January 31, 2019 / 7:58 AM / 4 months ago

UPDATE 1-Sweden's Essity rides price hikes, cost cuts to Q4 profit beat

(Adds analyst comment, company comment, background, detail)

STOCKHOLM, Jan 31 (Reuters) - Swedish hygiene products group Essity reported quarterly core earnings above market forecasts on Thursday on the back of a bigger-than-expected boost from costs savings and price hikes, more of which were on tap for later this year.

Adjusted operating profit before amortisation at Essity, which rivals Procter & Gamble and Kimberly-Clark, dipped to 3.45 billion crowns ($383 million) in the fourth quarter from 3.62 billion a year ago, but easily topped the mean forecast 3.07 billion in a poll of analysts. "Earnings were positively impacted by higher prices in all business areas, higher volumes and cost savings," Essity said in a statement. "Further price increases are expected in 2019".

Essity, the world’s second largest supplier of consumer tissue and a market leader in incontinence products with its TENA brand, also reported higher than expected quarterly sales at 31.1 billion crowns versus the 30.4 billion seen by analysts. "Overall a pleasing beat on top line and margins ... We expect today's release to be well received," JP Morgan said in a research note.

Essity has been under pressure from sharply higher input costs for raw materials such as pulp, a major ingredient in tissues and diapers.

The company embarked on a cost-saving program late last year, which it said it still expected to generate annual cost savings of around 900 million crowns, with full effect at the end of 2019. ($1 = 9.0179 Swedish crowns) (Reporting by Johannes Hellstrom, editing by Niklas Pollard)

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