September 28, 2018 / 6:24 AM / 2 years ago

Essity launches new cost measures as higher raw material costs bite

STOCKHOLM, Sept 28 (Reuters) - Swedish hygiene products group Essity on Friday announced a new cost-cutting program aimed at 800 million crowns ($90.5 million) in annual savings and said the negative impact from higher raw material costs had accelerated in the third quarter.

Essity said it expected the savings to reach full effect at the end of 2019, adding the program would include staff cuts.

During the first half of this year, rapidly increasing costs have largely been offset by increased prices, product mix improvements and cost savings, Essity said in a statement.

"During the third quarter of 2018, the negative impact of external market factors, such as sharply increasing costs for pulp, oil-based raw materials and energy, have accelerated further," it added.

Essity, which competes with Procter & Gamble and Kimberly-Clark, said that restructuring costs will be related to headcount reductions and will be presented in the fourth quarter.

A market leader in incontinence products with its TENA brand and in professional hygiene with Tork, Essity was spun off from forest products group SCA in 2017. ($1 = 8.8409 Swedish crowns) (Reporting by Helena Soderpalm, editing by Johannes Hellstrom)

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