion of cost savings. And what drove the decision? And why was the timing at the Q3? What was the context of that?

I see your question. It's quite an easy answer. I mean I stepped into the role in June. And then for me, even if I've been in the company for many, many years, of course, it was important to take a step back and listen both to external voices and internal voices on what we need to change in order to accelerate profitable growth. And basically, when I've done that assessment, I, together with the executive management team decided on to 2 actions that we needed to take. One of them was the reorganization and the other one was the cost save program because we want to -- as I don't think I mentioned that, but our intention is to reinvest the majority of those savings to fuel profitable growth. And it's all about accelerating that profitable growth.

And then on that change of the organization, how fast do you think you could start to see the impact of the changes? And also, what do you think are the main benefits of splitting consumer goods again?

Well, we already see some benefits from that organization so you could already now see that we are taking more business and commercial-led decisions when you have the full end-to-end accountability. It's also very easy for us to see every business now delivering on their own merits. So we already see that positive effect to some extent, although I expect the full effect of that to come gradually as we move along. Then when it comes to splitting consumer goods, well, there are 2, I would say, benefits with that.

One is that when looking at the organization in order for us to create this end-to-end accountability that I wanted to achieve, this was the way we then have -- we have to make it category based for that to work for innovation and for supply chain and so on to be part of the integrated part of the business areas, that was the way we then need to set up having it category led. But besides that, it's also a big benefit of us then creating even sharper focus on the most attractive categories and segments. So Personal Care gets more attention by now being a separate business unit. But also within Consumer Tissue, the very profitable segments that we have like moist toilet paper, hankey, facials and so on get more attention within Consumer Tissue. So many benefits.

That's very good. And in terms of the portfolio optimization, do you think you could revisit the disposal of the Consumer Tissue private label in Europe?

Yes. Well, when we work -- as I shared here in the strategy, when we work with our portfolio optimization, we proactively work to prioritize the categories and segments and areas where -- that are most attractive. And so that is the model that we have. But I would not rule out that we revisit -- when it comes to the private label division, I would not rule out that we revisit that at any point in time because we continuously look at our full portfolio and business to see what makes sense to do. But that said, again, our focus is to drive performance in each and every business and to work proactively to grow faster in the most attractive areas and then support with acquisitions like we did now with the Edgewell acquisition.

And maybe if we go into more detail into the volume dynamics. You had 4 consecutive quarters of flattish volume growth. But how do you see the different categories performing in terms of market share with those volumes? And yes, what would you say in terms of categories and geographies?

Well, first, maybe to comment on this with the flat volume growth, which we, of course, are not satisfied with, but we should remember that part of that before has been about the restructuring that we did also in Professional Hygiene. So underlying, we've had some volume growth in that. But of course, we want to have more profitable volume growth. And if we look at the dynamics, what I think is important -- what we believe is very important is that we grow where it matters the most. So we grow in the segments and areas that are the most attractive, that has the higher yield, so that would drive a mix element. And also we are winning the relative game where it matters the most.

So that is important, I think, as a base for that discussion. But I can elaborate a bit more. So if we look maybe at the areas where we have not performed as well, one is in the Consumer Tissue private label division where we have not grown volumes with the market. And that is because we have been mindful of maintaining our profit margin so that this is a value creating part of our business. If you look at the branded business of Consumer Tissue, however, we have been growing and strengthening our market share. Then we have Baby that I was alluding to before, we are impacted by the declining birth rates and a very fierce competition.

At the same time, if you look at our branded business with Libero in the Nordics, that is -- there we have grown and also strengthened our market share. And then if we talk Tork, Professional Hygiene, here, we have a base assortment where we have not been growing in line with market. So that we are correcting by making sure that we launch volume fighters that have the right price positioning and the right pack count to be successful. But more importantly, we have been growing well above the market in our strategic systems, which is the future, right? So again, the same thing, right, that we are growing where it matters the most. And Incontinence Care, Feminine Care, Wound Care, our highest-yielding categories, we have continued to grow.

Well, that's the most important thing.

Yes.

And in terms of year-to-date, have you seen the same momentum on those key categories that are helpful for the profitability in terms of the market share?

More -- I mean, this is too early to say. I mean we'll have to come back to that once we have reported the Q1 results, but I have no reason to see that something major will change.

Okay. And so to keep accelerating or to get an acceleration on the volumes, how are you reinvesting the SG&A savings?

Yes. Well, that will follow our normal investment plan, I would say. So first to grow is, of course, the strategy that we talked about. Secondly is to -- in this market environment that we are is to make sure that we are competitive in all different value segments. So we work a lot with innovation now in the value tier part of the assortment and the volume factors I mentioned, but also with some selective price adjustments. Then also important is that we, for Feminine Care and Incontinence Care specifically, reinvest in A&P.

I talked about innovation before, and we have a very high share of our portfolio higher than ever that is preferred by our consumers over other alternatives, which makes it a perfect time to reinvest in A&P in order to create awareness and drive profitable growth in these areas. So that is also part of our plan. And the savings that we then generate through our cost-saving program, we will be building in to further enhance that investment program.

Great. And then in terms of this year, in terms of the organic sales growth, I mean, you have a medium-term target of growing organic sales growth by 3%. So for this year, obviously, we have some input costs increasing suddenly more than anyone expected. But how do you see kind of the combination of volume, pricing and mix evolving?

Yes. We don't give guidance on a full year basis. So I cannot answer that in any detail. But what I can say is that we are fully committed to drive volume growth to a bigger extent than what we were able to do in '25. So that is where we have focused. And of course, it goes without saying that, that should be profitable volume growth. And considering what I just said about our strategy, you should also expect that we will have mix improvements.

And in terms of the -- going back to the market share because I guess between volume and market share, as you know, this is a key driver for your share price. But what percentage of your country and category combinations do you think will be leading to an increase of market share volume improvement?

Well, we have -- if you look at Q4, we had 65% of our country category combinations in the branded business in retail that we're growing market share. And of course, we aim to be on at least that level as we move forward. That is what we aim for, really, really winning market share. What we don't really know because we don't have external data is, of course, in our B2B business. So if we talk Wound Care or Incontinence in Health Care or Tork, then we don't have the same level of external data to rely on. But we have reason to believe that we are growing in line with or better than the market in those as well where it matters the most.

Well, 65% is a pretty good number.

Yes, it is.

When [indiscernible] reported a couple of weeks ago, they said 30% where they're gaining share or stable. So 65%, it's a great number.

It is. And especially, I think in an environment where there is a weaker consumer sentiment, it's so important to -- it's more important than ever to stay focused on winning the relative game and staying focused on winning where it matters the most.

So going to that point of the consumer sentiment or consumer being under pressure, in many countries, especially the low income. In terms of the innovation, which type of innovation are you doing on the more affordable end of the spectrum? And can you give us some examples of that?

Well, one example that I was alluding to was this with volume fighters in Tork. That's not really innovation. It's more about adapting our assortment to make sure that we are as attractive as possible in each of the value segments. But one -- maybe one good example, I think, is something we launched in -- during '25, which was Cushelle Simply Soft in Consumer Tissue in the U.K. specifically. And that was one of the drivers behind us growing market share in our tissue business, the branded tissue business in U.K. So it's not the only factor, but it's a contributing factor, of course, these innovations. So that is a good example.

And then going back to input cost, right? I know over the years, you've been able to pass through price increases faster and faster. What is your view at the moment with the latest developments on input cost and oil, how do you see how pricing can progress?

Well, it will be -- I don't see it differently than any other time. I think given that this is something that affects the full sector, I think we will, of course, knock on the doors of our customers and talk about price increases. And we will use the capabilities that we have built in being as agile as we are now when it comes to pricing.

Are those conversations happening already?

I would say that probably because -- I would say, yes, conversations are probably happening. Now I cannot say for sure. But as I talked about before, there is also a time lag in those cost increases. And it's, of course, more easy to have those conversations once the price increases -- cost increases become a fact, then is when the real discussions start.

Great. And then in the Professional Hygiene side, you exited some low-margin businesses in the last 12 to 18 months. Basically, they were like around a 10% headwind to your volumes there. Are you rethinking about whether to chase this lower-margin business again because of the market growth being a bit more sluggish? Or especially, for example, with the HoReCa customers, what are you thinking in doing improvement?

No. I mean we exited those segments because we didn't see the path to profitability, and that has not changed. We don't see the path to profitability. So of course, we want to have an assortment that is attractive in all value segments and so on so that we can drive growth. But in the end of the day, if it's not a healthy profit margin and we don't see a path towards a healthy profit margin, then it's not for us. So no.

And then in Baby Care in Europe, I mean, you mentioned in the presentation that the organic sales have been declining. We had a lower birth rate. But how confident do you feel in this category structurally in a medium to long term that you -- would you want to continue to be exposure, you think you can outperform the players?

Yes. Now yes, I fully understand the question because, of course, as you say, the declining birth rates indicates a structural -- that structurally, it's not that attractive of a category. But there are some other factors that makes it attractive. And one is that it is a very high engagement category where, of course, the Libero brand that we have, for example, matters and where innovation matters. Also, it's a very highly strategically important category for the retailers because it drives traffic of parents with children into the stores. So there are also some fundamentals that are positive. And then for us, it's also the benefit of scale. We have the benefit of scale in the go-to-market with retailers because of having Baby in our portfolio.

Also, there are many synergies for us in R&D and manufacturing between Baby and Incontinence Care and Feminine Care. So one thing is then the structural attractiveness, but the other thing is then how attractive is it for us. And therefore, I think it has a place in our portfolio also midterm and as far as I can see as long term as well. We are also, as I said, with Libero, for example, in the Nordics, we are winning the relative game and doing well. So we will continue to focus on winning the relative game. That said, it's important also to say this is not a category to your point, that we look to expand. So we will do good where we're at, but we don't look to expand it.

And I just wanted to touch on one of the points that you made. I mean, it is a very important traffic driver for the retailers. So does it help you in your negotiations then when you negotiate with them other areas like Feminine or the Incontinence or even Tissue. Is this something that helps you?

Yes, it does. I think it does look different from market to market. And in some markets, we have 2 categories. In other markets, we have 4 categories. And the importance of scale and multi-portfolio is different from market to market. But in many places, yes, it does help both from a scale perspective, but also from a relevance perspective.

And now I'm going to move to cash returns. So on the share buyback side, I mean, you have a very strong balance sheet. Leverage is only around 1x. And you have a share buyback of around SEK 3 billion. And the share price now is relatively low. So would you consider potentially increasing the share buyback level that you have currently?

Yes. When it comes to capital allocation and the balance sheet, first and foremost, what's very important for us is to maintain that strong balance sheet. That is very important for us. And then our first priority -- having that secured, our first priority is to support our organic growth as well as to make sure that we have stable and rising dividends as we have had now year after year, and we plan to continue to have rising dividends. So that's our first priority. Then we want to have the room to maneuver when it comes to M&A. But as we had this -- as we had last year, we see room for share buyback program also going forward. So in the notice to AGM that we have now in a few weeks, there is a proposal on the next round of share buyback program. And if that gets approved, then it's the Board decision on the level of share buyback. And when they decide on that, they look rather on cash flow than on the share price.

Okay. But it helps, right? And so then on the point of M&A, under your leadership, do you have more appetite to do more deals? One question. And then the second, what are the white spaces where you would focus?

Well, if we start with the focus, I shared when I presented here where we want to focus on growth. And we have the same priorities when it comes to inorganic growth as we do for organic growth. So what's relevant from an M&A perspective is Incontinence Care, it's Feminine Care, it's Wound Care and also the strategic parts of Professional Hygiene. So that's where we focus the most. And from a geographical standpoint, I don't want to exclude anything, but North America remains an attractive geography for us, but also D&E markets is important to us. So there are a lot of potential areas for innovation -- sorry, for acquisitions. And we have a very big appetite for profitable growth and thereby also a very big appetite for M&As. What I see maybe is also -- I mean, first and foremost, M&A is there to build scale quickly, to increase our -- expand our presence quickly. But I see also that innovation can be helpful. I say innovation again, but that is because acquisition can...

[indiscernible] what I want to say.

Acquisition can also help with innovation and bring innovation to the company as a complement to our own in-house R&D efforts. So there are many opportunities. But I think good to highlight also is that even if we now have such a strong balance sheet that we do and have the room for M&A, and we have so many areas where we see and have a big appetite for M&A, we are very disciplined. So the M&A has to be value creative.

Great. Just checking if there's any questions? Please.

Thank you. Some companies are already thinking about AI and how they can achieve cost savings internally. Many companies would think that over the years, they would have to have a CAGR of employees over time as the sales would go up. But in this environment, you could theoretically have minus 10% over your next planning period and then do something with the cost savings. Have you thought about basically that optionality for you and it would be a way to obviously invest back into your business or give you better margins, improve returns, et cetera. And I know it's controversial because in Europe, you've got unions, so you have to be very careful kind of how you approach it. But do you see that opportunity? Is this something that SEC is going to take advantage of? Like what are you doing with AI? How much are you spending? What are your use cases so far?

Yes, I understand the question. So when we go back to our strategy, I had one important pillar, which was to capture efficiency gains across the value chain. And one way of capturing those efficiency gains, which is part of our strategy, is to have digital transformation. And digital transformation is automation. It's different digital tools where AI is one of those tools. So yes, we are certainly working with AI in order to become more efficient. And we've done that for quite some time. And our model of doing so is, I would say, top down and bottom up. because our experience is that it's super important that we increase the capabilities for AI across the organization.

So we really simulate and welcome initiatives that happen in the organization. At the same time, we need to be very mindful of investing where it matters the most. And therefore, we also have a top-down approach where we have an AI council where we capture all of the ideas, and we have some areas where we put specific focus and make sure that we channel the bigger investments into those areas. And it's also about, of course, avoiding any risks and having the right partnerships and so on. So that is our approach, top-down and bottom-up and driving AI initiatives that way. And I would say we apply AI in most areas actually to different degrees.

So in production, it's in our planning, in our operational planning, also in R&D. For any of you who want to join our Capital Markets Day on the 7th of May in -- outside of Gothenburg in Sweden, then we will show you how we apply AI in R&D. So please join us for that. And also in marketing quite a lot. For example, you can use AI in claims generation. So we are doing that as an integrate part of our efficiency improvements. Have we set any specific ambition or target for what that would generate in terms of savings? No, not at this point. We work with it project by project in this way.

Any other? Otherwise, I will just thank Ulrika for her presentation and all these answers to our questions. So thank you so much for coming to the conference. Thank you.

Thank you, and thank you for listening.

Good morning, and welcome to Essity's presentation of the Q4 and full year 2025 results. Here to take us through the highlights, we have our CEO, Ulrika Kolsrud; and our CFO, Fredrik Rystedt. After the presentation, we will open up for your questions. [Operator Instructions].

With that, let's get started. I'll leave over to our CEO, Ulrika. The floor is yours.

Thank you, Sandra. And also from my side, welcome to this webcast. The final quarter of 2025 confirms that we are standing strong in a continued challenging market environment. We continue to grow in our strategic segments, such as Incontinence Care, Wound Care and premium products in Professional Hygiene, and we strengthened market shares across our different branded categories.

We're also strengthening our profit margins. Actually, we are strengthening our profit margins in all 3 business areas in the quarter, and we delivered a stronger result than last year's same quarter. When it comes to volumes, sequentially, we have a stronger volume, so stronger volume in Q4 versus Q3. Looking at quarter over last year's quarter, however, there was a flat volume growth. And that, together with the fact that we are then lowering prices in order to compensate for lower input costs is resulting in that we are reporting a negative organic sales growth. And that underpins the importance of the initiatives that we took last quarter to accelerate profitable growth.

We are now operating in the new organizational setup with decentralized decision-making with end-to-end accountability and with even sharper focus on our most attractive categories and segments. And we are starting to implement our cost-saving program.

In the quarter, we also strengthened our position for profitable growth by acquiring the Edgewell Feminine Care business in North America. And now with the brands Carefree, Stayfree and Playtex in our bag, we are more than doubling our Personal Care sales in the U.S., in line with our focus on high-yielding categories in attractive geographies.

Another key highlight of the quarter is that we again got recognized for our strong sustainability performance. So we were awarded for the EcoVadis Platinum Medal, recognizing our sustainability performance, placing us among the top 1% companies worldwide that they are assessing when it comes to sustainability performance. And also, we have been placed on the CDP prestigious A list.

I would say sustainability performance is important in all of our business areas, but not the least in the health care sector. Many of our customers in the health care sectors have high ambitions when it comes to sustainability. One good example of that is one of our biggest customers, NHS, in the U.K. They continue to pursue ambitious sustainability agenda even if there is financial pressure, with increasing demand for health care and funding under pressure.

And speaking about funding under pressure, we talked already last quarter about that we see in some selected markets that there are some cuts in funding, and we continue to see that, for example, in Indonesia. That does not, however, prevent us from growing. Quite the contrary, we have a positive organic sales growth in Health & Medical, and we grow volumes both in incontinence Care as well as in Medical Solutions.

