Do you know that 400 million people suffer from incontinence? That last year, two out of five women in the world had to stay home from school or work due to menstruation? That 2.4 billion people live without basic sanitation services? More than 1.2 million people die each year from diseases caused by antimicrobial resistance. What do you think about that? Do you care? We do. We want to improve the wellbeing of everybody by raising awareness, breaking taboos, and driving innovation. How? We are where you are. Our products are in your home, at your workplace, on your vacation. We make everything, from wearable technology for smarter care to digital solutions for sanitation and wound healing. You'll use our products from the day you are born, until the day you don't need them anymore. We need more talented people to help us move forward. People who wants to make a career and make a difference. Who want to make the world better by breaking barriers to wellbeing. Work towards a circular and sustainable society. In the end, we want more people like us. People of all ages and genders, sexual orientation, and ethnicities. That's what makes us better, not just as a company, but as people, because that's what we are, people who care. Warm welcome to the second day of Essity's business area web presentations. Today, we will focus in on Professional Hygiene. I'm really looking forward to it, Joséphine. Good, Magnus. A warm welcome also from me. I'm Joséphine Edwall, Senior Vice President, Communications. Replays from yesterday's presentations you can find on essity.com. Tomorrow, we hope to see you also at 3:00 P.M. Central Europe time, when we will have a deep dive into Consumer Goods. Today, as Magnus said, we're gonna focus on Professional Hygiene, where we will have our President, Professional Hygiene, Mr. Don Lewis, as well as Pablo Fuentes, President, Latin America. Of course, we'll have a Q&A in the end, and we hope to have many questions from you out there. With this, Magnus, why don't you set the scene? Yes. Before getting into Professional Hygiene, a quick recap on Essity. In 2021, we had SEK 122 billion of sales in 150 countries with 56,000 employees. Our financial targets are to have an organic growth of above, or an organic and acquisition growth of above 5%, something that we have achieved on average over the last eight years, even though it was negatively impacted the last two years during the pandemics. While current year 2021, we see a huge uptick in growth, actually over 18% after nine months. When it comes to our target for adjusted return on capital employed, the target is to be above 17%. We're a bit away from that, considering that we raised the target as late as 2020, when we achieved the previous target to be above 15%, we still see good chances to get to above 17% by the end of 2025. We also have policies to remain solid investment grade and to have a dividend policy with stable or rising dividends. A quick overview of our three business areas. They are very distinct. We have completely different customers, different consumers, different use cases in these three business areas, different go-to-market sales channels, and also different competitors. Many things also keeps these three business areas together very much in the back end. It's about procurement, our supply chain, R&D, for example. With this, I'd like to hand over to our President of Professional Hygiene, Don Lewis. We believe in the fundamental importance of hygiene that's good for people and the planet, committed to giving all people equal access to sustainable hygiene when away from home. That's why we see the world in a different way. Where some see napkins, we see an opportunity to provide guests with a cleaner and safer dining experience. When some see soap and sanitizers, we see possibilities to improve hand hygiene compliance for a healthier society. When some see another round of cleaning, we see ways to empower staff for greater wellbeing. Where some see a bin full of paper waste, we see sustainability efforts to reduce carbon footprint. When some see dispensers with paper towels, we see equal access to new hygiene standards for all. We use our expertise in sustainable hygiene management to improve businesses and society. Creating sustainable hygiene for all. Hi, Don. Always good to see you. Hi, Joséphine. It's a pleasure to be here. I'll say good afternoon to everybody. In advance, I'll warn you, I'm fighting a little cold, so my voice is a little weak, but I assure you that I am very enthusiastic about Professional Hygiene. [audio distortion] Let's hear. If I may, there's a lot of great things going on right now, and over the last several months as we've rebounded from COVID, we've spent a lot of time looking on our future and we have a focus that's really focused on being margin accretive and looking at things that are less of a strain from a capital perspective. They're low capital and margin accretive, and I'm gonna talk about a lot of that today. Good. Thank you. First let me give you an update on the way Professional Hygiene shows to the group, and this is the share of the group from a net sales perspective, 22%, and from a share of group EBITDA perspective, 19%. Certainly, the goal is to have the EBITDA be a higher percentage than the sales, which we have done in the past and I'm confident we will do again in the future. From a sales split in categories, the main part of our business is the historic tissue business, which is paper towel, napkins, toilet paper, and solutions growing to help augment that, which I'll get to later. We have two growing areas which we're focusing on, which is part of our strategy, which is wiping and cleaning at 14%, and soaps and sanitizers at 3% of our business. If you look at the customer segments, we focus our marketing efforts and our innovation on these segments. Our largest segments is HoReCa or hotels, restaurants, and catering at 40%, commercial buildings at 24%, public interest at 15%, healthcare at 11%, and industrial at 10%. We'll pivot our focus at different times on where we feel the profitability pools are, and I'll show you how we also, our innovation plays to that, too. Mm-hmm. Before, maybe you should have your nine-month figure also. Yes, I'll get to that in one moment. From the sales split, I just wanted to let you know the geography of the North American business, 40%, Europe being our biggest market at 44%, followed by Asia at 7%, Latin America close behind at 6%, and other of 3%. Here are some of the figures that Joséphine was referring to at our nine-month point. We've had very good net sales growth at 27.4%, with adjusted gross margin of 21.9%. Our adjusted EBITDA margin has been increasing, as you may know, from quarter to quarter. It's now at 9.9%. Our adjusted return on capital employed at 12.1%. I have to say, it's really good to see the strong sales growth you had because it's been a tough world. It's still a really tough environment. Your customers were heavily impacted by the pandemic. How are they now? They're rebounding quickly. We had a very quick rebound from those customers that were in the restaurant business and also healthcare, which really didn't slow down much at all during the pandemic. Industrial and commercial office buildings have been much slower, especially commercial office buildings, and there's a chance they won't