October 26, 2017 / 6:59 AM / a year ago

UPDATE 2-Essity Q3 core profit beats expectations despite jump in pulp costs

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STOCKHOLM, Oct 26 (Reuters) - Hygiene products group Essity posted on Thursday a slightly bigger than expected rise in quarterly core profit and returned to comparable sales growth despite a jump in raw material costs, sending its shares higher.

* The earnings report is Essity’s second as a stand-alone company following the split of Swedish SCA in June into Essity and the forest and forest products company SCA

* Q3 operating profit before amortisation and one-off items grew 10 pct from a year ago to 3.43 bln SEK ($418.3 mln) vs a Reuters poll forecast of 3.34 bln

* Profit was boosted by recently acquired German medical technology firm BSN Medical, higher volumes, cost savings and exits from underperforming markets. Lower prices and higher costs for raw material costs, pulp in particular, weighed

* Essity had warned in July that raw material costs would be significantly higher in Q3 and that it would be difficult to mitigate that

* Excluding currency effects and BSN Medical, core profit fell 1 pct

* Shares rose 6.5 pct at 0737 GMT, reducing a debut-to-date fall to 3.3 pct

* Q3 organic growth was 1.8 pct, below a target of above 3 pct but up from a 0.1 pct decline in Q2. Organic sales in emerging markets grew 6.8 pct while in mature markets they shrank 0.8 pct

* Essity’s products range from incontinence, feminine care and baby diapers to napkins and toilet paper in around 150 markets. The group is market leader in incontinence products with the brand TENA, and in professional hygiene with Tork

* It has the bulk of business in Europe though it is looking to grow faster in emerging markets. Rivals include Procter & Gamble and Kimberly-Clark

* Essity said the global market for hygiene and health products remained challenging

($1 = 8.2003 Swedish crowns)

Reporting By Anna Ringstrom; editing by Niklas Pollard and Johannes Hellstrom

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