If we double-click on the Medical business, this is the 19th consecutive quarter that we grow the Medical business, and we grow in all 3 therapy areas. A critical success factor behind this good performance in Health & Medical is, of course, our strong and unique offers that we have. And we continue to strengthen those offers. In the quarter, we upgraded one of our flagship products in the TENA assortment, the belted TENA Flex product. This product is specifically easy and ergonomic for caregivers to use on bedridden patients. And in this quarter, then we upgraded it with an even better comfy stretch belt. The elasticity is better, so it adapts easier to different body types and thereby, you can use this product for more patients.

Also in the quarter, we relaunched one of our unique offers in the Advanced Wound Care assortment, the Cutimed Siltec Sorbact product. And in connection with that, we kicked off a new brand campaign for Cutimed on the theme of imagine a world where wounds would heal faster. And in this campaign, we showcase how our unique offers are helping health care to improve patient outcomes and reduce health care costs, thereby improving health economic -- or bringing health economic benefits. And it's, of course, leveraging these unique advanced solutions that is helping us and contributing to our performance in Wound Care and allowing us to gradually strengthen our positions in this category.

Strengthened positions is also the theme if we go to consumer goods. In the quarter, we strengthened our branded market shares in 65% -- more than 65% of our business. And this is not only attributed to one of the categories, but it's actually contributing from all different -- all 4 categories. Looking at Incontinence Care, there, we strengthened our market shares, and also it's a fast-growing category. So as a result of that, we saw very good growth in Incontinence Care.

In Feminine Care, we were impacted by a one-off, but underlying, we continue to perform very nicely also in this category, and that is demonstrated through the market share development that we see. In fact, in feminine, we grew our market shares in 80% of our business. And we had also some good records that we saw in the quarter. One very exciting of those is that we now in Mexico have 62% market share in Feminine Care. And as you know, Mexico is one of our most important markets for Feminine. Another exciting development in the quarter in Feminine was that we now are back to growth in Knix washable absorbent underwear. And that is thanks to new retail listings, higher prices, as well as product launches.

Then if we move to Baby Care and Consumer Tissue, here, we saw an organic net sales decline. And this is for the same reasons that we have talked about previous quarters. So in Baby, we are impacted by the lower birth rates and also the fierce competition that we see, and consumers being more price sensitive than what we have seen before. And in Consumer Tissue, it's the weak consumer sentiment that makes the growth happening mostly in the mid- and low-tier segments, and we also lost some private label contracts due to pricing. Then it's very encouraging to see that we are growing our branded business, both in Baby as well as in Consumer Tissue. And that's a testament to the effect of our launches and our marketing activities. They are really paying off.

And we continue to have a very high activity level in Consumer Goods. As you can see here on the slide, there are many different launches to talk about in the quarter. But in the interest of time, I have to choose one of them. And I choose to talk about the upgrade of our thin assortment, our thin towels in feminine care in Latin America. So having thin feminine pads is, of course, more discrete and comfortable than using thick pads when you have menstruation. But even so, many women actually choose thick pads because they don't fully trust the leakage security of the thinner ones.

Now with this upgrade, we are introducing a new core technology that we call SmartPROTECT that manage even sudden gushes and thereby increased leakage security. And for that benefit, we have 2 -- actually 2 benefits of that. One is, of course, that we strengthen our superiority even further in this ultra-thin segment in the market, but also that we move consumers from the thicker pads to the thinner pads, which is a benefit because we normally have higher profitability in this segment.

Now the activity level was also very high in Professional Hygiene in the quarter. Here, market growth continues to be depressed following the weak consumer sentiment, and we see that as impacting our sales. But we are responding to that by continuing to have selective price adjustments, continuing to work with joint sales plans together with our distributors, and also adapting our assortment. In this situation, it's super important to be competitive in all different price tiers. And in the quarter, we launched some what we call volume fighter specifications to make sure that we are at the right price point for the customer.

We expect this to pay off in the coming quarters, but what has already paid off is really our push in the premium segments. So we continue to see strong growth in our premium segments in Professional Hygiene like Tork skincare and Tork PeakServe. We also continue to develop these products even further. So in the quarter, we launched an automated sensor-based dispenser for PeakServe in addition to the manual one that we have already. And that will broaden the relevance of this premium solution in the market. We are also broadening the relevance of our center feed dispenser solutions. The center feed dispenser solution allows you to take one sheet at a time, which is more hygienic and it also controls consumption. So it's cost efficient for our customers.

Now in some segments, it's more important with design than in others. A good example of that is in restaurants that have an open kitchen. Then, of course, you are very dependent on a good-looking dispenser. And if you see on this picture, the black stylish dispenser here is what we launched in the quarter, and that is really a very strong fit into these type of environments. I would even call it decoration. It's really nice. Also, we launched a new refill paper with natural color that also has a lower price point. And that is then an excellent choice for those customers who are either very price sensitive and/or want to work with their sustainability image.

Now all of these innovations that I'm talking about, they have 2 purposes. I mean, one is to expand the relevance of the product, but also, of course, to drive product superiority. And with product superiority, we mean that it's the preferred choice by customers and consumers. And looking across categories in 2025, we reached a record level when it comes to product superiority. And that, of course, makes us very well equipped to continue on that positive market share growth that we have seen in the fourth quarter of 2025.

And now after all of these talk about products and innovations, I'm sure you guys want to hear a bit about the figures behind this. So over to you, Fredrik.

Thank you, Ulrika, and I will put a few numbers to what you have been talking about here. And as you can see, and you've already mentioned it, we actually had, in terms of organic sales, a negative development during Q4. And this is basically driven by price decline and a slight volume decline. It's maybe worth noting or perhaps repeating what you said, Ulrika, we are taking market share. So this is very much a market issue. And if we actually look at the sequential development of volume, it's always a little bit of seasonality. But nevertheless, you can see that we actually grew our volume sequentially between Q3 and Q4 with just under 2%. So it's a good momentum despite the fact that we have a decline versus Q4 of 2024. I mean, some of you will actually remember that Q4 of '24 was very strong. So we also have a bit of difficult comparable.

Now as before, the volume decline is very much driven by Baby, or same as in Q3, our Baby business, our Consumer Tissue business and also Professional Hygiene, and these all are leading to the group decline of volumes of minus 0.2%. So just really brief, Health & Medical, you've said it, Ulrika, we had a good volume development in Inco Health Care and Medical. And if you look at the Medical area, actually all therapy areas and especially Wound Care, so that story you will remember. And if you talk about price and mix, largely flat in Health & Medical.

Consumer Goods, Inco really, really doing very well in terms of volume, Inco Retail. Feminine is as well. It's a little bit -- it's positive volumes, just under 1% of positive volumes. And that is actually despite a fairly weak market in Europe. So overall, you can say we are growing, but the European market is a bit challenging.

Ulrika talked about a onetime issue in Feminine, and that is related to an adjustment that we have made of customer rebates in Latin America. So we've increased those, and that has actually impacted sales and the pricing components, and this is why you see a negative organic sales growth for Feminine. And this is temporary for the quarter. It will go back to normal in the next quarter. And if you actually adjust for that, we have stated that the underlying growth is good. And so what we mean by that is that growth would have been -- organic sales growth would have been low single digits, to give you a little bit of perspective.

When it comes to Baby, again, we are gaining in our branded business in the Nordics, but we are continuing to lose in the rest of the retail branded business in Europe. And overall, volumes are down with approximately about 4%. That's also for the market as a whole. So it's not just us, but it is a very competitive market in Europe. And this is also why we are losing volumes. And finally, Consumer Tissue, we're struggling a bit with volume there, minus 2%. And this is all actually related to private label. We have talked about this before. So there is no news here. We have lost a few contracts on the back of pricing. And of course, we have always prioritized margin over volume. But of course, we don't want to lose volume. So we have selectively actually reduced prices in Consumer Tissue. And hopefully, that will pay off as we go forward.

HoReCa, we've talked about Professional Hygiene, and this is, of course, still leading to a slight volume loss of about 0.5%. And there are signs here of at least stabilization of the HoReCa markets. So here, we're hoping for better conditions going forward, but there time will tell. And to summarize maybe for the group, minus 0.2% in terms of volume, minus 0.9% in terms of price and mix is actually flat. So that sums it up a bit.

Then if I go to the margin, you can see that we've actually -- we've improved our margins, both if you compare between Q4 of '24 and Q4 of '25 and sequentially. And it's not only for the group, it's actually for all the business areas. Gross profit, as you can see, increasing by 180 basis points, and this is on the back of lower COGS as we flagged when we talked to you last or after Q3. So that actually happened. And we've maintained a very good price management in the quarter, all of that leading to that very good improvement of the gross profit margin.

The COGS reduction is all about, I should say, raw material energy, but we actually -- and this is a little bit of -- we're proud of that. We managed under tough conditions to reach also our COGS savings of just above SEK 500 million. So you will know our target for the year was SEK 500 million to SEK 1 billion, and we said we were struggling to reach that range, but in the end, we actually managed to do that, and that contributed to that margin enhancement.

As you can see, and we've said that, we want to fuel our growth. We want to fuel our innovations that we put on the market. So we are spending more in terms of A&P, and that's both percentage of sales-wise and as an absolute number. When it comes to SG&A here, you see that it's actually favorable. So we have reduced in terms of absolute. Also in constant currency, we have reduced our spending in terms of SG&A. And this is due to, of course, a tight cost control. That's not surprising to you. We've reduced our travel, as an example, with more than 30%. We have a bit of lower bonus accruals. And there is also a bit of onetime here that is positive. So it's not as good as you see here. There is a bit of onetime. But if you look at the overall group, there is also positive and negative onetime impacts in the result. So overall, all the onetime impacts are balancing off for the group as a whole. But all in all, we're quite proud of our SG&A performance.

So let me then just talk a little bit about the SG&A program, the cost saving program that we have launched previously. And as you know, we're aiming for a run rate saving of SEK 1 billion towards the end of '26. Now we are actually aspiring to reach quite part of this saving already throughout this year, but that will be more towards the latter part. So you can expect more of the savings. So far, we have realized very, very little, and we've also put fairly little in terms of restructuring charges. We expect the cost of this program to be a bit over SEK 1 billion, so approximately SEK 1.1 billion in restructuring charges.

Let me end this part with a little bit of guidance for Q1, as we normally do. We expect actually COGS to be slightly lower, partly from savings, but also a little bit from currency or positive currency impact in raw materials. So slightly lower COGS, that is what we expect. And we are expecting a slightly higher SG&A. And please remember, I'm now giving you guidance Q1 of '26 versus Q1 of '25. So we are expecting slightly higher SG&A, and this is primarily driven by higher A&P in line with our ambition to fuel growth.

And customary, and you know that, we also give you a little bit of guidance for the full year, and we expect CapEx, to start with that, between SEK 8 billion to SEK 8.5 billion, a bit higher than we had in '25. And this is actually partly phasing and just ambitions to grow as we go forward. We expect other cost or the corporate cost, if you will, to be approximately SEK 1.3 billion, so very similar to this year -- or to 2025. The structural tax rate to be between 25% to 26%. And then finally, on the COGS savings, we remain with our estimated range of SEK 500 million to SEK 1 billion.

So let me move on then to the cash flow side. We're quite pleased with the cash flow here in Q4. This is driven by obviously a good cash surplus. The margin was good. So this was a good operating cash surplus, but we also had good working capital management. So inventory days came down a little bit, continue to do that. And we had unchanged credit days, both in receivables and payables. So all fine in terms of working capital. And net cash flow was also quite strong. And this cash flow has driven a continued strengthening, of course, of our balance sheet. So net debt-to-EBITDA is approximately 1.0 here, as you can see at the end of the year. We've continued to repurchase shares in line with our program that we launched with SEK 3 billion. And so far, we have purchased 9.2 million shares or totally SEK 2.4 billion. So we are roughly about 80% through this year's program.

So let me then finalize with a little bit of overview of 2025. In many aspects, this was a good year. We had an organic sales growth of 0.9%, and this is despite challenging market conditions. We actually had growth in all our business areas. We maintained our volumes and price management remained strong for the entire year. In terms of margin, we've already talked about that, but it was a very good year in terms of margin. In fact, if you look at that operating margin of 14.1%, it's the second highest we've ever had. It's second only to the artificially high margin during the pandemic that was caused by all the panic buying, for those of you who remember. So this is, from a historic perspective, a very attractive margin.

And then turning a little bit to what does that imply? And some of you may have seen from the report that our EPS growth was, if you look at it, between 2024 and 2025 in nominal terms, roughly about 1% growth. Now of course, the Swedish krona has strengthened a lot. So if you actually look at the EPS growth in comparable currencies, you will see a growth of roughly about 8%. And this is quite consistent with the long-term growth of about 6% if we start with the birth of Essity as the first year. So continued good performance. And this is, of course, on the back of good margins, the growth we've had and of course, also a shrinking finance net as our net debt has reduced.

Finally, then the Board has -- or will propose to the AGM a dividend increase of SEK 0.50 to SEK 8.75. This represents an increase of about 6%. And if you look at, once again, from the birth of Essity, you can say this is consistent with the growth that we've had, roughly about 6% or a total growth of 52%.

So with those words, leaving over to you, Ulrika.

Yes. Thank you, Fredrik. And with that, we are leaving a solid 2025 behind us. We finished the year with stronger market shares with continued growth in our strategic segments and not the least with strengthened profit margins. It's been, from an external perspective, a quite turbulent year with a lot of geopolitical uncertainty and the weak economy. And that has, of course, impacted also our industry. And we see that the resilience that we have shown during this is really a sign of strength. As Fredrik has shared, we have grown organically during the year. We have strengthened our profit margins, and we have now the strongest profit margin in 5 years, and we have delivered a solid result.

So we are proud over this, but we're also determined to accelerate our profitable volume growth and to speed up our progress towards our financial targets. And therefore, the initiatives that we've launched earlier than in 2025, with the reorganization with the cost saving program and with the acquisition of the Edgewell Feminine Care business in North America. And we bring those initiatives with us together with then the very strong financial position we have into 2026, where we remain fully committed to our strategy to drive profitable volume growth.

And we will do that by, first and foremost, making sure that we have the customer and consumer at the center in everything we do. We will also do that by continuing on the path to strengthen our market shares and our product superiority. We will, of course, integrate the Edgewell acquisition to strengthen our Personal Care position in North America. And we will implement our cost save programs, both the COGS cost save program that Fredrik was talking about as well as then the SG&A cost save program, where we have the ambition to reinvest the majority of that into fueling profitable growth. And also, we will fully leverage our new organizational setup with end-to-end accountability with more decentralized decision-making and also with even sharper focus on our most attractive parts of our business, so that we can unleash the full power of our fantastic Essity teams, and also to make the boat go faster.

Speaking about our fantastic Essity teams, you have the opportunity to meet some of them if you join us in our Capital Market Day on the 7th of May. We will host that in our Mölndal office in Sweden, which is our largest office. And you don't want to miss the opportunity of hearing more about our strategy to drive profitable growth and to be able to see some of our R&D laboratories in this facility as well as production facility in the neighborhood. So I really hope to see all of you there.

Thank you, Ulrika, and thank you, Fredrik, for that walk through. Now we are ready to take your questions. [Operator Instructions]. Ulrika and Fredrik, are you ready to open up for questions?

Yes.

Perfect. We have the first question from Niklas Ekman, DNB Carnegie.

Can I start asking about kind of your priorities for '26 here? Obviously, volumes have been weak now for some time. And now you have a couple of quarters with a pretty strong margin expansion. How do you view that now in '26? Are you willing to sacrifice some of that margin in order to restore volume growth? Or are you more optimistic maybe about the market now having had some kind of cyclical headwinds, that they might turn to some tailwinds in '26? Or you're thinking there on the mix between organic volume growth and margins and what your priorities are?

Well, as we have talked about previous quarters as well as in this quarter, we are doing selective price adjustments in order to fuel volume growth. And also, we have the intention to increase our A&P investments. We have seen that the investments that we do in A&P is paying off very nicely, as you saw in the market share development. So that we will do. And then the volume growth will give us operating leverage and thereby also securing the profit margins.

And since we talk about this and how to drive volume growth, I want to mention one thing that we're also very proud of in 2025 that will support volume growth in '26, and that is our innovation delivery in the year. We increased our share of sales that is generated through innovations and also the superiority record that I talked about earlier. That shows that we are strengthening our offers to consumers and customers, and that is the base for driving volume growth. And then, of course, we need to make sure we have the right price positioning and that we support those fantastic offers with A&P investments.

Very good. But do you see any risk of margins? Or are you looking at maybe sacrificing some of these strong margins now to accelerate growth? Or do you think that you can do both?

Our ambition is to do both. I mean, in some areas, of course, when we have selected price adjustments, that will have an impact on margin short term. But in other areas, we have opportunities to go in the other direction. So that is a continuous work that we do to optimize this.

Maybe to add, if I may, Niklas, as you are aware of, and we communicated last quarter that the cost saving program will generate fairly significant savings. And of course, we are aiming to use those funds to actually do what Ulrika was talking about here in terms of fueling growth, both in terms of selective price decline, but also A&P spend. So this is a way to make sure that we can do both, just to emphasize.

Next up is Charles Eden from UBS.

You mentioned the lower volumes and prices in Consumer Tissue private label. Are you able to quantify the organic sales decline for that business in Q4? And can I ask whether the continued challenges of this unit makes you reconsider whether this asset is indeed core to Essity going forward as you concluded at the most recent strategic review of this asset?