ever come back to the levels that they are. We've seen good growth in the other areas. Yeah. The only thing that many people learned during the pandemic, you had been an advocate for years about, for example, the importance of washing your hands, which can actually save lives and prevent infections, and now it's more important than ever. What more do you see with this? Yeah. That's been very positive. We didn't know, when we were in the midst of COVID, I think we were under the impression that the focus on hand hygiene would stay continued forever. We did see it back off. The good news up is that it's up 16% versus post, or I'm sorry, versus pre-pandemic level. People are washing their hands 16% more. We're seeing a lot more traffic. Those of you that travel probably notice the queues for the sinks are longer than the queues for the other parts of the restroom. That's a really positive thing for us moving forward. Mm-hmm. It plays to the growth of all of our product categories. That's good. What do you say? I mean, the current environment, we have, a really high cost inflation that is impacting everyone. What are you doing to handle that situation? It's unfortunate, and we're in the same boat as our customers, but we really took time to look at our already solid pricing practices and make them even better. In my business unit, pricing is centralized, and it actually reports into finance so that we can keep a good handle on it. We've made corridor prices to even out some of the discrepancies in markets. We've looked at more automation to help make it quicker. We look at, we've added a whole department actually that's more than paid for itself, and we've been able to execute really well this year on price increases. It's hard to do, but we've had no choice. I can tell you that we've gone from being pretty good at it to being a bit of a machine now, where we can introduce increases and surcharges much quicker, and we've had more increases this year than we've had any other year ever. By the end of the year, we'll be able to mitigate all the costs that we've received this year. Good work. Thank you. Good work. Let's look a little bit about the long-term trends. What would you say, are impacting your business? Luckily most of them are playing positively to us. Digital is a trend that we probably weren't ready for a decade ago, but the last five years we've really pushed hard, and you'll hear a little bit more about that later and how we really see it as a competitive advantage for us right now. Sustainability plays right to our sweet spot. The continued focus by customers on sustainability, they look at us as the subject matter expert to help them there. The hygiene focus, as I mentioned earlier, continues to play to us in a good way. I'm really optimistic that the trends are something that we're very well prepared for and that we can take advantage of. Good. Now let's hear about your categories. Sure. Mm. Thank you. If I may, the categories that we have are tissue and services and solutions, and again, I mentioned those earlier. Soaps and sanitizers, which has been a small part of business overall, but some markets we do much better than others, and we have a pretty significant share in those markets. Wiping and cleaning, and these areas are all part of the strategic direction that I presented previously. This really takes us from being a traditional towel and tissue company to being a full cleaning and hygiene company, and this will be more the way we're going in the future. This gives you a little view of the specific products that we have in the categories. You can see the different wiping products and solutions and the breadth of our product lines keep continuing. We've been taking a lot of cost out of our commodity products, but we've been continuing to focus our innovation on these products that are proprietary in nature, that are always accretive from a margin perspective and fit the company's needs of the future. Customers rather. Current addressable market is SEK 12 billion, and this is an increase of 4% per year. This number is from 2021. I think the good news is we have a lot of room to continue to grow, and there's a lot of opportunities for us ahead. From each of the major markets, we either have the number one or number two position, or we're close to getting there. Globally, I'm proud to say that we're number one with the Tork brand. In Europe, we have a strong number one position. In North America, number two. In Latin America, we've recently moved up from number four to three, and in Asia, number three. Globally, our percentage is 19%, and you can see followed by two rather major pro-players, and then after that it's extremely fragmented. In Europe, we're number one at 32%. It's a very consolidated marketplace. I'm sorry, it's semi-consolidated marketplace. You can see there's a couple players that have almost half of the market, but the rest is very fragmented, which leaves opportunity. In North America, it's a little different. We're the number two position at 23%, and it's very consolidated with three players having 2/3 of the market. Little different situation. When you talk about our vision and our go-to-market strategy, Tork is the global shaper in Professional Hygiene, and this kinda steers where we go from an ambition perspective. We keep the customer at the heart of everything that we do from an innovation perspective, and our goal is to continue to expand our value proposition and differentiate via omni-channel partnerships. Denise will talk about that, I'll introduce her a little later on what we're doing specifically there, but it's been a big part of our strategy over the last few years. Certainly having a grounding with people and culture and upskilling and sustainability, sustainable hygiene, being a differentiator and increasing our digital capabilities. Quite simply, this icon says a lot about our direction. Next, I'll talk about tissue services and solutions. I'll start by running a short video, and I'll follow up on that. It's the big game. The stadium is full. There's one minute to halftime. You've prepared the washrooms. It's one of the most crucial moments for you and your team. Hold-ups, mess, empty dispensers could mean fans risk missing out on the action. Of course, this isn't news to you. What might be is the launch of the new Tork PeakServe Continuous Hand Towel system, the highest capacity hand towel system on the market. With Tork PeakServe, you're armed with 250% more towels that dispense fast, improving the washroom flow for any crowd. As you know, the less time they spend in a washroom, the more they can spend with your business. With Tork PeakServe, you can also refill twice as fast whenever it suits you, freeing up more time for you and your team. Time to respond to the mess and those unpredictable challenges that come with big crowds, making your guest experience better overall. Whether it's the big game, morning rush at the airport, or a sellout concert, bring on the people, bring on the crowds. Some of you may have seen that video in the past. That was one that we did when we introduced the Tork PeakServe product, which has really been a blockbuster innovation for us. You can see behind me, some of the dispensers, and I'm sure you'll agree they're quite beautiful, but they're also very functional. As mentioned in the video, the capacity