April 23, 2020 / 11:02 AM / a month ago

Essity's first-quarter toilet paper sales on a roll but says growth could slow

STOCKHOLM (Reuters) - Sweden’s Essity (ESSITYb.ST) on Thursday warned that bulk buying of toilet paper and other products which boosted its first- quarter profit could slow sales growth ahead.

Lockdowns will also reduce buying by businesses, it said.

It reported a 67% jump in first-quarter operating profit before amortisation and items affecting comparability to 5.33 billion crowns ($528 million), in line with a preliminary reading published on April 14.

Organic sales grew 8% including a March jump of 20%, it said, but its shares were down 4% at 0800 GMT following its earnings statement and outlook.

Essity said in March it had boosted output to beyond its normal full capacity to cope with higher demand for most of its products, especially toilet paper.

“Sales in future quarters will be adversely impacted by the stockpiling seen in March and sales in Professional Hygiene will also be negatively impacted by reduced travel, fewer restaurant visits and more people working from home,” it said on Thursday.

Longer term the pandemic may lead to increased demand for hygiene and health products due to, for example, a greater focus on hand hygiene, it said.

FILE PHOTO: Essity products are seen on display at the venue of a presentation to investors by the hygiene product company in Stockholm, Sweden May 23, 2019. REUTERS/Anna Ringstrom

Essity is the world’s second-biggest maker of consumer tissue such as toilet paper and handkerchiefs with brands such as Lotus, Edet, Tempo and Vinda. It is the global leader in hygiene products for businesses under the Tork brand, and in incontinence products with TENA.

The company, which competes with Procter & Gamble (PG.N) and Kimberly-Clark (KMB.N), said the pandemic and measures to contain it meant uncertainty about future earnings.

Procter & Gamble last week reported forecast-beating quarterly profits helped by a jump in demand for hand soap, antibacterial spray and detergents. Sales at units that make paper towels, tampons, toilet paper and diapers rose between 6% and 8%.

Reporting by Anna Ringstrom; editing by Robert Birsel and Jason Neely

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