And then if I can sneak a clarification question, it's the usual one for me, Fredrik, on the group EBITA bridge. Of the SEK 749 million cost of goods sold tailwind in the quarter, can you help break that down between raw mats and energy distribution? I've got the SEK 190 million benefit from COGS savings in Q4 from the press release.

If we start with the second question, maybe there with the reconsidering, I mean, we are continuously looking at our portfolio in evaluating and optimizing our portfolio. Then Fredrik, maybe you can help on the details of private label...

COGS...

Yes, and the private label part.

Yes. Charles, we are not giving the details specifically as to the individual components. So I'm not going to say that. But of course, we already alluded to that the majority of the decline in volumes of the 2% or just under 2% is coming from there. But it's worth noting that the performance or actually EBITA is really, really good with Consumer Tissue private label. And we always have a bit of volume volatility in Consumer Tissue private label. So I don't think you can draw the conclusion that it's a bad business. In fact, it actually is generating quite a healthy margin and good profit. It's just that for the time being, volume is actually low.

Should I answer also -- you were asking for the breakdown of COGS, right? Was that your question there?

Yes.

So the majority was related to raw materials. So that was about 2/3, give and take. And then we had energy, how should I say, more or less the rest. And then if you look at the other COGS, which was basically volume decline or less absorption plus new lines, et cetera, that was about the same as the cost saving program, so to give you a little bit of indication. Does that answer your question, Charles?

Yes, it does. Thanks, Fredrik.

Then let's move to the next question. Warren Ackerman from Barclays.

Warren Ackerman here at Barclays. Could you maybe sort of dive a little bit deeper on the A&P spend? You're talking about the increase to help drive the volume. I get it's going to be funded from the savings. But are you able to say -- I think it's around 5% of sales at the moment. But how much do you want to increase that by? And what is your current A&P mix in terms of online digital, and how do you measure the returns on that investment? What kind of tools do you have to sort of figure out where and how you allocate that spend? It sounds like it's going to be a big part of the story for this year. So just keen to understand a bit more on the details.

And I can answer to some extent today, but I would also then invite you to the Capital Markets Day and talk more about this in detail. But of course, we are eager to measure the return of our marketing investments. So we do that on a regular basis. And it's by doing research on what we produce as well as following up that the activation is having the effect that we expect, both when it comes to purchase intent, when it comes to awareness and, at the end of the day, that it's generating the sales and the repurchase that we are expecting. So that we do on a continuous basis to make sure that we allocate the investments to where they do the best job for our brands. That was one question. The other question was more about how much we intend to increase A&P.

Yes, we haven't specified that. And of course, it's connected also to the innovation that we put on the market, because that always has an impact on the A&P spend. But generally speaking, we are, of course, convinced and, Ulrika, you gave a couple of examples here that A&P in general is fueling growth and is also profitable. You were asking there, Warren, about how we actually track profitability, return on market investments that we do. We believe we are reasonably good at it. Of course, as you always know, it's really very difficult to exactly have a scientific way of measuring. But we think we are pretty okay with measuring return of market investment. So to allocate where to put it, I think we are doing it reasonably okay. So we can't give you exact answers to your question as to how much or exactly how much the return is. It varies a lot. But generally speaking, we will increase, and we think we know where to increase.

And maybe just to clarify quickly, Fredrik. I guess I'm going to press you a little bit from a modeling point of view, I mean another way to ask it is, of that SEK 1 billion savings, how much of that will be sort of allocated to reinvestment? Or maybe another way to ask it is that 5%, how does that benchmark against peers? I mean, from a modeling point of view, do we stick in 6%? Or I mean, because it's sort of like it's quite a big swing factor. So any kind of help would be useful.

Yes. It's a great question. And of course, we got this question last quarter that is this going to impact in the end the EBIT margin or EBIT line. And we said, yes, it will, indirectly. So it's not so that we are putting the savings to our income statement or to the EBIT line immediately. We are investing it. And through that return on market investment, we believe that over time, we will both get operating leverage for growth and then, of course, margin enhancement. And it's not all about A&P, it is also about a combination of selective price increases that we partly have already done, but will do and A&P increases. So it's actually both. It's very difficult to give you specific details on exactly where, it's many different combinations. But over time, we think it will be profitable.

Your final question as to how do we compare. Quite difficult to answer that. We are making a lot of benchmarking and trying to kind of adjust for the differences in structures and categories. But I think overall, there is an upside for us to do this.

Let's continue then with a question from Johannes Grunselius from SB1 Markets.

I have a question on COGS again, if you can dive in a bit more there. Because Fredrik, you mentioned here, you will have slightly lower COGS year-over-year in Q1. In Q4, you obviously had a tailwind year-over-year of SEK 749 million. It's such a huge COGS base. So maybe you can provide a range or something on the year-over-year tailwind in Q1, that would be very appreciated, if you can give any indications, please.

Yes, we can. So thanks, Johannes, for the question. And we have chosen to guide only on COGS as a totality, because understanding all the ins and outs doesn't make things easier to actually grasp. So we are typically reasonably accurate when it comes to the estimate of the entire COGS number, and this is why we are giving it to you. But as I said, raw material is largely -- they're a bit in and out there, or positive and negative, but it's largely going to be a bit positive as energy as well, perhaps, if we compare then Q1 versus Q1.

We're going to continue to have a little bit of unfavorable volume comparisons. We're going to have a bit of new -- or cost for new lines that we will have -- we're putting in place in Q1, and then we'll have a bit of cost savings. So all in all, this will give a slightly lower cost. The main driver actually still being raw material. And if you think about the main driver of raw material, it's actually mainly favorable FX actually.

Okay. Okay. Can I put it the question in this way, if we look at COGS sequentially, are you thinking about more stable COGS? Or are COGS perhaps up a bit Q1 over Q4?

It's mainly stable. Mainly stable, you can say.

So let's move to the next question. Aron Adamski from Goldman Sachs.

First, I had a follow-up on growth expectations for 2026. I mean, against the backdrop of lower input cost environment that you highlighted, would you expect price to be negative for the entirety of '26? And given that context, would you expect to achieve a better organic sales growth in '26 than you have done in '25?

And then second, a quick follow-up on the A&P discussion. Can you please give us a sense of how the advertising step-up is going to be phased through 2026? Is it going to be more front-loaded? And therefore, could we expect the margin delivery to be relatively weaker in the first half of the year, given everything you said on volume, price adjustments and the cost savings delivery?

I almost forgot the first question after the third question. What was the first question again? Sorry.

Sorry, just on pricing expectations for '26.

Yes, it was pricing and volume expectation, that's true. So I mean, we need to be agile and want to be agile when it comes to pricing because it's, of course, dependent on what happens in the market environment. So we are adapting to both, of course, what happens with input costs, but also what happens when it comes to demand and need to adapt to that situation as well as being fully equipped to capture the market growth when the wind is turning. So therefore, of course, there are scenario planning and so on, but to be agile is most important.

When it comes to organic growth, yes, our ambition is clearly to move towards our financial target with 3% organic growth. So our ambition is to accelerate our growth. But again, we are in a volatile environment. So it's so important for us, and that's why it's so great to see that we are strengthening market shares in this quarter, because when the market is as volatile as it is, what we can focus on a lot is to win the relative game. And what we see in the quarter is that we're doing exactly that. And what's also important for us is that we win where it matters the most, and that is to drive our strategic segments. So that was an answer to say that we need to stay agile and see what happens in the market and then adapt to that.

Perfect. Aron, does that answer your question?

Yes. Just on the second question on the phasing of margins, I suppose, for 2026, maybe if you could give us a bit more color on how the step-up in A&P is going to be phased and how is that going to impact the margin phasing through the year?

Maybe I can -- we don't give those kind of detailed guidance, as you've seen, Aron, but just maybe as a little bit of still a hint or 2, maybe even. First of all, you can see that Q4, as we have just reported, was higher than Q4 of '24. So that step-up has already actually happened. And if you remember, I mentioned -- maybe you weren't participating, but I actually mentioned that we do expect higher SG&A cost in Q1 on the back of higher A&P. So this gives you a little bit of hint. So we believe that the higher A&P cost will be there immediately -- actually already is there, higher, if you see the numbers.

Now let's move to Tom Sykes, Deutsche Bank.

Would you be able to say how the A&P to sales for you differs by category? And just what are the categories which would have the greatest elasticity to increased A&P spend, please? And maybe just in addition is, what's happening to your trade retail spend? And how big is that in the COGS costs presumably?

Well, if we look at A&P to sales, it's the categories that you find in Personal Care that has the consumer brands that has the biggest A&P spend in relation to sales, or I should say A&P investment rather in share of sales. Then if you look at a category like Wound Care, for example, you have a much lower A&P in relation to sales. There, it's much more about the sales force and equipping the sales force with the right products and support. And you find that fueling growth is through the sales force. And then we have everything in between there.

Okay. And in terms of sort of the elasticity, where do you think the best place to allocate incremental A&P is? Was it just across the board?

Yes. This is more about where we have our most attractive segments and categories. We want to invest the most where we have the highest potential for profitable growth and the strongest reason to win. So I think what you've seen here also now is that we have had good effect of investing, for example, in Feminine Care as well as in Incontinence Care. But we do want to fuel growth across our categories, but that should give you an indication.

And I guess, Tom, your question on trade spend, are you referring then to promotional activity there, I guess, right?

Yes. I guess it's yes. That's spend with retailers.

Yes. And that is by far Consumer Tissue traditionally. So the promotional -- the percentage of all products sold under promotion is by far highest in Consumer Tissue.

Okay. So that's just sitting in reduction of your revenues? Is it...

It's a pricing issue. It's a way -- you can say the pricing activity, they're strategic, so kind of headline pricing, and then you've got tactical pricing. And so promotion is a tactical -- it's what you do on a more temporary basis. So it's not list price adjustment.

I get some of it. Sorry. Is there not spends that you would do on the websites of major retailers to get up the ladder of people searching for particular categories? I mean, that wouldn't -- or do you just include that in pricing?

No, there is also brand communication and marketing that we do through the retailers or in connection with the retailers. So that is one element. But to Fredrik's point, when it comes to price campaigns, that you see in the sales.

Okay. But just to clarify, does all your, if you like, A&P type spend, setting aside any promotion and price reductions, does all of that sit in the A&P line? Or does some of it sit also in the COGS line, because it's trade spend that goes on?

Not in COGS. It's not in COGS. It's either sales or A&P. So in this case, what you're referring to is A&P. So it's not COGS. I'm not sure how that could be possible. But we can talk about that offline, but it's not in COGS. Promotion is in sales and marketing in A&P.

Perfect. Next question comes from Karel Zoete from Kepler.

I have 2 questions, if I may. The first one is in relation to M&A. You've done last year, one acquisition, but the market is difficult certainly in places such as Latin America. What's hindering you from doing more M&A? Or why haven't we seen more acquisitions over the last 18 months given the difficult markets? And then the second question is more in relation to Asia. I think there's still an agreement within that they can use some of your brands. What's the status of this? Is this going to be renegotiated in the coming year? Or do you have plans to build operations yourself selectively to capture some of the growth in the Asian market?

If I start with the M&A question, maybe you can answer to Asia later. We continue to work actively with M&A, identifying potential targets and assessing potential targets. As you know, it's part of our strategy to grow both organically, but also inorganically. So we clearly have the ambition to do value-creating M&As. But we are, to that point, very disciplined to make sure that they are value creating. So that is, of course, always what we're doing in the screening to make sure that, that is the case, and always judging what is the most value creating, is it organic growth or inorganic growth. And you could argue, of course, when it comes to valuation, that in order to bridge the potential valuation gap, we need to find quite a lot of synergies then to secure that value creation. So the short answer is that we have the ambition to drive more M&As and are working on that actively.

So Karel, when it comes to Asia, the story isn't really different there. When we divested Vinda in 2024, there was a license agreement for these brands, and that expires in 2027. Now as we sold the company, we also granted an option for the buyer to continue licensing these brands also in the future against, of course, a license fee. And that option has not yet been translated into an agreement. And of course, we remain unsure of whether that will actually happen. So there are 2 possibilities here. One is that we continue with the license agreement subject to the buyer actually exercising on that option, or if they don't, then, of course, we get those brands back in Asia. So we cannot give you an answer at this point of time as we actually don't know.

Let's move then to Misha Omanadze, BNP Paribas.

I just wanted to zoom in a bit more on your end market dynamics where you already provided some helpful color. And overall, it seems that the markets remain challenging. If you were to look at your biggest category geography exposures, where would you say you saw the biggest sequential change from the previous quarter in both positive and negative direction in terms of end market trends and consumer environment?

I wouldn't say that we've seen any big movements between quarter 4 and quarter 3. It's been quite stable when it comes to market environment.

Next question comes from Henrik Bartnes from ABG.

One question for me, please. You have historically talked about seasonally lower volumes in Q1 compared to Q4. And if we look at Q1 sequentially, how should we think about volumes this year? Are there any indications that this year won't show any seasonally lower volumes?

I can maybe answer. First of all, we don't give volume estimates. We can only report what has historically been the case in terms of seasonality. So as you rightly say, seasonality would suggest that volumes in Q1 are lower than Q4. It's not actually one and the same for all our business areas or categories. Some don't have that. But in general, if you look at the group as a whole, clearly, volumes are typically, I should say, lower in Q1 versus Q4, but we are not giving an estimate for '26 specifically.

Let's now move on to Celine Pannuti from JPMorgan.

So my question is coming back on the Consumer Goods performance with price/mix negative. I think you mentioned that you had to roll back some pricing in order to keep some of your customers. I think it was in private label. Does that mean that going forward, we still have to annualize that, and so we'll have continuous negative pricing. I also said you mentioned there was a one-off impact from Latin America. So if you could give us a bit of an idea on that go forward. [indiscernible].

Sorry, your sound is not working really. So we can't really hear your question. Maybe we can just start with the 2 questions you had now, because then we have to move on. Is that okay?

Perfect.

Good.

Yes. I think I got the question whether the price/mix -- the negative price/mix in consumer goods would flow into Q1 or Q2? Was that the question, Celine?

Yes. I mean, I would presume it annualizes if you have made some pricing concessions. And then the question, is there any other price negotiation that you are going through now in retail?

Yes, right. No, again, we can't comment on, obviously, price negotiations. That's more commercially related, I can't do that. But of course, as we have lower prices now in Q3 and Q4 and especially here in Q4. So there has been a price decline in Consumer Tissue. That will, of course, obviously continue into Q2. So in short, we'll see those price impacts coming or continuing in Q1 and Q2 potentially.

And just how material is the Latin America impact that you mentioned?

Yes, we are not actually giving you the exact number there, Celine, and this is for commercial reasons basically. But if you actually look at -- I gave you a little bit of guidance. It's always interesting when you say you're not going to give a number and then you almost do it anyway. But I'll do it because if you look at the minus 0.6% in terms of organic sales growth for Feminine in the quarter. And then we also stated that without that sales, organic sales growth would have been low single digit. That gives you a little bit of indication as to the size. So this is a bit -- of course, for the group, not a lot, but for Feminine, it is a bit, and it comes out as pricing. So that's temporary. That will not be there in the next quarter.

Perfect. Thanks for your question, Celine. Now we will move to our final question, and that question is from Oskar Lindstrom, Danske Bank.

Just a slightly different question from me. Following the Edgewell acquisition and an acquisition by another company, you're not going to be sharing, I understand, the brands Stayfree and Carefree between you. Who owns those brands? And who is paying royalties or fees to whom?

Well, we own the brands in the geographies that we are operating the brands with. So in those geographies, it's our -- we can actually then do what we think is commercially right to do with those brands.

So in short, no royalties paid to anyone.

Wonderful. That's all the questions I had.

That's what you wanted to know. Thank you for that interpretation.

Thank you, Oskar, for that question. And now it's time to wrap up. But before we end, I would like to hand over to you, Ulrika, again, for final remarks.

Yes. Well, thank you, Sandra. Thank you for joining us today. We are leaving, as I said, a solid 2025 behind us, where I think our resilience has really been a critical success factor. And it's especially great to go into 2026 with this good market share momentum that we have talked about today. And finally, I look forward to see you all on the 7th of May in Mölndal, Sweden.

Yes. Thank you for that, Ulrika, and thanks to you for joining. If you have any further questions, just reach out. We will be road showing in Stockholm today virtually next week, and we will also be in London next week. So see you there. And take care, and have a good rest of the day. Bye for now.

Hi, Ulrika.

Hi Sandra.

And a warm welcome to Grey Stockholm. This morning, we published our Q4 and full year 2025 results. If we start with the quarter, what are the key highlights?

Well, the first key highlight is that we grew market share. In consumer goods, where we have access to external data, we know that we grew market shares in more than 65% of our branded business with all 4 categories contributing. I think that is a testament to that our innovations and our marketing activities are really paying off. There is also a reason to believe that in Tork and TENA, we defended our positions very well in the business-to-business environment and that we continue to strengthen our position in wound care.