is the key to this. It's the highest capacity dispensing system on the marketplace. The quality is great. It makes for very speedy flow of people through a facility. It's got, it also has sustainability benefits because they're compressed, and you can actually ship more on a truck, which uses less fuel. That's a few of the attributes, but the interesting thing is really how the story expands. We first had the one product, the large one that you can see on the left of the screen. We saw that although we first thought it would just be used in very high capacity areas, there was a demand from other customers. We introduced the Mini, a quite smaller one, and also a cartridge that can be inserted in previously hung metal dispensers. This has really allowed us for very fast growth. You can see along the bottom some of the key customers that we've been able to acquire over the last year. The list of customers is much more extensive than that, but it just shows some of the visibility of this dispenser. The best part of this story is this: this has been the fastest-growing innovation in Professional Hygiene, and it may be one of the fastest in all of Essity. We introduced this in 2018, you could see the growth has been tremendous. A CAGR of 182%. If I showed the margin that went along with that, you'd see that it's very strong margin development. As I mentioned previously, the story again is growth, but growth with margin development. Tork Vision Cleaning is another area that we've talked about from our IoT solution. I'm gonna move to a video from Nancy Farrell and let her tell you a little bit about this system. Thanks, Don. Tork Vision Cleaning is our IoT service that uses data to help property managers, facility managers, and cleaning staff meet higher than ever standards of hygiene and cleaning while working smarter and doing more with their resources. We call this data-driven cleaning, a phrase that we created when we first launched our system, one of the first on the market. Tork Vision Cleaning uses connected devices to collect data throughout a facility. We use people counters that show visitor traffic to inform cleaning teams where and when their attention is needed most based on high touch point areas. We also have sensors within our Tork dispensers measuring how much product is left. All this real-time information is easily accessed by customers using Tork Vision Cleaning software from their desktop, tablet, or mobile devices. Tork Vision Cleaning takes out the guesswork so you can improve quality while also creating efficiency. Take a seemingly simple action of checking a dispenser, which takes about 30 seconds. It may not seem like a lot, but it adds up quite quickly over the course of a year. Real-time dispenser data guides cleaners, so they only check and refill dispensers when needed. On average, our customers see a 91% reduction in dispenser checks alone, saving hundreds of hours per year, with many customers seeing even more. One of our office customers in the U.K. said they got nearly three hours back per day for their cleaning staff to focus on other critical cleaning tasks. Data-driven refilling also ensures dispensers stay stocked, so guests have access to critical hygiene products, which supports a more hygienic and safer environment. Our approach is working. Today, we're connecting many different types of sites in segments from office buildings to airports, stadiums, amusement parks, universities, manufacturing sites, hospitals, and more. In a survey of Tork Vision Cleaning customers across Europe and North America, 100% of them would recommend our system. As we and our customers have more data, they're able to use that data to make strategic business decisions. I'll let Don share a great example of this with you. Thanks, and back to you, Don. Oops, let me go back. There was a lot of information in that video, and I hope you made note of it. But this has been a solution that not only drives business on its own, but we find it's great for our brand development and also customer retention. Here's an actual result from a European airport that uses our Tork Vision Cleaning. You can see there's 100% more visitors, as you can see through the post-COVID, 2020 was COVID, 70% fewer cleans, and zero complaints about empty dispensers because of the way that we were able to help with Tork Vision Cleaning. They know when to fill the dispensers. It's also cut down the time to a third of them actually having cleaning people having to go into the washrooms. This has been a huge benefit. They're not the only ones. There's a lot of other customers that appreciate innovation, especially technology innovation, and I'm sure you'll recognize all of those names up there. That's just to name a few. It's just the beginning, and it's been a great opportunity for us, and it's also been a great opportunity for us to help fill the needs of our customers. Tork PaperCircle, along the same vein, is this value-added solution. This is where we can actually take washroom waste right from the washroom, from the waste bin, have it collected, ship it back to our plants, put it back into the paper process, totally clean, and take back out to our customers. When you're really looking at a circular solution, there's nothing more circular than Tork PaperCircle. We've been expanding this quickly. We started in a few countries, and you can see the countries have grown quickly. 35 million people now have access to Tork PaperCircle if you look at the amount of people that go through the facilities that we're in. As you can see a post in the bottom there, that's from a, I believe a Dutch or a customer in Denmark that actually uses it for reputation building and how by them using Tork PaperCircle adds to their own reputation. So these two services, Tork PaperCircle and Solutions, have really added a lot of value to us and to our customers. Soaps and sanitizers is the next area. If you remember, I showed this at the beginning of a big growth area for us. I'll now turn it over to Summer Kazmarek to tell you a little bit about it. Thanks, Don. I'm excited to be talking about Clarity Foam Soap, one of our newest hand hygiene innovations. People have higher expectations for the places they visit when it comes to hygiene. The past few years have created a major challenge in that people want to feel safe when they're away from home in places like school and work. Sustainability is also becoming a main focus, as there's a broader recognition that it is vital for a better tomorrow. The Tork brand is committed to delivering both hygiene as well as sustainability. Many often wonder, do you have to sacrifice one in order to have the other? Clarity is one example of how Tork is offering sustainable hygiene management. Clarity was developed with the goal of promoting hand hygiene while minimizing environmental impact. Clarity is a proprietary formula developed by our Essity R&D team using a circular lens. Starting with the resources, 99% of the ingredients are of natural origin. Looking at manufacturing, Clarity is produced using renewable energy. From a use perspective, all ingredients in Clarity soap are biodegradable, as is the finished formula. It has a lower impact on aquatic life, and it's also classified as easy to rinse, which equates to 35% less water consumption. Finally, looking at waste, the Clarity bottle collapses as the contents are used, helping to reduce waste by 70%. With all of its many sustainable properties, Clarity is still safe and effective. Each ingredient in Clarity was carefully selected to optimize for skin health without compromising on performance. It holds four third-party certifications covering all aspects related to well-being, giving users peace of mind. We're proud of Clarity and the customer interest it has received. We are excited to be bringing forward more sustainability initiatives and innovation on the horizon for soaps and sanitizers. Back to you, Don. If you listen to this, I think the interesting thing is we talked about some of the trends earlier that we can take advantage of. In this area, we're taking advantage of the trend in hygiene and also the trend in sustainability together. As we prioritize this area, we're continuing to introduce leading innovations and be very targeted with a go-to-market strategy. We've increased our awareness and training to increase the capabilities of our sales force. We were also the Innovation Award winner at the ISSA Show, which is the International Sanitary Supply Show, which was in the United States, one of the biggest shows in the industry. Out of many, many competitors, not just in our arena, but in all types of competitors that are in the away-from-home industry, we took the lead award for innovation. Part of what we displayed was this, the Tork Clarity soap in a fishbowl and actually a fish living in the fishbowl, and it actually lived the whole show and was still living when we ended the show. It just shows how environmentally sound it is that you could keep life alive in this product. This has taken off, and I'm proud to say that we've won this innovation award, as we have with many of the products that I've shown today. Nice story is we're up 21% organic growth through the first nine months of the year. Every year we raise our aspirations on this, and we expand our markets that we're hitting with the soap, and it plays as a perfect solution to our other products. Wiping and cleaning, this is the other area that I showed. This is an area we're also expanding and also very good margins for us. We've prioritized as a growth area with continued organic expansion. We've accelerated growth both through mergers and acquisitions and strategic partnerships. We've done a lot of capability buildings. Object wiping sales is a much longer sales cycle, but the business lasts a long time and is extremely profitable. As you may remember, we expanded by purchasing Legacy early in the year. This gave us converting capabilities in the United States, which we did not have before. It also expanded our line. You can see many of the products there in large task wiping, and wet wipe type products that are in industrial use for gyms or places like that. We're in the process of integrating, and it's been a good message to the marketplace that we're serious about investing and growing in our wiping business. You've heard a lot about partnerships these days, and I think this is something else that came out of COVID where people worked together. What we also had as part of our strategy of being a holistic cleaning and hygiene company is expanding into surface cleaners. The easiest and fastest way to do that, and we think the most effective, was through a partnership. We partnered with another known brand and company, Reckitt. And it's been a perfect marriage thus far. You have us with the number one in Professional Hygiene and our think ahead mentality. You have Dettol as the number one disinfectant brand in U.K., and Sagrotan as the surface in skincare in Germany. Both of us are well-known companies, and together there's a good synergy. We're taking our strength in the business-to-business world and their strength in brand recognition and formulations and surface cleaning chemicals, and we're working together. We've just jointly kicked this off. We'll be using our sales force to sell. You can see there's co-branding on there with both the Reckitt brands and the Essity's Tork brand. This will be a good way for us to expand quickly in the European market and others as we move forward. Wiping and cleaning thus far up 20%, again, I think the good news is a lot of the growth that we're showing are coming from a great mix of products. Next I'd like to talk about how we're accelerating digital. I talked about our omni-channel experience. I'd like to introduce our VP of E-commerce, Denise Vivas. Denise has been somebody that's really worked hand in hand with me over the last five years now? Almost five, yeah. We've done a lot of work that I'm very proud of. Denise will tell you and show you some of the examples of that. Well, thank you for the nice introduction, Don, and good afternoon, everybody. I'll start by sharing that our digital transformation efforts are going up across every inch of Professional Hygiene. From the way we manufacture our products, to the way we make our business smarter and more efficient, to the way we reach and engage with end customers, and of course, all the way to how we think about new business and profit opportunities. With that in mind, a lot of those efforts are really centered around executing our customer-centric strategy, which you presented early on. A big component of that is to ensure that we leverage digital to bring Tork products and solutions to our customers with great convenience and speed. We've done a number of initiative around this particular point. Today, I'll talk about Tork EasyOrder. Tork EasyOrder was launched in 2017, and is a direct to customer solution, right? It's a direct e-commerce model, a web shop, that serves smaller distributors in North America and Europe. We do that through the delivering convenience to e-enable 24/7 shopping, as well as several self-service features. The portfolio of products that we typically sell through Tork EasyOrder is proprietary and branded, making it one of the most profitable channels for Professional Hygiene. We have a number of initiative already lined up to continue to accelerate this direct e-commerce model. At the end of the day, we're very mindful as well that most of our business is and will continue to be done through our distributor partners. Many of them are also investing heavily in digitalization. That's why we've been building capabilities to really support them through this journey. An example is we now are able to provide best in class content. What you see on the screen is for Tork PeakServe, actually. You just introduced Tork PeakServe. Very important innovation, now we're helping our distributor partners leverage the digital shelf to sell more faster, right? This innovation. We also provide expertise in the areas of digital selling and digital campaign activation. Now, all these new value add services are now combined with the great work that we were doing offline already with them under what we believe is a very differentiated omni-channel strategy, going back to the strategy for the business. What we're aiming to do with this is jointly win end customers, and drive value creation for both Professional Hygiene and our distributor partners. Now, all of this work already secure a very strong position for Essity, for Professional Hygiene in the market, but we're not stopping here. We are actually actively working on the new, the next wave of digital