Now it is a challenging market environment. Overall sales declined as a result of lower pricing, all the more reason to focus on winning the relative game. And the market share development shows that we did exactly that. As well, very important to win where it matters the most, which also was the case in the quarter, we continue to grow in our strategic segments like Incontinence Care, Wound Care and premium products in Professional Hygiene. Then the second key highlight was our profit margins. We strengthened our profit margins in all 3 business areas, and we reached 14.7%, which is an improvement by 160 basis points.

Quite fantastic. Yes, that's really a result to be proud of. Now if we broaden the perspective and reflect on full year 2025, what achievements are you most proud of and what defines the year for Essity?

Well, I'm particularly proud of our innovation delivery in the year. When it comes to share of sales that is generated by innovations, that increased in the year and also our product superiority, meaning that our products are preferred by customers and consumers, that reached record high levels. Then your second question, that was what defined Essity in 2025. And I think I'd say resilience. In a challenging market environment, we delivered strong results. We had -- we delivered on organic sales growth and the best profit margin that we have had in 5 years.

Also, we continue to have a very strong balance sheet and our strong financial position that allows us to invest in organic growth as well as in return to our shareholders. So our Board is proposing to increase the dividend to SEK 8.75, which is a 6% improvement, and that is very well in line with our ambition to deliver stable and rising dividends.

Finally, looking ahead, what are the key priorities for Essity in 2026? And what is your main focus?

Well, one of my main focuses is that we make sure that we have customers and consumers at the center in everything we do. And we are fully committed to continue our strategy to deliver profitable growth and to accelerate the progress towards our financial targets. And we will do that by continuing on the path when it comes to strengthening market shares and strengthening product superiority. And we will do that by integrating the Edgewell acquisition to strengthen our Personal Care business in North America. We will also deliver on our cost-saving programs, both when it comes to COGS as well as now SG&A in order for us to free up resources to reinvest in profitable growth.

And we will implement and leverage the organizational change where we create end-to-end accountability and decentralized decision-making, thereby unleashing the full power of our organization.

Thank you, Ulrika, for sharing your reflections and priorities.

Thank you for listening.

And thanks to you for joining. Before you leave, please save the date for Essity Capital Markets Day, which takes place on May 7. More information to come. With that, take care and bye for now.

Good morning, everyone. Thanks for -- thanks Fredrik coming to our conference and to do this chat with me. So we'll go straight into Q&A, discuss a bit latest trends, what you're seeing, a lot of news flow around the world.

And maybe to start with around your latest acquisition with Edgewell. Obviously, reinforcing a bit your North America presence, your personal care, which kind of like tick all the boxes you wanted to bit in your bolt-on acquisitions. Can you go maybe a bit more into details around the deal? How do you expect a bit to continue to scale up into the regions? How do you think you can compare to maybe some of the larger players there like P&G, like it would be great to start maybe with this.

Yes, it's a good start. But if I may, Antoine, so first of all, thanks for inviting us to the conference. So that's a pleasure to be here. So Essity, I mean we've been here for many years. And you see here on the slide there that we have about SEK 146 billion or so in turnover, and we're into our 3 business areas. So retail, obviously, and we'll come on to that in a second with your question.

Then Professional Hygiene with a Tork business that is existing in most hotels or airlines around the world, and also health and medical with medical and incontinence business. So we have 3 quite attractive areas and a very clear strategy. And the reason I'm mentioning it is because the acquisition of Edgewell's family business is very much into this strategy.

So if you look at our 3 business areas, each of them have growth prospects. And when I say growth, it's not just growth, it's profitable growth prospects. So we want to grow. If you look at the health and medical side, we would like to grow pretty much all of that area and especially wound care and incontinence generally. If we look at Professional Hygiene, we'd really like to continue to expand geographically.

We'd like to continue to expand in our adjacent business like soaps and sanitizers cleaning. And when you look at our retail business, we would like to become bigger in particularly feminine and incontinence in retail. These are the areas where we're very, very profitable. So from -- if you kind of sum all of this up from a group perspective, we are aspiring and this is our ambition and also what we are doing to overinvest organically and inorganically into our high-yielding businesses.

So feminine incontinence, professional hygiene and medical, those are the areas. And so in the retail arena then, we have also stated geographically that we're super good represented in Europe. We're really strong in Latin America. North America, we're small. So on the retail environment in North America, we're only existing with a relatively small incontinence business, relatively small.

And so we have aspired to become bigger in the retail area in the U.S. and Canada. In Canada, we're sizable, but in the U.S. And there, of course, specifically, we would like to do it in the feminine area. So this is a good step. This acquisition is perfect for us because what we are acquiring are very, very strong brands. So for the U.S. population, these brands, Carefree, Stayfree, Playtex, o.b., they're very, very strong and well known.

And so we have the opportunity that together with the businesses we already have in Inco and washable absorbent underwear with Knix, together with the Edgewell feminine business, we form now, which is a much more sizable retail business in the U.S. And of course, there's lots of synergies. Our intention is to continue to invest significantly into A&P and over time, grow our retail business significantly.

It's a very attractive market. It's good -- reasonably good growth and very high margins. So you asked me a very short question, and you got a 10-minute answer, 5 minutes at least, but this is a little bit the strategy of the company. So it's a good acquisition for us.

Perfect. But Edgewell maybe has been losing a bit of market share and growth recently. Part of it was because of pad, the pad part of the business. How do you plan on maybe stemming that and bringing back the business into the growth that you are talking about ultimately?

Yes, it's a great question because if you actually look at the company, just visually, if you look at the numbers, so Q3 versus Q3 of last year, it's minus 10%. So it looks like it's not going anywhere in a positive direction. But the reason isn't really anything else than what they did in Edgewell at the latter part of 2024.

They -- if you look at the feminine side, there are tampons under the Playtex brand. There's liners under the Carefree brand, and they also had a pads business under the Stayfree brand, which was much smaller. So market shares are very strong for tampons and liners, but not so strong for pads under the Stayfree. So what they chose to do was to migrate all of their pads business into Carefree.

And they believe that, that was a good thing because Carefree was a good brand and known to the consumers. And they also took the opportunity to raise prices. And of course, this didn't work very well for them. So they lost roughly about half of their pad sales in one go more or less, not a good -- unfortunately, not a good transition for them. So after that, things have actually stabilized.

So if you look at sequential development, it's been quite okay for them. So it's not that it's really rapidly falling. It was a one cliff or one step change. And since then, it's been quite stable. So of course, our intention is to using the capabilities we have, and we are basically very profitable in every position we happen to be in. And we're typically market leader or #2 in wherever we exist.

So what we intend to do is to make sure that we start investing into these brands that we now have acquired in the U.S., so Carefree, particularly in Playtex, those 2, but also Stayfree. We will actually do that and reinvigorate that a bit.

And then, of course, we will also apply the innovations that we have on the market, and we will use what is very -- also very good in within the company. So this is our core. It has never been Edgewell's core. So of course, it's -- this is what we do well and Edgewell have an interest to focus on other things. So it's a very good match, I think.

That's great. I mean to follow up on your comment that you need to reinvest a bit in those brands to help them grow. I mean, you have a big part of what you announced around synergies as well. So how will you balance maybe the synergies you would get and the reinvestment needed into these brands to bring them back into kind of that more offensive?

Yes. So it's interesting because we -- the cost synergies or the synergies that we announced and we talked about, they're all cost, and they're not very difficult to actually achieve. We will achieve them. It's not difficult because it's administration, it's procurement, it's things that we can very easily just compare. And when we put this into our own already existing business, those synergies will materialize.

There is also lots of other revenue-based synergies that we simply chose not to include in the calculations, right? We chose not to do that because you tend to be kind of optimistic on revenue synergies, and we wanted to make sure that we base financially the acquisition only on very, very tangible cost synergies.

So in reality, we'll have much more synergies. I'm absolutely 100% sure of that. Your question was, are we going to reinvest? Yes, we are going to do that. If we do nothing, this and just integrate it, then this will become quite profitable relatively soon. In the next 2 to 3 years, it will actually start looking good without actually a lot of growth. So this is not what we have in mind.

As I already said, we would like to, over time, make sure that we have a growing business, both in feminine on washable absorbent and with the business we just bought and the Inco business. So we will invest. So this is a long-term proposition for us. It will be slightly margin dilutive for the business, but you're not going to notice that because it's a fraction only. But for us, this is a really, really interesting way of building the company on the retail business and retail sector in the U.S. We think it's a good proposition. So we'll invest.

And I mean, obviously, the starting point is that it's a bit margin dilutive. But usually in the U.S., maybe in FMCG, there is a bit better margin in North America. So long term, do you think like as you build muscles into this North America Personal Care kind of like regions, do you think it can be a margin driver like in the structural sense for Essity?

Yes, I think so. If I put it this way, U.S. is a high margin. It is actually. I'm not 100% sure why it is, but it is. And so partly, it's an efficient structure and from a production setup, logistics, all of that, there's not a lot of barriers like what we see in Europe. So it's efficient from that perspective, it's profitable. And so I think the answer to your question is, yes, over time, it will be. But of course, if you compare to -- and you were actually asking about scale, we're still relatively small.

So although we're small, we believe that there is no reason why this shouldn't be for the group margin accretive over time. But it's going to take quite a few years to get there in our plans, but we will get margin accretive in the future to get really, really good profitability. We need to become bigger. And of course, we would like to do that both organically and inorganically over time. But for the time being, we're -- yes, in the next few -- or next time frame, mostly organic then.

Understood. And when you look at this type of deals, obviously, there is also to take into consideration your own kind of like multiples and how you are willing to pay for this and how do you include the synergies. Does that limit a bit the amount of deals you would like to do? Because as you said, you want to grow, you want to build scale into the U.S. So how does that impact maybe the way you are looking at deals?

Yes. I think it really does impact because it's interesting. When you look at our own valuation, you can very easily just do kind of a traditional EBITDA multiple, and you can conclude that our multiple is quite low. So we have consistently over many years now, gradually improved our profitability. So our margin is much higher now. We've consistently had growth. But you can see, as our peers actually, the share price is standing still, right?

And of course, as we grow our profitability a lot and the share price standing still, then EBITDA multiple is obviously then basically falling. So it's quite low. And most of -- or if I should say, more or less all of the acquisition targets typically would have a higher multiple. And so this then becomes at least in multiple terms, not in DCF terms necessarily, but in multiple terms, this becomes dilutive.

And so that makes it more difficult to do acquisitions unless you have a lot of synergies that bridges that gap. So if you look at the acquisition of Edgewell, this is one of the examples where actually the synergies are so big that it bridges that gap, right? This is an example. There are others like that, but of course, it limits.

If you have a low valuation, my absolute conviction is that the share price of our company should be a lot higher. I mean most CFOs would tend to say that. But we actually do think this is -- it should be the future. So hopefully, this is a problem that, over time, will go away. But for the time being, we need to be cautious and be very, very selective in what we buy. So this is why you don't see a lot of acquisitions coming from us.

But historically, I mean, you have done quite a significant amount of deals.

Yes.

Maybe what have been some of the learnings that you had made from those and kind of like that now affect the way you are approaching deals and then the execution on those once it's done?

Yes. So we've done a lot of it, to your point. And I think I should say all of them, with the exception of 2, have been successful in delivering at business plan or better. So been very value creative, all of them with the exception of 2. One was done in 2017, which was BSN, our medical business, which was a very significant acquisition. That's actually super well performing now, right?

But it's, to be fair, 8 years later. So we have a good growth now, good margin, good everything, everything is great. But if you look at what we actually thought when we bought it, the growth of the company was much slower. So we got the synergies. We executed on the margin, all of that was fine, but we didn't actually get the growth, right? And so that made that acquisition being, for a few years, quite expensive. Now it's fine, but it wasn't actually.

So there was a learning from this, one -- or actually two, be cautious when you buy stuff from private equity companies. And I hope I'm not stepping on any toes, but be really careful. You think you know everything, but you don't. So there you are. And I think the second thing is that when you venture into something that's quite distance from what you do, then you may -- how shall I say, sounds a bit self-punishing, but you tend to perhaps overestimate your own capabilities. We did that.

So we integrated it really fast with our incontinence health care business and a lot of the leading medical people actually left and we had a lot of Inco people running both -- what it was medical, and that was not successful from a growth perspective. So good learning. Now it's okay. But -- and the other that has also been challenging for us was Knix in the U.S., where we paid a very, very high multiple.

It was actually -- I've been CFO for many years, many, many years and done a lot of transactions. This was, for me, a completely unique experience because we paid a lot, and this was an opportunity for Essity to become a global leader in this particular segment of washable absorbent underwear. So we took that opportunity. And what actually happened after that was that obviously, you all know that U.S. market really kind of became quite inflationary, not just the U.S., but the globe.

And of course, that made people be quite reluctant to buy expensive products. And this is still the case that because of disposable income issues and historic inflation issues, it becomes more tempting to buy perhaps single-use pads at a very low price and not maybe 3 or 4 of these washable absorbent underwear that are quite expensive. So that's actually now recovering again.

And I'm absolutely convinced a few years from now, this is going to be a really good acquisition, too. So historically, pretty much all the acquisitions have been okay or actually more than okay. And I don't doubt that Knix will be as well, in some frame, and I'm absolutely convinced this will be as well. So we got very good experience and from acquisitions. And over time, we just want to make money for simple people in that way.

Perfect. I mean shifting gears maybe a bit more towards the current trends and the business. First, maybe around volume, which have been a bit weaker this year. And as we move into Q4, where last year, you had quite good performance in volume, especially in health and medical and consumer goods. I mean, how are you approaching maybe this as you are lapping these tough comps in a quite subdued environment?

Yes, it's interesting. I mean, obviously, I can't -- I don't have a crystal ball. I really would like one, but I don't. So it's quite clear, when you look at this year, the whole year, Q1, Q2, Q3, we've had a collective -- for all those 3 quarters combined, we've had a year-to-date growth, I think it was 0.2%, something like that in terms of volume. So 1.9% in terms of organic sales growth. So that's fine. A couple of percent. It's not a bad number really.

But in terms of volume, it's quite low. And when we actually started the year, we were planning for much higher volume growth. So we can clearly see that the market demand in North America on HoReCa, actually Europe as well, Southern Europe, France is one example, where we see things like hotel visits, travel, going out to eat is much less frequent now, and we also see consumers being a bit stretched in how they consume. So it's been a weaker year than we estimated.

And so I don't see a big change. I'm actually trying to ask all of you here because you meet a lot of companies, what's your impression? And from what I hear, I'm not seeing markets really changing anytime soon. So as we go forward, we are planning to make sure that we actually grow from a volume perspective profitably also in markets that are a little bit soft. And so in the third quarter here, we launched 2 initiatives beyond, obviously, this acquisition.

And one was relating to an organizational change, which is very profound for us and will make us much better in all sorts of different ways. But the other is a cost-saving program where we will take out SEK 1 billion from our SG&A cost, and we will reinvest that into growth. So promotional spend or selective pricing or A&P or whatever to make sure that we also, within this environment, over time will grow. This is more for '26 or the latter part. But still, we can see markets being relatively soft and continuing probably to be that. And then we will, within that context, still grow. That's the plan.

That's clear. And of course, I mean, cost environment is a bit more favorable for Essity. But similarly, I mean, you're lapping a bit of price increase you have put last year in 3Q and 4Q.

Right, right. Yes.

So how -- I mean, considering the bit weaker volume, are you planning to reinvest a bit in price? How -- I mean, is it on the A&P or also a bit on pricing? I mean, how are you kind of like balancing a bit both to try to help a bit on volume?

Yes. I mean it's really difficult to comment on specifically how we are acting from a commercial perspective or even give you a volume estimate. I can only echo what you said there that Q4 last year was really, really strong. So of course, we are up against tough comparables. That's obvious. But -- and with a relatively weaker market, then, of course, you have a challenge there, which we are addressing in all sorts of different ways. And specifically, if you look at actually this year, I already mentioned it, we have just over flat growth.

And what has been challenging this year has been, as I said, hotels and all that professional hygiene. Baby, there are unfortunately not that many babies born in the world, which we are very much against. So we would like that to be -- to change, but not something we can influence. And then, of course, we've also struggled with incontinence on the health care side, not on retail, which is really, really doing well, but those 3.

And it's interesting because in the third quarter, we have made lots of stuff to -- lots of things to make sure that we get better at growing these 3 areas that I just mentioned. And we actually did that during Q3. But on the other hand, then we saw suddenly Consumer Tissue -- not suddenly, but Consumer Tissue come down. So it is a bit challenging, but we continue to work relentlessly and investing into, as I said, selective price increases, promotional spend, if needed or just a continued increase of A&P.

Yes. And if we take a look at more mix and like innovations, premiumizations, I mean, similarly, this year has maybe been a bit more down trading. And so does that change the way you approach new product launches and innovations into the, let's say, coming periods?

Yes, I think it does actually because this is very, very interesting to me. And this is maybe a behavioral change that we can look to ourselves to figure out. I think it's -- sometimes it's not a bad idea to actually look at your own behavior a bit. So if we look at historic down trading, and that's occurred in the history many times and not least in areas such as Latin America, when times become a bit more challenging with lower disposable incomes or unemployment or whatever, you see down trading. But it typically is not long lasting. It kind of goes back.