capabilities. In this phase, we're really focused on further simplifying our business model by really leveraging the power of advanced analytics and automation to provide very, very enhanced experiences to our customers via digital means. Now, some of these capabilities are naturally leading into selling more products, more categories per order, again, drive more profitable growth for both us and our partners. With that thought, I'll turn it back to Don to wrap up the session. Thanks, Denise. It's been a very exciting journey, and we've gotten great feedback by customers. We talk about enhancing the digital customer experience. It's all about our customer, and I want to make sure our customers can buy any way they want, any time they want. We can really offer that now. It gives us a lot of really good benefits. It actually allows us to accelerate our growth and our virtual shelf space that is pretty much unlimited now, which really helps us get some of our new products to market fast. We've expanded our direct e-commerce model, so Denise mentions our partnership with distribution, but we can also sell direct. The differentiated omni-channel experience, we're now looking for those people that can keep up with us and partner with us as we also help people. We've had to do a lot of work to really uplift our own capabilities, which we're not done with yet. Everybody in our organization knows that we're going towards digital in a very large way, and they have to be a part of it. We're actually making sure that we have a great customer experience. We've won several awards from customers for our work here, and it's really enhanced our growth and been a large part of our growth. If you looked at the percentages, it's the fastest growing channel, I guess, of our business right now. Great and impressive work. Thank you, Don, and thank you, Denise. I have to say, Don, you really missed the Professional Hygiene. You and your team have really filled the Tork brand with great products, services, and content. Also now you were early on starting with the digital elements. Really nice to hear. I have a question to you, Denise. Sure. Do you see this area, is that a way to retain market leadership or go for new business opportunities? It's a really, really good question, Joséphine, and I'll say it's both, right? We've really nurture our business in a way that we're market leaders in many of the geographies where we are. The reality is that when our customers turn to online or switch, they have a number of alternative now that are literally a click away, right? There's a lot of choices that they can make. Also our customer base has turned to be more millennial these days. With that, we know that about 70% of them actually go online to research the products and solutions for their needs, and the vast majority actually makes a decision before even calling a salesperson. It is incredibly important for us to develop this digital presence online in a way that our the superiority of our products and brand is very tangible and differentiated. Super important to defend our market leadership. At the same time, I will say that building our digital presence is giving us the opportunity to accelerate against initiatives that provide incremental growth and incremental profits for us. An example of that could be all the work that we do with search that allow us to grow faster in very profitable categories like skincare, don't talk about it no long ago, and industrial and industrial segment. Also, our digital presence and direct models such as Easy Order allowing us to go faster, or respond faster to micro and small businesses which naturally shop online more often than large enterprise businesses. Again, I think the work that we have, started now five years ago, is really helping us to do both, maintain or defend our market leadership, but also go after new profit and revenue pools. Really good. Thank you. Don, How has the reaction been for your current customer with these value-added services? It's changed. Mm-hmm. At the beginning, they were a little afraid. I think our distributor customers were also trying to figure out if they needed a digital strategy. As soon as I announced that I was bringing Denise on board, I got a lot of emails from customers, "What are you doing? Are you gonna attack our business?" This is from our distributional partners. I said, "No, we're here to help." Mm-hmm. I said, "If you see us as a threat, you're missing an opportunity. The opportunity is to partner with us, and we can get there together." I said, "We're going there either way, and you, whether you know it or not, you're gonna end up going there, too." A lot of them have, and I think now they see that we're a great partner on it. Mm-hmm. There's room for us to sell direct when we need to, but for the most part, partner with a distribution customer. Yeah. What I can share with you is that every distributor partner that is working with us under this approach is growing faster and more profitably. Mm-hmm. It's really driving value creation for both. It's a win-win. It's a win-win. Definitely a win-win. Yeah. Yes. Thank you, Denise. You're welcome. Thank you, Don. Thank you for having me. Thank you. You're gonna stay. I'll stay. I would like to welcome my colleague, Pablo Fuentes, to talk about the emerging markets and Professional Hygiene. We swap places. Welcome, Pablo. Thank you, Joséphine. Now we'll talk about emerging markets. Emerging markets represents 19% of our global Professional Hygiene sales, and it is estimated that 60% of the growth in this category in the next years will come from emerging markets. Latin America is one of our most important emerging market regions for Essity, we have been building a very strong position by leading and leveraging our strength on proprietary differentiated systems. In Latin America, we have been growing consistently over the last 10 years above the market and improving profitability in a significant way, as you can see in this chart. We have done this by leveraging, as I was saying, our leadership in proprietary differentiated systems, but we also have very strong positions in key markets for us like Mexico, Central America, Colombia, Ecuador, Chile, while we are also expanding geographically into growth opportunities for us like Brazil or Argentina. Quite important growth opportunities in Latin America. One concrete success case that I would like to share with you is regarding Tork SmartOne that, as you know, is one of our key global proprietary systems. We launched this in Latin America, and as you can see, it has been quite successful. The reason behind this success is that we took the global SmartOne model, but then we adapted for emerging market through a very specific different go-to-market, for example, specific, specification, prices, tiering. What we demonstrated with this is that we can take our global proprietary systems, our global models that Don was presenting, and then being very successful and profitable in emerging markets. With this, we go back to you, Don, for priorities. Thank you, Pablo. The priorities for the business are quite simple. Number one is continue with price management. I feel that price management is so important to this business that it's been one of our main focus, but it's also been an area that we've invested in talent and systems to be better at. We