So we have set a long-term growth target of 3% of organic sales growth. And if you look at that organic sales growth target, we estimate roughly about a couple of percent coming from volume or more than that, more than 2% and roughly about 1% coming from mix. Now if you look at the last couple of quarters or 3, the mix component has been 0.2% in that order of magnitude, so quite low. So right now, what is happening, and it's not consistent for every category and every geography. But if you look at some, the name of the game now is not actually premiumization.

People are holding their wallet close to their chest and trying to not save necessarily, but be very cautious on what they buy. It's not -- as I said, everywhere, when it comes to incontinence, this is not the case. When it comes to Feminine, typically not the case. When it comes to Consumer Tissue, absolutely. So we see this people being much more cautious than normally. And this is why we see the growth in areas, which are more the kind of value end. The change for us, premiumization, is that going to be back on as a theme? Yes, absolutely.

1, 2, 3 years, I don't know, but it's going to be back absolutely because it's been the name of the game for so many years. I'm absolutely convinced. We'll go back to that. But in the meantime, what we are doing is we're innovating also for the value end. And this doesn't come out as mix gain in organic sales. It comes out as mix gain in EBIT margin because it's typically you innovate for lower cost rather than for higher price, if that makes sense.

Definitely. And when you look about the new organization that you're putting through and separating a bit within consumer goods, I mean, how do you expect that to influence a bit the decisions taken at the business level to go for growth? And how does that really fit into your midterm expectations on growth maybe?

Yes, it's difficult to give you that exact statement. Maybe as a more philosophical background, I think you all can relate to this. I mean, a lot of companies will kind of centralize and harmonize for scale, right? So you put lots of things together and over time, you become more centralized and harmonized and you start building bigger central functions that will take care of stuff like supply chain or global marketing or global innovation, global this or shared services or whatever.

And that's actually not a bad thing because you get better efficiencies and you get scale. But the problem is that as these organizations become over time bigger, you start getting problems with things like accountability and also one other thing, which is super key for any company, resource allocation. And to give you a practical example, where do I put my money? Do I put that into investing into an enlarged shared service center in some country? Or do I put it in developing a new product for incontinence. I mean that's just a practical example.

And so typically, those decisions are very, very difficult to make because both are good and what you start doing then is building cost everywhere, right? And so typically, then you change management, bang and you go back full decentralized and then you start all over again. And this cycle is about 20 years, right? You get the point. And so I think we have done a lot of good things when it comes to making our company a lot more efficient.

But I think we have come to a phase where it's time for us to become more agile, more accountable and much more decentralized. And to give you a few examples, what we are now doing is to ensure that our business unit heads will be accountable for pretty much all of the cost. Right now, they're actually accountable for approximately -- they got the full P&L responsibility, but they control roughly about 20% of the cost. And from now after New Year, they'll control pretty much all of it.

There is no clear ownership of things like market share, things like product cost, things like volume estimate and how much you actually man in your plants, all of that will be transferred to the P&L owners. So it will become a much faster, much more agile and then, obviously, a company much more designed for growth. So exactly how this will play out in the next few quarters, I think we are in the kind of process of putting this in place. So it's going to take a long time. If you look at it on a 1-year perspective, I think it will be clearly growth-promoting.

Great. And maybe, obviously, the competitive environment is also changing a bit. I mean, between Kenvue, Kimberly-Clark deal, for instance, or also the cost environment. Maybe can you unpack a bit how you are thinking it will affect bit Essity and how maybe you can benefit from these changes or not?

Yes. I mean, first of all, I think Kimberly-Clark has done 2 quite remarkable transactions. I mean, obviously, first, the tissue transaction with Suzano, that joint venture and eventually divestment. And then they're international, I should say, Consumer Tissue business and then the acquisition of Kenvue. So I think they've done a good job in reshaping the business. So complements to that, of course.

And as you can imagine, all the companies in their sector will immediately start analyzing is this good or bad for us or how is that going to impact? And it's, of course, really is always really difficult to say and you start speculating. I think there are a few factors that we have kind of come to -- it's potentially good for us in a few different ways and potentially also negative in a couple of other ways. On balance, if anything, but it's super difficult to say.

We would probably think it's marginally positive for us. And the reason being that, of course, as the combined company will focus on many other things than what we actually focus on. I think this presents a bit of an opportunity. I think second, of course, as you do such a merger, you also tend to focus on many other things rather than the business. I think there is also a few areas where the market -- combined market position becomes a bit of a problem, which is an opportunity for us.

So these are some of the potential benefits. I think the disadvantage for us and an advantage for them might be that they become bigger versus retailers, so they become stronger in terms of bargaining power. And this may be negative for us, who knows. But time will tell.

And you mentioned a couple of areas where maybe you could gain a bit of an advantage from that.

Potentially. Who knows?

Any specific sales you want to point out?

No, no. No, I can't do that because I think it's -- we'll see. I mean, they haven't even done the transaction yet. They're quite far from that. So it's too early to say. But of course, every competitor will analyze by country, by category, what the situation will look like and try to identify how you approach that from a strategic perspective. So we do the same.

And maybe taking a bit of a look at Latin America, which has been pretty much one of the regions where you have always performed very well and gained a lot of market share. It has been one of the regions where recently has been a bit weaker on the consumer side. Have you seen a bit this kind of like deceleration from the consumer? Or anything you want maybe to comment a bit upon?

Yes. We've seen a lot of it. I mean we see it absolutely consumers becoming more cautious and there are obviously -- it's obviously a tougher environment in some of the countries. We've had a great year in Latin America, super good actually. So we've been able to kind of within that relatively challenging time frame, we'll have been able to with -- our team there, I must say, have done a tremendous job, not least in feminine and incontinence has really, really been very, very good this year.

So Personal Care, generally speaking, has been very, very healthy. I think Professional Hygiene is doing super well as well also in Latin America. So sometimes occasionally, times are bad, but you're still doing really well. And sometimes, of course, markets can be okay and you're not doing so well for all sorts of reasons. This year and actually quite a few previous years, we have done really well under a bit leaking market. So we're very happy with the performance there generally.

And any learnings that you have from this kind of like Latin America outperformance that you're trying to apply maybe over a region.

Yes. I think there are super many learnings. It's interesting. I was in Mexico a couple of weeks ago, actually a week before last. And it's just fascinating because what -- I think -- I mean, you probably know Latin America, but it's quite a -- in comparison to Europe, it's -- Europe is robust, and it's not changing a lot. I mean a lot of things is happening all the time. You got moving currencies and prices moving up and down, lots of shifts in the retail environment, all sorts of things happening all at once. And what that actually brings is a lot of agility.

So if you look at our shelf, I mean, you look at a big retailer in Mexico and you look at the shelf, 2 years later, nothing on the shelf will be the same, right? So it constantly moves and changes. So there's a lot of things to learn, I think. So this environment triggers agility. You're really fast, you continuously work with consumer insights or movements, you continuously work with trials and various things.

And they've been able, as a consequence, to grow at a very healthy rate. And I mean, we're above -- I don't know, I mean we're more than 60% of market share in feminine Mexico and we continuously can grow. It used to be small, the smallest one, and we have outgrown everyone there. So there -- we got a great organization.

Definitely. And I mean looking into this geographic expansion a bit, I mean, obviously, you have the U.S. that we mentioned as a focus. Any other area where you really want to increase your size and scale?

Yes. I mean, first of all, I think U.S. is, as I said, obviously, a very good example of where we would like to become bigger because the market is simply attractive, and we're small there in the retail arena. In fact, U.S. is also an area where we'd like to become bigger in everything, but also in medical actually. Latin America, we are growing very much in medical. It's still quite a tiny part, and I think we can become a lot bigger there. We have a sizable business now, but we can still and should become bigger and get more scale.

So Latin America, in general terms, there is -- although we have very, very good market shares for some of our categories, there are also other areas, other countries that are less strong for us. So Latin America will be a growth engine, I think, for years to come. I'm pretty convinced about that. One -- and of course, Eastern Europe with -- is still good. We are doing things in Middle East, actually.

I mean, these areas are occasionally turbulent, but actually bringing good growth and good profit for us. So you have to be a bit long term, but still good growth areas. I think the white spot for us is Asia, obviously, as we sold -- divested Vinda -- I mean, last year, we -- in March, we divested it. And so it's a white spot now with the exception of a fairly good, but small medical business. We're in -- we are actually across Southeast Asia.

But over time, we would like to become much bigger in Asia, also with our Personal Care categories and potentially others as well. So this is -- I don't have the answer to exactly how that will happen. It depends a little bit on our relationship with the buyer of Vinda. We may get our brands back there in -- during '27 actually. We may not do that. So we need to think of how to approach Asia over the longer perspective. So this is not something that I'll be able to provide you with an answer next quarter or next 6 months. It's going to take a while before we actually -- but over time, we would like to do that.

And you briefly touched upon health and medical as well as one of the focus. I mean when you look at medical, it's also an area where you're a bit smaller than some of med tech players of competition. I mean how do you plan on continue growing there despite a bit lower scale? Like what is the strategy there to have the right to win ultimately?

Yes. I mean the right to win, we already have that. I mean we have a very attractive margin to start with. We have a very attractive growth rate in -- especially in wound care. It's okay also for -- it's okay for compression Orthopedics, but profitability is much lower there. So our primary target is advanced and acute wound care. And we got technologies, which we think are quite attractive, the Sorbact technology.

And you're not -- I'm sure, you're not wound care experts, but you can address an ulcer or a chronic wound by either killing bacteria and the most frequent method to do that is using silver. Some of you will recognize that. And another way to address that is to absorb or actually not kill it, but rather remove it. And so what is happening on the planet is that silver is becoming increasingly controversial, and it's now actually been banned in Germany.

And most of the big players in the industry are using silver. We are not. We have the Sorbact technology, which is absorbing. Just out of curiosity, it's actually listed as -- Sweden is not a big country, but it's listed as one of Sweden's most important inventions in history. So Sorbact is a great technology. It is actually. So with that, we're able to continue to grow quite healthy in chronic wound. And the other -- we also have another technology in the U.S. under the Hydrofera company that we bought a few years ago that also, as does silver, kill, but not with silver with another technology.

So we think we have the technology in the wound care space to continue to have a very good growth rate. We're very pleased with that. We would like -- to be honest, and I mentioned that earlier that we would like to complement the organic growth also with inorganic predominantly in wound care. And there are companies we would very much like to buy to get scale or technology or all sorts of different things. It's not necessarily easy from a financial perspective in the valuation or multiple issue that I talked about earlier.

Any specific area you would want to...

Yes, it's mainly wound care, as I said. Yes, mainly wound care. But it's not necessarily only because we are also looking at both preventive and after treatment. We're mainly treating chronic ulcers or wound or various dispositions like lymphedema or whatever. There are also other things that you can go into like detection or prevention or then potentially after treatment. So there is a possibility of widening and using our capabilities or go-to-market to expand our business scale-wise. We're exploring things like that, and we are also obviously exploring just size, scale.

And maybe moving a bit more to COGS and margins and the usual questions around that. I mean, Q3, you had really a bit of COGS improvements, let's say, around pulp and energy despite some of the distribution a bit tougher. Maybe how are you seeing things moving? Pulp prices remains quite attractive, I would say, on your end. So what are bit maybe your expectations into Q4 and also distribution is maybe a bit less of an issue with the tariff. I mean, maybe unpack a bit on that.

Yes. I mean we -- COGS, I think if you talk about kind of the recent trends towards COGS, as you rightly say, there are certain materials that for the time being is moving in a favorable direction, namely pulp. And maybe for -- maybe not all of you are so much into Essity, but the thing is that we have been -- since many, many years and, when I say that, I mean, more than 30, we've been able to fully compensate through price and price alone, raw material impact.

So although interesting with whatever pulp cost you have or price, whatever that may be interesting, but it's only interesting for a quarter or 2 because we always compensate. So occasionally, if things like pulp increases, then our visual margin becomes lower than the structural for a couple of quarters. And of course, if pulp cost goes down, then we're showing a bit better margin than what the structural margin is for a couple of quarters.

So we have a, I shouldn't say, perfect pricing power, that's bragging. It sounds like arrogant almost. We don't have that, but we have a very, very strong pricing power. So over time, we compensate. And I think this -- when it comes to COGS, generally speaking, we have some tailwind in terms of material. We have some headwind in terms of distribution, as you rightly say. And this year, we've actually been able to generate less savings than we are used to.

We continuously work a lot with efficiency. So if you think back 10 years or 5 years and the improvement we've continuously seen in our margin, the absolute overwhelming contributor to that has been innovation. It's the most important; and with number two, efficiency, those are the 2 things. And then, of course, we have done all sorts of cure or kill restructuring activities and making sure that all parts of the company is performing all of that stuff.

But efficiency is a very key thing. And so we continuously work with our cost team in COGS. And it's fair to say that this year has actually been challenging. And the reason is simply that volume has not been growing so much in our plan. So if you work extensively making sure that you perhaps use less people and -- or you increase your machine efficiency, that means that you can produce more with the same cost.

But if you don't have the need to manufacture more, then you just don't save. And this is why we have seen savings being a bit lower this year than previous. Hopefully, we'll be back to our normal range next year.

And within A&P reinvestments, I mean next year, you have also this plan to reinvest a bit...

Yes, yes.

I mean, what would you characterize a bit maybe the right level of investments Essity needs, in general, in terms of A&P?

Yes. I mean, it's extremely tricky thing to say because it ties to a lot of stuff. I mean we have a bit over 5% in A&P spend, and we've been there. We've been gradually increasing a bit. So -- and as we've grown the company from an absolute standpoint, we continuously spend more. So it's very linked to innovation. So the more innovation we put on the market the more A&P spend.

Because if you don't want -- if you don't put A&P spend behind the innovation, you might as well skip the innovation in the first place, right? You're never going to get traction. So you're very much linking A&P to your innovation. And what we have done over the last many years is that we have tried to work with innovation in a different way, so bigger and -- yes, bigger bets, if you put it, fewer and bigger bets.

So what we have actually done is, we have become much more efficient in our innovation work. So everything we put on the market now sells for a lot more, but we do fewer, which means that we also become more efficient in our A&P. And I think that as we have experienced this, it's very clear that A&P is a profitable proposition. So if we -- and now I'm speculating, if you go 5 years forward, I'm pretty sure that we have a considerably higher or at least higher A&P spend as a percentage of sales.

Very clear. And also one of the things I was a bit surprised within Q3 numbers was the very strong contribution within your EBITA bridge on the volume side despite top rent volume in a bit slower. Can you maybe unpack how it really fits and volume contribution...

This is a really tough question. Why did you ask that? This was such a nice discussion up until -- no, no, I'm joking. So when you measure volume impact or mix impact or whatever, then you cannot do that perfectly. So you always get mix impact also in volume. So the answer here is that we have grown certain parts of our business a lot. And then in other categories, we have taken out volume from areas with low profitability.

So what do you actually see in that volume number is, in fact, a mix impact. You cannot -- you cannot make that. It's a technical calculation. So in reality, it is actually a mix impact. So we have a positive volume impact, quite positive volume impact in our EBITA, but we don't have that in our sales. In reality, it's a mix issue.

Understood.

Thank you for asking.

And maybe -- just one other question on the margin structure within your midterm target of being above this 15% EBITA. I mean, obviously, one of the great improvement that you have done over the years has been on your gross margin. And maybe what level of gross margin do you think is kind of like required or needed to be -- to fit them into this above 15% kind of like targets?

Yes. So I mean we're -- we set the targets last year in June of 2024. And our financial targets for those of you not knowing that, is that we should grow more than 3% organically, and have an EBITA margin of more than 15%. So what we said at the time was that the primary means to get there is, of course, as before innovation and its efficiency and its operating leverage.

So basically, the growth that we generate should then give us an operating leverage, so we also specifically stated that we are not striving specifically to increase our margin in the short term, but rather as a consequence of growing volumes. Now clearly, if you look at our numbers since then, we have not been able to grow that much because of the reasons we have talked about before, but we have kept our margins quite high, right?

So to me, I don't have a doubt that we'll be able to make that more than 15% and more than 3%, but it's imperative for us that we get our growth back in where it should be. So we're not striving to get more than 15% now because that's not going to be sustainable if we have 0 or negative growth, then you can get there in the short term. but you're not going to be sustainably generating a positive net present value or value creation.

So we want to make sure that we get our growth to the levels that we want to get with the operating level, get that margin to where it should be. And we always set targets based on plans that we have made. It's not a pie in the sky, and we've always increased our targets when we have delivered on the previous one. So we intend to deliver also on these targets.

And I mean, conscious of time, maybe one last question to wrap it up. I mean, this year has been quite eventful. Obviously, for Essity, I mean, Ulrika coming in also, but also market that has been a bit challenging, let's say. So maybe what is one of the things you have been very happy about the execution, what happened this year at Essity? And ones, maybe something, where you were less happy about and that you can learn a bit from into next year and how you see it in '26?

Yes. I mean, I think, it's a great question. I think -- there's a lot of energy in the company and a lot of willingness to deliver on, of course, what we promise to our customers and consumers. So it's obviously a passion and the care for that, that I think I'm super happy. But I'm actually very happy about the passion eagerness. It's a lot of stuff that we are doing now. We're acquiring, we're reorganizing, we're saving money. We're doing all of that.

People are just doing, grabbing with a lot of enthusiasm. So this is what I'm very happy about. And what I'm actually -- I shouldn't say unhappy about is, it's not the right word, but you always want to make sure that you're able to execute what you have set out to execute in a good way.

So you've got to be super good at prioritizing and you need to make sure that you just don't embark on 10 million things and hope that everything will finish. We're going to make sure that we execute. So that's where I'm -- I'm not sleepless, I really sleep really well, but where I'm very focused is to make sure that we execute.

Perfect. Thanks a lot, Fredrik.

Thank you.

It's good to have you here.

Thank you.

Good morning, everyone. I'm Sandra Åberg, Head of Investor Relations at Essity. Thank you for joining our audiocast today following yesterday's evening announcement with the news that Essity acquires Edgewell Feminine Care business in North America.

Today's presenters are Essity's President and CEO, Ulrika Kolsrud; and our Executive Vice President and CFO, Fredrik Rystedt. They will take us through the highlights of the acquisition and the financials. Presentation slides are shown in this webcast, and you can also find them on essity.com. After the presentation, we will open up for questions.

With that, I hand over to our CEO, Ulrika Kolsrud.

Thank you, Sandra. And also from my side, good morning, everyone. I am very pleased with our announcement last night that Essity is acquiring Edgewell's well-known feminine care brands in North America. We're talking about Carefree, Stayfree, o.b. and Playtex. And this is a business with net sales of approximately USD 260 million or SEK 2.5 billion. And this means that our global Feminine Care business of today will increase 18% in net sales based on 2024 numbers. Now the benefit of this acquisition goes beyond that increased size, and I will come back to that in a minute.

In addition to the brands, the acquisition includes a production facility, and this is where most of the 500 employees who will join our organization work. The purchase price is USD 340 million, approximately SEK 3.2 billion.

So the brands that we are welcoming into the Essity portfolio through this acquisition are well-known, established brands with strong positions both in the U.S. and in Canada. They have a #2 or #3 position in their respective segments: Carefree within liners, o.b. and Playtex within tampons and Stayfree and Carefree within pads. And this is a strong foundation to build on. And by applying Essity's recipe for success in feminine care, we aim to revitalize these brands, gain market share and grow further while improving profit margins.

Feminine care is a high-margin category where we have the right to win and where we do win where we choose to play. And the acquisition of these brands represents a unique opportunity for us to expand our Feminine Care business also into North America. In addition to expanding our presence in feminine care, the acquisition provides scale in retail for the benefit of our incontinence retail business in the U.S., and this will generate revenue synergies. We also expect cost synergies, and Fredrik will soon provide more details on what those are.

So with this acquisition, we take an important step on our journey to create a stronger Personal Care business in North America, not the least in the U.S. We can leverage Edgewell's brick-and-mortar footprint for our Personal Care categories and we'll become an even more relevant partner for retail customers by having a broader portfolio and bigger scale. The tangible benefits that I've just now mentioned is one reason why I'm truly excited about welcoming these brands to Essity.

Another reason is the perfect strategic fit. This is our strategy for profitable growth, and you have seen it many times before, with the first two pillars being to focus on high-yielding segments and to grow in attractive geographic areas. Feminine care is definitely one of our high-yielding categories and so is, by the way, incontinence retail that will also benefit from this expanded platform. And U.S. being the world's largest hygiene market, where we currently have limited presence in personal care, is certainly an attractive geography where we would like to expand.

It is furthermore a perfect match with our M&A strategy. For those of you who joined our Capital Markets Day in Valls, you might remember our inorganic growth priorities in consumer goods: to grow in the feminine care category and to expand our U.S. presence.

Now you might wonder how we will make these brands more successful. Well, feminine care is a focus area for Essity. We know how to win and have strong positions where we choose to compete. If we look at the last 5 years, we have clearly outperformed the market with a net sales growth CAGR of around 8% to compare with a market growth of 2% to 3%. And one of the ingredients in our recipe for success is our global innovation platform with unbeatable protection and superior products, innovations that now will benefit our acquired brands.

Another ingredient is our bold and purpose-driven brand building. Combined with relevant product positioning and strong claims, we know how to cut through to consumers. Among the many other ingredients in our recipe for success, I'd like to highlight also our go-to-market expertise and, in the back end, the cost-competitive supply chain, including global scale benefits in purchasing of raw materials.

And briefly, a few quick touchdowns around the world to illustrate how we have developed the Feminine Care business in other regions. And we start now with Australia and New Zealand, where Essity acquired Asaleo Care and the Libra brand in 2021 and has since successfully gained market share and advanced to be the #1 brand.

Moving on around the world to Latin America, where we have a strong #1 position in both Mexico and Colombia. The graph that you see here shows our fantastic journey with the Saba brand in Mexico, which we can attribute to consistently applying Essity's way of working in the feminine care category. And then finally, in Europe, where we are the fastest-growing player in feminine care with strong positions in key markets. We are, for example, #1 in the Nordics and #2 in France and in the U.K.

Now over to some more details about the transaction. So over to Fredrik.

Thank you, Ulrika. And as already been said here, the purchase price on a cash and debt-free basis is USD 340 million or equivalent to about SEK 3.2 billion. The revenue, and here we're basing it on the 12 months rolling ending June 30 of 2025, was approximately USD 260 million and the operating profit is approximately USD 17 million, so roughly SEK 2.5 billion in sales and about SEK 160 million of operating profit.

We expect to complete this transaction and, of course, this is subject to customary regulatory approvals. We are not expecting any specific issues there. And we expect the transaction to close sometime during the first quarter of 2026.

Obviously, the company is a continuous business and it will continue to run as is for the time being. So there is a transaction service agreement, or TSA, with Edgewell. And this will last for up to 1 year relating to such areas as IT, HR, administration, customer service and actually also for sales. And we will gradually, over the course of 2026, take these services over.

So if we look at the financial impact. I'll bridge a little bit the EBITDA multiples on the next slide, so I'll show you some more detail. But as you can see, based on that June 30, 2025 rolling 12 months number, the EBITDA multiple is approximately 12 or just over. And if we include all the synergies on a pro forma run rate basis, then multiple is 8.3. We expect those synergies to fully materialize by the end of year 2 at the latest.

And it's worth noting here that these synergies relate to cost synergies. There are also other synergies relating to more revenue benefits coming from joining our incontinence sales in the North American market and the feminine sales of Edgewell, but we have not calculated the benefits within those multiples that you see here. So there are additional synergies that we expect to come from year 3 and thereafter.

So you're already aware of, most of you, I guess, that we have a very strong balance sheet. So as of September 30, we had an approximate leverage or net debt-to-EBITDA of 1.18 or close to 1.20. And if you now look at this acquisition as if we had done it by September 30, the pro forma number would have been 1.28. So the impact is 0.2 in net debt to EBITDA. We expect this to be neutral from an EPS perspective year 1, excluding onetime costs. Now those onetime costs are not material, so largely neutral, you can say, for the first year and then, of course, accretive from year 2 and onwards.

So if I turn to the next slide and just show you briefly the bridge. So we've based it on, as I already mentioned, June 30 rolling 12 months, approximately $17 million. And if you look at historic decrease in amortization, roughly about $10 million. And then there are smaller accounting adjustments to translate the result into IFRS with another $1 million. You get to an underlying pro forma EBITDA of approximately $28 million.

And then we have, and I already mentioned that, cost synergies. They are relating to COGS, so procurement, they are relating to admin and many other areas. And the total amount there is $13 million. We've done a lot of benchmarking versus our own cost in other parts of the group to derive at this number. And we feel very certain that we will be able to deliver this in cost synergies. And all in all pro forma $41 million, and that leads to an EBITDA multiple of 8.3.

And with those words, Sandra?

Yes. Thank you, Fredrik, for that. And thank you, Ulrika. Now we will move to Q&A. So operator, please open up for questions.

The first question comes from the line Niklas Ekman calling from DNB Carnegie.

Can I just ask about your view on the strength of this Feminine Care business? Because when I look at Edgewell's reporting, it seems like this is a business that has been struggling for quite a few years with declining sales and margins that are well below historical levels. What is your view on this? What do you view as the reason for this? And how confident are you in managing a turnaround of this business?

Well, you're totally right that sales have declined. There has been a weak development and sales have declined and profits have declined. The brands acquired are very well known. They hold #2 to #3 positions in their respective segments. And they do that and have been able to retain these positions based on a lasting brand equity despite being noncore, if I may say so, under the previous leadership or ownership. So for Essity, of course, Feminine Care is a core business, and we will give it another level of attention and our full focus. So that is the starting point.

The brands, with them being well known and trusted among women, then we have a very good base to build from. And then we have this success recipe that I talked about. We know how to win in feminine care and we will apply this to these brands. They will get the benefit of the innovations that have been successful across markets. They will get the benefits of our brand building that has been successful across markets. And that will help to revitalize the brands and thereby gain market share and grow.

Niklas, if it's possible, can I add just one thing. So when you look at the numbers, as you've seen, sales and profit has fallen as you rightly point out there. There was a very special circumstance. So during Q4 of 2024, the Edgewell Feminine Care business migrated the pads business from Stayfree to Carefree, and that migration was less successful. So there was a quite significant loss of sales at the late part of 2024 and, to a smaller degree, in the beginning of 2025.

So if you look at the year-on-year sales development, it's exactly as you say, quite a lot down, a bit over 10%, as you see. But if you actually look at it sequentially, you will have discovered that the situation has clearly stabilized. So in fact, it's not shrinking anymore. This was a result of that migration that was less successful and that has now partly been mitigated and partly reversed. So the company has now stabilized. So it looks a bit weaker than in reality it is, if that makes sense.

Very clear. Can I also just ask, when you're talking about sales synergies, is your aim to use this as a springboard to expand your existing brands into the North American market? Or are you more talking about using the existing technology and applying that to these Edgewell brands?

Well, there, we have to differentiate between the trademarks and the brand positioning. So the trademarks, of course, they have built a lot of trust and awareness in these markets. And that trust and awareness we, of course, want to build on and keep those trademarks. The brand positioning that we have that is driving how we communicate around our brands, how we drive innovation, what innovations that we put on the market in order to deliver on customer or consumer needs, that we will apply to those brands. So there is a difference between the two.

The next question comes from the line of Patrick Folan calling from Barclays.

So I understand the U.S. angle and increasing exposure in fem care. But in the fem category, what makes you believe you have the right to win in U.S. retail, I mean, considering you have a relatively small exposure there at the moment, as you said? And I get what you've done in LatAm and European fem care. But the U.S. market is quite different and very competitive, as you touched on.

And then just secondly, on the synergies within the COGS front. Can you just maybe elaborate here where in particular you'll see the benefit? Is it across raw material buying? Does it change the raw material mix much in the consumer segment?

Well, obviously, as you say, the U.S. market is competitive. But the competition that we see in the U.S. market is quite similar to what we see in other markets as well. So that competitive set is not unknown to us. I mean, if we look at Australia, we look at Europe and many other markets where we are successful, we meet the same competitors and have a lot of competitive pressure. So we believe that our -- and the consumer needs, by the way, are actually quite similar across the different mature markets.

So we believe that our recipe for success will work as well in the U.S. as it will in other markets. Then, of course, what's important in the customer-facing part is to have a broad portfolio and a scale and thereby relevance with the retailers. And by now having both Incontinence Care and Feminine Care in the U.S., we are much better placed to drive that growth across our Personal Care business.

You were asking specifically on the COGS savings. And there are two sources, I'm sure there are more, but what we have been able to very clearly quantify. And the first one relates to procurement conditions. So of course, using our scale relating to materials used for feminine products production will enable us to simply have better conditions, better terms. And the other one is relating to, and you were actually mentioning it yourself, material rationalization and those kind of projects. So those are the main two parts in the COGS side. Then we have very significant synergies also in the admin side.

Okay. And just as a follow-up, Ulrika, on your comments, I mean, in terms of volume growth, which in terms of the target you guys are focusing on over the medium term, that's obviously a key focus for you guys. So I'm just wondering how you plan to turn this around, the business that's kind of been struggling for the last few years, to get to a maybe 3% top line target considering some of the headwinds. Is that something that will be a bit more long dated? Or should we expect an immediate improvement?

Well, I think there are two aspects of that. Firstly, to your point, I mean, the market growth roughly is 2%. And we have the clear ambition to outgrow the market. And I think one effect you will get just by us having a different level of focus and attention, that one in itself will be a benefit to the business. Then when it comes to reapplying the innovations and brand building and so on, the effect of that will, of course, take a bit longer time.

The next question comes from the line of Celine Pannuti calling from JPMorgan.

My first question is probably a bit of a clarification because I think Edgewell yesterday said that for fiscal year '26, they expected the business to contribute to $35 million to $45 million in EBITDA. You are saying that with the synergy, it's $41 million. So I just want to understand whether with your $41 million there was anyway something backed up from like some form of recovery in the underlying business. And then if you can specifically talk about where are the synergies and quantify the synergies that you are seeing on top.

And then the second question in terms of understanding your -- like how you plan to turn around this business. Can you talk about the A&P spending? And once you have done this EBITDA level, how much do you need to spend on top in order to revitalize the business? And what do you think this business will need to have? What are the plans if you think about 1 to 3 years, your plans in terms of reinvestment and when the new innovation will come through?

If I start with the second question and then Fredrik can come back to the first one. I mean, that level of detail is difficult to go into at this point. But of course, we will invest in A&P in order to revitalize the brands. As I said before, it's a very good starting point because the fact that these brands have been able to keep their positions in spite of quite low attention tell something about the strength of these brands. So we have something good to build on, and we'll gradually apply our innovations and our brand building over the coming years.

Celine, on your first question, I'm actually not sure I fully understood it. But just to explain the bridge perhaps as a starting point, it is a mix of history and future, as I explained there. So the starting point, the $17 million, is the rolling 12 months up until June 30 of 2025. So that's history. And the D&A there as well as the pro forma IFRS adjustment, all of that is history. So you can say the $28 million is just what would it have been sort of EBITDA June 30 of 2025.

Now the $30 million I mentioned there or you can find in the bridge is forward looking. So this is the run rate after 2 years, so fully realized in year 3. So you can say the $41 million is a mix of history and the future. So of course, the profit in 3 years' time will be different than $41 million, obviously. So I'm not sure. I think you were referring to an estimate done by Edgewell.

Basically, Edgewell says that the impact on '26 fiscal year is $35 million to $45 million EBITDA. So I mean, that means that they're forward looking. So the $28 million would have become $35 million to $45 million for fiscal year '26. So there was already a bit of a step-up that they were planning for.

As I said, we are not providing -- as you already know here, Celine, we're not providing any forecast. So the view they're portraying there is then more a forward-looking statement for next year. And we're not doing that. We're just taking pro forma numbers for '25 and adding synergies in the future. So we're not providing a forecast for '26 and they are doing that. So it's a bit comparing apples to pears. And of course, it's of course good that they envisage a positive development for the company. So that's helpful.

Yes. Maybe can I just follow up on that? So the synergies -- because the level of profitability of that business is quite low and much lower of that of your Feminine Care business. And if I look at the $41 million EBITDA, basically, more or less, will raise that margin to the low teens level. I mean, do you think that this is the right level of profitability you can maintain, including the investment that this business needs?

When we look at Edgewell's reported margin today, it also in our view reflects an overallocation of costs. So when we apply our costs based on benchmark that we have internally, what we need to drive the feminine business, then the real profit margin is higher. It is still below what we have in total for the Essity Feminine Care business, but it's higher than what you see in the report from Edgewell.

I think, Celine, to be fair, without giving you kind of a time frame on that, we don't see a reason why this business should be weaker in performance than the rest of the business. But of course, the priority, as Ulrika very clearly alluded to, is to revitalize the brand, make sure that this business is growing. And we will do that through investing in the business with A&P.

And over time, as we grow this business and we grow scale and we kind of normalize A&P investments then, of course, over time, margins will also expand and approach those of the rest of our business. But that's, of course, for the future. So this is a long-term investment project, a very exciting one. So this is the plan. It's not immediate, of course, as we've already said here.

[Operator Instructions] The next question comes from the line of Oskar Lindstrom calling from Danske Bank.

Two questions from my side. First off, looking back a bit, back in 2022, you acquired the Knix wear business based in Canada but, I guess, operating in the U.S. as well. How does that fit into this or maybe vice versa? So that's my first question.

And then second question is, do you see this acquisition now of the Edgewell business as a platform acquisition enabling you to grow further in the wider U.S. personal care segment? Should we expect further acquisitions? Yes, the sort of strategic implications of this acquisition, those are my two questions.

Yes. I think to start with the first one, the M&A strategy and the strategy for profitable growth that we have, that remains the same. So feminine care is still an attractive category to invest in and the U.S. remains a priority market. So yes, this is a platform for further growth, organic and potentially inorganic.

Then when it comes to Knix, Knix is having a bit of a different go-to-market today. But of course, having a stronger presence and strength in the retail environment could potentially over time benefit also Knix.

Right. So just coming back to the first answer there where you talked about further acquisitions in this segment. Would that be within Feminine Care? Or do you see also that there are attractive opportunities in other Personal Care or health and medical segments in North America?