need to maintain and further strengthen Tork as a unique leader in sustainable hygiene and solutions. We've got great momentums, but there's still some markets where we need to build this up a little bit, and we still need some more brand development. Innovate to further enhance the customer experience. This can be all types of innovations and products and services, solutions, digital. All of those help us be more important to our customers, and actually, I believe, are allowing us to give more money for our products because of what we can deliver to our customers. Accelerate growth in high margin and high growth segments and channels. I told you how we were pivoting. We've now moved to grow more in industrial as it's coming back because our products are fitting there very nicely. We've also looked at the different channels, as I mentioned, through omni-channel. We aren't afraid to make moves to capture short-term and long-term opportunities. Continue to grow in selected D&E markets, such as the great story that Pablo talked about in Latin America. Great. Thank you, Don- Thank you. ... and Pablo. I have to say, your work is really helping to improving wellbeing in the world, which is more important than ever in today's world. Now it's time for the Q&A session. I would like to welcome Magnus back on stage, and you will find the dialed-in details on your screen or on essity.com. While waiting for the first question, operator, you will help us, Magnus, what do you think I will ask you? Do you have any key takeaways from today? There's been so much good information and so many opportunities. Maybe two reflections, one that hasn't really been mentioned today, which is quite amazing how quickly Professional Hygiene has recovered after the pandemic. Less than a year out, and I mean, we're partly still in the pandemic, our Professional Hygiene business has fully recovered, so that's something I want to mention. A takeaway from today is that even though this is still mostly a tissue business, there are so many opportunities and so much going on as relates to digitalization, sustainability, and adjacent products, and that's really where the future is while we continue to invest behind the core business, as well as we see from all these beautiful dispensers, for example, that we have around us. Those are two reflections. Good. By then, Operator, have you received any questions from the audience? Thank you. As a reminder, it is star one if you'd like to ask a question. The first question today comes from Oskar Lindström of Danske Bank. Yes. Good afternoon, thank you for those presentations. I have two questions for Don, I guess. I mean, most businesses have parts of it that are above and below sort of average in terms of margins, profitability, growth. Within your business, I mean, which segments are above average and below average in terms of margins and growth? I mean, is that something you could tell us a little bit about? Also, I mean, what is the spread? Is there, you know, some very, very profitable and high-growing parts and others which barely make it? Or, you know, how does the business look a little bit on in that regards? I was thinking around the Essity strategy pyramid that Magnus also talked about yesterday, about there being sort of pyramids now within each business area. In terms of Professional Hygiene, which segments or categories are sort of at the top of your pyramid and which are at the base of your pyramid? Two questions, quite long-winded. Sorry. Thanks. Sure. Hi, Oskar. No problem. First, as far as the segments, it's a difficult one to answer, not because I don't know the answer or don't wanna tell you. It's just, it depends on a couple of things. It depends on the geography, and it depends on the assets that we have in that specific area. You know, there could be a segment that's more profitable in one area because of our asset base or that's more profitable because of what the customer will pay. It's somewhat differs from market to market. Overall, we find that it's usually related to the products that we can sell in there, not just the pricing. If you look at industrial, which we've been moving in that direction, although it's a small share now, all the items that I mentioned or that I showed today could be sold in that segment, those very profitable items. That actually makes that more profitable per se because of the items we can sell into it. you know, we have a large bit of business in HoReCa. We have some of our products within that category. Napkins, we make very, very good margins. Others are very commoditized, so it's the whole package. Although we look at each of these segments, we've almost got to look at micro segments within these segments and how we position our products in there. It's, it's pretty complicated, although it doesn't seem like it, because there's just not an easy answer across the world to that question. I'll move to your second one, but if you feel you need more on that, I'll be glad to answer it. The second, if I recall again, if maybe somebody can help me. Your second question, Oskar? The pyramid. Your pyramid. The pyramid. Oh. pyramid. Oh. For Professional Hygiene. Yeah. So if you look at our pyramid of products, it's kinda flipped a bit. I mean, in the old days, it was just all products within the tissue pyramid. Depending, again, on the geography, it could be any certain way. Historically, we'd probably make more on towels, napkin, and tissue or toilet paper being less in the pyramid. Now the pyramid, the top of the pyramid, if the top's the pinnacle of the pyramid, would be the skincare product and then followed by the wiping products and the solutions and the towel and tissue product at the bottom, with the exception of some of the specific products such as PeakServe, which would be up there, too. Again, I hope I didn't make it more confusing than helpful, but maybe it gives you some idea of where the profit pools are from that. If I can, just- Yeah, please. ... step in. What's clear from your answer is that you know what the profitability is. Yes. Of every SKU. Absolutely. in every market- Yes. ... and every segment. That's key because we keep on running our Cure or Kill program. Yes. ... not only per each category and country, but also within each category and market down to great detail. Of course we're constantly looking at the lowest performers and deciding what to do with them, if we can improve them or if we have to replace them or we just take them out. That's ongoing constantly. Absolutely. All the time. Okay. Thank you. I understand. It seems the business is quite integrated. It's not as easy perhaps. Yeah. ... sort of- It's not. If you were just talking. To determine what the profitability is. one market, the answer is much easier. With a lot of geography, it's more difficult to answer. We look at it very intimately, very, very specifically. All right. Thank you. You're welcome. Our next question comes from Victoria Nice of SG. Hi there. This question or these questions are really for Don. You talked about the recently announced co-branding partnership with Reckitt, and you suggested this could be a big opportunity in the future. Just wondered where do you see this eventually getting to, and whether SG feels it has the necessary technology in cleaning liquids? Maybe perhaps beyond partnerships, could it look externally to