Yes. There, I mean, we have talked about the categories where we have the highest potential for profitable growth and where we have the strongest right to win. And that still holds true and that holds true for North America as well. It is Incontinence Care and Feminine Care, also Wound Care being a very attractive category together with lymphology.

The next question comes from the line of Antoine Prevot calling from Bank of America.

Just coming back on the run rate synergies of USD 30 million over the coming years. And as you said, there will be needs or reinvestments. So within this USD 30 million, I mean, what level of reinvestment rate should we be thinking about maybe?

And then second one, on the gross margin level for this business, I mean, is there a major difference compared to your Feminine Care business that you have right now?

Antoine, could you repeat the -- I actually didn't get the first question, sorry about that. The sound was a little bit bad.

Sorry. No, just on the USD 30 million run rate synergies, as you said, there will be need of reinvestments. So within this USD 30 million, I mean, what level of reinvestment rate should we be thinking about maybe?

Yes. So if I understand it, of the USD 30 million in synergies, how much of that are we going to reinvest. Is that what you're asking?

Exactly.

And so we haven't actually defined or stated that specifically. I think, Ulrika, maybe you should comment. But the aim is, of course, to invest sufficient funds in A&P and in other ways including new products, et cetera, to make sure that we get the growth to an attractive level.

And as we get that growth and enhance, grow our sales, then margins will over time come up and, in the longer perspective, of course, approach, the rest of our feminine business. So that's the plan. We haven't given any specific number. But I'm not sure if you want to comment more, Ulrika.

No, I don't have anything to add. I would answer the exact same way.

your gross profit margin question, whether this is lower or higher, and the answer is that it's currently lower in gross profit than the rest of our feminine business. And this is partly -- there are many things, I think, partly a cost issue and a scale issue. And of course, we will, over time, make sure that, as we've already said, gross profit or margins over time will improve.

[Operator Instructions] The next question comes from the line of Diana Gomes calling from Bloomberg Intelligence.

Very exciting transaction here. I'm just wondering if you could share some of your thoughts around the fact that some of these iconic brands that you are acquiring in North America also play a very important role around the world, but they are owned by another company. So just thinking, it's less clear cut in that sense. And the brands travel. So are there thoughts in terms of how the brands' global perception is in terms of consistency, of image, communication and quality outside North America? Just some thoughts there would be quite helpful.

Yes. Thank you. And you are right. Of course, there could be implications of how brands are driven and positioned in other parts of the world. But I think the overarching aspect is how they are perceived and how they are positioned within that market. And here, we have the freedom to position the brand and drive the brand credentials that we see fit for them. And that is what's important to us.

We have another follow-up question from Celine Pannuti from JPMorgan.

My question is on Feminine Care. I think you made the point how successful you've been in running these businesses in Latin America, in Australia, in Europe. But I would say, there, you also have a quite strong footprint, if I think about the Nordics or France.

My question is, what is your assessment of the competitive landscape in the U.S. where obviously you have two major competitors who have big exposure and big muscle to the overall retail space? I think like you -- obviously, you have a recipe for success in terms of innovation and brand building. But if you could talk about how your assessment of that programmatic as you were looking into this acquisition?

Yes. I think there, we could actually look at our Incontinence Care business where we are growing in spite of having a low market share and one category with retailers since we have a differentiated position and are seen as adding value to the category. We still can drive a very strong growth.

And now I don't remember the exact numbers, but I believe it was 21% growth in inco in U.S. retail in Q3. And I think that is proof that, of course, the scale and the broad portfolio helps, but it's not an absolute necessity. And with having now two brands in the portfolio or several brands in the portfolio -- two categories in the portfolio, that would improve our probability of success with the retailers.

But can you talk specifically how you see the competitive dynamic in the category in the U.S.?

Do you have any specifics in mind? I think the...

Well, I think that you have two big competitors. And so whether as you, like, obviously, it's a brand that -- those brands that you acquired need to be revitalized, and you talked about your ability to build brands and as well to come with innovation. But at the same time, you are facing with, yes, two major players with entry in the retail and across many categories.

As I said there, I think, of course, it is a benefit to have scale and portfolio, but that is what we're building. And also, we have proven with incontinence retail that we can drive growth and revitalize the brand and drive growth also with fewer categories in our portfolio.

Then when it comes to the competitive set, we have one market leader and then the second player is Edgewell -- a shared second player is Edgewell, where Edgewell is a clear #2 in panty liners and a shared #2 basically in tampons and then #3 in pads. And that is a strong position as a starting point for us.

So then, of course, there are some new entrants into the category as well, as can be expected. So the competitive set is not that different from many other markets that we compete in. Of course, we have respect for this being a very competitive market, but we also believe in our success recipe.

The next question comes from the line of Misha Omanadze calling from BNP Paribas.

I have just one. Do you think that this acquisition will be accretive to your top line growth in the coming years? You mentioned that it will be earnings accretive, but do you believe it will be accretive to your growth profile? And if yes, when do you expect it to be the case?

Well, the market growth is 2%, and we aim to outgrow the market, meaning that we should be at least on 3% in growth. And you know our financial targets being to be 3% in organic growth. So of course, that depends on how fast we progress towards our financial targets in the rest of the business.

Ladies and gentlemen, there are no further questions in the queue. So I will hand it back to your host to conclude today's conference. Thank you.

Thank you, and thank you for all the questions. Now it's time to wrap up. But before we end, I would like to hand over to Ulrika again for a summary.

Yes. Thank you, Sandra. So let's summarize what we achieved through this acquisition. We expand our presence in North America by acquiring a feminine care business, feminine care being a category where we have a proven recipe for success, as I now have said a number of times. We are acquiring well-known brands with high potential for further expansion, and we're all adding scale and synergies to our existing North America Personal Care platform. This move, focusing on high-yielding categories in attractive geographies, is perfectly aligned with our strategy to drive profitable growth and to create value.

So with that, I say thank you.

Yes. Thank you, Ulrika, and thank you to our audience for listening in today. If you have any further questions, you know where to find us. We wish you a good rest of the day. Bye.

Good morning. Welcome to Essity's presentation of the Q3 results. We will start with an overview of the financial highlights and the business highlights and Ulrika will present the business highlights. Following that, we will have a session with our CFO, who will take us through the financials. Ulrika will then present the initiatives that we announced this morning, initiatives launched to accelerate Essity's profitable growth. We will, as usual, end today with a Q&A session where you have the possibility to engage directly with us. [Operator Instructions] With that, let's dive into the quarterly performance. Ulrika, over to you.

Thank you, Sandra, and welcome also from my side to this presentation of Essity's Q3 results. And to summarize the quarter, we continue to deliver positive organic sales growth. We also strengthened our profit margins. We delivered a strong cash flow and a result above SEK 5 billion. Price, volume and mix all contributed to the 0.9% organic sales growth, with price being the most significant contributor. And we had organic sales growth in all our 3 business areas. Once again, we delivered record high gross profit margins and this quarter, it flowed through down to the bottom line.

So the call to action that we had in July to pull the brakes on our SG&A cost development really made a difference. And we ended up at a profit margin of 14.6%. Setting aside the quarterly results now for a moment. This quarter has also been about how to set ourselves up for future success.

As I shared in the Q2 webcast in my -- during my first month in this new role, I have done an extensive review of the business. And then together with the leadership team worked on what to change, what to improve, what to prioritize in order to accelerate our progress towards our financial targets and towards our vision.

As a result of that, I am today launching 2 initiatives, that will improve our performance. The first one is the reorganization designed to sharpen our focus to become more fast and also more agile. And related to that, the second one, a cost-saving program that will reduce our organizational costs. More about that later, but let's now dive into the Q3 results, and we start with Health and Medical. Q3 now, for '25, marks the 18th consecutive quarter of growth for our Medical Solutions business. We are growing across the 3 therapy areas; Wound Care, Compression Therapy and Orthopedics.

And what is very important for future growth and profitable growth in the medical categories is innovation. That plays a key role. There are still so many unmet needs, both for healthcare as well as for patients and consumers to innovate on. One example is for people with wrist fractures. Today, it's difficult for them to keep up with hygiene and keep up with the daily activities of lives with wrist braces that exist commonly in the marketplace.

And with the launch of Actimove Manus Air, we are solving that problem. This wrist brace that you see now on the page here has a lot of advantages. It's water resistant so that you can wash your hands. It's food-grade resistant so that you can cook and keep up hygiene. It doesn't restrain the movements of the fingers and the hands, so you can keep on working if you work by the computer. Also, it has an open design. So if you're a health care professional, you can inspect the wound and change wound dressings with the brace on -- and all of this, while providing that stabilization that is needed in order to heal in a fast way. So certainly, this innovation is a very good addition to our offer in Orthopedics.

Then if we move to incontinence care in health care, also in Incontinence Care, we were growing sales and volumes in the quarter. You might remember last quarter, then I talked about the challenging market conditions that we had in some markets, and that is still the case. However, we have very strong underlying growth in many other markets that is compensating for this. And in times where health care funding is under pressure, it's even more relevant to have products and solutions that are saving time for caregivers.

And with the launch that we had this quarter with TENA, a new product concept, we are addressing exactly that. The TENA Pro skin stretch day and night is a unique product concept that we have put to market now that makes it easier to put on and take off the product. When it's in a closed fashion, then it is just as a TENA pant, you can pull it up and down just like normal underwear, making it easy for the wearer to use the product.

The challenge with the pant though is that it's not so easy for a caregiver to apply the product. And this one is reopenable. You can open and close it, and that means that the caregiver can also very easily apply the incontinence protection. And that saves time for the caregiver.

Now this is not the only impactful innovation that we are launching in the quarter. We're also launching a new product in the lighter range of our assortment, and that is the TENA Discreet Ultra. It's a very discrete product, super discrete to wear, yet it does not compromise on the superior TENA protection. And why is it then important to have a superior product in this part of the assortment? Well, this is where we attract consumers where we bring consumers into the category.

And we, of course, want the women to experience the first little leaks to choose purpose-made products and to choose TENA as their purpose-made products. And many consumers do that. They choose TENA. And we see that because our incontinence sales in retail is continuing to grow at a very good rate. This is especially true for the U.S. And if you might remember that in U.S., we are investing to grow, and those investments are paying off. So in the quarter, we could enjoy a 21% growth of incontinence in U.S. retail.

In Feminine Care, we're also continuing to grow in a very good way with high growth rates. Here, Mexico is an important market for us. We are clear market leaders, and we will continue to strengthen our position in Mexico by launching a new night product, SABA Noches. And also here, it's a very important segment to be superior in because not only do we provide a good night sleep for the wearer, but also it's a quality stamp for the brand.

So as you can hear, we are continuing to grow strongly in the 2 higher yielding categories in consumer goods. So Feminine Care and Incontinence Care. On the other hand, in Consumer Tissue and in baby, we are declining. In Consumer Tissue, we are suffering in the branded sales from the weaker consumer sentiment. And also, we see a price competitiveness increasing across the consumer tissue business.

The good news is that if we look at Mexico, we are growing very well in our Regio brand during the quarter. And also now we are really gearing up for the sneezing season making sure that we have the right hankers in the shelf to be ready for the sales boost that will come during the next quarter.

And also, we continue with our efforts to have a high promotional pressure and to focus a lot on the value segment so that we can fuel growth in Consumer Tissue. Then what about baby? Well, you all know that we have had a period where we have had declining volumes on the back of lower birth rates and also very intense competition. We're still declining in baby, but we have improved.

In the quarter, we turned around Libero in the Nordics big time. We had the actions of higher frequency rate, of promotions, of a limited edition. I was going to say that is called Wildlife that you see on the picture here and also stronger marketing campaigns. And all of that paid off. So the Libero consumers have found their way back to their brand.

Another category where we can report a big improvement is in Professional Hygiene. Also here, we continue to see a challenging market situation, of the least in the U.S. in the HoReCa channel. However, we are improving volume sequentially in Professional Hygiene. And that is thanks to the activities that we have done with selective price adjustments and also more focus on the value segment that we talked about last time.

What's also very good to see is that we continue to grow our premium products, so our strategic segments as we did also previous quarter. This is, of course, very important for us short term, but it's also important to fuel future profitable growth. And speaking about that, what's super important to fuel future profitable growth is that we are -- really have strong relationships with our customers.

What's happening right now in the customer landscape in Professional Hygiene is that a lot of our distributors are consolidating. And then it's even more important than ever to be the preferred supplier. And therefore, it's so nice to see that one of our customers, Impacts, have this quarter named as the best supplier.

And with that positive news, I hand over to our CFO, Fredrik Rystedt.

Thank you so much, Ulrika, and I will give a little bit of numbers background to what Ulrika just mentioned here. So I'll start with our sales. And as you've already heard, we are continuing to grow organically with 0.9%, so just under 1%. Now if you look at the absolute sales number, it is down by 4.5%. But of course, this is just due to the fact that the Swedish kroner is strengthening.

So if you actually look at our sales in constant currency, we actually grew with a bit over SEK 300 million. So it's basically currency impact. So turning a bit back to the organic sales growth of 1%. As you see, the volume growth was 0.2%. And this is exactly what it was also in Q2 and similar to what it was also in Q1.

So we've had this volume growth level now for a few quarters. It is, however, a bit different. And so you remember perhaps that we have struggled a bit with professional hygiene with baby and degree also with Inco Health Care. And those have all 3 improved this quarter. But on the other hand, that improvement has been partly offset by lower volume development in consumer tissue. So it is a bit different. We are happy to see the improvement in those areas that I mentioned.

So to give you a little bit more flavor, if we start with Health and Medical, generally speaking, volumes picked up actually. So it is still challenging when it comes to Inco Health Care markets in general. But despite that fact, a bit as we expected, we have picked up volumes and it looks clearly a bit better at this point of time. Medical continues to grow, especially in the wound care, and we've seen that growth for so many quarters now. So it's a very, very good and continuous development for medical in general. It's wound care as I said, but it's also this quarter, actually a lot in compression. So good development overall in the volume sense.

Now if I go then to consumer goods, geographically, we are growing everywhere when it comes to incontinence and feminine. So it continues with strong growth in both of those areas. Ulrika mentioned earlier that baby is looking a bit better. And of course, this is due to a much better performance in our Nordic branded area with Libero. So we've taken market shares there. It's still challenging on the European market for the retail branded European market for baby and that will also remain for a few quarters to come, most likely, but it's looking a lot better.

So you may remember that we had a volume decline of about 4.5% or in that vicinity, volume decline in baby in Q2 and a similar decline also in Q1. And this quarter, it's been about 1% decline. So it looks clearly better. On the other hand, as we have already talked about here, Consumer Tissue is a bit more down, negative growth, and this is because we have prioritized margin rather than growth in volume. And we do continue to see actually a down trading in that market. So volume is not so good in consumer tissue.

Finally, Professional Hygiene, looking a lot better, and the volume decline is still there, it's minus 1% roughly. And of course, that's a lot better than what we saw in Q1 and Q2. So clearly, looking better. As before, it is a base assortment that is declining and the premium products or strategic products as we sometimes call them, dispensary base is continuing to do quite well in terms of growth.

So overall, mix is actually continuing to behave very, very well in professional hygiene. So turning a bit to price and mix. As you see, 0.7%, this is basically most of it actually related to price. And you can see from the slide here that Consumer Goods and Professional Hygiene, both performing well in terms of price performance. And Health and Medical is slightly down. This is all actually Inco. So this is selective price declines that we have -- that we have done. We did talk and Ulrika mentioned it earlier that we also have sequentially a little bit lower prices in professional hygiene. This is deliberate.

We wanted to -- on top of expanding our value offering in Professional Hygiene, we also wanted to grow more generally by selective price decreases. So if you look at just sequential price decreases, we also see a little bit of that in Professional Hygiene, deliberate. So that's pretty much it on the volume and an organic sales side.

So turning to our margin, that is improving both sequentially and year-on-year. So if we look at -- decompose the year-on-year improvement, you can see that a lot of is coming, of course, from the gross profit margin. And most of it, as we've already talked about, relating to obviously price to a smaller degree on mix and volume, but it's -- a lot of it is price. We also actually have a positive development in our COGS. And this is no surprise.

Raw material is performing better, and so is energy. And -- but we also have other cost items there. One thing that we have talked about a lot is, of course, the savings that we do. In this particular quarter, we had about [ 115 ] or so in savings, which we were happy about. Generally speaking, it has been a tough year when it comes to saving in COGS. And we still aspire to reach our annual target range of about EUR 50 million to EUR 100 million. We're not there. We aspire to get into that range for the full year, but it is challenging, and this is, of course, due to the relatively low volume development that we have in our production. So that makes it a bit more challenging to get to our target range.

A&P, not surprising. We've increased the absolute spending level and also as a percentage of sales. And this is a profitable proposition. We know that the return of A&P spend is attractive. So this is why we do that. We talked a lot about SG&A previously, and we've also announced measures to actually -- to make the growth rate become much lower. And there has been a lot of success there.

So clearly, when you look at our SG&A development, is much better now than we have seen in the previous quarters. The growth in particularly IT and personnel cost is lower now. Let me just point out, though, that there is a portion -- a smaller portion, I should say, of the improvement that relates to lower bonus provisions. So the improvement is not as strong as you see here, there is a smaller portion that is due to that. But I'll come back to the future in a second. But generally speaking, if you disregard that, underlying performance of SG&A is much lower than the inflation rate. So the measures we've taken have clearly paid off.