build its capabilities in this area? Then my second question is you sort of talked about the recovery to 2019 levels. Just wondered whether you see a risk that an economic downturn could sort of knock back this recovery in areas like the HoReCa segment. I guess also still related to that, is downtrading a threat in this business, and do you sort of play across the price piano so you can capture maybe some of the potential moves? Thanks. Sorry, quite a lot there. That's okay. As far as the first question with the Reckitt partnership, it doesn't preclude us from doing something in the future. It doesn't preclude either one of us, but it is right now our priority from a partnership perspective. I think we've been upfront as far as what we're looking for as a partnership short-term and long-term. I believe that it is the quickest way for each of us to get here. I really do. The market expansion depends because they have different brands in different markets, and we're talking about the opportunities on their that are available now. We wanted to get started in Europe as we look at other country expansion outside of Europe. It does not preclude us from having our own strategy along with this in the upcoming years. It sure easier to get started with somebody that has the expertise, just like we have the expertise with the B2B customer. When you look at the next one as far as the economy and downtrading, you'll find that with the exception of COVID, Professional Hygiene really didn't get hurt that bad with economic downturns. When we had the big economic crisis in 2008, we had one of our best years because we're really essential products. COVID was an anomaly because it just took everybody out of the system. I'm not saying that there couldn't be some reduction in restaurants, but at least from what I see right now, there's a line to get in everywhere. It could come, but I don't see it as a big threat. I see it as a minor threat, but nothing like COVID. We've had the downturns before. There'll always be some downtrading, but we haven't seen that much. We've seen the threats of it in a little bit, but so far we haven't. It could happen, but we're prepared for it. We're growing so rapidly with our value-added products that hopefully we could weather any storm like that. Thank you. You're welcome. The next question comes from Karri Rinta of SHB. Yes, thank you very much. I also have two questions. I'll take them one at a time. Firstly, about the pricing management that you discussed. I mean, at least historically, this segment has had. It's been easier to raise or adjust prices compared to maybe Consumer Goods and Personal Care. Has this period of hyperinflation impacted you somehow? Has it made you? I mean, you mentioned that you have raised prices more often than ever before. What specific changes we have seen in price management, either in the U.S. or in Europe, and do you see those as sustainable going forward? Okay. First, I'll say it's not easy. I'll come back to your word on that. It's never easy. It takes a lot of work. I know how you meant it. I think that I mentioned that I have it into finance, which I've had for a long time. We found that until our backs were against the wall and you really have a crisis situation that makes you more creative, it really made us realize, and you know, Magnus, you've said this often too, you know, the pricing is just so critical, we had to get faster at it. We could get it, and we hold on to it. When costs go a different direction, we do a great job of holding on to it, we couldn't execute quickly. What we tried to do was take more of the decision-making out of the field's hands. We'd have senior management discussions and make sure that we could just have a system that we could push a button and get a pricing increase out quickly. Now, we have a lot of business on contracts and on tenders, so sometimes there's lag times. We've really not looked at things such as surcharges before, but we did this time, and it worked, and it was understood by our customers. We never wanna take advantage of a customer, but we have to be able to get pricing up quicker. By doing those things, we added some strategic headcount in that area to be able to be better at it, and we've really increased the collaboration between the commercial regions and our price management team so that there's really good dialogue with them and with the finance community. That's allowed us to be better. We're not perfect yet. We still need to get better yet, but we're getting there. Just a quick follow-up of that. There isn't any meaningful difference in price management in North America versus Europe from your perspective? It's not as much in the price management as in a couple other things. The North American business is more laden with tenders or contracts, so it takes. We can announce an increase, but it takes a while. You don't see the net effect as quickly because the contracts can come up on a rolling basis. That's why there'll often be a lag time with North America in getting an increase. By the other hand, when things go the other direction and costs go down, then these contracts actually insulate you, and you can hold on to it longer. It's a bit like having a portfolio of stocks, that have different, you know, some you want for fast growth, some you want for, you know, long-term. We have a portfolio like that that we manage. We still have room to improve in North America and we have to make sure that we're less reliant on the contracts and that we could also adjust the contracts quicker. We used to not adjust the contracts for six months or a year. Now we've gone in in a month's notice or two months' notice because we've had to and adjusted the contract. That's been a bit of a paradigm shift that we've caused that will pay dividends in the future. We haven't seen them quite yet, but it will make us better in the future. Right. Thank you. The second question is about the profitability and you continue to trail your largest North American competitor in terms of profit margins. How should we think about this difference? Is it purely geographic, i.e., that you have more Europe? How should we think about different components? Geography, sort of the end customer categories, industrial versus restaurants, and maybe more specifically about 2022, how big of a role has energy prices played for your profitability. Fir- -in Europe versus the U.S.? First, I'd like to comment, when you say historically, Or when you say we've trailed them, historically we have, but if you look through the past several quarters, although there might be a net gap in margin, you could see where we've actually rebounded in some cases faster. Our growth has been better, and our margin didn't decrease as much. So from a relative perspective, we've actually done pretty good. Now, the gap that we have to solve for a long time or long term is due to a few things. It's a little because of geography. It's a little bit because of our product mix. They report a large percentage of their business in PPE, which we aren't in that arena, so that also contributes to the margin. That's why we're looking at these, continuing to grow in these other areas that we've mentioned, so we can be in the more margin-accretive areas. I think if you would pull out those and we would look tissue to tissue, you'd find we're pretty similar. That makes