Now finally, there's a bit of other here. This is just a one-off in last year actually. We had an insurance payments last year and we didn't have it this year. So that's the final part. So overall, a very, very good quarter, I should say for the group in terms of margin. And basically, you can see year-on-year, that health and medical and professional hygiene are still slightly down and consumer goods up. But if you look at it sequentially, which we're happy about, both Health and Medical and Professional Hygiene have turned a little bit and actually now improved. So all in all, a good margin development.

Turning to cash flow, a bit -- just some short comments, generally speaking, quite a good quarter, both in terms of underlying cash generation, but also in terms of working capital. We were not so happy about working capital in the second quarter, much better looking this quarter. So when you look at accounts receivables or accounts payables in working capital, the days are roughly about the same. It's still a bit too high when it comes to inventory. We are working our way down to that. So hopefully, we'll see a good development in working capital also as we go forward.

And finally, the balance sheet as a consequence of that strong cash flow generation. We have been able to, in comparison to the 6 months balance sheet, we have been able to reduce our net debt with about SEK 3 billion or so, and of course, our net debt-to-EBITDA ratio is now down to SEK 1.2 billion. I think this is a good -- perhaps opportunity to give you a little bit about the flavor for what we expect for Q4. I mean, again, we don't give that much of forecast, but let me just give you a little bit. Strating with COGS. Perhaps, we expect to -- that COGS will actually, from a year-on-year -- compared to Q4 of 2024, we expect COGS to be lower this quarter coming up in '25. And the reason is mainly driven by input cost or and particularly so [indiscernible] cost.

So we expect COGS to be lower. When it comes to A&P, we also -- we expect it to be flat to higher compared to last year. So Q4 versus Q4, we expect to spend more in A&P. As I said, this is a good return on those investments. And finally, when it comes to SG&A, this is worth mentioning that we will have, also in comparison Q4-Q4, a fairly low growth rate. So clearly, we will retain that lower growth rate than we've had in the previous year. But just worth noting that from a sequential standpoint, Q4 SG&A, excluding A&P is always much higher. So sequentially, you should expect higher cost but year-on-year, a quite a low growth rate.

So finally, I guess, just a reminder, perhaps, we have our financial targets. They remain intact. So more than 3% in organic sales growth and more than 15% in EBIT margin, excluding items affecting comparability. As you know, as you've seen here in Q3, we're close to our margin target. And of course, we got some work to do when it comes to our annual organic sales growth. And that, Ulrika, I guess, you will talk more about.

Yes. Thank you, Fredrik. So question then, of course, is how to deliver on those financial targets. And you all know this, but I think it's worth repeating. We will deliver on our targets by prioritizing the categories segments, market and channel combinations that has the highest potential for profitable growth and where we have a clear right to win. We will deliver on our financial targets, not the least by delivering differentiated innovations that are driving market share development and pricing power. Also by having the most effective and efficient go-to-market. It should be easy to do business with Essity.

Also to really find efficiency savings across our full value chain and not the least to continue to grow our people and to continue to build that winning culture that we have. Now I've said before that this strategy is highly relevant and is something that we continue to execute on. My focus has been how do we accelerate the execution on this strategy because I see significant potential for us to fuel growth and improve our performance. For example, we could unlock the full potential of our portfolio by sharpening our focus on the most attractive categories and segments.

Also, I see opportunities for unleashing the full power of our organization by creating more end-to-end accountabilities, by decentralizing decision-making and reducing our operational complexity in the organization. And we could, by freeing up resources to reinvest in A&P and in our growth initiatives, we could become -- drive profitable growth more forcefully and also be more competitive. And those are the reasons why we are now then launching 2 initiatives.

The first one is the reorganization to become faster, to become more agile and also to sharpen our focus. What we will do is that we will create 4 new business units that are global and based on our product categories. They will have the full P&L responsibility and also have the end-to-end accountability, and that is what is different from before.

Those 4 business units will be Health and Medical, Personal Care, Consumer Tissue and Professional Hygiene. And consequently, we will start reporting financially in these segments as from 1st of January, 2026. Now the benefits with doing this is that we are decentralizing decision-making. We are cutting out duplication, and we are becoming more consumer and customer-centric. And by that, we will be faster in our decisions, we will be faster in our execution, and we will be faster in responding to evolving consumer and customer needs.

We will furthermore sharpen our focus then on the most attractive categories and segments. Now what I've explained now is how this organization will become more effective, but it will also drive efficiencies since we are simplifying the structure. And those efficiency gains is the key component of the cost saving program that we're also launching. And this cost-saving program is expected to generate a saving of SEK 1 billion and had full effect in the run rate by end of 2026. It's primarily SG&A we're talking about, and that is on top of the COGS saving program that we have that Fredrik was alluding to before, and that is generating SEK 0.5 billion to SEK 1 billion annually.

Market A&P, so market investments are excluded. In fact, it's important that we maintain -- at least maintain both A&P as well as R&D investments in order to fuel growth. And we want to reinvest the savings that we generate into our growth opportunities in higher-yielding areas where we also have a proven track record of high return on investments.

So with these 2 measures, we will unleash the full power of the organization, we will free up resources that we can invest in profitable growth, and we will unlock the full potential of Essity's product portfolio.

Now let's summarize the quarter before we move into Q&A. In the quarter, as you have heard, we delivered positive organic sales growth. We strengthened our profit margins, had a good cash flow and delivered a profit above SEK 5 billion. We also launched 2 measures to improve performance and fuel growth. And needless to say, looking forward now, 2 of our key priorities will be to implement this organizational change as well as to achieve the SG&A and COGS savings that we have been talking about. In parallel with that, of course, a priority is for us to continue with our efforts to drive volume growth and profitable volume growth in a challenging market environment with the ambition to perform while we transform. Thank you.

Thank you, Ulrika, and thank you, Fredrik. We will now move into questions.

[Operator Instructions]

And please try to limit your questions to one at a time because that will give Ulrika and Fredrik, the possibility to give you the best answers. Are you ready to start with the questions?

Yes.

So let's move into questions. So we have a first question from Aron Adamski.

Sandra, Ulrika, Fredrik. My first question is on the divergence between lower COGS picture and the prices which are higher. In that context, it would be great to hear why your expectations for pricing across your biggest categories over the next couple of quarters? And also, are you currently seeing any pressures from retailers to roll back prices or maybe the competitive pressures accelerating?

If I start, I could say that, as I mentioned, when it comes to Consumer Tissue, there is a high price competition across that business. And of course, also in other parts of our business, it's a high price competition. And we always look at ways to balance, of course, volume growth with having a good pricing performance. We've talked before in Q2, but also this quarter about the selective price adjustments that we do in Professional Hygiene, which is to fuel growth and to adapt to the market situation that we have there. Anything you want to add, Fredrik?

No, not really. I mean we didn't specifically talk about sequential price movement now in our presentation here, but we've seen a bit of price decline sequentially in Inco Health Care and Professional Hygiene and baby as you alluded to, and these are deliberate basically. I think it's fair to say -- we also saw a very, very tiny price sequential decline in Consumer Tissue. And exactly as you say that, of course, there is more room for that potentially when [indiscernible] comes down even further. But again, it's very difficult to discount. We always try to maintain a very solid price management. So it's difficult to comment in advance.

I hope that answered your question, Aron, did it?

Yes.

Thank you, Aron. So now it's time for Oskar Lindstrom, Danske Bank.

Good morning. A couple of questions from me. First off, on the cost savings. Of the SEK 1 billion, how much should we expect to sort of drop down to the bottom line or to EBIT? And how much will be reinvested in increased A&P spending. That's my first question. Should I go on with the other?

No. Let me answer that one first because as I said, primarily, we are going to reinvest that saving into profitable growth. And then you will see the effect on margin as we grow volumes and then we'll have the operating leverage of margin.

Right, and about the timing here, should we expect the sort of reinvestment into A&P then to sort of come at the same time as the cost savings are being implemented or before? Or what's the timing going to look like? Essentially, what I'm looking for is, is this going to have a positive and negative impact on EBIT margins during 2026.

If I start with the way we will work with this is that as the savings materialize, we will then have freed up resources that we can reinvest. So it will coincide to a big extent. Fredrik, do you want to comment on margin development in light of that?

No. I think one thing, Oskar, maybe just to remind you, is that we've always said that what will bring our margins higher is basically operating leverage, so it's volume. So what we are now doing is using the freed up -- as Ulrika just said, we are using the funds that we free up to fuel volume growth, and that volume growth in its turn will enhance margin. That's the plan. So it's not our intention to boost, if you say, the margin with the cost saving program, but rather to reinvest it as the savings occur. Does that make sense?

Yes, thank you. And just a final question on the sort of balance between lower-end private label and your own branded or higher-end branded product. I mean a lot of other consumer segments have seen this deteriorating from the producer's perspective in that consumers are down traded and you've also mentioned this during the past -- how is that developing? Are you seeing any -- is it worsening the same signs of an improvement?

It's -- I would say, if we talk -- I mean we're talking consumer tissue, it's pretty much the same. I mean we see that there is a down trading, and that is what we see in our branded business is declining and the private label market is increasing. And I don't see any major movements. It's quite similar to what it's been.

Thank you, Oskar, for your questions. [Operator Instructions] And as I can see, Patrick Folan from Barclays, you have a question.

I just joined some -- sorry, from repeating question already asked, but 2 for me. On health and medical, can you maybe walk through any kind of contracts that were gained or lost during the period? And maybe how you see kind of the outlook for the segments you're considering your experience there? And maybe more specifically kind of looking at the reorganization and the change in structure, I mean what was behind the decision to strip out personal care and tissue from the Consumer Goods unit? Is there more focus trying to go into certain segments? Or is it just trying to have more disciplined cost strategy in terms of how you allocate resources?

Thank you, Patrick, if I start with the first question, I think if you look at Health & Medical, it's a lot of contracts, especially on the medical side, but also on the Inco side, it's a lot of contracts. So we don't necessarily talk about all those individual contracts and what we have gained and lost and so on over time. I think in the Incontinence Care, health care arena, it's quite stable when it comes to our contract base. And in Health and Medical, as you can see, we are continuing to grow.

So we are growing with new contracts and taking new business as well as with growth within those contracts that we have. Then if we move to the organization, there is the intention, as you heard me -- or maybe you didn't hear explain, you said you came on a bit late.

But we want to create this end-to-end accountability. And to do so, we want to work then with the different product categories more separated because then that allows us to have that end-to-end accountability with the business unit and the one P&L responsible is responsible for innovation, marketing, supply chain and sales. So that is one reason. Another reason is that it allows us to focus on the most attractive categories and segments.

Both that Personal Care comes more in the limelight, and that will drive performance and focus on Personal Care, but also in Consumer Tissue, it allows us to focus more on the most attractive segments within that category. And then I would say thirdly is that Personal Care and Consumer Tissue, our businesses that have quite different character. And by running them separately, we can optimize the way we work based on the specific business drivers in those 2 businesses.

Okay. Clear. And just a follow-up on that. In terms of the benchmarking exercise, for the SG&A kind of cost program. How did you guys arrive at that kind of SEK 1 billion number, I suppose?

Maybe I can try and answer that, Patrick. So 2 things. We looked at the reorganization if we start in that end and we looked at what kind of savings potential, that organizational change actually brought with it. So that was a starting point. We also looked at our other buckets of SG&A, and we looked at where we could optimize that spend.

So as an example, our IT spend as we go forward, you will perhaps remember that we've had a very, very significant increase of our IT spending for various reasons over the course of a couple of years. We now feel it's appropriate to actually reduce that as an example. So there are many different things that has gone into that analysis. But the main part is actually related to the reorganization that we have described here today.

Thank you, Patrick. I hope you have your answers to your questions now. Then we will move to Niklas Ekman, DNB Carnegie.

Can I ask you about use of funds because you are now generating cash flow in the range of SEK 12 million, maybe SEK 13 billion, you have dividends that are slightly below SEK 6 billion and buybacks of SEK 3 billion. So you're essentially now improving your balance sheet significantly. Can you elaborate a little bit about -- on your thoughts here on M&A potential? Are you saving for future M&A potential? Is there scope to increase either the dividends or buybacks? Or what's your thoughts here on the use of funds?

Well, if we start with the dividends, we stay with our policy to increase our dividends over a year and stay true to that. Then we see buybacks as a recurring way to allocate capital so that we will continue with as well. Then the good thing is that we have, as you say, a strong balance sheet. So we can both invest in organic growth and deleverage, and we can have the funds to invest in an M&A, should we find something that is value creating.

And just how is that market now and the potential for you to do M&A and also considering the valuation of your own shares at the moment?

Well, I think we talked about that last quarter as well, right, that, of course, we want to be careful in making sure that our M&As that we potentially do are value creating. And then there has to be the synergies to bridge that gap between the valuation of a potential acquisition and our own valuation.

Very clear. Can I also ask about U.S. tariffs? That was not a big, but still an issue in the Q2 results. What is it looking like now? How is it impacting you?

Maybe I can take that, Niklas. We've had this quarter, Q3, SEK 110 million roughly and we are looking at a lower number, about SEK 70 million in Q4. And the reason between -- the difference between these numbers is simply that the Canadian government has actually taken out the tariffs on our exports from the U.S. to Canada. So this is the difference. So as I said, Q3, SEK 110 million, roughly about SEK 70 million in Q4.

The next question comes from Antoine Prevot, Bank of America.

A question from me on Latin America, I mean, continue to be strong compared to, I mean, maybe some of the part of Staples, which have been a bit weaker there. Anything specific you want to flag? Is it you mainly continue to gain market share there? And do you expect that to continue in the coming quarters?

I don't know want to necessarily comment on the coming quarters because we don't know how that will play out. But what we can say is that we are doing well in what is a quite challenging market now in Latin America, where the consumer sentiment is changing and so on, but we are growing very nicely. We talked earlier now this morning about the feminine brands, for example, that is doing very well. And also in our Consumer Tissue business, we are growing in, for example, Mexico. Also, our incontinence business is growing very well in Latin America. So overall, it's looking good for us in Latin America.

Perfect. Just to follow up. I mean, it's more like innovations led to that market share? Or is there something else there?

Can you repeat, sorry? Antoine, can you repeat your question?

Yes, sorry. Is it just -- what's driving these different strong performance in North America in the different categories you defined? Have you launched new product there? Or what has been kind of like backing that?

It's a combination as in many cases. If we look at Consumer Tissue, it's been -- we've had quite good promotional season that has helped to boost growth in that category specifically. In feminine, as I shared, we have a new launch, and we have a very strong offer that we continue to invest behind, and we get the payoff from those investments. So -- but in most cases, it's a combination of really marketing our attractive offer, adding on new innovations and upgrades to fuel growth and then also promotions.

Let's now move to Charles Eden, UBS.

Just wanted to clarify your comments because I think there is perhaps an incorrect interpretation this morning, looking at how the share price has developed during the call. You said the cost savings are not going to improve the margin of the group, which one could conclude means your cost of business is going up and that you need to spend more just to stand still. Am I correct?

What you're trying to say is you will reinvest these SEK 1 billion cost savings into the business with the aim of driving superior volume growth and market share gains. And then these factors should contribute to stronger margins over time as opposed to just trying to cut cost to drive the margin improvement? Is that the right way to look at it? Maybe that's been misinterpreted.

Exactly.

Because I think people have sort of interpreted you saying we need to spend more just to stay where we are on the margins and that's not what you're trying to say, right? You're trying to say, look, we want to drive it through market share gains to push the margin higher rather than we have to spend more to stand still.

Exactly.

Thanks for the clarification.

Thank you for clarifying for us. Very helpful.

Then I think that we have another question from Aron Adamski, Goldman Sachs. Is that right, Aron?

I have 2 very quick follow-ups. Firstly, on Baby Care. I think clearly, the business performance improved sequentially, but it's still below the midterm outlook that I think you laid out at the CMD last year. I was just wondering, since your targets were formed initially, do you think there has been any fundamental shift in the category fundamentals, specifically in Europe that could perhaps make the initial goals more difficult to achieve in the longer term?

And then the second follow-up is very quick, just on Consumer Tissue and sorry, if you mentioned this already. How is your private label business performing both on volume and pricing. Is that still a significantly accretive part to this category?

If I start with the first one, I'm not so sure, but the time horizon here what we are referring to. But generally speaking, I could say that we do see the lower birth rates and that is something that continues to develop. That has an impact on the fundamentals of the category.

When it comes to weaker climate that we see and that some consumers are more price sensitive, that is more of a temporary situation. So that we expect to change over time. Then with the private label division, I mean that is still a value-creating part of our business, even if we now have lower -- we have lower volumes in that business in the third quarter. As we said, it's a high price competition in this category.

And there, we mentioned it earlier, Antoine, that we have maintained a margin protective stance a bit. So we have been eager to do that. And of course, with high price competition, it is a bit challenging on the volume side. But once again, this is more, you can say, normal fluctuations in that business. So nothing dramatic.

So I think that we are out of questions. So do we have any more questions? [Operator Instructions] No, I think we're out of questions. That means that we can wrap up. Any closing remarks, Ulrika, before we end?