for a difference along with the margin concentration. Certainly, the energy issue in Europe has affected us much more because of our business, the way it's split in Europe versus North America. It's always been something that we keep in our mind, but it's actually been better over the last 2 quarters, and I think we have room to continue to close that gap. Yeah. just to underscore, the third quarter was really- Yeah. ...exceptional with the energy crisis and. It was. The gas and electricity price impacts that we saw in Europe and of course that didn't happen in the U.S. The strengthening of the dollar in relation to the euro during the third quarter. Mm-hmm. We can now go to Faham Baig of Credit Suisse. Hi, good afternoon, everyone. Thank you for the presentation. I have one question, and it's on price. You've been successful on prices, but Don, you highlighted one of the mechanisms you've used is surcharges, and that could be partly related to energy. Are you seeing unwind in any of those surcharges as energy costs have recently reduced? Well, did so over the last couple of months anyway. And related to pricing, I think you mentioned, correct me if I'm wrong, that pricing will cover costs by the end of the year. Is that to suggest, given the input cost environment right now, you will not require further pricing in 2023? Thank you. Just to start, since this covers both emerging and mature markets, we will continue to raise prices because we see continued cost inflation in other areas, like SG&A during next year. There's still a strong momentum for continued price increases. Of course, at the same time as we've stated, for the fourth quarter, we see stabilizing global market prices for commodities. Energy, of course, it changes every day. It's lower than in the third quarter, but of course, compared to a year ago or historically, energy costs are still incredibly high. I think that's kind of an overview of the situation. I would have answered identically. As far as your question about the unraveling of the surcharge, we've not made any move on surcharge yet. It's too soon to do that. You have to realize that we are absorbing a lot of the costs on the front end of this. I don't see any immediate change to that either. Many thanks. Our next question comes from Charles Eden of UBS. Hi. Good afternoon. Thanks for the presentation. Just two quick ones from me, please. Firstly, just following up on margin, I'm just gonna try and ask a question slightly different. Obviously with your emerging market margins, they've improved quite a lot year to date, as you showed. Can you help us understand how that margin compares to the developed markets currently? I guess what I'm asking is, as the emerging markets grow faster for you over time, will this be a drag on the divisions margins? Second question, can you just remind us the% of your sales that go to distributors, and is there any major variance here by geography? I ask because I'm just wondered around your visibility on inventory levels here, as we've heard some other B2B consumer companies discussing destocking trends, particularly in North America. Are you seeing any evidence that there may be historically above historical levels of inventory in your distributor system at the moment? Thank you. Maybe you want to start with the second question, Don. Yeah. Okay. Yeah. I'll start with the second one. Yeah, we haven't seen any destocking yet in North America. I've talked to many customers and not really heard of much. Primarily, most of what we sell is through distribution. We have a certain amount of e-commerce business which is growing very quickly, but some of that is through distribution and some of it is direct. For the most part, the majority of our business is sold through distribution or pulled through distribution with the end customer through us or national accounts and so forth. We mostly invoice distributors. Yeah. The first question, of course, as emerging markets grows faster, there's always the question, you know, will that be a drag on margins? Having said that, what we have seen overall over the last couple of years, and I think we showed that at the last Capital Markets Day, is that actually the gap between margins in emerging markets and mature market has narrowed over the years, and this is also the case for Professional Hygiene. I think it's a perfect opportunity to also have Pablo say some last words here before we close the Q&A. Pablo, are you closing the gap to the mature markets? Yes, we are. We of course follow this very diligently and we now have a very profitable position that is growing very fast, as I already presented. Good. Do we have any final question, Operator? We have one more question in the queue. Mm-hmm. It comes from Linus Larsson of SEB. Thanks for taking my question and many thanks for the presentation. I wonder about, you described the various categories now on the call, and I wonder about business mix and how you see that develop and maybe in, say, five years, what the mix will be or where you would like it to be. Relating to that, which portfolio adjustments might there need to be made? I mean, you made the big acquisition in Away- From- Home Tissue in North America in 2017, I think. That sort of big move, or are you more seeing a smaller add-ons? If so, which categories are prioritized? Also the other way around, obviously, on a group level, there have been a number of exits out of a number of market positions over the past several years. If you could talk a bit about the portfolio mix, today and in a five-year perspective. Maybe I'll go on, I'll let you footnote it, Magnus. I think that our strategy is just in line with the group strategy. You know, we're looking to expand on things that are low on capital investments and that are high on margin. I can see that if you look at the pie that I showed you and where you have object wiping and skincare being a small percentage of our business, as I look forward, that and other adjacencies would be a much bigger part of the business. We won't abandon the towel tissue and napkin business by any means, but I think it's doubtful, unless it's a geographic positioning, that we would do another tissue acquisition like the one that you mentioned. It would have to fill a geographic void. It would more than likely be in these adjacent areas that we could grow quickly and profitably without a lot of capital investment. Mm. Maybe just to add to that, We currently have a quite high capacity utilization in our Professional Hygiene tissue business. Again, Cure or Kill is always ongoing and when we see that we need the capacity for the strategic products and for the high margin products, we tend to step out of maybe lower margin. We don't have much private label, but to the extent that we have contracts, for instance. That's continuously ongoing. Would you like to add something about the emerging markets? No, nothing else, Magnus. Yeah. It's the same strategy, globally. Yep. Thanks, Linus. Great. Thanks. Okay. If we have one more question, why don't we bring it up? Otherwise, we will conclude. Operator, do we have any more questions? There are no further questions at this time. Okay. Excellent. Thank you so much for joining us today. I really hope you will join tomorrow as well, where we will present the business area Consumer Goods. Thank you. Hope to see you tomorrow.